10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM 10-K
[X]		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the fiscal year ended December 31, 2004
OR
[   ]		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from _________ to ___________
Commission File Number			Registrant; State of Incorporation; Address and Telephone Number		IRS Employer Identification No.
1-11459			PPL Corporation (Exact name of Registrant as specified in its charter) (Pennsylvania) Two North Ninth Street Allentown, PA 18101-1179 (610) 774-5151		23-2758192
333-74794			PPL Energy Supply, LLC (Exact name of Registrant as specified in its charter) (Delaware) Two North Ninth Street Allentown, PA 18101-1179 (610) 774-5151		23-3074920
1-905			PPL Electric Utilities Corporation (Exact name of Registrant as specified in its charter) (Pennsylvania) Two North Ninth Street Allentown, PA 18101-1179 (610) 774-5151		23-0959590
Securities registered pursuant to Section 12(b) of the Act:
Title of each class				Name of each exchange on which registered
Common Stock of PPL Corporation				New York & Philadelphia Stock Exchanges
Preferred Stock of PPL Electric Utilities Corporation
	4-1/2% 4.40% Series			New York Stock Exchange New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrants' knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

PPL Corporation	[     ]
PPL Energy Supply, LLC	[ X ]
PPL Electric Utilities Corporation	[ X ]

Indicate by check mark whether the Registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.

PPL Corporation	Yes  X	No
PPL Energy Supply, LLC	Yes  X	No
PPL Electric Utilities Corporation	Yes  X	No

Indicate by check mark whether the Registrants are accelerated filers (as defined in Rule 12b-2 of the Act).

PPL Corporation	Yes  X	No
PPL Energy Supply, LLC	Yes	No  X
PPL Electric Utilities Corporation	Yes	No  X

As of June 30, 2004, PPL Corporation had 188,894,379 shares of its $.01 par value Common Stock outstanding, excluding 31,034,476 shares held as treasury stock. The aggregate market value of these common shares (based upon the closing price of these shares on the New York Stock Exchange on that date) held by non-affiliates was $8,670,251,996. As of January 31, 2005, PPL Corporation had 189,122,513 shares of its $.01 par value Common Stock outstanding, excluding 31,045,853 shares held as treasury stock.

As of June 30, 2004, PPL Corporation held all 78,029,863 outstanding common shares, no par value, of PPL Electric Utilities Corporation, excluding 79,270,519 shares held as treasury stock. The aggregate market value of the voting preferred stock held by non-affiliates of PPL Electric Utilities Corporation at June 30, 2004, was $39,080,968.

PPL Corporation indirectly holds all of the membership interests in PPL Energy Supply, LLC.

PPL Energy Supply, LLC meets the conditions set forth in General Instructions (I)(1)(a) and (b) of Form 10-K and is therefore filing this form with the reduced disclosure format.

Documents incorporated by reference:

PPL Corporation and PPL Electric Utilities Corporation have incorporated herein by reference certain sections of PPL Corporation's 2005 Notice of Annual Meeting and Proxy Statement, and PPL Electric Utilities Corporation's 2005 Notice of Annual Meeting and Information Statement, which will be filed with the Securities and Exchange Commission not later than 120 days after December 31, 2004. Such Statements will provide the information required by Part III of this Report.

PPL CORPORATION
PPL ENERGY SUPPLY, LLC
PPL ELECTRIC UTILITIES CORPORATION

FORM 10-K ANNUAL REPORT TO
THE SECURITIES AND EXCHANGE COMMISSION
FOR THE YEAR ENDED DECEMBER 31, 2004

TABLE OF CONTENTS

This combined Form 10-K is separately filed by PPL Corporation, PPL Energy Supply, LLC and PPL Electric Utilities Corporation. Information contained herein relating to PPL Energy Supply, LLC and PPL Electric Utilities Corporation is filed by PPL Corporation and separately by PPL Energy Supply, LLC and PPL Electric Utilities Corporation on their own behalf. No registrant makes any representation as to information relating to any other registrant, except that information relating to the two PPL Corporation subsidiaries is also attributed to PPL Corporation.

Item		Page
PART I
1.	Business	1
2.	Properties	12
3.	Legal Proceedings	13
4.	Submission of Matters to a Vote of Security Holders	16
	Executive Officers of the Registrants	17
PART II
5.	Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer     Purchases of Equity Securities	19
6.	Selected Financial and Operating Data	19
7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22
7A.	Quantitative and Qualitative Disclosures About Market Risk	74
	Report of Independent Registered Public Accounting Firm	75
8.	Financial Statements and Supplementary Data	79
9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	163
9A.	Controls and Procedures	163
9B.	Other Information	163
PART III
10.	Directors and Executive Officers of the Registrant	164
11.	Executive Compensation	164
12.	Security Ownership of Certain Beneficial Owners and Management	165
13.	Certain Relationships and Related Transactions	166
14.	Principal Accounting Fees and Services	166
PART IV
15.	Exhibits and Financial Statement Schedules	167
	Shareowner and Investor Information	168
	Signatures	170
	Exhibit Index	173
	Computation of Ratio of Earnings to Fixed Charges	181
	Certifications of Principal Executive Officer and Principal Financial Officer Pursuant to    Section 302 of the Sarbanes-Oxley Act of 2002	184
	Certificates of Principal Executive Officer and Principal Financial Officer Pursuant to    Section 906 of the Sarbanes-Oxley Act of 2002	190
	PPL Corporation - Corporate Organization	196

GLOSSARY OF TERMS AND ABBREVIATIONS

£ - British pounds sterling.

1945 First Mortgage Bond Indenture - PPL Electric's Mortgage and Deed of Trust, dated as of October 1, 1945, to Deutsche Bank Trust Company Americas, as trustee, as supplemented.

2001 Senior Secured Bond Indenture - PPL Electric's Indenture, dated as of August 1, 2001, to JPMorgan Chase Bank, as trustee, as supplemented.

AFUDC (Allowance for Funds Used During Construction) - the cost of equity and debt funds used to finance construction projects of regulated businesses, which is capitalized as part of construction cost.

ANEEL - National Electric Energy Agency, Brazil's agency that regulates the transmission and distribution of electricity.

APA - Asset Purchase Agreement.

APB - Accounting Principles Board.

ARB - Accounting Research Bulletin.

ARO - asset retirement obligation.

Bangor Hydro - Bangor Hydro-Electric Company.

Bcf - billion cubic feet.

CEMAR - Companhia Energética do Maranhão, a Brazilian electric distribution company in which PPL Global had a majority ownership interest until the transfer of this interest in April 2004.

CGE - Compañia General de Electricidad, S.A., a distributor of electricity and natural gas with other industrial segments in Chile and Argentina in which PPL Global had an 8.7% direct and indirect minority ownership interest until the sale of this interest in March 2004.

Clean Air Act - federal legislation enacted to address certain environmental issues related to air emissions including acid rain, ozone and toxic air emissions.

CTC - competitive transition charge on customer bills to recover allowable transition costs under the Customer Choice Act.

Customer Choice Act - the Pennsylvania Electricity Generation Customer Choice and Competition Act, legislation enacted to restructure the state's electric utility industry to create retail access to a competitive market for generation of electricity.

DelSur - Distribuidora de Electricidad Del Sur, S.A. de C.V., an electric distribution company in El Salvador, a majority of which is owned by EC.

DEP - Department of Environmental Protection, a state government agency.

Derivative - a financial instrument or other contract with all three of the following characteristics:

1. It has (1) one or more underlyings and (2) one or more notional amounts or payment provisions or both. Those terms determine the amount of the settlement or settlements, and, in some cases, whether or not a settlement is required.
2. It requires no initial net investment or an initial net investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors.
3. Its terms require or permit net settlement, it can readily be settled net by a means outside the contract, or it provides for delivery of an asset that puts the recipient in a position not substantially different from net settlement.

DIG - Derivatives Implementation Group.

DOE - Department of Energy, a U.S. government agency.

DRIP - Dividend Reinvestment Plan.

EC - Electricidad de Centroamerica, S.A. de C.V., an El Salvadoran holding company and the majority owner of DelSur. EC was also the majority owner of El Salvador Telecom, S.A. de C.V. until the sale of this company in June 2004. PPL Global has 100% ownership of EC.

EGS - electric generation supplier.

EITF - Emerging Issues Task Force, an organization that assists the FASB in improving financial reporting through the identification, discussion and resolution of financial accounting issues within the framework of existing authoritative literature.

Elfec - Empresa de Luz y Fuerza Electrica Cochabamba S.A., a Bolivian electric distribution company in which PPL Global has a majority ownership interest.

Emel - Empresas Emel S.A., a Chilean electric distribution holding company in which PPL Global has a majority ownership interest.

EMF - electric and magnetic fields.

Enrichment - the concentration of fissionable isotopes to produce a fuel suitable for use in a nuclear reactor.

EPA - Environmental Protection Agency, a U.S. government agency.

EPS - earnings per share.

ESOP - Employee Stock Ownership Plan.

EWG - exempt wholesale generator.

Fabrication - the process which manufactures nuclear fuel assemblies for insertion into the reactor.

FASB - Financial Accounting Standards Board, a rulemaking organization that establishes financial accounting and reporting standards.

FERC - Federal Energy Regulatory Commission, the federal agency that regulates interstate transmission and wholesale sales of electricity and related matters.

FIN - FASB Interpretation.

FSP - FASB Staff Position.

GAAP - generally accepted accounting principles.

Griffith - a 600 MW gas-fired station in Kingman, Arizona, which is jointly owned by indirect subsidiaries of PPL Generation and Duke Energy Corporation.

GWh - gigawatt-hour, one million kilowatt-hours.

Hyder - Hyder Limited, a subsidiary of WPDL that was the previous owner of South Wales Electricity plc. In March 2001, South Wales Electricity plc was acquired by WPDH Limited and renamed WPD (South Wales).

IBEW - International Brotherhood of Electrical Workers.

ICP - Incentive Compensation Plan.

ICPKE - Incentive Compensation Plan for Key Employees.

Integra - Empresa de Ingenieria y Servicios Integrales Cochabamba S.A., a Bolivian construction and engineering services company in which PPL Global has a majority ownership interest.

IRS - Internal Revenue Service, a U.S. government agency.

ISO - Independent System Operator.

ITC - intangible transition charge on customer bills to recover intangible transition costs associated with securitizing stranded costs under the Customer Choice Act.

kVA - kilovolt-ampere.

kWh - kilowatt-hour, basic unit of electrical energy.

LIBOR - London Interbank Offered Rate.

MicDos - Minicentrales Dos, S.A., a Spanish company which owns several small hydroelectric generating facilities in Spain. PPL Global sold its ownership interest in MicDos in June 2004.

Mirant - Mirant Corporation, a diversified energy company based in Atlanta. PPL Global and Mirant jointly owned WPD from 1996 until September 6, 2002.

Montana Power - The Montana Power Company, a Montana-based company that sold its generating assets to PPL Montana in December 1999. Through a series of transactions consummated during the first quarter of 2002, Montana Power sold its electricity delivery business to NorthWestern.

MW - megawatt, one thousand kilowatts.

MWh - megawatt-hour, one thousand kilowatt-hours.

NorthWestern - NorthWestern Energy Division, a Delaware corporation and a division of NorthWestern Corporation and successor in interest to Montana Power's electricity delivery business, including Montana Power's rights and obligations under contracts with PPL Montana.

NPDES - National Pollutant Discharge Elimination System.

NRC - Nuclear Regulatory Commission, the federal agency that regulates the operation of nuclear power facilities.

NUGs(Non-Utility Generators) - generating plants not owned by public utilities, whose electrical output must be purchased by utilities under the PURPA if the plant meets certain criteria.

Ofgem - Office of Gas and Electricity Markets, the British agency that regulates transmission, distribution and wholesale sales of electricity and related matters.

OSM - Office of Surface Mining, a U.S. government agency.

PCB - polychlorinated biphenyl, an additive to oil used in certain electrical equipment up to the late-1970s. It is now classified as a hazardous chemical.

PEPS Units (Premium Equity Participating Security Units, or PEPS^SM Units) - securities issued by PPL and PPL Capital Funding Trust I that consisted of a Preferred Security and a forward contract to purchase PPL common stock.

PEPS Units, Series B (Premium Equity Participating Security Units, or PEPS^SM Units, Series B) - securities issued by PPL and PPL Capital Funding that consisted of an undivided interest in a debt security issued by PPL Capital Funding and guaranteed by PPL, and a forward contract to purchase PPL common stock.

PJM (PJM Interconnection, L.L.C.) - operator of the electric transmission network and electric energy market in all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia.

PLR (Provider of Last Resort) - The role of PPL Electric in providing electricity to retail customers within its delivery territory who have not chosen to select an alternative electricity supplier under the Customer Choice Act.

PP&E - property, plant and equipment.

PPL - PPL Corporation, the parent holding company of PPL Electric, PPL Energy Funding and other subsidiaries.

PPL Capital Funding - PPL Capital Funding, Inc., a PPL financing subsidiary.

PPL Capital Funding Trust I - a Delaware statutory business trust created to issue the Preferred Security component of the PEPS Units. This trust was terminated in June 2004.

PPL Coal Supply - PPL Coal Supply, LLC, a limited liability company owned by PPL Coal Holdings Corporation (a subsidiary of PPL Generation) and Iris Energy LLC. PPL Coal Supply procures coal, which it sells to PPL Generation for power plants and to Iris Energy for synfuel production.

PPL Development Company - PPL Development Company, LLC, a subsidiary of PPL Services that has responsibility for all of PPL's acquisition, divestiture and development activities.

PPL Electric - PPL Electric Utilities Corporation, a regulated utility subsidiary of PPL that transmits and distributes electricity in its service territory and provides electric supply to retail customers in this territory as a PLR.

PPL Energy Funding - PPL Energy Funding Corporation, a subsidiary of PPL and the parent company of PPL Energy Supply.

PPL EnergyPlus - PPL EnergyPlus, LLC, a subsidiary of PPL Energy Supply that markets wholesale and retail electricity, and supplies energy and energy services in deregulated markets.

PPL Energy Supply - PPL Energy Supply, LLC, a subsidiary of PPL Energy Funding and the parent company of PPL Generation, PPL EnergyPlus, PPL Global and other subsidiaries.

PPL Gas Utilities - PPL Gas Utilities Corporation, a regulated utility subsidiary of PPL that specializes in natural gas distribution, transmission and storage services, and the competitive sale of propane.

PPL Generation - PPL Generation, LLC, a subsidiary of PPL Energy Supply that owns and operates U.S. generating facilities through various subsidiaries.

PPL Global - PPL Global, LLC, a subsidiary of PPL Energy Supply that owns and operates international energy businesses that are focused on the distribution of electricity.

PPL Holtwood - PPL Holtwood, LLC, a subsidiary of PPL Generation that owns PPL's hydroelectric generating operations in Pennsylvania.

PPL Maine - PPL Maine, LLC, a subsidiary of PPL Generation that owns generating operations in Maine.

PPL Martins Creek - PPL Martins Creek, LLC, a generating subsidiary of PPL Generation that owns generating operations in Pennsylvania.

PPL Montana - PPL Montana, LLC, an indirect subsidiary of PPL Generation that generates electricity for wholesale sales in Montana and the Pacific Northwest.

PPL Services - PPL Services Corporation, a subsidiary of PPL that provides shared services for PPL and its subsidiaries.

PPL Susquehanna - PPL Susquehanna, LLC, the nuclear generating subsidiary of PPL Generation.

PPL Telcom - PPL Telcom, LLC, an indirect subsidiary of PPL Energy Funding that delivers high bandwidth telecommunication services in the Northeast corridor from Washington, D.C., to New York City and to six metropolitan areas in central and eastern Pennsylvania.

PPL Transition Bond Company - PPL Transition Bond Company, LLC, a subsidiary of PPL Electric that was formed to issue transition bonds under the Customer Choice Act.

Preferred Securities - company-obligated mandatorily redeemable preferred securities issued by PPL Capital Funding Trust I, which solely held debentures of PPL Capital Funding, and by SIUK Capital Trust I, which solely holds debentures of WPD LLP.

PUC - Pennsylvania Public Utility Commission, the state agency that regulates certain ratemaking, services, accounting and operations of Pennsylvania utilities.

PUC Final Order - final order issued by the PUC on August 27, 1998, approving the settlement of PPL Electric's restructuring proceeding.

PUHCA - Public Utility Holding Company Act of 1935, legislation passed by the U.S. Congress.

PURPA - Public Utility Regulatory Policies Act of 1978, legislation passed by the U.S. Congress to encourage energy conservation, efficient use of resources and equitable rates.

PURTA - the Pennsylvania Public Utility Realty Tax Act.

RMC - Risk Management Committee.

Sarbanes-Oxley 404 - Section 404 of the Sarbanes-Oxley Act of 2002, which sets requirements for management assessment of internal controls for financial reporting. It also requires an independent auditor to attest to and report on management's assessment.

SCR - selective catalytic reduction, a pollution control process.

SEC - Securities and Exchange Commission, a U.S. government agency whose primary mission is to protect investors and maintain the integrity of the securities markets.

SFAS - Statement of Financial Accounting Standards, the accounting and financial reporting rules issued by the FASB.

SIUK Capital Trust I - a business trust created to issue preferred securities and whose common securities are held by WPD  LLP.

SIUK Limited - was an intermediate holding company within the WPDH Limited group. In January 2003, SIUK Limited transferred its assets and liabilities to WPD LLP.

SPE - special purpose entity.

Superfund - federal environmental legislation that addresses remediation of contaminated sites; states also have similar statutes.

Synfuel projects - production facilities that manufacture synthetic fuel from coal or coal byproducts. Favorable federal tax credits are available on qualified synthetic fuel products.

Tolling agreement - agreement whereby the owner of an electric generating facility agrees to use that facility to convert fuel provided by a third party into electric energy for delivery back to the third party.

UF - inflation-indexed Chilean peso-denominated unit.

VEBA - Voluntary Employee Benefit Association Trust, trust accounts for health and welfare plans for future benefit payments for employees, retirees or their beneficiaries.

WPD - refers collectively to WPDH Limited and WPDL. PPL Global purchased Mirant's 49% ownership interest in these entities on September 6, 2002, thereby achieving 100% ownership and operational control.

WPD LLP - Western Power Distribution LLP, a wholly owned subsidiary of WPDH Limited, which owns WPD (South West) and WPD (South Wales).

WPD (South Wales) - Western Power Distribution (South Wales) plc, a British regional electric utility company.

WPD (South West) - Western Power Distribution (South West) plc, a British regional electric utility company.

WPDH Limited - Western Power Distribution Holdings Limited, an indirect, wholly owned subsidiary of PPL Global. WPDH Limited owns WPD LLP.

WPDL - WPD Investment Holdings Limited, an indirect wholly owned subsidiary of PPL Global. WPDL owns 100% of the common shares of Hyder.

Forward-looking Information

Statements contained in this Form 10-K concerning expectations, beliefs, plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements which are other than statements of historical facts are "forward-looking statements" within the meaning of the federal securities laws. Although PPL, PPL Energy Supply and PPL Electric believe that the expectations and assumptions reflected in these statements are reasonable, there can be no assurance that these expectations will prove to be correct. These forward-looking statements involve a number of risks and uncertainties, and actual results may differ materially from the results discussed in the forward-looking statements. In addition to the specific factors discussed in the Management's Discussion and Analysis of Financial Condition and Results of Operations sections herein, the following are among the important factors that could cause actual results to differ materially from the forward-looking statements:

• market demand and prices for energy, capacity and fuel;
• weather conditions affecting customer energy usage and operating costs;
• competition in retail and wholesale power markets;
• the effect of any business or industry restructuring;
• the profitability and liquidity of PPL and its subsidiaries;
• new accounting requirements or new interpretations or applications of existing requirements;
• operation and availability of existing generation facilities and operating costs;
• transmission and distribution system conditions and operating costs;
• environmental conditions and requirements;
• development of new projects, markets and technologies;
• performance of new ventures;
• asset acquisitions and dispositions;
• political, regulatory or economic conditions in states, regions or countries where PPL or its subsidiaries conduct business;
• receipt of necessary governmental permits, approvals and rate relief;
• impact of state, federal or foreign investigations applicable to PPL and its subsidiaries and the energy industry;
• the outcome of litigation against PPL and its subsidiaries;
• capital market conditions and decisions regarding capital structure;
• stock price performance;
• the market prices of equity securities and the impact on pension income and resultant cash funding requirements for defined benefit pension plans;
• securities and credit ratings;
• state, federal and foreign regulatory developments;
• foreign exchange rates;
• new state, federal or foreign legislation, including new tax legislation;
• national or regional economic conditions, including any potential effects arising from terrorist attacks in the U.S., the situation in Iraq and any consequential hostilities or other hostilities; and
• the commitments and liabilities of PPL and its subsidiaries.

Any such forward-looking statements should be considered in light of such important factors and in conjunction with other documents of PPL, PPL Energy Supply and PPL Electric on file with the SEC.

New factors that could cause actual results to differ materially from those described in forward-looking statements emerge from time to time, and it is not possible for PPL, PPL Energy Supply or PPL Electric to predict all of such factors, or the extent to which any such factor or combination of factors may cause actual results to differ from those contained in any forward-looking statement. Any forward-looking statement speaks only as of the date on which such statement is made, and PPL, PPL Energy Supply and PPL Electric undertake no obligations to update the information contained in such statement to reflect subsequent developments or information.

PART I

ITEM 1. BUSINESS

BACKGROUND

PPL Corporation, headquartered in Allentown, PA, is an energy and utility holding company that was incorporated in 1994. PPL has been exempted by the SEC from the provisions of PUHCA applicable to it as a holding company. Through its subsidiaries, PPL generates electricity from power plants in the northeastern and western U.S.; markets wholesale or retail energy primarily in the northeastern and western portions of the U.S.; delivers electricity to nearly five million customers in Pennsylvania, the U.K. and Latin America; and provides energy services for businesses in the mid-Atlantic and northeastern U.S. PPL's significant subsidiaries are shown below:

See Exhibit 99 in Item 15 for a listing of the current corporate organization. In addition to PPL Corporation, the other SEC registrants included in this filing are:

PPL Energy Supply, LLC, an indirect, wholly owned subsidiary of PPL formed in 2000, is an energy company engaged through its subsidiaries in the generation and marketing of power primarily in the northeastern and western power markets of the U.S. and in the delivery of electricity in the U.K. and Latin America. PPL Energy Supply's major operating subsidiaries are PPL Generation, PPL EnergyPlus and PPL Global. PPL Energy Supply owns or controls 12,274 MW of electric power generation capacity, and has current plans to implement capital projects at certain of its existing generation facilities in Pennsylvania and Montana that would provide 255 MW of additional generation capacity by 2010.

PPL Electric Utilities Corporation, incorporated in 1920, is a direct subsidiary of PPL and a regulated public utility. PPL Electric provides electricity delivery service in its service territory in Pennsylvania, and provides electricity supply to retail customers in that territory as a PLR under the Customer Choice Act.

Segment Information

PPL is organized into segments consisting of Supply, Delivery and International. PPL Energy Supply's segments consist of Supply and International. PPL Electric operates in a single business segment, Delivery. See Note 2 to the Financial Statements for financial information about the segments and geographic financial data.

•	Supply Segment -
	Owns and operates power plants to generate electricity; markets this electricity and other power purchases to deregulated wholesale and retail markets; and acquires and develops domestic generation projects. Consists of the activities of PPL Generation and PPL EnergyPlus.

PPL has generation assets that are focused on the eastern and western markets. The eastern generation assets are focused on the Northeast/Mid-Atlantic energy markets - including PJM, the New York ISO, ISO New England and the Mid-American Interconnection Network. PPL's western generating capacity is focused on the markets within the Western Systems Coordinating Council.

PPL Generation

PPL Generation had a total generating capacity of 12,274 MW at December 31, 2004. Through subsidiaries, PPL Generation owns and operates power plants in Pennsylvania, Montana, Maine, Connecticut, Arizona, Illinois and New York. See "Power Supply" for a complete listing of PPL's generating capacity.

The Pennsylvania generation plants had a total capacity of 9,227 MW at December 31, 2004. These plants are fueled by nuclear reaction, coal, gas, oil and hydro power. The electricity from these plants is sold to PPL EnergyPlus under FERC-jurisdictional power purchase agreements.

PPL's U.S. generation subsidiaries are EWGs, which sell electricity into the wholesale market. PPL's EWGs are subject to regulation by the FERC but not subject to regulation under PUHCA. The FERC has authorized these EWGs to sell generation from their facilities at market-based prices.

PPL Susquehanna, a subsidiary of PPL Generation, owns a 90% undivided interest in each of the two nuclear-fueled generating units at its Susquehanna station, while Allegheny Electric Cooperative, Inc. owns the remaining 10% undivided interest. PPL's 90% share of Susquehanna's capacity was 2,124 MW at December 31, 2004. In 2004, PPL Susquehanna completed the installation of more efficient steam turbines at Unit 1 that increased the capacity of the Susquehanna plant by 49 MW, of which PPL Susquehanna has a 90% undivided interest.

PPL Generation operates its Pennsylvania and Illinois power plants in conjunction with PJM. PPL Generation's Pennsylvania power plants and PPL EnergyPlus are parties to the Mid-Atlantic Area Coordination Agreement. PPL's Illinois power plants are parties to the Mid-America Interconnected Network Agreement. Refer to "Delivery Segment" for information regarding PJM's operations and functions and the Mid-Atlantic Area Coordination Agreement.

The Montana generating stations were acquired from Montana Power in 1999. The coal-fired and hydro-powered stations have a capacity of 1,259 MW. PPL Montana supplies 300 MW of around-the-clock electricity and 150 MW of unit-contingent on-peak electricity to NorthWestern under two five-year agreements that began in July 2002. These contracts accounted for 30% of PPL Montana's operating revenue in 2004. PPL Montana also purchases 98 MW of firm energy and capacity during the months of November through April from Basin Electric Cooperative. PPL Montana's power plants are parties to the Western Electricity Coordinating Council Agreement.

The Maine generating assets were acquired from Bangor Hydro in 1998. The oil-fired and hydro-powered stations have a total capacity of 96 MW. The Maine generating assets are operated in conjunction with ISO New England and are parties to the Northeast Power Coordinating Council Agreement. See Note 9 for information on the possible sale of three hydroelectric dams.

The Connecticut generating station was constructed by PPL and began commercial operations in 2001. This natural gas-fired station has a total capacity of 243 MW. The Connecticut generating station is operated in conjunction with ISO New England and is party to the Northeast Power Coordinating Council Agreement.

During 2002, PPL began commercial operations in Arizona of two natural gas-fired generating stations. PPL's ownership interest in the Griffith station is 300 MW. The Sundance station has a total capacity of 450 MW. PPL's Arizona generating stations are parties to the Western Electricity Coordinating Council Agreement. See Note 9 for additional information on the possible sale of the Sundance facility.

In 2002, PPL also began commercial operations in Illinois of its University Park 540 MW natural gas-fired generating station, and in New York of its Edgewood natural gas-fired generating station and its Shoreham oil-fired generating station. The New York plants have a combined capacity of 159 MW. The New York generating stations are operated in connection with the New York ISO and are parties to the Northeast Power Coordinating Council Agreement.

In 2004, PPL began commercial operations in Pennsylvania of its Lower Mt. Bethel 582 MW natural gas-fired generating station.

PPL Generation has current plans to implement capital projects at certain of its generation facilities in Pennsylvania and Montana that would provide 255 MW of additional generation capacity by 2010.

Refer to the "Power Supply" section for additional information regarding the various power plants operated by PPL Generation, to the "Fuel Supply" section for a discussion of fuel requirements and contractual arrangements for fuel and to "Item 2. Properties" for additional information regarding PPL's proposed capital projects to increase its generation capacity.

PPL Generation subsidiaries are subject to the jurisdiction of certain federal, regional, state and local regulatory agencies with respect to air and water quality, land use and other environmental matters. PPL Susquehanna is subject to the jurisdiction of the NRC in connection with the operation of the Susquehanna units. Certain of PPL Generation's other subsidiaries, including PPL Montana, are subject to the jurisdiction of the NRC in connection with the operation of their fossil plants with respect to certain level and density monitoring devices.

Certain operations of PPL Generation's subsidiaries are subject to the Occupational Safety and Health Act of 1970 and comparable state statutes.

PPL EnergyPlus

PPL EnergyPlus markets or brokers the electricity produced by PPL Generation subsidiaries, along with purchased power, natural gas and oil, in competitive wholesale and deregulated retail markets in order to take advantage of opportunities in the competitive energy marketplace.

PPL EnergyPlus buys and sells energy at competitive prices. PPL EnergyPlus purchases electric capacity and energy at the wholesale level, and also sells electric capacity and energy at the wholesale level under FERC market-based tariffs. PPL EnergyPlus enters into these agreements to market available energy and capacity from PPL Generation's assets and to profit from market price fluctuations. PPL EnergyPlus actively manages its portfolios to maximize the value of PPL's generating assets and to limit exposure to price fluctuations. PPL EnergyPlus also purchases and sells energy forward and futures contracts as well as other commodity-based financial instruments in accordance with PPL's risk management policies, objectives and strategies.

PPL EnergyPlus has executed contracts to provide electricity to PPL Electric sufficient for it to meet its PLR obligation through 2009, at the predetermined capped rates PPL Electric is entitled to charge its customers during this period. This arrangement with PPL Electric accounted for 34% of PPL Energy Supply's consolidated revenues in 2004. See Note 15 to the Financial Statements for more information concerning these contracts.

PPL EnergyPlus has a PUC license to act as an EGS in Pennsylvania. This license permits PPL EnergyPlus to offer retail electric supply to customers throughout Pennsylvania. In 2004, PPL EnergyPlus was licensed, and supplied energy to industrial and commercial customers in Pennsylvania, New Jersey and Montana. PPL EnergyPlus also is licensed to provide energy in Delaware, Maryland, Maine and Massachusetts. PPL EnergyPlus currently is not marketing to residential customers in the competitive marketplace based on economic considerations.

PPL EnergyPlus also develops distributed generation plants on customer sites using technologies such as fuel cells, small turbines, microturbines and reciprocating engines. As of December 31, 2004, a subsidiary of PPL Energy Supply owned approximately 11 MW of installed capacity serving commercial and industrial customers.

PPL Synfuel Investments, LLC, a subsidiary of PPL EnergyPlus, indirectly owns, through its subsidiaries, two production facilities that manufacture synthetic fuel from coal or coal byproducts. PPL receives federal tax credits for these qualified manufactured synfuel products. See Note 14 for additional information.

PPL Telcom

PPL Telcom, an unregulated subsidiary of PPL Energy Funding, has a fiber optic network and markets available capacity on PPL Electric's fiber optic cables in eastern and central Pennsylvania. The fiber optic services include point-to-point data transport, high-speed connections among multiple sites and access to national and global fiber networks. PPL Telcom markets its services to customers such as other telecommunications companies, internet service providers and large enterprises that need high-speed data connections between multiple locations. Additionally, PPL Telcom provides engineering, construction and site leasing services to wireless carriers.

In 2003, a subsidiary of PPL Telcom acquired the fiber optic network of a Fairfax, Virginia-based company. The 1,330-route-mile metropolitan area fiber network connects New York, northern New Jersey, Philadelphia, Baltimore and Washington, D.C.

•	Delivery Segment -
	Includes the regulated electric and gas delivery operations of PPL Electric and PPL Gas Utilities.

PPL Electric

PPL Electric provides electricity delivery service to approximately 1.4 million customers in a 10,000-square mile territory in 29 counties of eastern and central Pennsylvania. The largest cities in this territory are Allentown, Bethlehem, Harrisburg, Hazleton, Lancaster, Scranton, Wilkes-Barre and Williamsport.

Pursuant to the PUC Final Order, PPL Electric agreed in 1998 to a cap on the electricity transmission and distribution rates that it collected from retail customers in its service territory. This cap expired on December 31, 2004. In March 2004, PPL Electric filed a request with the PUC for an overall annual net increase in distribution rates of approximately $164 million (subsequently amended to $160 million), based on a return on equity of 11.5%, and notified the PUC that it planned to pass through to customers approximately $57 million in increased transmission charges imposed on PPL Electric by PJM. In December 2004, the PUC approved an increase in PPL Electric's distribution rates of approximately $137 million (based on a return on equity of 10.7%), and approved PPL Electric's proposed mechanism for collecting the additional $57 million in transmission-related charges, for a total increase of approximately $194 million, effective January 1, 2005.

In addition to providing electricity delivery service in its service territory in Pennsylvania, PPL Electric also provides electricity supply to retail customers in that territory as a PLR under the Customer Choice Act. As part of the PUC Final Order, PPL Electric agreed to provide this electricity supply at predetermined capped rates through 2009. PPL Electric has executed two contracts to purchase electricity from PPL EnergyPlus sufficient for PPL Electric to meet its PLR obligation through 2009, at the predetermined capped rates. PPL Electric's PLR obligation after 2009 will be determined by the PUC pursuant to rules that have not yet been promulgated.

During 2004, about 94% of PPL Electric's operating revenues were derived from regulated electricity deliveries and supply as a PLR. About 6% of 2004 operating revenues were from wholesale sales, primarily the sale to PPL EnergyPlus of power purchased from NUGs. During 2004, about 43% of electricity delivery and PLR revenues were from residential customers, 36% from commercial customers, 20% from industrial customers and 1% from other customer classes.

PPL Electric's transmission facilities are operated as part of PJM. PJM operates the electric transmission network and electric energy market in the mid-Atlantic and Midwest regions of the U.S. Bulk electricity is transmitted to wholesale users throughout a geographic area including all or part of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia. PPL Electric also is a party to the Mid-Atlantic Area Coordination Agreement, which provides for the coordinated planning of generation and transmission facilities by the companies included in PJM.

PJM serves as a FERC-approved Regional Transmission Organization (RTO) in order to accommodate greater competition and broader participation in the region. (An RTO, like an ISO, is a designation provided by the FERC to a FERC-approved independent entity that operates the transmission system and typically administers a competitive power market.) A purpose of the RTO/ISO is to separate the operation of, and access to, the transmission grid from PJM electric utilities' generation interests. PJM also administers regional markets for energy, capacity and ancillary services. Electric utilities continue to own the transmission assets, but the RTO/ISO directs the control and operation of the transmission facilities. As described above, effective January 1, 2005, PPL Electric began to fully recover from retail customers the charges that it pays to PJM for transmission-related services. PJM imposes these charges pursuant to its FERC-approved Open Access Transmission Tariff. PPL Electric's retail electric tariff authorizes it to recover such charges from its retail customers, but PPL Electric had been precluded from such recovery through December 31, 2004, pursuant to the transmission and distribution rate cap described above.

PPL Electric is subject to regulation as a public utility by the PUC, and certain of its activities are subject to the jurisdiction of the FERC under the Federal Power Act. PPL Electric is not a holding company under PUHCA.

PPL Electric also is subject to the jurisdiction of certain federal, regional, state and local regulatory agencies with respect to land use and other environmental matters. Certain operations of PPL Electric are subject to the Occupational Safety and Health Act of 1970 and comparable state statutes.

In November 2004, Pennsylvania enacted the Alternative Energy Portfolio Standards legislation, which requires electric distribution companies, such as PPL Electric, and electric generation suppliers serving retail load to provide 18% of the electricity sold to retail customers in Pennsylvania from alternative sources within 15 years (by 2020). Under this new state legislation, alternative sources include hydro, wind, solar, waste coal, landfill methane and fuel cells. An electric distribution company will pay an alternative compliance payment of $45 for each MWh that it is short of its required alternative energy supply percentage. Since PPL Electric's PLR generation rates are capped through 2009 as described above and the legislation allows for a cost recovery exemption period, PPL Electric will not be subject to the requirements of this legislation until 2010. In that year, PPL Electric will have to supply about 9% of the total amount of electricity it delivers to its PLR customers from alternative energy sources. At this time, PPL Electric cannot predict the impact of this legislation on its future results of operations because the impact will depend on a number of factors that will not be known until 2010, including customer load requirements, PLR contract terms and available alternative energy sources in the market at that time.

PPL Gas Utilities

PPL Gas Utilities operates a natural gas distribution and propane business in portions of various counties in Pennsylvania, as well as in a small portion of Maryland and Delaware, providing natural gas and propane services to approximately 107,000 customers. PPL Gas Utilities provides its natural gas services in Pennsylvania subject to the regulatory jurisdiction of the PUC. PPL Gas Utilities also provides intrastate and interstate natural gas storage service from storage fields in Pennsylvania. The intrastate storage service is regulated by the PUC and the interstate storage service is regulated by the FERC. However, by order of the FERC issued in 1992, rates for interstate storage services are the rates set by the PUC for intrastate service. The propane delivery service is not subject to the regulatory jurisdiction of the PUC or the FERC. PPL Gas Utilities was formed in 1946 and PPL acquired the company in 1998.

•	International Segment -
	Owns and operates international energy businesses that are focused on the distribution of electricity.

In September 2002, PPL Global's acquisition of Mirant's 49% interest for approximately $236 million provided PPL Global with complete ownership of WPD. WPD, through indirect wholly owned subsidiaries, operates two electric distribution companies in the U.K., that together serve approximately 2.6 million end-users. WPD delivered 28,847 million kWh of electricity in 2004. See Note 9 to the Financial Statements for additional information on this acquisition.

In November 2004, Ofgem published its final decision on new price controls for the five-year regulatory period commencing April 1, 2005. Ofgem's decision provides for a price increase of 1.5% for WPD (South West) and 6.2% for WPD (South Wales), or an average of 3.6% for WPD. The price increase is in effect for the 12-month period beginning April 1, 2005, followed by an adjustment in prices reflecting WPD's capital investment program and inflationary effects in each of the following four years. The price increases include reimbursement for higher operating and capital costs to be incurred during the new regulatory period. Ofgem set the weighted average cost of capital at 4.8% on an after-tax basis, equivalent to 6.9% on a pre-tax real basis, which is a 0.4% increase from the previous regulatory period. Although published as a price increase by Ofgem, the net effect of the new price controls to WPD is a revenue decrease of approximately 3.5% when excluding certain reclassifications and cost pass-through reimbursements.

PPL Global also has controlling interests in electric transmission and distribution companies serving customers in Chile, El Salvador and Bolivia. Emel, of which PPL Global owns 95.4%, serves approximately 544,000 customers through subsidiary distribution companies in northern Chile and just south of its headquarters in Santiago, Chile. DelSur, of which PPL Global owns 86.4%, is an electric distribution company headquartered in San Salvador, which serves approximately 268,000 customers in the central and southern regions of El Salvador, including a portion of the city of San Salvador. Elfec, of which PPL Global owns 92.1%, is the second largest electric distribution company in Bolivia, and serves approximately 259,000 customers in Cochabamba. Currently, there is significant political and economic instability in Bolivia, and PPL at this time is unable to predict the impact of this instability on its Bolivian operations.

PPL Global also has a minority investment in a combined generating and natural gas production facility in Peru.

In August 2002, PPL Global deconsolidated its 90% equity interest in its Brazilian investment, CEMAR, when ANEEL authorized an administrative intervention and fully assumed operational and financial control of the company. In April 2004, PPL Global sold its investment in CEMAR. See Note 9 to the Financial Statements for additional information on the CEMAR investment.

In 2004, PPL Global also sold its minority investments in generating facilities in Spain and in an electricity and natural gas distributor in Chile, as well as its majority ownership interest in a telecommunications company in El Salvador. See Note 9 to the Financial Statements for additional information on these divestitures.

• Other

PPL Services

Various corporate service functions reside in PPL Services, an unregulated subsidiary of PPL. PPL Services provides shared services for PPL and its subsidiaries. These services include financial, legal, human resources and information services. These services are directly charged or allocated, as appropriate, to the Supply, Delivery and International segments. In the third quarter of 2004, PPL Services formed a wholly owned subsidiary, PPL Development Company, which has responsibility for all of PPL's acquisition, divestiture and development activities. These activities previously were the responsibility of PPL Global.

Seasonality

Demand for and market prices of electricity are impacted by weather. As a result, PPL's overall operating results in the future may fluctuate substantially on a seasonal basis, especially when more severe weather conditions such as heat waves or winter storms make such fluctuations more pronounced. The pattern of this fluctuation may change depending on the nature and location of the facilities PPL acquires and the terms of the contracts to sell electricity.

FINANCIAL CONDITION

See PPL's, PPL Energy Supply's and PPL Electric's Management's Discussion and Analysis of Financial Condition and Results of Operations for this information.

CAPITAL EXPENDITURE REQUIREMENTS

See "Financial Condition - Capital Expenditure Requirements" in PPL's, PPL Energy Supply's and PPL Electric's Management's Discussion and Analysis of Financial Condition and Results of Operations for information concerning estimated capital expenditure requirements for the years 2005-2009. See Note 14 to the Financial Statements for additional information concerning expected capital expenditures for environmental matters.

COMPETITION

The unregulated businesses and markets that PPL and its subsidiaries participate in are highly competitive. The electric industry has experienced an increase in the level of competition in the energy markets over the last several years due to federal and state deregulation initiatives.

In 1992, the Energy Act amended the PUHCA to create a new class of independent power producers, and amended the Federal Power Act to provide open access to electric transmission systems for wholesale transactions. In 1996, the Customer Choice Act was enacted in Pennsylvania to restructure the state's electric utility industry in order to create retail access to a competitive market for the generation of electricity. Certain other states in which PPL's subsidiaries operate have also adopted a "customer choice" plan to allow customers to choose their electricity supplier. Competitive factors affecting PPL's results of operations include energy and fuel prices, new market entrants, construction by others of generating assets, the actions of regulatory authorities and other factors. PPL cannot predict the impact of these and other competitive factors on its future results of operations or financial condition.

PPL and its subsidiaries believe that competition in deregulated energy markets will continue to be intense. In addition to deregulation, competitive pressures have resulted from technological advances in power generation and electronic communications and the greater efficiency of energy markets.

The wholesale power markets in which PPL Generation subsidiaries and PPL EnergyPlus operate are highly competitive. Competitors include regulated utilities, industrial companies, non-utility generators and unregulated subsidiaries of regulated utilities. Although PPL EnergyPlus has long-term supply agreements (see "Background - Supply Segment"), a substantial portion of PPL's future sales will be made into the competitive wholesale markets. Competition will occur principally on the basis of the price of products and, to a lesser extent, on the basis of reliability and availability.

PPL EnergyPlus also faces competition in the wholesale markets for energy capacity and ancillary services. As pricing information becomes increasingly available in the energy trading and marketing business and assuming deregulation in the electricity markets continues, PPL EnergyPlus anticipates that trading, marketing and risk management operations will experience greater competition. PPL EnergyPlus primarily competes with other energy merchants based on the ability to aggregate supplies at competitive prices from different sources and locations and to efficiently utilize transportation from third-party pipelines and transmission from electric utilities. Competitors may employ widely differing strategies in their fuel supply and power sales contracts with respect to pricing and other terms and conditions. PPL EnergyPlus also competes against other energy marketers on the basis of relative financial condition and access to credit sources.

Some restructured markets have recently experienced supply problems and price volatility. In a number of these markets, government agencies and other interested parties have made proposals to delay market restructuring or even re-regulate certain areas of these markets that have previously been deregulated. In California, legislation has been passed placing a moratorium on the sale of generation plants by public utilities regulated by the California Public Utilities Commission. In June 2001, the FERC instituted a series of price controls designed to mitigate (or cap) prices in the entire western U.S. to address the extreme volatility in the California energy markets. These price controls have contributed to the lowering of spot and forward energy prices in the western market. In addition, RTO/ISOs that oversee the transmission systems in certain wholesale power markets have from time to time been authorized to address volatility in power markets. These types of price limitations and other mechanisms may adversely impact the profitability of PPL's wholesale power marketing and trading business. Other proposals to institute price controls or to re-regulate the energy industry may be made, and legislative or other actions may cause the electric power restructuring process to be delayed, discontinued or reversed in the states in which PPL currently, or may in the future, operates. If the competitive restructuring of the wholesale and retail power markets is delayed, discontinued or reversed, PPL's business prospects and financial condition could be materially adversely affected.

See Note 14 to the Financial Statements for information on the FERC Proposed Rules entitled "Remedying Undue Discrimination through Open Access Transmission Service and Standard Electricity Market Design."

Pursuant to PPL Electric's authorizations from the Commonwealth of Pennsylvania and the PUC, PPL Electric operates a regulated distribution monopoly in its service area. Accordingly, PPL Electric does not face competition in its distribution business. Although the majority of PPL Global's international electricity transmission and distribution companies operate in non-exclusive concession areas in their respective countries, these companies currently face little or no competition with respect to residential customers. See "Franchises and Licenses" for more information.

POWER SUPPLY

PPL Generation's system capacity (winter rating) at December 31, 2004, was as follows:

Plant			Net MW Capacity
Pennsylvania
Nuclear-fueled steam station
	Susquehanna		2,124	(a)
Coal-fired steam stations
	Montour		1,540
	Brunner Island		1,483
	Martins Creek		300
	Keystone		211	(b)
	Conemaugh		278	(c)
		Total coal-fired	3,812
Gas- and oil-fired steam station
	Martins Creek		1,670
	Lower Mt. Bethel		582	(d)
		Total gas- and oil-fired	2,252
Combustion turbines and diesels			451
Hydroelectric			153
		Total generating capacity	8,792
Firm purchases
	Hydroelectric		140	(e)
	Qualifying facilities		295
		Total firm purchases	435
Total system capacity - Pennsylvania			9,227
Montana
Coal-fired stations
	Colstrip Units 1 & 2		307	(f)
	Colstrip Unit 3		222	(g)
	Corette		154
		Total coal-fired	683
Hydroelectric			576
Total system capacity - Montana			1,259
Arizona
Natural gas-fired stations
	Griffith		300	(h)
	Sundance		450
Total system capacity - Arizona			750
Connecticut
Natural gas-fired station
	Wallingford		243
Illinois
Natural gas-fired station
	University Park		540
New York
Natural gas- and oil-fired stations
	Edgewood and Shoreham		159
Maine
Oil-fired generating station
	Wyman Unit 4		52	(i)
Hydroelectric			44	(j)
Total system capacity - Maine			96
Total system capacity - PPL Generation			12,274

(a)	PPL's 90% interest.
(b)	PPL's 12.34% interest.
(c)	PPL's 16.25% interest.
(d)	Began commercial operations in May 2004.
(e)	From Safe Harbor Water Power Corporation.
(f)	PPL's 50% leasehold interest.
(g)	PPL's 30% leasehold interest.
(h)	PPL's 50% interest.
(i)	PPL's 8.33% interest.
(j)	Includes PPL's 50% interest in the West Enfield Station.

The capacity of generating units is based upon a number of factors, including the operating experience and physical condition of the units, and may be revised periodically to reflect changed circumstances.

During 2004, PPL Generation's plants generated the following amounts of electricity:

State		Millions of kWh
Pennsylvania		44,337
Montana		8,313
Arizona		593
Maine		341
New York		148
Illinois		116
Connecticut		60
	Total	53,908

This generation represented a 3% increase over the output for 2003. Of this generation, 56% of the energy was generated by coal-fired stations, 30% from nuclear operations at the Susquehanna station, 8% from hydroelectric stations and 6% from oil/gas-fired stations.

On average, approximately 83% of PPL's expected annual generation output for the period 2005 through 2009 is committed to meet:

• PPL EnergyPlus' obligation under two contracts to provide electricity for PPL Electric to satisfy its PLR obligation under the Customer Choice Act;
• PPL EnergyPlus' obligation under two contracts to provide electricity to NorthWestern through June 2007; and
• other contractual sales to other counterparties for terms of various lengths.

See Note 14 to the Financial Statements for more information regarding PPL's wholesale energy commitments and Note 15 for more information regarding the PLR contracts. These contractual arrangements are consistent with and are an integral part of PPL's overall business strategy, which includes the matching of PPL's anticipated energy supply with load, or customer demand, under long-term and intermediate-term contracts with creditworthy counterparties to capture profits while reducing PPL's exposure to movements in energy and fuel prices and counterparty credit risk.

FUEL SUPPLY

Coal

Pennsylvania

PPL Coal Supply provides coal to three PPL Generation power plants and to Iris Energy, LLC for the production of synthetic fuel. In 2004, synthetic fuel from Iris Energy provided 57% of the fuel requirements of PPL Generation's Pennsylvania stations. The contract with Iris Energy terminates at the end of 2007. The balance of the requirements was met by coal provided by PPL Coal Supply. PPL Coal Supply actively manages its supply base principally in central Appalachia and western and central Pennsylvania.

During 2004, about 89% of the coal delivered to PPL Generation's Pennsylvania stations was purchased under long-term contracts and 11% was obtained through open market purchases. These long-term contracts provided PPL Generation with about 7.3 million tons of coal. Contracts currently in place are expected to provide approximately 7.7 million tons in 2005. At December 31, 2004, Pennsylvania plants had sufficient supply for about 37 days of operations. The amount of coal in inventory varies from time-to-time depending on market conditions and plant operations.

At December 31, 2004, a PPL Generation subsidiary owned a 12.34% interest in the Keystone station and a 16.25% interest in the Conemaugh station. The owners of the Keystone station have a long-term contract with a synthetic fuel supplier to provide 90% of the station's fuel requirements, up to 4.5 million tons in 2005. This contract terminates at the end of 2007. In addition, the Keystone station contracts with Keystone Fuels, LLC for the balance of its requirements. The owners of the Conemaugh station have a long-term contract with a synthetic fuel supplier to provide a minimum of 2.4 million tons through 2007. The balance of the Conemaugh station requirements is purchased under contract from Conemaugh Fuels, LLC.

Montana

PPL Montana has a 50% leasehold interest in Colstrip Units 1 and 2, and a 30% leasehold interest in Unit 3. PPL Montana is party to contracts to purchase coal from a neighboring mine with defined quality characteristics and specifications. The coal supply contract for Units 1 and 2 is in effect through December 31, 2009. The coal supply contract for Unit 3 is in effect through December 31, 2019.

Coal supply contracts are in place to purchase low-sulfur coal with defined quality characteristics and specifications for PPL Montana's Corette station. The contracts supplied 100% of the plant coal requirements in 2004. Similar contracts are currently in place to supply 100% of the expected coal requirements through 2008.

Oil and Natural Gas

PPL Generation's Martins Creek Units 3 and 4 burn both oil and natural gas. PPL EnergyPlus is responsible for procuring the oil and natural gas supply for all PPL Generation operations. During 2004, 100% of the physical oil requirements for the Martins Creek units were purchased on the spot market. As of December 31, 2004, PPL EnergyPlus had no long-term agreements for these requirements.

PPL EnergyPlus has a long-term pipeline capacity contract for delivery of gas supply representing approximately 10% of the maximum requirements of the Sundance facility, but has no long-term supply agreement to purchase natural gas. As of December 31, 2004, there were no long-term delivery or supply agreements to purchase natural gas for University Park.

PPL EnergyPlus has a long-term contract for approximately 40% of the expected pipeline transportation requirements of the Wallingford facility, but has no long-term supply agreement to purchase natural gas. Likewise, PPL EnergyPlus has long-term pipeline transportation contracts in place for the Griffith facility equaling 100% of the expected requirements.

In 2004, PPL EnergyPlus began supplying natural gas for the commercial operation at the Lower Mt. Bethel facility. PPL EnergyPlus has two gas transportation contracts in place for approximately 30% of the maximum daily requirements of the plant. These contracts expire in September 2008 and 2013.

PPL EnergyPlus employs a strategy of procuring natural gas and oil in conjunction with electricity sales commitments.

Nuclear

PPL Susquehanna has in effect uranium supply and conversion agreements that, including options, satisfy 100% of its uranium requirements in 2005 and 2006 and will satisfy approximately 75% of its requirements in 2007, and approximately 30% of its requirements in 2008 and 2009. Deliveries under these agreements are expected to provide sufficient uranium to permit Unit 1 to operate into the first quarter of 2008 and Unit 2 to operate into the first quarter of 2009.

PPL Susquehanna has executed an agreement that satisfies all of its enrichment requirements through 2008. Assuming that the other uranium components of the nuclear fuel cycle are satisfied, deliveries under this agreement are expected to provide sufficient enrichment to permit Unit 1 to operate into the first quarter of 2010 and Unit 2 to operate into the first quarter of 2011.

PPL Susquehanna has entered into an agreement that, including options, satisfies all of its fabrication requirements through 2014. Assuming that the uranium and other components of the nuclear fuel cycle are satisfied, deliveries under this agreement can provide sufficient fabrication to permit Unit 1 to operate into the first quarter of 2016 and Unit 2 to operate into the first quarter of 2015.

Federal law requires the federal government to provide for the permanent disposal of commercial spent nuclear fuel. Under the Nuclear Waste Policy Act (NWPA), the DOE initiated an analysis of a site in Nevada for a permanent nuclear waste repository. DOE does not expect the repository to be operational before 2010. As a result, it was necessary to expand Susquehanna's on-site spent fuel storage capacity. To support this expansion, PPL Susquehanna contracted for the design and construction of a spent fuel storage facility employing dry cask fuel storage technology. The facility is modular, so that additional storage capacity can be added as needed. The facility began receiving spent nuclear fuel in 1999. PPL Susquehanna estimates that there is sufficient storage capacity in the spent nuclear fuel pools and the on-site spent fuel storage facility at Susquehanna to accommodate spent fuel discharged through approximately 2017, under current operating conditions. If necessary, the on-site spent fuel storage facility can be expanded, assuming appropriate regulatory approvals are obtained, such that, together, the spent fuel pools and the expanded dry fuel storage facility will accommodate all of the spent fuel expected to be discharged through the current licensed life of the plant.

In 2002, President Bush approved the Congressional override of a veto by the State of Nevada, designating Yucca Mountain, Nevada as the site for development of a long-term repository for high-level radioactive waste. The next step is for the DOE to submit a license application to the NRC to build and then operate the Yucca Mountain repository. The DOE has not announced a date when that license application will be submitted.

In 1996, the U.S. Court of Appeals for the District of Columbia Circuit ruled that the NWPA imposed on DOE an unconditional obligation to begin accepting spent nuclear fuel on or before January 31, 1998. In 1997, the Court ruled that the contracts between the utilities and the DOE provide a potentially adequate remedy if the DOE failed to begin disposal of spent nuclear fuel by January 31, 1998. The DOE did not, in fact, begin to dispose of spent nuclear fuel on that date. The DOE continues to contest claims that its failures resulted in recoverable damages. On January 22, 2004, PPL Susquehanna filed suit in the U.S. Court of Federal Claims for unspecified damages suffered as a result of the DOE's breach of its contract to accept and dispose of spent nuclear fuel. PPL Susquehanna's lawsuit currently remains stayed, pending developments in lawsuits filed by other plaintiffs. PPL cannot predict the outcome of these proceedings.

ENVIRONMENTAL MATTERS

Certain PPL subsidiaries, including PPL Electric and PPL Generation subsidiaries, are subject to certain present and developing federal, regional, state and local laws and regulations with respect to air and water quality, land use and other environmental matters. See PPL's and PPL Energy Supply's "Financial Condition - Capital Expenditure Requirements" in Management's Discussion and Analysis of Financial Condition and Results of Operations for information concerning environmental expenditures during 2004 and their estimate of those expenditures during the years 2005-2009. PPL believes that its subsidiaries are in substantial compliance with applicable environmental laws and regulations.

See "Environmental Matters" in Note 14 to the Financial Statements for information concerning federal clean air legislation, groundwater degradation and waste water control at facilities owned by PPL's subsidiaries and PPL Electric's and PPL Gas Utilities' agreements with the Pennsylvania DEP concerning remediation at certain sites. Other environmental laws, regulations and developments that may have a substantial impact on PPL's subsidiaries are discussed below.

Air

The Clean Air Act includes, among other things, provisions that: (a) restrict the construction of, and revise the performance standards for, new and substantially modified coal-fired and oil-fired generating stations; and (b) authorize the EPA to impose substantial noncompliance penalties of up to $27,500 per day of violation for each facility found to be in violation of the requirements of an applicable state implementation plan. The state agencies administer the EPA's air quality regulations through the state implementation plans and have concurrent authority to impose penalties for non-compliance.

In its Clean Air Interstate Rule, the EPA has proposed substantial reductions for sulfur dioxide and nitrogen oxide emissions in 29 midwestern and eastern states, including Pennsylvania; and, in a separate rule, the EPA has proposed mercury reductions nationwide. Similarly, the Bush administration's Clear Skies Initiative and proposals by certain members of Congress would amend the Clean Air Act to require significant reductions in nitrogen oxide, sulfur dioxide and mercury. In addition, there is mounting pressure from various states and environmental groups and at the federal level for mandatory carbon dioxide reductions. For example, although the Bush administration's Clear Skies Initiative does not address carbon emissions, several states have already passed legislation capping carbon emissions and bills have been introduced at the federal level proposing mandatory reductions. The amount and timing of any such reductions that may be required is not yet clear. Such requirements could result in increased capital and operating expenses which are not now determinable, but could be significant.

Water

To implement the requirements of the Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act of 1977 and the Water Quality Act of 1987, the EPA has adopted regulations on effluent standards for steam electric stations. The states administer the EPA's effluent standards through state laws and regulations relating to, among other things, effluent discharges and water quality. The standards adopted by the EPA pursuant to the Clean Water Act may have a significant impact on existing facilities of certain PPL subsidiaries, depending on the states' interpretation and future amendments to regulations.

Pursuant to the Surface Mining and Reclamation Act of 1977, the Office of Surface Mining (OSM) has adopted effluent guidelines which are applicable to PPL subsidiaries as a result of their past coal mining and coal processing activities. The EPA and the OSM limitations, guidelines and standards also are enforced through the issuance of NPDES permits. In accordance with the provisions of the Clean Water Act and the Reclamation Act of 1977, the EPA and the OSM have authorized the states to implement the NPDES program. Compliance with applicable water quality standards is assured by state imposition of NPDES permit conditions and requirements to address acid mine drainage.

Solid and Hazardous Waste

The provisions of Superfund authorize the EPA to require past and present owners of contaminated sites and generators of any hazardous substance found at a site to clean-up the site or pay the EPA or the state for the costs of clean-up. The generators and past owners can be liable even if the generator contributed only a minute portion of the hazardous substances at the site. Present owners can be liable even if they contributed no hazardous substances to the site.

State laws such as the Pennsylvania and Montana Superfund statutes also give state agencies broad authority to identify hazardous or contaminated sites and to order owners or responsible parties to clean-up the sites. If responsible parties cannot or will not perform the clean-up, the agency can hire contractors to clean-up the sites and then require reimbursement from the responsible parties after the clean-up is completed. Another Pennsylvania statute, the Land Recycling and Environmental Remediation Standards, encourages voluntary clean-ups by allowing responsible parties to choose from a menu of clean-up standards and providing liability protection commensurate with the clean-up standard chosen.

Certain federal and state statutes, including federal and state Superfund statutes, also impose liability on the responsible parties for the lost value of damaged natural resources.

Low-Level Radioactive Waste

Under federal law, each state is responsible for the disposal of low-level radioactive waste generated in that state. States may join in regional compacts to jointly fulfill their responsibilities. The states of Pennsylvania, Maryland, Delaware and West Virginia are members of the Appalachian States Low-Level Radioactive Waste Compact. Efforts to develop a regional disposal facility in Pennsylvania were suspended by the Pennsylvania DEP in 1998. The Commonwealth retains the legal authority and may be required to resume the siting process should it be necessary. Low-level radioactive waste resulting from the operation of the Susquehanna facility is currently being sent to Barnwell, South Carolina, and Clive, Utah, for disposal. In the event these or other emergent disposal options become unavailable or no longer cost-effective, the low-level radioactive waste will be stored on-site at Susquehanna. PPL Susquehanna cannot predict the future availability of low-level waste disposal facilities or the cost of such disposal.

Asbestos

There have been increasing litigation claims throughout the U.S. based on exposure to asbestos against companies that manufacture or distribute asbestos products or that have these products on their premises. Certain of PPL's generation subsidiaries and certain of its energy services subsidiaries, such as those that have supplied, may have supplied or installed asbestos material in connection with the repair or installation of process piping and heating, ventilating and air conditioning systems, have been named as defendants in asbestos-related lawsuits. PPL cannot predict the outcome of these lawsuits or whether additional claims may be asserted against its subsidiaries in the future. PPL does not expect that the ultimate resolution of the current lawsuits will have a material adverse effect on its financial condition.

Electric and Magnetic Fields

Concerns have been expressed by some members of the public regarding potential health effects of power frequency electric and/or magnetic fields (EMFs), which are emitted by all devices carrying electricity, including electric transmission and distribution lines and substation equipment. Government officials in the U.S. and the U.K. have reviewed this issue. The U.S. National Institute of Environmental Health Sciences concluded in 2002 that, for most health outcomes, there is no evidence of EMFs causing adverse effects. The agency further noted that there is some epidemiological evidence of an association with childhood leukemia, but that this evidence is difficult to interpret without supporting laboratory evidence. The U.K. National Radiological Protection Board concluded in 2004 that, while the research on EMFs does not provide a basis to find that EMFs cause any illness, there is a basis to consider precautionary measures beyond existing exposure guidelines. PPL and its subsidiaries believe the current efforts to determine whether EMFs cause adverse health effects should continue and are taking steps to reduce EMFs, where practical, in the design of new transmission and distribution facilities. PPL is unable to predict what effect, if any, the EMF issue might have on its operations and facilities either in the U.S. or abroad, and the associated cost, or what, if any, liabilities it might incur related to the EMF issue.

General

PPL and its subsidiaries are unable to predict the ultimate effect of evolving environmental laws and regulations upon their existing and proposed facilities and operations. In complying with statutes, regulations and actions by regulatory bodies involving environmental matters, including the areas of water and air quality, hazardous and solid waste handling and disposal and toxic substances, PPL's subsidiaries may be required to modify, replace or cease operating certain of their facilities. PPL's subsidiaries may also incur significant capital expenditures and operating expenses in amounts which are not now determinable, but could be significant.

FRANCHISES AND LICENSES

PPL Electric is authorized to provide electric public utility service throughout its service area as a result of grants by the Commonwealth of Pennsylvania in corporate charters to PPL Electric and companies to which it has succeeded and as a result of certification by the PUC. PPL Electric is granted the right to enter the streets and highways by the Commonwealth subject to certain conditions. In general, such conditions have been met by ordinance, resolution, permit, acquiescence or other action by an appropriate local political subdivision or agency of the Commonwealth.

See "Background - Supply Segment" for a discussion of PPL EnergyPlus' licenses in various states. PPL EnergyPlus also has an export license from the DOE to sell capacity and/or energy to electric utilities in Canada.

PPL Susquehanna operates Units 1 and 2 pursuant to NRC operating licenses which expire in 2022 and 2024, respectively. In November 2001, PPL Susquehanna notified the NRC that it intends to seek extensions of its operating licenses. The application for this extension will be made in 2006, in accordance with NRC guidelines. If the NRC approves PPL Susquehanna's application, the operating licenses for Units 1 and 2 would each be extended for an additional 20 years, to 2042 and 2044, respectively.

PPL Holtwood operates the Holtwood hydroelectric generating station pursuant to a license renewed by the FERC in 1980 and expiring in 2014. PPL Holtwood operates the Wallenpaupack hydroelectric generating station pursuant to a license with the FERC that is in the process of being renewed. PPL Holtwood also owns one-third of the capital stock of Safe Harbor Water Power Corporation (Safe Harbor), which holds a project license that extends the operation of its hydroelectric generating station until 2030. The total capacity of the Safe Harbor generating station is 418 MW, and PPL Holtwood is entitled by contract to one-third of the total capacity.

The 11 hydroelectric facilities and one storage reservoir purchased from Montana Power in 1999 are licensed by the FERC. These licenses expire periodically, and the generating facilities must be relicensed at such times. The FERC license for the Mystic facility expires in 2009; the Thompson Falls and Kerr licenses expire in 2025 and 2035, respectively; and the licenses for the nine Missouri-Madison facilities expire in 2040. PPL Montana is working to have the Mystic facility relicensed.

In connection with the relicensing of these generation facilities, FERC may, under applicable law, relicense the original licensee or license a new licensee, or the U.S. government may take over the facility. If the original licensee is not relicensed, it is compensated for its net investment in the facility, not to exceed the fair value of the property taken, plus reasonable damages to other property affected by the lack of relicensing.

PPL Global's international electricity transmission and distribution companies are authorized by the governments of their respective countries to provide electric distribution services within their concession areas and service territories, subject to certain conditions and obligations. For instance, each of these companies is subject to governmental regulation on the prices that it can charge and the quality of service it must provide, and the companies can be fined or even have their licenses or concessions revoked if they do not meet the mandated quality of service.

WPD operates under distribution licenses granted, and price controls set, by Ofgem. The price control formula that governs WPD's allowed revenue is normally determined every five years, with the most recent review having been completed in late-2004 and new prices effective April 1, 2005.

Emel is subject to regulated maximum tariffs set by Chile's National Energy Commission. The components of the distribution tariffs are energy and capacity prices, a transmission surcharge and the value added on account of distribution costs (VAD). The VAD includes a targeted return on invested capital of 10% per year. The energy and capacity prices are a direct pass-through to regulated customers of the energy charge that Emel pays to the generation companies. The tariffs are calculated every four years, with the most recent tariff review having been completed and revised rates becoming effective as of November 2004.

DelSur is subject to regulated maximum tariffs set by El Salvador's General Superintendent of Electricity and Telecommunications. The three components of the distribution tariff are an energy price, a commercialization charge and a distribution charge. DelSur's tariff specifies the energy price as a trailing six-month average of the spot market price. The tariffs are calculated every 5 years and are adjusted for inflation on January 1 of each year. The next comprehensive tariff review will take place in 2007 and be effective in 2008.

Elfec is subject to regulated maximum tariffs set by Bolivia's Superintendent of Electricity. Tariffs are calculated every four years based on the trailing three-year average of the equity returns from companies listed in the Dow Jones Utility Index. Tariffs are adjusted on a monthly basis for local inflation and every six months to reflect any changes in the energy node prices, which is a pass-through to regulated customers of the energy charge that Elfec pays to generation companies. The tariffs are calculated every four years. The most recent tariff review was completed in January 2004 and new prices became effective beginning in 2004.

EMPLOYEE RELATIONS

As of December 31, 2004, PPL and its subsidiaries had the following full-time employees:

PPL Energy Supply
	PPL Generation		2,626
	PPL EnergyPlus		1,745	(a)
	PPL Global
		Domestic	12
		International	3,824	(b)
	Total PPL Energy Supply		8,207
PPL Electric			2,212
PPL Gas Utilities			396
PPL Services & Other			1,213
Total PPL			12,028

(a)	Includes union employees of mechanical contracting subsidiaries, which tend to fluctuate due to the nature of their business.
(b)	Includes employees of WPD and PPL Global's consolidated subsidiaries in Latin America.

Approximately 59%, or 4,802, of PPL's domestic workforce are members of labor unions, with four IBEW locals representing 3,208 employees. The other unions primarily represent employees of the mechanical contractors and gas utility employees in Pennsylvania. The bargaining agreement with the largest union was negotiated in May 2002 and expires in May 2006. Eight four-year contracts with smaller gas utility locals in Pennsylvania were negotiated in 2003. In June 2004, the IBEW representing approximately 240 employees at the Montana Colstrip power plant approved a new four-year labor agreement. In 2001, a four-year contract was concluded with an IBEW local in Montana that represents approximately 80 employees. This IBEW contract expires in April 2005.

Approximately 86%, or 3,301, of PPL's international workforce are members of labor unions. WPD employs the majority of the international workforce. WPD recognizes five unions, the largest of which represents 37% of union members. WPD has two employment agreements which are negotiated with the unions. The largest agreement, the Electricity Business Agreement, covers 2,376 employees; it may be amended by agreement between WPD and the unions and is terminable with 12 months' notice by either side.

PPL's Latin American subsidiaries have 879 union employees that are represented by 12 unions. Emel and DelSur have agreements in place until 2006. Annually, Elfec negotiates adjustments to its compensation and benefits.

AVAILABLE INFORMATION

PPL's Internet Web site is www.pplweb.com. On the Investor Center page of that Web site, PPL provides access to all SEC filings of PPL registrants free of charge, as soon as reasonably practicable after filing with the SEC. Additionally, PPL registrants' filings are available at the SEC's Web site (www.sec.gov) and at the SEC's Public Reference Room at 450 Fifth Street, NW, Washington, DC 20549, or by calling 1-800-SEC-0330.

ITEM 2. PROPERTIES

Domestic Generation

For a description of PPL's domestic generation portfolio, see "Item 1. Business - Power Supply."

At December 31, 2004, PPL Generation was planning on implementing the following incremental capacity increases:

Project		Type	Total MW Capacity (a)	PPL Ownership or Lease Interest in MW		Expected In-Service Date (b)
Pennsylvania
	Susquehanna (c)	Nuclear	197	177	(90%)	2007 - 2010
	Susquehanna (d)	Nuclear	20	18	(90%)	2005 - 2006
	Brunner Island (e)	Coal-fired	16	16	(100%)	2006
	Montour (e)	Coal-fired	16	16	(100%)	2008
Montana
	Colstrip (f)	Coal-fired	74	20	(15-50%)	2006-2008
	Corette (e)	Coal-fired	8	8	(100%)	2005
Total			331	255

(a)	The capacity of generation units is based on a number of factors, including the operating experience and physical condition of the units, and may be revised periodically to reflect changed circumstances.
(b)	The expected in-service dates are subject to receipt of required approvals and permits and to other contingencies.
(c)	This project involves the extended uprate of Units 1 and 2 and will be implemented during two refueling outages per unit, with the first increase being an average of 60 MW per unit. The outages for Unit 1 are expected to occur in 2008 and 2010. The outages for Unit 2 are expected to occur in 2007 and 2009.
(d)	This project involves the installation of more efficient internals for the high pressure turbine moisture separators on Units 1 and 2.
(e)	These projects involve turbine upgrades.
(f)	This project involves turbine upgrades to all four Colstrip Units that are expected to be implemented over three years during the normal overhaul schedules. Units 1 and 4 are expected to be completed in 2006, Unit 3 in 2007 and Unit 2 in 2008.

PPL continually reexamines development projects based on market conditions and other factors to determine whether to proceed with these projects, sell them, expand them, execute tolling agreements or pursue other opportunities.

Domestic Delivery

Electric

For a description of PPL Electric's service territory, see "Item 1. Business - Background." At December 31, 2004, PPL Electric had electric transmission and distribution lines in public streets and highways pursuant to franchises and rights-of-way secured from property owners. PPL Electric's system included 380 substations with a total capacity of 25.7 million kVA, 32,896 circuit miles of overhead lines and 6,525 cable miles of underground conductors. All of PPL Electric's facilities are located in Pennsylvania. Substantially all of PPL Electric's transmission and distribution properties are subject to the lien of PPL Electric's 1945 First Mortgage Bond Indenture and its 2001 Senior Secured Bond Indenture.

Gas

PPL Gas Utilities distributes natural gas and propane to customers in northern, southeastern and central Pennsylvania and in a small portion of Maryland and Delaware. It also has natural gas storage facilities in Pennsylvania. At December 31, 2004, PPL Gas Utilities had approximately 107,000 natural gas and propane delivery customers and 3,753 miles of pipeline mains, with 18 miles in Maryland and the remainder in Pennsylvania.

International Delivery

PPL Global has consolidated investments in electricity distribution companies, serving approximately 3.5 million delivery customers in Latin America and the U.K., as follows:

Company	Location	PPL Ownership Interest	2004 Electricity Sales GWh (a)
Latin America
Emel	Santiago, Chile	95.4%	2,438
Elfec	Cochabamba, Bolivia	92.1%	606
DelSur	San Salvador, El Salvador	86.4%	955
United Kingdom
WPDH Limited	Bristol, England	100%	28,847
Total			32,846

(a) Corresponds to revenues recorded by PPL Global in 2004.

PPL Global's distribution system in Latin America includes 94 substations with a total capacity of 1.9 million kVA, 22,478 miles of overhead lines and 75 cable miles of underground conductors. PPL Global's distribution system in the U.K. includes 641 substations with a total capacity of 22.9 million kVA, 29,218 miles of overhead lines and 22,347 cable miles of underground conductors.

ITEM 3. LEGAL PROCEEDINGS

See "Item 1. Business - Fuel Supply," for information concerning a lawsuit against the DOE for failure of that agency to perform certain contractual obligations. See "Environmental Matters" in Note 14 to the Financial Statements for information concerning legal proceedings regarding certain environmental matters.

Montana Power Shareholders' Litigation

In August 2001, a purported class-action lawsuit was filed by a group of shareholders of Montana Power against Montana Power, the directors of Montana Power, certain advisors and consultants of Montana Power and PPL Montana. The plaintiffs allege, among other things, that Montana Power was required to, and did not, obtain shareholder approval of the sale of Montana Power's generation assets to PPL Montana in 1999. Although most of the claims in the complaint are against Montana Power, its board of directors, and its consultants and advisors, two claims are asserted against PPL Montana. In the first claim, plaintiffs seek a declaration that because Montana Power shareholders did not vote on the 1999 sale of generating assets to PPL Montana, that sale "was null and void ab initio." The second claim alleges that PPL Montana was privy to and participated in a strategy whereby Montana Power would sell its generation assets to PPL Montana without first obtaining Montana Power shareholder approval, and that PPL Montana has made net profits in excess of $100 million as the result of this alleged illegal sale. In the second claim, plaintiffs request that the court impose a "resulting and/or constructive trust" on both the generation assets themselves and all profits, plus interest on the amounts subject to the trust. This lawsuit is currently pending in the U.S. District Court of Montana, Butte Division. In July 2004, the plaintiffs notified the District Court that the parties had reached an oral partial settlement of the case that would result in the dismissal of PPL Montana as a defendant, and in January 2005 a global settlement agreement was filed with the District Court along with a motion to approve the agreement. Under the terms of the global settlement agreement, the plaintiffs' claims against PPL Montana would be dismissed and PPL Montana would not have to pay any amounts to the plaintiffs. The global settlement agreement must still be approved by the District Court. PPL and PPL Energy Supply cannot predict whether the global settlement agreement will be approved or the outcome of this matter if it is not approved.

NorthWestern Corporation Litigation

In connection with the acquisition of the Montana generation assets, the Montana Power APA, which was previously assigned to PPL Montana by PPL Global, includes a provision concerning the proposed purchase by PPL Montana of a portion of NorthWestern's interest in the 500-kilovolt Colstrip Transmission System (CTS) for $97 million. During 2002, PPL Montana had been in discussions with NorthWestern regarding the proposed purchase of the CTS and the claims that PPL Montana believes it has against NorthWestern arising from the Montana Power APA and related agreements. Notwithstanding such discussions, in September 2002, NorthWestern filed a lawsuit against PPL Montana in Montana state court seeking specific performance of PPL Montana's purchase of the CTS or, alternatively, damages for breach of contract. Pursuant to PPL Montana's application, the matter was removed to the U.S. District Court of Montana, Butte Division. Following removal, NorthWestern asserted additional claims for damages against PPL Montana, including a claim for punitive damages. PPL Montana filed defenses denying liability for NorthWestern's claims as well as counterclaims against NorthWestern seeking damages PPL Montana believes it has suffered under the Montana Power APA and related agreements.

In October 2004, the federal district court in Delaware, where NorthWestern's bankruptcy proceeding had been pending, approved a joint stipulation between PPL Montana and NorthWestern under which NorthWestern agreed to establish a segregated reserve to be used for any distributions to be made to satisfy any final judgment that PPL Montana may be awarded pursuant to PPL Montana's counterclaims. This segregated reserve has been funded with shares of NorthWestern common stock equal to $50 million, valued as of the effective date of NorthWestern's plan of reorganization. Also in October, the federal district court in Delaware confirmed NorthWestern's plan of reorganization, and in November 2004, NorthWestern announced that it officially emerged from bankruptcy protection.

The trial for this matter is expected to commence in the Montana federal district court in the last half of 2005. PPL and PPL Energy Supply cannot predict the outcome of this litigation.

Montana Hydroelectric Litigation

In October 2003, a lawsuit was filed against PPL Montana, PPL Services, Avista Corporation, PacifiCorp and nine John Doe defendants in the U.S. District Court of Montana, Missoula Division, by two residents allegedly acting in a representative capacity on behalf of the State of Montana. In January 2004, the complaint was amended to, among other things, include the Great Falls school districts as additional plaintiffs. In May 2004, the Montana Attorney General filed a motion to allow the State of Montana to intervene as an additional plaintiff in the litigation. This motion was granted without objection. Both the individual plaintiffs' and the school districts' complaint and the State's complaint sought declaratory judgment, compensatory damages and attorneys fees and costs for use of state and/or "school trust" lands by hydropower facilities and to require the defendants to adequately compensate the State and/or the State School Trust fund for full market value of lands occupied. Generally, the suit is founded on allegations that the bed of navigable rivers became state-owned property upon Montana's admission to statehood, and that the use thereof for placement of dam structures, affiliated structures and reservoirs should, under an existing regulatory scheme, trigger lease payments for use of land underneath. The plaintiffs also sought relief on theories of unjust enrichment, trespass and negligence. No specific amount of damages or future rental value has been claimed by the plaintiffs. The defendants filed separate motions to dismiss the individual plaintiffs' and school district's complaint, as well as the complaint of the State of Montana. In September 2004, the federal court granted the motions to dismiss the individual plaintiffs' and school districts' complaint but denied the similar motions as to the State of Montana's complaint. Following the federal court's September decision, PPL Montana and the other defendants filed a motion to dismiss the State of Montana's complaint for lack of diversity jurisdiction and also filed a motion to vacate certain portions of the decision. The federal court has not yet ruled on these motions.

In November 2004, PPL Montana, Avista Corporation and PacifiCorp commenced an action for declaratory judgment in Montana First Judicial District Court seeking a determination that no lease payments or other compensation for the hydropower facilities' use and occupancy of streambeds can be collected by the State of Montana. The State subsequently filed counterclaims and a motion for summary judgment. In February 2005, the individual plaintiffs and school districts who were dismissed from the federal court proceeding, along with a state teachers' union, filed a motion to intervene as additional defendants in this state court proceeding, and also filed a proposed answer and counterclaims to be used if their motion to intervene is granted. The state court has not yet ruled on any of the above-described motions. PPL Montana and PPL Services cannot predict the outcome of either the federal or the state court proceeding.

California ISO and Western Markets

Through its subsidiaries, PPL made approximately $18 million of sales to the California ISO during the period from October 2000 through June 2001, of which $17 million has not been paid to PPL subsidiaries. Given the myriad of electricity supply problems presently faced by the California electric utilities and the California ISO, PPL cannot predict whether or when it will receive payment. As of December 31, 2004, PPL has fully reserved for possible underrecoveries of payments for these sales.

Regulatory proceedings arising out of the California electricity supply situation have been filed at the FERC. The FERC has determined that all sellers of energy into markets operated by the California ISO and the California Power Exchange, including PPL Montana, should be subject to refund liability for the period beginning October 2, 2000, through June 20, 2001, and initiated an evidentiary hearing concerning refund amounts. In April 2003, the FERC changed the manner in which this refund liability is to be computed and ordered further proceedings to determine the exact amounts that the sellers, including PPL Montana, would be required to refund. In September 2004, the U.S. Court of Appeals for the Ninth Circuit held that the FERC had the additional legal authority to order refunds for periods prior to October 2, 2000, and ordered the FERC to determine whether or not it would be appropriate to grant such additional refunds.

In June 2003, the FERC took several actions as a result of a number of related investigations. The FERC terminated proceedings pursuant to which it had been considering whether to order refunds for spot market bilateral sales made in the Pacific Northwest, including sales made by PPL Montana, during the period December 2000 through June 2001. The FERC explained that the totality of the circumstances made refunds unfeasible and inequitable, and that it had provided adequate relief by adopting a price cap throughout the western U.S. The FERC also denied pending complaints against long-term contracts in the western U.S. In these complaints, various power buyers had challenged selected long-term contracts that they entered into during 2000 and 2001, complaining that the power prices were too high and reflected manipulation of those energy markets. The FERC found that the complainants had not met their burden of showing that changing or canceling the contracts was "in the public interest" and that the dysfunction in the California markets did not justify changing these long-term contracts. These orders have been appealed to the U.S. Court of Appeals for the Ninth Circuit. In two separate orders, the FERC also ordered 65 different companies, agencies or municipalities to show cause why they should not be ordered to disgorge profits for "gaming" or anomalous market behavior during 2000 and 2001. These orders to show cause address both unilateral and joint conduct identified as the "Enron trading strategies." Neither PPL EnergyPlus nor PPL Montana was included in these orders to show cause, and they previously have explained in responses to data requests from the FERC that they have not engaged in such trading strategies. Finally, the FERC issued a new investigation order directing its staff to investigate any bids made into the California markets in excess of $250/MWh during the period from May 2000 to October 2000, a period of time prior to the period examined in connection with most of the proceedings described above. To their knowledge, neither PPL EnergyPlus nor PPL Montana is being investigated by the FERC under this new order.

Litigation arising out of the California electricity supply situation has been filed in California courts against sellers of energy to the California ISO. The plaintiffs and intervenors in these legal proceedings allege, among other things, abuse of market power, manipulation of market prices, unfair trade practices and violations of state antitrust laws, and seek other relief, including treble damages and attorneys' fees. While PPL's subsidiaries have not been named by the plaintiffs in these legal proceedings, PPL Montana was named by a defendant in its cross-complaint in a consolidated court proceeding, which combined into one master proceeding several of the lawsuits alleging antitrust violations and unfair trade practices. This generator denies that any unlawful, unfair or fraudulent conduct occurred but asserts that, if it is found liable, the other generators and power marketers, including PPL Montana, caused, contributed to and/or participated in the plaintiffs' alleged losses.

In February 2004, the Montana Public Service Commission initiated a limited investigation of the Montana retail electricity market for the years 2000 and 2001, focusing on how that market was affected by transactions involving the possible manipulation of the electricity grid in the western U.S. The investigation includes all public utilities and licensed electricity suppliers in Montana, as well as other entities that may possess relevant information. Through its subsidiaries, PPL is a licensed electricity supplier in Montana and a wholesale supplier in the western U.S. In June 2004, the Montana Attorney General served PPL Montana and more than 20 other companies with subpoenas requesting documents, and PPL Montana has provided responsive documents to the Montana Attorney General. As with the other investigations taking place as a result of the issues arising out of the electricity supply situation in California and other western states, PPL and its subsidiaries believe that they have not engaged in any improper trading or marketing practices affecting the Montana retail electricity market.

While PPL and its subsidiaries believe that they have not engaged in any improper trading practices, they cannot predict whether, or the extent to which, any PPL subsidiaries will be the target of any additional governmental investigations or named in other lawsuits or refund proceedings, the outcome of any such lawsuits or proceedings or whether the ultimate impact on them of the electricity supply situation in California and other western states will be material.

PJM Capacity Litigation

In December 2002, PPL was served with a complaint against PPL, PPL EnergyPlus and PPL Electric filed in the U.S. District Court for the Eastern District of Pennsylvania by a group of 14 Pennsylvania boroughs that apparently alleges, among other things, violations of the federal antitrust laws in connection with the pricing of installed capacity in the PJM daily market during the first quarter of 2001. These boroughs were wholesale customers of PPL Electric. The claims of the boroughs are similar to those previously alleged by a single borough in litigation brought in the same court that is still pending. In addition, in November 2003, PPL and PPL EnergyPlus were served with a complaint which was filed in the same court by Joseph Martorano, III (d/b/a ENERCO), that also alleges violations of the federal antitrust laws in early 2001. The complaint indicates that ENERCO provides consulting and energy procurement services to clients in Pennsylvania and New Jersey. In September 2004, this complaint was dismissed by the District Court and the plaintiff has appealed the dismissal to the U.S. Court of Appeals for the Third Circuit.

Each of the U.S. Department of Justice - Antitrust Division, the FERC and the Pennsylvania Attorney General conducted investigations regarding PPL's PJM capacity market transactions in early 2001 and did not find any reason to take action against PPL.

Although PPL, PPL Energy Supply and PPL Electric believe the claims in these complaints are without merit, they cannot predict the outcome of these matters.

New England Investigation

In January 2004, PPL became aware of an investigation by the Connecticut Attorney General and the FERC's Office of Market Oversight and Investigation (OMOI) regarding allegations that natural gas-fired generators located in New England illegally sold natural gas instead of generating electricity during the week of January 12, 2004. Subsequently, PPL and other generators were served with a data request by OMOI. The data request indicated that PPL was not under suspicion of a regulatory violation, but that OMOI was conducting an initial investigation. PPL has responded to this data request. PPL also has responded to data requests of ISO - New England and data requests served by subpoena from the Connecticut Attorney General. Both OMOI and ISO - New England have issued preliminary reports finding no regulatory or other violations concerning these matters. While PPL does not believe that it committed any regulatory or other violations concerning the subject matter of these investigations, PPL cannot predict the outcome of these investigations.

PJM Billing

In December 2004, Exelon Corporation, on behalf of its subsidiary, PECO Energy, Inc. (PECO), filed a complaint against PJM and PPL Electric with the FERC alleging that PJM had overcharged PECO from April 1998 through May 2003 as a result of an error by PJM in the State Estimator Program used in connection with billing all PJM customers for certain transmission, spot market energy and ancillary services charges. Specifically, the complaint alleges that PJM mistakenly identified PPL Electric's Elroy substation transformer as belonging to PECO and that, as a consequence, during times of congestion, PECO's bills for transmission congestion from PJM erroneously reflected energy that PPL Electric took from the Elroy substation and used to serve PPL Electric's load. The complaint requests the FERC, among other things, to direct PPL Electric to refund to PJM $39 million, plus interest of approximately $8 million, and for PJM to refund these same amounts to PECO. PPL Electric and PPL Energy Supply do not believe that they or any PPL subsidiaries have any financial responsibility or liability to PJM or PECO as a result of PJM's alleged error. PPL Electric and PPL Energy Supply cannot predict the outcome of this matter or the impact on any PPL subsidiary.

FERC Market-Based Rate Authority

In December 1998, the FERC issued an order authorizing PPL EnergyPlus to make wholesale sales of electric power and related products at market-based rates. In that order, the FERC directed PPL EnergyPlus to file an updated market analysis within three years of the date of the order, and every three years thereafter. PPL EnergyPlus filed its initial updated market analysis in December 2001. Several parties thereafter filed interventions and protests requesting that PPL EnergyPlus be required to provide additional information demonstrating that it has met the FERC's market power tests necessary for PPL EnergyPlus to continue its market-based rate authority. PPL EnergyPlus has responded that the FERC does not require the economic test suggested by the intervenors and that, in any event, it would meet such economic test if required by the FERC.

In June 2004, FERC approved certain changes to its standards for granting market-based rate authority. As a result of the schedule adopted by the FERC, PPL EnergyPlus, PPL Electric, PPL Montana and most of PPL Generation's subsidiaries were required to file in November 2004 updated analyses demonstrating that they should continue to maintain market-based rate authority under the new standards. PPL made two filings, one for PPL Montana and one for most of the other PPL subsidiaries. The Montana Public Service Commission and the Montana Consumer Counsel filed pleadings opposing the filing by PPL Montana. The Montana Public Service Commission requested that the FERC hold a hearing on the market-based rate renewal application, while the Montana Consumer Counsel suggested applying an altered version of the FERC's tests for assessing market power in reviewing the renewal application. The PJM Industrial Customer Coalition, the PP&L Industrial Customer Alliance and the consumer advocates of Maryland and Pennsylvania filed pleadings opposing the filings by the other PPL subsidiaries. These parties challenge the FERC's continued reliance on market-based rates to yield just and reasonable prices for wholesale electric transactions and suggest that the FERC change its tests for market power to include capacity and ancillary services markets. While PPL believes its filings demonstrate that all PPL subsidiaries pass the new tests established by the FERC in June 2004, PPL cannot predict the outcome of these proceedings.

Lower Mt. Bethel

In August 2002, the Northampton County Court of Common Pleas issued a decision setting the permissible noise levels for operation of the Lower Mt. Bethel facility. PPL appealed the court's decision to the Commonwealth Court, and an intervenor in the lawsuit cross-appealed the court's decision. In May 2003, the Commonwealth Court remanded the case to the Court of Common Pleas for further findings of fact concerning the zoning application relating to the construction of the facility. In September 2003, the Court of Common Pleas ruled in PPL's favor while also reaffirming its decision on the noise levels, and the intervenor appealed this ruling to the Commonwealth Court. In April 2004, the Commonwealth Court affirmed the decision of the Court of Common Pleas. The intervenor has pending before the Supreme Court of Pennsylvania a Petition for Allowance of Appeal.

The certificate of occupancy for the Lower Mt. Bethel facility was issued by the local township zoning officer in April 2004, and the facility was placed in service in May 2004. In May 2004, the intervenor in the legal proceedings regarding the facility's permissible noise levels filed an appeal with the township board regarding the issuance of the certificate of occupancy. The hearing on the appeal was held in December 2004, and the intervenor's appeal was denied.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of security holders, through the solicitation of proxies or otherwise, during the fourth quarter of 2004.

EXECUTIVE OFFICERS OF THE REGISTRANTS

Officers of PPL, PPL Energy Supply and PPL Electric are elected annually by their Boards of Directors (or Board of Managers for PPL Energy Supply) to serve at the pleasure of the respective Boards. There are no family relationships among any of the executive officers, nor is there any arrangement or understanding between any executive officer and any other person pursuant to which the officer was selected.

There have been no events under any bankruptcy act, no criminal proceedings and no judgments or injunctions material to the evaluation of the ability and integrity of any executive officer during the past five years.

Listed below are the executive officers at December 31, 2004:

PPL Corporation
Name		Age	Positions Held During the Past Five Years	Dates
William F. Hecht		61	Chairman, President and Chief Executive Officer	February 1995 - present
John R. Biggar		60	Executive Vice President and Chief Financial Officer	January 2001 - present
			Senior Vice President and Chief Financial Officer	November 1998 - January 2001
James H. Miller		56	Executive Vice President and Chief Operating Officer	September 2004 - present
			Executive Vice President	January 2004 - August 2004
			President - PPL Generation	February 2001 - August 2004
			Executive Vice President - USEC, Inc.	January 1999 - February 2001
Robert J. Grey		54	Senior Vice President, General Counsel and Secretary	March 1996 - present
Paul T. Champagne*		46	President - PPL EnergyPlus	October 2001 - present
			President - PPL Global	May 1999 - October 2001
Rick L. Klingensmith*		44	President - PPL Global	August 2004 - present
			Vice President - Finance - PPL Global	August 2000 - August 2004
			General Manager - Assets - PPL Global	February 2000 - August 2000
			Manager of Energy Systems and Acquisitions - Air Products and    Chemicals, Inc.	May 1999 - February 2000
Roger L. Petersen*		53	President - PPL Development Company	September 2004 - present
			President - PPL Global	October 2001 - August 2004
			President and Chief Executive Officer - PPL Montana	May 1999 - October 2001
Bryce L. Shriver*		57	President and Chief Nuclear Officer - PPL Generation	September 2004 - present
			Senior Vice President - PPL Generation	May 2002 - August 2004
			Vice President - Nuclear Site Operations - PPL Susquehanna	July 2000 - May 2002
			Vice President - Nuclear Site Operations - PP&L, Inc.	January 2000 - July 2000
John F. Sipics*		56	President - PPL Electric	October 2003 - present
			Vice President - Asset Management	August 2001 - October 2003
			Vice President - Regulatory Support	August 2000 - August 2001
			Vice President - Delivery Services & Economic Development	October 1998 - August 2000
James E. Abel		53	Vice President - Finance and Treasurer	June 1999 - present
Paul A. Farr		37	Vice President and Controller	August 2004 - present
			Senior Vice President - PPL Global	January 2004 - August 2004
			Vice President - International Operations - PPL Global	June 2002 - January 2004
			Vice President - PPL Global	October 2001 - June 2002
			Vice President and Chief Financial Officer - PPL Montana	June 1999 - October 2001
*	Messrs. Champagne, Klingensmith, Petersen, Shriver and Sipics have been designated executive officers of PPL by virtue of their respective positions at PPL subsidiaries.

PPL Electric Utilities Corporation
Name	Age	Positions Held During the Past Five Years	Dates
John F. Sipics	56	President	October 2003 - present
		Vice President - Asset Management	August 2001 - October 2003
		Vice President - Regulatory Support	August 2000 - August 2001
		Vice President - Delivery Services & Economic Development	October 1998 - August 2000
James E. Abel	53	Treasurer	July 2000 - present
		Vice President - Finance and Treasurer	June 1999 - July 2000
Paul A. Farr	37	Vice President and Controller	August 2004 - present
		Senior Vice President - PPL Global	January 2004 - August 2004
		Vice President - International Operations - PPL Global	June 2002 - January 2004
		Vice President - PPL Global	October 2001 - June 2002
		Vice President and Chief Financial Officer - PPL Montana	June 1999 - October 2001

PPL Energy Supply, LLC

Item 4 is omitted as PPL Energy Supply meets the conditions set forth in General Instruction (I)(1)(a) and (b) of Form 10-K.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY,
RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES

PPL Corporation

Additional information for this item is set forth in the sections entitled "Quarterly Financial, Common Stock Price and Dividend Data," "Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters" and "Shareowner and Investor Information" of this report. The number of common shareowners is set forth in "Item 6. Selected Financial and Operating Data."

PPL Energy Supply, LLC

There is no established public trading market for PPL Energy Supply's membership interests. PPL Energy Funding, a direct wholly owned subsidiary of PPL, owns all of PPL Energy Supply's outstanding membership interests. Distributions on the membership interests will be paid as determined by PPL Energy Supply's Board of Managers. PPL Energy Supply made cash distributions to PPL Energy Funding of approximately $410 million in 2004 and $1.2 billion in 2003.

PPL Electric Utilities Corporation

Additional information for this item is set forth in the sections entitled "Quarterly Financial Data" and "Shareowner and Investor Information" of this report.

ITEM 6. SELECTED FINANCIAL AND OPERATING DATA

PPL Energy Supply, LLC

Item 6 is omitted as PPL Energy Supply meets the conditions set forth in General Instructions (I)(1)(a) and (b) of Form 10-K.

 

ITEM 6. SELECTED FINANCIAL AND OPERATING DATA
PPL Corporation (a)					2004		2003		2002		2001		2000
Income Items - millions
	Operating revenues (b)			$	5,812	$	5,596	$	5,491	$	5,147	$	4,541
	Operating income				1,387		1,340		1,246		850		1,194
	Income from continuing operations				700		719		360		169		487
	Net income				698		734		208		179		498
Balance Sheet Items - millions (c)
	Property, plant and equipment - net (b)				11,209		10,593		9,733		5,947		5,948
	Recoverable transition costs				1,431		1,687		1,946		2,172		2,425
	Total assets				17,761		17,123		15,552		12,562		12,360
	Long-term debt				7,658		7,859		6,267		5,579		4,784
	Long-term debt with affiliate trusts (d)				89		681
	Company-obligated mandatorily redeemable   preferred securities of subsidiary trusts holding   solely company debentures (d)								661		825		250
	Preferred stock
			With sinking fund requirements						31		31		46
			Without sinking fund requirements		51		51		51		51		51
	Common equity				4,239		3,259		2,224		1,857		2,012
	Short-term debt				42		56		943		118		1,037
	Total capital provided by investors				12,079		11,906		10,177		8,461		8,180
	Capital lease obligations				11		12
Financial Ratios
	Return on average common equity - %				18.14		26.55		10.27		8.41		27.49
	Embedded cost rates (c)
			Long-term debt - %		6.67		6.56		7.04		6.84		6.98
			Preferred stock - %		5.14		5.14		5.81		5.81		5.87
			Preferred securities - % (d)						8.02		8.13		8.44
	Times interest earned before income taxes				2.72		2.93		1.97		2.19		3.05
	Ratio of earnings to fixed charges - total enterprise    basis (e)				2.6		2.5		1.9		1.7		2.5
Common Stock Data
	Number of shares outstanding - thousands
			Year-end		189,072		177,362		165,736		146,580		145,041
			Average		184,228		172,795		152,492		145,974		144,350
	Number of shareowners of record (c)				81,175		83,783		85,002		87,796		91,777
	Income from continuing operations - Basic EPS			$	3.80	$	4.16	$	2.36	$	1.16	$	3.38
	Income from continuing operations - Diluted EPS			$	3.78	$	4.15	$	2.36	$	1.15	$	3.37
	Net income - Basic EPS			$	3.79	$	4.25	$	1.37	$	1.23	$	3.45
	Net income - Diluted EPS			$	3.77	$	4.24	$	1.36	$	1.22	$	3.44
	Dividends declared per share			$	1.64	$	1.54	$	1.44	$	1.06	$	1.06
	Book value per share (c)			$	22.42	$	18.38	$	13.42	$	12.67	$	13.87
	Market price per share (c)			$	53.28	$	43.75	$	34.68	$	34.85	$	45.188
	Dividend payout rate - % (f)				44		36		106		87		31
	Dividend yield - % (g)				3.08		3.52		4.15		3.04		2.35
	Price earnings ratio (f) (g)				14.13		10.32		25.50		28.57		13.14
Sales Data - millions of kWh
	Domestic - Electric energy supplied - retail				37,664		36,774		36,746		37,395		37,758
	Domestic - Electric energy supplied - wholesale				37,394		37,841		36,849		27,683		40,925
	Domestic - Electric energy delivered				35,897		36,083		35,712		35,534		34,731
	International - Electric energy delivered (h)				32,846		31,952		33,313		5,919		3,735
(a)		The earnings each year were affected by unusual items, which affected net income. See "Earnings" in Management's Discussion and Analysis of Financial Condition and Results of Operations for a description of unusual items in 2004, 2003 and 2002.
(b)		Data for certain years are reclassified to conform to the current presentation.
(c)		At year-end.
(d)		On July 1, 2003, PPL adopted the provisions of SFAS 150, "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity." The company-obligated mandatorily redeemable preferred securities are mandatorily redeemable financial instruments, as they require the issuer to redeem the securities for cash on a specified date. Thus, they should be classified as liabilities, as a component of long-term debt, instead of "mezzanine" equity on the Balance Sheet. However, as of December 31, 2004 and 2003, no amounts were included in "Long-term Debt" for these securities because PPL Capital Funding Trust I and SIUK Capital Trust I were deconsolidated effective December 31, 2003, in connection with the adoption of FIN 46, "Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51," for certain entities. Instead, the subordinated debt securities that support the company-obligated mandatorily redeemable preferred securities of the trusts are reflected in "Long-term Debt with Affiliate Trusts" as of December 31, 2004 and 2003, to the extent they were outstanding. See Notes 8 and 22 to the Financial Statements for additional information.
(e)		Computed using earnings and fixed charges of PPL and its subsidiaries. Fixed charges consist of interest on short- and long-term debt, other interest charges, interest on capital lease obligations, the estimated interest component of other rentals and preferred dividends.
(f)		Based on diluted EPS.
(g)		Based on year-end market prices.
(h)		Deliveries for 2002 include the electricity deliveries of WPD for the full year and of CEMAR prior to deconsolidation.

ITEM 6. SELECTED FINANCIAL AND OPERATING DATA
PPL Electric Utilities Corporation (a)							2004		2003		2002		2001		2000
Income Items - millions
	Operating revenues					$	2,847	$	2,788	$	2,748	$	2,694	$	3,336
	Operating income						259		251		275		419		669
	Income available to PPL Corporation						74		25		39		119		261
Balance Sheet Items - millions (b)
	Property, plant and equipment - net						2,657		2,589		2,456		2,319		2,401
	Recoverable transition costs						1,431		1,687		1,946		2,172		2,425
	Total assets						5,526		5,469		5,583		5,921		6,023
	Long-term debt						2,544		2,937		3,175		3,459		3,126
	Company-obligated mandatorily redeemable    preferred securities of subsidiary trusts holding    solely company debentures												250		250
	Preferred stock
			With sinking fund requirements								31		31		46
			Without sinking fund requirements				51		51		51		51		51
	Common equity						1,272		1,222		1,147		931		1,160
	Short-term debt						42				15				59
	Total capital provided by investors						3,909		4,210		4,419		4,722		4,692
Financial Ratios
	Return on average common equity - %						5.95		2.08		3.87		11.09		19.40
	Embedded cost rates (b)
			Long-term debt - %				6.86		6.61		6.83		6.81		6.88
			Preferred stock - %				5.14		5.14		5.81		5.81		5.87
			Preferred securities - %										8.44		8.44
	Times interest earned before income taxes						1.45		1.22		1.33		1.92		2.81
	Ratio of earnings to fixed charges (c)						1.4		1.2		1.2		1.7		2.5
Sales Data
	Customers (thousands) (b)						1,351		1,330		1,308		1,298		1,270
	Electric energy delivered - millions of kWh
				Residential			13,441		13,266		12,640		12,269		11,924
				Commercial			12,610		12,388		12,371		12,130		11,565
				Industrial			9,611		9,599		9,853		10,000		10,224
				Other			163		154		169		211		194
					Retail electric sales		35,825		35,407		35,033		34,610		33,907
					Wholesale electric sales (d)		72		676		679		924		17,548
					Total electric energy sales delivered		35,897		36,083		35,712		35,534		51,455
	Electric energy supplied as a PLR - millions of kWh						34,832		33,627		33,747		31,653		32,260
(a)		The earnings each year were affected by unusual items, which affected net income. See "Earnings" in Management's Discussion and Analysis of Financial Condition and Results of Operations for a description of unusual items in 2004, 2003 and 2002.
(b)		At year-end.
(c)		Computed using earnings and fixed charges of PPL Electric and its subsidiaries. Fixed charges consist of interest on short- and long-term debt, other interest charges, interest on capital lease obligations and the estimated interest component of other rentals.
(d)		After the July 1, 2000, corporate realignment, PPL Electric had only wholesale sales to municipalities and NUG purchases that are resold to PPL EnergyPlus. The contracts for wholesale sales to municipalities expired in January 2004.

PPL CORPORATION
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

PPL is an energy and utility holding company with headquarters in Allentown, PA. See "Item 1. Business - Background," for descriptions of PPL's major segments. See Exhibit 99 in Item 15 for a listing of the current corporate organization. Through its subsidiaries, PPL is primarily engaged in the generation and marketing of electricity in two key markets - the northeastern and western U.S. - and in the delivery of electricity in Pennsylvania, the U.K. and Latin America. PPL's strategy for its electricity generation and marketing business is to match energy supply with load, or customer demand, under long-term and intermediate-term contracts with creditworthy counterparties. PPL's strategy for its electricity delivery businesses is to own and operate these businesses at the highest level of quality and reliability and at the most efficient cost.

PPL faces several risks in its generation business. The principal risks are electricity wholesale price risk, fuel supply and price risk, power plant performance and counterparty credit risk. PPL attempts to manage these risks through various means. For instance, PPL operates a portfolio of generation assets that is diversified as to geography, fuel source, cost structure and operating characteristics. PPL is focused on the operating efficiency of these power plants and maintaining their availability. In addition, PPL has in place and continues to pursue long-term and intermediate-term contracts for energy sales and fuel supply, and other means, to mitigate the risks associated with adverse changes in the difference, or margin, between the cost to produce electricity and the price at which PPL sells it. PPL's contractual commitments for energy sales are primarily satisfied through its own generation assets - i.e., PPL primarily markets and trades around its physical portfolio of generating assets through integrated generation, marketing and trading functions. PPL has in place risk management programs that, among other things, are designed to monitor and manage its exposure to volatility of earnings and cash flows related to changes in energy and fuel prices, interest rates, foreign currency exchange rates, counterparty credit quality and the operational performance of its generating units.

PPL's electricity delivery businesses are rate-regulated. Accordingly, these businesses are subject to regulatory risk in terms of the costs that they may recover and the investment returns that they may collect in customer rates. The principal challenge that PPL faces in its electricity delivery businesses is to maintain high standards of customer service and reliability in a cost-effective manner. PPL faces certain financial risks by conducting international operations, such as fluctuations in currency exchange rates. PPL attempts to manage these financial risks through its risk management program.

A key challenge for PPL's business as a whole is to maintain a strong credit profile. In the past few years, investors, analysts and rating agencies that follow companies in the energy industry have been particularly focused on the credit quality and liquidity position of energy companies. PPL is focused on strengthening its balance sheet and improving its liquidity position, thereby improving its credit profile.

The purpose of "Management's Discussion and Analysis of Financial Condition and Results of Operations" is to provide information concerning PPL's past and expected future performance in implementing the strategies and managing the risks and challenges outlined above. Specifically:

• "Results of Operations" provides an overview of PPL's operating results in 2004, 2003 and 2002, starting with a review of earnings. The earnings review includes a listing of certain unusual items that had significant impacts in these years, and it also includes a description of key factors that management expects may impact future earnings. "Results of Operations" also includes an explanation of changes during this three-year period in significant income statement components, such as energy margins, utility revenues, operation and maintenance expenses, financing costs, income taxes and cumulative effects of accounting changes.

• "Financial Condition - Liquidity" provides an analysis of PPL's liquidity position and credit profile, including its sources of cash (including bank credit facilities and sources of operating cash flow) and uses of cash (including contractual commitments and capital expenditure requirements) and the key risks and uncertainties that impact PPL's past and future liquidity position and financial condition. This subsection also includes an explanation of recent rating agency decisions affecting PPL, as well as a listing of PPL's current credit ratings.

• "Financial Condition - Risk Management - Energy Marketing & Trading and Other" includes an explanation of PPL's risk management program relating to market risk (i.e., commodity price, interest rate and foreign currency exchange risk) and credit risk (i.e., counterparty credit risk).

• "Application of Critical Accounting Policies" provides an overview of the accounting policies that are particularly important to the results of operations and financial condition of PPL and that require PPL's management to make significant estimates, assumptions and other judgments. Although PPL's management believes that these estimates, assumptions and other judgments are appropriate, they relate to matters that are inherently uncertain. Accordingly, changes in the estimates, assumptions and other judgments applied to these accounting policies could have a significant impact on PPL's results of operations and financial condition, as reflected in PPL's Financial Statements.

The information provided in "Management's Discussion and Analysis of Financial Condition and Results of Operations" should be read in conjunction with PPL's Financial Statements and the accompanying Notes.

Terms and abbreviations are explained in the glossary. Dollars are in millions, except per share data, unless otherwise noted.

Results of Operations

The following discussion, which explains significant annual changes in principal items on the Statement of Income, compares 2004 to 2003 and compares 2003 to 2002.

WPD's results, as consolidated in PPL's Statement of Income, are impacted by changes in foreign currency exchange rates. Changes in foreign exchange rates increased WPD's portion of revenue and expense line items by about 12% in 2004 compared with 2003, and by about 9% in 2003 compared with 2002.

The comparability of certain items on the 2003 and 2002 Statements of Income has also been impacted by PPL Global's investment in CEMAR. The consolidated results of CEMAR are included from January to August 2002, when PPL had a controlling interest. See Note 9 to the Financial Statements for more information, including the sale of this investment in 2004.

Earnings

Net income and the related EPS were as follows:

	2004		2003		2002
Net income	$	698	$	734	$	208
EPS - basic	$	3.79	$	4.25	$	1.37
EPS - diluted	$	3.77	$	4.24	$	1.36

The after-tax changes in net income were primarily due to:

			2004 vs. 2003			2003 vs. 2002
Domestic:
	Eastern U.S. non-trading margins		$	35		$	(2	)
	Northwestern U.S. non-trading margins			(1	)		16
	Southwestern U.S. non-trading margins			(5	)		5
	Net energy trading margins			7			(6	)
	Delivery revenues (net of CTC/ITC amortization, interest expense on transition bonds and ancillary charges)			5			11
	Operation and maintenance expenses			(17	)		(41	)
	Realized earnings on nuclear decommissioning trust (Note 16)			(16	)		12
	Contribution of property			(10	)		12
	Taxes, other than income (excluding gross receipts tax)			10			(14	)
	Synfuel earnings			11			2
	Depreciation			(22	)
	Energy related businesses			(5	)		(4	)
	Interest income on IRS tax settlement			14
	Reduction in tax reserves associated with stranded costs securitization			22
	Interest expense and distributions on preferred securities			(14	)		51
	Other			6			(6	)
		Total Domestic		20			36

			2004 vs. 2003			2003 vs. 2002
International:
	U.K. operations:
		Benefit of complete ownership of WPD (Note 9)					29
		Impact of changes in foreign currency exchange rates		22			14
		Distribution margins		5
		Operation and maintenance expenses		11
		Other		(6	)		1
	Latin America			3			18
	Other			(7	)		3
		Total International		28			65
Unusual items				(84	)		425
			$	(36	)	$	526

The changes in net income from year to year were, in part, attributable to several unusual items with significant earnings impacts, including accounting changes, discontinued operations and infrequently occurring items. The after-tax impacts of these unusual items are:

		2004			2003			2002
Accounting changes:
	ARO (Note 21)				$	63
	Consolidation of variable interest entities (Note 22)					(27	)
	Goodwill impairment (Note 19)							$	(150	)
Sale of CGE (Note 9)		$	(7	)
Sale of CEMAR (Note 9)			23
Discontinued operations (Note 9)			(2	)		(20	)
CEMAR-related net tax benefit (Note 5)						81
Impairment of investment in technology supplier (Note 9)			(6	)
Workforce reduction (Note 20)						(5	)		(44	)
Write-down of generation assets (Note 9)									(26	)
CEMAR operating losses (Note 9)									(23	)
CEMAR impairment (Note 9)									(98	)
Tax benefit - Teesside (Note 9)									8
Total		$	8		$	92		$	(333	)

The year-to-year changes in earnings components, including domestic gross energy margins by region and income statement line items, are discussed in the balance of "Results of Operations."

PPL's future earnings could be, or will be, impacted by a number of key factors, including the following:

• PPL's future energy margins and, consequently, its future earnings, may be impacted by fluctuations in market prices for electricity, as well as fluctuations in fuel prices, fuel transportation costs and emission allowance expenses. For instance, although PPL expects market prices for electricity in 2005 to be higher than in 2004, PPL is not expecting an increase in its 2005 energy margins due to expected increases in the cost of fuel, fuel transportation and emissions allowances.

• A key part of PPL's overall strategy is to enter into long-term and intermediate-term energy supply agreements in order to mitigate market price and supply risk. PPL's ability to continue to enter into such agreements, and to renew existing energy supply agreements, may affect its future earnings. See "Item 1. Business - Power Supply" and Note 14 to the Financial Statements for more information regarding PPL's wholesale energy commitments and Note 15 for more information regarding the PLR contracts.

• As discussed in "Item 1. Business - Background," PPL Electric has agreed to provide electricity supply to its PLR customers at predetermined rates through 2009, and it has entered into PUC-approved, full requirements energy supply agreements with PPL EnergyPlus to fulfill its PLR obligation. The predetermined charges for generation supply which PPL Electric collects from its PLR customers and pays to PPL EnergyPlus under the energy supply agreements provide for annual increases in each year commencing in 2006 and continuing through 2009. PPL Electric's PLR obligation after 2009 will be determined by the PUC pursuant to rules that have not yet been promulgated.

• Due to current electricity and natural gas price levels, there is a risk that PPL may be unable to recover its investment in certain gas-fired generation facilities. Under GAAP, PPL does not believe that there is an impairment charge to be recorded for these facilities at this time. PPL is unable to predict the earnings impact of this issue, based upon future energy and fuel price levels, applicable accounting rules and other factors, but such impact may be material.

• In June 2004, a subsidiary of PPL Generation agreed to sell the 450 MW Sundance power plant to Arizona Public Service Company (APS). Each party has waived the remaining contractual conditions for approval of the transaction by the Arizona Corporation Commission. The sale still requires approvals of the FERC under the Federal Power Act. PPL cannot predict whether or when these approvals will be obtained. PPL estimates that a loss on sale or an impairment charge of about $47 million after tax, or $0.25 per share, could be recorded in 2005 depending on the timing and likelihood of obtaining the FERC approvals.

• PPL's ability to manage operational risk with respect to its generation plants is critical to its financial performance. Specifically, depending on the timing and duration of both planned and unplanned outages (in particular, if such outages are during peak periods or periods of severe weather), PPL's revenue from energy sales could be adversely affected and its need to purchase power to satisfy its energy commitments could be significantly increased. PPL has been successful in the past several years in increasing fleet-wide equivalent availability (i.e., the percentage of time in a year that a generating unit is capable of producing power) from the low 80% range to over 90%. However, since many of its generating units are reaching mid-life, PPL is faced with the potential for outages of longer duration to accommodate significant investments in major component replacements.

• PPL has interests in two synthetic fuel facilities and receives tax credits pursuant to Section 29 of the Internal Revenue Code based on its sale of synthetic fuel to unaffiliated third-party purchasers. PPL has estimated that these facilities will contribute approximately $0.21 to annual EPS through 2007. See Note 14 to the Financial Statements for a discussion of the requirements to receive the Section 29 tax credits, the IRS review of synthetic fuel production procedures and the impact of higher oil prices on the Section 29 tax credits.

• In March 2004, PPL Electric filed a request with the PUC for an overall annual net increase in distribution rates of approximately $164 million (subsequently amended to $160 million), based on a return on equity of 11.5%, and notified the PUC that it planned to pass through to customers approximately $57 million in increased transmission charges imposed on PPL Electric by PJM. In December 2004, the PUC approved an increase in PPL Electric's distribution rates of approximately $137 million (based on a return on equity of 10.7%), and approved PPL Electric's proposed mechanism for collecting the additional $57 million in transmission-related charges, for a total increase of approximately $194 million, effective January 1, 2005.

• In January 2005, severe ice storms hit PPL Electric's service territory. PPL Electric had to restore service to about 238,000 customers. Although the actual cost of these storms and the specific allocation of such cost between operation and maintenance expense and capital costs is not yet finalized, PPL Electric currently estimates a total cost of $22 million, with approximately 85% being expensed.

  On February 11, 2005, PPL Electric filed a petition with the PUC for authority to defer and amortize for regulatory accounting and reporting purposes its actual cost of these storms, excluding capitalized costs of approximately $3 million and regular payroll expenses of approximately $2 million (pursuant to PUC precedent on this issue). If the PUC grants this petition, PPL Electric's management at that time will assess the recoverability of these costs in PPL Electric's next general rate increase proceeding. Based on the PUC's action on the petition and management's assessment, PPL Electric would either record these storm expenses, excluding regular payroll, as a regulatory asset in accordance with SFAS 71, "Accounting for the Effects of Certain Types of Regulation," or record these storm expenses on its income statement. If the PUC grants the petition before PPL Electric files its Form 10-Q for the first quarter of 2005, the result of this assessment will be reflected in PPL Electric's financial statements for the first quarter of 2005. If the PUC has not acted on or has denied the petition by such date, PPL Electric would record these storm expenses on its income statement. At this time, PPL Electric cannot predict the outcome of this matter.

• Earnings in 2005 and beyond are expected to continue to be adversely affected by increased pension costs. Specifically, WPD will experience increased pension costs due to a recent actuarial valuation of WPD's plans that reflects higher pension obligations. The increase in pension costs in 2005 is forecasted to be approximately $22 million after tax, and the increase in pension costs is expected to continue to be significant in 2006. See "Other Operation and Maintenance" for the impact on earnings in 2004.

• PPL is unable to predict whether future impairments of goodwill may be required for its domestic and international investments. While no goodwill impairments were required based on the annual review performed in the fourth quarter of 2004, future impairments may occur due to determinations of carrying value exceeding the fair value of these investments.

• See Note 14 to the Financial Statements for potential commitments and contingent liabilities that may impact future earnings.

• See "Application of Critical Accounting Policies" for an overview of accounting policies that are particularly important to the results of operations and financial condition of PPL and that require PPL's management to make significant estimates, assumptions and other judgments. Although PPL's management believes that these estimates, assumptions and other judgments are appropriate, they relate to matters that are inherently uncertain.

• See Note 23 to the Financial Statements for new accounting standards that have been issued but not yet adopted by PPL that may impact future earnings.

Domestic Gross Energy Margins

The following table provides changes in the income statement line items that comprise domestic gross energy margins:

			2004 vs. 2003			2003 vs. 2002
Utility revenues			$	183		$	31
Unregulated retail electric and gas revenues				(34	)		(30	)
Wholesale energy marketing revenues				25			183
Net energy trading margins				12			(10	)
Other revenue adjustments (a)				(112	)		4
	Total revenues			74			178
Fuel				125			44
Energy purchases				(87	)		100
Other cost adjustments (a)				(25	)		12
	Total cost of sales			13			156
		Domestic gross energy margins	$	61		$	22

(a) Adjusted to exclude the impact of any revenues and costs not associated with domestic gross energy margins, in particular, revenues and energy costs related to the international operations of PPL Global and the domestic delivery operations of PPL Electric and PPL Gas Utilities. Also adjusted to include gains or losses on sales of emission allowances, which are included in "Other operation and maintenance" expenses on the Statement of Income, and the reduction of the reserve for Enron receivables, as described in Note 17 to the Financial Statements.

Changes in Domestic Gross Energy Margins By Region

Domestic gross energy margins are generated through PPL's normal and hedge activities (non-trading), as well as trading activities. Non-trading margins are now discussed on a geographic basis rather than on an activity basis, as reported prior to 2004. A regional perspective more closely matches the internal view of how PPL's energy business is managed.

		2004 vs. 2003			2003 vs. 2002
Eastern U.S. non-trading		$	59		$	(4	)
Northwestern U.S. non-trading			(2	)		27
Southwestern U.S. non-trading			(8	)		9
Net energy trading			12			(10	)
	Domestic gross energy margins	$	61		$	22

Eastern U.S.

Eastern U.S. non-trading margins were higher in 2004 compared to 2003, primarily due to 3% higher generation, as well as higher prices and slightly higher sales volumes. In PJM, where the majority of PPL's Eastern wholesale activity occurs, average spot prices rose 15% in 2004 over 2003. PPL also benefited from favorable transmission congestion positions. In addition, retail energy prices increased by approximately 1% in 2004 in accordance with the schedule established by the PUC Final Order. The higher volumes reflect the return of customers who had previously shopped for electricity, as well as new load obligations in Connecticut and New Jersey, partially offset by lower wholesale sales. Partially offsetting these improvements were increased supply costs driven by increased fossil fuel and purchased power prices.

Eastern U.S. non-trading margins were essentially flat in 2003 compared to 2002 due to lower supply costs in 2002 caused by the buyout of a NUG contract in February 2002, which reduced 2002's power purchases by $25 million. Excluding the NUG buyout, margins in 2003 were higher compared to 2002, primarily due to higher wholesale volumes, which increased by 47%. The higher volumes were primarily driven by market opportunities to optimize the value of generating assets and by higher spot prices that allowed PPL Energy Supply to increase the utilization of its higher-cost generating units.

Northwestern U.S.

Northwestern U.S. non-trading margins were slightly lower in 2004 compared to 2003, due in part to a retroactive coal price adjustment caused by an unfavorable arbitration ruling. Incremental expense of $6 million was recorded in 2004 as a result of the ruling, most of which related to years 2001 to 2003. Contributing to the decrease in margins in 2004 compared to 2003 was a $6 million positive impact to 2003 margins related to a partial reversal of a reserve against Enron receivables (discussed in Note 17 to the Financial Statements) and a 2003 favorable litigation settlement of $3 million with Energy West Resources. These decreases were offset by improved generation and higher prices.

Northwestern U.S. non-trading margins were higher in 2003 compared to 2002, due to higher wholesale prices. Average wholesale prices for 2003 were $6/MWh higher than prices in 2002. A $6 million partial reversal of a reserve against Enron receivables (discussed in Note 17 to the Financial Statements) and a favorable settlement of $3 million with Energy West Resources also positively impacted margins in 2003.

Southwestern U.S.

Southwestern U.S. non-trading margins were lower in 2004 compared to 2003, primarily due to wholesale sales volumes decreasing 17%. Also contributing to the decrease in margins in 2004 compared to 2003 was a $3 million positive impact to 2003 margins related to a partial reversal of a reserve against Enron receivables (discussed in Note 17 to the Financial Statements).

Southwestern U.S. non-trading margins were higher in 2003 compared to 2002, due to the inception of new tolling agreements in Arizona and an increase of average wholesale prices by $16/MWh in 2003 compared to 2002. In addition, margins were positively impacted by $3 million in 2003 related to a partial reversal of a reserve against Enron receivables.

Net Energy Trading

PPL enters into certain energy contracts that meet the criteria of trading derivatives as defined by EITF Issue 02-3, "Issues Involved in Accounting for Derivative Contracts Held for Trading Purposes and Contracts Involved in Energy Trading and Risk Management Activities." These physical and financial contracts cover trading activity associated with electricity, gas and oil. The $12 million increase in 2004 compared to 2003 was due to a $6 million increase in electricity positions and a $6 million increase in gas and oil positions. The $10 million decrease in 2003 compared to 2002 was primarily due to realized electric swap losses in 2003. The physical volumes associated with energy trading were 5,700 GWh and 11.7 Bcf in 2004; 5,200 GWh and 12.6 Bcf in 2003; and 9,600 GWh and 12.4 Bcf in 2002. The amount of energy trading margins from unrealized mark-to-market transactions was $13 million in 2004 and not significant in 2003 and 2002.

Utility Revenues

The increases in utility revenues were attributable to the following:

			2004 vs. 2003			2003 vs. 2002
Domestic:
	Retail electric revenue (PPL Electric)
		PLR electric generation supply	$	94		$	22
		Electric delivery		(7	)		48
	Wholesale electric revenue (PPL Electric)			(23	)		1
	Gas revenue (PPL Gas Utilities)			22			6
	Other			(1	)		(1	)
International:
	Retail electric delivery (PPL Global)
		U.K.		70			36
		Chile		27			18
		Bolivia		1			1
		Brazil					(113	)
		El Salvador					13
			$	183		$	31

The increase in utility revenues for 2004 compared with 2003 was attributable to:

• higher PLR revenues due to higher energy and capacity rates, and a 3.6% increase in volume, in part due to the return of customers previously served by alternate suppliers;
• higher gas revenues primarily due to off-system sales of storage gas in the fourth quarter of 2004, and the increase in natural gas prices, which are a pass-through to customer rates, partially offset by a decrease in volume;
• higher WPD revenues, primarily due to the change in foreign currency exchange rates;
• higher revenues in Chile, due to higher energy prices, which are a pass-through to customer rates, the change in foreign currency exchange rates, and a 7% increase in sales volume; partially offset by
• lower electric delivery revenues due to a decrease in ITC and CTC revenue as a result of lower ITC rates, and several rate groups reaching their rate cap; and
• lower wholesale electric revenues, due to the expiration of all PPL Electric municipal purchase power agreements at the end of January 2004.

The increase in utility revenues for 2003 compared with 2002 was attributable to:

• higher electric delivery revenues resulting from a 1.1% increase in delivery sales, in part due to colder winter weather in the first quarter of 2003;
• higher PLR revenues, due to higher energy and capacity rates;
• higher gas revenues, primarily due to higher sales volume of propane and natural gas;
• higher WPD revenues, primarily due to the change in foreign currency exchange rates;
• higher revenues in El Salvador, primarily due to higher volume and higher pass-through energy costs, partially offset by a 6% tariff reduction effective January 1, 2003; and
• higher revenues in Chile, primarily due to higher volume and the consolidation of TransEmel (see Note 9 to the Financial Statements); partially offset by
• lower revenues in Brazil attributable to the deconsolidation of CEMAR in August 2002 (see Note 9).

Energy Related Businesses

Energy related businesses contributed $45 million less to operating income in 2004 compared with 2003. The decrease was primarily attributable to the following:

• a $15 million pre-tax loss on the sale of CGE in 2004 (see Note 9 to the Financial Statements);
• a $5 million pre-tax decrease from mechanical contracting and engineering subsidiaries due to the continued decline in capital spending in commercial and industrial markets, lower margins experienced in those markets, and cost overruns at two major projects;
• a $3 million pre-tax decrease from Latin American subsidiaries due primarily to lower dividends received and lower construction sales; and
• a $17 million higher pre-tax operating loss from synfuel projects.

Energy related businesses contributed $17 million less to operating income in 2003 compared with 2002. The decrease resulted primarily from:

• $7 million of credits recorded on development projects in 2002, due largely to a favorable settlement on the cancellation of a generation project in Washington state;
• a $5 million operating loss on some Hyder properties in the first quarter of 2003, which were subsequently sold in April 2003;
• an $8 million decrease in Latin America revenues from lower material and construction project sales (In 2002, a Bolivian subsidiary participated in the construction of a 1,500 kilometer transmission line in rural areas.); and
• a $3 million decrease in margins from telecommunications, due to the acquisition of a fiber optic network and start-up activities for new products; partially offset by
• a $3 million improvement in contributions from mechanical contracting subsidiaries, due to enhanced project controls that were implemented to minimize project overruns, offset by a continuing decline in construction markets in 2003.

Other Operation and Maintenance

The increases in other operation and maintenance expenses were primarily due to:

	2004 vs. 2003			2003 vs. 2002
Property damage and environmental insurance settlements which were recorded in 2003	$	27		$	(27	)
Increase in domestic and international pension costs		18			47
Increased operating expenses in domestic business lines and other					54
Additional expenses of new generating facilities		5			28
Increase in WPD expenses due to regulatory accounting adjustments, and resolution of purchase accounting contingencies in 2002 related to the Hyder acquisition					18
Increase in foreign currency exchange rates		15			10
Increase in WPD tree trimming costs		8
Decrease in the Clean Air Act contingency relating to generating facilities recorded in 2003		8			(8	)
Outage costs associated with planned maintenance at the Montour and Conemaugh plants		7
Consulting and independent auditor costs to meet the requirements of Sarbanes-Oxley 404		6
Write-off of Hurricane Isabel costs not approved for recovery by the PUC		4
Accretion expense as a result of applying SFAS 143 (Note 21)		1			18
Timing and extent of outage costs associated with the planned refueling and inspection at the Susquehanna station and of other nuclear-related expenses		2			7
Change to account for CEMAR on the cost method in 2002					(38	)
Estimated reduction in salaries and benefits as a result of the workforce reduction initiated in 2002 (Note 20)					(28	)
Decrease in lease expense due to consolidation of the Sundance and University Park generation facilities		(24	)
Vacation liability adjustment in 2002 in conjunction with the workforce reduction					(15	)
WPD capitalization		(13	)
Increase (decrease) in other postretirement benefit expense		(12	)		16
Decrease in Brunner Island expenses due to outage work in 2003. No major outage work performed in 2004		(6	)
Gains on sales of emission allowances		(1	)		(17	)
Other		(3	)		5
	$	42		$	70

The $18 million increase in net pension costs was attributable to reductions in the discount rate assumption for PPL's domestic and international pension plans at December 31, 2003. Although financial markets have improved and PPL's domestic and international pension plans have experienced significant asset gains in 2003 and 2004, domestic interest rates on fixed-income obligations have continued to fall, requiring a further reduction in the discount rate assumption for PPL's domestic plans as of December 31, 2004. The reduction in the discount rate assumption has a significant impact on the measurement of plan obligations and net pension cost. In addition, there was an increase in the obligations of the WPD pension plan as determined by its most recent actuarial valuation as of March 31, 2004. PPL's net pension costs are expected to increase by approximately $40 million in 2005. Approximately $31 million of the increased costs is attributable to the WPD pension plans. See Note 12 to the Financial Statements for details of the funded status of PPL's pension plans.

Depreciation

Increases in depreciation expense were primarily due to:

	2004 vs. 2003			2003 vs. 2002
Additions to PP&E	$	13		$	29
Sundance and University Park generation facilities - FIN 46 (a)		15
Depreciation on Lower Mt. Bethel generation facility, which began commercial operation in May 2004		10
Foreign currency exchange rates		16			10
Lower depreciation due to deconsolidation of CEMAR in 2002					(7	)
2003 purchase accounting adjustments to WPD assets (Note 9)		(22	)		3
No decommissioning expense in 2003 due to application of SFAS 143, "Accounting for Asset Retirement Obligations" (b)					(22	)
	$	32		$	13

(a)

The lessor of these facilities was consolidated under FIN 46, "Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51," effective December 31, 2003. In June 2004, subsidiaries of PPL Energy Supply purchased the Sundance and University Park generation assets from the lessor that was consolidated by PPL Energy Supply under FIN 46. See Note 22 to the Financial Statements for additional information.

(b)

There was a corresponding recording of accretion expense for PPL Susquehanna in 2003, which is included in "Other operation and maintenance" expense on the Statement of Income. See Note 21 to the Financial Statements for additional information.

Taxes, Other Than Income

Taxes, other than income, decreased by $6 million in 2004 compared with 2003. The decrease was primarily due to a $14 million reversal of a prior year accrual and a $5 million decrease in domestic capital stock expense, partially offset by a $9 million increase in WPD property taxes. In the first quarter of 2004, PPL Electric reversed a $14 million accrued liability for 1998 and 1999 PURTA taxes that had been accrued based on potential exposure in the proceedings regarding the Susquehanna nuclear station tax assessment. The rights of the third-party intervenors to further appeal expired in 2004. WPD's property taxes increased by $9 million, primarily from the impact of changes in foreign currency exchange rates, adjustments recorded in 2003 and an increase in property tax rates.

Taxes, other than income, increased by $25 million in 2003 compared with 2002 due to the settlement of prior years' capital stock tax refund claims of $8 million in 2002, higher taxes related to an increase in the basis on which capital stock tax is calculated in 2003 and higher real estate taxes.

Other Charges

Other charges of $9 million in 2003 consisted of a charge for a workforce reduction program (see Note 20 to the Financial Statements).

Other charges of $232 million in 2002 consisted of the write-down of PPL Global's investment in CEMAR and several smaller impairment charges on other international investments (see Note 9), the write-down of generation assets (see Note 9) and a charge for a workforce reduction program (see Note 20).

Other Income - net

See Note 16 to the Financial Statements for details of other income and deductions.

Financing Costs

The increase (decrease) in financing costs, which include "Interest Expense" and "Distributions on Preferred Securities," were primarily due to:

	2004 vs. 2003			2003 vs. 2002
Increase in interest expense due to consolidation of the lessors of the Sundance, University Park and Lower Mt. Bethel generation facilities, in accordance with FIN 46	$	34
Financing costs associated with the repayment of the consolidated trust's debt for the Sundance and University Park generation facilities		9
Increase in foreign currency exchange rates		15		$	10
Decrease in interest expense due to hedging activities accounted for under SFAS 133, "Accounting for Derivative Instruments and Hedging Activities"		(10	)		(20	)
Decrease in amortization expense		(5	)		(13	)
Decrease in short-term debt interest expense		(10	)		(20	)
Decrease in long-term debt interest expense		(1	)		(31	)
Decrease in long-term debt interest from the deconsolidation of CEMAR in August 2002					(34	)
Charge in 2002 related to the ineffectiveness and subsequent dedesignation of hedges on anticipated debt issuances that did not occur					(15	)
Charge in 2002 to cancel a remarketing agreement					(24	)
Decrease in capitalized interest		1			14
Write-off of unamortized swap costs on WPD debt restructuring in 2003		(11	)		11
Other		1			(3	)
	$	23		$	(125	)

Income Taxes

Income tax expense increased by $25 million in 2004 compared with 2003. This increase was primarily attributable to:

• an $84 million tax benefit recognized in 2003 related to foreign investment losses not recurring in 2004; and
• a $9 million tax benefit recognized in 2003 related to a charitable contribution of property not recurring in 2004; offset by
• a $22 million tax benefit recognized in 2004 related to a reduction in tax reserves associated with stranded costs securitization predicated upon management's reassessment of its best estimate of probable tax exposure, relative to 2003;
• a $25 million decrease in tax expense on foreign earnings in 2004; and
• a $22 million tax benefit recognized in 2004 related to additional nonconventional fuel tax credits in excess of credits recognized in 2003.

Income tax expense decreased by $40 million in 2003 compared with 2002. This decrease was due to:

• a $31 million reduction related to deferred income tax valuation allowances recorded on impairment charges on PPL's investment in Brazil recorded during 2002;
• an $84 million reduction in income taxes related to the tax benefit recognized in 2003 on foreign investment losses included in the 2002 federal income tax return;
• a $9 million decrease related to a contribution of property; and
• a $2 million decrease related to additional nonconventional fuel tax credits recognized; offset by
• higher pre-tax domestic book income, resulting in an $84 million increase in income taxes.

Annual tax provisions include amounts considered sufficient to pay assessments that may result from examination of prior year tax returns by taxing authorities. However, the amount ultimately paid upon resolution of any issues raised by such authorities may differ materially from the amount accrued. In evaluating the exposure associated with various filing positions, PPL accounts for changes in probable exposures based on management's best estimate of the amount that should be recognized. An allowance is maintained for the tax contingencies, the balance of which management believes to be adequate. During 2004, PPL reached partial settlement with the IRS with respect to the tax years 1991 through 1995 and received a cash refund in the amount of $52 million. As a result of this settlement, the net tax impact recorded in 2004 was not significant.

See Note 5 to the Financial Statements for details on effective income tax rates and for information on the American Jobs Creation Act of 2004.

Discontinued Operations

In 2003, PPL reported a loss of $20 million in connection with the approval of a plan of sale of PPL Global's investment in a Latin American telecommunications company. An additional $2 million loss was recorded in 2004, representing operating losses through the date of the sale. See "Discontinued Operations" in Note 9 to the Financial Statements for additional information related to the sale.

Cumulative Effects of Changes in Accounting Principles

In 2003, PPL recorded a charge of $27 million, after-tax, as a cumulative effect of a change in accounting principle in connection with the adoption of FIN 46, "Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51," for certain entities. See Note 22 to the Financial Statements for additional information.

PPL adopted SFAS 143, "Accounting for Asset Retirement Obligations," effective January 1, 2003. SFAS 143 addresses the accounting for obligations associated with the retirement of tangible long-lived assets. It requires legal obligations associated with the retirement of long-lived assets to be recognized as a liability in the financial statements. Application of the new rules resulted in a cumulative effect of adoption that increased net income by $63 million in 2003. See Note 21 to the Financial Statements for additional information.

PPL adopted SFAS 142, "Goodwill and Other Intangible Assets," on January 1, 2002. SFAS 142 requires an annual impairment test of goodwill and other intangible assets that are not subject to amortization. PPL performed a transition impairment analysis in the first quarter of 2002 and recorded a transition goodwill impairment charge of $150 million. See Note 19 to the Financial Statements for additional information.

Financial Condition

Liquidity

PPL is focused on maintaining a strong liquidity position and strengthening its balance sheet, thereby improving its credit profile. PPL believes that its cash on hand, operating cash flows, access to debt and equity capital markets and borrowing capacity, taken as a whole, provide sufficient resources to fund its ongoing operating requirements, future security maturities and estimated future capital expenditures. PPL currently expects cash on hand at the end of 2005 to be about $300 million, with about $2.3 billion in available credit facilities. However, PPL's cash flows from operations and its access to cost effective bank and capital markets are subject to risks and uncertainties, including but not limited to, the following:

• changes in market prices for electricity;
• changes in commodity prices that may increase the cost of producing power or decrease the amount PPL receives from selling power;
• price and credit risks associated with selling and marketing products in the wholesale power markets;
• ineffectiveness of trading, marketing and risk management policies and programs used to mitigate PPL's risk exposure to adverse energy and fuel prices, interest rates, foreign currency exchange rates and counterparty credit;
• unusual or extreme weather that may damage PPL's transmission and distribution facilities or affect energy sales to customers;
• reliance on transmission and distribution facilities that PPL does not own or control to deliver its electricity and natural gas;
• unavailability of generating units (due to unscheduled or longer-than-anticipated generation outages) and the resulting loss of revenues and additional costs of replacement electricity;
• ability to recover and the timeliness and adequacy of recovery of costs associated with regulated utility businesses; and
• a downgrade in PPL's or PPL's subsidiaries' credit ratings that could negatively affect their ability to access capital and increase the cost of maintaining credit facilities and any new debt.

At December 31, 2004, PPL had $616 million in cash and cash equivalents and $42 million of short-term debt compared to $466 million in cash and cash equivalents and $56 million of short-term debt at December 31, 2003, and $245 million in cash and cash equivalents and $943 million of short-term debt at December 31, 2002. The changes in cash and cash equivalents resulted from the following:

	2004			2003			2002
Net Cash Provided by Operating Activities	$	1,437		$	1,340		$	774
Net Cash Used in Investing Activities		(718	)		(739	)		(1,057	)
Net Cash Used in Financing Activities		(578	)		(387	)		(363	)
Effect of Exchange Rates on Cash & Cash Equivalents		9			7			2
Increase (Decrease) in Cash & Cash Equivalents	$	150		$	221		$	(644	)

Net Cash Provided by Operating Activities

Net cash from operating activities increased by 7%, or $97 million, in 2004 versus 2003, reflecting higher energy margins and other improvements in cash-adjusted net income.

Important elements supporting the stability of PPL's cash provided by operating activities are the long-term and intermediate-term commitments from wholesale and retail customers and long-term fuel supply contracts PPL has in place. PPL estimates that, on average, approximately 83% of its expected annual generation output for the period 2005 through 2009 is committed under long-term and intermediate-term energy supply contracts. PPL EnergyPlus also enters into contracts under which it agrees to sell and purchase electricity, natural gas, oil and coal. These contracts often require cash collateral or other credit enhancement, or reductions or terminations of a portion of the entire contract through cash settlement in the event of a downgrade of PPL or the respective subsidiary's credit ratings or adverse changes in market prices. For example, in addition to limiting its trading ability, if PPL or its respective subsidiary's ratings were lowered to below "investment grade" and energy prices increased by 10%, PPL estimates that, based on its December 31, 2004, positions, it would have had to post additional collateral of approximately $280 million, compared to $190 million at December 31, 2003. PPL has in place risk management programs that, among other things, are designed to monitor and manage its exposure to volatility of cash flows related to changes in energy prices, interest rates, foreign currency exchange rates, counterparty credit quality and the operational performance of its generating units.

Net cash from operating activities increased by $566 million in 2003 versus 2002 reflecting higher net income adjusted for non-cash items, working capital improvements and lower cash income taxes. In addition, 2002 included cash outlays of $152 million for the cancellation of generation projects and $50 million for the termination of a NUG contract. The higher net income in 2003 was principally driven by complete ownership of WPD, higher wholesale energy margins, lower interest expense and savings from a workforce reduction program in the U.S. that commenced in 2002. The working capital improvements resulted from a decrease in accounts receivable and prepayments. These positive changes were partially offset by rising transmission and distribution operating costs at PPL Electric and other factors.

Net Cash Used in Investing Activities

Net cash used in investing activities decreased by 3%, or $21 million, in 2004 versus 2003 primarily as the result of the $123 million proceeds from the sale of PPL's minority interest in CGE. The primary use of cash for investing activities is capital and investment expenditures. See "Capital Expenditure Requirements" for capital and investment expenditures in 2004 and expected expenditures in 2005 through 2009. In 2005, PPL expects to be able to fund all of its capital expenditures with cash from operations and cash on hand.

The $318 million reduction in net cash used in investing activities in 2003, compared with 2002, was primarily due to reduced investment in generation assets and electric energy projects and the acquisition of the controlling interest in WPD in September 2002.

Net Cash Used in Financing Activities

Net cash used in financing activities was $578 million in 2004, compared to $387 million in 2003. The increase primarily reflects higher retirement of long-term debt and increased dividends to shareholders. In 2004, cash used in financing activities primarily consisted of net debt retirements of $863 million and common and preferred dividends paid of $299 million, partially offset by common stock sale proceeds of $596 million, of which $575 million related to the settlement of the common stock purchase contracts that were a component of the PEPS Units and the PEPS Units, Series B. In 2003, cash used in financing activities primarily consisted of net debt retirements of $460 million, preferred stock retirements of $31 million and common and preferred dividends paid of $287 million, partially offset by common stock sale proceeds of approximately $426 million. PPL currently has no plans to issue any significant amounts of additional common stock. See Note 8 to the Financial Statements for additional information on common stock sales in 2004.

PPL's debt financing activity in 2004 was as follows:

		Issuances		Retirements
PPL Energy Supply Senior Unsecured Notes		$	300
PPL Capital Funding Medium-Term Notes				$	(104	)
PPL Transition Bond Company Transition Bonds					(264	)
PPL Electric First Mortgage Bonds					(71	)
PPL Electric Senior Secured Bonds					(59	)
PPL Energy Supply lease financing					(656	)
WPD short-term debt (net change)					(56	)
PPL Electric Asset-backed Commercial Paper (net change)			42
North Penn Gas, Inc. Notes					(2	)
Latin American companies long-term debt			22		(15	)
	Total	$	364	$	(1,227	)
Net reduction				$	(863	)

Debt issued during 2004 had stated interest rates ranging from 1.1% to 9.0% and maturities from 2004 through 2014. See Note 8 to the Financial Statements for more detailed information regarding PPL's financing activities.

In March 2004, PPL Electric reactivated its commercial paper program to provide it with an additional financing source to fund its short-term liquidity needs, if and when necessary. At December 31, 2004, PPL Electric had no commercial paper outstanding.

In August 2004, PPL Electric began participating in an asset-backed commercial paper program through which PPL Electric obtains financing by selling and contributing its eligible accounts receivable and unbilled revenue to a special purpose, wholly owned subsidiary on an ongoing basis. The subsidiary pledges these assets to secure loans of up to an aggregate of $150 million from a commercial paper conduit sponsored by a financial institution. PPL Electric expects to use the proceeds from the program for general corporate purposes and to cash collateralize letters of credit. At December 31, 2004, the loan balance outstanding was $42 million, all of which was being used to cash collateralize letters of credit.

In December 2004, PPL Energy Supply reactivated its commercial paper program to provide it with an additional financing source to fund its short-term liquidity needs, if and when necessary. At December 31, 2004, PPL Energy Supply had no commercial paper outstanding and currently has no plans to access the commercial paper market in the short-term.

At December 31, 2004, PPL's total committed borrowing capacity under credit facilities and the use of this borrowing capacity were as follows:

		Committed Capacity		Borrowed	Letters of Credit Issued (d)		Available Capacity
PPL Electric Credit Facilities (a)		$	300				$	300
PPL Energy Supply Credit Facilities (b)			1,100		$	250		850
WPD (South West) Bank Facilities (c)			769			2		767
	Total	$	2,169		$	252	$	1,917

(a)	PPL Electric's credit facilities allow for borrowings at LIBOR-based rates plus a spread, depending upon the company's public debt rating. PPL Electric also has the capability to cause the lenders to issue up to $300 million of letters of credit under these facilities, which issuances reduce available borrowing capacity. The credit facilities contain a financial covenant requiring debt to total capitalization to not exceed 70%. At December 31, 2004 and 2003, PPL Electric's consolidated debt to total capitalization percentages, as calculated in accordance with its credit facilities, were 54% and 57%. The credit facilities also contain certain representations and warranties that must be made for PPL Electric to borrow under them, including, but not limited to, a material adverse change clause that relates to PPL Electric's ability to perform its obligations under the credit agreements and related loan documents.
(b)	PPL Energy Supply's credit facilities allow for borrowings at LIBOR-based rates plus a spread, depending upon the company's public debt rating. PPL Energy Supply also has the capability to cause the lenders to issue up to $950 million of letters of credit under these facilities, which issuances reduce available borrowing capacity. These credit facilities contain financial covenants requiring debt to total capitalization to not exceed 65% and requiring that PPL Energy Supply maintain an interest coverage ratio to not be less than 2.0 times consolidated earnings before income taxes, depreciation and amortization. At December 31, 2004 and 2003, PPL Energy Supply's consolidated debt to total capitalization percentages, as calculated in accordance with one of its credit facilities, were 35% and 36%. Under a second credit facility entered into in June 2004, the consolidated debt to capitalization percentage was 34% at December 31, 2004. At December 31, 2004 and 2003, PPL Energy Supply's interest coverage ratios, as calculated in accordance with its credit facilities, were 6.2 and 6.3. The credit facilities also contain certain representations and warranties that must be made for PPL Energy Supply to borrow under them, including, but not limited to, a material adverse change clause that relates to PPL Energy Supply's ability to perform its obligations under the credit agreements and related loan documents.
(c)	WPD (South West)'s credit facilities allow for borrowings at LIBOR-based rates plus a spread, depending upon the company's public debt rating. These credit facilities contain financial covenants that require WPD (South West) to maintain an interest coverage ratio of not less than 3.0 times consolidated earnings before income taxes, depreciation and amortization and a regulatory asset base (RAB) at £150 million greater than total gross debt, in each case as calculated in accordance with the credit facilities. At December 31, 2004 and 2003, WPD (South West)'s interest coverage ratio, as calculated in accordance with its credit lines, were 6.8 and 6.7. At December 31, 2004 and 2003, WPD (South West)'s RAB, as calculated in accordance with the credit facilities, exceeded its total gross debt by £531 million and £482 million.
(d)	The Borrower under each of these facilities has a reimbursement obligation to the extent any letters of credit are drawn. The letters of credit issued as of December 31, 2004, expire in 2005.

These credit agreements contain various other covenants. Failure to meet those covenants beyond applicable grace periods could result in acceleration of due dates of borrowings and/or termination of the agreements. PPL monitors the covenants on a regular basis. At December 31, 2004, PPL was in material compliance with those covenants. PPL Energy Supply and WPD (South West) intend to renew and extend all of their syndicated credit facilities in 2005.

The increase of $24 million in net cash used in financing activities in 2003 compared to 2002 primarily reflected the repayment of short-term debt, retirement of long-term debt and increased dividends to shareholders. In 2003, the $387 million of net cash used in financing activities primarily consisted of net debt retirements of $460 million, preferred stock retirements of $31 million and common and preferred dividends paid of $287 million, partially offset by common stock sale proceeds of approximately $426 million. In 2002, the $363 million of net cash used in financing activities primarily consisted of net debt retirements of $412 million, company-obligated mandatorily redeemable preferred security retirements of $250 million and common and preferred dividends paid of $261 million, partially offset by common stock sale proceeds of approximately $587 million.

Operating Leases

PPL and its subsidiaries also have available funding sources that are provided through operating leases. PPL's subsidiaries lease vehicles, office space, land, buildings, personal computers and other equipment. These leasing structures provide PPL with additional operating and financing flexibility. The operating leases contain covenants that are typical for these agreements, such as maintaining insurance, maintaining corporate existence and timely payment of rent and other fees. Failure to meet these covenants could limit or restrict access to these funds or require early payment of obligations. At this time, PPL believes that these covenants will not limit access to these funding sources or cause acceleration or termination of the leases.

PPL, through its subsidiary PPL Montana, leases a 50% interest in Colstrip Units 1 and 2 and a 30% interest in Unit 3, under four 36-year non-cancelable operating leases. These operating leases are not recorded on PPL's Balance Sheet, which is in accordance with applicable accounting guidance. The leases place certain restrictions on PPL Montana's ability to incur additional debt, sell assets and declare dividends. At this time, PPL believes that these restrictions will not limit access to these funding sources or cause acceleration or termination of the leases. See Note 8 to the Financial Statements for a discussion of other dividend restrictions related to PPL subsidiaries.

See Note 10 to the Financial Statements for further discussion of the operating leases.

Contractual Obligations

At December 31, 2004, the estimated contractual cash obligations of PPL were as follows:

Contractual Cash Obligations	Total		Less Than 1 Year		1-3 Years		3-5 Years		After 5 Years
Long-term Debt (a)	$	7,755	$	866	$	2,266	$	1,310	$	3,313
Capital Lease Obligations		18		1		2		2		13
Operating Leases		784		77		133		117		457
Purchase Obligations (b)		3,273		684		1,280		580		729
Other Long-term Liabilities Reflected on the Balance Sheet under GAAP (c)		174		38		116		20
Total Contractual Cash Obligations	$	12,004	$	1,666	$	3,797	$	2,029	$	4,512

(a)	Reflects principal maturities only, including maturities of consolidated lease debt.
(b)	The payments reflected herein are subject to change, as certain purchase obligations included are estimates based on projected obligated quantities and/or projected pricing under the contracts.
(c)	The amounts reflected represent estimated pension funding requirements.

Credit Ratings

Standard & Poor's Ratings Services (S&P), Moody's Investors Service, Inc. (Moody's) and Fitch Ratings (Fitch) periodically review the credit ratings on the debt and preferred securities of PPL and its subsidiaries. Based on their respective reviews, the rating agencies may make certain ratings revisions.

The ratings of S&P, Moody's and Fitch are not a recommendation to buy, sell or hold any securities of PPL or its subsidiaries. Such ratings may be subject to revisions or withdrawal by the agencies at any time and should be evaluated independently of each other and any other rating that may be assigned to their securities.

The following table summarizes the credit ratings of PPL and its key financing subsidiaries at December 31, 2004:

		Moody's	S&P	Fitch
PPL
	Issuer Rating		BBB
	Senior Unsecured Debt	Baa3	BBB-	BBB
	Outlook	STABLE	STABLE	STABLE
PPL Energy Supply
	Issuer Rating		BBB
	Senior Unsecured Notes	Baa2	BBB	BBB+
	Commercial Paper	P-2	A-2	F2
	Outlook	STABLE	STABLE	STABLE
PPL Capital Funding
	Senior Unsecured Debt	Baa3	BBB-	BBB
	Subordinated Debt	Ba1	BBB-
	Medium -Term Notes	Baa3	BBB-	BBB
	Outlook	STABLE	STABLE	STABLE
PPL Electric
	Senior Unsecured/Issuer   Rating	Baa2	A-
	First Mortgage Bonds	Baa1	A-	A-
	Pollution Control Bonds (a)	Aaa	AAA
	Senior Secured Bonds	Baa1	A-	A-
	Commercial Paper	P-2	A-2	F2
	Preferred Stock	Ba1	BBB	BBB+
	Outlook	STABLE	NEGATIVE	STABLE
PPL Transition Bond Company
	Transition Bonds	Aaa	AAA	AAA
PPL Montana
	Pass -Through Certificates	Baa3	BBB-	BBB
	Outlook	STABLE	STABLE
WPDH Limited
	Issuer Rating	Baa3	BBB-
	Senior Unsecured Debt	Baa3	BBB-	BBB
	Short-term Debt		A-3
	Outlook	NEGATIVE	NEGATIVE	STABLE
WPD LLP
	Issuer Rating		BBB-
	Senior Unsecured Debt	Baa2	BBB-	BBB+
	Short-term Debt		A-3
	Preferred Stock	Baa3	BB	BBB
	Outlook	NEGATIVE	NEGATIVE	STABLE
WPD (South Wales)
	Issuer Rating		BBB+
	Senior Unsecured Debt	Baa1	BBB+	A-
	Short-term Debt		A-2	F1
	Outlook	STABLE	NEGATIVE	STABLE
WPD (South West)
	Issuer Rating	Baa1	BBB+
	Senior Unsecured Debt	Baa1	BBB+	A-
	Short-term Debt	P-2	A-2	F1
	Outlook	STABLE	NEGATIVE	STABLE

(a) Insured as to payment of principal and interest.

Rating Agency Actions in 2004

S&P

In May 2004, S&P affirmed its BBB ratings on both PPL and PPL Energy Supply and revised its outlook on both entities from negative to stable. S&P also affirmed its BBB- rating on PPL Montana's Pass-Through Certificates due 2020 and revised its outlook from negative to stable. At the same time, S&P affirmed its A-/A-2 rating and negative outlook on PPL Electric. Also, S&P indicated that the following ratings would remain unchanged following the aforementioned revision to PPL's outlook:

• WPDH Limited of BBB-/Negative/A-3;
• WPD (South West) of BBB+/Negative/A-2; and
• WPD (South Wales) of BBB+/Negative/A-2.

In December 2004, S&P confirmed its A-2 rating on PPL Energy Supply's reactivated commercial paper program.

Moody's

In March 2004, Moody's confirmed its P-2 rating on PPL Electric's reactivated commercial paper program.

In December 2004, Moody's confirmed its P-2 rating on PPL Energy Supply's reactivated commercial paper program.

Also in December 2004, Moody's downgraded the senior unsecured long-term debt ratings of WPDH Limited from Baa2 to Baa3 with a negative outlook. At the same time, Moody's changed the outlook on the senior unsecured long-term debt rating of WPD LLP from stable to negative and affirmed its Baa1 senior unsecured long-term ratings of WPD (South West) and WPD (South Wales). The outlook on WPD (South West) and WPD (South Wales) is stable.

Moody's indicated that its ratings actions with respect to WPD reflect its concern that WPDH Limited has an adjusted net debt/Regulatory Asset Base (RAB) ratio in excess of 95% after pension deficits that are not recoverable through the U.K. regulatory process are taken into account. Moody's also indicated that the ratings reflect its expectation that adjusted net debt/RAB will fall to less than 90% during the course of 2005.

Fitch

In March 2004, Fitch confirmed its F2 rating on PPL Electric's reactivated commercial paper program.

In December 2004, Fitch confirmed its F2 rating on PPL Energy Supply's reactivated commercial paper program.

Ratings Triggers

PPL Energy Supply's 2.625% Convertible Senior Notes due 2023 are convertible upon the occurrence of certain events, including if the long-term credit ratings assigned to the notes by S&P and Moody's are lower than BB and Ba2, or either S&P or Moody's no longer rates the notes. The terms of the notes were modified in November 2004 to, among other things, require cash settlement of the principal amount upon conversion of the notes. These modifications were made in response to the FASB's ratification of EITF Issue 04-8, "The Effect of Contingently Convertible Instruments on Diluted Earnings per Share." See Note 4 to the Financial Statements for more information concerning these modifications, Note 8 for a discussion of the consent solicitation that effected these modifications and Note 23 for a discussion of EITF Issue 04-8.

PPL and its respective subsidiaries do not have additional material liquidity exposures caused by a ratings downgrade below "investment grade" that would accelerate the due dates of borrowings. However, if PPL and PPL Energy Supply's debt ratings were below investment grade at December 31, 2004, PPL and PPL Energy Supply would have had to post an additional $118 million of collateral to counterparties.

Subsequent Ratings Events

In January 2005, S&P affirmed PPL Electric's A-/A-2 corporate credit ratings and has favorably revised its outlook on the company to stable from negative following the authorization of a $194 million rate increase by the PUC. S&P indicated that the outlook revision reflects its expectations that the rate increase, effective January 1, 2005, will allow for material improvement in PPL Electric's financial profile, which had lagged S&P's expectations in recent years. S&P indicated that the stable outlook reflects its expectations that PPL Electric "will rapidly improve and then maintain financial metrics more consistent with its ratings." S&P indicated that it expects PPL Electric's operations to remain stable through the expiration of the PLR agreement.

Additionally, in January 2005, S&P revised its outlooks on the WPD companies to stable from negative. S&P attributes this positive change to financial profile improvements resulting from the final regulatory outcome published by Ofgem in November 2004. At the same time, S&P affirmed the WPD companies' long-term and short-term credit ratings.

Also in January 2005, Fitch announced that it downgraded the WPD companies' senior unsecured credit ratings by one notch as follows:

• WPDH Limited to BBB- from BBB
• WPD LLP to BBB from BBB+
• WPD (South West) and WPD (South Wales) to BBB+/F2 from A-/F1

Fitch has a stable outlook on all of the WPD companies.

Fitch stated that its downgrade was prompted by the high level of pension adjusted leverage at WPD. Fitch acknowledged that WPD's funding plan should reduce its pension deficit over time and it expects WPD to proceed with its de-leveraging program. However, Fitch indicated that it is not certain enough, due to the unpredictability in future pension valuations, that pension adjusted leverage will support a BBB rating at WPDH Limited. Fitch indicated that WPD (South West) and WPD (South Wales) have been downgraded to maintain a two-notch differential with WPDH Limited because Fitch does not believe that WPD's financial ring-fencing is restrictive enough to support a three-notch differential.

Dividend Policy

In December 2004, PPL's Board of Directors adopted a dividend policy that provides for growing the common stock dividend in the future at a rate that exceeds the projected rate of growth in earnings per share from ongoing operations. Earnings from ongoing operations exclude unusual items. PPL plans to pursue this policy until the dividend payout ratio reaches the 50% level, subject to the Board of Directors' quarterly dividend declarations based on the company's financial position and other relevant considerations at the time.

Off-Balance Sheet Arrangements

PPL provides guarantees for certain affiliate financing arrangements that enable certain transactions. Some of the guarantees contain financial and other covenants that, if not met, would limit or restrict the affiliates' access to funds under these financing arrangements, require early maturity of such arrangements or limit the affiliates' ability to enter into certain transactions. At this time, PPL believes that these covenants will not limit access to the relevant funding sources.

PPL has entered into certain guarantee agreements that are within the scope of FIN 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, an Interpretation of FASB Statements No. 5, 57, and 107 and Rescission of FASB Interpretation No. 34." See Note 14 to the Financial Statements for a discussion on guarantees.

Risk Management - Energy Marketing & Trading and Other

Market Risk

Background

Market risk is the potential loss PPL may incur as a result of price changes associated with a particular financial or commodity instrument. PPL is exposed to market risk from:

• commodity price risk for energy and energy-related products associated with the sale of electricity, the purchase of fuel for the generating assets and energy trading activities;
• interest rate risk associated with variable-rate debt and the fair value of fixed-rate debt used to finance operations, as well as the fair value of debt securities invested in by PPL's nuclear decommissioning fund;
• foreign currency exchange rate risk associated with investments in affiliates in Latin America and Europe, as well as purchases of equipment in currencies other than U.S. dollars; and
• equity securities price risk associated with the fair value of equity securities invested in by PPL's nuclear decommissioning fund.

PPL has a risk management policy approved by its Board of Directors to manage market risk and counterparty credit risk. (Credit risk is discussed below.) The RMC, comprised of senior management and chaired by the Vice President-Risk Management, oversees the risk management function. Key risk control activities designed to monitor compliance with risk policies and detailed programs include, but are not limited to, credit review and approval, validation of transactions and market prices, verification of risk and transaction limits, sensitivity analyses, and daily portfolio reporting, including open positions, mark-to-market valuations and other risk measurement metrics.

The forward-looking information presented below provides estimates of what may occur in the future, assuming certain adverse market conditions, due to reliance on model assumptions. Actual future results may differ materially from those presented. These disclosures are not precise indicators of expected future losses, but only indicators of reasonably possible losses.

Contract Valuation

PPL utilizes forward contracts, futures contracts, options, swaps and tolling agreements as part of its risk management strategy to minimize unanticipated fluctuations in earnings caused by commodity price, interest rate and foreign currency volatility. When available, quoted market prices are used to determine the fair value of a commodity or financial instrument. This may include exchange prices, the average mid-point bid/ask spreads obtained from brokers, or an independent valuation by an external source, such as a bank. However, market prices for energy or energy-related contracts may not be readily determinable because of market illiquidity. If no active trading market exists, contracts are valued using internally developed models, which are then reviewed by an independent, internal group. Although PPL believes that its valuation methods are reasonable, changes in the underlying assumptions could result in significantly different values and realization in future periods.

To record derivatives at their fair value, PPL discounts the forward values using LIBOR. Additionally, PPL reduces derivative assets' carrying values to recognize differences in counterparty credit quality and potential illiquidity in the market:

• The credit adjustment takes into account the probability of default, as calculated by an independent service, for each counterparty that has an out-of-the money position with PPL.

• The liquidity adjustment takes into account the fact that it may not be appropriate to value contracts at the midpoint of the bid/ask spread. PPL might have to accept the "bid" price if PPL wanted to close an open sales position or PPL might have to accept the "ask" price if PPL wanted to close an open purchase position.

Accounting and Reporting

To account for and report on contracts entered into to manage market risk, PPL follows the provisions of SFAS 133, "Accounting for Derivative Instruments and Hedging Activities," as amended by SFAS 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities," and SFAS 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities," and interpreted by DIG issues (together, "SFAS 133"), EITF 02-3, "Issues Involved in Accounting for Derivative Contracts Held for Trading Purposes and Contracts Involved in Energy Trading and Risk Management Activities," and EITF 03-11, "Reporting Realized Gains and Losses on Derivative Instruments That Are Subject to FASB Statement No. 133 and Not 'Held for Trading Purposes' as Defined in Issue No. 02-3." SFAS 133 requires that all derivative instruments be recorded at fair value on the balance sheet as an asset or liability (unless they meet SFAS 133's criteria for exclusion) and that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met.

In April 2003, the FASB issued SFAS 149, which amends and clarifies SFAS 133 to improve financial accounting and reporting for derivative instruments and hedging activities. To ensure that contracts with comparable characteristics are accounted for similarly, SFAS 149 clarified the circumstances under which a contract with an initial net investment meets the characteristics of a derivative, clarified when a derivative contains a financing component, amended the definition of an "underlying" and amended certain other existing pronouncements. Additionally, SFAS 149 placed additional limitations on the use of the normal purchase or normal sale exception. SFAS 149 was effective for contracts entered into or modified and for hedging relationships designated after June 30, 2003, except certain provisions relating to forward purchases or sales of when-issued securities or other securities that did not yet exist. PPL adopted SFAS 149 as of July 1, 2003. The adoption of SFAS 149 did not have a significant impact on PPL.

PPL adopted the final provisions of EITF 02-3 during the fourth quarter of 2002. As such, PPL now reflects its net realized and unrealized gains and losses associated with all derivatives that are held for trading purposes in the "Net energy trading margins" line on the Statement of Income. Non-derivative contracts that met the definition of energy trading activities as defined by EITF 98-10, "Accounting for Energy Trading and Risk Management Activities" are reflected in the financial statements using the accrual method of accounting. Under the accrual method of accounting, unrealized gains and losses are not reflected in the financial statements. Prior periods were reclassified. No cumulative effect adjustment was required upon adoption.

PPL adopted the final provisions of EITF 03-11 prospectively as of October 1, 2003. As a result of this adoption, non-trading bilateral sales of electricity at major market delivery points are netted with purchases that offset the sales at those same delivery points. A major market delivery point is any delivery point with liquid pricing available. See Note 17 to the Financial Statements for the impact of the adoption of EITF 03-11.

PPL's short-term derivative contracts are recorded as "Price risk management assets" and "Price risk management liabilities" on the Balance Sheet. Long-term derivative contracts are included in "Regulatory and Other Noncurrent Assets - Other" and "Deferred Credits and Other Noncurrent Liabilities - Other."

Accounting Designation

Energy contracts that do not qualify as derivatives receive accrual accounting. For energy contracts that meet the definition of a derivative, the circumstances and intent existing at the time that energy transactions are entered into determine their accounting designation. In addition to energy-related transactions, PPL enters into financial interest rate and foreign currency swap contracts to hedge interest expense associated with both existing and anticipated debt issuances. PPL also enters into foreign currency swap contracts to hedge the fair value of firm commitments denominated in foreign currency and net investments in foreign operations. As with energy transactions, the circumstances and intent existing at the time of the transaction determine a contract's accounting designation. These designations are verified by a separate internal group on a daily basis. See Note 17 to the Financial Statements for a summary of the guidelines that have been provided to the traders who are responsible for contract designation for derivative energy contracts due to the adoption of SFAS 149.

Commodity Price Risk (Non-trading)

Commodity price risk is one of PPL's most significant risks due to the level of investment that PPL maintains in its generation assets, coupled with the volatility of prices for energy and energy-related products. Several factors influence price levels and volatilities. These factors include, but are not limited to, seasonal changes in demand, weather conditions, available generating assets within regions, transportation availability and reliability within and between regions, market liquidity, and the nature and extent of current and potential federal and state regulations. To hedge the impact of market price fluctuations on PPL's energy-related assets, liabilities and other contractual arrangements, PPL EnergyPlus sells and purchases physical energy at the wholesale level under FERC market-based tariffs throughout the U.S. and enters into financial exchange-traded and over-the-counter contracts. Because PPL owns or controls generating assets, the majority of PPL's energy transactions qualify for accrual or hedge accounting.

Within PPL's hedge portfolio, the decision to enter into energy contracts hinges on the expected value of PPL's generation. To address this risk, PPL takes a conservative approach in determining the number of MWhs that are available to be sold forward. In this regard, PPL reduces the maximum potential output that a plant may produce by three factors - planned maintenance, unplanned outages and economic conditions. The potential output of a plant is first reduced by the amount of unavailable generation due to planned maintenance on a particular unit. Another reduction, representing the unplanned outage rate, is the amount of MWhs that historically is not produced by a plant due to such factors as equipment breakage. Finally, the potential output of certain plants (like peaking units) are reduced because their higher cost of production will not allow them to economically run during all hours.

PPL's non-trading portfolio also includes full requirements energy contracts. The net obligation to serve these contracts changes minute by minute. PPL analyzes historical on-peak and off-peak usage patterns, as well as spot prices and weather patterns, to determine a monthly level of a block of electricity that best fits the usage patterns in order to minimize earnings volatility. On a forward basis, PPL reserves a block amount of generation for full requirements energy contracts that is expected to be the best match with their anticipated usage patterns and energy peaks. Anticipated usage patterns and peaks are affected by expected load growth, regional economic drivers and seasonality.

PPL's commodity derivative contracts that qualify for hedge accounting treatment mature at various times through 2010. The following chart sets forth PPL's net fair market value of these contracts as of December 31:

	Gains (Losses)
	2004			2003
Fair value of contracts outstanding at the beginning of the period	$	86		$	63
Contracts realized or otherwise settled during the period		(66	)		(94	)
Fair value of new contracts at inception
Other changes in fair values		(31	)		117
Fair value of contracts outstanding at the end of the period	$	(11	)	$	86

The following chart segregates estimated fair values of PPL's commodity derivative contracts that qualify for hedge accounting treatment at December 31, 2004, based on whether the fair values are determined by quoted market prices or other more subjective means.

	Fair Value of Contracts at Period-End Gains (Losses)
	Maturity Less Than 1 Year		Maturity 1-3 Years			Maturity 3-5 Years			Maturity in Excess of 5 Years			Total Fair Value
Source of Fair Value
Prices actively quoted	$	4	$	3								$	7
Prices provided by other external sources		14		(21	)	$	(10	)	$	(1	)		(18	)
Prices based on models and other valuation methods
Fair value of contracts outstanding at the end of the period	$	18	$	(18	)	$	(10	)	$	(1	)	$	(11	)

The "Prices actively quoted" category includes the fair value of exchange-traded natural gas futures contracts quoted on the New York Mercantile Exchange (NYMEX). The NYMEX has currently quoted prices through 2010.

The "Prices provided by other external sources" category includes PPL's forward positions and options in natural gas and power and natural gas basis swaps at points for which over-the-counter (OTC) broker quotes are available. The fair value of electricity positions recorded above use the midpoint of the bid/ask spreads obtained through OTC brokers. On average, OTC quotes for forwards and swaps of natural gas and power extend one and two years into the future.

The "Prices based on models and other valuation methods" category includes the value of transactions for which an internally developed price curve was constructed as a result of the long-dated nature of the transaction or the illiquidity of the market point, or the value of options not quoted by an exchange or OTC broker. Additionally, this category includes "strip" transactions whose prices are obtained from external sources and then modeled to monthly prices as appropriate.

Because of PPL's efforts to hedge the value of the energy from its generation assets, PPL sells electricity and buys fuel on a forward basis, resulting in open contractual positions. If PPL were unable to deliver firm capacity and energy or to accept delivery of fuel under its agreements, under certain circumstances it could be required to pay damages. These damages would be based on the difference between the market price and the contract price of the commodity. Depending on price volatility in the wholesale energy markets, such damages could be significant. Extreme weather conditions, unplanned power plant outages, transmission disruptions, non-performance by counterparties (or their counterparties) with which it has energy contracts and other factors could affect PPL's ability to meet its obligations, or cause significant increases in the market price of replacement energy. Although PPL attempts to mitigate these risks, there can be no assurance that it will be able to fully meet its firm obligations, that it will not be required to pay damages for failure to perform, or that it will not experience counterparty non-performance in the future.

As of December 31, 2004, PPL estimated that a 10% adverse movement in market prices across all geographic areas and time periods would have decreased the value of the commodity contracts in its non-trading portfolio by approximately $165 million, compared to a decrease of $146 million at December 31, 2003. However, the change in the value of the non-trading portfolio would have been substantially offset by an increase in the value of the underlying commodity, the electricity generated, because these contracts serve to reduce the market risk inherent in the generation of electricity. Additionally, the value of PPL's unsold generation would be improved. Because PPL's electricity portfolio is generally in a net sales position, the adverse movement in prices is usually an increase in prices. Conversely, because PPL's commodity fuels portfolio is generally in a net purchase position, the adverse movement in prices is usually a decrease in prices. If both of these scenarios happened, the implied margins for the unsold generation would increase.

In accordance with its marketing strategy, PPL does not completely hedge its generation output or fuel requirements. PPL estimates that for its entire portfolio, including all generation and physical and financial energy positions, a 10% adverse change in power prices across all geographic zones and time periods will decrease expected 2005 gross margins by about $2 million. Similarly, a 10% adverse movement in all fossil fuel prices will decrease 2005 gross margins by $5 million.

PPL also executes energy contracts to take advantage of market opportunities. As a result, PPL may at times create a net open position in its portfolio that could result in significant losses if prices do not move in the manner or direction anticipated. The margins from these trading activities are shown in the Statement of Income as "Net energy trading margins."

Commodity Price Risk (Trading)

PPL's trading contracts mature at various times through 2006. The following chart sets forth PPL's net fair market value of trading contracts as of December 31:

	Gains (Losses)
	2004			2003
Fair value of contracts outstanding at the beginning of the period	$	3		$	(6	)
Contracts realized or otherwise settled during the period		(12	)		16
Fair value of new contracts at inception		1			2
Other changes in fair values		18			(9	)
Fair value of contracts outstanding at the end of the period	$	10		$	3

PPL will reverse approximately $3 million of the $10 million unrealized trading gains over the first three months of 2005 as the transactions are realized.

The following chart segregates estimated fair values of PPL's trading portfolio at December 31, 2004, based on whether the fair values are determined by quoted market prices or other more subjective means.

	Fair Value of Contracts at Period-End Gains (Losses)
	Maturity Less Than 1 Year			Maturity 1-3 Years		Maturity 3-5 Years	Maturity in Excess of 5 Years	Total Fair Value
Source of Fair Value
Prices actively quoted	$	3						$	3
Prices provided by other external sources		6		$	4				10
Prices based on models and other valuation methods		(3	)						(3	)
Fair value of contracts outstanding at the end of the period	$	6		$	4			$	10

See "Commodity Price Risk (Non-trading)" for information on the various sources of fair value.

As of December 31, 2004, PPL estimated that a 10% adverse movement in market prices across all geographic areas and time periods would have decreased the value of the commodity contracts in its trading portfolio by $5 million, compared to a decrease of $3 million at December 31, 2003.

Interest Rate Risk

PPL and its subsidiaries have issued debt to finance their operations. PPL utilizes various financial derivative products to adjust the mix of fixed and floating interest rates in its debt portfolio, adjust the duration of its debt portfolio and lock in U.S. Treasury rates (and interest rate spreads over treasuries) in anticipation of future financing, when appropriate. Risk limits under the risk management program are designed to balance risk exposure to volatility in interest expense and changes in the fair value of PPL's debt portfolio due to changes in the absolute level of interest rates.

At December 31, 2004, PPL's potential annual exposure to increased interest expense, based on a 10% increase in interest rates, was estimated at $4 million, compared to a $2 million exposure at December 31, 2003.

PPL is also exposed to changes in the fair value of its domestic and international debt portfolios. At December 31, 2004, PPL estimated that its potential exposure to a change in the fair value of its debt portfolio, through a 10% adverse movement in interest rates, was approximately $216 million, compared to $212 million at December 31, 2003.

PPL utilizes various risk management instruments to reduce its exposure to adverse interest rate movements for future anticipated financing. While PPL is exposed to changes in the fair value of these instruments, they are designed such that any economic loss in value should generally be offset by interest rate savings at the time the future anticipated financing is completed. At December 31, 2004, PPL estimated that its potential exposure to a change in the fair value of these instruments, through a 10% adverse movement in interest rates, was approximately $2 million, compared to a $6 million exposure at December 31, 2003.

PPL also utilizes various risk management instruments to adjust the mix of fixed and floating interest rates in its debt portfolio. While PPL is exposed to changes in the fair value of these instruments, any change in market value is recorded with an equal and offsetting change in the value of the debt being hedged. At December 31, 2004, PPL estimated that its potential exposure to a change in the fair value of these instruments, through a 10% adverse movement in interest rates, was approximately $19 million, compared to a $28 million exposure at December 31, 2003.

Foreign Currency Risk

PPL is exposed to foreign currency risk, primarily through investments in affiliates in Latin America and Europe. In addition, PPL may make purchases of equipment in currencies other than U.S. dollars.

PPL has adopted a foreign currency risk management program designed to hedge certain foreign currency exposures, including firm commitments, recognized assets or liabilities and net investments. In addition, PPL enters into financial instruments to protect against foreign currency translation risk.

PPL executed net forward sale transactions for £13.7 million to hedge a portion of its net investment in WPDH Limited. The estimated value of these agreements as of December 31, 2004, was $2 million, being the amount PPL would pay to terminate the transactions.

WPDH Limited held a net position in cross-currency swaps totaling $1.1 billion to hedge the interest payments and value of its U.S. dollar-denominated bonds. The estimated value of this position at December 31, 2004, being the amount PPL would pay to terminate it, including accrued interest, was $274 million.

On the Statement of Income, gains and losses associated with hedges of interest payments denominated in foreign currencies are reflected in "Interest Expense." Gains and losses associated with the purchase of equipment are reflected in "Depreciation." Gains and losses associated with net investment hedges remain in "Accumulated other comprehensive loss" on the Balance Sheet until the investment is disposed.

Nuclear Decommissioning Fund - Securities Price Risk

In connection with certain NRC requirements, PPL Susquehanna maintains trust funds to fund certain costs of decommissioning the Susquehanna station. As of December 31, 2004, these funds were invested primarily in domestic equity securities and fixed-rate, fixed-income securities and are reflected at fair value on PPL's Balance Sheet. The mix of securities is designed to provide returns to be used to fund Susquehanna's decommissioning and to compensate for inflationary increases in decommissioning costs. However, the equity securities included in the trusts are exposed to price fluctuation in equity markets, and the values of fixed-rate, fixed-income securities are exposed to changes in interest rates. PPL Susquehanna actively monitors the investment performance and periodically reviews asset allocation in accordance with its nuclear decommissioning trust policy statement. At December 31, 2004, a hypothetical 10% increase in interest rates and a 10% decrease in equity prices would have resulted in an estimated $30 million reduction in the fair value of the trust assets, as compared to a $24 million reduction at December 31, 2003. See Note 6 to the Financial Statements for more information regarding the nuclear decommissioning trust funds.

Credit Risk

Credit risk relates to the risk of loss that PPL would incur as a result of non-performance by counterparties of their contractual obligations. PPL maintains credit policies and procedures with respect to counterparties (including requirements that counterparties maintain certain credit ratings criteria) and requires other assurances in the form of credit support or collateral in certain circumstances in order to limit counterparty credit risk. However, PPL has concentrations of suppliers and customers among electric utilities, natural gas distribution companies and other energy marketing and trading companies. These concentrations of counterparties may impact PPL's overall exposure to credit risk, either positively or negatively, in that counterparties may be similarly affected by changes in economic, regulatory or other conditions. As discussed above in "Contract Valuation," PPL records certain non-performance reserves to reflect the probability that a counterparty with contracts that are out of the money (from the counterparty's standpoint) will default in its performance, in which case PPL would have to sell into a lower-priced market or purchase from a higher-priced market. These reserves are reflected in the fair value of assets recorded in "Price risk management assets" on the Balance Sheet. PPL also records reserves to reflect the probability that a counterparty will not make payments for deliveries PPL has made but not yet billed. These reserves are reflected in "Unbilled revenues" on the Balance Sheet. PPL has also established a reserve with respect to certain sales to the California ISO for which PPL has not yet been paid, as well as a reserve related to PPL's exposure as a result of the Enron bankruptcy, which are reflected in "Accounts receivable" on the Balance Sheet. See Notes 14 and 17 to the Financial Statements.

Related Party Transactions

PPL is not aware of any material ownership interests or operating responsibility by senior management of PPL, PPL Energy Supply or PPL Electric in outside partnerships, including leasing transactions with variable interest entities, or other entities doing business with PPL.

For additional information on related party transactions, see Note 15 to the Financial Statements.

Capital Expenditure Requirements

The schedule below shows PPL's current capital expenditure projections for the years 2005-2009 and actual spending for the year 2004:

			Actual		Projected
			2004		2005		2006		2007		2008		2009
Construction expenditures (a) (b)
	Generating facilities		$	156	$	180	$	231	$	233	$	170	$	163
	Transmission and distribution facilities			461		481		505		546		536		557
	Environmental			23		43		136		265		230		172
	Other			43		59		57		40		19		15
		Total Construction Expenditures		683		763		929		1,084		955		907
Nuclear fuel				58		68		69		76		76		78
		Total Capital Expenditures	$	741	$	831	$	998	$	1,160	$	1,031	$	985

(a)	Construction expenditures include AFUDC and capitalized interest, which are expected to be less than $19 million in each of the years 2005-2009.
(b)	This information excludes any potential investments by PPL Global and PPL Development Company for new projects.

PPL's capital expenditure projections for the years 2005-2009 total about $5.0 billion. Capital expenditure plans are revised periodically to reflect changes in market and asset regulatory conditions. PPL also leases vehicles, personal computers and other equipment, as described in Note 10 to the Financial Statements. See Note 14 for additional information regarding potential capital expenditures for environmental projects.

Acquisitions, Development and Divestitures

From time-to-time, PPL and its subsidiaries are involved in negotiations with third parties regarding acquisitions, joint ventures and other arrangements which may or may not result in definitive agreements. See Note 9 to the Financial Statements for information regarding recent acquisitions and development activities.

At December 31, 2004, PPL Global had investments in foreign facilities, including consolidated investments in WPD, Emel, EC and others. See Note 3 to the Financial Statements for information on unconsolidated investments accounted for under the equity method.

In connection with an on-going review of its non-core international minority ownership investments, PPL Global sold its interest in CGE in 2004. See Note 9 to the Financial Statements for additional information.

PPL is currently planning incremental capacity increases of 255 MW at several existing domestic generating facilities.

PPL is continuously reexamining development projects based on market conditions and other factors to determine whether to proceed with these projects, sell them, cancel them, expand them, execute tolling agreements or pursue other opportunities.

Environmental Matters

See Note 14 to the Financial Statements for a discussion of environmental matters.

Competition

See "Item 1. Business - Competition," for a discussion of competitive factors affecting PPL.

New Accounting Standards

See Note 23 to the Financial Statements for information on new accounting standards adopted in 2004 or pending adoption.

Application of Critical Accounting Policies

PPL's financial condition and results of operations are impacted by the methods, assumptions and estimates used in the application of critical accounting policies. The following accounting policies are particularly important to the financial condition or results of operations of PPL, and require estimates or other judgments of matters inherently uncertain. Changes in the estimates or other judgments included within these accounting policies could result in a significant change to the information presented in the financial statements. (These accounting policies are also discussed in Note 1 to the Financial Statements.) PPL's senior management has reviewed these critical accounting policies, and the estimates and assumptions regarding them, with its Audit Committee. In addition, PPL's senior management has reviewed the following disclosures regarding the application of these critical accounting policies with the Audit Committee.

1) Price Risk Management

See "Risk Management - Energy Marketing & Trading and Other" in Financial Condition.

2) Pension and Other Postretirement Benefits

PPL follows the guidance of SFAS 87, "Employers' Accounting for Pensions," and SFAS 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," when accounting for pension and other postretirement benefits. Under these accounting standards, assumptions are made regarding the valuation of benefit obligations and the performance of plan assets. Delayed recognition of differences between actual results and expected or estimated results is a guiding principle of these standards. This delayed recognition of actual results allows for a smoothed recognition of changes in benefit obligations and plan performance over the working lives of the employees who benefit under the plans. The primary assumptions are as follows:

• Discount Rate - The discount rate is used in calculating the present value of benefits, which is based on projections of benefit payments to be made in the future.

• Expected Return on Plan Assets - Management projects the future return on plan assets considering prior performance, but primarily based upon the plans' mix of assets and expectations for the long-term returns on those asset classes. These projected returns reduce the net benefit costs PPL records currently.

• Rate of Compensation Increase - Management projects employees' annual pay increases, which are used to project employees' pension benefits at retirement.

• Health Care Cost Trend Rate - Management projects the expected increases in the cost of health care.

In selecting discount rates, PPL considers fixed-income security yield rates. At December 31, 2004, PPL decreased the discount rate for its domestic plans from 6.25% to 5.75% as a result of decreased domestic fixed-income security returns. The discount rate remained at 5.50% at December 31, 2004, for PPL's international pension plans.

In selecting an expected return on plan assets, PPL considers tax implications, past performance and economic forecasts for the types of investments held by the plans. At December 31, 2004, PPL's expected return on plan assets remained at 9.0% for its domestic pension plans and increased to 7.9% from 7.8% for its other postretirement benefit plans. For its international plans, PPL maintained 8.30% as the expected return on plan assets at December 31, 2004.

In selecting a rate of compensation increase, PPL considers past experience in light of movements in inflation rates. At December 31, 2004, PPL's rate of compensation increase remained at 4.0% for its domestic plans. For its international plans, PPL's rate of compensation increase remained at 3.75% at December 31, 2004.

In selecting health care cost trend rates, PPL considers past performance and forecasts of health care costs. At December 31, 2004, PPL's health care cost trend rates were 10% for 2005, gradually declining to 5.0% for 2010.

A variance in the assumptions listed above could have a significant impact on projected benefit obligations, accrued pension and other postretirement benefit liabilities, reported annual net periodic pension and other postretirement benefit cost and other comprehensive income (OCI). The following chart reflects the sensitivities in the 2004 Financial Statements associated with a change in certain assumptions. While the chart below reflects either an increase or decrease in each assumption, the inverse of this change would impact the projected benefit obligation, accrued pension and other postretirement benefit liabilities, reported annual net periodic pension and other postretirement benefit cost and OCI by a similar amount in the opposite direction. Each sensitivity below reflects an evaluation of the change based solely on a change in that assumption.

	Increase (Decrease)
Actuarial Assumption	Change in Assumption		Impact on Obligation		Impact on Liabilities (a)		Impact on Cost		Impact on OCI
Discount Rate		(0.25)%	$	191	$	7	$	7	$	108
Expected Return on Plan Assets		(0.25)%		N/A		11		11		(6	)
Rate of Compensation Increase		0.25%		31		5		5		(1	)
Health Care Cost Trend Rate (b)		1.0%		11		1		1		N/A

(a)	Excludes the impact of additional minimum liability.
(b)	Only impacts other postretirement benefits.

PPL's total net pension and other postretirement benefit obligation as of December 31, 2004, was $886 million. PPL recognized an aggregate net accrued pension and other postretirement benefit liability of $517 million on its Balance Sheet as of December 31, 2004. The total obligation is not fully reflected in the current financial statements due to the delayed recognition criteria of the accounting standards for these obligations.

In 2004, PPL recognized net periodic pension and other postretirement costs charged to operating expenses of $7 million. This amount represents a $6 million increase from 2003. This increase in expense was primarily due to the decrease in the discount rate at December 31, 2003, offset by decreased postretirement medical costs resulting from increased employee cost sharing.

As a result of the decrease in the assumed discount rate at December 31, 2004 for its domestic pension plans and the increase in the obligations for its international plans determined by their 2004 valuation, PPL was required to increase its recognized additional minimum pension liability. Recording the change in the additional minimum liability resulted in a $53 million increase to the pension-related charge to OCI, net of taxes, translation adjustment and unrecognized prior service costs, with no effect on net income. This charge increased the pension-related balance in OCI, which is a reduction to shareowners' equity, to $369 million at December 31, 2004. The charges to OCI will reverse in future periods if the fair value of trust assets exceeds the accumulated benefit obligation.

Refer to Note 12 to the Financial Statements for additional information regarding pension and other postretirement benefits.

3) Asset Impairment

PPL performs impairment analyses for long-lived assets, including intangibles, that are subject to depreciation or amortization in accordance with SFAS 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." PPL tests for impairment whenever events or changes in circumstances indicate that a long-lived asset's carrying value may not be recoverable. Examples of such events or changes in circumstances are:

• a significant decrease in the market price of an asset;
• a significant adverse change in the manner in which an asset is being used or in its physical condition;
• a significant adverse change in legal factors or in the business climate;
• an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of an asset;
• a current-period operating or cash flow loss combined with a history of losses or a forecast that demonstrates continuing losses; or
• a current expectation that, more likely than not, an asset will be sold or otherwise disposed of before the end of its previously estimated useful life.

For a long-lived asset, an impairment exists when the carrying value exceeds the sum of the estimated undiscounted cash flows expected to result from the use and eventual disposition of the asset. If the asset is impaired, an impairment loss is recorded to adjust the asset's carrying value to its estimated fair value.

In determining asset impairments, management must make significant judgments to estimate future cash flows, the useful lives of long-lived assets, the fair value of the assets and management's intent to use the assets. Changes in assumptions and estimates included within the impairment reviews could result in significantly different results than those identified and recorded in the financial statements. For determining fair value, the FASB has indicated that quoted market prices in active markets are the best evidence of fair value. However, when market prices are unavailable, other valuation techniques may be used. PPL has generally used a present value technique (i.e., discounted cash flow). Discounted cash flow is calculated by estimating future cash flow streams and applying appropriate discount rates to determine the present value of the cash flow streams.

PPL has determined that when alternative courses of action to recover the carrying value of a long-lived asset are being considered, it uses estimated cash flows from the most likely approach to assess impairment whenever one scenario is clearly the most likely outcome. If no scenario is clearly most likely, then a probability-weighted approach is used taking into consideration estimated cash flows from the alternative scenarios. For assets tested for impairment as of the balance sheet date, the estimates of future cash flows used in that test consider the likelihood of possible outcomes that existed at the balance sheet date, including the assessment of the likelihood of the future sale of the assets. That assessment made as of the balance sheet date is not revised based on events that occur after the balance sheet date.

During 2004, PPL and its subsidiaries evaluated certain gas-fired generation assets for impairment, as events and circumstances indicated that the carrying value of these assets may not be recoverable. PPL did not record an impairment of these gas-fired generation assets in 2004. For these impairment analyses, the most significant assumption was the estimate of future cash flows. PPL estimates future cash flows using information from its corporate business plan adjusted for any recent sales or purchase commitments. Key factors that impact cash flows include projected prices for electricity and gas as well as firm sales and purchase commitments. A 10% decrease in estimated future cash flows for certain gas-fired generation assets would have resulted in an impairment charge.

In June 2004, a subsidiary of PPL Generation agreed to sell the 450 MW Sundance power plant to Arizona Public Service Company, subject to the receipt of various state and federal regulatory approvals and customary closing conditions. At December 31, 2004, as a result of the significant regulatory approvals still needed to complete the sale, PPL management did not believe that it was more likely than not that the sale would be consummated and concluded that no impairment charge was required at that time. See Note 9 to the Financial Statements for additional information on the potential sale of Sundance.

PPL performs impairment analyses for goodwill in accordance with SFAS 142, "Goodwill and Other Intangible Assets." PPL performs an annual impairment test for goodwill, or more frequently if events or changes in circumstances indicate that the asset might be impaired.

SFAS 142 requires goodwill to be tested for impairment at the reporting unit level. PPL has determined its reporting units to be one level below its operating segments.

Goodwill is tested for impairment using a two-step approach. The first step of the goodwill impairment test compares the estimated fair value of a reporting unit with its carrying value, including goodwill. If the estimated fair value of a reporting unit exceeds its carrying value, goodwill of the reporting unit is considered not impaired. If the carrying value exceeds the estimated fair value of the reporting unit, the second step is performed to measure the amount of impairment loss, if any.

The second step requires a calculation of the implied fair value of goodwill. The implied fair value of goodwill is determined in the same manner as the amount of goodwill in a business combination. That is, the estimated fair value of a reporting unit is allocated to all of the assets and liabilities of that unit as if the reporting unit had been acquired in a business combination and the estimated fair value of the reporting unit was the price paid to acquire the reporting unit. The excess of the estimated fair value of a reporting unit over the amounts assigned to its assets and liabilities is the implied fair value of goodwill. The implied fair value of the reporting unit goodwill is then compared with the carrying value of that goodwill. If the carrying value exceeds the implied fair value, an impairment loss is recognized in an amount equal to that excess. The loss recognized cannot exceed the carrying value of the reporting unit's goodwill.

PPL completed its annual goodwill impairment test in the fourth quarter of 2004. This test did not require any second-step assessments and did not result in any impairments. PPL's most significant assumptions surrounding the goodwill impairment test relate to the estimates of reporting unit fair values. PPL estimated fair values primarily based upon discounted cash flows. Although a full two-step evaluation was not completed, a decrease in the forecasted cash flows of 10% or an increase of the discount rates by 25 basis points would have resulted in the carrying value of certain reporting units exceeding their estimated fair values, indicating a potential impairment of goodwill.

4) Leasing

PPL applies the provisions of SFAS 13, "Accounting for Leases," to all leasing transactions. In addition, PPL applies the provisions of numerous other accounting pronouncements issued by the FASB and the EITF that provide specific guidance and additional requirements related to accounting for various leasing arrangements. In general, there are two types of leases from a lessee's perspective: operating leases - leases accounted for off-balance sheet; and capital leases - leases capitalized on the balance sheet.

In accounting for leases, management makes various assumptions, including the discount rate, the fair market value of the leased assets and the estimated useful life, in determining whether a lease should be classified as operating or capital. Changes in these assumptions could result in the difference between whether a lease is determined to be an operating lease or a capital lease, thus significantly impacting the amounts to be recognized in the financial statements.

In addition to uncertainty inherent in management's assumptions, leasing transactions and the related accounting rules become increasingly complex when they involve: real estate and/or related integral equipment; sale/leaseback accounting (leasing transactions where the lessee previously owned the leased assets); synthetic leases (leases that qualify for operating lease treatment for book accounting purposes and financing treatment for tax accounting purposes); and lessee involvement in the construction of leased assets.

At December 31, 2004, PPL continued to participate in a significant sale/leaseback transaction. In July 2000, PPL Montana sold its interest in the Colstrip generating plant to owner lessors who are leasing the assets back to PPL Montana under four 36-year operating leases. This transaction is accounted for as an operating lease in accordance with current rules related to sale/leaseback arrangements. If for any reason this transaction did not meet the requirements for off-balance sheet operating lease treatment as a sale/leaseback, PPL would have recorded approximately $290 million of additional assets and approximately $331 million of additional liabilities on its balance sheet at December 31, 2004, and would have recorded additional expenses currently estimated at $8 million, after-tax, in 2004.

See Note 10 to the Financial Statements for additional information related to operating leases.

5) Loss Accruals

PPL periodically accrues losses for the estimated impacts of various conditions, situations or circumstances involving uncertain outcomes. These events are called "contingencies," and PPL's accounting for such events is prescribed by SFAS 5, "Accounting for Contingencies." SFAS 5 defines a contingency as "an existing condition, situation, or set of circumstances involving uncertainty as to possible gain or loss to an enterprise that will ultimately be resolved when one or more future events occur or fail to occur."

For loss contingencies, the loss must be accrued if (1) information is available that indicates it is "probable" that the loss has been incurred, given the likelihood of the uncertain future events and (2) the amount of the loss can be reasonably estimated. FASB defines "probable" as cases in which "the future event or events are likely to occur." SFAS 5 does not permit the accrual of contingencies that might result in gains. PPL continuously assesses potential loss contingencies for environmental remediation, litigation claims, income taxes, regulatory penalties and other events.

PPL also has accrued estimated losses on long-term purchase commitments when significant events have occurred. For example, estimated losses were accrued when long-term purchase commitments were assumed under asset acquisition agreements and when PPL Electric's generation business was deregulated. Under regulatory accounting, PPL Electric recorded the above-market cost of energy purchases from NUGs as part of its purchased power costs on an as-incurred basis, since these costs were recovered in regulated rates. When the generation business was deregulated, the estimated loss associated with these long-term purchase commitments to make above-market NUG purchases was recorded because PPL Electric was committed to purchase electricity at above market prices but it could no longer recover these costs in regulated rates.

The accounting aspects of estimated loss accruals include: (1) the initial identification and recording of the loss; (2) the determination of triggering events for reducing a recorded loss accrual; and (3) the on-going assessment as to whether a recorded loss accrual is sufficient. All three aspects of accounting for loss accruals - the initial identification and recording of a probable loss, the identification of triggering events to reduce the loss accrual, and the ongoing assessment of the sufficiency of a recorded loss accrual - require significant judgment by PPL's management.

Initial Identification and Recording of the Loss Accrual

PPL uses its internal expertise and outside experts (such as lawyers, tax specialists and engineers), as necessary, to help estimate the probability that a loss has been incurred and the amount (or range) of the loss.

PPL has identified certain events which could give rise to a loss, but which do not meet the conditions for accrual under SFAS 5. SFAS 5 requires disclosure, but not a recording, of potential losses when it is "reasonably possible" that a loss has been incurred. The FASB defines "reasonably possible" as cases in which "the chance of the future event or events occurring is more than remote but less than likely." See Note 14 to the Financial Statements for disclosure of potential loss contingencies, most of which have not met the criteria for accrual under SFAS 5.

Reducing Recorded Loss Accruals

When an estimated loss is accrued, PPL identifies, where applicable, the triggering events for subsequently reducing the loss accrual. The triggering events generally occur when the contingency has been resolved and the actual loss is incurred, or when the risk of loss has diminished or been eliminated. The following are some of the triggering events that provide for the reduction of certain recorded loss accruals:

• Certain loss accruals are systematically reduced based on the expiration of contract terms. An example of this is the loss accrual for above-market NUG purchase commitments, which is described below. This loss accrual is being reduced over the lives of the NUG purchase contracts.

• Allowances for excess or obsolete inventory are reduced as the inventory items are pulled from the warehouse shelves and sold as scrap or otherwise disposed.

• Allowances for uncollectible accounts are reduced when accounts are written off after prescribed collection procedures have been exhausted or when underlying amounts are ultimately collected.

• Environmental and other litigation contingencies are reduced when the contingency is resolved and PPL makes actual payments or the loss is no longer considered probable.

On-Going Assessment of Recorded Loss Accruals

PPL reviews its loss accruals on a regular basis to assure that the recorded potential loss exposures are sufficient. This involves on-going communication and analyses with internal and external legal counsel, engineers, tax specialists, operation management and other parties.

The largest loss accrual on PPL's balance sheet, and the loss accrual that changed most significantly in 2004, was for an impairment of above-market NUG purchase commitments. This loss accrual reflects the estimated difference between the above-market contract terms, under the purchase commitments, and the fair value of the electricity to be purchased. This loss accrual was originally recorded at $854 million in 1998, when PPL Electric's generation business was deregulated. This loss accrual was transferred to PPL EnergyPlus in the July 1, 2000, corporate realignment. The above-market loss accrual was $279 million at December 31, 2004.

When the loss accrual related to NUG purchases was recorded in 1998, PPL Electric established the triggering events for when the loss accrual would be reduced. A schedule was established to reduce the liability based on projected purchases over the lives of the NUG contracts. All but one of the NUG contracts expire by 2009, with the last one ending in 2014. PPL EnergyPlus reduces the above-market NUG liability based on the aforementioned schedule. As PPL EnergyPlus reduces the liability for the above-market NUG purchases, it offsets the actual cost of NUG purchases, thereby bringing the net power purchase expense more in line with market prices.

PPL EnergyPlus assessed the remaining $279 million above-market liability at December 31, 2004, comparing the projected electricity purchases under the pricing terms of the NUG contracts with the purchases assuming current projected market prices for the energy. This assessment was based on projected PJM market prices, including capacity, and a discount factor for the unit contingent nature of each NUG's output through 2014. The assessment also used a sensitivity around the market prices, adjusting such prices downward by 15%. PPL management believes that the 15% range in volatility is appropriate due to the significant increase in energy prices over the last few years. For example, at December 31, 2004, PJM future market prices, including capacity, were 18% higher than the comparable projections at December 31, 2003.

The assessment is dependent on the market prices of energy and the estimated output levels of the NUGs. Market prices of energy are dependent on many variables, including growth in electricity demand in PJM, available generation, and changes in regulatory and economic conditions. Accordingly, a market price sensitivity was used in the assessment. Based on current projected market prices for energy, the loss accrual for the above-market NUG purchase commitments would be approximately $225 million. Even if estimated market prices were adjusted downwards by 15% during the remaining term of the NUG contracts, the loss accrual for the above-market NUG purchase commitments would be approximately $287 million. As noted above, it is very difficult to estimate future electricity prices, which are dependent on many variables and subject to significant volatility. However, based on this assessment, PPL's management believes that the current recorded NUG above-market liability of $279 million was sufficient at December 31, 2004.

6) Asset Retirement Obligations

SFAS 143, "Accounting for Asset Retirement Obligations," requires legal obligations associated with the retirement of long-lived assets to be recognized as a liability in the financial statements. The initial obligation should be measured at the estimated fair value. An equivalent amount should be recorded as an increase in the value of the capitalized asset and allocated to expense over the useful life of the asset. Until the obligation is settled, the liability should be increased, through the recognition of accretion expense in the income statement, for changes in the obligation due to the passage of time.

In determining asset retirement obligations, management must make significant judgments and estimates to calculate fair value. Fair value is developed through consideration of estimated retirement costs in today's dollars, inflated to the anticipated retirement date and then discounted back to the date the asset retirement obligation was incurred. Changes in assumptions and estimates included within the calculations of asset retirement obligations could result in significantly different results than those identified and recorded in the financial statements.

At December 31, 2004, PPL had asset retirement obligations totaling $257 million recorded on the Balance Sheet. PPL's most significant assumptions surrounding asset retirement obligations are the forecasted retirement cost, discount rate and inflation rate. A variance in the forecasted retirement cost, discount rate or inflation rate could have a significant impact on the ARO liability.

The following chart reflects the sensitivities related to the ARO liability as of December 31, 2004, associated with a change in these assumptions at the time of initial recognition. There is no significant change to the ARO asset value, depreciation expense of the ARO asset or accretion expense of the ARO liability as a result of changing the assumptions. Each sensitivity below reflects an evaluation of the change based solely on a change in that assumption.

	Change in Assumption	Impact on ARO Liability
Retirement Cost	10%/(10)%	$23/$(23)
Discount Rate	0.25%/(0.25)%	$(25)/$27
Inflation Rate	0.25%/(0.25)%	$29/$(26)

Other Information

PPL's Audit Committee has approved the independent auditor to provide audit and audit-related services and other services permitted by the Sarbanes-Oxley Act of 2002 and SEC rules. The audit and audit-related services include services in connection with statutory and regulatory filings, reviews of offering documents and registration statements, employee benefit plan audits and internal control reviews.

PPL ENERGY SUPPLY, LLC
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

PPL Energy Supply is an energy company with headquarters in Allentown, PA. See "Item 1. Business - Background," for a description of PPL Energy Supply's domestic and international businesses. See Exhibit 99 in Item 15 for a listing of its principal subsidiaries. Through its subsidiaries, PPL Energy Supply is primarily engaged in the generation and marketing of electricity in two key markets - the northeastern and western U.S. - and in the delivery of electricity in the U.K. and Latin America. PPL Energy Supply's strategy for its electricity generation and marketing business is to match energy supply with load, or customer demand, under long-term and intermediate-term contracts with creditworthy counterparties. PPL Energy Supply's strategy for its international electricity delivery businesses is to own and operate these businesses at the highest level of quality and reliability and at the most efficient cost.

PPL Energy Supply faces several risks in its generation business. The principal risks are electricity wholesale price risk, fuel supply and price risk, power plant performance and counterparty credit risk. PPL Energy Supply attempts to manage these risks through various means. For instance, PPL Energy Supply operates a portfolio of generation assets that is diversified as to geography, fuel source, cost structure and operating characteristics. PPL Energy Supply is focused on the operating efficiency of these power plants and maintaining their availability. In addition, PPL Energy Supply has in place and continues to pursue long-term and intermediate-term contracts for energy sales and fuel supply, and other means, to mitigate the risks associated with adverse changes in the difference, or margin, between the cost to produce electricity and the price at which PPL Energy Supply sells it. PPL Energy Supply's contractual commitments for energy sales are primarily satisfied through its own generation assets - i.e., PPL Energy Supply primarily markets and trades around its physical portfolio of generating assets through integrated generation, marketing and trading functions. PPL Energy Supply has in place risk management programs that, among other things, are designed to monitor and manage its exposure to volatility of earnings and cash flows related to changes in energy and fuel prices, interest rates, foreign currency exchange rates, counterparty credit quality and the operational performance of its generating units.

PPL Energy Supply's international electricity delivery businesses are rate-regulated. Accordingly, these businesses are subject to regulatory risks in terms of the costs that they may recover and the investment returns that they may collect in customer rates. The principal challenge that PPL Energy Supply faces in its international electricity delivery businesses is to maintain high standards of customer service and reliability in a cost-effective manner. PPL Energy Supply faces certain financial risks by conducting international operations, such as fluctuations in currency exchange rates. PPL Energy Supply attempts to manage these financial risks through its risk management program.

A key challenge for PPL Energy Supply's business as a whole is to maintain a strong credit profile. In the past few years, investors, analysts and rating agencies that follow companies in the energy industry have been particularly focused on the credit quality and liquidity position of energy companies. PPL Energy Supply is focused on strengthening its balance sheet and improving its liquidity position, thereby improving its credit profile.

The purpose of "Management's Discussion and Analysis of Financial Condition and Results of Operations" is to provide information concerning PPL Energy Supply's past and expected future performance in implementing the strategies and managing the risks and challenges outlined above. Specifically:

• "Results of Operations" provides an overview of PPL Energy Supply's operating results in 2004, 2003 and 2002, starting with a review of earnings. The earnings review includes a listing of certain unusual items that had significant impacts in these years, and it also includes a description of key factors that management expects may impact future earnings. "Results of Operations" also includes an explanation of changes during this three-year period in significant income statement components, such as energy margins, utility revenues, operation and maintenance expenses, financing costs, income taxes and cumulative effects of accounting changes.

• "Financial Condition - Liquidity" provides an analysis of PPL Energy Supply's liquidity position and credit profile, including its sources of cash (including bank credit facilities and sources of operating cash flow) and uses of cash (including contractual commitments and capital expenditure requirements) and the key risks and uncertainties that impact PPL Energy Supply's past and future liquidity position and financial condition. This subsection also includes an explanation of recent rating agency decisions affecting PPL Energy Supply, as well as a listing of PPL Energy Supply's current credit ratings.

• "Financial Condition - Risk Management - Energy Marketing & Trading and Other" includes an explanation of PPL Energy Supply's risk management program relating to market risk (i.e., commodity price, interest rate and foreign currency exchange risk) and credit risk (i.e., counterparty credit risk).

• "Application of Critical Accounting Policies" provides an overview of the accounting policies that are particularly important to the results of operations and financial condition of PPL Energy Supply and that require PPL Energy Supply's management to make significant estimates, assumptions and other judgments. Although PPL Energy Supply's management believes that these estimates, assumptions and other judgments are appropriate, they relate to matters that are inherently uncertain. Accordingly, changes in the estimates, assumptions and other judgments applied to these accounting policies could have a significant impact on PPL Energy Supply's results of operations and financial condition, as reflected in PPL Energy Supply's Financial Statements.

The information provided in "Management's Discussion and Analysis of Financial Condition and Results of Operations" should be read in conjunction with PPL Energy Supply's Financial Statements and the accompanying Notes.

Terms and abbreviations are explained in the glossary. Dollars are in millions unless otherwise noted.

Results of Operations

The following discussion, which explains significant annual changes in principal items on the Statement of Income, compares 2004 to 2003 and compares 2003 to 2002.

WPD's results, as consolidated in PPL Energy Supply's Statement of Income, are impacted by changes in foreign currency exchange rates. Changes in foreign exchange rates increased WPD's portion of revenue and expense line items by about 12% in 2004 compared with 2003, and by about 9% in 2003 compared with 2002.

The comparability of certain items on the 2003 and 2002 Statements of Income has also been impacted by PPL Global's investment in CEMAR. The consolidated results of CEMAR are included from January to August 2002, when PPL had a controlling interest. See Note 9 to the Financial Statements for more information, including the sale of this investment in 2004.

Earnings

Net income was as follows:

2004		2003		2002
$	651	$	727	$	279

The after-tax changes in net income were primarily due to:

			2004 vs. 2003			2003 vs. 2002
Domestic:
	Eastern U.S. non-trading margins		$	35		$	(2	)
	Northwestern U.S. non-trading margins			(1	)		16
	Southwestern U.S. non-trading margins			(5	)		5
	Net energy trading margins			7			(6	)
	Other income - affiliated interest			(6	)		(4	)
	Energy related businesses			(6	)		(13	)
	Realized earnings on nuclear decommissioning trust (Note 16)			(16	)		12
	Depreciation			(18	)		6
	Trademark license fees from affiliate			3			(18	)
	Interest income on IRS tax settlement			9
	Operation and maintenance expenses			(5	)		(28	)
	Interest expense			(34	)		(3	)
	Synfuel earnings			11			2
	Other			5			6
		Total Domestic		(21	)		(27	)
International:
	U.K. operations:
		Benefit of complete ownership of WPD (Note 9)					29
		Impact of changes in foreign currency exchange rates		22			14
		Distribution margins		5
		Operation and maintenance expenses		11
		Other		(6	)		1
	Latin America			3			18
	Other			(7	)		3
		Total International		28			65
Unusual items				(83	)		410
			$	(76	)	$	448

The changes in net income from year to year were, in part, attributable to several unusual items with significant earnings impacts, including accounting changes, discontinued operations and infrequently occurring items. The after-tax impacts of these unusual items are:

		2004			2003			2002
Accounting changes:
	ARO (Note 21)				$	63
	Consolidation of variable interest entities (Note 22)					(27	)
	Goodwill impairment (Note 19)							$	(150	)
Sale of CGE (Note 9)		$	(7	)
Sale of CEMAR (Note 9)			23
Discontinued operations (Note 9)			(2	)		(20	)
CEMAR-related net tax benefit (Note 5)						81
Workforce reduction (Note 20)									(24	)
Write-down of generation assets (Note 9)									(26	)
CEMAR operating losses (Note 9)									(23	)
CEMAR impairment (Note 9)									(98	)
Tax benefit - Teesside (Note 9)									8
Total		$	14		$	97		$	(313	)

The year-to-year changes in earnings components, including domestic gross energy margins by region and income statement line items, are discussed in the balance of "Results of Operations."

PPL Energy Supply's future earnings could be, or will be, impacted by a number of key factors, including the following:

• PPL Energy Supply's future energy margins and, consequently, its future earnings, may be impacted by fluctuations in market prices for electricity, as well as fluctuations in fuel prices, fuel transportation costs and emission allowance expenses. For instance, although PPL Energy Supply expects market prices for electricity in 2005 to be higher than in 2004, PPL Energy Supply is not expecting an increase in its 2005 energy margins due to expected increases in the cost of fuel, fuel transportation and emissions allowances.

• A key part of PPL Energy Supply's overall strategy is to enter into long-term and intermediate-term energy supply agreements in order to mitigate market price and supply risk. PPL Energy Supply's ability to continue to enter into such agreements, and to renew existing energy supply agreements, may affect its future earnings. See "Item 1. Business - Power Supply" and Note 14 to the Financial Statements for more information regarding PPL Energy Supply's wholesale energy commitments and Note 15 for more information regarding the PLR contracts.

• As discussed in "Item 1. Business - Background," PPL Electric has agreed to provide electricity supply to its PLR customers at predetermined rates through 2009, and it has entered into PUC-approved, full requirements energy supply agreements with PPL EnergyPlus to fulfill its PLR obligation. The predetermined charges for generation supply which PPL Electric collects from its PLR customers and pays to PPL EnergyPlus under the energy supply agreements provide for annual increases in each year commencing in 2006 and continuing through 2009. PPL Electric's PLR obligation after 2009 will be determined by the PUC pursuant to rules that have not yet been promulgated.

• Due to current electricity and natural gas price levels, there is a risk that PPL Energy Supply may be unable to recover its investment in certain gas-fired generation facilities. Under GAAP, PPL Energy Supply does not believe that there is an impairment charge to be recorded for these facilities at this time. PPL Energy Supply is unable to predict the earnings impact of this issue, based upon future energy price and fuel levels, applicable accounting rules and other factors, but such impact may be material.

• In June 2004, a subsidiary of PPL Generation agreed to sell the 450 MW Sundance power plant to Arizona Public Service Company (APS). Each party has waived the remaining contractual conditions for approval of the transaction by the Arizona Corporation Commission. The sale still requires approvals of the FERC under the Federal Power Act. PPL Energy Supply cannot predict whether or when these approvals will be obtained. PPL Energy Supply estimates that a loss on sale or an impairment charge of about $47 million after tax, could be recorded in 2005 depending on the timing and likelihood of obtaining the FERC approvals.

• PPL Energy Supply's ability to manage operational risk with respect to its generation plants is critical to its financial performance. Specifically, depending on the timing and duration of both planned and unplanned outages (in particular, if such outages are during peak periods or periods of severe weather), PPL Energy Supply's revenue from energy sales could be adversely affected and its need to purchase power to satisfy its energy commitments could be significantly increased. PPL Energy Supply has been successful in the past several years in increasing fleet-wide equivalent availability (i.e., the percentage of time in a year that a generating unit is capable of producing power) from the low 80% range to over 90%. However, since many of its generating units are reaching mid-life, PPL Energy Supply is faced with the potential for outages of longer duration to accommodate significant investments in major component replacements.

• PPL Energy Supply has interests in two synthetic fuel facilities and receives tax credits pursuant to Section 29 of the Internal Revenue Code based on its sale of synthetic fuel to unaffiliated third-party purchasers. PPL Energy Supply has estimated that these facilities will contribute approximately $40 million per year to earnings through 2007. See Note 14 to the Financial Statements for a discussion of the requirements to receive the Section 29 tax credits, the IRS review of synthetic fuel production procedures and the impact of higher oil prices on the Section 29 tax credits.

• Earnings in 2005 and beyond are expected to continue to be adversely affected by increased pension costs. Specifically, WPD will experience increased pension costs due to a recent actuarial valuation of WPD's plans that reflects higher pension obligations. The increase in pension costs in 2005 is forecasted to be approximately $22 million after tax, and the increase in pension costs is expected to continue to be significant in 2006. See "Other Operation and Maintenance" for the impact on earnings in 2004.

• PPL Energy Supply is unable to predict whether future impairments of goodwill may be required for its domestic and international investments. While no goodwill impairments were required based on the annual review performed in the fourth quarter of 2004, future impairments may occur due to determinations of carrying value exceeding the fair value of these investments.

• See Note 14 to the Financial Statements for potential commitments and contingent liabilities that may impact future earnings.

• See "Application of Critical Accounting Policies" for an overview of accounting policies that are particularly important to the results of operations and financial condition of PPL Energy Supply and that require PPL Energy Supply's management to make significant estimates, assumptions and other judgments. Although PPL Energy Supply's management believes that these estimates, assumptions and other judgments are appropriate, they relate to matters that are inherently uncertain.

• See Note 23 to the Financial Statements for new accounting standards that have been issued but not yet adopted by PPL Energy Supply that may impact future earnings.

Domestic Gross Energy Margins

The following table provides changes in the income statement line items that comprise domestic gross energy margins:

		2004 vs. 2003			2003 vs. 2002
Wholesale energy marketing revenues		$	25		$	183
Wholesale energy marketing to affiliates revenues			56			13
Unregulated retail electric and gas revenues			(34	)		(30	)
Net energy trading margins			12			(10	)
Other revenue adjustments (a)			15			22
Total revenues			74			178
Fuel			105			42
Energy purchases			(95	)		98
Energy purchases from affiliates			2			(8	)
Other cost adjustments (a)			1			24
Total cost of sales			13			156
	Domestic gross energy margins	$	61		$	22

(a) Adjusted to exclude the impact of any revenues and costs not associated with domestic gross energy margins, in particular, revenues and energy costs related to the international operations of PPL Global. Also adjusted to include gains or losses on sales of emission allowances, which are included in "Other operation and maintenance" expenses on the Statement of Income, and the reduction of the reserve for Enron receivables, as described in Note 17 to the Financial Statements.

Changes in Domestic Gross Energy Margins By Region

Domestic gross energy margins are generated through PPL Energy Supply's normal and hedge activities (non-trading), as well as trading activities. Non-trading margins are now discussed on a geographic basis rather than on an activity basis, as reported prior to 2004. A regional perspective more closely matches the internal view of how PPL Energy Supply's energy business is managed.

		2004 vs. 2003			2003 vs. 2002
Eastern U.S. non-trading		$	59		$	(4	)
Northwestern U.S. non-trading			(2	)		27
Southwestern U.S. non-trading			(8	)		9
Net energy trading			12			(10	)
	Domestic gross energy margins	$	61		$	22

Eastern U.S.

Eastern U.S. non-trading margins were higher in 2004 compared to 2003, primarily due to 3% higher generation, as well as higher prices and slightly higher sales volumes. In PJM, where the majority of PPL's Eastern wholesale activity occurs, average spot prices rose 15% in 2004 over 2003. PPL Energy Supply also benefited from favorable transmission congestion positions. In addition, retail energy prices increased by approximately 1% in 2004 in accordance with the schedule established by the PUC Final Order. The higher volumes reflect the return of customers who had previously shopped for electricity, as well as new load obligations in Connecticut and New Jersey, partially offset by lower wholesale sales. Partially offsetting these improvements were increased supply costs driven by increased fossil fuel and purchased power prices.

Eastern U.S. non-trading margins were essentially flat in 2003 compared to 2002 due to lower supply costs in 2002 caused by the buyout of a NUG contract in February 2002, which reduced 2002's power purchases by $25 million. Excluding the NUG buyout, margins in 2003 were higher compared to 2002, primarily due to higher wholesale volumes, which increased by 47%. The higher volumes were primarily driven by market opportunities to optimize the value of generating assets and by higher spot prices that allowed PPL Energy Supply to increase the utilization of its higher-cost generating units.

Northwestern U.S.

Northwestern U.S. non-trading margins were slightly lower in 2004 compared to 2003, due in part to a retroactive coal price adjustment caused by an unfavorable arbitration ruling. Incremental expense of $6 million was recorded in 2004 as a result of the ruling, most of which related to years 2001 to 2003. Contributing to the decrease in margins in 2004 compared to 2003 was a $6 million positive impact to 2003 margins related to a partial reversal of a reserve against Enron receivables (discussed in Note 17 to the Financial Statements) and a 2003 favorable litigation settlement of $3 million with Energy West Resources. These decreases were offset by improved generation and higher prices.

Northwestern U.S. non-trading margins were higher in 2003 compared to 2002, due to higher wholesale prices. Average wholesale prices for 2003 were $6/MWh higher than prices in 2002. A $6 million partial reversal of a reserve against Enron receivables (discussed in Note 17 to the Financial Statements) and a favorable settlement of $3 million with Energy West Resources also positively impacted margins in 2003.

Southwestern U.S.

Southwestern U.S. non-trading margins were lower in 2004 compared to 2003, primarily due to wholesale sales volumes decreasing 17%. Also contributing to the decrease in margins in 2004 compared to 2003 was a $3 million positive impact to 2003 margins related to a partial reversal of a reserve against Enron receivables (discussed in Note 17 to the Financial Statements).

Southwestern U.S. non-trading margins were higher in 2003 compared to 2002, due to the inception of new tolling agreements in Arizona and an increase of average wholesale prices by $16/MWh in 2003 compared to 2002. In addition, margins were positively impacted by $3 million in 2003 related to a partial reversal of a reserve against Enron receivables.

Net Energy Trading

PPL Energy Supply enters into certain energy contracts that meet the criteria of trading derivatives as defined by EITF Issue 02-3, "Issues Involved in Accounting for Derivative Contracts Held for Trading Purposes and Contracts Involved in Energy Trading and Risk Management Activities." These physical and financial contracts cover trading activity associated with electricity, gas and oil. The $12 million increase in 2004 compared to 2003 was due to a $6 million increase in electricity positions and a $6 million increase in gas and oil positions. The $10 million decrease in 2003 compared to 2002 was primarily due to realized electric swap losses in 2003. The physical volumes associated with energy trading were 5,700 GWh and 11.7 Bcf in 2004; 5,200 GWh and 12.6 Bcf in 2003; and 9,600 GWh and 12.4 Bcf in 2002. The amount of energy trading margins from unrealized mark-to-market transactions was $13 million in 2004 and not significant in 2003 and 2002.

Utility Revenues

The increase (decrease) in utility revenues was attributable to the following:

		2004 vs. 2003		2003 vs. 2002
International:
Retail electric delivery (PPL Global)
	U.K.	$	70	$	36
	Chile		27		18
	Bolivia		1		1
	Brazil				(113	)
	El Salvador				13
		$	98	$	(45	)

The increase for 2004 compared with 2003 was primarily due to:

• higher WPD revenues, primarily due to the change in foreign currency exchange rates; and
• higher revenues in Chile, due to higher energy prices, which are a pass-through to customer rates, the change in foreign currency exchange rates, and a 7% increase in sales volume.

The decrease for 2003 compared with 2002 was primarily due to the deconsolidation of CEMAR in August 2002. (See Note 9 to the Financial Statements for additional information.) This decrease was partially offset by:

• higher WPD revenues, primarily due to the change in foreign currency exchange rates;
• higher revenues in Chile, primarily due to higher volume and the consolidation of TransEmel (See Note 9); and
• higher revenues in El Salvador, primarily due to higher volume and higher pass-through energy costs, partially offset by a 6% tariff reduction effective January 1, 2003.

Energy Related Businesses

Energy related businesses contributed $45 million less to operating income in 2004 compared with 2003. The decrease was attributable to the following:

• a $15 million pre-tax loss on the sale of CGE in 2004 (see Note 9 to the Financial Statements);
• a $5 million pre-tax decrease from mechanical contracting and engineering subsidiaries due to the continued decline in capital spending in commercial and industrial markets, lower margins experienced in those markets, and cost overruns at two major projects;
• a $3 million pre-tax decrease from Latin American subsidiaries due primarily to lower dividends received and lower construction sales; and
• a $17 million higher pre-tax operating loss from synfuel projects.

Energy related businesses contributed $16 million less to operating income in 2003 compared with 2002. The decrease resulted primarily from:

• $7 million of credits recorded on development projects in 2002, due largely to a favorable settlement on the cancellation of a generation project in Washington state;
• a $5 million operating loss on some Hyder properties in the first quarter of 2003, which were subsequently sold in April 2003; and
• an $8 million decrease in Latin America revenues from lower material and construction project sales (In 2002, a Bolivian subsidiary participated in the construction of a 1,500 kilometer transmission line in rural areas.); partially offset by
• a $3 million improvement in contributions from mechanical contracting subsidiaries, due to enhanced project controls that were implemented to minimize project overruns, offset by a continuing decline in construction markets in 2003.

Other Operation and Maintenance

The increases in other operation and maintenance expenses were primarily due to:

	2004 vs. 2003			2003 vs. 2002
Property damage and environmental insurance settlements which were recorded in 2003	$	26		$	(26	)
Increase in foreign currency exchange rates		15			10
Increase in domestic and international pension costs		8			29
Additional expenses of new generating facilities		5			28
Increase in WPD expenses due to regulatory accounting adjustments, and resolution of purchase accounting contingencies in 2002 related to the Hyder acquisition					18
Increase in WPD tree trimming costs		8
Decrease in the Clean Air Act contingency relating to generating facilities recorded in 2003		8			(8	)
Accretion expense as a result of applying SFAS 143 (Note 21)		1			18
Increased operating expenses in domestic business lines and other					21
Outage costs associated with planned maintenance at the Montour and Conemaugh plants		7
Timing and extent of outage costs associated with the planned refueling and inspection at the Susquehanna station and of other nuclear-related expenses		2			7
Change to account for CEMAR on the cost-method in 2002					(38	)
Estimated reduction in salaries and benefits as a result of the workforce reduction initiated in 2002 (Note 20)					(15	)
Vacation liability adjustment in 2002 in conjunction with the workforce reduction					(6	)
Decrease in lease expense due to the consolidation of the Sundance and University Park generation facilities		(24	)
WPD capitalization		(13	)
Decrease in Brunner Island expenses due to outage work in 2003. No major outage work performed in 2004		(6	)
Trademark license fees from a PPL subsidiary (Note 15)		(5	)		31
Increase (decrease) in other postretirement benefit expense		(2	)		5
Gains on sales of emission allowances		(1	)		(17	)
Other		(13	)		7
	$	16		$	64

The $8 million increase in net pension costs was attributable to reductions in the discount rate assumptions for PPL's and PPL Energy Supply's domestic and international pension plans at December 31, 2003. Although financial markets have improved and the domestic and international pension plans have experienced significant asset gains in 2003 and 2004, domestic interest rates on fixed-income obligations have continued to fall, requiring a further reduction in the discount rate assumption for the domestic plans as of December 31, 2004. The reduction in the discount rate assumption has a significant impact on the measurement of plan obligations and net pension cost. In addition, there was an increase in the obligations of the WPD pension plan as determined by its most recent actuarial valuation as of March 31, 2004. PPL Energy Supply's net pension costs are expected to increase by approximately $34 million in 2005. Approximately $31 million of the increased costs is attributable to the WPD pension plans. See Note 12 to the Financial Statements for details of the funded status of PPL's pension plans.

Depreciation

Increases in depreciation expense were primarily due to:

	2004 vs. 2003			2003 vs. 2002
Additions to PP&E	$	7		$	17
Sundance and University Park generation facilities - FIN46 (a)		15
Depreciation on Lower Mt. Bethel generation facility, which began commercial operation in May 2004		10
Foreign currency exchange rates		16			10
Lower depreciation due to deconsolidation of CEMAR in 2002					(7	)
2003 purchase accounting adjustments to WPD assets (Note 9)		(22	)		3
No decommissioning expense in 2003 due to application of SFAS 143, "Accounting for Asset Retirement Obligations" (b)					(22	)
	$	26		$	1

(a)

The lessor of these facilities was consolidated under FIN 46, "Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51," effective December 31, 2003. In June 2004, subsidiaries of PPL Energy Supply purchased the Sundance and University Park generation assets from the lessor that was consolidated by PPL Energy Supply under FIN 46. See Note 22 to the Financial Statements for additional information.

(b)

There was a corresponding recording of accretion expense for PPL Susquehanna in 2003, which is included in "Other operation and maintenance" expense on the Statement of Income. See Note 21 to the Financial Statements for additional information.

Taxes, Other Than Income

Taxes, other than income, increased by $7 million in 2004, compared with 2003. The increase was primarily due to higher WPD property taxes of approximately $9 million, primarily from the impact of changes in foreign currency exchange rates, adjustments recorded in 2003 and an increase in property tax rates.

Taxes, other than income, increased by $11 million in 2003 compared with 2002, due to higher taxes related to increases in the basis on which capital stock tax is calculated and higher real estate taxes in 2003.

Other Charges

Other charges of $198 million in 2002 consisted of the write-down of PPL Global's investment in CEMAR and several smaller impairment charges on other international investments (see Note 9 to the Financial Statements), the write-down of generation assets (see Note 9) and a charge for a workforce reduction program (see Note 20).

Other Income - net

See Note 16 to the Financial Statements for details of other income and deductions.

Financing Costs

The increase (decrease) in financing costs, which include "Interest Expense," "Interest Expense with Affiliate" and "Distributions on Preferred Securities," were primarily due to:

	2004 vs. 2003			2003 vs. 2002
Increase in interest expense due to consolidation of the lessors of the Sundance, University Park and Lower Mt. Bethel generation facilities, in accordance with FIN 46	$	34
Financing costs associated with the repayment of the consolidated trust's debt for the Sundance and University Park generation facilities		9
Increase in long-term debt interest expense		36		$	18
Increase in foreign currency exchange rates		15			10
Increase in interest expense with affiliate		7			(2	)
Decrease in amortization expense		(9	)		(6	)
Decrease in short-term debt interest expense		(10	)		(20	)
Decrease in long-term debt interest from the deconsolidation of CEMAR in August 2002					(34	)
Decrease in capitalized interest		1			13
Write-off of unamortized swap costs on WPD debt restructuring in 2003		(11	)		11
Other		1			(5	)
	$	73		$	(15	)

Income Taxes

Income tax expense increased by $14 million in 2004 compared with 2003. This increase was primarily attributable to:

• an $84 million tax benefit recognized in 2003 related to foreign investment losses not recurring in 2004; offset by
• a $22 million tax benefit recognized in 2004 related to additional nonconventional fuel tax credits in excess of credits recognized in 2003;
• a $25 million decrease in tax expense on foreign earnings in 2004; and
• a $27 million reduction in income taxes related to lower pre-tax book income.

Income tax expense decreased by $81 million in 2003 compared with 2002. This decrease was due to:

• a $31 million reduction related to deferred income tax valuation allowances recorded on impairment charges on PPL Energy Supply's investment in Brazil recorded during 2002;
• an $84 million reduction in income taxes related to the tax benefit recognized in 2003 on foreign investment losses included in the 2002 federal income tax return; and
• a $2 million decrease related to additional nonconventional fuel tax credits recognized; offset by
• higher pre-tax domestic book income, resulting in a $39 million increase in income taxes.

Annual tax provisions include amounts considered sufficient to pay assessments that may result from examination of prior year tax returns by taxing authorities. However, the amount ultimately paid upon resolution of any issues raised by such authorities may differ materially from the amount accrued. In evaluating the exposure associated with various filing positions, PPL Energy Supply accounts for changes in probable exposures based on management's best estimate of the amount that should be recognized. An allowance is maintained for the tax contingencies, the balance of which management believes to be adequate. During 2004, PPL Energy Supply reached partial settlement with the IRS with respect to the tax years 1991 through 1995 and received a cash refund in the amount of $7 million. As a result of this settlement, the net tax impact recorded in 2004 was not significant.

See Note 5 to the Financial Statements for details on effective income tax rates and for information on the American Jobs Creation Act of 2004.

Discontinued Operations

In 2003, PPL Energy Supply reported a loss of $20 million in connection with the approval of a plan of sale of PPL Global's investment in a Latin American telecommunications company. An additional $2 million loss was recorded in 2004, representing operating losses through the date of the sale. See "Discontinued Operations" in Note 9 to the Financial Statements for additional information related to the sale.

Cumulative Effects of Changes in Accounting Principles

In 2003, PPL Energy Supply recorded a charge of $27 million, after-tax, as a cumulative effect of a change in accounting principle in connection with the adoption of FIN 46, "Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51," for certain entities. See Note 22 to the Financial Statements for additional information.

PPL Energy Supply adopted SFAS 143, "Accounting for Asset Retirement Obligations," effective January 1, 2003. SFAS 143 addresses the accounting for obligations associated with the retirement of tangible long-lived assets. It requires legal obligations associated with the retirement of long-lived assets to be recognized as a liability in the financial statements. Application of the new rules resulted in a cumulative effect of adoption that increased net income by $63 million in 2003. See Note 21 to the Financial Statements for additional information.

PPL Energy Supply adopted SFAS 142, "Goodwill and Other Intangible Assets," on January 1, 2002. SFAS 142 requires an annual impairment test of goodwill and other intangible assets that are not subject to amortization. PPL Energy Supply performed a transition impairment analysis in the first quarter of 2002 and recorded a transition goodwill impairment charge of $150 million. See Note 19 to the Financial Statements for additional information.

Financial Condition

Liquidity

PPL Energy Supply is focused on maintaining a strong liquidity position and strengthening its balance sheet, thereby improving its credit profile. PPL Energy Supply believes that its cash on hand, operating cash flows, access to debt and equity capital markets and borrowing capacity, taken as a whole, provide sufficient resources to fund its ongoing operating requirements, future security maturities and estimated future capital expenditures. PPL Energy Supply currently expects cash on hand at the end of 2005 to be approximately $180 million, with about $1.9 billion in credit facilities. However, PPL Energy Supply's cash flows from operations and its access to cost effective bank and capital markets are subject to risks and uncertainties, including but not limited to, the following:

• changes in market prices for electricity;
• changes in commodity prices that may increase the cost of producing power or decrease the amount PPL Energy Supply receives from selling power;
• price and credit risks associated with selling and marketing products in the wholesale power markets;
• ineffectiveness of trading, marketing and risk management policies and programs used to mitigate PPL Energy Supply's risk exposure to adverse energy and fuel prices, interest rates, foreign currency exchange rates and counterparty credit;
• unusual or extreme weather that may damage its international transmission and distribution facilities or affect energy sales to customers;
• reliance on transmission and distribution facilities that PPL Energy Supply does not own or control to deliver its electricity and natural gas;
• unavailability of generating units (due to unscheduled or longer-than-anticipated generation outages) and the resulting loss of revenues and additional costs of replacement electricity;
• ability to recover and the timeliness and adequacy of recovery of costs associated with international electricity delivery businesses; and
• a downgrade in PPL Energy Supply's or its rated subsidiaries' credit ratings that could negatively affect their ability to access capital and increase the cost of maintaining credit facilities and any new debt.

At December 31, 2004, PPL Energy Supply had $357 million in cash and cash equivalents and no short-term debt compared to $222 million in cash and cash equivalents and $56 million of short-term debt at December 31, 2003, and $149 million in cash and cash equivalents and $928 million of short-term debt at December 31, 2002. The changes in cash and cash equivalents resulted from the following:

	2004			2003			2002
Net Cash Provided by Operating Activities	$	556		$	904		$	626
Net Cash Provided by (Used in) Investing Activities		(465	)		205			(1,119	)
Net Cash Provided by (Used in) Financing Activities		35			(1,043	)		(175	)
Effect of Exchange Rates on Cash & Cash Equivalents		9			7			2
Increase (Decrease) in Cash & Cash Equivalents	$	135		$	73		$	(666	)

Net Cash Provided by Operating Activities

Net cash from operating activities decreased by 38%, or $348 million, in 2004 versus 2003, reflecting the posting of $300 million in cash collateral to PPL Electric related to the PLR energy supply agreements and higher cash taxes, partially offset by higher energy margins.

Important elements supporting the stability of PPL Energy Supply's cash provided by operating activities are the long-term and intermediate-term commitments from wholesale and retail customers and long-term fuel supply contracts PPL Energy Supply has in place. PPL Energy Supply estimates that, on average, approximately 83% of its expected annual generation output for the period 2005 through 2009 is committed under long-term and intermediate-term energy supply contracts. PPL EnergyPlus also enters into contracts under which it agrees to sell and purchase electricity, natural gas, oil and coal. These contracts often require cash collateral or other credit enhancement, or reductions or terminations of a portion of the entire contract through cash settlement in the event of a downgrade of PPL Energy Supply or the respective subsidiary's credit ratings or adverse changes in market prices. For example, in addition to limiting its trading ability, if PPL Energy Supply or its respective subsidiary's ratings were lowered to below "investment grade" and energy prices increased by 10%, PPL Energy Supply estimates that, based on its December 31, 2004 positions, it would have had to post collateral of approximately $280 million as compared to $490 million at December 31, 2003. PPL Energy Supply has in place risk management programs that, among other things, are designed to monitor and manage its exposure to volatility of cash flows related to changes in energy prices, interest rates, foreign currency exchange rates, counterparty credit quality and the operational performance of its generating units.

Net cash provided by operating activities increased by 44%, or $278 million, in 2003 versus 2002, reflecting higher net income adjusted for non-cash items and lower cash income taxes. In addition, 2002 included cash outlays of $152 million for the cancellation of generation projects and $50 million for the termination of a NUG contract. The higher net income in 2003 was principally driven by complete ownership of WPD, higher wholesale energy margins, lower interest expense and savings from a workforce reduction program in the U.S. that commenced in 2002.

Net Cash Provided by (Used in) Investing Activities

Net cash used in investing activities increased by $670 million in 2004 versus 2003. The primary reason for the increase was the repayment of a $653 note receivable from an affiliate in 2003. The primary use of cash for investing activities is capital and investment expenditures. See "Capital Expenditure Requirements" for capital and investment expenditures in 2004 and expected expenditures in 2005 through 2009. In 2005, PPL Energy Supply expects to be able to fund all of its capital expenditures with cash from operating activities.

The increase of $1.3 billion in net cash provided by investing activities in 2003 compared to 2002 was primarily due to the reduced investment in generation assets and electric energy projects, the acquisition of the controlling interest in WPD in September 2002, and a repayment of a loan by an affiliate.

Net Cash Provided by (Used in) Financing Activities

Net cash from financing activities in 2004 increased by $1.1 billion versus 2003. The primary reasons for the increase in cash from financing activities was due to a net reduction of $758 million in distributions to member and a $495 million increase in note payable to affiliate.

PPL Energy Supply's debt financing activity in 2004 was as follows:

		Issuances		Retirements
PPL Energy Supply Senior Unsecured Notes		$	300
PPL Energy Supply lease financing				$	(656	)
PPL Energy Supply Note Payable to Affiliate			495
WPD short-term debt (net change)					(56	)
Latin American companies long-term debt			22		(15	)
	Total	$	817	$	(727	)
Net addition		$	90

Debt issued during 2004 had stated interest rates ranging from 2.1% to 9.0% and maturities from 2006 through 2014. See Note 8 to the Financial Statements for more detailed information regarding PPL Energy Supply's financing activities.

In December 2004, PPL Energy Supply reactivated its commercial paper program to provide it with an additional financing source to fund its short-term liquidity needs, if and when necessary. At December 31, 2004, PPL Energy Supply had no commercial paper outstanding and currently has no plans to access the commercial paper market in the short-term.

At December 31, 2004, PPL Energy Supply's total committed borrowing capacity under credit facilities and the use of this borrowing capacity were as follows:

		Committed Capacity		Borrowed	Letters of Credit Issued (c)		Available Capacity
PPL Energy Supply Credit Facilities (a)		$	1,100		$	250	$	850
WPD (South West) Bank Facilities (b)			769			2		767
	Total	$	1,869		$	252	$	1,617

(a)	PPL Energy Supply's credit facilities allow for borrowings at LIBOR-based rates plus a spread, depending upon the company's public debt rating. PPL Energy Supply also has the capability to cause the lenders to issue up to $950 million of letters of credit under these facilities, which issuances reduce available borrowing capacity. These credit facilities contain financial covenants requiring debt to total capitalization to not exceed 65% and requiring that PPL Energy Supply maintain an interest coverage ratio to not be less than 2.0 times consolidated earnings before income taxes, depreciation and amortization. At December 31, 2004 and 2003, PPL Energy Supply's consolidated debt to total capitalization percentages, as calculated in accordance with one of its credit facilities, were 35% and 36%. Under a second credit facility entered into in June 2004, the consolidated debt to capitalization percentage was 34% at December 31, 2004. At December 31, 2004 and 2003, PPL Energy Supply's interest coverage ratios, as calculated in accordance with its credit facilities, were 6.2 and 6.3. The credit facilities also contain certain representations and warranties that must be made for PPL Energy Supply to borrow under them, including, but not limited to, a material adverse change clause that relates to PPL Energy Supply's ability to perform its obligations under the credit agreements and related loan documents.
(b)	WPD (South West)'s credit facilities allow for borrowings at LIBOR-based rates plus a spread, depending upon the company's public debt rating. These credit facilities contain financial covenants that require WPD (South West) to maintain an interest coverage ratio of not less than 3.0 times consolidated earnings before income taxes, depreciation and amortization and a regulatory asset base (RAB) at £150 million greater than total gross debt, in each case as calculated in accordance with the credit facilities. At December 31, 2004 and 2003, WPD (South West)'s interest coverage ratio, as calculated in accordance with its credit lines, were 6.8 and 6.7. At December 31, 2004 and 2003, WPD (South West)'s RAB, as calculated in accordance with the credit facilities, exceeded its total gross debt by £531 million and £482 million.
(c)	PPL Energy Supply and WPD (South West) have a reimbursement obligation to the extent any letters of credit are drawn upon. The letters of credit issued as of December 31, 2004, expire in 2005.

These credit agreements contain various other covenants. Failure to meet those covenants beyond applicable grace periods could result in acceleration of due dates of borrowings and/or termination of the agreements. PPL Energy Supply monitors the covenants on a regular basis. At December 31, 2004, PPL Energy Supply was in material compliance with those covenants. At this time, PPL Energy Supply believes that these covenants and other borrowing conditions will not limit access to these funding sources. PPL Energy Supply and WPD (South West) intend to renew and extend all of their syndicated credit facilities in 2005.

The increase of $868 million in net cash used in financing activities in 2003 compared to 2002 primarily reflected the repayment of short-term debt, retirement of long-term debt, distributions to PPL to support dividend payments to PPL shareholders, and maturities and interest payments on PPL Capital Funding's debt. In 2003, PPL Energy Supply had net retirements of $120 million compared with net issuances of $378 million in 2002. Net distributions to Member were $907 million in 2003 compared with $550 million in 2002.

Operating Leases

PPL Energy Supply and its subsidiaries also have available funding sources that are provided through operating leases. PPL Energy Supply's subsidiaries lease vehicles, office space, land, buildings, personal computers and other equipment. These leasing structures provide PPL Energy Supply with additional operating and financing flexibility. The operating leases contain covenants that are typical for these agreements, such as maintaining insurance, maintaining corporate existence and timely payment of rent and other fees. Failure to meet these covenants could limit or restrict access to these funds or require early payment of obligations. At this time, PPL Energy Supply believes that these covenants will not limit access to these funding sources or cause acceleration or termination of the leases.

PPL Energy Supply, through its subsidiary PPL Montana, leases a 50% interest in Colstrip Units 1 and 2 and a 30% interest in Unit 3, under four 36-year non-cancelable operating leases. These operating leases are not recorded on PPL Energy Supply's Balance Sheet, which is in accordance with applicable accounting guidance. The leases place certain restrictions on PPL Montana's ability to incur additional debt, sell assets and declare dividends. At this time, PPL Energy Supply believes that these restrictions will not limit access to these funding sources or cause acceleration or termination of the leases. See Note 8 to the Financial Statements for a discussion of other dividend restrictions related to PPL Global subsidiaries.

See Note 10 to the Financial Statements for further discussion of the operating leases.

Contractual Obligations

At December 31, 2004, the estimated contractual cash obligations of PPL Energy Supply were as follows:

Contractual Cash Obligations	Total		Less Than 1 Year		1-3 Years		3-5 Years		After 5 Years
Long-term Debt (a)	$	3,974	$	181	$	604	$	228	$	2,961
Capital Lease Obligations
Operating Leases		733		63		115		107		448
Purchase Obligations (b)		2,900		623		1,162		516		599
Other Long-term Liabilities Reflected on the Balance Sheet under GAAP (c)		174		38		116		20
Total Contractual Cash Obligations	$	7,781	$	905	$	1,997	$	871	$	4,008

(a)	Reflects principal maturities only, including maturities of consolidated lease debt.
(b)	The payments reflected herein are subject to change, as the purchase obligation reflected is an estimate based on projected obligated quantities and projected pricing under the contract.
(c)	The amounts reflected represent estimated pension funding requirements.

Credit Ratings

Standard & Poor's Ratings Services (S&P), Moody's Investors Service, Inc. (Moody's) and Fitch Ratings (Fitch) periodically review the credit ratings on the debt and preferred securities of PPL Energy Supply and its subsidiaries. Based on their respective reviews, the rating agencies may make certain ratings revisions.

The ratings of S&P, Moody's and Fitch are not a recommendation to buy, sell or hold any securities of PPL Energy Supply or its subsidiaries. Such ratings may be subject to revisions or withdrawal by the agencies at any time and should be evaluated independently of each other and any other rating that may be assigned to their securities.

The following table summarizes the credit ratings of PPL Energy Supply and its financing subsidiaries at December 31, 2004:

		Moody's	S&P	Fitch
PPL Energy Supply
	Issuer Rating		BBB
	Senior Unsecured Notes	Baa2	BBB	BBB+
	Commercial Paper	P-2	A-2	F2
	Outlook	STABLE	STABLE	STABLE
PPL Montana
	Pass -Through Certificates	Baa3	BBB-	BBB
	Outlook	STABLE	STABLE
WPDH Limited
	Issuer Rating	Baa3	BBB-
	Senior Unsecured Debt	Baa3	BBB-	BBB
	Short-term Debt		A-3
	Outlook	NEGATIVE	NEGATIVE	STABLE
WPD LLP
	Issuer Rating		BBB-
	Senior Unsecured Debt	Baa2	BBB-	BBB+
	Short-term Debt		A-3
	Preferred Stock	Baa3	BB	BBB
	Outlook	NEGATIVE	NEGATIVE	STABLE
WPD (South Wales)
	Issuer Rating		BBB+
	Senior Unsecured Debt	Baa1	BBB+	A-
	Short-term Debt		A-2	F1
	Outlook	STABLE	NEGATIVE	STABLE
WPD (South West)
	Issuer Rating	Baa1	BBB+
	Senior Unsecured Debt	Baa1	BBB+	A-
	Short-term Debt	P-2	A-2	F1
	Outlook	STABLE	NEGATIVE	STABLE

Rating Agency Actions in 2004

In December 2004, S&P, Moody's and Fitch confirmed their ratings of A-2, P-2 and F2, respectively, for PPL Energy Supply commercial paper.

S&P

In May 2004, S&P affirmed its BBB ratings on PPL Energy Supply and revised its outlook from negative to stable. S&P also affirmed its BBB- rating on PPL Montana's Pass-Through Certificates due 2020 and revised its outlook from negative to stable. Also, S&P indicated that the following ratings would remain unchanged following the aforementioned revision to PPL Energy Supply's outlook:

• WPDH Limited of BBB-/Negative/A-3;
• WPD (South West) of BBB+/Negative/A-2; and
• WPD (South Wales) of BBB+/Negative/A-2.

Moody's

Also in December 2004, Moody's downgraded the senior unsecured long-term debt ratings of WPDH Limited from Baa2 to Baa3 with a negative outlook. At the same time, Moody's changed the outlook on the senior unsecured long-term debt rating of WPD LLP from stable to negative and affirmed its Baa1 senior unsecured long-term ratings of WPD (South West) and WPD (South Wales.) The outlook on WPD (South West) and WPD (South Wales) is stable.

Moody's indicated that its ratings actions with respect to WPD reflect its concern that WPDH Limited has an adjusted net debt/ Regulatory Asset Base (RAB) ratio in excess of 95% after pension deficits that are not recoverable through the U.K. regulatory process are taken into account. Moody's also indicated that the ratings reflect its expectation that adjusted net debt/RAB will fall to less than 90% during the course of 2005.

Ratings Triggers

PPL Energy Supply's 2.625% Convertible Senior Notes due 2023 are convertible upon the occurrence of certain events, including if the long-term credit ratings assigned to the notes by S&P and Moody's are lower than BB and Ba2, or either S&P or Moody's no longer rates the notes. The terms of the notes were modified in November 2004 to, among other things, require cash settlement of the principal amount upon conversion of the notes. These modifications were made in response to the FASB's ratification of EITF Issue 04-8, "The Effect of Contingently Convertible Instruments on Diluted Earnings per Share." See Note 4 to the Financial Statements for more information concerning these modifications, Note 8 for a discussion of the consent solicitation that effected these modifications and Note 23 for a discussion of EITF Issue 04-8.

PPL Energy Supply and its respective subsidiaries do not have additional material liquidity exposures caused by a ratings downgrade below "investment grade" that would accelerate the due dates of borrowings. However, if PPL Energy Supply's debt ratings were below investment grade at December 31, 2004, PPL Energy Supply and its respective subsidiaries would have had to post an additional $118 million of collateral to counterparties.

Subsequent Ratings Events

In January 2005, S&P revised its outlooks on the WPD companies to stable from negative. S&P attributes this positive change to financial profile improvements resulting from the final regulatory outcome published by Ofgem in November 2004. At the same time, S&P affirmed the WPD companies' long-term and short-term credit ratings.

Also in January 2005, Fitch announced that it downgraded the WPD companies' senior unsecured credit ratings by one notch as follows:

• WPDH Limited to BBB- from BBB
• WPD LLP to BBB from BBB+
• WPD (South West) and WPD (South Wales) to BBB+/F2 from A-/F1

Fitch has a stable outlook on all of the WPD companies.

Fitch stated that its downgrade was prompted by the high level of pension adjusted leverage at WPD. Fitch acknowledged that WPD's funding plan should reduce its pension deficit over time and it expects WPD to proceed with its de-leveraging program. However, Fitch indicated that it is not certain enough, due to the unpredictability in future pension valuations, that pension adjusted leverage will support a BBB rating at WPDH Limited. Fitch indicated that WPD (South West) and WPD (South Wales) have been downgraded to maintain a two-notch differential with WPDH Limited because it does not believe that the financial ring-fencing is restrictive enough to support a three-notch differential.

Off-Balance Sheet Arrangements

PPL Energy Supply provides guarantees for certain affiliate financing arrangements that enable certain transactions. Some of the guarantees contain financial and other covenants that, if not met, would limit or restrict the affiliates' access to funds under these financing arrangements, require early maturity of such arrangements or limit the affiliates' ability to enter into certain transactions. At this time, PPL Energy Supply believes that these covenants will not limit access to the relevant funding sources.

PPL Energy Supply has entered into certain guarantee agreements that are within the scope of FIN 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, an Interpretation of FASB Statements No. 5, 57, and 107 and Rescission of FASB Interpretation No. 34." See Note 14 to the Financial Statements for a discussion on guarantees.

Risk Management - Energy Marketing & Trading and Other

Market Risk

Background

Market risk is the potential loss PPL Energy Supply may incur as a result of price changes associated with a particular financial or commodity instrument. PPL Energy Supply is exposed to market risk from:

• commodity price risk for energy and energy-related products associated with the sale of electricity, the purchase of fuel for the generating assets and energy trading activities;
• interest rate risk associated with variable-rate debt and the fair value of fixed-rate debt used to finance operations, as well as the fair value of debt securities invested in by PPL Energy Supply's nuclear decommissioning fund;
• foreign currency exchange rate risk associated with investments in affiliates in Latin America and Europe, as well as purchases of equipment in currencies other than U.S. dollars; and
• equity securities price risk associated with the fair value of equity securities invested in by PPL Energy Supply's nuclear decommissioning fund.

PPL Energy Supply has a risk management policy approved by PPL's Board of Directors to manage market risk and counterparty credit risk. (Credit risk is discussed below.) The RMC, comprised of senior management and chaired by the Vice President-Risk Management, oversees the risk management function. Key risk control activities designed to monitor compliance with risk policies and detailed programs include, but are not limited to, credit review and approval, validation of transactions and market prices, verification of risk and transaction limits, sensitivity analyses, and daily portfolio reporting, including open positions, mark-to-market valuations and other risk measurement metrics.

The forward-looking information presented below provides estimates of what may occur in the future, assuming certain adverse market conditions, due to reliance on model assumptions. Actual future results may differ materially from those presented. These disclosures are not precise indicators of expected future losses, but only indicators of reasonably possible losses.

Contract Valuation

PPL Energy Supply utilizes forward contracts, futures contracts, options, swaps and tolling agreements as part of its risk management strategy to minimize unanticipated fluctuations in earnings caused by commodity price, interest rate and foreign currency volatility. When available, quoted market prices are used to determine the fair value of a commodity or financial instrument. This may include exchange prices, the average mid-point bid/ask spreads obtained from brokers, or an independent valuation by an external source, such as a bank. However, market prices for energy or energy-related contracts may not be readily determinable because of market illiquidity. If no active trading market exists, contracts are valued using internally developed models, which are then reviewed by an independent, internal group. Although PPL Energy Supply believes that its valuation methods are reasonable, changes in the underlying assumptions could result in significantly different values and realization in future periods.

To record derivatives at their fair value, PPL Energy Supply discounts the forward values using LIBOR. Additionally, PPL Energy Supply reduces derivative assets' carrying values to recognize differences in counterparty credit quality and potential illiquidity in the market:

• The credit adjustment takes into account the probability of default, as calculated by an independent service, for each counterparty that has an out-of-the money position with PPL Energy Supply.

• The liquidity adjustment takes into account the fact that it may not be appropriate to value contracts at the midpoint of the bid/ask spread. PPL Energy Supply might have to accept the "bid" price if PPL Energy Supply wanted to close an open sales position or PPL Energy Supply might have to accept the "ask" price if PPL Energy Supply wanted to close an open purchase position.

Accounting and Reporting

To account for and report on contracts entered into to manage market risk, PPL Energy Supply follows the provisions of SFAS 133, "Accounting for Derivative Instruments and Hedging Activities," as amended by SFAS 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities," and SFAS 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities," and interpreted by DIG issues (together, "SFAS 133"), EITF 02-3, "Issues Involved in Accounting for Derivative Contracts Held for Trading Purposes and Contracts Involved in Energy Trading and Risk Management Activities," and EITF 03-11, "Reporting Realized Gains and Losses on Derivative Instruments That Are Subject to FASB Statement No. 133 and Not 'Held for Trading Purposes' as Defined in Issue No. 02-3." SFAS 133 requires that all derivative instruments be recorded at fair value on the balance sheet as an asset or liability (unless they meet SFAS 133's criteria for exclusion) and that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met.

In April 2003, the FASB issued SFAS 149, which amends and clarifies SFAS 133 to improve financial accounting and reporting for derivative instruments and hedging activities. To ensure that contracts with comparable characteristics are accounted for similarly, SFAS 149 clarified the circumstances under which a contract with an initial net investment meets the characteristics of a derivative, clarified when a derivative contains a financing component, amended the definition of an "underlying" and amended certain other existing pronouncements. Additionally, SFAS 149 placed additional limitations on the use of the normal purchase or normal sale exception. SFAS 149 was effective for contracts entered into or modified and for hedging relationships designated after June 30, 2003, except certain provisions relating to forward purchases or sales of when-issued securities or other securities that did not yet exist. PPL Energy Supply adopted SFAS 149 as of July 1, 2003. The adoption of SFAS 149 did not have a significant impact on PPL Energy Supply.

PPL Energy Supply adopted the final provisions of EITF 02-3 during the fourth quarter of 2002. As such, PPL Energy Supply now reflects its net realized and unrealized gains and losses associated with all derivatives that are held for trading purposes in the "Net energy trading margins" line on the Statement of Income. Non-derivative contracts that met the definition of energy trading activities as defined by EITF 98-10, "Accounting for Energy Trading and Risk Management Activities" are reflected in the financial statements using the accrual method of accounting. Under the accrual method of accounting, unrealized gains and losses are not reflected in the financial statements. Prior periods were reclassified. No cumulative effect adjustment was required upon adoption.

PPL Energy Supply adopted the final provisions of EITF 03-11 prospectively as of October 1, 2003. As a result of this adoption, non-trading bilateral sales of electricity at major market delivery points are netted with purchases that offset the sales at those same delivery points. A major market delivery point is any delivery point with liquid pricing available. See Note 17 to the Financial Statements for the impact of the adoption of EITF 03-11.

PPL Energy Supply's short-term derivative contracts are recorded as "Price risk management assets" and "Price risk management liabilities" on the Balance Sheet. Long-term derivative contracts are included in "Other Noncurrent Assets - Other" and "Deferred Credits and Other Noncurrent Liabilities - Other."

Accounting Designation

Energy contracts that do not qualify as derivatives receive accrual accounting. For energy contracts that meet the definition of a derivative, the circumstances and intent existing at the time that energy transactions are entered into determine their accounting designation. In addition to energy-related transactions, PPL Energy Supply enters into financial interest rate and foreign currency swap contracts to hedge interest expense associated with both existing and anticipated debt issuances. PPL Energy Supply also enters into foreign currency swap contracts to hedge the fair value of firm commitments denominated in foreign currency and net investments in foreign operations. As with energy transactions, the circumstances and intent existing at the time of the transaction determine the contract's accounting designation. These designations are verified by a separate internal group on a daily basis. See Note 17 to the Financial Statements for a summary of the guidelines that have been provided to the traders who are responsible for contract designation for derivative energy contracts due to the adoption of SFAS 149.

Commodity Price Risk (Non-Trading)

Commodity price risk is one of PPL Energy Supply's most significant risks due to the level of investment that PPL Energy Supply maintains in its generation assets, coupled with the volatility of prices for energy and energy-related products. Several factors influence price levels and volatilities. These factors include, but are not limited to, seasonal changes in demand, weather conditions, available generating assets within regions, transportation availability and reliability within and between regions, market liquidity, and the nature and extent of current and potential federal and state regulations. To hedge the impact of market price fluctuations on PPL Energy Supply's energy-related assets, liabilities and other contractual arrangements, PPL EnergyPlus sells and purchases physical energy at the wholesale level under FERC market-based tariffs throughout the U.S. and enters into financial exchange-traded and over-the-counter contracts. Because PPL Energy Supply owns or controls generating assets, the majority of PPL Energy Supply's energy transactions qualify for accrual or hedge accounting.

Within PPL Energy Supply's hedge portfolio, the decision to enter into energy contracts hinges on the expected value of PPL Energy Supply's generation. To address this risk, PPL Energy Supply takes a conservative approach in determining the number of MWhs that are available to be sold forward. In this regard, PPL Energy Supply reduces the maximum potential output that a plant may produce by three factors - planned maintenance, unplanned outages and economic conditions. The potential output of a plant is first reduced by the amount of unavailable generation due to planned maintenance on a particular unit. Another reduction, representing the unplanned outage rate, is the amount of MWhs that historically are not produced by a plant due to such factors as equipment breakage. Finally, the potential output of certain plants (like peaking units) are reduced because their higher cost of production will not allow them to economically run during all hours.

PPL Energy Supply's non-trading portfolio also includes full requirements energy contracts. The net obligation to serve these contracts changes minute by minute. PPL Energy Supply analyzes historical on-peak and off-peak usage patterns, as well as spot prices and weather patterns, to determine a monthly level of a block of electricity that best fits the usage patterns in order to minimize earnings volatility. On a forward basis, PPL Energy Supply reserves a block amount of generation for full requirements energy contracts that is expected to be the best match with their anticipated usage patterns and energy peaks. Anticipated usage patterns and peaks are affected by expected load growth, regional economic drivers and seasonality.

PPL Energy Supply's commodity derivative contracts that qualify for hedge accounting treatment mature at various times through 2010. The following chart sets forth PPL Energy Supply's net fair market value of these contracts as of December 31:

	Gains (Losses)
	2004			2003
Fair value of contracts outstanding at the beginning of the period	$	86		$	58
Contracts realized or otherwise settled during the period		(66	)		(87	)
Fair value of new contracts at inception
Other changes in fair values		(29	)		115
Fair value of contracts outstanding at the end of the period	$	(9	)	$	86

The following chart segregates estimated fair values of PPL Energy Supply's commodity derivative contracts that qualify for hedge accounting treatment at December 31, 2004, based on whether the fair values are determined by quoted market prices or other more subjective means.

	Fair Value of Contracts at Period-End Gains (Losses)
	Maturity Less Than 1 Year		Maturity 1-3 Years			Maturity 3-5 Years			Maturity in Excess of 5 Years			Total Fair Value
Source of Fair Value
Prices actively quoted	$	4	$	3								$	7
Prices provided by other external sources		15		(20	)	$	(10	)	$	(1	)		(16	)
Prices based on models and other valuation methods
Fair value of contracts outstanding at the end of the period	$	19	$	(17	)	$	(10	)	$	(1	)	$	(9	)

The "Prices actively quoted" category includes the fair value of exchange-traded natural gas futures contracts quoted on the New York Mercantile Exchange (NYMEX). The NYMEX has currently quoted prices through 2010.

The "Prices provided by other external sources" category includes PPL Energy Supply's forward positions and options in natural gas and power and natural gas basis swaps at points for which over-the-counter (OTC) broker quotes are available. The fair value of electricity positions recorded above use the midpoint of the bid/ask spreads obtained through OTC brokers. On average, OTC quotes for forwards and swaps of natural gas and power extend one and two years into the future.

The "Prices based on models and other valuation methods" category includes the value of transactions for which an internally developed price curve was constructed as a result of the long-dated nature of the transaction or the illiquidity of the market point, or the value of options not quoted by an exchange or OTC broker. Additionally, this category includes "strip" transactions whose prices are obtained from external sources and then modeled to monthly prices as appropriate.

Because of PPL Energy Supply's efforts to hedge the value of the energy from its generation assets, PPL Energy Supply sells electricity and buys fuel on a forward basis, resulting in open contractual positions. If PPL Energy Supply were unable to deliver firm capacity and energy or to accept the delivery of fuel under its agreements, under certain circumstances it could be required to pay damages. These damages would be based on the difference between the market price and the contract price of the commodity. Depending on price volatility in the wholesale energy markets, such damages could be significant. Extreme weather conditions, unplanned power plant outages, transmission disruptions, non-performance by counterparties (or their counterparties) with which it has energy contracts and other factors could affect PPL Energy Supply's ability to meet its obligations, or cause significant increases in the market price of replacement energy. Although PPL Energy Supply attempts to mitigate these risks, there can be no assurance that it will be able to fully meet its firm obligations, that it will not be required to pay damages for failure to perform, or that it will not experience counterparty non-performance in the future.

As of December 31, 2004, PPL Energy Supply estimated that a 10% adverse movement in market prices across all geographic areas and time periods would have decreased the value of the commodity contracts in its non-trading portfolio by approximately $165 million, compared to a decrease of $146 million at December 31, 2003. However, the change in the value of the non-trading portfolio would have been substantially offset by an increase in the value of the underlying commodity, the electricity generated, because these contracts serve to reduce the market risk inherent in the generation of electricity. Additionally, the value of PPL Energy Supply's unsold generation would be improved. Because PPL Energy Supply's electricity portfolio is generally in a net sales position, the adverse movement in prices is usually an increase in prices. Conversely, because PPL Energy Supply's commodity fuels portfolio is generally in a net purchase position, the adverse movement in prices is usually a decrease in prices. If both of these scenarios happened, the implied margins for the unsold generation would increase.

In accordance with its marketing strategy, PPL Energy Supply does not completely hedge its generation output or fuel requirements. PPL Energy Supply estimates that for its entire portfolio, including all generation and physical and financial energy positions, a 10% adverse change in power prices across all geographic zones and time periods will decrease expected 2005 gross margins by about $2 million. Similarly, a 10% adverse movement in all fossil fuel prices will decrease 2005 gross margins by $5 million.

PPL Energy Supply also executes energy contracts to take advantage of market opportunities. As a result, PPL Energy Supply may at times create a net open position in its portfolio that could result in significant losses if prices do not move in the manner or direction anticipated. The margins from these trading activities are shown in the Statement of Income as "Net energy trading margins."

Commodity Price Risk (Trading)

PPL Energy Supply's trading contracts mature at various times through 2006. The following chart sets forth PPL Energy Supply's net fair market value of trading contracts as of December 31:

	Gains (Losses)
	2004			2003
Fair value of contracts outstanding at the beginning of the period	$	3		$	(6	)
Contracts realized or otherwise settled during the period		(14	)		16
Fair value of new contracts at inception		1			2
Other changes in fair values		19			(9	)
Fair value of contracts outstanding at the end of the period	$	9		$	3

PPL Energy Supply will reverse approximately $2 million of the $9 million unrealized trading gains over the first three months of 2005 as the transactions are realized.

The following chart segregates estimated fair values of PPL Energy Supply's trading portfolio at December 31, 2004, based on whether the fair values are determined by quoted market prices or other more subjective means.

	Fair Value of Contracts at Period-End Gains (Losses)
	Maturity Less Than 1 year			Maturity 1-3 years		Maturity 3-5 years	Maturity in Excess of 5 Years	Total Fair Value
Source of Fair Value
Prices actively quoted	$	3						$	3
Prices provided by other external sources		5		$	4				9
Prices based on models and other valuation methods		(3	)						(3	)
Fair value of contracts outstanding at the end of the period	$	5		$	4			$	9

See "Commodity Price Risk (Non-trading)" for information on the various sources of fair value.

As of December 31, 2004, PPL Energy Supply estimated that a 10% adverse movement in market prices across all geographic areas and time periods would have decreased the value of the commodity contracts in its trading portfolio by $5 million, compared to a decrease of $3 million at December 31, 2003.

Interest Rate Risk

PPL Energy Supply and its subsidiaries have issued debt to finance their operations. PPL manages interest rate risk for PPL Energy Supply by using various financial derivative products to adjust the mix of fixed and floating interest rates in its debt portfolio, adjust the duration of its debt portfolio and lock in U.S. Treasury rates (and interest rate spreads over treasuries) in anticipation of future financing, when appropriate. Risk limits under the risk management program are designed to balance risk exposure to volatility in interest expense and changes in the fair value of PPL Energy Supply's debt portfolio due to changes in the absolute level of interest rates.

At December 31, 2004, PPL Energy Supply's potential annual exposure to increased interest expense, based on a 10% increase in interest rates, was estimated at $1 million, and was insignificant at December 31, 2003.

PPL Energy Supply is also exposed to changes in the fair value of its domestic and international debt portfolio. At December 31, 2004, PPL Energy Supply estimated that its potential exposure to a change in the fair value of its debt portfolio, through a 10% adverse movement in interest rates, was approximately $156 million, compared to $143 million at December 31, 2003.

PPL and PPL Energy Supply utilize various risk management instruments to reduce PPL Energy Supply's exposure to adverse interest rate movements for future anticipated financing. While PPL Energy Supply is exposed to changes in the fair value of these instruments, they are designed such that any economic loss in value should generally be offset by interest rate savings at the time the future anticipated financing is completed. At December 31, 2004, PPL Energy Supply had none of these instruments outstanding. At December 31, 2003, PPL Energy Supply estimated that its potential exposure to a change in the fair value of these instruments, through a 10% adverse movement in interest rates, was approximately $1 million.

PPL and PPL Energy Supply also utilize various risk management instruments to adjust the mix of fixed and floating interest rates in PPL Energy Supply's debt portfolio. While PPL Energy Supply is exposed to changes in the fair value of these instruments, any change in market value is recorded with an equal and offsetting change in the value of the debt being hedged. At December 31, 2004, PPL Energy Supply estimated that its potential exposure to a change in the fair value of these instruments, through a 10% adverse movement in interest rates, was approximately $2 million, compared to an exposure of $1 million at December 31, 2003.

Foreign Currency Risk

PPL Energy Supply is exposed to foreign currency risk, primarily through investments in affiliates in Latin America and Europe. In addition, PPL Energy Supply may make purchases of equipment in currencies other than U.S. dollars.

PPL has adopted a foreign currency risk management program designed to hedge certain foreign currency exposures, including firm commitments, recognized assets or liabilities and net investments. In addition, PPL enters into financial instruments to protect against foreign currency translation risk.

PPL executed net forward sale transactions for £13.7 million to hedge a portion of its net investment in WPDH Limited. The estimated value of these agreements as of December 31, 2004, was $2 million, being the amount PPL would pay to terminate the transactions.

WPDH Limited held a net position in cross-currency swaps totaling $1.1 billion to hedge the interest payments and value of its U.S. dollar-denominated bonds. The estimated value of this position at December 31, 2004, being the amount PPL would pay to terminate it, including accrued interest, was $274 million.

On the Statement of Income, gains and losses associated with hedges of interest payments denominated in foreign currencies are reflected in "Interest Expense." Gains and losses associated with the purchase of equipment are reflected in "Depreciation." Gains and losses associated with net investment hedges remain in accumulated other comprehensive loss on the Balance Sheet until the investment is disposed.

Nuclear Decommissioning Fund - Securities Price Risk

In connection with certain NRC requirements, PPL Susquehanna maintains trust funds to fund certain costs of decommissioning the Susquehanna station. As of December 31, 2004, these funds were invested primarily in domestic equity securities and fixed-rate, fixed-income securities and are reflected at fair value on PPL Energy Supply's Balance Sheet. The mix of securities is designed to provide returns to be used to fund Susquehanna's decommissioning and to compensate for inflationary increases in decommissioning costs. However, the equity securities included in the trusts are exposed to price fluctuation in equity markets, and the values of fixed-rate, fixed-income securities are exposed to changes in interest rates. PPL Susquehanna actively monitors the investment performance and periodically reviews asset allocation in accordance with its nuclear decommissioning trust policy statement. At December 31, 2004, a hypothetical 10% increase in interest rates and a 10% decrease in equity prices would have resulted in an estimated $30 million reduction in the fair value of the trust assets, as compared to a $24 million reduction at December 31, 2003. See Note 6 to the Financial Statements for more information regarding the nuclear decommissioning trust funds.

Credit Risk

Credit risk relates to the risk of loss that PPL Energy Supply would incur as a result of non-performance by counterparties of their contractual obligations. PPL Energy Supply maintains credit policies and procedures with respect to counterparties (including requirements that counterparties maintain certain credit ratings criteria) and requires other assurances in the form of credit support or collateral in certain circumstances in order to limit counterparty credit risk. However, PPL Energy Supply has concentrations of suppliers and customers among electric utilities, natural gas distribution companies and other energy marketing and trading companies. These concentrations of counterparties may impact PPL Energy Supply's overall exposure to credit risk, either positively or negatively, in that counterparties may be similarly affected by changes in economic, regulatory or other conditions. As discussed above in "Contract Valuation," PPL Energy Supply records certain non-performance reserves to reflect the probability that a counterparty with contracts that are out of the money (from the counterparty's standpoint) will default in its performance, in which case PPL Energy Supply would have to sell into a lower-priced market or purchase from a higher-priced market. These reserves are reflected in the fair value of assets recorded in "Price risk management assets" on the Balance Sheet. PPL Energy Supply also records reserves to reflect the probability that a counterparty will not make payments for deliveries PPL Energy Supply has made but not yet billed. These reserves are reflected in "Unbilled revenues" on the Balance Sheet. PPL Energy Supply has also established a reserve with respect to certain sales to the California ISO for which PPL Energy Supply has not yet been paid, as well as a reserve related to PPL Energy Supply's exposure as a result of the Enron bankruptcy, which are reflected in "Accounts receivable" on the Balance Sheet. See Notes 14 and 17 to the Financial Statements.

Related Party Transactions

PPL Energy Supply is not aware of any material ownership interests or operating responsibility by senior management of PPL Energy Supply in outside partnerships, including leasing transactions with variable interest entities, or other entities doing business with PPL Energy Supply.

For additional information on related party transactions, see Note 15 to the Financial Statements.

Capital Expenditure Requirements

The schedule below shows PPL Energy Supply's current capital expenditure projections for the years 2005-2009 and actual spending for the year 2004:

				Actual		Projected
				2004		2005		2006		2007		2008		2009
Construction expenditures (a) (b)
	Generating facilities			$	156	$	180	$	231	$	233	$	170	$	163
	Transmission and distribution facilities				275		287		292		283		286		293
	Environmental				23		41		134		263		228		170
	Other				19		25		37		23		2		3
		Total Construction Expenditures			473		533		694		802		686		629
Nuclear fuel					58		68		69		76		76		78
			Total Capital Expenditures	$	531	$	601	$	763	$	878	$	762	$	707

(a)	Construction expenditures include capitalized interest, which is expected to be less than $16 million in each of the years 2005-2009.
(b)	This information excludes any potential investments by PPL Global for new projects.

PPL Energy Supply's capital expenditure projections for the years 2005-2009 total about $3.7 billion. Capital expenditure plans are revised periodically to reflect changes in market and asset regulatory conditions. PPL Energy Supply also leases vehicles, personal computers and other equipment as described in Note 10 to the Financial Statements. See Note 14 for additional information regarding potential capital expenditures for environmental projects.

Acquisitions, Development and Divestitures

From time-to-time, PPL Energy Supply and its subsidiaries are involved in negotiations with third parties regarding acquisitions, joint ventures and other arrangements which may or may not result in definitive agreements. See Note 9 to the Financial Statements for information regarding recent acquisitions and development activities.

At December 31, 2004, PPL Global had investments in foreign facilities, including consolidated investments in WPD, Emel, EC and others. See Note 3 to the Financial Statements for information on unconsolidated investments accounted for under the equity method.

In connection with an on-going review of its non-core international minority ownership investments, PPL Global sold its interest in CGE in 2004. See Note 9 to the Financial Statements for additional information.

PPL Energy Supply is currently planning incremental capacity increases of 255 MW at several existing domestic generating facilities.

PPL Energy Supply is continuously reexamining development projects based on market conditions and other factors to determine whether to proceed with these projects, sell them, cancel them, expand them, execute tolling agreements or pursue other opportunities.

Environmental Matters

See Note 14 to the Financial Statements for a discussion of environmental matters.

Competition

See "Item 1. Business - Competition," for a discussion of competitive factors affecting PPL Energy Supply.

New Accounting Standards

See Note 23 to the Financial Statements for information on new accounting standards adopted in 2004 or pending adoption.

Application of Critical Accounting Policies

PPL Energy Supply's financial condition and results of operations are impacted by the methods, assumptions and estimates used in the application of critical accounting policies. The following accounting policies are particularly important to the financial condition or results of operations of PPL Energy Supply, and require estimates or other judgments of matters inherently uncertain. Changes in the estimates or other judgments included within these accounting policies could result in a significant change to the information presented in the financial statements. (These accounting policies are also discussed in Note 1 to the Financial Statements.) PPL's senior management has reviewed these critical accounting policies, and the estimates and assumptions regarding them, with its Audit Committee. In addition, PPL's senior management has reviewed the following disclosures regarding the application of these critical accounting policies with the Audit Committee.

1) Price Risk Management

See "Risk Management - Energy Marketing & Trading and Other" in Financial Condition.

2) Pension and Other Postretirement Benefits

As described in Note 12 to the Financial Statements, PPL Energy Supply subsidiaries sponsor various pension and other postretirement plans and participate in, and are allocated a significant portion of the liability and net periodic pension cost of the PPL Retirement Plan and the PPL Postretirement Benefit Plan. PPL and PPL Energy Supply follow the guidance of SFAS 87, "Employers' Accounting for Pensions," and SFAS 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," when accounting for these pension and other postretirement benefits. Under these accounting standards, assumptions are made regarding the valuation of benefit obligations and the performance of plan assets. Delayed recognition of differences between actual results and expected or estimated results is a guiding principle of these standards. This delayed recognition of actual results allows for a smoothed recognition of changes in benefit obligations and plan performance over the working lives of the employees who benefit under the plans. The primary assumptions are as follows:

• Discount Rate - The discount rate is used in calculating the present value of benefits, which are based on projections of benefit payments to be made in the future.

• Expected Return on Plan Assets - Management projects the future return on plan assets considering prior performance, but primarily based upon the plans' mix of assets and expectations for the long-term returns on those asset classes. These projected returns reduce the net benefit costs PPL Energy Supply records currently.

• Rate of Compensation Increase - Management projects employees' annual pay increases, which are used to project employees' pension benefits at retirement.

• Health Care Cost Trend Rate - Management projects the expected increases in the cost of health care.

In selecting discount rates, PPL and PPL Energy Supply consider fixed-income security yield rates. At December 31, 2004, PPL and PPL Energy Supply decreased the discount rate for their domestic plans from 6.25% to 5.75% as a result of decreased domestic fixed-income security returns. The discount rate remained at 5.50% at December 31, 2004 for PPL Energy Supply's international pension plans.

In selecting an expected return on plan assets, PPL and PPL Energy Supply consider tax implications, past performance and economic forecasts for the types of investments held by the plans. At December 31, 2004, PPL and PPL Energy Supply's expected return on plan assets for their domestic pension plans remained at 9.0%. For its international plans, PPL Energy Supply maintained 8.30% as the expected return on plan assets at December 31, 2004.

In selecting a rate of compensation increase, PPL and PPL Energy Supply consider past experience in light of movements in inflation rates. At December 31, 2004, PPL and PPL Energy Supply's rates of compensation increase remained at 4.0% for their domestic plans. For its international plans, PPL Energy Supply's rate of compensation increase remained at 3.75% at December 31, 2004.

In selecting health care cost trend rates, PPL and PPL Energy Supply consider past performance and forecasts of health care costs. At December 31, 2004, PPL and PPL Energy Supply's health care cost trend rates were 10% for 2005, gradually declining to 5.0% for 2010.

A variance in the assumptions listed above could have a significant impact on projected benefit obligations, accrued pension and other postretirement benefit liabilities, reported annual net periodic pension and other postretirement benefit cost and other comprehensive income (OCI). The following chart reflects the sensitivities in the 2004 Financial Statements associated with a change in certain assumptions. While the chart below reflects either an increase or decrease in each assumption, the inverse of this change would impact the projected benefit obligation, accrued pension and other postretirement benefit liabilities, reported annual net periodic pension and other postretirement benefit cost and OCI by a similar amount in the opposite direction. Each sensitivity below reflects an evaluation of the change based solely on a change in that assumption.

	Increase (Decrease)
Actuarial Assumption	Change in Assumption		Impact on Obligation		Impact on Liabilities (a)		Impact on Cost		Impact on OCI
Discount Rate		(0.25)%	$	140	$	3	$	3	$	108
Expected Return on Plan Assets		(0.25)%		N/A		8		8		(6	)
Rate of Compensation Increase		0.25%		18		3		3		(1	)
Health Care Cost Trend Rate (b)		1.0%		3						N/A

(a)	Excludes the impact of additional minimum liability.
(b)	Only impacts other postretirement benefits.

The total net pension and other postretirement benefit obligation for PPL Energy Supply's plans was $473 million as of December 31, 2004. PPL Energy Supply recognized an aggregate net accrued pension and other postretirement benefit liability of $327 million on its Balance Sheet as of December 31, 2004, for its plans. The total obligation is not fully reflected in the current financial statements due to the delayed recognition criteria of the accounting standards for these obligations. At December 31, 2004, PPL Energy Supply also reflected a net liability of $58 million on its Balance Sheet for pension liabilities and prepaid other postretirement benefit costs allocated from plans sponsored by PPL Services.

In 2004, PPL Energy Supply was allocated and recognized net periodic pension and other postretirement income credited to operating expenses of $19 million. This amount represents a $6 million decrease versus the credit recognized during 2003. This decrease was primarily due to the decrease in the discount rate at December 31, 2003.

As a result of the decrease in the assumed discount rate at December 31, 2004, for its domestic pension plans and the increase in the obligations for its international plans determined by their 2004 valuations, PPL Energy Supply was required to increase its recognized additional minimum pension liability. Recording the change in the additional minimum liability resulted in a $51 million increase to the pension-related charge to OCI, net of taxes, translation adjustment and unrecognized prior service costs, with no effect on net income. This charge increased the pension-related balance in OCI, which is a reduction to Member's Equity, to $360 million at December 31, 2004. The charges to OCI will reverse in future periods if the fair value of trust assets exceeds the accumulated benefit obligation.

Refer to Note 12 to the Financial Statements for additional information regarding pension and other postretirement benefits.

3) Asset Impairment

PPL Energy Supply performs impairment analyses for long-lived assets, including intangibles, that are subject to depreciation or amortization in accordance with SFAS 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." PPL Energy Supply tests for impairment whenever events or changes in circumstances indicate that a long-lived asset's carrying value may not be recoverable. Examples of such events or changes in circumstances are:

• a significant decrease in the market price of an asset;
• a significant adverse change in the manner in which an asset is being used or in its physical condition;
• a significant adverse change in legal factors or in the business climate;
• an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of an asset;
• a current-period operating or cash flow loss combined with a history of losses or a forecast that demonstrates continuing losses; or
• a current expectation that, more likely than not, an asset will be sold or otherwise disposed of before the end of its previously estimated useful life.

For a long-lived asset, an impairment exists when the carrying value exceeds the sum of the estimated undiscounted cash flows expected to result from the use and eventual disposition of the asset. If the asset is impaired, an impairment loss is recorded to adjust the asset's carrying value to its estimated fair value.

In determining asset impairments, management must make significant judgments to estimate future cash flows, the useful lives of long-lived assets, the fair value of the assets and management's intent to use the assets. Changes in assumptions and estimates included within the impairment reviews could result in significantly different results than those identified and recorded in the financial statements. For determining fair value, the FASB has indicated that quoted market prices in active markets are the best evidence of fair value. However, when market prices are unavailable, other valuation techniques may be used. PPL Energy Supply has generally used a present value technique (i.e., discounted cash flow). Discounted cash flow is calculated by estimating future cash flow streams and applying appropriate discount rates to determine the present value of the cash flow streams.

PPL Energy Supply has determined that when alternative courses of action to recover the carrying value of a long-lived asset are being considered, it uses estimated cash flows from the most likely approach to assess impairment whenever one scenario is clearly the most likely outcome. If no scenario is clearly most likely, then a probability-weighted approach is used taking into consideration estimated cash flows from the alternative scenarios. For assets tested for impairment as of the balance sheet date, the estimates of future cash flows used in that test consider the likelihood of possible outcomes that existed at the balance sheet date, including the assessment of the likelihood of the future sale of the assets. That assessment made as of the balance sheet date is not revised based on events that occur after the balance sheet date.

During 2004, PPL Energy Supply and its subsidiaries evaluated certain gas-fired generation assets for impairment, as events and circumstances indicated that the carrying value of these assets may not be recoverable. PPL Energy Supply did not record an impairment of these gas-fired generation assets in 2004. For these impairment analyses, the most significant assumption was the estimate of future cash flows. PPL Energy Supply estimates future cash flows using information from its corporate business plan adjusted for any recent sales or purchase commitments. Key factors that impact cash flows include projected prices for electricity and gas as well as firm sales and purchase commitments. A 10% decrease in estimated future cash flows for certain gas-fired generation assets would have resulted in an impairment charge.

In June 2004, a subsidiary of PPL Generation agreed to sell the 450 MW Sundance power plant to Arizona Public Service Company, subject to the receipt of various state and federal regulatory approvals and customary closing conditions. At December 31, 2004, as a result of the significant regulatory approvals still needed to complete the sale, PPL management did not believe that it was more likely than not that the sale would be consummated and concluded that no impairment charge was required at that time. See Note 9 to the Financial Statements for additional information on the potential sale of Sundance.

PPL Energy Supply performs impairment analyses for goodwill in accordance with SFAS 142, "Goodwill and Other Intangible Assets." PPL Energy Supply performs an annual impairment test for goodwill, or more frequently if events or changes in circumstances indicate that the asset might be impaired.

SFAS 142 requires goodwill to be tested for impairment at the reporting unit level. PPL Energy Supply has determined its reporting units to be one level below its operating segments.

Goodwill is tested for impairment using a two-step approach. The first step of the goodwill impairment test compares the estimated fair value of a reporting unit with its carrying value, including goodwill. If the estimated fair value of a reporting unit exceeds its carrying value, goodwill of the reporting unit is considered not impaired. If the carrying value exceeds the estimated fair value of the reporting unit, the second step is performed to measure the amount of impairment loss, if any.

The second step requires a calculation of the implied fair value of goodwill. The implied fair value of goodwill is determined in the same manner as the amount of goodwill in a business combination. That is, the estimated fair value of a reporting unit is allocated to all of the assets and liabilities of that unit as if the reporting unit had been acquired in a business combination and the estimated fair value of the reporting unit was the price paid to acquire the reporting unit. The excess of the estimated fair value of a reporting unit over the amounts assigned to its assets and liabilities is the implied fair value of goodwill. The implied fair value of the reporting unit goodwill is then compared with the carrying value of that goodwill. If the carrying value exceeds the implied fair value, an impairment loss is recognized in an amount equal to that excess. The loss recognized cannot exceed the carrying value of the reporting unit's goodwill.

PPL Energy Supply completed its annual goodwill impairment test in the fourth quarter of 2004. This test did not require any second-step assessments and did not result in any impairments. PPL Energy Supply's most significant assumptions surrounding the goodwill impairment test relate to the estimates of reporting unit fair values. PPL Energy Supply estimated fair values primarily based upon discounted cash flows. Although a full two-step evaluation was not completed, a decrease in the forecasted cash flows of 10% or an increase of the discount rates by 25 basis points would have resulted in the carrying value of certain reporting units exceeding their estimated fair values, indicating a potential impairment of goodwill.

4) Leasing

PPL Energy Supply applies the provisions of SFAS 13, "Accounting for Leases," to all leasing transactions. In addition, PPL Energy Supply applies the provisions of numerous other accounting pronouncements issued by the FASB and the EITF that provide specific guidance and additional requirements related to accounting for various leasing arrangements. In general, there are two types of leases from a lessee's perspective: operating leases - leases accounted for off-balance sheet; and capital leases - leases capitalized on the balance sheet.

In accounting for leases, management makes various assumptions, including the discount rate, the fair market value of the leased assets and the estimated useful life, in determining whether a lease should be classified as operating or capital. Changes in these assumptions could result in the difference between whether a lease is determined to be an operating lease or a capital lease, thus significantly impacting the amounts to be recognized in the financial statements.

In addition to uncertainty inherent in management's assumptions, leasing transactions and the related accounting rules become increasingly complex when they involve: real estate and/or related integral equipment; sale/leaseback accounting (leasing transactions where the lessee previously owned the leased assets); synthetic leases (leases that qualify for operating lease treatment for book accounting purposes and financing treatment for tax accounting purposes); and lessee involvement in the construction of leased assets.

At December 31, 2004, PPL Energy Supply continued to participate in a significant sale/leaseback transaction. In July 2000, PPL Montana sold its interest in the Colstrip generating plant to owner lessors who are leasing the assets back to PPL Montana under four 36-year operating leases. This transaction is accounted for as an operating lease in accordance with current rules related to sale/leaseback arrangements. If for any reason this transaction did not meet the requirements for off-balance sheet operating lease treatment as a sale/leaseback, PPL Energy Supply would have recorded approximately $290 million of additional assets and approximately $331 million of additional liabilities on its balance sheet at December 31, 2004, and would have recorded additional expenses currently estimated at $8 million, after-tax, in 2004.

See Note 10 to the Financial Statements for additional information related to operating leases.

5) Loss Accruals

PPL Energy Supply periodically accrues losses for the estimated impacts of various conditions, situations or circumstances involving uncertain outcomes. These events are called "contingencies," and PPL Energy Supply's accounting for such events is prescribed by SFAS 5, "Accounting for Contingencies." SFAS 5 defines a contingency as "an existing condition, situation, or set of circumstances involving uncertainty as to possible gain or loss to an enterprise that will ultimately be resolved when one or more future events occur or fail to occur."

For loss contingencies, the loss must be accrued if (1) information is available that indicates it is "probable" that the loss has been incurred, given the likelihood of the uncertain future events and (2) the amount of the loss can be reasonably estimated. FASB defines "probable" as cases in which "the future event or events are likely to occur." SFAS 5 does not permit the accrual of contingencies that might result in gains. PPL Energy Supply continuously assesses potential loss contingencies for environmental remediation, litigation claims, income taxes, regulatory penalties and other events.

PPL Energy Supply also has accrued estimated losses on long-term purchase commitments when significant events have occurred. For example, estimated losses were accrued when long-term purchase commitments were assumed under asset acquisition agreements and when PPL Electric's generation business was deregulated. Under regulatory accounting, PPL Electric recorded the above-market cost of energy purchases from NUGs as part of its purchased power costs on an as-incurred basis, since these costs were recovered in regulated rates. When the generation business was deregulated, the estimated loss associated with these long-term purchase commitments to make above-market NUG purchases was recorded because PPL Electric was committed to purchase electricity at above market prices but it could no longer recover these costs in regulated rates.

The accounting aspects of estimated loss accruals include: (1) the initial identification and recording of the loss; (2) the determination of triggering events for reducing a recorded loss accrual; and (3) the on-going assessment as to whether a recorded loss accrual is sufficient. All three aspects of accounting for loss accruals - the initial identification and recording of a probable loss, the identification of triggering events to reduce the loss accrual, and the ongoing assessment of the sufficiency of a recorded loss accrual - require significant judgment by PPL Energy Supply's management.

Initial Identification and Recording of the Loss Accrual

PPL Energy Supply uses its internal expertise and outside experts (such as lawyers, tax specialists and engineers), as necessary, to help estimate the probability that a loss has been incurred and the amount (or range) of the loss.

PPL Energy Supply has identified certain events which could give rise to a loss, but which do not meet the conditions for accrual under SFAS 5. SFAS 5 requires disclosure, but not a recording, of potential losses when it is "reasonably possible" that a loss has been incurred. The FASB defines "reasonably possible" as cases in which "the chance of the future event or events occurring is more than remote but less than likely." See Note 14 to the Financial Statements for disclosure of potential loss contingencies, most of which have not met the criteria for accrual under SFAS 5.

Reducing Recorded Loss Accruals

When an estimated loss is accrued, PPL Energy Supply identifies, where applicable, the triggering events for subsequently reducing the loss accrual. The triggering events generally occur when the contingency has been resolved and the actual loss is incurred, or when the risk of loss has diminished or been eliminated. The following are some of the triggering events that provide for the reduction of certain recorded loss accruals:

• Certain loss accruals are systematically reduced based on the expiration of contract terms. An example of this is the loss accrual for above-market NUG purchase commitments, which is described below. This loss accrual is being reduced over the lives of the NUG purchase contracts.

• Allowances for excess or obsolete inventory are reduced as the inventory items are pulled from the warehouse shelves and sold as scrap or otherwise disposed.

• Allowances for uncollectible accounts are reduced when accounts are written off after prescribed collection procedures have been exhausted or when underlying amounts are ultimately collected.

• Environmental and other litigation contingencies are reduced when the contingency is resolved and PPL Energy Supply makes actual payments or the loss is no longer considered probable.

On-Going Assessment of Recorded Loss Accruals

PPL Energy Supply reviews its loss accruals on a regular basis to assure that the recorded potential loss exposures are sufficient. This involves on-going communication and analyses with internal and external legal counsel, engineers, tax specialists, operation management and other parties.

The largest loss accrual on PPL Energy Supply's balance sheet, and the loss accrual that changed most significantly in 2004, was for an impairment of above-market NUG purchase commitments. This loss accrual reflects the estimated difference between the above-market contract terms, under the purchase commitments, and the fair value of the electricity to be purchased. This loss accrual was originally recorded at $854 million in 1998, when PPL Electric's generation business was deregulated. This loss accrual was transferred to PPL EnergyPlus in the July 1, 2000, corporate realignment. The above-market loss accrual was $279 million at December 31, 2004.

When the loss accrual related to NUG purchases was recorded in 1998, PPL Electric established the triggering events for when the loss accrual would be reduced. A schedule was established to reduce the liability based on projected purchases over the lives of the NUG contracts. All but one of the NUG contracts expire by 2009, with the last one ending in 2014. PPL EnergyPlus reduces the above-market NUG liability based on the aforementioned schedule. As PPL EnergyPlus reduces the liability for the above-market NUG purchases, it offsets the actual cost of NUG purchases, thereby bringing the net power purchase expense more in line with market prices.

PPL EnergyPlus assessed the remaining $279 million above-market liability at December 31, 2004, comparing the projected electricity purchases under the pricing terms of the NUG contracts with the purchases assuming current projected market prices for the energy. This assessment was based on projected PJM market prices, including capacity, and a discount factor for the unit contingent nature of each NUG's output through 2014. The assessment also used a sensitivity around the market prices, adjusting such prices downward by 15%. PPL Energy Supply management believes that the 15% range in volatility is appropriate due to the significant increase in energy prices over the last few years. For example, at December 31, 2004, PJM future market prices, including capacity, were 18% higher than the comparable projections at December 31, 2003.

The assessment is dependent on the market prices of energy and the estimated output levels of the NUGs. Market prices of energy are dependent on many variables, including growth in electricity demand in PJM, available generation, and changes in regulatory and economic conditions. Accordingly, a market price sensitivity was used in the assessment. Based on current projected market prices for energy, the loss accrual for the above-market NUG purchase commitments would be approximately $225 million. Even if estimated market prices were adjusted downwards by 15% during the remaining term of the NUG contracts, the loss accrual for the above-market NUG purchase commitments would be approximately $287 million. As noted above, it is very difficult to estimate future electricity prices, which are dependent on many variables and subject to significant volatility. However, based on this assessment, PPL Energy Supply's management believes that the current recorded NUG above-market liability of $279 million was sufficient at December 31, 2004.

6) Asset Retirement Obligations

SFAS 143, "Accounting for Asset Retirement Obligations," requires legal obligations associated with the retirement of long-lived assets to be recognized as a liability in the financial statements. The initial obligation should be measured at the estimated fair value. An equivalent amount should be recorded as an increase in the value of the capitalized asset and allocated to expense over the useful life of the asset. Until the obligation is settled, the liability should be increased, through the recognition of accretion expense in the income statement, for changes in the obligation due to the passage of time.

In determining asset retirement obligations, management must make significant judgments and estimates to calculate fair value. Fair value is developed through consideration of estimated retirement costs in today's dollars, inflated to the anticipated retirement date and then discounted back to the date the asset retirement obligation was incurred. Changes in assumptions and estimates included within the calculations of asset retirement obligations could result in significantly different results than those identified and recorded in the financial statements.

At December 31, 2004, PPL Energy Supply had asset retirement obligations totaling $257 million recorded on the Balance Sheet. PPL's Energy Supply most significant assumptions surrounding asset retirement obligations are the forecasted retirement cost, discount rate and inflation rate. A variance in the forecasted retirement cost, discount rate or inflation rate could have a significant impact on the ARO liability.

The following chart reflects the sensitivities related to the ARO liability as of December 31, 2004, associated with a change in these assumptions at the time of initial recognition. There is no significant change to the ARO asset value, depreciation expense of the ARO asset or accretion expense of the ARO liability as a result of changing the assumptions. Each sensitivity below reflects an evaluation of the change based solely on a change in that assumption.

	Change in Assumption	Impact on ARO Liability
Retirement Cost	10%/(10)%	$23/$(23)
Discount Rate	0.25%/(0.25)%	$(25)/$27
Inflation Rate	0.25%/(0.25)%	$29/$(26)

Other Information

PPL's Audit Committee has approved the independent auditor to provide audit and audit-related services and other services permitted by the Sarbanes-Oxley Act of 2002 and SEC rules. The audit and audit-related services include services in connection with statutory and regulatory filings, reviews of offering documents and registration statements, employee benefit plan audits and internal control reviews. See "Item 14. Principal Accounting Fees and Services" for more information.

PPL ELECTRIC UTILITIES CORPORATION
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

PPL Electric provides electricity delivery service in eastern and central Pennsylvania. Its headquarters are in Allentown, PA. See "Item 1. Business - Background," for a description of PPL Electric's business. PPL Electric's strategy and principal challenge is to own and operate its electricity delivery business at the highest level of quality and reliability and at the most efficient cost.

PPL Electric's electricity delivery business is rate-regulated. Accordingly, PPL Electric is subject to regulatory risks in terms of the costs that it may recover and the investment returns that it may collect in customers' rates.

An important challenge for PPL Electric is to maintain a strong credit profile. In the past few years, investors, analysts and rating agencies that follow companies in the energy industry have been particularly focused on the credit quality and liquidity position of these companies. PPL Electric is focused on strengthening its balance sheet and improving its liquidity position, thereby improving its credit profile.

The purpose of "Management's Discussion and Analysis of Financial Condition and Results of Operations" is to provide information concerning PPL Electric's past and expected future performance in implementing the strategy and challenges outlined above. Specifically:

• "Results of Operations" provides an overview of PPL Electric's operating results in 2004, 2003 and 2002, starting with a review of earnings. The earnings review discusses the outcome of the delivery rate increase that PPL Electric filed with the PUC in 2004. "Results of Operations" also includes an explanation of changes during this three-year period in significant income statement components, such as operating revenues, operation and maintenance expenses, financing costs and income taxes.

• "Financial Condition - Liquidity" provides an analysis of PPL Electric's liquidity position and credit profile, including its sources of cash (including bank credit facilities and sources of operating cash flow) and uses of cash (including contractual commitments and capital expenditure requirements) and the key risks and uncertainties that impact PPL Electric's past and future liquidity position and financial condition. This subsection also includes a listing of PPL Electric's current credit ratings.

• "Financial Condition - Risk Management" includes an explanation of PPL Electric's risk management activities regarding commodity price risk and interest rate risk.

• "Application of Critical Accounting Policies" provides an overview of the accounting policies that are particularly important to the results of operations and financial condition of PPL Electric and that require PPL Electric's management to make significant estimates, assumptions and other judgments. Although PPL Electric's management believes that these estimates, assumptions and other judgments are appropriate, they relate to matters that are inherently uncertain. Accordingly, changes in the estimates, assumptions and other judgments applied to these accounting policies could have a significant impact on PPL Electric's results of operations and financial condition, as reflected in PPL Electric's Financial Statements.

The information provided in "Management's Discussion and Analysis of Financial Condition and Results of Operations" should be read in conjunction with PPL Electric's Financial Statements and the accompanying Notes.

Terms and abbreviations are explained in the glossary. Dollars are in millions unless otherwise noted.

Results of Operations

The following discussion, which explains significant annual changes in principal items on the Statement of Income, compares 2004 to 2003 and compares 2003 to 2002.

Earnings

Income available to PPL was as follows:

2004		2003		2002
$	74	$	25	$	39

The after-tax changes in income available to PPL were primarily due to:

	2004 vs. 2003			2003 vs. 2002
Delivery revenues (net of CTC/ITC amortization, interest expense on transition bonds and ancillary charges)	$	5		$	11
Operation and maintenance expenses		(3	)		(15	)
Taxes, other than income (excluding gross receipts tax)		9			(6	)
Depreciation		(2	)		(5	)
Reduction in tax reserves associated with stranded costs securitization		22
Interest income on IRS tax settlement		5
Financing costs (excluding transition bond interest expense)		2			(6	)
Other		6			(7	)
Unusual item - workforce reduction (Note 20)		5			14
	$	49		$	(14	)

The year-to-year changes in earnings components are discussed in the balance of "Results of Operations."

PPL Electric's future earnings could be, or will be, impacted by a number of factors, including the following:

• In March 2004, PPL Electric filed a request with the PUC for an overall annual net increase in distribution rates of approximately $164 million (subsequently amended to $160 million), based on a return on equity of 11.5%, and notified the PUC that it planned to pass through to customers approximately $57 million in increased transmission charges imposed on PPL Electric by PJM. In December 2004, the PUC approved an increase in PPL Electric's distribution rates of approximately $137 million (based on a return on equity of 10.7%), and approved PPL Electric's proposed mechanism for collecting the additional $57 million in transmission-related charges, for a total increase of approximately $194 million, effective January 1, 2005.

• As discussed in "Item 1. Business - Background," PPL Electric has agreed to provide electricity supply to its PLR customers at predetermined rates through 2009, and it has entered into PUC-approved, full requirements energy supply agreements with PPL EnergyPlus to fulfill its PLR obligation. The predetermined charges for generation supply which PPL Electric collects from its PLR customers and pays to PPL EnergyPlus under the energy supply agreements provide for annual increases in each year commencing in 2006 and continuing through 2009. PPL Electric's PLR obligation after 2009 will be determined by the PUC pursuant to rules that have not yet been promulgated.

• In January 2005, severe ice storms hit PPL Electric's service territory. PPL Electric had to restore service to about 238,000 customers. Although the actual cost of these storms and the specific allocation of such cost between operation and maintenance expense and capital costs is not yet finalized, PPL Electric currently estimates a total cost of $22 million, with approximately 85% being expensed.

  On February 11, 2005, PPL Electric filed a petition with the PUC for authority to defer and amortize for regulatory accounting and reporting purposes its actual cost of these storms, excluding capitalized costs of approximately $3 million and regular payroll expenses of approximately $2 million (pursuant to PUC precedent on this issue). If the PUC grants this petition, PPL Electric's management at that time will assess the recoverability of these costs in PPL Electric's next general rate increase proceeding. Based on the PUC's action on the petition and management's assessment, PPL Electric would either record these storm expenses, excluding regular payroll, as a regulatory asset in accordance with SFAS 71, "Accounting for the Effects of Certain Types of Regulation," or record these storm expenses on its income statement. If the PUC grants the petition before PPL Electric files its Form 10-Q for the first quarter of 2005, the result of this assessment will be reflected in PPL Electric's financial statements for the first quarter of 2005. If the PUC has not acted on or has denied the petition by such date, PPL Electric would record these storm expenses on its income statement. At this time, PPL Electric cannot predict the outcome of this matter.

• See Note 14 to the Financial Statements for potential commitments and contingent liabilities that may impact future earnings.

• See "Application of Critical Accounting Policies" for an overview of accounting policies that are particularly important to the results of operations and financial condition of PPL Electric and that require PPL Electric's management to make significant estimates, assumptions and other judgments. Although PPL Electric's management believes that these estimates, assumptions and other judgments are appropriate, they relate to matters that are inherently uncertain.

• See Note 23 to the Financial Statements for new accounting standards that have been issued but not yet adopted by PPL Electric that may impact future earnings.

Operating Revenues

Retail Electric (Including to Affiliate)

The increases in revenues from retail electric operations were attributable to the following:

	2004 vs. 2003			2003 vs. 2002
PLR electric generation supply	$	94		$	22
Electric delivery		(7	)		48
Delivery and PLR supply to PPL Generation		(5	)		(15	)
Other		(1	)
	$	81		$	55

The increase in revenues from retail electric operations for 2004 compared with 2003 was primarily due to:

• higher PLR revenues due to higher energy and capacity rates, and a 3.6% increase in volume, in part due to the return of customers previously served by alternate suppliers; partially offset by
• lower electric delivery revenues due to a decrease in ITC and CTC revenue as a result of lower ITC rates, and several rate groups reaching their cap; and
• lower sales to PPL Generation. PPL Generation's power plants began self-supplying their station use in April 2003, rather than taking supply from PPL Electric.

The increase in revenues from retail electric operations for 2003 compared with 2002 was primarily due to:

• higher PLR revenues due to higher energy and capacity rates; and
• higher electric delivery revenues resulting from a 1.1% increase in delivery sales, in part due to colder winter weather in the first quarter of 2003; partially offset by
• lower sales to PPL Generation. PPL Generation's power plants began self-supplying their station use in April 2003, rather than taking supply from PPL Electric.

Wholesale Electric

PPL Electric wholesale revenues are derived from sales to municipalities. The $23 million decrease in wholesale electric revenues in 2004 compared with 2003 was due to the expiration of all municipal purchase power agreements at the end of January 2004.

Wholesale Electric to Affiliate

PPL Electric has a contract to sell to PPL EnergyPlus the electricity that PPL Electric purchases under contracts with NUGs. The termination of one NUG contract in April 2003 and another in February 2002 caused PPL Electric to purchase $8 million less NUG energy in 2003 compared to 2002. PPL Electric therefore had less electricity to sell to PPL EnergyPlus.

Energy Purchases from Affiliate

Energy purchases from affiliate increased by $56 million in 2004 compared with 2003. The increase reflects an increase in PLR load, as well as higher prices for energy purchased under the power supply contracts with PPL EnergyPlus needed to support PLR load.

Energy purchases from affiliate increased by $13 million in 2003 compared with 2002, reflecting higher prices under the power supply contracts with PPL EnergyPlus.

Other Operation and Maintenance

The increases in other operation and maintenance expenses were primarily due to:

	2004 vs. 2003				2003 vs. 2002
Increase in pension costs	$	5		$		13
Lower net rent allocations to other PPL affiliates in 2004 and 2003		4				6
Write-off of Hurricane Isabel costs not approved for recovery by the PUC		4
Increase in expenses related to pole attachments		2
Increase (decrease) in other postretirement benefit expense		(11	)			7
Increases in expenses in responding to customers' service calls						2
Work performed to assure reliability of the T&D system						2
Environmental accrual in 2003 for a former manufactured gas plant		(2	)			2
Estimated reduction in salaries and benefits as a result of the workforce reduction initiated in 2002						(8	)
Vacation liability adjustment in 2002 in conjunction with the workforce reduction						(7	)
Other - net		6				9
	$	8		$		26

Depreciation

Depreciation increased by $4 million in 2004 compared to 2003 and by $9 million in 2003 compared to 2002. These increases were primarily due to plant additions, including the Automated Meter Reading project. Additionally, 2003 compared with 2002 was impacted by software additions.

Taxes, Other Than Income

In the first quarter of 2004, PPL Electric reversed a $14 million accrued liability for 1998 and 1999 PURTA taxes that had been accrued based on potential exposure in the proceedings regarding the Susquehanna nuclear station tax assessment. The rights of the third-party intervenors to further appeal expired in 2004. The reversal is the primary reason for the $12 million decrease in taxes in 2004, compared with 2003. Also contributing to the decrease was lower capital stock tax expense. These decreases were partially offset by higher gross receipts tax expense.

Taxes, other than income, increased by $11 million in 2003 compared with 2002 due to the settlement of prior years' capital stock tax refund claims of $8 million in 2002, and higher taxes related to an increase in the basis on which capital stock tax is calculated in 2003.

Workforce Reduction

See Note 20 to the Financial Statements for information on the charges recorded in 2003 and 2002.

Other Income - net

See Note 16 to the Financial Statements for details of other income and deductions.

Financing Costs

Interest expense decreased by $21 million in 2004 compared to 2003 and by $7 million in 2003 compared to 2002. These decreases reflect the net impact of long-term debt retirements. Over the past two years, $824 million of long-term debt retirements have occurred, while new issuances over the same period totaled $190 million.

Distributions on preferred securities decreased by $13 million in 2003 compared to 2002 due to retirements and redemptions of preferred securities and preferred stock.

Income Taxes

Income tax expense decreased by $10 million in 2004 compared with 2003. This decrease was primarily attributable to:

• a $22 million tax benefit recognized in 2004 related to a reduction in tax reserves associated with stranded costs securitization predicated upon management's reassessment of its best estimate of probable tax exposure, relative to 2003; offset by
• a $15 million increase in income tax expense related to higher pre-tax book income.

Income tax expense did not change for 2003 compared with 2002. This was due to lower pre-tax book income, resulting in a $5 million reduction in income taxes, offset by a $3 million increase in income tax expense related to the filing of PPL Electric's income tax returns.

Annual tax provisions include amounts considered sufficient to pay assessments that may result from examination of prior year tax returns by taxing authorities. However, the amount ultimately paid upon resolution of any issues raised by such authorities may differ materially from the amount accrued. In evaluating the exposure associated with various filing positions, PPL Electric accounts for changes in probable exposures based on management's best estimate of the amount that should be recognized. An allowance is maintained for the tax contingencies, the balance of which management believes to be adequate. During 2004, PPL Electric reached partial settlement with the IRS with respect to the tax years 1991 through 1995 and received a cash refund in the amount of $45 million. As a result of this settlement, the net tax impact recorded in 2004 was not significant.

See Note 5 to the Financial Statements for details on effective income tax rates and other income tax related matters.

Financial Condition

Liquidity

PPL Electric is focused on maintaining a strong liquidity position and strengthening its balance sheet, thereby improving its credit profile. PPL Electric believes that its cash on hand, operating cash flows, access to debt and equity capital markets and borrowing capacity, taken as a whole, provide sufficient resources to fund its ongoing operating requirements, future security maturities and estimated future capital expenditures. PPL Electric currently expects cash on hand at the end of 2005 to be approximately $100 million, with about $300 million in credit facilities and up to $150 million in short-term debt capacity related to an asset-backed commercial paper program. However, PPL Electric's cash flows from operations and its access to cost effective bank and capital markets are subject to risks and uncertainties, including but not limited to, the following:

• unusual or extreme weather that may damage PPL Electric's transmission and distribution facilities or affect energy sales to customers;
• ability to recover and the timeliness and adequacy of recovery of costs associated with regulated utility businesses; and
• a downgrade in PPL Electric's credit ratings that could negatively affect its ability to access capital and increase the cost of maintaining credit facilities and any new debt.

At December 31, 2004, PPL Electric had $151 million in cash and cash equivalents and $42 million of short-term debt compared to $162 million in cash and cash equivalents and no short-term debt at December 31, 2003, and $29 million in cash and cash equivalents and $15 million of short-term debt at December 31, 2002. The $42 million increase in short-term debt from 2003 to 2004 resulted entirely from loan proceeds attributable to the asset-backed commercial paper program, of which the full amount was used to cash collateralize letters of credit. The change in short-term debt from 2002 to 2003 reflects the repayment of PPL Electric commercial paper. The changes in cash and cash equivalents resulted from the following:

	2004			2003			2002
Net Cash Provided by Operating Activities	$	898		$	528		$	270
Net Cash Provided by (Used in) Investing Activities		(523	)		(145	)		89
Net Cash Used in Financing Activities		(386	)		(250	)		(365	)
Increase (Decrease) in Cash & Cash Equivalents	$	(11	)	$	133		$	(6	)

Net Cash Provided by Operating Activities

Net cash provided by operating activities increased by $370 million in 2004 versus 2003, reflecting primarily the receipt of $300 million in cash collateral related to the PLR energy supply agreements and a federal income tax refund.

An important element supporting the stability of PPL Electric's cash from operations is its long-term purchase contracts with PPL EnergyPlus. These contracts provide sufficient energy for PPL Electric to meet its PLR obligation through 2009, at the predetermined capped rates it is entitled to charge its customers over this period. These contracts require cash collateral or other credit enhancement, or reductions or terminations of a portion of the entire contract through cash settlement in the event of a downgrade of PPL Electric or adverse changes in market prices. For example, if PPL Electric's ratings were lowered to below "investment grade" and energy prices decreased by 10% from year-end 2004 or 2003 price levels, PPL Electric estimates that, based on its December 31, 2004 positions, it would not have had to post additional collateral compared to $300 million at December 31, 2003. The maximum amount that PPL Electric would have to post under these contracts is $300 million.

The increase of $258 million in net cash provided by operating activities in 2003 compared to 2002 reflected working capital improvements resulting from a decrease in accounts receivable and an increase in accounts payable. The savings from a workforce reduction program that was commenced in 2002 was more than offset by rising transmission and distribution operating costs.

Net Cash Provided by (Used in) Investing Activities

Net cash used in investing activities increased by $378 million in 2004 versus 2003 primarily as a result of initiating a $300 million demand loan to an affiliate. The primary use of cash for investing activities is capital and investment expenditures. See "Capital Expenditure Requirements" for capital and investment expenditures in 2004 and expected expenditures in 2005 through 2009. In 2005, PPL Electric expects to be able to fund all of its capital expenditures with cash from operations.

The increase of $234 million in net cash used in investing activities in 2003 compared to 2002 was primarily the result of a lower loan repayment by an affiliate.

Net Cash Used in Financing Activities

Net cash used in financing activities increased by $136 million in 2004 compared to 2003, due to the lack of new long-term debt issuances in 2004 compared to $190 million in 2003. In 2004, the $386 million of cash used in financing activities consisted of net debt retirements of $352 million and common and preferred dividends of $26 million.

PPL Electric's debt financing activity in 2004 was as follows:

		Issuances		Retirements
PPL Transition Bond Company Transition Bonds				$	(264	)
PPL Electric First Mortgage Bonds					(71	)
PPL Electric Senior Secured Bonds					(59	)
PPL Electric Asset-backed Commercial Paper (net change)		$	42
	Total	$	42	$	(394	)
Net reduction				$	(352	)

Debt issued during 2004 had stated interest rates ranging from 1.1% to 2.3% and with maturities in 2004 or 2005. See Note 8 to the Financial Statements for more detailed information regarding PPL Electric's financing activities.

In March 2004, PPL Electric reactivated its commercial paper program to provide it with an additional financing source to fund its short-term liquidity needs, if and when necessary. At December 31, 2004, PPL Electric had no commercial paper outstanding.

In August 2004, PPL Electric began participating in an asset-backed commercial paper program through which PPL Electric obtains financing by selling and contributing its eligible accounts receivable and unbilled revenue to a special purpose, wholly owned subsidiary on an ongoing basis. The subsidiary pledges these assets to secure loans of up to an aggregate of $150 million from a commercial paper conduit sponsored by a financial institution. PPL Electric expects to use the proceeds from the program for general corporate purposes and to cash collateralize letters of credit. At December 31, 2004, the loan balance outstanding was $42 million, all of which was being used to cash collateralize letters of credit.

At December 31, 2004, PPL Electric's total committed borrowing capacity under credit facilities and the use of this borrowing capacity were as follows:

	Committed Capacity		Borrowed	Letters of Credit Issued (b)	Available Capacity
PPL Electric Credit Facilities (a)	$	300			$	300

(a)

PPL Electric's credit facilities allow for borrowings at LIBOR-based rates plus a spread, depending upon the company's public debt rating. PPL Electric also has the capability to cause the lenders to issue up to $300 million of letters of credit under these facilities, which issuances reduce available borrowing capacity. The credit facilities contain a financial covenant requiring debt to total capitalization to not exceed 70%. At December 31, 2004 and 2003, PPL Electric's consolidated debt to total capitalization percentages, as calculated in accordance with its credit facilities, were 54% and 57%. The credit facilities also contain certain representations and warranties that must be made for PPL Electric to borrow under them, including, but not limited to, a material adverse change clause that relates to PPL Electric's ability to perform its obligations under the credit agreements and related loan documents.

(b)

PPL Electric has a reimbursement obligation to the extent any letters of credit are drawn.

These credit agreements contain various other covenants. Failure to meet those covenants beyond applicable grace periods could result in acceleration of due dates of borrowings and/or termination of the agreements. PPL Electric monitors the covenants on a regular basis. At December 31, 2004, PPL Electric was in material compliance with those covenants. At this time PPL Electric believes that these covenants and other borrowing conditions will not limit access to these funding sources.

PPL Electric's 2001 Senior Secured Bond Indenture restricts dividend payments in the event that PPL Electric fails to meet interest coverage ratios or fails to comply with certain requirements included in its Articles of Incorporation and Bylaws to maintain its separateness from PPL and PPL's other subsidiaries. PPL Electric does not, at this time, expect that any of such limitations would significantly impact its ability to declare dividends.

The decrease of $115 million in net cash used in financing activities in 2003 compared to 2002 reflects the repayment of long-term debt. In 2003, the $250 million of cash used in financing activities primarily consisted of net debt retirements of $255 million, preferred stock retirements of $31 million, and common and preferred dividends paid of $32 million, offset by a contribution from parent of $75 million.

Operating Leases

PPL Electric has operating lease agreements to lease vehicles, office space, land, buildings, personal computers and other equipment. These leasing structures provide PPL Electric with additional operating and financing flexibility. The operating leases contain covenants that are typical for these agreements, such as maintaining insurance, maintaining corporate existence and timely payment of rent and other fees. Failure to meet these covenants could limit or restrict access to these funds or require early payment of obligations. At this time, PPL Electric believes that these covenants will not limit access to these funding sources or cause acceleration or termination of the leases.

See Note 10 to the Financial Statements for further discussion of the operating leases.

Contractual Obligations

At December 31, 2004, the estimated contractual cash obligations of PPL Electric were as follows:

Contractual Cash Obligations	Total		Less Than 1 Year		1-3 Years		3-5 Years		After 5 Years
Long-term Debt (a)	$	2,548	$	336	$	989	$	881	$	342
Capital Lease Obligations
Operating Leases		49		13		18		10		8
Purchase Obligations (b)		8,890		1,564		3,517		3,809
Other Long-term Liabilities Reflected on the Balance Sheet under GAAP
Total Contractual Cash Obligations	$	11,487	$	1,913	$	4,524	$	4,700	$	350

(a)	Reflects maturities only. Includes $1.2 billion of transition bonds issued by PPL Transition Bond Company in 1999 to securitize a portion of PPL Electric's stranded costs. This debt is non-recourse to PPL Electric.
(b)	The payments reflected herein are subject to change, as the purchase obligation reflected is an estimate based on projected obligated quantities and projected pricing under the contract.

Credit Ratings

Standard & Poor's Ratings Services (S&P), Moody's Investors Service, Inc. (Moody's) and Fitch Ratings (Fitch) periodically review the credit ratings on the debt and preferred securities of PPL Electric and its subsidiary. Based on their respective reviews, the rating agencies may make certain ratings revisions.

The ratings of S&P, Moody's and Fitch are not a recommendation to buy, sell or hold any securities of PPL Electric or its subsidiary, PPL Transition Bond Company. Such ratings may be subject to revisions or withdrawal by the agencies at any time and should be evaluated independently of each other and any other rating that may be assigned to their securities.

The following table summarizes the credit ratings of PPL Electric and its subsidiary, PPL Transition Bond Company, at December 31, 2004:

		Moody's	S&P	Fitch
PPL Electric
	Senior Unsecured/Issuer   Rating	Baa2	A-
	First Mortgage Bonds	Baa1	A-	A-
	Pollution Control Bonds (a)	Aaa	AAA
	Senior Secured Bonds	Baa1	A-	A-
	Commercial Paper	P-2	A-2	F2
	Preferred Stock	Ba1	BBB	BBB+
	Outlook	STABLE	NEGATIVE	STABLE
PPL Transition Bond Company
	Transition Bonds	Aaa	AAA	AAA

(a) Insured as to payment of principal and interest.

Rating Agency Actions in 2004

In March 2004, Moody's and Fitch confirmed their ratings of P-2 and F2, respectively, for PPL Electric's commercial paper.

In May 2004, S&P affirmed its A-/A-2 rating and negative outlook on PPL Electric.

Subsequent Ratings Events

In January 2005, S&P affirmed PPL Electric's A-/A-2 corporate credit ratings and has favorably revised its outlook on the company to stable from negative following the authorization of a $194 million rate increase by the PUC. S&P indicated that the outlook revision reflects its expectations that the rate increase, effective January 1, 2005, will allow for material improvement in PPL Electric's financial profile, which had lagged S&P's expectations in recent years. S&P indicated that the stable outlook reflects its expectations that PPL Electric "will rapidly improve and then maintain financial metrics more consistent with its ratings." S&P indicated that it expects PPL Electric's operations to remain stable through the expiration of the PLR agreement.

Off-Balance Sheet Arrangements

PPL Electric has entered into certain guarantee agreements that are within the scope of FIN 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, an Interpretation of FASB Statements No. 5, 57, and 107 and Rescission of FASB Interpretation No. 34." See Note 14 to the Financial Statements for a discussion on guarantees.

Risk Management

Market Risk

Commodity Price Risk - PLR Contracts

PPL Electric and PPL EnergyPlus have power supply agreements under which PPL EnergyPlus sells to PPL Electric (under a predetermined pricing arrangement) energy and capacity to fulfill PPL Electric's PLR obligation through 2009. As a result, PPL Electric has shifted any electric price risk relating to its PLR obligation to PPL EnergyPlus through 2009. See Note 15 to the Financial Statements for information on the PLR contracts.

Interest Rate Risk

PPL Electric has issued debt to finance its operations, which increases its interest rate risk. At December 31, 2004 and 2003, PPL Electric's potential annual exposure to increased interest expense, based on a 10% increase in interest rates, was insignificant.

PPL Electric is also exposed to changes in the fair value of its debt portfolio. At December 31, 2004, PPL Electric estimated that its potential exposure to a change in the fair value of its debt portfolio, through a 10% adverse movement in interest rates, was approximately $50 million, compared to $59 million at December 31, 2003.

Related Party Transactions

PPL Electric is not aware of any material ownership interests or operating responsibility by senior management of PPL Electric in outside partnerships, including leasing transactions with variable interest entities, or other entities doing business with PPL Electric.

For additional information on related party transactions, see Note 15 to the Financial Statements.

Capital Expenditure Requirements

The schedule below shows PPL Electric's current capital expenditure projections for the years 2005-2009 and actual spending for the year 2004:

		Actual		Projected
		2004		2005		2006		2007		2008		2009
Construction expenditures (a)
	Transmission and distribution facilities	$	179	$	186	$	205	$	255	$	242	$	256

(a) Construction expenditures include AFUDC and capitalized interest, which are expected to be less than $3 million in each of the years 2005-2009.

PPL Electric's capital expenditure projections for the years 2005-2009 total $1.1 billion. Capital expenditure plans are revised periodically to reflect changes in market and asset regulatory conditions. PPL Electric also leases vehicles, personal computers and other equipment, as described in Note 10 to the Financial Statements.

Environmental Matters

See Note 14 to the Financial Statements for a discussion of environmental matters.

Competition

See "Item 1. Business - Competition," for a discussion of competitive factors affecting PPL Electric.

New Accounting Standards

See Note 23 to the Financial Statements for information on new accounting standards adopted in 2004 or pending adoption.

Application of Critical Accounting Policies

PPL Electric's financial condition and results of operations are impacted by the methods, assumptions and estimates used in the application of critical accounting policies. The following accounting policies are particularly important to the financial condition or results of operations of PPL Electric, and require estimates or other judgments of matters inherently uncertain. Changes in the estimates or other judgments included within these accounting policies could result in a significant change to the information presented in the financial statements. (These accounting policies are also discussed in Note 1 to the Financial Statements.) PPL's senior management has reviewed these critical accounting policies, and the estimates and assumptions regarding them, with its Audit Committee. In addition, PPL's senior management has reviewed the following disclosures regarding the application of these critical accounting policies with the Audit Committee.

1) Pension and Other Postretirement Benefits

As described in Note 12 to the Financial Statements, PPL Electric participates in, and is allocated a significant portion of the liability and net periodic pension cost of the PPL Retirement Plan and the PPL Postretirement Benefit Plan. PPL follows the guidance of SFAS 87, "Employers' Accounting for Pensions," and SFAS 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," when accounting for these benefits. Under these accounting standards, assumptions are made regarding the valuation of benefit obligations and performance of plan assets. Delayed recognition of differences between actual results and expected or estimated results is a guiding principle of these standards. This delayed recognition of actual results allows for a smoothed recognition of changes in benefit obligations and plan performance over the working lives of the employees who benefit under the plans. The primary assumptions are as follows:

• Discount Rate - The discount rate is used in calculating the present value of benefits, which are based on projections of benefit payments to be made in the future.

• Expected Return on Plan Assets - Management projects the future return on plan assets considering prior performance, but primarily based upon the plans' mix of assets and expectations for the long-term returns on those asset classes. These projected returns reduce the net benefit costs PPL Electric records currently.

• Rate of Compensation Increase - Management projects employees' annual pay increases, which are used to project employees' pension benefits at retirement.

• Health Care Cost Trend Rate - Management projects the expected increases in the cost of health care.

In selecting discount rates, PPL considers fixed-income security yield rates. At December 31, 2004, PPL decreased the discount rate for its domestic plans from 6.25% to 5.75% as a result of decreased fixed-income security returns.

In selecting an expected return on plan assets, PPL considers tax implications, past performance and economic forecasts for the types of investments held by the plan. At December 31, 2004, PPL's expected return on plan assets for its domestic pension plans remained at 9.0%.

In selecting a rate of compensation increase, PPL considers past experience in light of movements in inflation rates. At December 31, 2004, PPL's rate of compensation increase remained at 4.0% for its domestic plans.

In selecting health care cost trend rates, PPL considers past performance and forecasts of health care costs. At December 31, 2004, PPL's health care cost trend rates were 10% for 2005, gradually declining to 5.0% for 2010.

A variance in the assumptions listed above could have a significant impact on the accrued pension and other postretirement benefit liabilities and reported annual net periodic pension and other postretirement benefit cost allocated to PPL Electric. The following chart reflects the sensitivities in the 2004 Financial Statements associated with a change in certain assumptions. While the chart below reflects either an increase or decrease in each assumption, the inverse of this change would impact the accrued pension and other postretirement benefit liabilities and reported annual net periodic pension and other postretirement benefit cost by a similar amount in the opposite direction. Each sensitivity below reflects an evaluation of the change based solely on a change in that assumption.

	Increase (Decrease)
Actuarial Assumption	Change in Assumption		Impact on Liabilities		Impact on Cost
Discount Rate		(0.25)%	$	2	$	2
Expected Return on Plan Assets		(0.25)%		2		2
Rate of Compensation Increase		0.25%		1		1

At December 31, 2004, PPL Electric's Balance Sheet reflected a net liability of $72 million for pension liabilities and prepaid other postretirement benefit costs allocated from plans sponsored by PPL Services.

In 2004, PPL Electric was allocated net periodic pension and other postretirement costs charged to operating expense of $10 million. This amount represents a $6 million reduction in the charge recognized during 2003. This reduction was primarily due to decreased postretirement costs resulting from increased employee cost sharing, offset by increased pension costs resulting from the decrease in the discount rate at December 31, 2003.

Refer to Note 12 to the Financial Statements for additional information regarding pension and other postretirement benefits.

2) Loss Accruals

PPL Electric periodically accrues losses for the estimated impacts of various conditions, situations or circumstances involving uncertain outcomes. These events are called "contingencies," and PPL Electric's accounting for such events is prescribed by SFAS 5, "Accounting for Contingencies." SFAS 5 defines a contingency as "an existing condition, situation, or set of circumstances involving uncertainty as to possible gain or loss to an enterprise that will ultimately be resolved when one or more future events occur or fail to occur."

For loss contingencies, the loss must be accrued if (1) information is available that indicates it is "probable" that the loss has been incurred, given the likelihood of the uncertain future events and (2) the amount of the loss can be reasonably estimated. FASB defines "probable" as cases in which "the future event or events are likely to occur." SFAS 5 does not permit the accrual of contingencies that might result in gains. PPL Electric continuously assesses potential loss contingencies for environmental remediation, litigation claims, income taxes, regulatory penalties and other events.

PPL Electric also has accrued estimated losses on long-term purchase commitments when significant events have occurred. For example, estimated losses were accrued when PPL Electric's generation business was deregulated. Under regulatory accounting, PPL Electric recorded the above-market cost of energy purchases from NUGs as part of its purchased power costs on an as-incurred basis, since these costs were recovered in regulated rates. When the generation business was deregulated, the estimated loss associated with these long-term purchase commitments to make above-market NUG purchases was recorded because PPL Electric was committed to purchase electricity at above market prices but it could no longer recover these costs in regulated rates.

The accounting aspects of estimated loss accruals include: (1) the initial identification and recording of the loss; (2) the determination of triggering events for reducing a recorded loss accrual; and (3) the on-going assessment as to whether a recorded loss accrual is sufficient. All three aspects of accounting for loss accruals - the initial identification and recording of a probable loss, the identification of triggering events to reduce the loss accrual, and the ongoing assessment of the sufficiency of a recorded loss accrual - require significant judgment by PPL Electric's management.

Initial Identification and Recording of the Loss Accrual

PPL Electric uses its internal expertise and outside experts (such as lawyers, tax specialists and engineers), as necessary, to help estimate the probability that a loss has been incurred and the amount (or range) of the loss.

PPL Electric has identified certain events which could give rise to a loss, but which do not meet the conditions for accrual under SFAS 5. SFAS 5 requires disclosure, but not a recording, of potential losses when it is "reasonably possible" that a loss has been incurred. The FASB defines "reasonably possible" as cases in which "the chance of the future event or events occurring is more than remote but less than likely." See Note 14 to the Financial Statements for disclosure of potential loss contingencies, most of which have not met the criteria for accrual under SFAS 5.

Reducing Recorded Loss Accruals

When an estimated loss is accrued, PPL Electric identifies, where applicable, the triggering events for subsequently reducing the loss accrual. The triggering events generally occur when the contingency has been resolved and the actual loss is incurred, or when the risk of loss has diminished or been eliminated. The following are some of the triggering events that provide for the reduction of certain recorded loss accruals:

• Certain loss accruals are systematically reduced based on the expiration of contract terms. An example of this is the loss accrual for above-market NUG purchase commitments, which is described below. This loss accrual is being reduced over the lives of the NUG purchase contracts.

• Allowances for excess or obsolete inventory are reduced as the inventory items are pulled from the warehouse shelves and sold as scrap or otherwise disposed.

• Allowances for uncollectible accounts are reduced when accounts are written off after prescribed collection procedures have been exhausted or when underlying amounts are ultimately collected.

• Environmental and other litigation contingencies are reduced when the contingency is resolved and PPL Electric makes actual payments or the loss is no longer considered probable.

On-Going Assessment of Recorded Loss Accruals

PPL Electric reviews its loss accruals on a regular basis to assure that the recorded potential loss exposures are sufficient. This involves on-going communication and analyses with internal and external legal counsel, engineers, tax specialists, operation management and other parties.

The largest loss accrual that had been on PPL Electric's balance sheet was for an impairment of above-market NUG purchase commitments. This loss accrual reflected the estimated difference between the above-market contract terms, under the purchase commitments, and the fair value of the electricity to be purchased. This loss accrual was originally recorded at $854 million in 1998, when PPL Electric's generation business was deregulated. This loss accrual was transferred to PPL EnergyPlus in the July 1, 2000, corporate realignment.

When the loss accrual related to NUG purchases was recorded in 1998, PPL Electric established the triggering events for when the loss accrual would be reduced. A schedule was established to reduce the liability based on projected purchases over the lives of the NUG contracts. All but one of the NUG contracts expire by 2009, with the last one ending in 2014. Prior to the July 1, 2000 transfer, PPL Electric reduced the above-market NUG liability based on the aforementioned schedule. As PPL Electric reduced the liability for the above-market NUG purchases, it offset the actual cost of NUG purchases, thereby bringing the net power purchase expense more in line with market prices.

Other Information

PPL's Audit Committee has approved the independent auditor to provide audit and audit-related services and other services permitted by the Sarbanes-Oxley Act of 2002 and SEC rules. The audit and audit-related services include services in connection with statutory and regulatory filings, reviews of offering documents and registration statements, employee benefit plan audits and internal control reviews.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

PPL Corporation, PPL Energy Supply, LLC and PPL Electric Utilities Corporation

Reference is made to "Risk Management - Energy Marketing & Trading and Other" for PPL and PPL Energy Supply and "Risk Management" for PPL Electric in Management's Discussion and Analysis of Financial Condition and Results of Operations.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareowners of PPL Corporation:

We have completed an integrated audit of PPL Corporation's 2004 consolidated financial statements and of its internal control over financial reporting as of December 31, 2004 and audits of its 2003 and 2002 consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are presented below.

Consolidated financial statements and financial statement schedule

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of PPL Corporation and its subsidiaries (the "Company") at December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2004 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 1 to the consolidated financial statements, the Company adopted Emerging Issues Task Force Issue No. 03-11, Reporting Realized Gains and Losses on Derivative Instruments That Are Subject to FAS 133 and Not "Held for Trading Purposes" as Defined in Issue No. 02-3 and FASB Interpretation ("FIN") No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, in 2003. Also, as discussed in Note 1 to the consolidated financial statements, the Company elected the fair value method of accounting for stock-based compensation as prescribed by Statement of Financial Accounting Standards ("SFAS") No. 123, Accounting for Stock-Based Compensation, as amended by SFAS No. 148, Accounting for Stock-Based Compensation Transition and Disclosure, an Amendment of FASB Statement No. 123, in 2003. As discussed in Note 8 to the consolidated financial statements, the Company adopted SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, in 2003. As discussed in Note 21 to the consolidated financial statements, the Company adopted SFAS No. 143, Accounting for Asset Retirement Obligations, in 2003. As discussed in Note 22 to the consolidated financial statements, the Company adopted FIN No. 46, Consolidation of Variable Interest Entities -- an interpretation of ARB 51, as amended by FIN No. 46(R), in 2003.

Internal control over financial reporting

Also, in our opinion, management's assessment, included in "Management's Report on Internal Control Over Financial Reporting" appearing under Item 9A, that the Company maintained effective internal control over financial reporting as of December 31, 2004 based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), is fairly stated, in all material respects, based on those criteria. Furthermore, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control - Integrated Framework issued by the COSO. The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express opinions on management's assessment and on the effectiveness of the Company's internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, evaluating management's assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
February 25, 2005

Report of Independent Registered Public Accounting Firm

To the Board of Managers and Sole Member of PPL Energy Supply, LLC:

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of PPL Energy Supply, LLC and its subsidiaries (the "Company") at December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2004 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 1 to the consolidated financial statements, the Company adopted Emerging Issues Task Force Issue No. 03-11, Reporting Realized Gains and Losses on Derivative Instruments That Are Subject to FAS 133 and Not "Held for Trading Purposes" as Defined in Issue No. 02-3 and FASB Interpretation ("FIN") No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, in 2003. As discussed in Note 8 to the consolidated financial statements, the Company adopted SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, in 2003. As discussed in Note 21 to the consolidated financial statements, the Company adopted SFAS No. 143, Accounting for Asset Retirement Obligations, in 2003. As discussed in Note 22 to the consolidated financial statements, the Company adopted FIN No. 46, Consolidation of Variable Interest Entities -- an interpretation of ARB 51, as amended by FIN No. 46(R), in 2003.

/s/ PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
February 25, 2005

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareowner of PPL Electric Utilities Corporation:

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of PPL Electric Utilities Corporation and its subsidiaries (the "Company") at December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2004 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
February 25, 2005

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INDEX TO ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
			Page
FINANCIAL STATEMENTS
	PPL Corporation
		Consolidated Statement of Income for each of the three years ended December 31, 2004, 2003 and 2002	80
		Consolidated Statement of Cash Flows for each of the three years ended December 31, 2004, 2003 and 2002	81
		Consolidated Balance Sheet at December 31, 2004 and 2003	82
		Consolidated Statement of Shareowners' Common Equity and Comprehensive Income for each of the   three years ended December 31, 2004, 2003 and 2002	84
		Consolidated Statement of Preferred Stock at December 31, 2004 and 2003	85
		Consolidated Statement of Long-term Debt at December 31, 2004 and 2003	86
	PPL Energy Supply, LLC
		Consolidated Statement of Income for each of the three years ended December 31, 2004, 2003 and 2002	88
		Consolidated Statement of Cash Flows for each of the three years ended December 31, 2004, 2003 and 2002	89
		Consolidated Balance Sheet at December 31, 2004 and 2003	90
		Consolidated Statement of Member's Equity and Comprehensive Income for each of the three years   ended December 31, 2004, 2003 and 2002	92
		Consolidated Statement of Long-term Debt at December 31, 2004 and 2003	93
	PPL Electric Utilities Corporation
		Consolidated Statement of Income for each of the three years ended December 31, 2004, 2003 and 2002	94
		Consolidated Statement of Cash Flows for each of the three years ended December 31, 2004, 2003 and 2002	95
		Consolidated Balance Sheet at December 31, 2004 and 2003	96
		Consolidated Statement of Shareowner's Common Equity for each of the three years ended   December 31, 2004, 2003 and 2002	98
		Consolidated Statement of Preferred Stock at December 31, 2004 and 2003	99
		Consolidated Statement of Long-term Debt at December 31, 2004 and 2003	100
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			101
FINANCIAL STATEMENT SCHEDULES
	Schedule II - Valuation and Qualifying Accounts and Reserves
		PPL Corporation	158
		PPL Energy Supply, LLC	159
		PPL Electric Utilities Corporation	160
	Quarterly Financial, Common Stock Price and Dividend Data - PPL Corporation		161
	Quarterly Financial Data - PPL Electric Utilities Corporation		162

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CONSOLIDATED STATEMENT OF INCOME FOR THE YEARS ENDED DECEMBER 31,
PPL Corporation and Subsidiaries
(Millions of Dollars, except per share data)
			2004		2003		2002
Operating Revenues
	Utility		$	3,900	$	3,717	$	3,686
	Unregulated retail electric and gas			114		148		178
	Wholesale energy marketing			1,247		1,222		1,039
	Net energy trading margins			22		10		20
	Energy related businesses			529		499		568
	Total			5,812		5,596		5,491
Operating Expenses
	Operation
		Fuel		780		655		611
		Energy purchases		917		1,004		904
		Other operation and maintenance		1,243		1,201		1,131
		Amortization of recoverable transition costs		257		260		226
	Depreciation (Note 1)			412		380		367
	Taxes, other than income (Note 5)			250		256		231
	Energy related businesses			566		491		543
	Other charges
		Write-down of international energy projects (Note 9)						113
		Workforce reduction (Note 20)				9		75
		Write-down of generation assets (Note 9)						44
	Total			4,425		4,256		4,245
Operating Income				1,387		1,340		1,246
Other Income - net (Note 16)				41		58		29
Interest Expense				523		473		560
Income from Continuing Operations Before Income Taxes,   Minority Interest and Distributions on Preferred Securities				905		925		715
Income Taxes (Note 5)				195		170		210
Minority Interest (Note 9)				8		7		78
Distributions on Preferred Securities (Note 8)				2		29		67
Income from Continuing Operations				700		719		360
Loss from Discontinued Operations (net of income taxes) (Note 9)				2		20		2
Income Before Cumulative Effects of Changes in Accounting   Principles				698		699		358
Cumulative Effects of Changes in Accounting Principles (net of income   taxes) (Notes 19, 21 and 22)						35		(150	)
Net Income			$	698	$	734	$	208
Earnings Per Share of Common Stock (Note 4)
	Income from Continuing Operations:
		Basic	$	3.80	$	4.16	$	2.36
		Diluted	$	3.78	$	4.15	$	2.36
	Net Income:
		Basic	$	3.79	$	4.25	$	1.37
		Diluted	$	3.77	$	4.24	$	1.36
Dividends Declared Per Share of Common Stock			$	1.64	$	1.54	$	1.44
The accompanying Notes to Consolidated Financial Statements are an integral part of the financial statements.

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31,
PPL Corporation and Subsidiaries
(Millions of Dollars)
				2004			2003			2002
Cash Flows From Operating Activities
	Net income			$	698		$	734		$	208
	Adjustments to reconcile net income to net cash provided by   operating activities
		Loss from discontinued operations			2			20			2
		Cumulative effects of changes in accounting principles						(35	)		150
		Depreciation			412			380			289
		Stock compensation expense			12			11			5
		Amortizations - recoverable transition costs and other			242			244			198
		Payments to cancel generation projects									(152	)
		Dividends received from unconsolidated affiliates			5			7			14
		Pension income - net			(24	)		(41	)		(42	)
		Pension funding			(10	)		(18	)
		Write-down of assets			10			13			157
		Gain on asset sales and insurance settlements			(26	)		(21	)
		Distribution requirements - preferred securities			2			29			60
		Equity in earnings of unconsolidated affiliates			8			11			9
		Equity in earnings of WPD prior to acquiring controlling   interest in 2002									(75	)
		Deferred income taxes and investment tax credits			155			96			85
		Workforce reduction - net of cash paid						9			67
		Unrealized (gain) loss on derivatives			(15	)		(38	)		24
		Payment and gain on NUG contract termination									(75	)
		Write-off (deferral) of storm-related costs			4			(15	)
		Realized (gain) loss on nuclear trust fund			7			(20	)
		Interest accretion on asset retirement obligation and other			23			22			4
		Other			31			9			5
	Change in current assets and current liabilities
		Accounts receivable			109			11			(48	)
		Accounts payable			(49	)		7			(73	)
		Fuel, materials and supplies			(52	)		(13	)		13
		Other			(9	)		(20	)		(34	)
	Other operating activities
		Other assets			(40	)		34			(12	)
		Other liabilities			(58	)		(76	)		(5	)
			Net cash provided by operating activities		1,437			1,340			774
Cash Flows From Investing Activities
	Expenditures for property, plant and equipment				(703	)		(767	)		(641	)
	Investment in generating assets and electric energy projects				(31	)					(261	)
	Acquisition of controlling interest in WPD, net of cash acquired										(211	)
	Proceeds from the sale of minority interest in CGE				123
	Proceeds from sale of assets and insurance settlements and other				21			49			20
	Purchases of auction rate securities				(130	)		(15	)		(1,248	)
	Proceeds from sale of auction rate securities				74			5			1,292
	Net (increase) decrease in restricted cash				(51	)		10			29
	Other investing activities				(21	)		(21	)		(37	)
			Net cash used in investing activities		(718	)		(739	)		(1,057	)
Cash Flows From Financing Activities
	Issuance of long-term debt				322			992
	Retirement of long-term debt				(1,171	)		(575	)		(823	)
	Retirement of company-obligated mandatorily redeemable preferred securities										(250	)
	Issuance of common stock				596			426			587
	Retirement of preferred stock							(31	)
	Payment of common dividends				(297	)		(260	)		(198	)
	Payment of preferred distributions				(2	)		(27	)		(63	)
	Net increase (decrease) in short-term debt				(14	)		(877	)		411
	Other financing activities				(12	)		(35	)		(27	)
			Net cash used in financing activities		(578	)		(387	)		(363	)
Effect of Exchange Rates on Cash and Cash Equivalents					9			7			2
Net Increase (Decrease) in Cash and Cash Equivalents					150			221			(644	)
	Cash and Cash Equivalents at Beginning of Period				466			245			889
	Cash and Cash Equivalents at End of Period			$	616		$	466		$	245
Supplemental Disclosures of Cash Flow Information
	Cash paid (received) during the period for:
		Interest		$	488		$	456		$	412
		Income taxes - net		$	14		$	(23	)	$	91
The accompanying Notes to Consolidated Financial Statements are an integral part of the financial statements.

CONSOLIDATED BALANCE SHEET AT DECEMBER 31,
PPL Corporation and Subsidiaries
(Millions of Dollars)
			2004		2003
Assets
Current Assets
	Cash and cash equivalents		$	616	$	466
	Restricted cash (Note 18)			50		10
	Accounts receivable (less reserve: 2004, $88; 2003, $93)			459		555
	Unbilled revenues			407		341
	Fuel, materials and supplies (Note 1)			309		256
	Prepayments			57		54
	Deferred income taxes (Note 5)			162		105
	Price risk management assets (Note 17)			115		90
	Other			129		143
				2,304		2,020
Investments
	Investment in unconsolidated affiliates - at equity (Note 3)			51		74
	Investment in unconsolidated affiliates - at cost (Note 9)					126
	Nuclear plant decommissioning trust fund (Note 6)			409		357
	Other			12		29
				472		586
Property, Plant and Equipment - net (Note 1)
	Electric plant in service
		Transmission and distribution		5,983		5,456
		Generation		4,007		3,518
		General		480		435
				10,470		9,409
	Construction work in progress			148		614
	Nuclear fuel			153		144
		Electric plant		10,771		10,167
	Gas and oil plant			213		205
	Other property			225		221
				11,209		10,593
Regulatory and Other Noncurrent Assets (Note 1)
	Recoverable transition costs			1,431		1,687
	Goodwill (Note 19)			1,127		1,068
	Other intangibles (Note 19)			276		243
	Other			942		926
				3,776		3,924
			$	17,761	$	17,123
The accompanying Notes to Consolidated Financial Statements are an integral part of the financial statements.

CONSOLIDATED BALANCE SHEET AT DECEMBER 31,
PPL Corporation and Subsidiaries
(Millions of Dollars)
		2004			2003
Liabilities and Equity
Current Liabilities
	Short-term debt (Note 8)	$	42		$	56
	Long-term debt		866			395
	Accounts payable		407			456
	Above market NUG contracts (Note 14)		73			74
	Taxes		164			178
	Interest		129			121
	Dividends		79			70
	Price risk management liabilities (Note 17)		167			82
	Other		368			343
			2,295			1,775
Long-term Debt			6,792			7,464
Long-term Debt with Affiliate Trusts (Notes 15 and 22)			89			681
Deferred Credits and Other Noncurrent Liabilities
	Deferred income taxes and investment tax credits (Note 5)		2,426			2,205
	Accrued pension obligations (Note 12)		476			451
	Asset retirement obligations (Note 21)		257			242
	Above market NUG contracts (Note 14)		206			278
	Other (Note 12)		874			663
			4,239			3,839
Commitments and Contingent Liabilities (Note 14)
Minority Interest			56			54
Preferred Stock without Sinking Fund Requirements			51			51
Shareowners' Common Equity
	Common stock		2			2
	Capital in excess of par value		3,577			2,977
	Treasury stock		(838	)		(837	)
	Earnings reinvested		1,870			1,478
	Accumulated other comprehensive loss (Note 1)		(323	)		(297	)
	Capital stock expense and other		(49	)		(64	)
			4,239			3,259
		$	17,761		$	17,123
The accompanying Notes to Consolidated Financial Statements are an integral part of the financial statements.

CONSOLIDATED STATEMENT OF SHAREOWNERS' COMMON EQUITY
AND COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31,
PPL Corporation and Subsidiaries
(Millions of Dollars, except per share amounts)
				2004			2003			2002
Common stock at beginning of year				$	2		$	2		$	2
Common stock at end of year					2			2			2
Capital in excess of par value at beginning of year					2,977			2,543			1,960
	Common stock issued				575			426			587
	Other				25			8			(4	)
Capital in excess of par value at end of year					3,577			2,977			2,543
Treasury stock at beginning of year					(837	)		(836	)		(836	)
	Treasury stock purchased				(1	)		(1	)
Treasury stock at end of year					(838	)		(837	)		(836	)
Earnings reinvested at beginning of year					1,478			1,013			1,023
	Net income (b)				698			734			208
	Cash dividends declared on common stock				(306	)		(269	)		(218	)
Earnings reinvested at end of year					1,870			1,478			1,013
Accumulated other comprehensive loss at beginning of year (c)					(297	)		(446	)		(251	)
	Foreign currency translation adjustments (b)				112			106			125
	Unrealized gain (loss) on available-for-sale securities (b)				20			24			(3	)
	Minimum pension liability adjustments (b)				(53	)		(10	)		(301	)
	Unrealized gain (loss) on qualifying derivatives (b)				(105	)		29			(16	)
Accumulated other comprehensive loss at end of year					(323	)		(297	)		(446	)
Capital stock expense and other at beginning of year					(64	)		(52	)		(41	)
	Issuance costs and other charges to issue common stock							(9	)		(18	)
	Other				15			(3	)		7
Capital stock expense and other at end of year					(49	)		(64	)		(52	)
Total Shareowners' Common Equity				$	4,239		$	3,259		$	2,224
Common stock shares at beginning of year (a)					177,362			165,736			146,580
	Common stock issued through the ESOP, DRIP, ICP, ICPKE,   structured equity program and public offering				11,737			11,652			19,156
	Treasury stock purchased				(27	)		(26	)
Common stock shares at end of year					189,072			177,362			165,736
(a)		Shares in thousands; $.01 par value, 390 million shares authorized. Each share entitles the holder to one vote on any question presented to any shareowners' meeting.
(b)		Statement of Comprehensive Income (Note 1):
		Net income		$	698		$	734		$	208
		Other comprehensive income (loss):
			Foreign currency translation adjustments, net of tax expense    (benefit) of $0, $0, $(5)		112			106			125
			Unrealized gain (loss) on available-for-sale securities, net of tax    expense (benefit) of $18, $14, $(2)		20			24			(3	)
			Minimum pension liability adjustments, net of tax expense    (benefit) of $(24), $(4), $(131)		(53	)		(10	)		(301	)
			Unrealized gain (loss) on qualifying derivatives, net of tax    expense (benefit) of $(60), $15, $(10)		(105	)		29			(16	)
		Total other comprehensive income (loss)			(26	)		149			(195	)
		Comprehensive Income		$	672		$	883		$	13
(c)		See Note 1 for disclosure of balances for each component of Accumulated Other Comprehensive Loss.
The accompanying Notes to Consolidated Financial Statements are an integral part of the financial statements.

CONSOLIDATED STATEMENT OF PREFERRED STOCK AT DECEMBER 31,
PPL Corporation and Subsidiaries (a)
(Millions of Dollars)
							Shares Outstanding		Optional Redemption Price Per Share
			Outstanding					Shares
			2004		2003		2004	Authorized			(b)
PPL Electric
Preferred Stock - $100 par,   cumulative, without sinking   fund requirements
	4-1/2%		$	25	$	25	247,524	629,936	$	110.00
	Series Preferred
		3.35%		2		2	20,605			103.50
		4.40%		12		12	117,676			102.00
		4.60%		3		3	28,614			103.00
		6.75%		9		9	90,770			103.04
		Total Series Preferred		26		26	257,665	10,000,000
			$	51	$	51

Decreases in Preferred Stock (c)
				2004		2003			2002
				Shares	Amount	Shares	Amount		Shares	Amount
	Series Preferred
			6.125%			(167,500)	$	(17)
			6.15%			(97,500)		(10)
			6.33%			(46,000)		(4)
Decreases in Preferred Stock normally represent: (i) the redemption of stock pursuant to mandatory sinking fund requirements; or (ii) shares redeemed pursuant to optional redemption provisions.
(a)		Each share of PPL Electric's preferred stock entitles the holder to one vote on matters on which PPL Electric's shareowners are entitled to vote. There were 10 million shares of PPL's preferred stock and 5 million shares of PPL Electric's preference stock authorized; none were outstanding at December 31, 2004 and 2003.
(b)		The involuntary liquidation price of the preferred stock is $100 per share. The optional voluntary liquidation price is the optional redemption price per share in effect, except for the 4-1/2% Preferred Stock and the 6.75% Series Preferred Stock for which such price is $100 per share (plus in each case any unpaid dividends).
(c)		Decreases in 2003 were redemptions of previously outstanding preferred stock with sinking fund requirements.
The accompanying Notes to Consolidated Financial Statements are an integral part of the financial statements.

CONSOLIDATED STATEMENT OF LONG-TERM DEBT AT DECEMBER 31,
PPL Corporation and Subsidiaries
(Millions of Dollars)
				Outstanding
				2004				2003			Maturity (a)
Bonds:
	6-1/2% - 7.7% First Mortgage Bonds (b)			$	225			$	297			2004-2024
	3.125% - 6.40% First Mortgage Pollution Control   Bonds (b)				314				314			2008-2029
	4.30% - 6-1/4% Senior Secured Bonds (b)				841				900			2007-2013
	6.83% to 7.15% Series 1999-1 Transition Bonds				1,159				1,423			2004-2008
	5.875% - 9.25% Unsecured Bonds				2,051		(e)		1,982			2004-2028
	6.20% - 6.40% Inflation-linked Bonds				161		(e)		150			2006-2022
	2.0% Pollution Control Revenue Bonds				9				9			2027
	6.8% - 9.0% Bolivian Bonds				22							2005-2010
Notes:
	6.17% - 8.375% Medium-term Notes				632				737			2004-2007
	4.33% - 6.40% Senior Unsecured Notes				1,001				500			2009-2014
	8.05% - 8.30% Senior Secured Notes (c)				437				437			2013
	2.625% Convertible Senior Notes				400				400			2023
	7.29% Subordinated Notes				290							2006
	8.70% - 9.64% Unsecured Promissory Notes				10				12			2010-2022
	Senior Floating Rate Notes (3.36% at December 31, 2004)				99							2006
Term Loan - variable rate (2.56% at December 31, 2003)									625			2008
Trust Securities - variable rate (3.435% at December 31,    2003)									31			2008
Other Long-term Debt					15				27			2004-2013
					7,666				7,844
Fair Value Swaps					17				28
Unamortized Discount					(25	)			(13	)
					7,658				7,859
Less amount due within one year					(866	)			(395	)
		Total Long-term Debt		$	6,792			$	7,464
Long-term Debt with Affiliate Trusts:
	7.29% Subordinated Notes (d)							$	592			2006
	8.23% Subordinated Debentures (d)			$	89				89			2027
			Total Long-term Debt with Affiliate Trusts	$	89			$	681
See Note 8 for information on debt issuances, debt retirements and other changes in long-term debt.
(a)		Aggregate maturities of long-term debt through 2009 are (millions of dollars): 2005, $866; 2006, $1,244; 2007, $1,022; 2008, $623; and 2009, $687.
(b)		The First Mortgage Bonds and the First Mortgage Pollution Control Bonds were issued under, and are secured by, the lien of the 1945 First Mortgage Bond Indenture. The lien of the 1945 First Mortgage Bond Indenture covers substantially all electric transmission and distribution plant owned by PPL Electric. The Senior Secured Bonds were issued under the 2001 Senior Secured Bond Indenture. The Senior Secured Bonds are secured by (i) an equal principal amount of First Mortgage Bonds issued under the 1945 First Mortgage Bond Indenture and (ii) the lien of the 2001 Senior Secured Bond Indenture, which covers substantially all electric transmission and distribution plant owned by PPL Electric and which is junior to the lien of the 1945 First Mortgage Bond Indenture.
(c)		Represents lease financing consolidated through a variable interest entity. See Note 22 for additional information.
(d)		Represents debt with wholly owned trusts that were deconsolidated effective December 31, 2003, as a result of the adoption of FIN 46, "Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51," for certain entities. See Notes 8 and 22 for further discussion.
(e)		Increase due to an increase in foreign currency exchange rates.
The accompanying Notes to Consolidated Financial Statements are an integral part of the financial statements.

(THIS PAGE LEFT BLANK INTENTIONALLY.)

CONSOLIDATED STATEMENT OF INCOME FOR THE YEARS ENDED DECEMBER 31,
PPL Energy Supply, LLC and Subsidiaries
(Millions of Dollars)
			2004		2003		2002
Operating Revenues
	Wholesale energy marketing		$	1,247	$	1,222	$	1,039
	Wholesale energy marketing to affiliate (Note 15)			1,500		1,444		1,431
	Utility			1,032		934		979
	Unregulated retail electric and gas			114		148		178
	Net energy trading margins			22		10		20
	Energy related businesses			509		486		555
	Total			4,424		4,244		4,202
Operating Expenses
	Operation
		Fuel		674		569		527
		Energy purchases		698		793		695
		Energy purchases from affiliate (Note 15)		154		152		160
		Other operation and maintenance		887		871		807
	Depreciation (Note 1)			292		266		265
	Taxes, other than income (Note 5)			96		89		78
	Energy related businesses			537		469		522
	Other charges
		Write-down of international energy projects (Note 9)						113
		Workforce reduction (Note 20)						41
		Write-down of generation assets (Note 9)						44
	Total			3,338		3,209		3,252
Operating Income				1,086		1,035		950
Other Income - net (Note 16)				51		73		44
Interest Expense				269		198		207
Interest Expense with Affiliate (Note 15)				8		1		3
Income from Continuing Operations Before Income Taxes,    Minority Interest and Distributions on Preferred Securities				860		909		784
Income Taxes (Note 5)				199		185		266
Minority Interest (Note 9)				8		7		78
Distributions on Preferred Securities (Note 8)						5		9
Income from Continuing Operations				653		712		431
Loss from Discontinued Operations (net of income taxes) (Note 9)				2		20		2
Income Before Cumulative Effects of Changes in Accounting   Principles				651		692		429
Cumulative Effects of Changes in Accounting Principles (net of   income taxes) (Notes 19, 21 and 22)						35		(150	)
Net Income			$	651	$	727	$	279
The accompanying Notes to Consolidated Financial Statements are an integral part of the financial statements.

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31,
PPL Energy Supply, LLC and Subsidiaries
(Millions of Dollars)
				2004			2003			2002
Cash Flows From Operating Activities
	Net income			$	651		$	727		$	279
	Adjustments to reconcile net income to net cash provided by   operating activities
		Loss from discontinued operations			2			20			2
		Cumulative effects of changes in accounting principles						(35	)		150
		Depreciation			292			266			175
		Stock compensation expense			9			8			4
		Amortizations - energy commitments and other			(40	)		(38	)		(56	)
		Payments to cancel generation projects									(152	)
		Dividends received from unconsolidated affiliates			5			7			14
		Pension income - net			(30	)		(39	)		(20	)
		Pension funding			(7	)		(15	)
		Write-down of assets						13			157
		Gain on asset sales and insurance settlements			(27	)		(21	)
		Equity in earnings of unconsolidated affiliates			7			8			8
		Equity in earnings of WPD prior to acquiring controlling interest   in 2002									(75	)
		Deferred income taxes and investment tax credits			155			154			158
		Workforce reduction - net of cash paid									37
		Unrealized (gain) loss on derivatives			(13	)		(16	)		3
		Payment and gain on NUG contract termination									(75	)
		Realized (gain) loss on nuclear trust fund			7			(20	)
		Interest accretion on asset retirement obligation and other			23			22			4
		Other			29			14			5
	Change in current assets and current liabilities
		Accounts receivable			14			(50	)		109
		Accounts payable			(54	)		(29	)		(36	)
		Collateral on PLR energy supply (Note 15)			(302	)		2
		Fuels, materials and supplies			(57	)		8			14
		Other			(34	)		(49	)		(71	)
	Other operating activities
		Other assets			(41	)		14			(9	)
		Other liabilities			(33	)		(47	)		1
			Net cash provided by operating activities		556			904			626
Cash Flows From Investing Activities
	Expenditures for property, plant and equipment				(490	)		(502	)		(396	)
	Investment in generating assets and electric energy projects				(31	)					(261	)
	Acquisition of controlling interest in WPD, net of cash acquired										(211	)
	Proceeds from the sale of minority interest in CGE				123
	Proceeds from sale of assets and insurance settlements				16			47			20
	Purchases of auction rate securities				(60	)		(5	)		(1,176	)
	Proceeds from sale of auction rate securities				14						1,176
	Net (increase) decrease in notes receivable from affiliates				2			653			(260	)
	Net (increase) decrease in restricted cash				(18	)		18			22
	Other investing activities				(21	)		(6	)		(33	)
			Net cash provided by (used in) investing activities		(465	)		205			(1,119	)
Cash Flows From Financing Activities
	Issuance of long-term debt				322			802
	Net increase in note payable to affiliate				495
	Contributions from Member				358			261			160
	Retirement of long-term debt				(671	)		(60	)		(14	)
	Distributions to Member				(410	)		(1,168	)		(710	)
	Net increase (decrease) in short-term debt				(56	)		(862	)		392
	Other financing activities				(3	)		(16	)		(3	)
			Net cash provided by (used in) financing activities		35			(1,043	)		(175	)
Effect of Exchange Rates on Cash and Cash Equivalents					9			7			2
Net Increase (Decrease) in Cash and Cash Equivalents					135			73			(666	)
	Cash and Cash Equivalents at Beginning of Period				222			149			815
	Cash and Cash Equivalents at End of Period			$	357		$	222		$	149
Supplemental Disclosures of Cash Flow Information
	Cash paid (received) during the period for:
		Interest		$	209		$	171		$	97
		Income taxes - net		$	34		$	(25	)	$	27
The accompanying Notes to Consolidated Financial Statements are an integral part of the financial statements.

CONSOLIDATED BALANCE SHEET AT DECEMBER 31,
PPL Energy Supply, LLC and Subsidiaries
(Millions of Dollars)
			2004		2003
Assets
Current Assets
	Cash and cash equivalents		$	357	$	222
	Restricted cash (Note 18)			3		3
	Accounts receivable (less reserve: 2004, $68; 2003, $68)			259		320
	Unbilled revenues			250		215
	Accounts receivable from affiliates (Note 15)			152		71
	Collateral on PLR energy supply to affiliate (Note 15)			300
	Fuel, materials and supplies (Note 1)			256		198
	Prepayments			43		41
	Deferred income taxes (Note 5)			128		41
	Price risk management assets (Note 17)			113		88
	Other			96		78
				1,957		1,277
Investments
	Investment in unconsolidated affiliates - at equity (Note 3)			51		56
	Investment in unconsolidated affiliates - at cost (Note 9)					126
	Nuclear plant decommissioning trust fund (Note 6)			409		357
	Other			5		5
				465		544
Property, Plant and Equipment - net (Note 1)
	Electric plant in service
		Transmission and distribution		3,579		3,129
		Generation		4,007		3,518
		General		254		204
				7,840		6,851
	Construction work in progress			115		580
	Nuclear fuel			153		144
		Electric plant		8,108		7,575
	Gas and oil plant			21		21
	Other property			160		163
				8,289		7,759
Other Noncurrent Assets
	Goodwill (Note 19)			1,072		1,013
	Other intangibles (Note 19)			142		109
	Other			559		548
				1,773		1,670
			$	12,484	$	11,250
The accompanying Notes to Consolidated Financial Statements are an integral part of the financial statements.

CONSOLIDATED BALANCE SHEET AT DECEMBER 31,
PPL Energy Supply, LLC and Subsidiaries
(Millions of Dollars)
		2004		2003
Liabilities and Equity
Current Liabilities
	Short-term debt (Note 8)			$	56
	Long-term debt	$	181		6
	Accounts payable		338		381
	Accounts payable to affiliates (Note 15)		52		53
	Above market NUG contracts (Note 14)		73		74
	Taxes		101		110
	Interest		87		74
	Deferred revenue on PLR energy supply to affiliate (Note 15)		12		12
	Price risk management liabilities (Note 17)		163		76
	Other		262		224
			1,269		1,066
Long-term Debt			3,694		4,140
Note Payable to Affiliate (Note 15)			495
Long-term Debt with Affiliate Trust (Notes 15 and 22)			89		89
Deferred Credits and Other Noncurrent Liabilities
	Deferred income taxes and investment tax credits (Note 5)		1,261		1,012
	Accrued pension obligations (Note 12)		341		323
	Asset retirement obligations (Note 21)		257		242
	Above market NUG contracts (Note 14)		206		278
	Deferred revenue on PLR energy supply to affiliate (Note 15)		46		58
	Other (Note 12)		720		510
			2,831		2,423
Commitments and Contingent Liabilities (Note 14)
Minority Interest			56		54
Member's Equity			4,050		3,478
		$	12,484	$	11,250
The accompanying Notes to Consolidated Financial Statements are an integral part of the financial statements.

CONSOLIDATED STATEMENT OF MEMBER'S EQUITY AND COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31,
PPL Energy Supply, LLC and Subsidiaries
(Millions of Dollars)
					2004			2003			2002
Member's Equity at beginning of year					$	3,478		$	3,507		$	3,972
	Comprehensive income:
			Net income			651			727			279
			Other comprehensive income (loss) (a)
				Foreign currency translation adjustments, net of tax expense    (benefit) of $0, $0, $(5) (b)		112			106			125
				Unrealized gain (loss) on qualifying derivatives, net of tax     expense (benefit) of $(61), $17, $(15)		(107	)		33			(23	)
				Minimum pension liability adjustments, net of tax expense    (benefit) of $(23), $(5), $(128)		(51	)		(12	)		(296	)
				Unrealized gain on available-for-sale securities, net of tax     expense of $16, $12		17			24
	Total Comprehensive income					622			878			85
	Member's contributions					358			261			160
	Distributions to Member					(410	)		(1,168	)		(710	)
	Other					2
Member's Equity at end of year					$	4,050		$	3,478		$	3,507
(a)		See Note 1 for disclosure of balances for each component of Accumulated Other Comprehensive Loss.
(b)		Includes a $94 million credit for the write-off of the CEMAR cumulative translation adjustment in June 2002. See Note 9 for additional information.
The accompanying Notes to Consolidated Financial Statements are an integral part of the financial statements.

CONSOLIDATED STATEMENT OF LONG-TERM DEBT AT DECEMBER 31,
PPL Energy Supply, LLC and Subsidiaries
(Millions of Dollars)
		Outstanding
		2004				2003			Maturity (a)
5.40% - 6.40% Senior Unsecured Notes		$	800			$	500			2011-2014
2.625% Convertible Senior Notes			400				400			May 15, 2023
5.875% to 9.25% Unsecured Bonds			2,051		(d)		1,982			2004-2028
Term loan - variable rate (2.56% at December 31,   2003)							625			June 30, 2008
Trust Securities - variable rate (3.435% at   December 31, 2003)							31			June 30, 2008
8.05% Senior Secured Notes (b)			284				284			December 21, 2013
8.30% Senior Secured Notes (b)			153				153			December 21, 2013
6.20% - 6.40% Bonds - Inflation-linked bonds			161		(d)		150			2006-2022
6% Bolivian Govt.							9			November 24, 2009
5.0% to 8.5% UF-denominated debt			3				4			2004-2013
6.8% - 9.0% Bolivian Bonds			22							2005-2010
Other Long-term Debt			11				16			2004-2011
			3,885				4,154
Fair Value Swaps			(2	)
Unamortized Discount			(8	)			(8	)
			3,875				4,146
Less amount due within one year			(181	)			(6	)
	Total Long-term Debt	$	3,694			$	4,140
Long-term Debt with Affiliate Trust:
	8.23% Subordinated Debentures (c)	$	89			$	89			2027
See Note 8 for information on debt issuances, debt retirements and other changes in long-term debt.
(a)	Aggregate maturities of long-term debt through 2009 are (millions of dollars): 2005, $181; 2006, $420; 2007, $184; 2008, $228; and 2009, $0. There are no debt securities outstanding that have sinking fund requirements.
(b)	Represents lease financing consolidated through a variable interest entity. See Note 22 for additional information.
(c)	Represents debt with a wholly owned trust that was deconsolidated effective December 31, 2003, as a result of the adoption of FIN 46, "Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51," for certain entities. See Notes 8 and 22 for further discussion.
(d)	Increase due to an increase in foreign currency exchange rates.
The accompanying Notes to Consolidated Financial Statements are an integral part of the financial statements.

CONSOLIDATED STATEMENT OF INCOME FOR THE YEARS ENDED DECEMBER 31,
PPL Electric Utilities Corporation and Subsidiaries
(Millions of Dollars)
			2004		2003		2002
Operating Revenues
	Retail electric		$	2,683	$	2,597	$	2,527
	Retail electric to affiliate			3		8		23
	Wholesale electric			6		29		28
	Wholesale electric to affiliate (Note 15)			154		152		160
	Energy related businesses			1		2		10
	Total			2,847		2,788		2,748
Operating Expenses
	Operation
		Energy purchases		218		211		208
		Energy purchases from affiliate (Note 15)		1,500		1,444		1,431
		Other operation and maintenance		353		345		319
		Amortization of recoverable transition costs		257		260		226
	Depreciation (Note 1)			107		103		94
	Taxes, other than income (Note 5)			152		164		153
	Energy related businesses			1		1		9
	Workforce reduction (Note 20)					9		33
	Total			2,588		2,537		2,473
Operating Income				259		251		275
Other Income - net (Note 16)				15		6		16
Interest Expense				190		211		218
Income Before Income Taxes				84		46		73
Income Taxes (Note 5)				8		18		18
Income Before Distributions on Preferred Securities				76		28		55
Distributions on Preferred Securities				2		3		16
Income Available to PPL Corporation			$	74	$	25	$	39
The accompanying Notes to Consolidated Financial Statements are an integral part of the financial statements.

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31,
PPL Electric Utilities Corporation and Subsidiaries
(Millions of Dollars)
				2004			2003			2002
Cash Flows From Operating Activities
	Net income			$	74		$	25		$	39
	Adjustments to reconcile net income to net cash provided by   operating activities
		Depreciation			107			103			94
		Stock compensation expense			3			2			1
		Amortizations - recoverable transition costs and other			278			281			245
		Distribution requirements - preferred securities			2			3			16
		Deferred income taxes and investment tax credits			81			17			21
		Workforce reduction - net of cash paid						9			31
		Write-off (deferral) of storm-related costs			4			(15	)
		Pension (income) expense			1			(4	)		(17	)
		Other			(2	)
	Change in current assets and current liabilities
		Accounts receivable			40			19			(65	)
		Accounts payable			50			70			(98	)
		Collateral on PLR energy supply (Note 15)			302			(2	)
		Other			(7	)		5			5
	Other operating activities
		Other assets			(1	)		(4	)		7
		Other liabilities			(34	)		19			(9	)
			Net cash provided by operating activities		898			528			270
Cash Flows From Investing Activities
	Expenditures for property, plant and equipment				(179	)		(235	)		(224	)
	Purchases of auction rate securities				(60	)					(72	)
	Proceeds from sale of auction rate securities				50						116
	Net (increase) decrease in notes receivable from affiliates				(300	)		90			260
	Net (increase) decrease in restricted cash				(35	)		(2	)		8
	Other investing activities				1			2			1
			Net cash provided by (used in) investing activities		(523	)		(145	)		89
Cash Flows From Financing Activities
	Issuance of long-term debt							190
	Contribution from parent							75			240
	Retirement of long-term debt				(394	)		(430	)		(285	)
	Retirement of company-obligated mandatorily redeemable   preferred securities										(250	)
	Retirement of preferred stock							(31	)
	Payment of preferred distributions				(2	)		(3	)		(22	)
	Payment of common dividends to PPL Corporation				(24	)		(29	)		(63	)
	Net increase (decrease) in short-term debt				42			(15	)		15
	Other financing activities				(8	)		(7	)
			Net cash used in financing activities		(386	)		(250	)		(365	)
Net Increase (Decrease) in Cash and Cash Equivalents					(11	)		133			(6	)
	Cash and Cash Equivalents at Beginning of Period				162			29			35
	Cash and Cash Equivalents at End of Period			$	151		$	162		$	29
Supplemental Disclosures of Cash Flow Information
	Cash paid (received) during the period for:
		Interest		$	180		$	204		$	222
		Income taxes - net		$	(69	)	$	(17	)	$	24
The accompanying Notes to Consolidated Financial Statements are an integral part of the financial statements.

CONSOLIDATED BALANCE SHEET AT DECEMBER 31,
PPL Electric Utilities Corporation and Subsidiaries
(Millions of Dollars)
			2004		2003
Assets
Current Assets
	Cash and cash equivalents		$	151	$	162
	Restricted cash (Note 18)			42
	Accounts receivable (less reserve: 2004, $18; 2003, $24)			179		212
	Unbilled revenues			148		123
	Accounts receivable from affiliates (Note 15)			17		27
	Note receivable from affiliate (Note 15)			300
	Income tax receivable					35
	Prepayment on PLR energy supply from affiliate (Note 15)			12		12
	Deferred income taxes (Note 5)			14		45
	Other			58		59
				921		675
Property, Plant and Equipment - net (Note 1)
	Electric plant in service
		Transmission and distribution		2,404		2,327
		General		220		226
				2,624		2,553
	Construction work in progress			29		31
		Electric plant		2,653		2,584
	Other property			4		5
				2,657		2,589
Regulatory and Other Noncurrent Assets (Note 1)
	Recoverable transition costs			1,431		1,687
	Intangibles (Note 19)			117		116
	Prepayment on PLR energy supply from affiliate (Note 15)			46		58
	Other			354		344
				1,948		2,205
			$	5,526	$	5,469
The accompanying Notes to Consolidated Financial Statements are an integral part of the financial statements.

CONSOLIDATED BALANCE SHEET AT DECEMBER 31,
PPL Electric Utilities Corporation and Subsidiaries
(Millions of Dollars)
		2004			2003
Liabilities and Equity
Current Liabilities
	Short-term debt	$	42
	Long-term debt		336		$	289
	Accounts payable		39			44
	Accounts payable to affiliates (Note 15)		168			92
	Taxes		46			86
	Interest		29			32
	Collateral on PLR energy supply from affiliate (Note 15)		300
	Other		69			83
			1,029			626
Long-term Debt			2,208			2,648
Deferred Credits and Other Noncurrent Liabilities
	Deferred income taxes and investment tax credits (Note 5)		776			728
	Other (Note 12)		190			194
			966			922
Commitments and Contingent Liabilities (Note 14)
Preferred Stock without Sinking Fund Requirements			51			51
Shareowner's Common Equity
	Common stock		1,476			1,476
	Additional paid-in capital		361			361
	Treasury stock		(912	)		(912	)
	Earnings reinvested		354			304
	Capital stock expense and other		(7	)		(7	)
			1,272			1,222
		$	5,526		$	5,469
The accompanying Notes to Consolidated Financial Statements are an integral part of the financial statements.

CONSOLIDATED STATEMENT OF SHAREOWNER'S COMMON EQUITY FOR THE YEARS ENDED DECEMBER 31,
PPL Electric Utilities Corporation and Subsidiaries
(Millions of Dollars, except share amounts)
		2004			2003			2002
Common stock at beginning of year		$	1,476		$	1,476		$	1,476
Common stock at end of year			1,476			1,476			1,476
Additional paid-in capital at beginning of year			361			282			51
	Capital contribution from PPL					75			240
	Other					4			(9	)
Additional paid-in capital at end of year			361			361			282
Treasury stock at beginning of year			(912	)		(912	)		(912	)
Treasury stock at end of year			(912	)		(912	)		(912	)
Earnings reinvested at beginning of year			304			308			332
	Net income (a)		74			25			39
	Cash dividends declared on common stock		(24	)		(29	)		(63	)
Earnings reinvested at end of year			354			304			308
Capital stock expense and other at beginning of year			(7	)		(7	)		(16	)
	Other								9
Capital stock expense and other at end of year			(7	)		(7	)		(7	)
Total Shareowner's Common Equity		$	1,272		$	1,222		$	1,147
Common stock shares at beginning of year (b)			78,030			78,030			78,030
Common stock shares at end of year			78,030			78,030			78,030
(a)	PPL Electric's net income approximates comprehensive income.
(b)	Shares in thousands. No par value. 170 million shares authorized. All common shares of PPL Electric stock are owned by PPL.
The accompanying Notes to Consolidated Financial Statements are an integral part of the financial statements.

CONSOLIDATED STATEMENT OF PREFERRED STOCK AT DECEMBER 31,
PPL Electric Utilities Corporation and Subsidiaries (a)
(Millions of Dollars)
							Shares Outstanding		Optional Redemption Price Per Share
			Outstanding					Shares Authorized
			2004		2003		2004				(b)
Preferred Stock - $100 par,   cumulative, without sinking   fund requirements
	4-1/2%		$	25	$	25	247,524	629,936	$	110.00
	Series Preferred
		3.35%		2		2	20,605			103.50
		4.40%		12		12	117,676			102.00
		4.60%		3		3	28,614			103.00
		6.75%		9		9	90,770			103.04
		Total Series Preferred		26		26	257,665	10,000,000
			$	51	$	51

Decreases in Preferred Stock (c)
				2004		2003			2002
				Shares	Amount	Shares	Amount		Shares	Amount
	Series Preferred
			6.125%			(167,500)	$	(17)
			6.15%			(97,500)		(10)
			6.33%			(46,000)		(4)
Decreases in Preferred Stock normally represent: (i) the redemption of stock pursuant to mandatory sinking fund requirements; or (ii) shares redeemed pursuant to optional redemption provisions.
(a)		Each share of PPL Electric's preferred stock entitles the holder to one vote on matters on which PPL Electric's shareowners are entitled to vote. There were 5 million shares of PPL Electric's preference stock authorized; none were outstanding at December 31, 2004 and 2003.
(b)		The involuntary liquidation price of the preferred stock is $100 per share. The optional voluntary liquidation price is the optional redemption price per share in effect, except for the 4-1/2% Preferred Stock and the 6.75% Series Preferred Stock for which such price is $100 per share (plus in each case any unpaid dividends).
(c)		Decreases in 2003 were redemptions of previously outstanding preferred stock with sinking fund requirements.
The accompanying Notes to Consolidated Financial Statements are an integral part of the financial statements.

CONSOLIDATED STATEMENT OF LONG-TERM DEBT AT DECEMBER 31,
PPL Electric Utilities Corporation and Subsidiaries
(Millions of Dollars)
		Outstanding
		2004			2003			Maturity (a)
First Mortgage Bonds (b)
	6-7/8%				$	25		March 1, 2004
	6-1/2%	$	69			110		April 1, 2005
	6.55%		146			146		March 1, 2006
	7-3/8%		10			10		March 1, 2014
	7.30%					6		March 1, 2024
			225			297
First Mortgage Pollution Control Bonds (b)
	3.125% Series		90			90		November 1, 2008
	5.50% Series I		53			53		February 15, 2027
	6.40% Series J		116			116		September 1, 2029
	6.15% Series K		55			55		August 1, 2029
			314			314
Senior Secured Bonds (b)
	5-7/8%		255			300		August 15, 2007
	6-1/4%		486			500		August 15, 2009
	4.30%		100			100		June 1, 2013
			841			900
Series 1999-1 Transition Bonds
	6.83% to 7.15%		1,159			1,423		2004-2008
Pollution Control Revenue Bonds - 2.0%			9			9		June 1, 2027
			2,548			2,943
Unamortized discount			(4	)		(6	)
			2,544			2,937
Less amount due within one year			(336	)		(289	)
	Total Long-term Debt	$	2,208		$	2,648

See Note 8 for information on debt issuances, debt retirements and other changes in long-term debt.
(a)	Aggregate maturities of long-term debt through 2009 are (millions of dollars): 2005, $336; 2006, $434; 2007, $555; 2008, $395; and 2009, $486. There are no bonds outstanding that have sinking fund requirements.
(b)	The First Mortgage Bonds and the First Mortgage Pollution Control Bonds were issued under, and are secured by, the lien of the 1945 First Mortgage Bond Indenture. The lien of the 1945 First Mortgage Bond Indenture covers substantially all electric transmission and distribution plant owned by PPL Electric. The Senior Secured Bonds were issued under the 2001 Senior Secured Bond Indenture. The Senior Secured Bonds are secured by (i) an equal principal amount of First Mortgage Bonds issued under the 1945 First Mortgage Bond Indenture and (ii) the lien of the 2001 Senior Secured Bond Indenture, which covers substantially all electric transmission and distribution plant owned by PPL Electric and which is junior to the lien of the 1945 First Mortgage Bond Indenture.
The accompanying Notes to Consolidated Financial Statements are an integral part of the financial statements.

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Terms and abbreviations appearing in Combined Notes to Consolidated Financial Statements are explained in the glossary. Dollars are in millions, except per share data, unless otherwise noted.

1. Summary of Significant Accounting Policies

   Business and Consolidation

   (PPL, PPL Energy Supply and PPL Electric)

   PPL is an energy and utility holding company that, through its subsidiaries, is primarily engaged in the generation and marketing of electricity in the northeastern and western U.S. and in the delivery of electricity in Pennsylvania, the U.K. and Latin America. Based in Allentown, PA, PPL's principal direct subsidiaries are PPL Energy Funding, PPL Electric, PPL Gas Utilities, PPL Services and PPL Capital Funding.

   (PPL and PPL Energy Supply)

   PPL Energy Funding is the parent of PPL Energy Supply, which serves as the holding company for PPL's principal unregulated subsidiaries. PPL Energy Supply is the parent of PPL Generation, PPL EnergyPlus and PPL Global.

   PPL Generation owns and operates a portfolio of domestic power generating assets. These power plants are located in Pennsylvania, Montana, Arizona, Illinois, Connecticut, New York and Maine and use well-diversified fuel sources including coal, nuclear, natural gas, oil and hydro. PPL EnergyPlus markets or brokers electricity produced by PPL Generation, along with purchased power, natural gas and oil in competitive wholesale and deregulated retail markets, primarily in the northeastern and western portions of the U.S. PPL Global owns and operates international energy businesses that are primarily focused on the distribution of electricity.

   (PPL and PPL Electric)

   PPL Electric is a rate-regulated subsidiary of PPL. PPL Electric's principal businesses are the transmission and distribution of electricity to serve retail customers in its franchised territory in eastern and central Pennsylvania, and the supply of electricity to retail customers in that territory as a PLR.

   (PPL, PPL Energy Supply and PPL Electric)

   The consolidated financial statements of PPL, PPL Energy Supply and PPL Electric include each company's own accounts as well as the accounts of all entities in which the company has a controlling financial interest. Investments in entities in which the company has the ability to exercise significant influence but does not have a controlling financial interest are accounted for under the equity method. See Note 3 for further discussion. All other investments are carried at cost or fair value. All significant intercompany transactions have been eliminated. Any minority interests are reflected in the consolidated financial statements.

   (PPL and PPL Energy Supply)

   It is the policy of PPL and PPL Energy Supply to consolidate or record equity in earnings of foreign entities on a lag, based on the availability of financial data on a U.S. GAAP basis:

   • PPL and PPL Energy Supply consolidate the results of foreign entities in which they have a controlling financial interest (WPD, Emel, EC, the Bolivian subsidiaries and other investments) on a one-month lag.

   • Earnings from foreign equity method investments are recorded on a three-month lag.

   Effective August 21, 2002, PPL Energy Supply deconsolidated CEMAR and began accounting for it using the cost method. See Note 9 for further discussion, including the sale of this investment.

   Effective December 31, 2003, PPL's and PPL Energy Supply's consolidated financial statements include the accounts of the lessors under the operating leases for the Sundance, University Park and Lower Mt. Bethel generation facilities. These entities were not included in the consolidated financial statements for periods ending prior to December 31, 2003. See Note 22 for further discussion.

   Effective December 31, 2003, PPL deconsolidated PPL Capital Funding Trust I, a wholly owned trust. PPL and PPL Energy Supply deconsolidated SIUK Capital Trust I, also a wholly owned trust. Both entities were included in PPL's consolidated financial statements for periods ending prior to December 31, 2003. SIUK Capital Trust I was included in PPL Energy Supply's consolidated financial statements for periods ending prior to December 31, 2003. See Note 22 for further discussion.

   The consolidated financial statements of PPL and PPL Energy Supply include their share of undivided interests in jointly-owned facilities, as well as their share of the related operating costs of those facilities. See Note 13 for additional information.

   Use of Estimates (PPL, PPL Energy Supply and PPL Electric)

   The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

   Loss Accruals (PPL, PPL Energy Supply and PPL Electric)

   Loss accruals are recorded in accordance with SFAS 5, "Accounting for Contingencies." Potential losses are accrued when (1) information is available that indicates it is "probable" that the loss has been incurred, given the likelihood of the uncertain future events and (2) the amount of the loss can be reasonably estimated.

   Guarantees (PPL, PPL Energy Supply and PPL Electric)

   In accordance with the provisions of FIN 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, an Interpretation of FASB Statements No. 5, 57, and 107 and Rescission of FASB Interpretation No. 34," which was adopted by PPL and its subsidiaries effective January 1, 2003, the fair values of guarantees related to arrangements entered into prior to January 1, 2003, as well as guarantees excluded from the initial recognition and measurement provisions of FIN 45, are not recorded in the financial statements. See Note 14 for further discussion of recorded and unrecorded guarantees.

   Accounting Records (PPL and PPL Electric)

   The system of accounts for PPL Electric and PPL Gas Utilities are maintained in accordance with the Uniform System of Accounts prescribed by the FERC and adopted by the PUC.

   Cash Equivalents (PPL, PPL Energy Supply and PPL Electric)

   All highly liquid debt instruments purchased with original maturities of three months or less are considered to be cash equivalents.

   PPL invests in auction rate and similar securities which provide for periodic reset of interest rates and are highly liquid. Even though PPL considers these debt securities as part of its liquid portfolio, it does not include these securities in cash and cash equivalents due to the stated maturity of the securities. These securities are included in "Current Assets - Other" on the Balance Sheet.

   Restricted Cash (PPL, PPL Energy Supply and PPL Electric)

   Bank deposits that are restricted by agreement or that have been designated for a specific purpose are classified as restricted cash. The change in restricted cash is reported as an investing activity in the Statement of Cash Flows. On the Balance Sheet, the current portion of restricted cash is shown as "Restricted cash" within current assets, while the noncurrent portion is included in "Other" within other noncurrent assets. See Note 18 for the components of restricted cash.

   Allowance for Doubtful Accounts (PPL, PPL Energy Supply and PPL Electric)

   Accounts receivable collectibility is evaluated using a combination of factors. Reserve balances are analyzed to assess the reasonableness of the balances in comparison to the actual accounts receivable balances and write-offs. Adjustments are made to reserve balances based on the results of analysis, the aging of receivables, and historical and industry trends.

   Additional specific reserves for uncollectible accounts receivable, such as bankruptcies, are recorded on a case-by-case basis after having been researched and reviewed by management. Unusual items, trends in write-offs, the age of the receivable, counterparty creditworthiness and economic conditions are considered as a basis for determining the adequacy of the reserve for uncollectible account balances.

   Fuels, Materials and Supplies

   (PPL)

   PPL and its subsidiaries value inventory at the lower of cost or market primarily using the average cost method. PPL Gas Utilities values a portion of its natural gas inventory using the last-in, first-out method, consistent with its rate-making treatment. The carrying value of that inventory was $5 million and $14 million at December 31, 2004 and 2003, and the excess of replacement cost over carrying value was $7 million and $5 million at December 31, 2004 and 2003.

   (PPL Energy Supply and PPL Electric)

   Fuels, materials and supplies are valued at the lower of cost or market using the average cost method.

   Property, Plant and Equipment (PPL, PPL Energy Supply and PPL Electric)

   PP&E is recorded at original cost, unless impaired. If impaired, the asset is written down to fair value at that time, which becomes the asset's new cost basis. Original cost includes material, labor, contractor costs, construction overheads and financing costs, where applicable. The cost of repairs and minor replacements are charged to expense as incurred. PPL records costs associated with planned major maintenance projects in the period in which the costs are incurred. No costs are accrued in advance of the period in which the work is performed.

   AFUDC is capitalized as part of the construction costs for regulated projects. Interest is capitalized as part of construction costs for non-regulated projects.

   Depreciation is computed over the estimated useful lives of property using various methods including the straight-line, composite and group methods. PPL and its subsidiaries periodically review and adjust the depreciable lives of their fixed assets. When a component of PP&E is retired that was depreciated under the composite or group method, the original cost is charged to accumulated depreciation. When all or a significant portion of an operating unit that was depreciated under the composite or group method is retired or sold, the property and the related accumulated depreciation account is reduced and any gain or loss is included in income, unless otherwise required by regulators.

   Following are the classes of PP&E, with the associated accumulated depreciation, at December 31:

   		2004
   		PPL		PPL Energy Supply		PPL Electric
   Electric plant
   	Generation	$	8,877	$	8,877
   	Transmission and distribution		7,991		4,088	$	3,903
   	General		736		372		353
   	Construction work in progress		148		115		29
   	Nuclear fuel		314		314
   Gas and oil plant			336		64
   Other property			290		214		4
   			18,692		14,044		4,289
   Less: Accumulated depreciation and amortization			7,483		5,755		1,632
   		$	11,209	$	8,289	$	2,657

   		2003
   		PPL		PPL Energy Supply		PPL Electric
   Electric plant
   	Generation	$	8,347	$	8,347
   	Transmission and distribution		7,324		3,568	$	3,756
   	General		733		370		353
   	Construction work in progress		614		580		31
   	Nuclear fuel		308		308
   Gas and oil plant			321		63
   Other property			276		213		5
   			17,923		13,449		4,145
   Less: Accumulated depreciation and amortization			7,330		5,690		1,556
   		$	10,593	$	7,759	$	2,589

   Following are the weighted-average rates of depreciation at December 31:

   	2004
   	PPL		PPL Energy Supply		PPL Electric
   Generation		2.11%		2.11%
   Transmission and distribution		2.86%		3.49%		2.22%
   General		3.41%		3.75%		3.19%

   	2003
   	PPL		PPL Energy Supply		PPL Electric
   Generation		2.01%		2.01%
   Transmission and distribution		3.16%		4.10%		2.31%
   General		3.75%		3.96%		3.64%

   The annual provisions for depreciation have been computed principally in accordance with the following ranges, in years, of assets lives:

   	PPL		PPL Energy Supply		PPL Electric
   Generation		5-65		5-65
   Transmission and distribution		15-80		30-40		15-80
   General		3-80		3-60		10-80

   (PPL)

   Included in PP&E above are capitalized costs of software projects that were developed or obtained for internal use. At December 31, 2004 and 2003, capitalized software costs were $82 million and $76 million, and there was $43 million and $31 million of accumulated amortization. Such capitalized amounts are amortized ratably over the expected lives of the projects when they become operational, generally not to exceed 10 years. During 2004, 2003 and 2002, PPL amortized capitalized software costs of $11 million, $11 million, and $5 million.

   (PPL Energy Supply)

   Included in PP&E above are capitalized costs of software projects that were developed or obtained for internal use. At December 31, 2004 and 2003, capitalized software costs were $51 million and $47 million, and there was $30 million and $24 million of accumulated amortization. Such capitalized amounts are amortized ratably over the expected lives of the projects when they become operational, generally not to exceed 10 years. During 2004, 2003 and 2002, PPL Energy Supply amortized capitalized software costs of $5 million, $5 million, and $3 million.

   (PPL Electric)

   Included in PP&E above are capitalized costs of software projects that were developed or obtained for internal use. At both December 31, 2004 and 2003, capitalized software costs were $20 million. At December 31, 2004 and 2003, accumulated amortization was $8 million and $4 million. Such capitalized amounts are amortized ratably over the expected lives of the projects when they become operational, generally not to exceed 5 years. During 2004, 2003 and 2002, PPL Electric amortized capitalized software costs of $4 million, $5 million, and $1 million.

   Impairments - Property, Plant and Equipment, Goodwill and Intangible Assets (PPL, PPL Energy Supply and PPL Electric)

   PPL and its subsidiaries review long-lived assets, including intangibles, that are subject to depreciation or amortization for impairment when events or circumstances indicate carrying amounts may not be recoverable. An impairment loss is recognized if the carrying amount of long-lived assets is not recoverable from undiscounted future cash flow. The impairment charge is measured by the difference between the carrying amount of the asset and its fair value.

   Goodwill is reviewed for impairment, at the reporting unit level, annually or more frequently when events or circumstances indicate that the carrying value may be greater than the implied fair value. PPL's reporting units are one level below its operating segments. If the carrying value of the reporting unit exceeds its fair value, the implied fair value of goodwill must be calculated. If the implied fair value of goodwill is less than its carrying value, the difference represents the amount of impairment. See Notes 9 and 19 for a discussion of asset impairment charges recorded.

   Asset Retirement Obligations (PPL, PPL Energy Supply and PPL Electric)

   In 2001, the FASB issued SFAS 143, "Accounting for Asset Retirement Obligations," which addresses the accounting for obligations associated with the retirement of tangible long-lived assets. SFAS 143 requires legal obligations associated with the retirement of long-lived assets to be recognized as a liability in the financial statements. The initial obligation should be measured at the estimated fair value. An equivalent amount should be recorded as an increase in the value of the capitalized asset and allocated to expense over the useful life of the asset. Until the obligation is settled, the liability should be increased, through the recognition of accretion expense in the income statement, for changes in the obligation due to the passage of time. See Note 21 for a discussion of accounting for asset retirement obligations.

   Goodwill and Other Intangible Assets (PPL, PPL Energy Supply and PPL Electric)

   Goodwill represents the excess of the purchase price paid over the estimated fair value of the assets acquired and liabilities assumed in the acquisition of a business. Upon the adoption of SFAS 142, "Goodwill and Other Intangible Assets," on January 1, 2002, PPL and its subsidiaries stopped amortizing goodwill.

   Other intangible assets that have finite useful lives are valued at cost and amortized over their useful lives based upon the pattern in which the economic benefits of the intangible asset are consumed or otherwise used up.

   Investments in Debt and Marketable Equity Securities (PPL, PPL Energy Supply and PPL Electric)

   Investments in debt securities are classified as held-to-maturity, and measured at amortized cost, when there is an intent and ability to hold the securities to maturity. Debt securities and marketable equity securities that are acquired and held principally for the purpose of selling them in the near-term are classified as trading. All other investments in debt and marketable equity securities are classified as available-for-sale. Both trading and available-for-sale securities are carried at fair value. Any unrealized gains and losses for trading securities are included in earnings. Unrealized gains and losses for available-for-sale securities are reported, net of tax, in other comprehensive income or are recognized currently in earnings when a decline in fair value is determined to be other than temporary. The specific identification method is used to calculate realized gains and losses on debt and marketable equity securities. See Note 6 for additional information on securities held in the nuclear decommissioning trusts.

   Regulation (PPL, PPL Energy Supply and PPL Electric)

   PPL Electric, PPL Gas Utilities, and Elfec account for regulated operations in accordance with the provisions of SFAS 71, "Accounting for the Effects of Certain Types of Regulation," which requires rate-regulated entities to reflect the effects of regulatory decisions in their financial statements.

   The following regulatory assets were included in the "Regulatory and Other Noncurrent Assets" section of the Balance Sheet at December 31:

   	PPL				PPL Electric
   	2004		2003		2004		2003
   Recoverable transition costs	$	1,431	$	1,687	$	1,431	$	1,687
   Taxes recoverable through future rates		276		250		261		242
   Other		20		24		17		20
   	$	1,727	$	1,961	$	1,709	$	1,949

   Based on the PUC Final Order, PPL Electric began amortizing its competitive transition (or stranded) costs, $2.97 billion, over an 11-year transition period effective January 1, 1999. In August 1999, competitive transition costs of $2.4 billion were converted to intangible transition costs when they were securitized by the issuance of transition bonds. The intangible transition costs are being amortized over the life of the transition bonds, through December 2008, in accordance with an amortization schedule filed with the PUC. The assets of PPL Transition Bond Company, including the intangible transition property, are not available to creditors of PPL or PPL Electric. The transition bonds are obligations of PPL Transition Bond Company and are non-recourse to PPL and PPL Electric. The remaining competitive transition costs are also being amortized based on an amortization schedule previously filed with the PUC, adjusted for those competitive transition costs that were converted to intangible transition costs. As a result of the conversion of a significant portion of the competitive transition costs into intangible transition costs, amortization of substantially all of the remaining competitive transition costs will occur in 2009.

   Included in "Other" above as of December 31, 2004 and 2003, are approximately $11 million and $15 million of storm restoration costs associated with the September 2003 Hurricane Isabel. PPL Electric deferred these costs in accordance with the PUC declaratory order of January 2004. The $4 million reduction in deferred costs is the result of a PUC order entered in December 2004. The remaining costs will be recovered through customer transmission and distribution rates, and will be amortized over ten years beginning in 2005.

   In March 2004, PPL Electric filed a proposed distribution rate increase of $164 million (subsequently amended to $160 million) and, at the same time, notified the PUC of an estimated increase in transmission service charges of $57 million. In December 2004, the PUC entered its order granting PPL Electric a distribution rate increase of $137 million and approved PPL Electric's proposed mechanism for collecting the additional $57 million in transmission-related charges.

   Accounting for Derivatives and Other Contracts Held for Trading Purposes (PPL and PPL Energy Supply)

   PPL and PPL Energy Supply enter into energy and energy-related contracts to hedge the variability of expected cash flows associated with their generating units and for trading purposes. PPL and PPL Energy Supply enter into interest rate derivative contracts to hedge their exposure to changes in the fair value of their debt instruments and to hedge their exposure to variability in expected cash flows associated with existing debt instruments or forecasted transactions. PPL and PPL Energy Supply also enter into foreign currency derivative contracts to hedge foreign currency exposures, including firm commitments, recognized assets or liabilities, forecasted transactions, net investments, or foreign earnings translation.

   Contracts that meet the definition of a derivative are accounted for under SFAS 133, "Accounting for Derivative Instruments and Hedging Activities," as amended and interpreted. Certain energy contracts have been excluded from the requirements of SFAS 133 because they meet the definition of a "normal purchase or normal sale" under DIG Issue C15, "Scope Exceptions: Normal Purchases and Normal Sales Exception for Certain Option-Type Contracts and Forward Contracts in Electricity." These contracts are reflected in the financial statements using the accrual method of accounting.

   Additionally, PPL and PPL Energy Supply adopted SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities," as of July 1, 2003. The requirements of SFAS 149, which required prospective application, placed additional limitations on the use of the normal purchase or normal sale exception. Therefore, the accounting for certain types of transactions has been changed on a prospective basis to conform with SFAS 149.

   All derivative contracts that are subject to the requirements of SFAS 133 and its amendments are reflected on the balance sheet at their fair value. On the date the derivative contract is executed, PPL designates the derivative as a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment ("fair value" hedge), a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability ("cash flow" hedge), a foreign currency fair value or cash flow hedge ("foreign currency" hedge), a hedge of a net investment in a foreign operation or a trading derivative. Changes in the fair value of a derivative that is highly effective as, and is designated and qualifies as, a fair value hedge, along with the loss or gain on the hedged asset or liability that is attributable to the hedged risk, are recorded in current-period earnings. Changes in the fair value of a derivative that is highly effective as, and is designated as and qualifies as, a cash flow hedge are recorded in other comprehensive income, until earnings are affected by the variability of cash flows being hedged. Changes in the fair value of derivatives that are designated as and qualify as foreign currency hedges are recorded in either current-period earnings or other comprehensive income, depending on whether the hedge transaction is a fair value hedge or a cash flow hedge. If a derivative is used as a hedge of a net investment in a foreign operation, its changes in fair value, to the extent effective as a hedge, are recorded within other comprehensive income. Changes in the fair value of derivatives that are not designated as hedging instruments are reported in current-period earnings.

   Unrealized gains and losses from changes in market prices of energy contracts accounted for as fair value hedges are reflected in "Energy purchases" on the Statement of Income, as are changes in the underlying positions. Realized gains and losses from energy contracts accounted for as fair value hedges or cash flow hedges, when recognized on the Statement of Income, are reflected in "Wholesale energy marketing" revenues, "Fuel," or "Energy purchases," consistent with the hedged item. Gains and losses from interest rate and foreign currency derivative contracts that hedge interest payments, when recognized on the Statement of Income, are accounted for in "Interest Expense." Gains and losses from foreign currency derivative contracts that economically hedge foreign earnings translation are recognized in "Other Income - net." Gains and losses from foreign currency derivative contracts that hedge foreign currency payments for equipment, when recognized on the Statement of Income, are accounted for in "Depreciation."

   In the fourth quarter of 2002, PPL Energy Supply adopted the accounting requirements under EITF 02-3, "Issues Involved in Accounting for Derivative Contracts Held for Trading Purposes and Contracts Involved in Energy Trading and Risk Management Activities." As such, PPL reflects its net realized and unrealized gains and losses associated with all derivatives that are held for trading purposes in the "Net energy trading margins" line on the Statement of Income. Non-derivative contracts that met the definition of energy trading activities as defined by EITF 98-10, "Accounting for Energy Trading and Risk Management Activities" are reflected in the financial statements using the accrual method of accounting. Prior periods were restated.

   PPL Energy Supply adopted the final provisions of EITF 03-11, "Reporting Realized Gains and Losses on Derivative Instruments That Are Subject to FASB Statement No. 133 and Not 'Held for Trading Purposes' as Defined in Issue No. 02-3," prospectively as of October 1, 2003. As a result of the adoption, non-trading bilateral sales of electricity at major market delivery points are netted with purchases that offset the sales at those same delivery points. A major market delivery point is any delivery point with liquid pricing available.

   See Note 17 for additional information on SFAS 133, its amendments and related accounting guidance.

   Revenue Recognition (PPL, PPL Energy Supply and PPL Electric)

   Operating revenues, except for "Energy related businesses," are recorded based on energy deliveries through the end of the calendar month. Unbilled retail revenues result because customers' meters are read and bills are rendered throughout the month, rather than all being read at the end of the month. Unbilled revenues for a month are calculated by multiplying an estimate of unbilled kWh by the estimated average cents per kWh. Unbilled wholesale energy revenues are recorded at month-end to reflect estimated amounts until actual dollars and MWhs are confirmed and invoiced. At that time, unbilled revenue is reversed and actual revenue is recorded.

   "Energy related businesses" revenue includes revenues from the mechanical contracting and engineering subsidiaries and PPL Global's proportionate share of affiliate earnings under the equity or cost method of accounting, as described in the "Business and Consolidation" section of Note 1. The mechanical contracting and engineering subsidiaries record profits from construction contracts on the percentage-of-completion method of accounting. Income from time and material contracts is recognized currently as the work is performed.

   Utility Revenue

   (PPL and PPL Energy Supply)

   The Statement of Income "Utility" line item contains revenues from domestic and international rate-regulated delivery operations.

   WPD revenues are stated net of value-added tax.

   (PPL Electric)

   Since most of PPL Electric's operations are regulated, it is not meaningful to use a "Utility" caption. Therefore, the revenues of PPL Electric are presented according to specific types of revenue.

   Income Taxes

   (PPL, PPL Energy Supply and PPL Electric)

   The income tax provision for PPL and its subsidiaries is calculated in accordance with SFAS 109, "Accounting for Income Taxes." PPL and its domestic subsidiaries file a consolidated U.S. federal income tax return.

   Significant management judgment is required in developing PPL's provision for income taxes, including the determination of deferred tax assets and liabilities and any valuation allowances that might be required against the deferred tax assets. PPL and its subsidiaries record valuation allowances to reduce deferred tax assets to the amounts that are more likely than not to be realized. PPL and its subsidiaries have considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for valuation allowances. If PPL and its subsidiaries determined that they would be able to realize deferred tax assets in the future in excess of net deferred tax assets, adjustments to the deferred tax assets would increase income by reducing tax expense in the period that such determination was made. Likewise, if PPL and its subsidiaries determined that they would not be able to realize all or part of net deferred tax assets in the future, adjustments to the deferred tax assets would decrease income by increasing tax expense in the period that such determination was made.

   Annual tax provisions include amounts considered sufficient to pay assessments that may result from examination by taxing authorities of prior year tax returns; however, the amount ultimately paid upon resolution of issues raised by such authorities may differ materially from the amount accrued and may materially impact PPL's financial statements. In evaluating the exposure associated with various tax filing positions, PPL and its subsidiaries accrue charges for probable exposures based on management's best estimate of the amount that should be recognized. PPL and its subsidiaries maintain an allowance for tax contingencies, the balance of which management believes to be adequate.

   The provision for PPL Energy Supply and PPL Electric is calculated in accordance with an intercompany tax sharing policy which provides that the taxable income be calculated as if PPL Energy Supply and PPL Electric and its domestic subsidiaries filed a separate consolidated return. PPL Energy Supply's intercompany tax liability was $44 million and $61 million at December 31, 2004 and 2003. PPL Electric's intercompany tax receivable was $5 million and $20 million at December 31, 2004 and 2003.

   PPL Energy Supply and PPL Electric deferred investment tax credits when they were utilized and are amortizing the deferrals over the average lives of the related assets. See Note 5 for additional discussion regarding income taxes.

   (PPL and PPL Electric)

   The provision for PPL Electric's deferred income taxes for regulated assets is based upon the ratemaking principles reflected in rates established by the PUC and the FERC. The difference in the provision for deferred income taxes for regulated assets and the amount that otherwise would be recorded under U.S. GAAP is deferred and included in taxes recoverable through future rates in "Regulatory and Other Noncurrent Assets - Other" on the Balance Sheet. See Note 5 for additional information.

   Leases

   (PPL, PPL Energy Supply and PPL Electric)

   PPL and its subsidiaries apply the provisions of SFAS 13, "Accounting for Leases," as amended and interpreted, to all transactions that qualify for lease accounting. See Note 10 for a discussion of accounting for leases under which PPL, PPL Energy Supply and PPL Electric are lessees.

   (PPL and PPL Energy Supply)

   In 2002, PPL began commercial operation of its 79.9 MW oil-powered station in Shoreham, New York. The Long Island Power Authority has contracted to purchase all of the plant's capacity and ancillary services as part of a 15-year power purchase agreement with PPL EnergyPlus. The capacity payments in the power purchase agreement result in the plant being classified as a direct financing lease, under which PPL EnergyPlus is the lessor. In December 2004, PPL and PPL Energy Supply recorded a sales-type lease related to an 8 MW on-site electrical generation plant, under which a subsidiary of PPL Energy Supply is the lessor.

   As of December 31, 2004 and 2003, PPL and PPL Energy Supply had receivable balances of $273 million and $277 million (included in "Current Assets - Other" and "Regulatory and Other Noncurrent Assets - Other" for PPL and "Current Assets - Other" and "Other Noncurrent Assets - Other" for PPL Energy Supply) and unearned revenue balances of $158 million and $167 million (included in "Deferred Credits and Other Noncurrent Liabilities - Other"). The receivable balances include $65 million of an unguaranteed residual value. Rental income received during 2004, 2003 and 2002 was $14 million, $15 million and $5 million. Total future minimum lease payments expected to be received on both leases are estimated at $16 million for each of the years from 2005 through 2009.

   Stock-Based Compensation

   (PPL, PPL Energy Supply and PPL Electric)

   PPL grants stock options, restricted stock, restricted stock units and stock units to employees and directors under several stock-based compensation plans. SFAS 123, "Accounting for Stock-Based Compensation," encourages entities to record compensation expense for stock-based compensation plans at fair value but provides the option of measuring compensation expense using the intrinsic value method prescribed by APB Opinion No. 25, "Accounting for Stock Issued to Employees." The fair value method under SFAS 123 is the preferable method of accounting for stock-based compensation, as it provides a consistent basis of accounting for all stock-based awards, thereby facilitating a better measure of compensation cost and improved financial reporting.

   Prior to 2003, PPL accounted for stock-based compensation in accordance with APB Opinion No. 25, as permitted by SFAS 123. Effective January 1, 2003, PPL and its subsidiaries adopted the fair value method of accounting for stock-based compensation, as prescribed by SFAS 123, using the prospective method of transition permitted by SFAS 148, "Accounting for Stock-Based Compensation - Transition and Disclosure, an Amendment of FASB Statement No. 123." The prospective method of transition requires PPL and its subsidiaries to use the fair value method under SFAS 123 for all stock-based compensation awards granted, modified or settled on or after January 1, 2003. Thus, all awards granted prior to January 1, 2003, continue to be accounted for under the intrinsic value method of APB Opinion No. 25, to the extent such awards are not modified or settled. Stock-based compensation is recognized on a straight-line basis over the vesting period of the awards and is included in "Other operation and maintenance" expense on PPL's Statement of Income.

   Use of the fair value method prescribed by SFAS 123 requires PPL and its subsidiaries to recognize compensation expense for stock options issued. Fair value for the stock options is determined using the Black-Scholes options pricing model.

   PPL and its subsidiaries were not required to recognize compensation expense for stock options issued and accounted for under the intrinsic value method of APB Opinion No. 25, since PPL grants stock options with an exercise price that is not less than the fair market value of PPL's common stock on the date of grant. For stock options granted and accounted for under the fair value method of SFAS 123, stock option expense for PPL was approximately $6 million for 2004 and $3 million for 2003. As currently structured, awards of restricted stock, restricted stock units and stock units result in the same amount of compensation expense under the fair value method of SFAS 123 as they would under the intrinsic value method of APB Opinion No. 25.

   See Note 23 for a discussion of SFAS 123 (revised 2004), "Share-Based Payment." See Note 11 for a discussion of stock-based compensation.

   The following table illustrates the pro forma effect on net income and EPS as if the fair value method had been used to account for all outstanding stock-based compensation awards in the years shown:

   (PPL)

   		2004		2003		2002
   Net Income
   Net Income - as reported		$	698	$	734	$	208
   	Add: Stock-based employee compensation expense included in reported net income, net of tax		8		5		3
   	Deduct: Total stock-based compensation expense determined under the fair value method for all awards, net of tax		10		9		8
   Pro forma Net Income		$	696	$	730	$	203
   EPS
   Basic - as reported		$	3.79	$	4.25	$	1.37
   Basic - pro forma		$	3.78	$	4.23	$	1.34
   Diluted - as reported		$	3.77	$	4.24	$	1.36
   Diluted - pro forma		$	3.76	$	4.22	$	1.33

   (PPL Energy Supply)

   		2004		2003		2002
   Net Income
   Net Income - as reported		$	651	$	727	$	279
   	Add: Stock-based employee compensation expense included in reported net income, net of tax		5		3		2
   	Deduct: Total stock-based compensation expense determined under the fair value method for all awards, net of tax		7		6		5
   Pro forma Net Income		$	649	$	724	$	276

   Stock-based compensation expense includes an allocation of PPL Services' expense.

   (PPL Electric)

   Stock-based compensation expense, including awards granted to employees and an allocation of costs of awards granted to employees of PPL Services, was insignificant under both the intrinsic value and fair value methods for each of 2004, 2003 and 2002.

   Pension and Other Postretirement Benefits (PPL, PPL Energy Supply and PPL Electric)

   PPL and certain of its subsidiaries sponsor various pension and other postretirement and postemployment benefit plans. PPL follows the guidance of SFAS 87, "Employers' Accounting for Pensions," and SFAS 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," when accounting for these benefits.

   PPL and certain of its subsidiaries also provide supplemental retirement benefits to directors, executives and other key management employees through unfunded nonqualified retirement plans.

   The majority of employees of PPL's domestic subsidiaries will become eligible for certain health care and life insurance benefits upon retirement through contributory plans. Postretirement benefits under the PPL Retiree Health Plans (covering retirees of PPL Electric and various other affiliated PPL companies) and certain employees of PPL Gas Utilities are paid from funded VEBA trusts sponsored by the respective companies.

   See Note 12 for a discussion of pension and other postretirement benefits.

   Comprehensive Income (PPL and PPL Energy Supply)

   Comprehensive income consists of net income and other comprehensive income, defined as changes in common equity from transactions not related to shareowners. Other comprehensive income consists of foreign currency translation adjustments recorded by PPL Global, unrealized gains or losses on available-for-sale securities and qualifying derivatives, and the excess of additional pension liability over unamortized prior service costs, net of taxes. Comprehensive income is reflected on the PPL Statement of Shareowners' Common Equity and Comprehensive Income, and "Accumulated other comprehensive loss" is presented on the PPL Balance Sheet. Comprehensive income is reflected on the PPL Energy Supply Statement of Member's Equity and Comprehensive Income, and accumulated other comprehensive loss is included in Member's Equity on the PPL Energy Supply Balance Sheet.

   The accumulated other comprehensive loss of PPL consisted of the following after tax amounts at December 31:

   	2004			2003
   Foreign currency translation adjustments	$	75		$	(37	)
   Net unrealized gains on available-for-sale securities		40			20
   Minimum pension liability		(369	)		(316	)
   Unrealized gains (losses) on qualifying derivatives		(69	)		36
   	$	(323	)	$	(297	)

   The accumulated other comprehensive loss of PPL Energy Supply consisted of the following after tax amounts at December 31:

   	2004			2003
   Foreign currency translation adjustments	$	75		$	(37	)
   Net unrealized gains on available-for-sale securities		39			22
   Minimum pension liability		(360	)		(309	)
   Unrealized gains (losses) on qualifying derivatives		(51	)		56
   	$	(297	)	$	(268	)

   Treasury Stock (PPL and PPL Electric)

   Treasury shares are reflected on the balance sheet as an offset to common equity under the cost method of accounting. Management has no definitive plans for the future use of these shares. Treasury shares are not considered outstanding in calculating EPS.

   At December 31, 2004 and 2003, PPL had 31,045,853 and 31,019,352 shares of treasury stock outstanding. At December 31, 2004 and 2003, PPL Electric had 79,270,519 shares of treasury stock outstanding.

   Foreign Currency Translation and Transactions (PPL and PPL Energy Supply)

   Assets and liabilities of international operations, where the local currency is the functional currency, are translated at year-end exchange rates, and related revenues and expenses are translated at average exchange rates prevailing during the year. Adjustments resulting from translation are recorded in accumulated other comprehensive loss.

   Gains or losses relating to foreign currency transactions are recognized currently in income. The aggregate transaction gain (loss) was an insignificant amount in 2004, $(1) million in 2003 and $(9) million in 2002.

   Independent System Operator (PPL, PPL Energy Supply and PPL Electric)

   Certain PPL subsidiaries participate in PJM in several roles. Certain PPL subsidiaries also participate in the New England ISO (ISO-NE) and the New York ISO (NYISO) in a less significant way than in PJM. In PJM, PPL EnergyPlus is a marketer, a load-serving entity to its customers who selected it as a supplier under the Customer Choice Act and a seller for PPL's generation subsidiaries. PPL Electric is a transmission owner and provider of last resort in PJM. In ISO-NE, PPL EnergyPlus is a marketer, a load-serving entity, and a seller for PPL's New England generating assets. In the NYISO, PPL EnergyPlus acts as a marketer. PPL Electric does not participate in ISO-NE or NYISO.

   A function of interchange accounting is to match participants' MWh entitlements (generation plus scheduled bilateral purchases) against their MWh obligations (load plus scheduled bilateral sales) during every hour of every day. If the net result during any given hour is an entitlement, the participant is credited with a spot market sale to the ISO at the respective market price for that hour; if the net result is an obligation, the participant is charged with a spot market purchase from the ISO at the respective market price for that hour. ISO purchases and sales are not allocated to individual customers.

   PPL records the hourly net sales and purchases in its financial statements as sales to and purchases from the respective ISOs, in accordance with the FERC and industry accounting.

   Reclassifications (PPL, PPL Energy Supply and PPL Electric)

   Certain amounts in the 2003 and 2002 financial statements have been reclassified to conform to the current presentation. The reclassifications did not affect net income or total equity.

   New Accounting Standards (PPL, PPL Energy Supply and PPL Electric)

   See Note 23 for a discussion of new accounting standards adopted in 2004 or pending adoption.

2. Segment and Related Information

   (PPL and PPL Energy Supply)

   PPL's reportable segments are Supply, Delivery and International. The Supply segment primarily consists of the domestic energy marketing, domestic generation and domestic development operations of PPL Energy Supply. The Delivery segment includes the regulated electric and gas delivery operations of PPL Electric and PPL Gas Utilities. The International segment includes operations of the international energy businesses of PPL Global. The majority of PPL Global's international businesses are located in the U.K., Chile, El Salvador and Bolivia.

   PPL Energy Supply's reportable segments are Supply and International. The International segment at the PPL Energy Supply level is consistent with the International segment at the PPL level. The Supply segment information reported at the PPL Energy Supply level will not agree with the Supply segment information reported at the PPL level. Additional Supply segment functions, including telecommunications, exist at PPL that are outside of PPL Energy Supply. Furthermore, certain income items, including PLR revenue and certain interest income, exist at the PPL Energy Supply level, but are eliminated in consolidation at the PPL level. Finally, certain expense items are fully allocated to the segments at the PPL level only.

   Segments include direct charges, as well as an allocation of indirect corporate costs, for services provided by PPL Services. These service costs include functions such as financial, legal, human resources and information services.

   Financial data for the segments are as follows:

   		PPL									PPL Energy Supply
   		2004			2003			2002			2004			2003			2002
   Income Statement Data
   Revenues from external customers
   	Supply	$	1,846		$	1,804		$	1,707		$	3,327		$	3,230		$	3,124
   	Delivery		2,869			2,778			2,706
   	International		1,097			1,014			1,078			1,097			1,014			1,078
   			5,812			5,596			5,491			4,424			4,244			4,202
   Intersegment revenues
   	Supply		1,500			1,444			1,431
   	Delivery		157			160			183
   Equity in earnings of unconsolidated affiliates
   	Supply		(10	)		(14	)		(12	)		(9	)		(11	)		(11	)
   	International		2			3			3			2			3			3
   			(8	)		(11	)		(9	)		(7	)		(8	)		(8	)
   Depreciation
   	Supply		152			120			129			146			116			127
   	Delivery		114			110			100
   	International		146			150			138			146			150			138
   			412			380			367			292			266			265
   Amortizations - recoverable transition costs and other
   	Supply		(25	)		(27	)		(38	)		(40	)		(38	)		(56	)
   	Delivery		267			271			236
   			242			244			198			(40	)		(38	)		(56	)

   		PPL								PPL Energy Supply
   		2004		2003			2002			2004		2003			2002
   Interest income
   	Supply		15		(2	)		(5	)		23		17			27
   	Delivery		16		7			20
   	International		8		7			13			8		7			13
   			39		12			28			31		24			40
   Interest expense
   	Supply		124		41			107			74		(19	)		(29	)
   	Delivery		196		214			214
   	International		203		218			239			203		218			239
   			523		473			560			277		199			210
   Income taxes - total
   	Supply		119		177			119			140		215			199
   	Delivery		17		23			24
   	International		59		(30	)		67			59		(30	)		67
   			195		170			210			199		185			266
   Deferred income taxes and investment tax credits
   	Supply		18		19			(21	)		105		99			73
   	Delivery		87		22			21
   	International		50		55			85			50		55			85
   			155		96			85			155		154			158
   Net Income
   	Supply (a)		421		502			356			454		531			475
   	Delivery		80		36			48
   	International (b)		197		196			(196	)		197		196			(196	)
   		$	698	$	734		$	208		$	651	$	727		$	279
   Cash Flow Data
   Expenditures for property, plant and equipment
   	Supply	$	228	$	270		$	291		$	211	$	256		$	283
   	Delivery		196		251			237
   	International		279		246			113			279		246			113
   			703		767			641			490		502			396
   Investment in generating assets and electric energy projects
   	Supply		31					261			31					261
   	International (c)							211								211
   		$	31	$			$	472		$	31	$			$	472

   		PPL				PPL Energy Supply
   		As of December 31,				As of December 31,
   		2004		2003		2004		2003
   Balance Sheet Data
   Net investment in unconsolidated affiliates - at equity
   	Supply	$	36	$	48	$	36	$	30
   	International		15		26		15		26
   			51		74		51		56
   Total assets
   	Supply		6,673		6,491		7,094		6,308
   	Delivery		5,698		5,690
   	International		5,390		4,942		5,390		4,942
   		$	17,761	$	17,123	$	12,484	$	11,250

   		PPL						PPL Energy Supply
   		2004		2003		2002		2004		2003		2002
   Geographic Data
   Revenues from external customers
   	Domestic	$	4,715	$	4,582	$	4,413	$	3,327	$	3,230	$	3,124
   	Foreign		1,097		1,014		1,078		1,097		1,014		1,078
   		$	5,812	$	5,596	$	5,491	$	4,424	$	4,244	$	4,202

   		PPL				PPL Energy Supply
   		As of December 31,				As of December 31,
   		2004		2003		2004		2003
   Property, plant and equipment - net
   	Domestic	$	7,359	$	7,219	$	4,439	$	4,385
   	Foreign		3,850		3,374		3,850		3,374
   		$	11,209	$	10,593	$	8,289	$	7,759

   (a)	2003 includes two cumulative-effect changes in accounting principle recorded in January and December 2003. See Notes 21 and 22 for additional information.
   (b)	2002 includes the cumulative-effect change in accounting principle recorded in March 2002. See Note 19 for additional information. The International segment also includes the write-downs of the CEMAR investment recorded in March and June 2002, as described in Note 9.
   (c)	The 2002 amount represents the acquisition of the controlling interest in WPD.

   
   
3. Investment in Unconsolidated Affiliates - at Equity

   (PPL and PPL Energy Supply)

   Investment in unconsolidated affiliates accounted for under the equity method were as follows as of December 31 (equity ownership percentages as of December 31, 2004):

   		2004		2003
   Aguaytia Energy, LLC - 11.4%		$	9	$	11
   Bangor Pacific Hydro Associates - 50.0%			15		15
   MicDos					9
   Safe Harbor Water Power Corporation - 33.3%			15		15
   Other			12		6
   	Total PPL Energy Supply		51		56
   PPL Capital Funding Trust I					18
   	Total PPL	$	51	$	74

   The 50% investment interest in MicDos was sold in June 2004. See Note 9 for additional information. PPL no longer has its 100% interest in PPL Capital Funding Trust I as a result of exchanges of securities involving the trust preferred securities in January and February 2004 and the liquidation of the trust in March 2004. See Note 8 for additional information.

   A PPL subsidiary has a 50% interest in a partnership that owns the Griffith gas-fired generation station. The partnership arrangement is essentially a cost-sharing arrangement, in that each of the partners has rights to one-half of the plant capacity and energy, and an obligation to cover one-half of the operating costs of the station. Accordingly, the equity investment is not reflected in the table above and is classified as "Electric Plant in Service - Generation" on the Balance Sheet.

4. Earnings Per Share

   (PPL)

   Basic EPS is calculated using the weighted-average number of common shares outstanding during the period. Diluted EPS is calculated using weighted average shares outstanding that are increased for additional shares that would be outstanding if potentially dilutive securities were converted to common stock. Potentially dilutive securities consist of:

   • stock options, restricted stock and restricted stock units granted under the incentive compensation plans;

   • stock units representing common stock granted under the directors compensation programs;

   • common stock purchase contracts that were a component of the PEPS Units and PEPS Units, Series B; and

   • convertible senior notes.

   The basic and diluted EPS calculations, and the reconciliation of the shares (in thousands) used in the calculations, are shown below:

   		2004			2003			2002
   Income (Numerator)
   Income from continuing operations		$	700		$	719		$	360
   	Loss from discontinued operations (net of tax)		(2	)		(20	)		(2	)
   	Cumulative effects of changes in accounting principles (net of tax)					35			(150	)
   Net Income		$	698		$	734		$	208
   Shares (Denominator)
   Shares for Basic EPS			184,228			172,795			152,492
   Add: Incremental shares
   	Convertible Senior Notes		67
   	Stock options and other share-based awards		698			597			317
   Shares for Diluted EPS			184,993			173,392			152,809
   Basic EPS
   Income from continuing operations		$	3.80		$	4.16		$	2.36
   	Loss from discontinued operations (net of tax)		(0.01	)		(0.11	)		(0.01	)
   	Cumulative effects of changes in accounting principles (net of tax)					0.20			(0.98	)
   Net Income		$	3.79		$	4.25		$	1.37
   Diluted EPS
   Income from continuing operations		$	3.78		$	4.15		$	2.36
   	Loss from discontinued operations (net of tax)		(0.01	)		(0.11	)		(0.01	)
   	Cumulative effects of changes in accounting principles (net of tax)					0.20			(0.99	)
   Net Income		$	3.77		$	4.24		$	1.36

   In May 2001, PPL and PPL Capital Funding Trust I issued 23 million PEPS Units that contained a purchase contract component for PPL's common stock. The purchase contracts were only dilutive if the average price of PPL's common stock exceeded a threshold appreciation price, which was adjusted for cash distributions on PPL common stock. The threshold appreciation price was initially set at $65.03 and was adjusted to $63.38 as of April 1, 2004, based on dividends paid on PPL's common stock since issuance. The purchase contracts were settled in May 2004. Since the average price did not exceed the threshold appreciation price, the purchase contracts were excluded from the diluted EPS calculations for 2004, 2003 and 2002.

   In January 2004, PPL completed an exchange offer resulting in the exchange of approximately four million PEPS Units for PEPS Units, Series B. The primary difference in the units related to the debt component. The purchase contract components of both units, which were potentially dilutive, were identical. The threshold appreciation price for the purchase contract component of the PEPS Units, Series B was adjusted in the same manner as that of the PEPS Units and was $63.38 as a result of the adjustment as of April 1, 2004. These purchase contracts were settled in May 2004. Since the average price did not exceed the threshold appreciation price, the purchase contracts were excluded from the diluted EPS calculations for 2004. See Note 8 for a more detailed discussion of the exchange offer.

   In May 2003, PPL Energy Supply issued $400 million of 2.625% Convertible Senior Notes due 2023. The notes are guaranteed by PPL and, as originally issued, could be converted into shares of PPL common stock if:

   • during any fiscal quarter starting after June 30, 2003, the market price of PPL's common stock trades at or above $59.67 per share over a certain period during the preceding fiscal quarter;

   • PPL calls the debt for redemption;

   • the holder exercises its right to put the debt on any five-year anniversary of the offering;

   • the long-term credit rating assigned to the notes by Moody's Investors Service, Inc. and Standard & Poor's Ratings Services falls below Ba2 and BB or the notes are not rated; or

   • certain specified corporate transactions occur, e.g., change in control and certain distributions to the holders of PPL common stock.

   The initial conversion rate is 20.1106 shares per $1,000 principal amount of notes. It will be adjusted if certain specified distributions, whether in the form of cash, stock, other equity interests, evidence of indebtedness or assets, are made to holders of PPL common stock. Additionally, the conversion rate can be increased by PPL if its Board of Directors has made a determination that to do so would be in the best interests of either PPL or holders of PPL common stock.

   Depending upon which of the conversion events identified above occurs, the Convertible Senior Notes, as originally issued, could have been settled in cash or shares. However, the notes were modified in November 2004 to require cash settlement of the principal amount, permit settlement of any conversion premium in cash or stock and eliminate a provision that required settlement in stock in the event of default. These modifications were made in response to the FASB's ratification of EITF Issue 04-8, "The Effect of Contingently Convertible Instruments on Diluted Earnings per Share," as well as other anticipated rules relating to EPS. See Note 23 for a discussion of EITF Issue 04-8, and Note 8 for a discussion of the consent solicitation that effected these modifications.

   The maximum number of shares that could potentially be issued to settle the conversion premium, based upon the current conversion rate, is 8,044,240 shares. Based on PPL's common stock price at December 31, 2004, the conversion premium equated to 536,732 shares, or approximately $29 million.

   As currently structured, the Convertible Senior Notes will have a dilutive impact when the average market price of PPL common stock exceeds the conversion price of $49.73. The Convertible Senior Notes did not have a dilutive impact on 2003 EPS.

   The following number of stock options to purchase PPL common shares were excluded in the periods' computations of diluted EPS because the effect would have been antidilutive.

   (Thousands of Shares)	2004		2003		2002
   Antidilutive stock options		1,133		1,683		1,294

   See Note 23 for a discussion of EITF Issue 03-6 "Participating Securities and the Two-Class Method under FASB Statement No. 128, 'Earnings Per Share'."

5. Income and Other Taxes

   For 2004, 2003 and 2002, the statutory U.S. corporate federal income tax rate was 35%. The statutory corporate net income tax rate for Pennsylvania was 9.99%.

   (PPL)

   "Income from Continuing Operations Before Income Taxes, Minority Interest and Distributions on Preferred Securities" included the following components for the years ended December 31:

   	2004		2003		2002
   Domestic income	$	641	$	727	$	605
   Foreign income		264		198		110
   	$	905	$	925	$	715

   Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for accounting purposes and their basis for income tax purposes and the tax effects of net operating loss and tax credit carryforwards.

   Net deferred tax assets have been recognized based on management's estimates of future taxable income for U.S. and certain foreign jurisdictions in which PPL's operations have historically been profitable.

   Significant components of PPL's deferred income tax assets and liabilities from continuing operations were as follows:

   		2004			2003
   Deferred Tax Assets
   	Deferred investment tax credits	$	42		$	48
   	NUG contracts and buybacks		135			168
   	Accrued pension costs		86			81
   	Federal tax credit carryforwards		58			9
   	Foreign loss carryforwards		152			278
   	Foreign - pensions		51			67
   	Foreign - other		26			38
   	Contribution in aid of construction		65			63
   	Other		219			218
   	Valuation allowance		(164	)		(293	)
   			670			677

   Deferred Tax Liabilities
   	Plant - net		1,291		1,073
   	Restructuring - CTC		526		617
   	Taxes recoverable through future rates		115		106
   	Reacquired debt costs		14		11
   	Foreign - plant		770		792
   	Foreign - other		55		1
   	Other domestic		62		61
   			2,833		2,661
   Net deferred tax liability		$	2,163	$	1,984

   Details of the components of income tax expense, a reconciliation of federal income taxes derived from statutory tax rates applied to income from continuing operations for accounting purposes, and details of taxes other than income are as follows:

   		2004			2003			2002
   Income Tax Expense
   	Current-Federal	$	45		$	26		$	41
   	Current-State		(32	)		13			(9	)
   	Current-Foreign		27			35			52
   			40			74			84
   	Deferred-Federal		102			39			70
   	Deferred-State		17			24			27
   	Deferred-Foreign		51			48			44
   			170			111			141
   	Investment tax credit, net-federal		(15	)		(15	)		(15	)
   	Total income tax expense from continuing operations	$	195		$	170		$	210
   Total income tax expense-Federal		$	132		$	50		$	96
   Total income tax expense-State			(15	)		37			18
   Total income tax expense-Foreign			78			83			96
   	Total income tax expense from continuing operations	$	195		$	170	(a)	$	210

   
   

   (a) Excludes $26 million of current and deferred federal and state tax expense related to the cumulative effect of changes in accounting principles recorded net of tax.

   In 2004, 2003 and 2002, PPL realized stock option tax benefits, recorded as an increase to capital in excess of par value, of approximately $3 million, $5 million and an insignificant amount.

   		2004			2003			2002
   Reconciliation of Income Tax Expense
   	Indicated federal income tax on pre-tax income before cumulative effects of changes in accounting principles at statutory tax rate - 35%	$	317		$	324		$	250
   Increase (decrease) due to:
   	State income taxes		11			25			11
   	Amortization of investment tax credit		(10	)		(10	)		(11	)
   	Write-down of international energy projects					(83	)		14
   	Difference related to income recognition of foreign affiliates (net of foreign income taxes)		(32	)		(7	)		18
   	Stranded cost securitization		(22	)
   	Federal income tax credits		(74	)		(52	)		(50	)
   	Contribution of property		(2	)		(9	)
   	Other		7			(18	)		(22	)
   			(122	)		(154	)		(40	)
   Total income tax expense from continuing operations		$	195		$	170		$	210
   Effective income tax rate			21.5%			18.4%			29.4%
   Taxes, Other than Income
   	State gross receipts	$	156		$	155		$	154
   	State utility realty		(10	)		3			3
   	State capital stock		22			27			7
   	Property - foreign		54			44			42
   	Other - foreign		1
   	Domestic property and other		27			27			25
   		$	250		$	256		$	231

   PPL had federal alternative minimum tax credit carryforwards with an indefinite carryforward period of $58 million and $9 million at December 31, 2004 and 2003. PPL also had state net operating loss carryforwards that expire between 2005 and 2023 of approximately $77 million and $78 million at December 31, 2004 and 2003. Valuation allowances have been established for the amount that, more likely than not, will not be realized.

   PPL Global had foreign net operating loss carryforwards of approximately $27 million and $13 million at December 31, 2004 and 2003. PPL Global also had foreign capital loss carryforwards of $486 million at December 31, 2004 and $920 million at December 31, 2003. All of these losses have an unlimited carryforward period. However, it is more likely than not that these losses will not be utilized and, as such, a full valuation allowance has been provided against the related deferred tax asset.

   PPL Global does not pay or record U.S. income taxes on the undistributed earnings of its foreign subsidiaries where management has determined that the earnings are permanently reinvested. The cumulative undistributed earnings are included in "Earnings reinvested" on the Balance Sheet. The amounts considered permanently reinvested at December 31, 2004 and 2003, were $750 million and $530 million. If the earnings were remitted as dividends, PPL Global may be subject to additional U.S. taxes, net of allowable foreign tax credits. It is not practical to estimate the amount of additional taxes that might be payable on these foreign earnings.

   (PPL Energy Supply)

   "Income From Continuing Operations Before Income Taxes, Minority Interest and Distributions on Preferred Securities" included the following components for the years ended December 31:

   	2004		2003		2002
   Domestic income	$	596	$	711	$	674
   Foreign income		264		198		110
   	$	860	$	909	$	784

   Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for accounting purposes and their basis for income tax purposes and the tax effects of net operating loss and tax credit carryforwards.

   Net deferred tax assets have been recognized based on management's estimates of future taxable income for U.S. and certain foreign jurisdictions in which PPL's operations have historically been profitable.

   Significant components of PPL Energy Supply's deferred income tax assets and liabilities from continuing operations were as follows:

   		2004			2003
   Deferred Tax Assets
   	Deferred investment tax credits	$	33		$	37
   	NUG contracts and buybacks		135			168
   	Accrued pension costs		29			26
   	Federal tax credit carryforwards		58			9
   	Foreign loss carryforwards		152			278
   	Foreign - pensions		51			67
   	Foreign - other		26			38
   	Other domestic		132			111
   	Valuation allowance		(160	)		(288	)
   			456			446
   Deferred Tax Liabilities
   	Plant - net		644			481
   	Foreign investments		7			9
   	Foreign - plant		770			792
   	Foreign - other		55			1
   	Other domestic		32			42
   			1,508			1,325
   Net deferred tax liability		$	1,052		$	879

   Details of the components of income tax expense, a reconciliation of federal income taxes derived from statutory tax rates applied to income from continuing operations for accounting purposes, and details of taxes other than income are as follows:

   		2004			2003			2002
   Income Tax Expense
   	Current-Federal	$	8		$	(15	)	$	22
   	Current-State		9			11			(6	)
   	Current-Foreign		27			35			52
   			44			31			68
   	Deferred-Federal		101			94			134
   	Deferred-State		15			24			32
   	Deferred-Foreign		51			48			44
   			167			166			210
   	Investment tax credit, net-federal		(12	)		(12	)		(12	)
   	Total income tax expense from continuing operations	$	199		$	185		$	266
   Total income tax expense-Federal		$	97		$	67		$	144
   Total income tax expense-State			24			35			26
   Total income tax expense-Foreign			78			83			96
   	Total income tax expense from continuing operations	$	199		$	185	(a)	$	266

   (a) Excludes $26 million of current and deferred federal and state tax expense related to the cumulative effect of changes in accounting principles recorded net of tax.

   In 2004, 2003 and 2002, PPL Energy Supply realized stock option tax benefits, recorded as an increase to additional paid-in-capital, of approximately $1 million, $2 million and an insignificant amount.

   		2004			2003			2002
   Reconciliation of Income Tax Expense
   	Indicated federal income tax on pre-tax income before cumulative effects of changes in accounting principles at statutory tax rate - 35%	$	301		$	318		$	274
   Increase (decrease) due to:
   	State income taxes		19			27			17
   	Amortization of investment tax credit		(8	)		(8	)		(8	)
   	Write-down of international energy projects					(83	)		14
   	Difference related to income recognition of foreign affiliates (net of foreign income taxes)		(32	)		(7	)		18
   	Federal income tax credits		(74	)		(52	)		(50	)
   	Other		(7	)		(10	)		1
   			(102	)		(133	)		(8	)
   Total income tax expense from continuing operations		$	199		$	185		$	266
   Effective income tax rate			23.1%			20.4%			33.9%

   		2004		2003		2002
   Taxes, Other than Income
   	State gross receipts	$	2	$	3	$	4
   	State capital stock		13		14		9
   	Property - foreign		54		44		42
   	Foreign - other		1
   	Domestic property and other		26		28		23
   		$	96	$	89	$	78

   PPL Energy Supply had federal alternative minimum tax credit carryforwards with an indefinite carryforward period of $58 million and $9 million at December 31, 2004 and 2003.

   PPL Global had foreign net operating loss carryforwards of approximately $27 million and $13 million at December 31, 2004 and 2003. PPL Global also had foreign capital loss carryforwards of $486 million at December 31, 2004 and $920 million at December 31, 2003. All of these losses have an unlimited carryforward period. However, it is more likely than not that these losses will not be utilized and, as such, a full valuation allowance has been provided against the related deferred tax asset.

   PPL Global does not pay or record U.S. income taxes on the undistributed earnings of its foreign subsidiaries where management has determined that the earnings are permanently reinvested. The cumulative undistributed earnings are included in "Member's Equity" on the Balance Sheet. The amounts considered permanently reinvested at December 31, 2004 and 2003, were $750 million and $530 million. If the earnings were remitted as dividends, PPL Global may be subject to additional U.S. taxes, net of allowable foreign tax credits. It is not practical to estimate the amount of additional taxes that might be payable on these foreign earnings.

   (PPL Electric)

   The provision for PPL Electric's deferred income taxes for regulated assets is based upon the ratemaking principles reflected in rates established by the PUC and the FERC. The difference in the provision for deferred income taxes for regulated assets and the amount that otherwise would be recorded under U.S. GAAP is deferred and included in taxes recoverable through future rates in "Regulatory and Other Noncurrent Assets - Other" on the Balance Sheet.

   The tax effects of significant temporary differences comprising PPL Electric's net deferred income tax liability were as follows:

   		2004		2003
   Deferred Tax Assets
   	Deferred investment tax credits	$	8	$	9
   	Accrued pension costs		35		34
   	Contribution in aid of construction		62		62
   	Other		39		64
   			144		169
   		2004		2003
   Deferred Tax Liabilities
   	Electric utility plant - net		603		558
   	Restructuring - CTC		142		143
   	Taxes recoverable through future rates		108		100
   	Reacquired debt costs		13		11
   	Other		21		18
   			887		830
   Net deferred tax liability		$	743	$	661

   Details of the components of income tax expense, a reconciliation of federal income taxes derived from statutory tax rates applied to income from continuing operations for accounting purposes, and details of taxes other than income are as follows:

   		2004			2003			2002
   Income Tax Expense
   	Current-Federal	$	(33	)	$	(2	)	$	(8	)
   	Current-State		(40	)		3			5
   			(73	)		1			(3	)
   	Deferred-Federal		79			22			27
   	Deferred-State		5			(2	)		(3	)
   			84			20			24
   	Investment tax credit, net-federal		(3	)		(3	)		(3	)
   	Total	$	8		$	18		$	18
   Total income tax expense-Federal		$	43		$	17		$	16
   Total income tax expense-State			(35	)		1			2
   	Total	$	8		$	18		$	18

   In 2004, 2003 and 2002, PPL Electric realized stock option tax benefits, recorded as an increase to additional paid-in capital, which were insignificant.

   		2004			2003			2002
   Reconciliation of Income Tax Expense
   	Indicated federal income tax on pre-tax income at statutory tax rate - 35%	$	30		$	16		$	26
   Increase (decrease) due to:
   	State income taxes		(1	)		1			1
   	Flow-through of depreciation differences not previously normalized		1			1
   	Stranded cost securitization		(22	)
   	Amortization of investment tax credit		(2	)		(2	)		(3	)
   	Other		2			2			(6	)
   			(22	)		2			(8	)
   Total income tax expense		$	8		$	18		$	18
   Effective income tax rate			9.4%			39.1%			24.7%
   Taxes, Other than Income
   	State gross receipts	$	155		$	152		$	151
   	State utility realty		(10	)		3			3
   	State capital stock		7			10			(2	)
   	Property and other					(1	)		1
   		$	152		$	164		$	153

   (PPL, PPL Energy Supply and PPL Electric)

   In October 2004, President Bush signed the American Jobs Creation Act of 2004 (the Act). The Act creates a temporary incentive for U.S. corporations to repatriate accumulated income earned abroad by providing an 85% dividends received deduction for certain dividends from controlled foreign corporations. The deduction is subject to a number of limitations, and uncertainty remains as to how to interpret numerous provisions in the Act. As such, PPL is not in a position to decide on whether, and to what extent, it might repatriate foreign earnings that have not yet been remitted to the U.S. based on its analysis to date. However, it is reasonably possible that PPL Energy Supply may repatriate some amount between zero and $500 million, with the respective tax liability ranging from zero to $27 million. PPL expects to be in a position to finalize its assessment by December 31, 2005.

   The Act also provides, beginning in 2005, a tax deduction from income for certain qualified domestic production activities. FSP FAS 109-1, "Application of FASB Statement No. 109, 'Accounting for Income Taxes,' to the Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of 2004," specifies that this tax deduction will be treated as a special deduction and not as a tax rate reduction. For 2004, this deduction had no effect with respect to PPL's or PPL Energy Supply's deferred tax assets and liabilities associated with such qualified domestic production activities. Additionally, as the Act specifically excludes the gross receipts from the transmission of electricity from the definition of qualifying domestic production gross receipts, PPL Electric will not receive a tax benefit from this new deduction.

6. Nuclear Decommissioning

   (PPL and PPL Energy Supply)

   The expected cost to decommission the Susquehanna station is based on a 2002 site-specific study that estimated the cost to dismantle and decommission each unit immediately following final shutdown. PPL Susquehanna's 90% share of the total estimated cost of decommissioning the Susquehanna station was approximately $936 million measured in 2002 dollars. This estimate includes decommissioning the radiological portions of the station and the cost of removal of non-radiological structures and materials.

   Beginning in January 1999, in accordance with the PUC Final Order, approximately $130 million of decommissioning costs are being recovered from PPL Electric's customers through the CTC over the 11-year life of the CTC rather than the remaining life of Susquehanna. The recovery includes a return on unamortized decommissioning costs. Under the power supply agreements between PPL Electric and PPL EnergyPlus, these revenues are passed on to PPL EnergyPlus. Similarly, these revenues are passed on to PPL Susquehanna under a power supply agreement between PPL EnergyPlus and PPL Susquehanna.

   Effective January 1, 2003, PPL adopted SFAS 143, "Accounting for Asset Retirement Obligations." Accretion expense, as determined under the provisions of SFAS 143, was $18 million and $16 million in 2004 and 2003, and is included in "Other operation and maintenance." In 2002, decommissioning expenses were $22 million and were recorded as a component of depreciation expense. Accrued nuclear decommissioning expenses, as determined under the provisions of SFAS 143, were $236 million and $218 million at December 31, 2004 and 2003, and are included in "Asset Retirement Obligations." See Note 21 for additional information on SFAS 143.

   The amounts collected for decommissioning, less applicable taxes, are deposited in external trust funds for investment and can be used only for future decommissioning costs. To the extent that the actual costs for decommissioning exceed the amounts in the nuclear decommissioning trust funds, PPL Susquehanna would be obligated to fund 90% of the shortfall.

   PPL and PPL Energy Supply classify investments in the trust funds for decommissioning the nuclear plant as available-for-sale. The following tables show the fair values and gross unrealized gains and gross unrealized losses for the securities held in the trust funds.

   		December 31, 2004
   		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
   Cash and cash equivalents							$	11
   Equity securities		$	70					279
   Debt securities
   	Government obligations		1	$	(3	)		102
   	Other debt securities							17
   Total debt securities			1		(3	)		119
   Total		$	71	$	(3	)	$	409

   		December 31, 2003
   		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
   Cash and cash equivalents							$	8
   Equity securities		$	42	$	(6	)		215
   Debt securities
   	Government obligations		1		(6	)		115
   	Other debt securities				(1	)		19
   Total debt securities			1		(7	)		134
   Total		$	43	$	(13	)	$	357

   The following table shows proceeds from and realized gains and losses on sales of securities held in the trust:

   	2004			2003
   Proceeds from sales	$	113		$	140
   Gross realized gains		3			14
   Gross realized losses (a)		(17	)		(3	)

   (a) 2004 includes a $(10) million adjustment to the net realized gains recorded in 2003. The adjustment was included in gross realized losses in this table.

   Net pre-tax unrealized gains associated with current year activities increased accumulated other comprehensive income by $24 million ($15 million after tax) and $41 million ($23 million after tax) in 2004 and 2003. Net pre-tax gains (losses) reclassified from accumulated other comprehensive income and realized in "Other Income - net" in the Statement of Income were $(14) million ($(8) million after tax) and $11 million ($6 million after tax) in 2004 and 2003.

   Prior to 2003, any trust activity was reflected on the balance sheet in the trust fund account and noncurrent liabilities. Beginning in January 2003, upon adoption of SFAS 143, any realized gains and losses were recognized in "Other Income - net."

   The proceeds from the sales of securities are reinvested in the trust. These funds, along with deposits of amounts collected from customers, are used to pay income taxes and fees related to managing the trust. Due to the restricted nature of these investments, they are not included in cash and cash equivalents of PPL or PPL Energy Supply.

   The government obligations and other debt securities that exist at December 31, 2004, mature on the following schedule:

   Within 1 year	$	7
   After 1 year through 5 years		44
   After 5 years through 10 years		42
   After 10 years		26
   Total maturities of debt obligations	$	119

   PPL Susquehanna intends to file with the NRC in 2006 for 20-year license renewals for each of the Susquehanna units. If approved, the operating licenses would be extended from 2022 to 2042 for Unit 1 and from 2024 to 2044 for Unit 2.

7. Financial Instruments

   (PPL, PPL Energy Supply and PPL Electric)

   At December 31, 2004 and 2003, the carrying value of cash and cash equivalents, investments in the nuclear decommissioning trust funds, other investments and short-term debt approximated fair value due to the short-term nature of the instruments, variable interest rates associated with the financial instruments or the carrying value of the instruments being based on established market prices. Price risk management assets and liabilities are valued using either exchange-traded market quotes or prices obtained through third-party brokers and are recorded at fair value. Financial instruments where the carrying amount on the Balance Sheet and the estimated fair value (based on quoted market prices for the securities where available and estimates based on current rates where quoted market prices are not available) are different, are set forth below:

   		December 31, 2004				December 31, 2003
   		Carrying Amount		Fair Value		Carrying Amount		Fair Value
   PPL
   	Long-term debt	$	7,658	$	8,141	$	7,859	$	8,443
   	Long-term debt with affiliate trusts		89		84		681		612
   PPL Energy Supply
   	Long-term debt	$	3,875	$	4,126	$	4,146	$	4,384
   	Long-term debt with affiliate trust		89		84		89		87
   PPL Electric
   	Long-term debt	$	2,544	$	2,711	$	2,937	$	3,215

   
   
8. Credit Arrangements and Financing Activities

   Credit Arrangements

   (PPL, PPL Energy Supply and PPL Electric)

   In February 2004, PPL Energy Supply reduced the size of its $500 million three-year credit facility expiring in June 2004 to $200 million. In June 2004, PPL Energy Supply replaced this facility and its $300 million three-year facility expiring in June 2005 with an $800 million five-year facility expiring in June 2009. PPL Energy Supply also has a $300 million three-year credit facility that expires in June 2006. Also in June 2004, PPL Electric replaced its $200 million 364-day facility expiring in June 2004 with a $200 million five-year facility expiring in June 2009. PPL Electric also has a $100 million three-year credit facility that expires in June 2006. At December 31, 2004, no cash borrowings were outstanding under any credit facilities of PPL Electric or PPL Energy Supply. Both PPL Electric and PPL Energy Supply have the ability to cause the lenders under their respective facilities to issue letters of credit. At December 31, 2004, PPL Electric had no letters of credit outstanding under its credit facilities, and PPL Energy Supply had $250 million of letters of credit outstanding under its credit facilities.

   (PPL and PPL Energy Supply)

   In December 2004, WPD (South West) borrowed £108 million (approximately $208 million at current exchange rates) under its credit facilities. This is not reflected on the Balance Sheet at December 31, 2004, due to the one-month reporting lag. In October 2004, WPD (South West) replaced its expiring £100 million 364-day credit facility expiring in October 2004 with a £100 million 364-day credit facility expiring in October 2005, extended its £150 million five-year credit facility to October 2009 and added a £150 million three-year credit facility expiring in October 2007. WPD also has a £2.5 million uncommitted borrowing line, which has £1.275 million (approximately $2 million at current exchange rates) of letters of credit outstanding.

   (PPL, PPL Energy Supply and PPL Electric)

   The subsidiaries of PPL are separate legal entities. PPL's subsidiaries are not liable for the debts of PPL. Accordingly, creditors of PPL may not satisfy their debts from the assets of the subsidiaries absent a specific contractual undertaking by a subsidiary to pay PPL's creditors or as required by applicable law or regulation. Similarly, absent a specific contractual undertaking or as required by applicable law or regulation, PPL is not liable for the debts of its subsidiaries. Accordingly, creditors of PPL's subsidiaries may not satisfy their debts from the assets of PPL absent a specific contractual undertaking by PPL to pay the creditors of its subsidiaries or as required by applicable law or regulation.

   Similarly, the subsidiaries of PPL Energy Supply and PPL Electric are separate legal entities. These subsidiaries are not liable for the debts of PPL Energy Supply and PPL Electric. Accordingly, creditors of PPL Energy Supply and PPL Electric may not satisfy their debts from the assets of their subsidiaries absent a specific contractual undertaking by a subsidiary to pay the creditors or as required by applicable law or regulation. In addition, absent a specific contractual undertaking or as required by applicable law or regulation, PPL Energy Supply and PPL Electric are not liable for the debts of their subsidiaries. Accordingly, creditors of these subsidiaries may not satisfy their debts from the assets of PPL Energy Supply or PPL Electric absent a specific contractual undertaking by that parent to pay the creditors of its subsidiaries or as required by applicable law or regulation.

   Financing Activities

   PEPS Units Transactions

   (PPL)

   In November 2003, PPL initiated an offer to exchange up to $573 million of its outstanding PEPS Units for up to $573 million of its PEPS Units, Series B and a cash payment by PPL of $0.375 for each validly tendered and accepted outstanding PEPS Unit. See Note 22 for a discussion of the PEPS Units. The exchange offer, which closed in January 2004, resulted in $99 million, or 17.28%, of the outstanding PEPS Units being exchanged.

   In February 2004, pursuant to the terms of the PEPS Units, PPL remarketed $257 million of the PPL Capital Funding Trust I trust preferred securities that were a component of the PEPS Units. The trust preferred securities were remarketed at a price of 107.284% of their aggregate stated liquidation amount, resulting in a yield to maturity of 3.912% based on the reset distribution rate of 7.29% per annum. Under the terms of the PEPS Units, holders were entitled to surrender their trust preferred securities for remarketing in order to settle the purchase contract component of the PEPS Units in May 2004. Holders of an aggregate of $218 million of the trust preferred securities elected not to participate in the remarketing. Those holders retained their trust preferred securities at a distribution rate of 7.29% per annum.

   Additionally, in February 2004, PPL Capital Funding issued $201 million of senior unsecured notes guaranteed by PPL in exchange for $185 million of the trust preferred securities of PPL Capital Funding Trust I and a payment of $400,000 in cash. The senior notes bear interest at a rate of 4.33% per year that is payable semi-annually on March 1 and September 1 of each year, from September 1, 2004, through the maturity date of March 1, 2009. The senior notes are not redeemable by PPL or PPL Capital Funding, and the holders will not be entitled to require PPL or PPL Capital Funding to repurchase the senior notes before maturity. The senior notes were issued in an SEC Rule 144A private offering to qualified institutional buyers and were exchanged in full for senior notes registered with the SEC pursuant to an exchange offer completed by PPL and PPL Capital Funding in July 2004. The registered senior notes issued pursuant to the exchange offer have the same terms as the senior notes issued in the 144A private offering.

   The January and February 2004 exchanges resulted in the cancellation of an aggregate of $284 million of the trust preferred securities and an aggregate of $9 million of PPL Capital Funding Trust I's common securities held by PPL Capital Funding, as well as a corresponding cancellation of the $293 million of PPL Capital Funding 7.29% subordinated notes due 2006 underlying these trust securities. The cancellation of the underlying PPL Capital Funding subordinated notes together with the issuance of the new PPL Capital Funding debt, as a result of the exchanges, resulted in a net decrease of $9 million of long-term debt, including "Long-term Debt with Affiliate Trusts," as reflected in the Balance Sheet. Following these exchanges, there remained outstanding $290 million of trust preferred securities and $9 million of trust common securities, as well as $299 million of underlying PPL Capital Funding 7.29% subordinated notes due 2006.

   In March 2004, PPL liquidated PPL Capital Funding Trust I, resulting in the cancellation of all of the outstanding trust preferred securities and the trust common securities. In exchange for the cancellation of the trust securities, PPL Capital Funding Trust I caused $290 million of underlying PPL Capital Funding 7.29% subordinated notes due 2006 to be distributed to the holders of the trust preferred securities and $9 million of PPL Capital Funding 7.29% subordinated notes due 2006, held by the trust, to be cancelled. The impact to PPL Capital Funding as a result of these cancellations was an additional net decrease of $9 million of long-term debt, including "Long-term Debt with Affiliate Trusts," as reflected in the Balance Sheet.

   In May 2004, pursuant to the terms of the PEPS Units, Series B, PPL remarketed approximately $99 million of the PPL Capital Funding notes due 2006 that were a component of the PEPS Units, Series B. The notes were remarketed at a price of 100.5% of their aggregate principal amount with a floating reset interest rate initially equal to 2.31%, which is three-month LIBOR plus a spread of 105 basis points, or 1.05%. Interest on the notes resets quarterly at three-month LIBOR plus a spread of 105 basis points, and is payable quarterly from May 18, 2004, through, but excluding, the maturity date of May 18, 2006. Under the terms of the PEPS Units, Series B, holders were entitled to surrender their PPL Capital Funding notes for remarketing in order to settle the purchase contract component of the PEPS Units, Series B in May 2004.

   (PPL and PPL Energy Supply)

   The purchase contract component of the PEPS Units and the PEPS Units, Series B settled in May 2004. Pursuant to the settlement of the purchase contracts, PPL issued an aggregate of approximately 11 million shares of its common stock and received aggregate proceeds of approximately $575 million. In June 2004, subsidiaries of PPL Energy Supply used these proceeds and cash on hand to purchase, for approximately $660 million, the Sundance and University Park generation assets that it had been leasing, through a synthetic lease arrangement, from a trust that was consolidated by PPL Energy Supply in accordance with FIN 46, "Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51." See Note 22 for a discussion of FIN 46. Under the terms of the synthetic lease arrangement, the PPL Energy Supply subsidiary had the right at any time to purchase these assets for an amount sufficient to pay off the consolidated trust's related financing, including accrued and unpaid interest. Repayment of the consolidated trust's debt resulted in a loss of approximately $9 million pre-tax, which is reflected in "Interest Expense."

   Other Financing Activities

   (PPL)

   In April 2004, PPL Capital Funding repurchased $4 million of its 8-3/8% Medium-term Notes due 2007 at a market value of approximately $5 million. This repurchase resulted in a loss of approximately $1 million pre-tax, which is reflected in "Interest Expense."

   In September 2004, a subsidiary of PPL Gas Utilities repurchased all remaining $2 million of its outstanding 9.64% Notes due 2010 at an approximately equivalent market value.

   In November 2004, PPL Capital Funding retired $100 million of its 6.79% Medium Term Notes due November 2004 at par value.

   (PPL and PPL Energy Supply)

   During 2004, a Bolivian subsidiary of PPL Global issued $13 million of bonds with interest rates varying from 6.8% to 7.4% and serial maturities from December 2005 to December 2008. In addition, the PPL Global subsidiary issued bonds denominated in UFVs (inflation-indexed bolivianos) totaling 72.3 million bolivianos (approximately $9 million at current exchange rates) with interest rates ranging from 8% to 9% and with maturities in December 2007 and May 2010. The proceeds of both issuances were used to repay intercompany loans, short-term bank borrowings, and $9 million of its multi-currency denominated Inter-American Development Bank note maturing in November 2009.

   In August 2004, PPL Energy Supply issued $300 million of 5.4% Senior Notes maturing in August 2014. These securities were issued under PPL Energy Supply's existing shelf registration statement on file with the SEC. The proceeds of the notes will be applied to the repayment at maturity of approximately $320 million of PPL Capital Funding's 7-3/4% Medium-term Notes that are due in April 2005. PPL EnergyPlus currently is using the proceeds to satisfy its collateral obligation under one of its PLR contracts with PPL Electric. See Note 15 for a discussion of the collateral requirement under this PLR contract.

   During 2004, PPL Energy Supply distributed approximately $410 million to its parent company, PPL Energy Funding, and received capital contributions of $358 million.

   In May 2004, PPL Energy Supply issued a $495 million note payable to an affiliate. The note matures in May 2006, with interest payable monthly in arrears at LIBOR plus 1%.

   In November 2004, PPL and PPL Energy Supply successfully completed their solicitation of consents from the holders of PPL Energy Supply's outstanding $400 million 2.625% Convertible Senior Notes due 2023 to amend certain provisions of the Indenture dated May 21, 2003, pursuant to which the Convertible Senior Notes were issued. The purpose of the consent solicitation was to modify the terms of the Convertible Senior Notes in response to changes to the calculation of diluted EPS resulting from EITF Issue 04-8, "The Effect of Contingently Convertible Instruments on Diluted Earnings per Share," as well as other anticipated rules relating to EPS. See Note 23 for a discussion of EITF Issue 04-8 and additional information.

   In December 2004, PPL Energy Supply reactivated its commercial paper program to provide an additional financing source to fund its short-term liquidity needs, if and when necessary or appropriate.

   At December 31, 2004, PPL Energy Supply had no commercial paper outstanding under its commercial paper program, and PPL Energy Supply currently has no plans to access the commercial paper market in the near-term.

   In December 2004, WPD retired $178 million of its 6.75% Unsecured Bonds, which will be reflected in the 2005 Financial Statements due to the one-month reporting lag.

   (PPL and PPL Electric)

   In March 2004, PPL Electric retired approximately $25 million of its outstanding First Mortgage Bonds, 6.875% Series due March 2004, at par value. Also in March, PPL Electric redeemed approximately $6 million aggregate principal amount of its First Mortgage Bonds, 7.30% Series due 2024, at par value, through the application of cash deposited with the trustee to release certain transmission lines and other equipment from the lien of the 1945 First Mortgage Bond Indenture.

   In April 2004, PPL Electric completed an offer to repurchase its outstanding First Mortgage Bonds, 6-1/2% Series due 2005. Pursuant to the offer, PPL Electric repurchased approximately $41 million of the bonds at a market value of $43 million. PPL Electric also repurchased in the open market $45 million of 5-7/8% Senior Secured Bonds and $14 million of 6-1/4% Senior Secured Bonds at market values of $48 million and $16 million, respectively. These repurchases resulted in a loss of approximately $7 million pre-tax, which is reflected in other noncurrent assets as an unamortized loss on reacquired debt. The purpose of the repurchases was to reduce future interest expense.

   In August 2004, PPL Electric began participating in an asset-backed commercial paper program through which PPL Electric obtains financing by selling and contributing its eligible accounts receivable and unbilled revenue to a special purpose, wholly owned subsidiary on an ongoing basis. The subsidiary has pledged these assets to secure loans from a commercial paper conduit sponsored by a financial institution. PPL Electric expects to use the proceeds from the credit agreement for general corporate purposes and to cash collateralize letters of credit. The subsidiary's borrowing limit under this credit agreement is $150 million, and interest under the credit agreement varies based on the commercial paper conduit's actual cost to issue commercial paper that supports the debt. At December 31, 2004, $96 million of accounts receivable and $128 million of unbilled revenue were pledged under the credit agreement. At December 31, 2004, there was $42 million of short-term debt outstanding under the credit agreement at an interest rate of 2.33%, with such debt being used to cash collateralize letters of credit issued on PPL Electric's behalf. At December 31, 2004, based on the accounts receivables and unbilled revenues pledged, an additional $100 million was available for borrowing. The funds used to cash collateralize the letters of credit are reported in "Restricted cash" on the Balance Sheet. PPL Electric's sale to its subsidiary of the accounts receivable and unbilled revenue is an absolute sale of the assets, and PPL Electric does not retain an interest in these assets. However, for financial reporting purposes, the subsidiary's financial results are consolidated in PPL Electric's financial statements. PPL Electric will continue to perform certain record-keeping and cash collection functions with respect to the assets in return for a servicing fee from the subsidiary. PPL Electric expects the subsidiary to renew the credit agreement on an annual basis.

   In 2004, PPL Transition Bond Company made principal payments on transition bonds totaling $264 million.

   At December 31, 2004, PPL Electric had no commercial paper outstanding under its commercial paper program.

   In February 2005, the Lehigh County Industrial Development Authority (LCIDA) issued $115.5 million of 4.70% Pollution Control Revenue Refunding Bonds due 2029 on behalf of PPL Electric. The proceeds of the LCIDA bonds will be used in March 2005 to refund the LCIDA's $115.5 million of 6.40% Pollution Control Revenue Refunding Bonds due 2029. PPL Electric has entered into a loan agreement with the LCIDA pursuant to which the LCIDA has loaned to PPL Electric the proceeds of the LCIDA bonds on payment terms that correspond to the LCIDA bonds. The scheduled principal and interest payments on the LCIDA bonds are insured. In order to secure its obligations to the insurance provider, PPL Electric issued $115.5 million aggregate principal amount of its Senior Secured Bonds (under its 2001 Senior Secured Bond Indenture), which also have payment terms that correspond to the LCIDA bonds.

   Dividends and Dividend Restrictions

   (PPL)

   In February 2004, PPL announced an increase to its quarterly common stock dividend, effective April 1, 2004, from 38.5 cents per share to 41 cents per share (equivalent to $1.64 per annum). In February 2005, PPL announced an increase to its quarterly common stock dividend, payable April 1, 2005, to 46 cents per share (equivalent to $1.84 per annum). Future dividends, declared at the discretion of the Board of Directors, will be dependent upon future earnings, cash flows, financial requirements and other factors.

   (PPL and PPL Energy Supply)

   The PPL Montana Colstrip lease places certain restrictions on PPL Montana's ability to declare dividends. At this time, PPL believes that these covenants will not limit PPL's or PPL Energy Supply's ability to operate as desired and will not affect their ability to meet any of their cash obligations. Certain of PPL Global's international subsidiaries also have financing arrangements which limit their ability to pay dividends. However, PPL does not, at this time, expect that any of such limitations would significantly impact PPL's or PPL Energy Supply's ability to meet their cash obligations.

   (PPL and PPL Electric)

   PPL Electric's 2001 Senior Secured Bond Indenture restricts dividend payments in the event that PPL Electric fails to meet interest coverage ratios or fails to comply with certain requirements included in its Articles of Incorporation and Bylaws to maintain its separateness from PPL and PPL's other subsidiaries. PPL Electric does not, at this time, expect that any of such limitations would significantly impact its ability to declare dividends.

   Mandatorily Redeemable Securities

   (PPL, PPL Energy Supply and PPL Electric)

   On July 1, 2003, PPL adopted the provisions of SFAS 150, "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity." As a result, PPL changed its classification of the trust preferred securities of PPL Capital Funding Trust I, which were issued as a component of the PEPS Units, PPL Energy Supply changed its classification of the trust preferred securities issued by SIUK Capital Trust I and PPL Electric changed its classification of its preferred stock with sinking fund requirements. Under SFAS 150, these securities were required to be classified as liabilities instead of "mezzanine" equity on the balance sheet because they were considered mandatorily redeemable securities. As of December 31, 2004 and 2003, no amounts were included in long-term debt for any of these securities because of the following: PPL deconsolidated PPL Capital Funding Trust I in accordance with FASB Interpretation No. 46, "Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51," effective December 31, 2003, and terminated the trust in 2004; PPL Energy Supply deconsolidated SIUK Capital Trust I in accordance with FIN 46, effective December 31, 2003; and there was no preferred stock with sinking fund requirements of PPL Electric outstanding (due to preferred stock redemptions). See Note 22 for a discussion of the deconsolidation of the trusts. As a result of the deconsolidation of the trusts, the subordinated debt securities that support the trust preferred securities, rather than the trust preferred securities themselves, are reflected in long-term debt as of December 31, 2004 and 2003, to the extent they were still outstanding.

   SFAS 150 also required the distributions on these mandatorily redeemable securities to be included as a component of "Interest Expense" instead of "Distributions on Preferred Securities" in the Statement of Income, effective July 1, 2003. "Interest Expense" for 2003 includes distributions on these securities totaling $27 million for PPL, $5 million for PPL Energy Supply and an insignificant amount for PPL Electric. As a result of the adoption of FIN 46 by PPL and PPL Energy Supply and the redemption of the preferred stock with sinking fund requirements by PPL Electric, no amounts are reflected in "Interest Expense" for these mandatorily redeemable securities in 2004. Periods ending prior to July 1, 2003, were not restated to conform to these presentations since SFAS 150 specifically prohibits the restatement of financial statements for periods prior to its adoption.

9. Acquisitions, Development and Divestitures

   Domestic Generation Projects (PPL and PPL Energy Supply)

   In 2002, PPL Global evaluated its options with respect to six unassigned turbines and other related equipment that were complete or substantially complete. These units were intended to be used at the Kings Park site on Long Island, New York. At that time, given low energy prices and the unavailability of a power contract, PPL Global was reevaluating its options with respect to the Kings Park project.

   Due to the uncertainty of the project and the absence of other viable projects, a valuation based upon replacement costs of the turbines and the other related equipment was completed. This resulted in the recognition of a $44 million impairment charge in 2002, which is reported on the Statement of Income as "Write-down of generation assets," a component of "Other charges." A deferred income tax benefit of $18 million was recognized on the write-down.

   In January 2003, PPL announced that it had decided not to proceed with development of the 300 MW Kings Park project. In March 2003, PPL Global sold its interest in Kings Park Energy, LLC. At that time, the six unassigned gas combustion turbine generators and other related equipment to be used at the Kings Park site were transferred to PPL Generation and retained as spare parts.

   In November 2003, PPL Generation sold four of the six spare gas combustion turbine generators and related equipment for approximately $33 million. PPL Generation received substantially all of the proceeds in January 2004. The pre-tax loss on the sale of about $3 million is included in "Other Income - net" on the Statement of Income in 2003. In February 2004, a subsidiary of PPL Generation sold one spare gas combustion turbine generator and related equipment for approximately $10 million. In June 2004, the subsidiary sold the remaining spare gas combustion turbine generator and related equipment for approximately $9 million. The net loss from these two sales was insignificant.

   In 2003, PPL Maine entered into an agreement in principle with a coalition of government agencies and private groups to sell three of its nine hydroelectric dams in Maine. The parties reached a final agreement in June 2004 and submitted the plan to the FERC for approval. Under the agreement, a non-profit organization designated by the coalition would have a five-year option to purchase the dams for approximately $25 million, and PPL Maine would receive rights to increase energy output at its other hydroelectric dams in Maine. The coalition has announced plans to remove or bypass the dams subject to the agreement in order to restore runs of Atlantic salmon and other migratory fish to the Penobscot River. The agreement requires several approvals by the FERC, and PPL cannot predict whether or when these regulatory approvals will be obtained.

   The turbine upgrade for PPL Susquehanna Unit 1 was completed in April 2004. This project provides a nominal power increase of 49 MW of generation capacity, of which PPL Susquehanna has a 90% undivided interest. Through December 31, 2004, approximately $82 million had been incurred on the Unit 1 upgrade.

   In May 2004, the 582 MW Lower Mt. Bethel plant in eastern Pennsylvania was placed in service. Construction of the natural gas-fired power plant began in December 2001. Through December 31, 2004, approximately $459 million had been capitalized in connection with the original plant construction.

   During 2004, a subsidiary of PPL Energy Supply placed in service 11 MW of distributed generation generating capacity to serve commercial and industrial customers under long-term agreements.

   See Note 8 for a discussion of the June 2004 purchase of the Sundance and University Park generation assets from a lessor trust consolidated by PPL Energy Supply.

   In June 2004, a subsidiary of PPL Generation agreed to sell the 450 MW Sundance power plant located in Pinal County, Arizona, to Arizona Public Service Company (APS) for approximately $190 million in cash, subject to the receipt of various state and federal regulatory approvals and customary closing conditions. In January 2005, each party waived the remaining contractual obligation for approval by the state regulator, the Arizona Corporation Commission. The sale still requires approvals by the FERC under the Federal Power Act. PPL estimates that a loss on sale or impairment charge of about $47 million after tax, or $0.25 per share, could be recorded in 2005 depending on the timing and likelihood of obtaining FERC approvals. PPL cannot predict whether or when the FERC approvals for this transaction will be obtained.

   International Energy Projects (PPL and PPL Energy Supply)

   Acquisitions

   WPD

   In 2002, PPL Global acquired the remaining 49% equity interest in WPDH Limited and WPDL from Mirant for approximately $236 million, including acquisition costs. The acquisition of Mirant's 49% interest provides PPL Global with complete ownership of WPD.

   Prior to the acquisition, PPL Global held 51% of the equity interest in WPD but shared control with Mirant pursuant to a shareholders' agreement. The shareholders' agreement was terminated in connection with the closing of the acquisition. No regulatory approvals were required for this transaction.

   The purchase of Mirant's interest in WPD was accounted for as a step-acquisition and resulted in the consolidation of WPD's accounts by PPL and PPL Energy Supply.

   The assets acquired and liabilities assumed were recorded at estimated fair value as determined by management based on information available at the time of acquisition. In 2003, management completed its review and determination of the fair values assigned to assets acquired and liabilities assumed. The fair value of PP&E, based on an independent appraisal, was approximately $800 million lower than the preliminary valuation. Accordingly, PP&E was reduced, with offsetting increases in goodwill and reductions in deferred income taxes.

   The following table summarizes the final allocation of the purchase price based on fair values of the assets acquired and liabilities assumed at the date of acquisition, plus the book value of assets and liabilities underlying PPL Global's previous 51% equity ownership:

   Current assets	$	236
   Investments (a)		(450	)
   PP&E		2,629
   Goodwill		740
   Other intangibles		4
   Other		244
   Total assets acquired		3,403
   Current liabilities		767
   Long-term debt		1,668
   Other		732
   Total liabilities assumed		3,167
   Net assets acquired	$	236

   (a) Includes the reversal of PPL Global's equity investment.

   The goodwill reflected above includes the remaining value of PPL Global's 51% share of the goodwill recognized by WPD on its acquisition of Hyder, in addition to the $568 million of non-deductible goodwill arising upon acquisition of Mirant's 49% interest.

   The PPL income statements include consolidated WPD results for the twelve-month periods ended November 30. This reflects PPL Global's policy of recording the results of foreign controlled subsidiaries on a one-month lag. The portion of earnings attributable to Mirant, $73 million for the year ended December 31, 2002, is reported on the Statement of Income in "Minority Interest."

   TransEmel

   Emel acquired the remaining 40% interest in a provider of transmission service to northern Chile in 2003 at a net cost of $3 million, bringing its total ownership interest in TransEmel to 100%. As a result of this acquisition, the operating results of TransEmel have been consolidated beginning January 1, 2003. The portion of earnings attributable to the minority shareholder is reported on the Statement of Income in "Minority Interest."

   Sale of CEMAR

   In 2001, PPL Global estimated that the long-term viability of its CEMAR investment was jeopardized and that there was minimal probability of positive future cash flows. At that time, PPL Global recorded an impairment loss of $217 million in the carrying value of its net assets in CEMAR. In March 2002, PPL Global recorded a further impairment loss of $6 million, which was charged to "Write-down of international energy projects." In June 2002, PPL made a decision to exit the investment. At that time, PPL Global's remaining portion of its CEMAR investment, which related to foreign currency translation adjustments (CTA), was written-off. The $94 million charge was also recorded in "Write-down of international energy projects." Accounting guidance prohibited the inclusion of CTA in impairment calculations prior to designating such assets as held for disposal.

   In August 2002, ANEEL authorized an administrative intervention in CEMAR and fully assumed operational and financial control of the company. The intervenor appointed by ANEEL initiated efforts to transfer the ownership interest in CEMAR to a new owner. Since PPL Global no longer controlled or managed CEMAR, it deconsolidated the assets and liabilities of CEMAR from its financial statements and stopped recording CEMAR's operating results at that time. In February 2003, due to the inability to discharge their obligations under the continuing intervention, PPL-related officers and directors of CEMAR resigned from their respective positions.

   In April 2004, PPL Global transferred its interest in CEMAR to two companies controlled by a private equity fund managed by GP Investimentos, a Brazilian private equity firm. The sale resulted in a credit of approximately $23 million, and is included in "Other Income - net" on the Statement of Income. This credit is a result of the reversal of the negative carrying value and the associated cumulative translation adjustment.

   Other Write-downs of International Energy Projects

   In 2002, PPL Global evaluated certain investments for impairment and recorded a $5 million impairment charge in connection with its investment in CGE, a $4 million impairment of a corporate joint venture's investment in Brazil, and a $4 million write-down of certain non-electrical assets in Bolivia.

   Discontinued Operations

   In December 2003, PPL Global's Board of Managers authorized PPL Global to sell its investment in a Latin American telecommunications company, and approved a plan of sale. It was determined that the viability of this non-strategic business was not economical. As a result, PPL Global recorded an $18 million write-down in the carrying value of the company's net assets to their estimated fair value of approximately $1 million as of December 31, 2003.

   In June 2004, PPL Global sold this investment to local management for a nominal amount. The operating results of the Latin American telecommunications company, which was a loss of approximately $2 million in 2004, 2003 and 2002, as well as the write-down of its net assets, which was an insignificant amount in 2004 and approximately $18 million in 2003, are recorded as "Loss from Discontinued Operations" on the Statement of Income. The discontinued operation had assets of $5 million and liabilities of $4 million at December 31, 2003, and are included in "Current Assets - Other" and "Current Liabilities - Other" on the Balance Sheet.

   Other Sales

   In 2003, a subsidiary of WPD sold certain Hyder properties. PPL Global received approximately $17 million from the sales, and recorded a pre-tax gain of about $2 million. This gain is included in "Other Income - net" on the Statement of Income.

   In March 2004, PPL Global completed the sale of its minority interest in shares of CGE for approximately $123 million. The sale resulted in a charge of approximately $15 million pre-tax, which is included in operating expenses, as "Energy related businesses," on the Statement of Income. This charge was due to the write-off of the associated cumulative translation adjustment, primarily as a result of the devaluation of the Chilean peso since the original acquisition in 2000.

   In June 2004, PPL Global completed the sale of its 50% ownership interest in MicDos for approximately $8 million. There was an insignificant loss on this transaction.

   DelSur Tender Offer

   In April 2004, EC launched a tender offer to acquire up to all of the outstanding shares of DelSur for an aggregate purchase price of up to $17 million. The offer closed in May, with a purchase of 163,927 shares for approximately $5 million, increasing EC's ownership of DelSur by 5.34%. Additional shares are purchased as they become available. At December 31, 2004, EC owned approximately 86.4% of DelSur.

   Other

   WPD has an equity interest in Teesside Power Limited (Teesside), the owner of the 1,875 MW Teesside Power Station, located in northeast England. Through its European affiliates, Enron was an owner, operator and power purchaser of the station's output. As a result of Enron being placed into receivership in the U.K. and its default on obligations under the power purchase agreements, in 2001, WPD wrote off its entire equity investment in Teesside. In 2002, PPL Global recognized an $8 million tax benefit on the worthlessness of WPD's investment in Teesside.

   Other (PPL)

   In 2003, a subsidiary of PPL Telcom acquired the fiber optic network of a Fairfax, Virginia-based company for approximately $21 million, consisting of $9 million in cash and a $12 million capital lease obligation for the right to use portions of a fiber optic network. The 1,330-route-mile metropolitan area fiber network connects New York, northern New Jersey, Philadelphia, Baltimore and Washington, D.C. The acquisition required certain regulatory approvals and authorizations in the area served by the network.

   In June 2004, a PPL subsidiary evaluated its investment in a technology supplier for impairment. As a result of the evaluation, the subsidiary recorded an impairment charge of approximately $10 million pre-tax, which is included in "Other Income - net" on the Statement of Income.

10. Leases

    Colstrip Generating Plant (PPL and PPL Energy Supply)

    PPL Montana leases a 50% interest in Colstrip Units 1 and 2 and a 30% interest in Unit 3, under four 36-year non-cancelable operating leases. These leases provide two renewal options based on the economic useful life of the generation assets. PPL Montana is required to pay all expenses associated with the operations of the generation units. The leases place certain restrictions on PPL Montana's ability to incur additional debt, sell assets and declare dividends and require PPL Montana to maintain certain financial ratios related to cash flow and net worth. The amount outstanding under these leases at December 31, 2004, was $278 million. There are no residual value guarantees in these leases. However, upon an event of default or an event of loss, the lessee could be required to pay a termination value of amounts sufficient to allow the lessor to repay amounts owing on the lessor notes and make the lessor whole for its equity investment and anticipated return on investment. The events of default include payment defaults, breaches of representations or covenants, acceleration of other indebtedness of PPL Montana, change in control of PPL Montana and certain bankruptcy events. The termination value was estimated to be $613 million at December 31, 2004.

    Other Leases

    (PPL, PPL Energy Supply and PPL Electric)

    PPL and its subsidiaries have leases for vehicles, office space, land, buildings, personal computers and other equipment. Rental expense for all operating leases was as follows:

    	PPL		PPL Energy Supply		PPL Electric
    2004	$	65	$	44	$	21
    2003		85		63		21
    2002		62		46		15

    Total future minimum rental payments for all operating leases are estimated as follows:

    	PPL		PPL Energy Supply		PPL Electric
    2005	$	77	$	63	$	13
    2006		70		60		10
    2007		62		54		8
    2008		60		54		6
    2009		57		53		4
    Thereafter		457		448		8
    	$	783	$	732	$	49

    (PPL)

    In connection with the acquisition of the fiber optic network discussed in Note 9, a subsidiary of PPL Telcom assumed a capital lease obligation through 2020 for the right to use portions of the fiber optic network. The balance outstanding at December 31, 2004 was $11 million. Total future minimum rental payments for this capital lease are estimated at $1 million for each of the years from 2005 through 2009, and $13 million thereafter.

11. Stock-Based Compensation

    (PPL, PPL Energy Supply and PPL Electric)

    Under the PPL Incentive Compensation Plan (ICP) and the Incentive Compensation Plan for Key Employees (ICPKE) (together, the Plans), restricted shares of PPL common stock, restricted stock units and stock options may be granted to officers and other key employees of PPL, PPL Electric and other affiliated companies. Awards under the Plans are made by the Compensation and Corporate Governance Committee (CCGC) of the PPL Board of Directors, in the case of the ICP, and by the PPL Corporate Leadership Council (CLC), in the case of the ICPKE. The ICP limits the total number of awards that may be granted under it after April 23, 1999, to 7,884,715 awards, or 5% of the total shares of common stock that were outstanding at April 23, 1999. The ICPKE limits the total number of awards that may be granted under it after April 25, 2003, to 8,286,804 awards, or 5% of the total shares of common stock that were outstanding at January 1, 2003, reduced by outstanding awards for which common stock was not yet issued as of April 25, 2003. In addition, each Plan limits the number of shares available for awards in any calendar year to 2% of the outstanding common stock of PPL on the first day of such calendar year. The maximum number of options that can be awarded under each Plan to any single eligible employee in any calendar year is 1.5 million shares. Any portion of these options that has not been granted may be carried over and used in any subsequent year. If any award lapses, is forfeited or the rights of the participant terminate, the shares of common stock underlying such an award are again available for grant. Shares delivered under the Plans may be in the form of authorized and unissued common stock, common stock held in treasury by PPL or common stock purchased on the open market (including private purchases) in accordance with applicable securities laws.

    Restricted Stock

    Restricted shares of PPL common stock are outstanding shares with full voting and dividend rights. Restricted stock awards are subject to a restriction or vesting period as determined by the CCGC in the case of the ICP, and the CLC in the case of the ICPKE. In addition, the shares are subject to forfeiture or accelerated payout under Plan provisions for termination, retirement, disability and death of employees. Restricted shares vest fully if control of PPL changes, as defined by the plans.

    Restricted Stock Units

    In 2003, the Plans were amended to allow for the grant of restricted stock units. Restricted stock units are awards based on the fair market value of PPL common stock. Actual PPL common shares will be issued upon completion of a restriction or vesting period as determined by the CCGC in the case of the ICP, and the CLC in the case of the ICPKE. Recipients of restricted stock units may also be granted the right to receive dividend equivalents through the end of the restriction period or until the award is forfeited. Restricted stock units are subject to forfeiture or accelerated payout under the Plan provisions for termination, retirement, disability and death of employees. Restricted stock units vest fully if control of PPL changes, as defined by the Plans.

    A summary of restricted stock/unit grants follows:

    		Restricted Shares Granted	Weighted Average Fair Value		Restricted Units Granted	Weighted Average Fair Value
    2004
    	PPL				233,055		$46.05
    	PPL Energy Supply				93,935		$46.28
    	PPL Electric				21,540		$46.25
    2003
    	PPL	42,090		$36.23	139,732		$35.09
    	PPL Energy Supply	10,110		$36.23	77,306		$35.11
    	PPL Electric	2,850		$36.23	21,170		$35.07
    2002
    	PPL	147,735		$34.12
    	PPL Energy Supply	82,211		$34.45
    	PPL Electric	18,860		$33.71

    Compensation expense related to restricted stock and restricted stock unit awards was $6 million, $5 million and $5 million for PPL for 2004, 2003 and 2002. At December 31, 2004, PPL had 366,201 restricted shares and 341,199 restricted units outstanding. These awards currently vest from three to 25 years from the date of grant.

    Compensation expense related to restricted stock and restricted stock unit awards for PPL Energy Supply in 2004, 2003 and 2002 was $5 million, $4 million and $4 million. Compensation expense related to restricted stock and restricted stock unit awards for PPL Electric was $1 million for 2004, 2003 and 2002.

    Stock Options (PPL, PPL Energy Supply and PPL Electric)

    Under the Plans, stock options may also be granted with an option exercise price per share not less than the fair market value of PPL's common stock on the date of grant. The options are exercisable beginning one year after the date of grant, assuming the individual is still employed by PPL or a subsidiary, in installments as determined by the CCGC in the case of the ICP, and the CLC in the case of the ICPKE. Options outstanding at December 31, 2004, vest over a three-year period from the date of grant in equal installments. The CCGC and CLC have discretion to accelerate the exercisability of the options. All options expire no later than ten years from the grant date. The options become exercisable immediately if control of PPL changes, as defined by the Plans.

    A summary of stock option activity follows:

    		2004						2003					2002
    		Number of Options				Weighted Average Exercise Price		Number of Options			Weighted Average Exercise Price		Number of Options			Weighted Average Exercise Price
    PPL
    Outstanding at beginning of year			2,912,258				$35.56		3,008,685			$32.09		2,255,051			$31.36
    	Granted		760,440				45.18		816,110			36.23		840,430			33.49
    	Exercised		(653,653		)		31.40		(860,915	)		24.09		(62,710	)		22.82
    	Forfeited		(38,070		)		42.74		(51,622	)		35.32		(24,086	)		36.18
    Outstanding at end of year			2,980,975				38.83		2,912,258			35.56		3,008,685			32.09
    Options exercisable at end of year			1,550,337				37.54		1,354,075			34.64		1,400,701			29.88
    Weighted-average fair value of options granted			$12.31						$11.92					$11.68
    PPL Energy Supply
    Outstanding at beginning of year			864,882				36.14		903,549			32.78		675,179			31.64
    	Granted		203,160				45.18		266,760			36.23		304,480			33.49
    	Transferred		(96,563		)		35.38
    	Exercised		(261,998		)		35.92		(253,805	)		24.41		(61,160	)		22.72
    	Forfeited		(24,630		)		41.41		(51,622	)		35.32		(14,950	)		37.07
    Outstanding at end of year			684,851				38.83		864,882			36.14		903,549			32.78
    Options exercisable at end of year			293,525				37.09		366,209			35.90		381,657			30.75
    Weighted-average fair value of options granted			$12.31						$11.92					$11.68
    PPL Electric
    Outstanding at beginning of year			226,193				37.42		232,376			34.40		163,942			34.92
    	Granted		48,180				45.18		66,630			36.23		77,570			33.49
    	Transferred								3,114			26.84
    	Exercised		(42,493	)			34.12		(75,927	)		26.68
    	Forfeited													(9,136	)		36.20
    Outstanding at end of year			231,880				40.08		226,193			37.42		232,376			34.40
    Options exercisable at end of year			171,827				39.65		87,488			39.75		95,561			31.97
    Weighted-average fair value of options granted			$12.31						$11.92					$11.68

    The estimated fair value of each option granted was calculated using a Black-Scholes option-pricing model. The weighted average assumptions used in the model were as follows:

    	2004	2003	2002
    Risk-free interest rate	3.79%	3.81%	5.35%
    Expected option life	7.47 yrs.	7.75 yrs.	10 yrs.
    Expected stock volatility	32.79%	39.94%	39.11%
    Dividend yield	3.51%	3.48%	3.34%

    The following table summarizes information about stock options at December 31, 2004:

    PPL

    	Options Outstanding			Options Exercisable
    Range of Exercise Prices	Number Outstanding	Weighted- Avg. Remaining Contractual Life	Weighted- Avg. Exercise Prices	Number Exercisable	Weighted- Avg. Exercise Price
    $19.00-$24.00	38,090	5.1	$21.42	38,090	$21.42
    $25.00-$29.00	192,453	4.3	26.84	192,453	26.84
    $30.00-$35.00	564,822	7.1	33.49	333,113	33.49
    $36.00-$39.00	714,747	8.1	36.23	226,068	36.23
    $40.00-$44.00	736,923	6.1	43.16	736,923	43.16
    $45.00-$49.00	733,940	9.1	45.18	23,690	45.18

    Total options outstanding had a weighted-average remaining life of 7.4 years at December 31, 2004.

    PPL Energy Supply

    	Options Outstanding			Options Exercisable
    Range of Exercise Prices	Number Outstanding	Weighted- Avg. Remaining Contractual Life	Weighted- Avg. Exercise Prices	Number Exercisable	Weighted- Avg. Exercise Price
    $19.00-$24.00	32,970	5.1	$21.23	32,970	$21.23
    $25.00-$29.00	16,880	4.3	26.84	16,880	26.84
    $30.00-$35.00	122,543	7.1	33.49	58,507	33.49
    $36.00-$39.00	168,385	8.1	36.23	31,195	36.23
    $40.00-$44.00	153,973	6.1	43.16	153,973	43.16
    $45.00-$49.00	190,100	9.1	45.18

    Total options outstanding had a weighted-average remaining life of 7.5 years at December 31, 2004.

    PPL Electric

    	Options Outstanding			Options Exercisable
    Range of Exercise Prices	Number Outstanding	Weighted- Avg. Remaining Contractual Life	Weighted- Avg. Exercise Prices	Number Exercisable	Weighted- Avg. Exercise Price
    $30.00-$35.00	36,240	7.1	$33.49	28,340	$33.49
    $36.00-$39.00	66,630	8.1	36.23	50,857	36.23
    $40.00-$44.00	80,830	6.1	43.16	80,830	43.16
    $45.00-$49.00	48,180	9.1	45.18	11,800	45.18

    Total options outstanding had a weighted-average remaining life of 7.4 years at December 31, 2004.

    Directors Stock Units (PPL)

    Under the Directors Deferred Compensation Plan, stock units are used to compensate members of PPL's Board of Directors who are not employees of PPL. Such stock units represent shares of PPL's common stock to which board members are entitled after they cease serving as a member of the Board of Directors. Board members are also entitled to defer any or all of their cash compensation into stock units. The stock unit accounts of each board member are increased based on dividends paid or other distributions on PPL's common stock. There were 116,389 stock units outstanding at December 31, 2004. Compensation expense was $2 million for 2004 and insignificant for 2003 and 2002.

    Stock Appreciation Rights (PPL and PPL Energy Supply)

    WPD uses stock appreciation rights to compensate senior management employees. Stock appreciation rights are granted with a reference price to PPL's common stock at the date of grant. These awards vest over a three-year period and have a 10-year term, during which time employees are entitled to receive a cash payment of any appreciation in the price of PPL's common stock over the grant date value. At December 31, 2004, there were 91,502 stock appreciation rights outstanding. Compensation expense for all periods reported was insignificant.

12. Retirement and Postemployment Benefits

    (PPL, PPL Energy Supply and PPL Electric)

    Pension and Other Postretirement Benefits

    The following disclosures distinguish between PPL's domestic and international pension plans.

    PPL uses a December 31 measurement date for its domestic pension and other postretirement benefit plans and its international pension plans.

    Net pension and other postretirement benefit costs (credits) were as follows:

    	Pension Benefits																		Other Postretirement Benefits
    	2004						2003						2002						2004			2003			2002
    	Domestic			International			Domestic			International			Domestic			International
    PPL
    Service cost	$	49		$	15		$	42		$	14		$	40		$	13		$	6		$	7		$	5
    Interest cost		112			139			105			124			99			98			29			31			26
    Expected return on plan assets		(151	)		(205	)		(143	)		(188	)		(147	)		(179	)		(17	)		(13	)		(12	)
    Net amortization and deferral		4			11			(6	)		4			(31	)		3			19			25			15
    Net periodic pension and postretirement costs (credits) prior to special termination benefits		14			(40	)		(2	)		(46	)		(39	)		(65	)		37			50			34
    Special termination benefits								9						62												4
    Net periodic pension and postretirement benefit cost (credit)	$	14		$	(40	)	$	7		$	(46	)	$	23		$	(65	)	$	37		$	50		$	38
    PPL Energy Supply
    Service cost	$	3		$	15		$	3		$	14		$	2		$	13
    Interest cost		4			139			4			124			4			98		$	1		$	1		$	1
    Expected return on plan assets		(5	)		(205	)		(4	)		(188	)		(3	)		(179	)
    Net amortization and deferral		1			11			1			4						3
    Net periodic pension and postretirement benefit cost (credit)	$	3		$	(40	)	$	4		$	(46	)	$	3		$	(65	)	$	1		$	1		$	1

    Net periodic pension cost charged (credited) to operating expense, excluding amounts charged to construction and other non-expense accounts, were:

    	2004					2003						2002
    	Domestic		Int'l			Domestic			Int'l			Domestic			Int'l
    PPL (a)	$	12	$	(36	)	$	(2	)	$	(40	)	$	(31	)	$	(58	)
    PPL Energy Supply (b)		6		(36	)		2			(40	)		(9	)		(58	)
    PPL Electric (c)		1					(4	)					(17	)

    (a)	The domestic amounts for 2003 and 2002 exclude the $9 million and $62 million cost of special termination benefits, which are included separately on the Statement of Income, within the "Workforce reduction" charge for those years.
    (b)	In addition to the specific plans sponsored by PPL Energy Supply, PPL Generation subsidiaries and PPL EnergyPlus are also allocated a portion of the costs of pension plans sponsored by PPL Services, included in the PPL total cost above, based on their participation in those plans.
    (c)	PPL Electric is also allocated a portion of the costs of pension plans sponsored by PPL Services, included in the PPL total cost above, based on participation in those plans.

    PPL uses an accelerated amortization method for the recognition of gains and losses for its pension plans. Under the accelerated method, gains and losses in excess of 10% but less than 30% of the greater of the plan's projected benefit obligation or the market-related value of plan assets are amortized on a straight-line basis over the estimated average future service period of plan participants. Gains and losses in excess of 30% of the plan's projected benefit obligation are amortized on a straight-line basis over a period equal to one-half of the average future service period of the plan participants.

    Other postretirement benefit costs charged to operating expense, excluding amounts charged to construction and other non-expense accounts, were:

    	2004		2003		2002
    PPL	$	31	$	43	$	27
    PPL Energy Supply (a)		12		14		9
    PPL Electric (b)		9		20		13

    (a)	In addition to the specific plans sponsored by PPL Energy Supply, PPL Generation subsidiaries and PPL EnergyPlus are also allocated a portion of the costs of other postretirement benefit plans sponsored by PPL Services, included in the PPL total cost above, based on their participation in those plans.
    (b)	PPL Electric is also allocated a portion of the costs of other postretirement benefit plans sponsored by PPL Services, included in the PPL total cost above, based on participation in those plans.

    The following assumptions were used in the valuation of the benefit obligations at December 31 and determination of net periodic benefit cost for the years ended December 31:

    PPL

    Pension Benefits	2004		2003		2002
    	Domestic	Int'l	Domestic	Int'l	Domestic	Int'l
    Discount rate
    - obligations	5.75%	5.50%	6.25%	5.50%	6.75%	5.75%
    - cost	6.25%	5.50%	6.75%	5.75%	7.25%	5.75%
    Expected return on plan assets
    - obligations	9.0%	8.30%	9.0%	8.30%	9.0%	8.31%
    - cost	9.0%	8.30%	9.0%	8.31%	9.2%	8.31%
    Rate of compensation increase
    - obligations	4.0%	3.75%	4.0%	3.75%	4.0%	3.75%
    - cost	4.0%	3.75%	4.0%	3.75%	4.25%	3.75%

    Other Postretirement Benefits	2004	2003	2002
    Discount rate
    - obligations	5.75%	6.25%	6.75%
    - cost	6.25%	6.75%	7.25%
    Expected return on plan assets
    - obligations	7.90%	7.80%	7.80%
    - cost	7.80%	7.80%	7.60%
    Rate of compensation increase
    - obligations	4.0%	4.0%	4.0%
    - cost	4.0%	4.0%	4.25%

    PPL Energy Supply

    Pension Benefits	2004		2003		2002
    	Domestic	Int'l	Domestic	Int'l	Domestic	Int'l
    Discount rate
    - obligations	5.75%	5.50%	6.25%	5.50%	6.75%	5.75%
    - cost	6.25%	5.50%	6.75%	5.75%	7.25%	5.75%
    Expected return on plan assets
    - obligations	8.6%	8.30%	9.0%	8.30%	9.0%	8.31%
    - cost	9.0%	8.30%	9.0%	8.31%	9.2%	8.31%
    Rate of compensation increase
    - obligations	4.0%	3.75%	4.0%	3.75%	4.0%	3.75%
    - cost	4.0%	3.75%	4.0%	3.75%	4.25%	3.75%

    Other Postretirement Benefits	2004	2003	2002
    Discount rate
    - obligations	5.75%	6.25%	6.75%
    - cost	6.25%	6.75%	7.25%
    Expected return on plan assets	N/A	N/A	N/A
    Rate of compensation increase
    - obligations	4.0%	4.0%	4.0%
    - cost	4.0%	4.0%	4.25%

    PPL and PPL Energy Supply

    Assumed health care cost trend rates at December 31,	2004	2003	2002
    Health care cost trend rate assumed for next year
    - obligations	10%	11%	12%
    - cost	11%	12%	7%
    Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)
    - obligations	5%	5%	5%
    - cost	5%	5%	6%
    Year that the rate reaches the ultimate trend rate
    - obligations	2010	2010	2010
    - cost	2010	2010	2006

    A one-percentage point change in the assumed health care costs trend assumption would have the following effects in 2004:

    	One Percentage Point
    	Increase		Decrease
    PPL
    Effect on service cost and interest cost components	$	1	$	(1	)
    Effect on postretirement benefit obligation		12		(10	)
    PPL Energy Supply
    Effect on service cost and interest cost components		-		-
    Effect on postretirement benefit obligation		1		(1	)

    The expected long-term rate of return for PPL's domestic pension plans considers the plans' historical experience, but is primarily based on the plans' mix of assets and expectations for long-term returns of those asset classes.

    (PPL)

    The expected long-term rate of return for PPL's other postretirement benefit plans is based on the VEBA trusts' mix of assets and expectations for long-term returns of those asset classes considering that a portion of those assets are taxable.

    (PPL and PPL Energy Supply)

    The expected rate of return for PPL's international pension plans considers that a portfolio largely invested in equities would be expected to achieve an average rate of return in excess of a portfolio largely invested in long-term bonds. The historical experience has been an excess return of 2% to 4% per annum on average over the return on long-term bonds.

    (PPL)

    The funded status of the PPL plans was as follows:

    		Pension Benefits												Other Postretirement Benefits
    		2004						2003						2004			2003
    		Domestic			International			Domestic			International
    Change in Benefit Obligation
    Benefit Obligation, January 1		$	1,772		$	2,474		$	1,558		$	2,126		$	512		$	423
    	Service cost		49			15			42			14			6			7
    	Interest cost		112			139			105			124			29			31
    	Participant contributions					5						5			4			1
    	Plan amendments								3						(47	)		48
    	Actuarial (gain) loss		115			180			127			101			17			30
    	Special termination benefits								9
    	Actual expense paid		(1	)					(1	)
    	Net benefits paid		(78	)		(160	)		(71	)		(131	)		(36	)		(28	)
    	Currency conversion					278						235
    Benefit Obligation, December 31			1,969			2,931			1,772			2,474			485			512
    Change in Plan Assets
    Plan assets at fair value, January 1			1,653			2,164			1,376			1,757			219			163
    	Actual return on plan assets		184			232			329			332			20			27
    	Employer contributions		9			3			20						42			56
    	Participant contributions					5						5			4			1
    	Actual expense paid		(1	)					(1	)
    	Net benefits paid		(78	)		(160	)		(71	)		(131	)		(36	)		(28	)
    	Currency conversion					239						201
    Plan assets at fair value, December 31			1,767			2,483			1,653			2,164			249			219
    Funded Status
    Funded Status of Plan			(202	)		(448	)		(119	)		(310	)		(236	)		(293	)
    Unrecognized actuarial (gain) loss			(100	)		676			(187	)		477			141			134
    Unrecognized prior service cost			154			32			167			33			23			76
    Unrecognized transition assets			(23	)					(27	)					69			78
    Currency conversion						69						57
    Net amount recognized at end of year		$	(171	)	$	329		$	(166	)	$	257		$	(3	)	$	(5	)
    Amounts recognized in the Balance Sheet consist of:
    	Prepaid benefit cost	$	7		$	329		$	4		$	257		$	8		$	4
    	Accrued benefit liability		(178	)					(170	)					(11	)		(9	)
    	Additional minimum liability		(37	)		(635	)		(28	)		(516	)
    	Intangible asset		9			36			9			37
    	Accumulated other comprehensive income (pre-tax)		28			503			19			434
    	Cumulative translation adjustment					96						45
    Net amount recognized at end of year		$	(171	)	$	329		$	(166	)	$	257		$	(3	)	$	(5	)
    Total accumulated benefit obligation for defined benefit pension plans		$	1,710		$	2,789		$	1,553		$	2,423

    Information for pension plans with projected benefit obligations in excess of plan assets follows:

    	2004				2003
    	Domestic		Int'l		Domestic		Int'l
    Projected benefit obligation	$	1,969	$	2,931	$	1,765	$	2,474
    Accumulated benefit obligation	$	1,710	$	2,789	$	1,546	$	2,423
    Fair value of assets	$	1,767	$	2,483	$	1,646	$	2,164

    Information for pension plans with accumulated benefit obligations in excess of plan assets follows:

    	2004				2003
    	Domestic		Int'l		Domestic		Int'l
    Projected benefit obligation	$	174	$	2,931	$	142	$	2,474
    Accumulated benefit obligation	$	159	$	2,789	$	130	$	2,423
    Fair value of assets	$	95	$	2,483	$	76	$	2,164

    Information for other postretirement benefit plans with accumulated postretirement benefit obligations in excess of plan assets follows:

    	2004		2003
    Accumulated postretirement benefit obligation	$	485	$	512
    Fair value of assets	$	249	$	219

    (PPL Energy Supply)

    The funded status of the PPL Energy Supply plans was as follows:

    		Pension Benefits													Other Postretirement Benefits
    		2004						2003							2004			2003
    		Domestic			International			Domestic			International
    Change in Benefit Obligation
    Benefit Obligation, January 1		$	62		$	2,474		$	58		$	2,126			$	11		$	9
    	Service cost		3			15			3			14
    	Interest cost		4			139			4			124				1			1
    	Participant contributions					5						5
    	Actuarial (gain) loss		6			180						101							1
    	Net benefits paid		(1	)		(160	)		(1	)		(131	)
    	Net transfer out								(2	)
    	Currency conversion					278						235
    Benefit Obligation, December 31			74			2,931			62			2,474				12			11
    Change in Plan Assets
    Plan assets at fair value, January 1			53			2,164			30			1,757
    	Actual return on plan assets		5			232			9			332
    	Employer contributions		4			3			15
    	Participant contributions					5						5
    	Net benefits paid		(1	)		(160	)		(1	)		(131	)
    	Currency conversion					239						201
    Plan assets at fair value, December 31			61			2,483			53			2,164
    Funded Status
    Funded Status of Plan			(13	)		(448	)		(9	)		(310	)			(12	)		(11	)
    Unrecognized actuarial loss			14			676			9			477				4			4
    Unrecognized prior service cost			3			32			4			33
    Currency conversion						69						57
    Net amount recognized at end of year		$	4		$	329		$	4		$	257			$	(8	)	$	(7	)
    Amounts recognized in the Balance Sheet consist of:
    	Prepaid benefit cost	$	4		$	329		$	4		$	257
    	Accrued benefit liability													$		(8	)	$	(7	)
    	Additional minimum liability		(17	)		(635	)		(11	)		(516	)
    	Intangible asset		3			36			3			37
    	Accumulated other comprehensive income (pre-tax)		14			503			8			434
    	Cumulative translation adjustment					96						45
    Net amount recognized at end of year		$	4		$	329		$	4		$	257			$	(8	)	$	(7	)
    Total accumulated benefit obligation for defined benefit pension plans		$	74		$	2,789		$	62		$	2,423

    Information for pension plans with projected and accumulated benefit obligations in excess of plan assets follows:

    	2004				2003
    	Domestic		Int'l		Domestic		Int'l
    Projected benefit obligation	$	74	$	2,931	$	55	$	2,474
    Accumulated benefit obligation	$	74	$	2,789	$	55	$	2,423
    Fair value of assets	$	61	$	2,483	$	46	$	2,164

    Information for other postretirement benefit plans with accumulated postretirement benefit obligations in excess of plan assets follows:

    	2004		2003
    Accumulated postretirement benefit obligation	$	12	$	11
    Fair value of assets	$		$

    In addition to the plans sponsored by PPL Energy Supply, PPL Generation subsidiaries and PPL EnergyPlus are allocated a portion of the liabilities and costs of the pension and other postretirement benefit plans sponsored by PPL Services based on their participation in those plans. The pension liabilities assumed by PPL Energy Supply for these plans were $60 million and $58 million at December 31, 2004 and 2003. The prepaid other postretirement benefit costs assumed by PPL Energy Supply for these plans were $2 million and $1 million at December 31, 2004 and 2003.

    PPL Energy Supply subsidiaries engaged in the mechanical contracting business make contributions to various multi-employer pension and health and welfare plans, depending on an employee's status. Contributions of $28 million, $23 million and $30 million were made in 2004, 2003 and 2002. The change in contributions from year to year was primarily the result of the changes in the workforce at the mechanical contracting companies. The contribution rates have also increased from year to year.

    (PPL Electric)

    Although PPL Electric does not directly sponsor any pension or other postretirement benefit plans, it is allocated a portion of the liabilities and costs of plans sponsored by PPL Services based on participation in those plans. At December 31, 2004 and 2003, the recorded balance of PPL Electric's allocated share of the total pension liability was $76 million and $74 million. At December 31, 2004 and 2003, the balance in PPL Electric's allocated share of the total prepaid other postretirement benefit cost was $4 million and $2 million.

    At December 31, 2004, PPL Electric had a regulatory asset of $4 million relating to postretirement benefits that is being amortized and recovered in rates, with a remaining life of eight years. PPL Electric also maintains an additional liability for the cost of health care of retired miners of former subsidiaries that had been engaged in coal mining. At December 31, 2004, the liability was $29 million. The liability is the net of $58 million of estimated future benefit payments offset by $29 million of available assets in a PPL Electric-funded VEBA trust.

    Plan Assets - Domestic Pension Plans (PPL and PPL Energy Supply)

    The asset allocation for the PPL Retirement Plan Master Trust and the target allocation, by asset category, is detailed below.

    Asset Category		Percentage of plan assets at December 31,				Target asset allocation
    		2004		2003
    Equity securities			73%		73%		70%
    Debt securities			22%		22%		25%
    Real estate and other			5%		5%		5%
    	Total		100%		100%		100%

    The domestic pension plan assets are managed by outside investment managers and are rebalanced as necessary to maintain the target asset allocation ranges. PPL's investment strategy with respect to the domestic pension assets is to achieve a satisfactory risk-adjusted return on assets that, in combination with PPL's funding policy and tolerance for return volatility, will ensure that sufficient dollars are available to provide benefit payments.

    Plan Assets - Domestic Other Postretirement Benefit Plans (PPL)

    The asset allocation for the PPL other postretirement benefit plans by asset category is detailed below.

    Asset Category		Percentage of plan assets at December 31,
    		2004		2003
    Equity securities			60%		56%
    Debt securities			40%		44%
    	Total		100%		100%

    PPL's investment strategy with respect to its other postretirement benefit obligations is to fund the VEBA trusts with voluntary contributions and to invest in a tax efficient manner utilizing a prudent mix of assets. Based on the current VEBA and postretirement plan structure, a targeted asset allocation range of 50% to 60% equity and 40% to 50% debt is maintained.

    Plan Assets - International Pension Plans (PPL and PPL Energy Supply)

    WPD operates three defined benefit plans, the WPD Group segment of the Electricity Supply Pension Scheme (ESPS), the Western Power Utilities Pension Scheme and the Infralec 1992 Scheme. The assets of all three schemes are held separately from those of WPD in trustee-administered funds.

    PPL's international pension plan asset allocation and target allocation is detailed below.

    Asset Category		Percentage of plan assets at December 31,				Target asset allocation
    		2004		2003
    Equity securities			74%		75%		75%
    Debt securities			22%		21%		23%
    Real estate and other			4%		4%		2%
    	Total		100%		100%		100%

    In consultation with its investment advisor and with WPD, the group trustees of the WPD Group of the ESPS have drawn up a Statement of Investment Principles to comply with the requirements of U.K. legislation.

    The group trustees' primary investment objective is to maximize investment returns within the constraint of avoiding excessive volatility in the funding position.

    Expected Cash Flows - Domestic Pension and Other Postretirement Benefit Plans

    (PPL)

    There are no contributions required for PPL's primary domestic pension plan or any of PPL's other domestic subsidiary pension plans. However, PPL subsidiaries expect to contribute approximately $10 million to their pension plans in 2005 to ensure future compliance with minimum funding requirements.

    PPL sponsors various non-qualified supplemental pension plans for which no assets are segregated from corporate assets. PPL expects to make approximately $2 million of benefit payments under these plans in 2005.

    PPL is not required to make contributions to its other postretirement benefit plans, but has historically funded these plans in amounts equal to the postretirement benefit costs recognized. Continuation of this past practice would provide for PPL to contribute $36 million to its other postretirement benefit plans in 2005.

    The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid and the following federal subsidy payments are expected to be received:

    			Other Postretirement
    	Pension		Benefit Payment		Expected Federal Subsidy
    2005	$	79	$	37
    2006		80		40	$	2
    2007		84		44		2
    2008		89		48		3
    2009		95		52		3
    2010 - 2014		605		321		7

    (PPL Energy Supply)

    There are no contributions required for the PPL Montana pension plan. However, PPL Montana expects to contribute approximately $6 million to the plan in 2005 to ensure future compliance with minimum funding requirements.

    The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:

    	Pension		Other Postretirement
    2005	$	1	$	1
    2006		2		1
    2007		2		1
    2008		2		1
    2009		3		1
    2010 - 2014		20		10

    Expected Cash Flows - International Pension Plans (PPL and PPL Energy Supply)

    The pension plans of WPD are subject to formal actuarial valuations every three years, which are used to determine funding requirements. Future contributions were evaluated in accordance with the latest valuation performed as of March 31, 2004, in respect of WPD's principal pension scheme, the ESPS, to determine contribution requirements for 2005 and forward. WPD expects to make contributions of approximately $38 million in 2005.

    The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:

    	Pension
    2005	$	168
    2006		172
    2007		177
    2008		181
    2009		186
    2010 - 2014		1,001

    Medicare Prescription Drug, Improvement and Modernization Act of 2003 (PPL, PPL Energy Supply and PPL Electric)

    In December 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the Act) was signed into law. The Act introduces a prescription drug benefit under Medicare Part D and also provides for a tax-free federal subsidy to sponsors of retiree health care benefit plans that provide an actuarially equivalent level of prescription drug benefits. The subsidy would be 28% of eligible drug costs for retirees that are over age 65 and covered under PPL's other postretirement benefit plans.

    In January 2004, the FASB issued FSP FAS 106-1, "Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003." FSP FAS 106-1 permitted companies to defer accounting for the effects of the Act, as the impact of the Act on the provisions of SFAS 106, "Employers' Accounting for Postretirement Benefits Other than Pensions," had not been determined as of such time. PPL elected to defer recognizing the effects of the Act in accounting for its other postretirement benefit plans until authoritative guidance on the accounting for the federal subsidy was issued.

    In May 2004, the FASB issued FSP FAS 106-2, "Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003," which supersedes FSP FAS 106-1. FSP FAS 106-2 details the accounting for the effects of the Act under SFAS 106 and requires certain disclosures. FSP FAS 106-2 is effective for the first interim or annual period beginning after June 15, 2004.

    PPL has consulted with its independent actuary and determined that portions of certain of its other postretirement benefit plans provide benefits that may be actuarially equivalent to Medicare Part D benefits, pending final detailed guidance from the U.S. Department of Health and Human Services. For those significant plans that provide benefits that are at least actuarially equivalent to Medicare Part D, PPL remeasured its plan assets and accumulated benefit obligation as of July 1, 2004, under the prospective method of adoption of FSP FAS 106-2. The prospective method of adoption allows for measuring the effects of the Act as of the date of adoption of FSP FAS 106-2. As a result, PPL's accumulated postretirement benefit obligation was reduced by approximately $12 million as of July 1, 2004, and resulted in an unrecognized actuarial gain of a similar amount. PPL's postretirement benefit cost recognized in 2004 was reduced by approximately $1 million.

    On January 21, 2005, the final regulations for implementing the Act were released. Although PPL has not been able to obtain a firm estimate of the effect of the regulations, any adjustments to the initial impact as disclosed above for changes in the accumulated postretirement benefit obligation and postretirement benefit cost are expected to be insignificant based on preliminary discussions with our actuaries.

    Savings Plans (PPL, PPL Energy Supply and PPL Electric)

    Substantially all employees of PPL's domestic subsidiaries are eligible to participate in deferred savings plans (401(k)s). Contributions to the plans charged to operating expense approximated the following:

    	2004		2003		2002
    PPL	$	13	$	11	$	11
    PPL Energy Supply		7		6		6
    PPL Electric		3		2		2

    Employee Stock Ownership Plan (PPL, PPL Energy Supply and PPL Electric)

    PPL sponsors a non-leveraged ESOP, in which substantially all employees, excluding those of PPL Global, PPL Montana, PPL Gas Utilities and the mechanical contractors, are enrolled after one year of credited service. Dividends paid on ESOP shares are treated as ordinary dividends by PPL. Under existing income tax laws, PPL is permitted to deduct the amount of those dividends for income tax purposes and to contribute the resulting tax savings (dividend-based contribution) to the ESOP.

    The dividend-based contribution is used to buy shares of PPL's common stock and is expressly conditioned upon the deductibility of the contribution for federal income tax purposes. Contributions to the ESOP are allocated to eligible participants' accounts as of the end of each year, based 75% on shares held in existing participants' accounts and 25% on the eligible participants' compensation.

    Amounts charged as compensation expense for ESOP contributions approximated $5 million in each of 2004, 2003 and 2002. These amounts were offset by the dividend-based contribution tax savings and had no impact on PPL's earnings.

    ESOP shares outstanding at December 31, 2004, were 4,628,117, or 2% of total common shares outstanding, and are included in all EPS calculations.

    Postemployment Benefits

    (PPL, PPL Energy Supply and PPL Electric)

    Certain PPL subsidiaries provide health and life insurance benefits to disabled employees and income benefits to eligible spouses of deceased employees. Postemployment benefits charged to operating expenses were not significant in 2004, 2003 and 2002.

    (PPL and PPL Energy Supply)

    Certain of PPL Global subsidiaries, including Emel, EC, Elfec and Integra, provide limited non-pension benefits to all current employees. All active employees are entitled to benefits in the event of termination or retirement in accordance with government-sponsored programs. These plans generally obligate a company to pay one month's salary per year of service to employees in the event of involuntary termination. Under certain plans, employees with five or more years of service are entitled to this payment in the event of voluntary or involuntary termination.

    The liabilities for these plans are accounted for under the guidance of EITF 88-1 "Determination of Vested Benefit Obligation for a Defined Benefit Pension Plan," using what is commonly referred to as the "shut down" method, where a company records the undiscounted obligation as if it were payable at each balance sheet date. The combined liabilities for these plans at December 31, 2004 and 2003, were $9 million and $8 million, and are recorded in "Deferred Credits and Noncurrent Liabilities - Other" on the Balance Sheet.

13. Jointly-Owned Facilities

    (PPL and PPL Energy Supply)

    At December 31, 2004, subsidiaries of PPL and PPL Energy Supply owned interests in the facilities listed below. The Balance Sheets of PPL and PPL Energy Supply include the amounts noted in the table below:

    		Ownership Interest	Electric Plant in Service		Other Property		Accumulated Depreciation		Construction Work in Progress
    PPL Generation
    Generating Stations
    	Susquehanna	90.00%	$	4,345			$	3,483	$	20
    	Griffith (a)	50.00%		151
    	Conemaugh	16.25%		196				76		1
    	Keystone	12.34%		99				52		2
    	Wyman Unit 4	8.33%		15				4
    Merrill Creek Reservoir		8.37%			$	22		13

    (a) A PPL subsidiary has a 50% interest in a partnership that owns the Griffith gas-fired generating station. The partnership arrangement is essentially a cost-sharing arrangement, in that each of the partners has rights to one-half of the plant capacity and energy, and an obligation to cover one-half of the operating costs of the station. Accordingly, the equity investment is classified as "Electric Plant in Service - Generation" on the Balance Sheet.

    Each PPL Generation subsidiary provided its own funding for its share of the facility. Each receives a portion of the total output of the generating stations equal to its percentage ownership. The share of fuel and other operating costs associated with the stations is reflected on the Statement of Income.

    In addition to the interests mentioned above, PPL Montana is the operator of the jointly-owned, coal-fired generating units comprising the Colstrip steam generation facility. At December 31, 2004 and 2003, PPL Montana had a 50% leasehold interest in Colstrip Units 1 and 2 and a 30% leasehold interest in Colstrip Unit 3 under operating leases. See Note 10 for additional information.

    PPL Montana's share of direct expenses associated with the operation and maintenance of these facilities is included in the corresponding operating expenses on the Statement of Income. Each joint-owner in these facilities provides its own financing. As operator of all Colstrip Units, PPL Montana invoices each joint-owner for their respective portion of the direct expenses. The amount due from joint-owners was approximately $6 million and $9 million at December 31, 2004 and 2003.

    At December 31, 2004, NorthWestern owned a 30% leasehold interest in Colstrip Unit 4. PPL Montana and NorthWestern have a sharing agreement to govern each party's responsibilities regarding the operation of Colstrip Units 3 and 4, and each party is responsible for 15% of the respective operating and construction costs, regardless of whether a particular cost is specified to Colstrip Unit 3 or 4. However, each party is responsible for its own fuel-related costs.

14. Commitments and Contingent Liabilities

    Energy Purchases and Sales Commitments

    Energy Purchase Commitments (PPL, PPL Energy Supply and PPL Electric)

    PPL and PPL Energy Supply enter into long-term purchase contracts to supply the fuel requirements for generation facilities. These include contracts to purchase coal, natural gas, oil and uranium. These contracts extend for terms through 2019. PPL and PPL Energy Supply also enter into long-term contracts for the storage and transport of natural gas. These contracts extend through 2014 and 2032, respectively. Additionally, PPL Energy Supply enters into long-term contracts to purchase power to meet load requirements and emissions allowances for its generation facilities. These contracts extend for terms through 2010.

    PPL Energy Supply entered into long-term power purchase agreements with two wind project developers to purchase the full output of their facilities when they are placed in commercial operation, which is expected by the end of 2005. One of the power purchase agreements is for 100 MW and extends for a term of 15 years, while the other is for 20 MW and extends for a term of 20 years.

    Liability for Above Market NUG Contracts

    In 1998, PPL Electric recorded a loss accrual for above market contracts with NUGs of $854 million, due to its generation business being deregulated. Effective January 1999, PPL Electric began reducing this liability as an offset to "Energy purchases" on the Statement of Income. This reduction is based on the estimated timing of the purchases from the NUGs and projected market prices for this generation. The final existing NUG contract expires in 2014. In connection with the corporate realignment in 2000, the remaining balance of this liability was transferred to PPL EnergyPlus. At December 31, 2004, the remaining liability associated with the above market NUG contracts was $279 million.

    Energy Sales Commitments (PPL and PPL Energy Supply)

    PPL Energy Supply enters into long-term power sales contracts in connection with its load-serving activities or associated with certain of its power plants. These power sales contracts extend for terms through 2017. All long-term contracts were executed at pricing that approximated market rates, including profit margin, at the time of execution.

    As part of the purchase of generation assets from Montana Power, PPL Montana assumed a power purchase agreement and a power sales agreement, which were still in effect at December 31, 2004. In accordance with purchase accounting guidelines, PPL Montana recorded liabilities of $65 million as the estimated fair value of these agreements at the acquisition date. The power sales agreement was re-evaluated under DIG Issue C20, "Scope Exceptions: Interpretation of the Meaning of Not Clearly and Closely Related in Paragraph 10(b) Regarding Contracts with a Price Adjustment Feature," and is now reflected at its fair value as a derivative instrument. The liability for the power purchase agreement is being reduced over the term of the agreement, through 2010, as an adjustment to "Energy purchases" on the Statement of Income. The unamortized balance of the liability related to the power purchase agreement at December 31, 2004, was $54 million and is included in "Deferred Credits and Other Noncurrent Liabilities - Other" on the Balance Sheet.

    On July 1, 2002, PPL EnergyPlus began to sell to NorthWestern an aggregate of 450 MW of energy supplied by PPL Montana. Under two five-year agreements, PPL EnergyPlus is supplying 300 MW of around-the-clock electricity and 150 MW of unit-contingent on-peak electricity. PPL Montana also makes short-term energy sales to NorthWestern.

    In September 2003, NorthWestern filed a voluntary petition for relief seeking to reorganize under Chapter 11 of the U.S. Bankruptcy Code, and in November 2004, NorthWestern announced that it had officially emerged from bankruptcy protection. NorthWestern had assumed the two energy supply agreements with PPL EnergyPlus in the bankruptcy proceeding and is current on all payments under the agreements.

    In April 2003, the Maryland Public Service Commission authorized the competitive provision of the Standard Offer Service (SOS) to allow utilities to procure SOS for customers through the competitive selection of wholesale supply. In March 2004, PPL EnergyPlus was awarded an 11-month fixed-price SOS contract for customer load (approximately 60 MW) for Potomac Electric Power Company. This contract commenced in July 2004.

    As a result of New Jersey's Electric Discount and Energy Competition Act, the New Jersey Board of Public Utilities authorized and made available to power suppliers, on a competitive basis, the opportunity to provide Basic Generation Service (BGS) to all non-shopping New Jersey customers. In February 2003, PPL EnergyPlus was awarded a 34-month fixed-price BGS contract for a fixed percentage of customer load (approximately 1,000 MW) for Atlantic City Electric Company, Jersey Central Power & Light Company and Public Service Electric & Gas Company. In February 2003, PPL EnergyPlus also was awarded a 10-month hourly energy price supply contract for about 500 MW. These contracts commenced in August 2003. Additionally, in February 2004, PPL EnergyPlus was awarded a 12-month hourly energy price supply BGS contract for a fixed percentage of customer load (approximately 450 MW) for Atlantic City Electric Company, Jersey Central Power & Light Company and Public Service Electric & Gas Company. These contracts commenced in June 2004.

    In April 2003, PPL EnergyPlus entered into an agreement with Arizona Public Service Company to provide 112 MW of capacity and associated electricity from July through September of 2003 and 150 MW from June through September of 2004 and 2005. See Note 9 for information regarding the possible sale of the Sundance power plant to Arizona Public Service Company.

    In January 2004, PPL EnergyPlus began supplying 12.5% of Connecticut Light & Power Company's Transitional Standard Offer load, under a three-year fixed-price contract. During peak hours, PPL EnergyPlus' obligation to supply the Transitional Standard Offer load may reach 625 MW.

    Legal Matters

    (PPL, PPL Energy Supply and PPL Electric)

    PPL and its subsidiaries are involved in numerous legal proceedings, claims and litigation in the ordinary course of business. PPL and its subsidiaries cannot predict the outcome of such matters, or whether such matters may result in material liabilities.

    Montana Power Shareholders' Litigation (PPL and PPL Energy Supply)

    In August 2001, a purported class-action lawsuit was filed by a group of shareholders of Montana Power against Montana Power, the directors of Montana Power, certain advisors and consultants of Montana Power and PPL Montana. The plaintiffs allege, among other things, that Montana Power was required to, and did not, obtain shareholder approval of the sale of Montana Power's generation assets to PPL Montana in 1999. Although most of the claims in the complaint are against Montana Power, its board of directors, and its consultants and advisors, two claims are asserted against PPL Montana. In the first claim, plaintiffs seek a declaration that because Montana Power shareholders did not vote on the 1999 sale of generating assets to PPL Montana, that sale "was null and void ab initio." The second claim alleges that PPL Montana was privy to and participated in a strategy whereby Montana Power would sell its generation assets to PPL Montana without first obtaining Montana Power shareholder approval, and that PPL Montana has made net profits in excess of $100 million as the result of this alleged illegal sale. In the second claim, plaintiffs request that the court impose a "resulting and/or constructive trust" on both the generation assets themselves and all profits, plus interest on the amounts subject to the trust. This lawsuit is currently pending in the U.S. District Court of Montana, Butte Division. In July 2004, the plaintiffs notified the District Court that the parties had reached an oral partial settlement of the case that would result in the dismissal of PPL Montana as a defendant, and in January 2005 a global settlement agreement was filed with the District Court along with a motion to approve the agreement. Under the terms of the global settlement agreement, the plaintiffs' claims against PPL Montana would be dismissed and PPL Montana would not have to pay any amounts to the plaintiffs. The global settlement agreement must still be approved by the District Court. PPL and PPL Energy Supply cannot predict whether the global settlement agreement will be approved or the outcome of this matter if it is not approved.

    NorthWestern Corporation Litigation (PPL and PPL Energy Supply)

    In connection with the acquisition of the Montana generation assets, the Montana Power APA, which was previously assigned to PPL Montana by PPL Global, includes a provision concerning the proposed purchase by PPL Montana of a portion of NorthWestern's interest in the 500-kilovolt Colstrip Transmission System (CTS) for $97 million. During 2002, PPL Montana had been in discussions with NorthWestern regarding the proposed purchase of the CTS and the claims that PPL Montana believes it has against NorthWestern arising from the Montana Power APA and related agreements. Notwithstanding such discussions, in September 2002, NorthWestern filed a lawsuit against PPL Montana in Montana state court seeking specific performance of PPL Montana's purchase of the CTS or, alternatively, damages for breach of contract. Pursuant to PPL Montana's application, the matter was removed to the U.S. District Court of Montana, Butte Division. Following removal, NorthWestern asserted additional claims for damages against PPL Montana, including a claim for punitive damages. PPL Montana filed defenses denying liability for NorthWestern's claims as well as counterclaims against NorthWestern seeking damages PPL Montana believes it has suffered under the Montana Power APA and related agreements.

    In October 2004, the federal district court in Delaware, where NorthWestern's bankruptcy proceeding had been pending, approved a joint stipulation between PPL Montana and NorthWestern under which NorthWestern agreed to establish a segregated reserve to be used for any distributions to be made to satisfy any final judgment that PPL Montana may be awarded pursuant to PPL Montana's counterclaims. This segregated reserve has been funded with shares of NorthWestern common stock equal to $50 million, valued as of the effective date of NorthWestern's plan of reorganization. Also in October, the federal district court in Delaware confirmed NorthWestern's plan of reorganization, and in November 2004, NorthWestern announced that it officially emerged from bankruptcy protection.

    The trial for this matter is expected to commence in the Montana federal district court in the last half of 2005. PPL and PPL Energy Supply cannot predict the outcome of this litigation.

    Montana Hydroelectric Litigation (PPL and PPL Energy Supply)

    In October 2003, a lawsuit was filed against PPL Montana, PPL Services, Avista Corporation, PacifiCorp and nine John Doe defendants in the U.S. District Court of Montana, Missoula Division, by two residents allegedly acting in a representative capacity on behalf of the State of Montana. In January 2004, the complaint was amended to, among other things, include the Great Falls school districts as additional plaintiffs. In May 2004, the Montana Attorney General filed a motion to allow the State of Montana to intervene as an additional plaintiff in the litigation. This motion was granted without objection. Both the individual plaintiffs' and the school districts' complaint and the State's complaint sought declaratory judgment, compensatory damages and attorneys fees and costs for use of state and/or "school trust" lands by hydropower facilities and to require the defendants to adequately compensate the State and/or the State School Trust fund for full market value of lands occupied. Generally, the suit is founded on allegations that the bed of navigable rivers became state-owned property upon Montana's admission to statehood, and that the use thereof for placement of dam structures, affiliated structures and reservoirs should, under an existing regulatory scheme, trigger lease payments for use of land underneath. The plaintiffs also sought relief on theories of unjust enrichment, trespass and negligence. No specific amount of damages or future rental value has been claimed by the plaintiffs. The defendants filed separate motions to dismiss the individual plaintiffs' and school district's complaint, as well as the complaint of the State of Montana. In September 2004, the federal court granted the motions to dismiss the individual plaintiffs' and school districts' complaint but denied the similar motions as to the State of Montana's complaint. Following the federal court's September decision, PPL Montana and the other defendants filed a motion to dismiss the State of Montana's complaint for lack of diversity jurisdiction and also filed a motion to vacate certain portions of the decision. The federal court has not yet ruled on these motions.

    In November 2004, PPL Montana, Avista Corporation and PacifiCorp commenced an action for declaratory judgment in Montana First Judicial District Court seeking a determination that no lease payments or other compensation for the hydropower facilities' use and occupancy of streambeds can be collected by the State of Montana. The State subsequently filed counterclaims and a motion for summary judgment. In February 2005, the individual plaintiffs and school districts who were dismissed from the federal court proceeding, along with a state teachers' union, filed a motion to intervene as additional defendants in this state court proceeding, and also filed a proposed answer and counterclaims to be used if their motion to intervene is granted. The state court has not yet ruled on any of the above-described motions. PPL Montana and PPL Services cannot predict the outcome of either the federal or the state court proceeding.

    Regulatory Issues

    California ISO and Western Markets (PPL and PPL Energy Supply)

    Through its subsidiaries, PPL made approximately $18 million of sales to the California ISO during the period from October 2000 through June 2001, of which $17 million has not been paid to PPL subsidiaries. Given the myriad of electricity supply problems presently faced by the California electric utilities and the California ISO, PPL cannot predict whether or when it will receive payment. As of December 31, 2004, PPL has fully reserved for possible underrecoveries of payments for these sales.

    Regulatory proceedings arising out of the California electricity supply situation have been filed at the FERC. The FERC has determined that all sellers of energy into markets operated by the California ISO and the California Power Exchange, including PPL Montana, should be subject to refund liability for the period beginning October 2, 2000, through June 20, 2001, and initiated an evidentiary hearing concerning refund amounts. In April 2003, the FERC changed the manner in which this refund liability is to be computed and ordered further proceedings to determine the exact amounts that the sellers, including PPL Montana, would be required to refund. In September 2004, the U.S. Court of Appeals for the Ninth Circuit held that the FERC had the additional legal authority to order refunds for periods prior to October 2, 2000, and ordered the FERC to determine whether or not it would be appropriate to grant such additional refunds.

    In June 2003, the FERC took several actions as a result of a number of related investigations. The FERC terminated proceedings pursuant to which it had been considering whether to order refunds for spot market bilateral sales made in the Pacific Northwest, including sales made by PPL Montana, during the period December 2000 through June 2001. The FERC explained that the totality of the circumstances made refunds unfeasible and inequitable, and that it had provided adequate relief by adopting a price cap throughout the western U.S. The FERC also denied pending complaints against long-term contracts in the western U.S. In these complaints, various power buyers had challenged selected long-term contracts that they entered into during 2000 and 2001, complaining that the power prices were too high and reflected manipulation of those energy markets. The FERC found that the complainants had not met their burden of showing that changing or canceling the contracts was "in the public interest" and that the dysfunction in the California markets did not justify changing these long-term contracts. These orders have been appealed to the U.S. Court of Appeals for the Ninth Circuit. In two separate orders, the FERC also ordered 65 different companies, agencies or municipalities to show cause why they should not be ordered to disgorge profits for "gaming" or anomalous market behavior during 2000 and 2001. These orders to show cause address both unilateral and joint conduct identified as the "Enron trading strategies." Neither PPL EnergyPlus nor PPL Montana was included in these orders to show cause, and they previously have explained in responses to data requests from the FERC that they have not engaged in such trading strategies. Finally, the FERC issued a new investigation order directing its staff to investigate any bids made into the California markets in excess of $250/MWh during the period from May 2000 to October 2000, a period of time prior to the period examined in connection with most of the proceedings described above. To their knowledge, neither PPL EnergyPlus nor PPL Montana is being investigated by the FERC under this new order.

    Litigation arising out of the California electricity supply situation has been filed in California courts against sellers of energy to the California ISO. The plaintiffs and intervenors in these legal proceedings allege, among other things, abuse of market power, manipulation of market prices, unfair trade practices and violations of state antitrust laws, and seek other relief, including treble damages and attorneys' fees. While PPL's subsidiaries have not been named by the plaintiffs in these legal proceedings, PPL Montana was named by a defendant in its cross-complaint in a consolidated court proceeding, which combined into one master proceeding several of the lawsuits alleging antitrust violations and unfair trade practices. This generator denies that any unlawful, unfair or fraudulent conduct occurred but asserts that, if it is found liable, the other generators and power marketers, including PPL Montana, caused, contributed to and/or participated in the plaintiffs' alleged losses.

    In February 2004, the Montana Public Service Commission initiated a limited investigation of the Montana retail electricity market for the years 2000 and 2001, focusing on how that market was affected by transactions involving the possible manipulation of the electricity grid in the western U.S. The investigation includes all public utilities and licensed electricity suppliers in Montana, as well as other entities that may possess relevant information. Through its subsidiaries, PPL is a licensed electricity supplier in Montana and a wholesale supplier in the western U.S. In June 2004, the Montana Attorney General served PPL Montana and more than 20 other companies with subpoenas requesting documents, and PPL Montana has provided responsive documents to the Montana Attorney General. As with the other investigations taking place as a result of the issues arising out of the electricity supply situation in California and other western states, PPL and its subsidiaries believe that they have not engaged in any improper trading or marketing practices affecting the Montana retail electricity market.

    While PPL and its subsidiaries believe that they have not engaged in any improper trading practices, they cannot predict whether, or the extent to which, any PPL subsidiaries will be the target of any additional governmental investigations or named in other lawsuits or refund proceedings, the outcome of any such lawsuits or proceedings or whether the ultimate impact on them of the electricity supply situation in California and other western states will be material.

    PJM Capacity Litigation (PPL, PPL Energy Supply and PPL Electric)

    In December 2002, PPL was served with a complaint against PPL, PPL EnergyPlus and PPL Electric filed in the U.S. District Court for the Eastern District of Pennsylvania by a group of 14 Pennsylvania boroughs that apparently alleges, among other things, violations of the federal antitrust laws in connection with the pricing of installed capacity in the PJM daily market during the first quarter of 2001. These boroughs were wholesale customers of PPL Electric. The claims of the boroughs are similar to those previously alleged by a single borough in litigation brought in the same court that is still pending. In addition, in November 2003, PPL and PPL EnergyPlus were served with a complaint which was filed in the same court by Joseph Martorano, III (d/b/a ENERCO), that also alleges violations of the federal antitrust laws in early 2001. The complaint indicates that ENERCO provides consulting and energy procurement services to clients in Pennsylvania and New Jersey. In September 2004, this complaint was dismissed by the District Court and the plaintiff has appealed the dismissal to the U.S. Court of Appeals for the Third Circuit.

    Each of the U.S. Department of Justice - Antitrust Division, the FERC and the Pennsylvania Attorney General conducted investigations regarding PPL's PJM capacity market transactions in early 2001 and did not find any reason to take action against PPL.

    Although PPL, PPL Energy Supply and PPL Electric believe the claims in these complaints are without merit, they cannot predict the outcome of these matters.

    New England Investigation (PPL and PPL Energy Supply)

    In January 2004, PPL became aware of an investigation by the Connecticut Attorney General and the FERC's Office of Market Oversight and Investigation (OMOI) regarding allegations that natural gas-fired generators located in New England illegally sold natural gas instead of generating electricity during the week of January 12, 2004. Subsequently, PPL and other generators were served with a data request by OMOI. The data request indicated that PPL was not under suspicion of a regulatory violation, but that OMOI was conducting an initial investigation. PPL has responded to this data request. PPL also has responded to data requests of ISO - New England and data requests served by subpoena from the Connecticut Attorney General. Both OMOI and ISO - New England have issued preliminary reports finding no regulatory or other violations concerning these matters. While PPL does not believe that it committed any regulatory or other violations concerning the subject matter of these investigations, PPL cannot predict the outcome of these investigations.

    PJM Billing (PPL, PPL Energy Supply and PPL Electric)

    In December 2004, Exelon Corporation, on behalf of its subsidiary, PECO Energy, Inc. (PECO), filed a complaint against PJM and PPL Electric with the FERC alleging that PJM had overcharged PECO from April 1998 through May 2003 as a result of an error by PJM in the State Estimator Program used in connection with billing all PJM customers for certain transmission, spot market energy and ancillary services charges. Specifically, the complaint alleges that PJM mistakenly identified PPL Electric's Elroy substation transformer as belonging to PECO and that, as a consequence, during times of congestion, PECO's bills for transmission congestion from PJM erroneously reflected energy that PPL Electric took from the Elroy substation and used to serve PPL Electric's load. The complaint requests the FERC, among other things, to direct PPL Electric to refund to PJM $39 million, plus interest of approximately $8 million, and for PJM to refund these same amounts to PECO. PPL Electric and PPL Energy Supply do not believe that they or any PPL subsidiaries have any financial responsibility or liability to PJM or PECO as a result of PJM's alleged error. PPL Electric and PPL Energy Supply cannot predict the outcome of this matter or the impact on any PPL subsidiary.

    FERC Market-Based Rate Authority (PPL and PPL Energy Supply)

    In December 1998, the FERC issued an order authorizing PPL EnergyPlus to make wholesale sales of electric power and related products at market-based rates. In that order, the FERC directed PPL EnergyPlus to file an updated market analysis within three years of the date of the order, and every three years thereafter. PPL EnergyPlus filed its initial updated market analysis in December 2001. Several parties thereafter filed interventions and protests requesting that PPL EnergyPlus be required to provide additional information demonstrating that it has met the FERC's market power tests necessary for PPL EnergyPlus to continue its market-based rate authority. PPL EnergyPlus has responded that the FERC does not require the economic test suggested by the intervenors and that, in any event, it would meet such economic test if required by the FERC.

    In June 2004, FERC approved certain changes to its standards for granting market-based rate authority. As a result of the schedule adopted by the FERC, PPL EnergyPlus, PPL Electric, PPL Montana and most of PPL Generation's subsidiaries were required to file in November 2004 updated analyses demonstrating that they should continue to maintain market-based rate authority under the new standards. PPL made two filings, one for PPL Montana and one for most of the other PPL subsidiaries. The Montana Public Service Commission and the Montana Consumer Counsel filed pleadings opposing the filing by PPL Montana. The Montana Public Service Commission requested that the FERC hold a hearing on the market-based rate renewal application, while the Montana Consumer Counsel suggested applying an altered version of the FERC's tests for assessing market power in reviewing the renewal application. The PJM Industrial Customer Coalition, the PP&L Industrial Customer Alliance and the consumer advocates of Maryland and Pennsylvania filed pleadings opposing the filings by the other PPL subsidiaries. These parties challenge the FERC's continued reliance on market-based rates to yield just and reasonable prices for wholesale electric transactions and suggest that the FERC change its tests for market power to include capacity and ancillary services markets. While PPL believes its filings demonstrate that all PPL subsidiaries pass the new tests established by the FERC in June 2004, PPL cannot predict the outcome of these proceedings.

    FERC Proposed Rules (PPL, PPL Energy Supply and PPL Electric)

    In July 2002, the FERC issued a Notice of Proposed Rulemaking entitled "Remedying Undue Discrimination through Open Access Transmission Service and Standard Electricity Market Design." The proposed rule is currently available for public comment and contains a proposed implementation date of July 31, 2003. However, since the issuance of the proposed rule, the FERC has delayed the implementation date. This far-reaching proposed rule, in its current form, purports to establish uniform transmission rules and a standard market design by, among other things:

    • enacting standard transmission tariffs and uniform market mechanisms,

    • monitoring and mitigating "market power,"

    • managing transmission congestion through pricing and tradable financial rights,

    • requiring independent operational control over transmission facilities,

    • forming state advisory committees on regional transmission organizations and resource adequacy, and

    • exercising FERC jurisdiction over all transmission service.

    In April 2003, the FERC issued a white paper describing certain modifications to the proposed rule. The FERC has requested comments and is holding numerous public comment sessions concerning the white paper.

    If adopted, this proposed rule may have a significant impact on PPL and its subsidiaries, which cannot be predicted at this time.

    In November 2003, the FERC adopted a proposed rule to require all existing and new electric market-based tariffs and authorizations to include provisions prohibiting the seller from engaging in anticompetitive behavior or the exercise of market power. The FERC order adopts a list of market behavior rules that apply to all electric market-based rate tariffs and authorizations, including those of PPL EnergyPlus and any other PPL subsidiaries that hold market-based rate authority. PPL does not expect this rule to have a significant impact on its subsidiaries.

    Wallingford Deactivation (PPL and PPL Energy Supply)

    In January 2003, PPL negotiated an agreement with ISO - New England that would declare that four of the five units at PPL's Wallingford, Connecticut facility are "reliability must run" units and put those units under cost-based rates. This agreement and the cost-based rates are subject to the FERC's approval, and PPL filed a request with the FERC for such approval. PPL requested authority for cost-based rates because the current and anticipated wholesale prices in New England are insufficient to cover the costs of keeping these units available for operation. In March 2003, PPL filed an application with the New England Power Pool to temporarily deactivate these four units. In May 2003, the FERC denied PPL's request for cost-based rates in light of the FERC's changes to the market and bid mitigation rules of ISO - New England made in a similar case involving generating units owned by NRG Energy, Inc. PPL subsequently has explained to the FERC that its changes to the market and bid mitigation rules of ISO - New England will not provide sufficient revenues to PPL, and PPL continues to seek approval of its cost-based rates. However, PPL has informed the New England Power Pool that it will not pursue its request to temporarily deactivate certain Wallingford units. In February 2004, PPL appealed the FERC's denial of its request for cost-based rates to the U.S. Court of Appeals for the District of Columbia Circuit. PPL cannot predict the outcome of this matter.

    IRS Synthetic Fuels Tax Credits (PPL and PPL Energy Supply)

    PPL, through its subsidiaries, has interests in two synthetic fuel production facilities: the Somerset facility located in Pennsylvania and the Tyrone facility located in Kentucky. PPL receives tax credits pursuant to Section 29 of the Internal Revenue Code based on the sale of synthetic fuel from these facilities to unaffiliated third-party purchasers. Section 29 of the Internal Revenue Code provides tax credits for the production and sale of solid synthetic fuels produced from coal. Section 29 tax credits are currently scheduled to expire at the end of 2007.

    To qualify for the Section 29 tax credits, the synthetic fuel must meet three primary conditions: (i) there must be a significant chemical change in the coal feedstock, (ii) the product must be sold to an unaffiliated entity, and (iii) the production facility must have been placed in service before July 1, 1998. In addition, Section 29 provides for the phase-out of the synthetic fuel tax credit when the reference price for crude oil, as adjusted for inflation, exceeds a certain threshold. The reference price is the annual average wellhead price per barrel for all unregulated domestic crude oil. The average reference price for crude oil through October 31, 2004, was $36.18 per barrel. Accordingly, the tax credit phase-out did not impact results in 2004. Accounting for inflation, PPL estimates that the 2005 tax credit phase-out would start at $51.15 per barrel and the tax credit would be totally eliminated at $64.20 per barrel.

    A PPL subsidiary owns and operates the Somerset facility. In November 2001, PPL received a private letter ruling from the IRS pursuant to which, among other things, the IRS concluded that the synthetic fuel produced at the Somerset facility qualifies for Section 29 tax credits. The Somerset facility uses the Covol technology to produce synthetic fuel, and the IRS issued the private letter ruling after its review and approval of that technology. In reliance on this private letter ruling, PPL has sold synthetic fuel produced at the Somerset facility resulting in an aggregate of approximately $205 million of tax credits as of December 31, 2004.

    PPL owns a limited partnership interest in the entity that owns and operates the Tyrone facility. In April 2004, this entity received a private letter ruling from the IRS. Similar to its conclusions relating to the Somerset facility, the IRS concluded that the synthetic fuel to be produced at the Tyrone facility qualifies for Section 29 tax credits. In reliance on this private letter ruling, this entity has sold synthetic fuel produced at the Tyrone facility resulting in an aggregate of approximately $15 million of tax credits as of December 31, 2004. The Tyrone facility commenced commercial operations in the third quarter of 2004, after being relocated to Kentucky from Pennsylvania.

    PPL also purchases synthetic fuel from unaffiliated third parties, at prices below the market price of coal, for use at its coal-fired power plants.

    In June 2003, the IRS announced that it had reason to question the scientific validity of certain test procedures and results that have been presented to it by taxpayers with interests in synthetic fuel operations as evidence that the required significant chemical change has occurred, and that it was reviewing information regarding these test procedures and practices. In October 2003, the IRS announced that it had completed its review and determined that the test procedures and results used by taxpayers are scientifically valid, if the procedures are applied in a consistent and unbiased manner. The IRS indicated that it would require taxpayers to comply with certain sampling and data/record retention practices to obtain or maintain a ruling on significant chemical change.

    PPL believes that the October 2003 IRS announcement and its receipt of the private letter ruling for the Tyrone facility following this announcement confirms that PPL is justified in its reliance on the private letter rulings for the Somerset and Tyrone facilities, and that the test results that PPL presented to the IRS in connection with its private letter rulings are scientifically valid. In addition, PPL believes that the Somerset facility and the Tyrone facility have been operated in compliance with their respective private letter rulings and Section 29 of the Internal Revenue Code.

    In October 2003, following the IRS announcement, it was reported that the U.S. Senate Permanent Subcommittee on Investigations, of the Committee on Governmental Affairs, had begun an investigation of the synthetic fuel industry and its producers. That investigation is ongoing. PPL cannot predict when the investigation will be completed or the potential results of the investigation.

    During 2004, certain other owners or operators of synthetic fuel facilities reported that the IRS had questioned whether their facilities were placed in service before July 1, 1998. Whether or not a facility meets the "placed-in service" requirement is based on the particular facts and circumstances relating to the operation of that facility. PPL is not aware of the facts and circumstances relating to the operation of the facilities being questioned by the IRS or the specific IRS position in these other matters. However, PPL believes that the Tyrone and Somerset facilities meet the in-service requirement.

    Environmental Matters - Domestic

    (PPL, PPL Energy Supply and PPL Electric)

    Due to the environmental issues discussed below or other environmental matters, PPL subsidiaries may be required to modify, replace or cease operating certain facilities to comply with statutes, regulations and actions by regulatory bodies or courts. In this regard, PPL subsidiaries also may incur capital expenditures or operating expenses in amounts which are not now determinable, but which could be significant.

    Air (PPL and PPL Energy Supply)

    The Clean Air Act deals, in part, with acid rain, attainment of federal ambient ozone standards, fine particulate matter standards and toxic air emissions in the U.S. PPL's subsidiaries are in substantial compliance with the Clean Air Act. The Bush administration's Clear Skies Initiative and proposals of certain members of Congress would amend the Clean Air Act. These amendments could require significant further reductions in emissions of nitrogen oxide and sulfur dioxide and reductions in emission of mercury. Although the Bush administration's Clear Skies Initiative does not include limits on carbon dioxide emissions, rising concerns about global warming have prompted several states to pass legislation capping carbon emissions and other bills have been introduced at the federal level proposing mandatory carbon dioxide reductions. An initiative is underway in nine Northeast states to propose a cap-and-trade program, the details of which are expected to be released in mid-2005 for carbon dioxide emissions from fossil fuel-fired power plants. Increased pressure is also coming from investor organizations and the international community. Pennsylvania and Montana have not, at this time, established any formal programs to address carbon dioxide and other greenhouse gases. If these or other legislative or regulatory initiatives result in mandatory reductions being imposed, the cost of such reductions could be significant.

    The EPA has developed new standards for ambient levels of ozone and fine particulates in the U.S. These standards have been upheld following court challenges. To facilitate attainment of these standards, the EPA has proposed a rule (now called the Clean Air Interstate Rule - CAIR) for 29 midwestern and eastern states, including Pennsylvania, to reduce national sulfur dioxide emissions by 40% (about 50% in the CAIR region) and to extend the currently seasonal program for nitrogen oxide emission reductions to a year-round program (in the CAIR region) starting in 2010. Starting in 2015, the proposed rule would require further reductions in sulfur dioxide and nitrogen oxide of 30% and 20%, respectively, from 2010 levels. The proposed rule would allow these reductions to be achieved through cap-and-trade programs, and is consistent with the Bush administration's proposed amendments to the Clean Air Act, except that it applies to only the 29 states. In order to continue meeting existing sulfur dioxide reduction requirements of the Clean Air Act, PPL will need to use its banked sulfur dioxide allowances and to purchase additional allowances. Currently, PPL has enough sulfur dioxide allowances to cover expected consumption through 2006, but will experience shortfalls in some years after 2006. As a result and based on projected allowance prices, PPL plans to complete the installation of sulfur dioxide scrubbers at its Montour Units 1 and 2 by 2008 and Brunner Island Unit 3 by 2010. PPL also is evaluating under CAIR the possible installation of SCR technology to reduce nitrogen oxide emissions at Brunner Island Unit 3 at a later date. The combined cost of the scrubbers at Montour and Brunner Island and of the SCR at Brunner Island is expected to be approximately $730 million.

    The EPA has proposed mercury and nickel regulations and is expected to finalize these regulations in 2005. The proposed mercury regulations affect coal-fired plants. With respect to mercury, the EPA has proposed two alternative approaches: an emission trading program to take effect beginning January 2010 or a requirement to take effect in March 2008 that every unit install maximum achievable control technology (MACT). The proposed nickel regulations impose MACT requirements on oil-fired units to take effect in 2008. The nickel regulations would affect Martins Creek Units 3 and 4. The cost of complying with these regulations is not now determinable, but could be significant.

    The Ozone Transport Commission (consisting of Pennsylvania and ten other states and the District of Columbia) has passed a resolution calling for reductions in sulfur dioxide, nitrogen oxide and mercury emissions that are more stringent than those proposed by EPA or contemplated by the Clear Skies Initiative. Should Pennsylvania implement such reductions, the cost to PPL is not now determinable but could be significant.

    In 1999, the EPA initiated enforcement actions against several utilities, asserting that older, coal-fired power plants operated by those utilities have, over the years, been modified in ways that subject them to more stringent "New Source" requirements under the Clean Air Act. The EPA has since issued notices of violation and commenced enforcement activities against other utilities. The future direction of the EPA's enforcement initiative is presently unclear. However, states and environmental groups have also been bringing enforcement actions alleging violations of "New Source" requirements by coal-fired plants. At this time, PPL is unable to predict whether such EPA, state or citizens enforcement actions will be brought with respect to any of its affiliates' plants. However, the EPA regional offices that regulate plants in Pennsylvania (Region III) and Montana (Region VIII) have indicated an intention to issue information requests to all utilities in their jurisdiction. The Region VIII office issued such a request to PPL Montana's Corette plant in 2000 and the Colstrip plant in 2003. The Region III office issued such a request to PPL Generation's Martins Creek plant in 2002. PPL and its subsidiaries have responded to the Corette and Martins Creek information requests and began responding to the Colstrip information request. The EPA has stayed further production of Colstrip documents pending discussion among the Colstrip owners and the EPA. The EPA has taken no further action following the Martins Creek and Corette submittals. PPL cannot presently predict what, if any, action the EPA might take in this regard. Should the EPA or any state or citizens group initiate one or more enforcement actions against PPL or its subsidiaries, compliance with any such enforcement actions could result in additional capital and operating expenses which are not now determinable, but could be significant.

    In 2003, the EPA issued changes to its "New Source" regulations that clarify what projects are exempt from "New Source" requirements as routine maintenance and repair. Under these clarifications, any project to replace existing equipment with functionally equivalent equipment would be considered routine maintenance and excluded from "New Source" review if the cost of the replaced equipment does not exceed 20% of the replacement cost of the entire process unit, the basic design is not changed and no permit limit is exceeded. These clarifications would substantially reduce the uncertainties under the prior "New Source" regulations; however, they have been stayed by the U.S. Court of Appeals for the District of Columbia Circuit. PPL is therefore continuing to operate under the "New Source" regulations as they existed prior to the EPA's 2003 clarifications.

    The New Jersey DEP and some New Jersey residents raised environmental concerns with respect to the Martins Creek plant, particularly with respect to sulfur dioxide emissions and the opacity of the plant's plume. These issues were raised in the context of an appeal by the New Jersey DEP of the Air Quality Plan Approval issued by the Pennsylvania DEP to the adjacent Lower Mt. Bethel facility. In October 2003, PPL finalized an agreement with the New Jersey DEP and the Pennsylvania DEP pursuant to which PPL will reduce sulfur dioxide emissions from its Martins Creek power plant. Under the agreement, PPL Martins Creek will shut down the plant's two coal-fired generating units by September 2007 and may repower them any time after shutting them down so long as it follows all applicable state and federal requirements, including installing the best available pollution control technology. Pursuant to the agreement, PPL Martins Creek began reducing the fuel sulfur content for the coal units as well as the plant's two oil-fired units in June 2004. In addition, PPL will donate to a non-profit organization 70% of the excess emission allowances and emission reduction credits that result from shutting down or repowering the coal units. As a result of the agreement, the New Jersey DEP withdrew its challenge to the Air Quality Plan Approval for the Lower Mt. Bethel facility. The agreement will not result in material costs to PPL. The agreement does not address the issues raised by the New Jersey DEP regarding the visible opacity of emissions from the oil-fired units at the Martins Creek plant. If it is determined that actions must be taken to address the visible opacity of these emissions, such actions could result in costs that are not now determinable, but could be significant.

    In addition to the opacity concerns raised by the New Jersey DEP, the Pennsylvania DEP also has raised concerns about the opacity of emissions from the Martins Creek and Montour plants. PPL is discussing these concerns with the Pennsylvania DEP. If it is determined that actions must be taken to address the Pennsylvania DEP's concerns, such actions could result in costs that are not now determinable, but could be significant.

    In December 2003, PPL Montana, as operator of the Colstrip facility, received an Administrative Compliance Order (ACO) from the EPA pursuant to the Clean Air Act. The ACO alleges that Units 3 and 4 of the facility have been in violation of the Clean Air Act permit at Colstrip since 1980. The permit required Colstrip to submit for review and approval by the EPA an analysis and proposal for reducing emissions of nitrogen oxide to address visibility concerns if and when the EPA promulgates Best Available Retrofit Technology requirements for nitrogen oxide emissions. The EPA is asserting that regulations it promulgated in 1980 triggered this requirement. PPL believes that the ACO is unfounded and is discussing the matter with the EPA. In addition, the Montana Department of Environmental Quality (DEQ) is questioning whether the permit limits for sulfur dioxide emissions from Colstrip Units 3 and 4 are too high under provisions of the Clean Air Act that limit allowable emissions from sources built after 1978. PPL is engaged in settlement negotiations on these matters with the EPA, the Montana DEQ and the Northern Cheyenne Tribe.

    Water/Waste (PPL and PPL Energy Supply)

    Seepages have been detected at one of the wastewater basins at the Montour station, and PPL Montour is working with the Pennsylvania DEP to assess the seepage and develop an abatement plan. PPL Brunner Island is assessing impacted groundwater at two closed wastewater basins to determine what abatement actions may be needed. PPL plans to comprehensively address issues related to wastewater basins at all of its Pennsylvania plants as part of the process to renew the residual waste permits for these basins which expire within the next three years. The cost of addressing seepages at PPL's Pennsylvania plants is not now determinable, but could be significant.

    PPL Montana continues to undertake certain groundwater investigation and remediation measures at its Colstrip plant to address groundwater contamination and property damage claims noted below. These measures include offering to extend city water to certain residents who live near the plant. The costs of these investigations and remedial measures are not now determinable, but could be significant.

    In May 2003, approximately 50 plaintiffs brought an action now pending at the Montana Sixteenth Judicial District Court, Rosebud County, against PPL Montana and the other owners of the Colstrip plant alleging property damage from seepage from the freshwater and wastewater ponds at Colstrip. This action could result in PPL Montana and the other Colstrip owners being liable for damages and being required to take additional remedial measures beyond those noted above. The cost to PPL Montana of any such damages and remedial measures is not now determinable, but could be significant.

    Brunner Island's NPDES permit contains a provision requiring further studies on the thermal impact of the cooling water discharge from the plant. These studies are underway and are expected to be completed in 2006. The Pennsylvania DEP has stated that it believes the studies to date show that the temperature of the discharge must be lowered. The Pennsylvania DEP has also stated that it believes the plant is in violation of a permit condition prohibiting the discharge from changing the river temperature by more than two degrees per hour. PPL is discussing these matters with the agency. Depending on the outcome of these discussions, the plant could be subject to additional capital and operating costs that are not now determinable, but could be significant.

    The EPA has significantly tightened the water quality standard for arsenic. The revised standard becomes effective in 2006. The revised standard may result in action by individual states that could require several PPL subsidiaries to either further treat wastewater or take abatement action at their power plants, or both. The cost of complying with any such requirements is not now determinable, but could be significant.

    The EPA recently finalized requirements for new or modified water intake structures. These requirements affect where generating facilities are built, establish intake design standards, and could lead to requirements for cooling towers at new and modified power plants. Another new rule that was finalized in July 2004 addresses existing structures. PPL does not believe that either of these rules will impose material costs on PPL subsidiaries. However, six northeastern states have challenged the new rules for existing structures as being inadequate. If this challenge is successful, it could result in the EPA establishing stricter standards for existing structures that could impose significant costs on PPL subsidiaries.

    Superfund and Other Remediation

    (PPL, PPL Energy Supply and PPL Electric)

    In 1995, PPL Electric and PPL Generation entered into a consent order with the Pennsylvania DEP to address a number of sites that were not being addressed under another regulatory program such as Superfund, but for which PPL Electric or PPL Generation may be liable for remediation. This may include potential PCB contamination at certain PPL Electric substations and pole sites; potential contamination at a number of coal gas manufacturing facilities formerly owned or operated by PPL Electric; oil or other contamination which may exist at some of PPL Electric's former generating facilities; and potential contamination at abandoned power plant sites owned by PPL Generation. As of December 31, 2004, work has been completed for 98% of the sites included in the consent order. Additional sites formerly owned or operated by PPL Electric are added to the consent order on a case-by-case basis.

    In 1996, PPL Gas Utilities entered into a similar consent order with the Pennsylvania DEP to address a number of sites where subsidiaries of PPL Gas Utilities may be liable for remediation. The sites primarily include former coal gas manufacturing facilities. Subsidiaries of PPL Gas Utilities are also investigating the potential for any mercury contamination from gas meters and regulators. Accordingly, PPL Gas Utilities and the Pennsylvania DEP have agreed to add 72 meter/regulation sites to the consent order. As of December 31, 2004, PPL Gas Utilities had addressed 48% of the sites under its consent order.

    Since the PPL Electric Consent Order expired on January 31, 2005, and since only four sites remained, PPL has negotiated a new consent order with Pennsylvania DEP that combines both PPL Electric's and PPL Gas Utilities' consent orders into one single agreement.

    At December 31, 2004, PPL Electric and PPL Gas Utilities had accrued approximately $3 million and $8 million, representing the estimated amounts each will have to spend for site remediation, including those sites covered by each company's consent orders mentioned above. Depending on the outcome of investigations at sites where investigations have not begun or have not been completed, the costs of remediation and other liabilities could be substantial. PPL also could face other non-remediation liabilities at sites included in the consent order or other contaminated sites, the costs of which are not now determinable, but could be significant.

    (PPL and PPL Energy Supply)

    Under the Pennsylvania Clean Streams Law, subsidiaries of PPL Generation are obligated to remediate acid mine drainage at former mine sites and may be required to take additional measures to prevent potential acid mine drainage at previously capped refuse piles. One PPL Generation subsidiary is pumping and treating mine water at two mine sites. Another PPL Generation subsidiary is installing passive wetlands treatment at a third site, and the Pennsylvania DEP has suggested that it may require that PPL Generation subsidiary to pump and treat the mine water at that third site. At December 31, 2004, a PPL Energy Supply subsidiary had accrued $28 million to cover the costs of pumping and treating groundwater at the two mine sites for 50 years and for operating and maintaining passive wetlands treatment at the third site.

    In 1999, the Montana Supreme Court held in favor of several citizens' groups that the right to a clean and healthful environment is a fundamental right guaranteed by the Montana Constitution. The court's ruling could result in significantly more stringent environmental laws and regulations, as well as an increase in citizens' suits under Montana's environmental laws. The effect on PPL Montana of any such changes in laws or regulations or any such increase in legal actions is not currently determinable, but could be significant.

    (PPL, PPL Energy Supply and PPL Electric)

    Future cleanup or remediation work at sites currently under review, or at sites not currently identified, may result in material additional operating costs for PPL subsidiaries that cannot be estimated at this time.

    Asbestos (PPL and PPL Energy Supply)

    There have been increasing litigation claims throughout the U.S. based on exposure to asbestos against companies that manufacture or distribute asbestos products or that have these products on their premises. Certain of PPL's generation subsidiaries and certain of its energy services subsidiaries, such as those that have supplied, may have supplied or installed asbestos material in connection with the repair or installation of process piping and heating, ventilating and air conditioning systems, have been named as defendants in asbestos-related lawsuits. PPL cannot predict the outcome of these lawsuits or whether additional claims may be asserted against its subsidiaries in the future. PPL does not expect that the resolution of the current lawsuits will have a material adverse effect on its results of operations.

    Electric and Magnetic Fields (PPL, PPL Energy Supply and PPL Electric)

    Concerns have been expressed by some members of the public regarding potential health effects of power frequency electric and/or magnetic fields (EMFs), which are emitted by all devices carrying electricity, including electric transmission and distribution lines and substation equipment. Government officials in the U.S. and the U.K. have reviewed this issue. The U.S. National Institute of Environmental Health Sciences concluded in 2002 that, for most health outcomes, there is no evidence of EMFs causing adverse effects. The agency further noted that there is some epidemiological evidence of an association with childhood leukemia, but that this evidence is difficult to interpret without supporting laboratory evidence. The U.K. National Radiological Protection Board concluded in 2004 that, while the research on EMFs does not provide a basis to find that EMFs cause any illness, there is a basis to consider precautionary measures beyond existing exposure guidelines. PPL and its subsidiaries believe the current efforts to determine whether EMFs cause adverse health effects should continue and are taking steps to reduce EMFs, where practical, in the design of new transmission and distribution facilities. PPL is unable to predict what effect, if any, the EMF issue might have on its operations and facilities either in the U.S. or abroad, and the associated cost, or what, if any, liabilities it might incur related to the EMF issue.

    Lower Mt. Bethel (PPL and PPL Energy Supply)

    In August 2002, the Northampton County Court of Common Pleas issued a decision setting the permissible noise levels for operation of the Lower Mt. Bethel facility. PPL appealed the court's decision to the Commonwealth Court, and an intervenor in the lawsuit cross-appealed the court's decision. In May 2003, the Commonwealth Court remanded the case to the Court of Common Pleas for further findings of fact concerning the zoning application relating to the construction of the facility. In September 2003, the Court of Common Pleas ruled in PPL's favor while also reaffirming its decision on the noise levels, and the intervenor appealed this ruling to the Commonwealth Court. In April 2004, the Commonwealth Court affirmed the decision of the Court of Common Pleas. The intervenor has pending before the Supreme Court of Pennsylvania a Petition for Allowance of Appeal.

    The certificate of occupancy for the Lower Mt. Bethel facility was issued by the local township zoning officer in April 2004, and the facility was placed in service in May 2004. In May 2004, the intervenor in the legal proceedings regarding the facility's permissible noise levels filed an appeal with the township board regarding the issuance of the certificate of occupancy. The hearing on the appeal was held in December 2004, and the intervenor's appeal was denied.

    Environmental Matters - International (PPL and PPL Energy Supply)

    U.K.

    WPD's distribution businesses are subject to numerous regulatory and statutory requirements with respect to environmental matters. PPL believes that WPD has taken and continues to take measures to comply with the applicable laws and governmental regulations for the protection of the environment. There are no material legal or administrative proceedings pending against WPD with respect to environmental matters. See "Environmental Matters - Domestic - Electric and Magnetic Fields" for a discussion of EMFs.

    Latin America

    Certain of PPL's affiliates have electric distribution operations in Latin America. PPL believes that these affiliates have taken and continue to take measures to comply with the applicable laws and governmental regulations for the protection of the environment. There are no material legal or administrative proceedings pending against PPL's affiliates in Latin America with respect to environmental matters.

    Other

    Nuclear Insurance (PPL and PPL Energy Supply)

    PPL Susquehanna is a member of certain insurance programs which provide coverage for property damage to members' nuclear generating stations. Facilities at the Susquehanna station are insured against property damage losses up to $2.75 billion under these programs. PPL Susquehanna is also a member of an insurance program which provides insurance coverage for the cost of replacement power during prolonged outages of nuclear units caused by certain specified conditions. Under the property and replacement power insurance programs, PPL Susquehanna could be assessed retroactive premiums in the event of the insurers' adverse loss experience. At December 31, 2004, this maximum assessment was about $39 million.

    PPL Susquehanna's public liability for claims resulting from a nuclear incident at the Susquehanna station is limited to about $10.8 billion under provisions of The Price Anderson Amendments Act of 1988. PPL Susquehanna is protected against this liability by a combination of commercial insurance and an industry assessment program. In the event of a nuclear incident at any of the reactors covered by The Price Anderson Amendments Act of 1988, PPL Susquehanna could be assessed up to $201 million per incident, payable at $20 million per year.

    Guarantees and Other Assurances

    (PPL, PPL Energy Supply and PPL Electric)

    In the normal course of business, PPL, PPL Energy Supply and PPL Electric enter into agreements that provide financial performance assurance to third parties on behalf of certain subsidiaries. Such agreements include, for example, guarantees, stand-by letters of credit issued by financial institutions and surety bonds issued by insurance companies. These agreements are entered into primarily to support or enhance the creditworthiness attributed to a subsidiary on a stand-alone basis or to facilitate the commercial activities in which these subsidiaries enter.

    (PPL)

    PPL fully and unconditionally guarantees all of the debt securities of PPL Capital Funding, a wholly owned financing subsidiary of PPL.

    (PPL, PPL Energy Supply and PPL Electric)

    PPL, PPL Energy Supply and PPL Electric provide certain guarantees that are required to be disclosed in accordance with FIN 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, an Interpretation of FASB Statements No. 5, 57, and 107 and Rescission of FASB Interpretation No. 34." The table below details guarantees provided as of December 31, 2004:

    		Recorded Liability at December 31,			Exposure at December 31,		Expiration
    		2004	2003		2004 (a)		Date	Description
    PPL
    Residual value guarantees of leased equipment					$	6	2005	(c)
    PPL Energy Supply (b)
    WPD LLP guarantee of obligations under SIUK Capital Trust I preferred securities						82	2027	WPD LLP guarantees all of the obligations of SIUK Capital Trust I, an unconsolidated wholly owned financing subsidiary of WPD LLP, under its trust preferred securities. The exposure at December 31, 2004, reflects principal payments only. See Note 22 for further discussion.
    Letters of credit issued on behalf of affiliates						8	2005	Standby letter of credit arrangements under PPL Energy Supply's $300 million three-year credit facility for the purposes of protecting various third parties against nonperformance by PPL and PPL Gas Utilities. This is not a guarantee of PPL on a consolidated basis.
    Support agreements to guarantee partnerships' obligations for the sale of coal						9	2007	PPL Generation has entered into certain partnership arrangements for the sale of coal to third parties. PPL Generation also has executed support agreements for the benefit of these third-party purchasers pursuant to which it guarantees the partnerships' obligations in an amount up to its pro rata ownership interest in the partnerships.
    Retroactive premiums under nuclear insurance programs						39		PPL Susquehanna is contingently obligated to pay this amount related to potential retroactive premiums that could be assessed under its nuclear insurance programs. See "Nuclear Insurance" for additional information.
    Nuclear claims under The Price Anderson Amendments Act of 1988						201		Under the Price Anderson Amendments Act of 1988, this is the maximum amount PPL Susquehanna could be assessed for each incident at any of the nuclear reactors covered by this Act. See "Nuclear Insurance" for additional information.
    Contingent purchase price payments to former owners of synfuel projects	$	11	$	4		56	2007	Certain agreements relating to the purchase of ownership interests in synfuel projects contain provisions that require certain PPL Energy Supply subsidiaries to make contingent purchase price payments to the former owners. These payments are non-recourse to PPL, PPL Energy Supply and their other subsidiaries and are based primarily upon production levels of the synfuel projects. The maximum potential amount of future payments is not explicitly stated in the related agreements.
    Residual value guarantees of leased equipment						3	2005	(c)
    WPD guarantee related to a contract assigned as part of a sale of one of its businesses						20	2005	Guarantee of a payment (£10 million) under a contract that was assigned as part of a sale of one of WPD's businesses.
    Indemnifications for entities in liquidation						293	2008 to 2012	In connection with the liquidation of wholly owned subsidiaries that have been deconsolidated upon turning the entities over to the liquidators, certain affiliates of PPL Global have agreed to indemnify the liquidators, directors and/or the entities themselves for any liabilities or expenses arising during the liquidation process, including liabilities and expenses of the entities placed into liquidation. In some cases, the indemnifications are limited to a maximum amount that is based on distributions made from the subsidiary to its parent either prior or subsequent to being placed into liquidation. In other cases, the maximum amount of the indemnifications is not explicitly stated in the agreements. The indemnifications generally expire two to seven years subsequent to the date of dissolution of the entities. The exposure noted is only for those cases in which the agreements provide for a specific limit on the amount of the indemnification, and the expiration date was based on an estimate of the dissolution date of the entities.
    WPD guarantee of an unconsolidated entity's lease obligations						2	2008	The maximum potential amount of future payments is not explicitly stated in the related agreements.
    Written put options for commodities						7	2005	PPL EnergyPlus enters into written put option contracts under which, in exchange for a premium received, it agrees to purchase a specified quantity of a commodity for a specified price if the counterparty exercises the option.
    PPL Electric (b)
    Guarantee of a portion of an unconsolidated entity's debt						7	2008	The exposure at December 31, 2004, reflects principal payments only.
    Residual value guarantees of leased equipment		1		16		81	2005	(c)

    (a)	Represents the estimated maximum potential amount of future payments that could be required to be made under the guarantee.
    (b)	Other than the letters of credit, all guarantees of PPL Energy Supply and PPL Electric also apply to PPL on a consolidated basis.
    (c)	PPL Services, PPL Montana and PPL Electric lease certain equipment under master operating lease agreements. The term for each piece of equipment leased by PPL Services and PPL Montana is one year, after which time the lease may be extended from month-to-month until terminated. The term for each piece of equipment leased by PPL Electric ranges from one to three years, after which time the lease term may be extended for certain equipment either (i) from month-to-month until terminated or (ii) for up to two additional years. Under these lease arrangements, PPL Services, PPL Montana and PPL Electric provide residual value guarantees to the lessors. PPL Services, PPL Montana and PPL Electric generally could be required to pay the guaranteed residual value of the leased equipment if the proceeds received from the sale of a piece of equipment upon termination of the lease are less than the expected residual value of the equipment. These guarantees generally expire within one year, unless the lease terms are extended. The liability recorded is included in "Other current liabilities" on the Balance Sheet. Although the expiration date noted is 2005, equipment of similar value is generally leased and guaranteed on an on-going basis.

    
    

    PPL, PPL Energy Supply and PPL Electric and their subsidiaries provide other miscellaneous guarantees through contracts entered into in the normal course of business. These guarantees are primarily in the form of various indemnifications or warranties related to services or equipment, and vary in duration. The obligated amounts of these guarantees often are not explicitly stated, and the overall maximum amount of the obligation under such guarantees cannot be reasonably estimated. Historically, PPL, PPL Energy Supply and PPL Electric and their subsidiaries have not made any significant payments with respect to these types of guarantees. As of December 31, 2004, the aggregate fair value of these indemnifications related to arrangements entered into subsequent to December 31, 2002, was insignificant. Among these guarantees are the following:

    • The companies' or their subsidiaries' leasing arrangements, including those discussed above, contain certain indemnifications in favor of the lessors (e.g., tax and environmental matters).

    • In connection with their issuances of securities, the companies and their subsidiaries engage underwriters, purchasers and purchasing agents to whom they provide indemnification for damages incurred by such parties arising from the companies' material misstatements or omissions in the related offering documents. In addition, in connection with these securities offerings and other financing transactions, the companies also engage trustees or custodial, escrow or other agents to act for the benefit of the investors or to provide other agency services. The companies and their subsidiaries typically provide indemnification to these agents for any liabilities or expenses incurred by them in performing their obligations.

    • In connection with certain of their credit arrangements, such as the asset-backed commercial paper program in which PPL Electric began participating in August 2004, the companies provide the creditors or credit arrangers with indemnification that is standard for each particular type of transaction. For instance, under the credit agreement for the asset-backed commercial paper program, PPL Electric and its special purpose subsidiary have agreed to indemnify the commercial paper conduit, the sponsoring financial institution and the liquidity banks for damages incurred by such parties arising from, among other things, a breach by PPL Electric or the subsidiary of their various representations, warranties and covenants in the credit agreement, PPL Electric's activities as servicer with respect to the pledged accounts receivable and any dispute by PPL Electric's customers with respect to payment of the accounts receivable.

    • PPL EnergyPlus is party to numerous energy trading or purchase and sale agreements pursuant to which the parties indemnify each other for any damages arising from events that occur while the indemnifying party has title to the electricity or natural gas. For example, in the case of the party that is delivering the product, such party would be responsible for damages arising from events occurring prior to delivery.

    • In connection with their sales of various businesses, WPD and its affiliates have provided the purchasers with indemnifications that are standard for such transactions, including indemnifications for certain pre-existing liabilities and environmental and tax matters. In addition, in connection with certain of these sales, WPD and its affiliates have agreed to continue their obligations under existing third-party guarantees, either for a set period of time following the transactions or upon the condition that the purchasers make reasonable efforts to terminate the guarantees. Finally, WPD and its affiliates remain secondarily responsible for lease payments under certain leases that they have assigned to third parties.

    PPL, on behalf of itself and its subsidiaries, maintains insurance that covers liability assumed under contract for bodily injury and property damage. The coverage requires a $4 million deductible per occurrence and provides maximum aggregate coverage of approximately $175 million. This insurance may be applicable to certain obligations under the contractual arrangements discussed above.

15. Related Party Transactions

    Affiliate Trusts (PPL and PPL Energy Supply)

    See Note 22 for a discussion of PPL Capital Funding Trust I and SIUK Capital Trust I, and see Note 8 for a discussion of various transactions involving PPL Capital Funding subordinated notes that were held by PPL Capital Funding Trust I. As of December 31, 2004 and 2003, $89 million and $681 million is reflected as "Long-term Debt with Affiliate Trusts" on PPL's Balance Sheet, and $89 million is reflected, as of both dates, as "Long-term Debt with Affiliate Trust" on PPL Energy Supply's Balance Sheet.

    PLR Contracts (PPL Energy Supply and PPL Electric)

    PPL Electric has power sales agreements with PPL EnergyPlus, effective January 1, 2002, to supply all of PPL Electric's PLR load through 2009. Under these contracts, PPL EnergyPlus provides electricity at the predetermined capped prices that PPL Electric is authorized to charge its PLR customers. These purchases totaled $1.5 billion in 2004 and $1.4 billion in 2003 and 2002, including nuclear decommissioning recovery and amortization of an up-front contract payment. These purchases are included in the Statement of Income as "Energy purchases from affiliate" by PPL Electric, and as "Wholesale energy marketing to affiliate" revenues by PPL Energy Supply.

    Under one of the PLR contracts, PPL Electric is required to make performance assurance deposits with PPL EnergyPlus when the market price of electricity is less than the contract price by more than its contract collateral threshold. Conversely, PPL EnergyPlus is required to make performance assurance deposits with PPL Electric when the market price of electricity is greater than the contract price by more than its contract collateral threshold. At December 31, 2004, PPL Energy Supply was required to provide PPL Electric with performance assurance of $300 million, the maximum amount required under the contract. PPL Energy Supply's deposit with PPL Electric was $300 million at December 31, 2004. This deposit is shown on the Balance Sheet as "Collateral on PLR energy supply to/from affiliate," a current asset of PPL Energy Supply and a current liability of PPL Electric. On their Statements of Cash Flows, PPL Electric treats the collateral as cash provided by operating activities, and PPL Energy Supply treats it as cash used in operating activities. PPL Electric pays interest equal to the one-month LIBOR plus 0.5% on this deposit, which is included in "Interest Expense" on the Statement of Income.

    In 2001, PPL Electric made a $90 million up-front payment to PPL EnergyPlus in connection with the PLR contracts. The up-front payment is being amortized by both parties over the term of the PLR contracts. The unamortized balance of this payment, and other payments under the contract, was $58 million at December 31, 2004 and $70 million at December 31, 2003. This balance is reported on the Balance Sheet as "Prepayment on PLR energy supply from affiliate" by PPL Electric and as "Deferred revenue on PLR energy supply to affiliate" by PPL Energy Supply.

    NUG Purchases (PPL Energy Supply and PPL Electric)

    PPL Electric has a reciprocal contract with PPL EnergyPlus to sell electricity purchased under contracts with NUGs. PPL Electric purchases electricity from the NUGs at contractual rates and then sells the electricity at the same price to PPL EnergyPlus. These purchases totaled $154 million in 2004, $152 million in 2003 and $160 million in 2002. These amounts are included in the Statement of Income as "Wholesale electric to affiliate" revenues by PPL Electric, and as "Energy purchases from affiliate" by PPL Energy Supply.

    Allocations of Corporate Service Costs (PPL Energy Supply and PPL Electric)

    PPL Services provides corporate functions such as financial, legal, human resources and information services. PPL Services bills the respective PPL subsidiaries for the cost of such services when they can be specifically identified. The cost of these services that is not directly charged to PPL subsidiaries is allocated to certain of the subsidiaries based on an average of the subsidiaries' relative invested capital, operation and maintenance expenses, and number of employees. PPL Services allocated the following charges to PPL Energy Supply and PPL Electric:

    		2004		2003		2002
    Direct expenses
    	PPL Energy Supply	$	102	$	94	$	88
    	PPL Electric		59		56		56
    Overhead costs
    	PPL Energy Supply		69		63		38
    	PPL Electric		29		27		28

    Intercompany Borrowings

    (PPL Energy Supply)

    PPL Energy Supply subsidiaries had no notes receivable from affiliates at December 31, 2004. At December 31, 2003, a PPL Energy Supply subsidiary had a $2 million note receivable from an affiliate with interest equal to the one-month LIBOR plus 3%. Interest earned on loans to affiliates, included in "Other Income - net" on the Statement of Income, was $6 million, $16 million and $22 million for 2004, 2003 and 2002.

    In May 2004, PPL Energy Supply issued a $495 million note payable to an affiliate, which is shown on the Balance Sheet as "Note Payable to Affiliate." The note matures in May 2006 with interest payable monthly in arrears at LIBOR plus 1%.

    Interest expense with affiliate, as shown on the Statement of Income, was $8 million, $1 million and $3 million for 2004, 2003 and 2002.

    (PPL Electric)

    In August 2004, a PPL Electric subsidiary made a $300 million demand loan to an affiliate, with interest due quarterly at a rate equal to the 3-month LIBOR plus 1.25%. This loan is shown on the Balance Sheet as "Note Receivable from Affiliate."

    Interest earned on loans to affiliates, included in "Other Income - net" on the Statement of Income, was $3 million for both 2004 and 2003 and $9 million for 2002.

    Trademark Royalties (PPL Energy Supply)

    In the fourth quarter of 2002, a PPL subsidiary that owns PPL trademarks began billing certain affiliates which use these trademarks. PPL Energy Supply was allocated $34 million of this license fee in 2004, $39 million in 2003 and $8 million in 2002. These allocations are primarily included in "Other Operation and Maintenance" on the Statement of Income.

    Other (PPL Energy Supply and PPL Electric)

    PPL Energy Supply owns no domestic transmission or distribution facilities, other than facilities to interconnect its generation with the electric transmission system. Therefore, PPL EnergyPlus and other PPL Generation subsidiaries must pay PJM, the operator of the transmission system, to deliver the energy these subsidiaries supply to retail and wholesale customers in PPL Electric's franchised territory in eastern and central Pennsylvania.

16. Other Income - Net

    (PPL)

    The breakdown of PPL's "Other Income - net" was as follows:

    		2004			2003		2002
    Other Income
    	Interest income - IRS settlement	$	23
    	Other interest income		16		$	12	$	28
    	Sale of CEMAR (Note 9)		23
    	Equity earnings		3					2
    	Realized earnings on nuclear decommissioning trust (a)		(7	)		20
    	Gain by WPD on the disposition of property		3			3		6
    	Hyder-related activity		3			8
    	Rental income					4
    	Reduction of reserves for receivables from Enron					10
    	Legal claim settlements					3
    	Miscellaneous - domestic		7			8		5
    	Miscellaneous - international		7			10		13
    	Total		78			78		54

    Other Deductions
    	Impairment of investment in technology supplier (Note 9)		10
    	Asset valuation write-down				3		1
    	Charitable contributions		2		2		2
    	Realized loss on available-for-sale investment		6
    	Non-operating taxes, other than income		2		1		3
    	Hyder-related activity						5
    	Miscellaneous - domestic		6		4		7
    	Miscellaneous - international		11		10		7
    Other Income - net		$	41	$	58	$	29

    (a) 2004 includes a $(10) million and a $(2) million adjustment to the realized earnings on the nuclear decommissioning trust recorded in 2003 and 2004, respectively. The adjustment was recorded in the fourth quarter of 2004, as the adjustment was not material to the financial statements for any affected periods in 2003 or 2004, or as recorded in the fourth quarter of 2004.

    (PPL Energy Supply)

    The breakdown of PPL Energy Supply's "Other Income - net" was as follows:

    		2004			2003		2002
    Other Income
    	Interest income - IRS settlement	$	15
    	Affiliated interest income		6		$	16	$	22
    	Other interest income		10			8		18
    	Sale of CEMAR (Note 9)		23
    	Reduction of reserves for receivables from Enron					10
    	Gain by WPD on the disposition of property		3			3		6
    	Legal claim settlements					3
    	Realized earnings on nuclear decommissioning trust (a)		(7	)		20
    	Rental income					4
    	Equity earnings		4			4		3
    	Hyder-related activity		3			8
    	Miscellaneous - domestic		3			6		3
    	Miscellaneous - international		7			11		13
    	Total		67			93		65
    Other Deductions
    	Loss on sale of property					2
    	Asset valuation write-down					3		1
    	Non-operating taxes, other than income		2			2		2
    	Hyder-related activity							5
    	Miscellaneous - domestic		3			3		6
    	Miscellaneous - international		11			10		7
    Other Income - net		$	51		$	73	$	44

    (a) 2004 includes a $(10) million and a $(2) million adjustment to the realized earnings on the nuclear decommissioning trust recorded in 2003 and 2004, respectively. The adjustment was recorded in the fourth quarter of 2004, as the adjustment was not material to the financial statements for any affected periods in 2003 or 2004, or as recorded in the fourth quarter of 2004.

    (PPL Electric)

    The breakdown of PPL Electric's "Other Income - net" was as follows:

    		2004		2003		2002
    Other Income
    	Affiliated interest income	$	3	$	3	$	9
    	Interest income - IRS settlement		8
    	Other interest income		5		4		8
    	Miscellaneous						1
    	Total		16		7		18
    Other Deductions
    	Miscellaneous		1		1		2
    Other Income - net		$	15	$	6	$	16

    
    
17. Derivative Instruments and Hedging Activities

    (PPL and PPL Energy Supply)

    PPL and PPL Energy Supply adopted SFAS 133, "Accounting for Derivative Instruments and Hedging Activities," on January 1, 2001. In April 2003, the FASB issued SFAS 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities," which amended and clarified SFAS 133 to improve financial accounting and reporting for derivative instruments and hedging activities. To ensure that contracts with comparable characteristics are accounted for similarly, SFAS 149 clarified the circumstances under which a contract with an initial net investment meets the characteristics of a derivative, clarified when a derivative contains a financing component, amended the definition of an "underlying" and amended certain other existing pronouncements. Additionally, SFAS 149 placed additional limitations on the use of the normal purchase or normal sale exception. SFAS 149 was effective for contracts entered into or modified and for hedging relationships designated after June 30, 2003, except certain provisions relating to forward purchases or sales of when-issued securities or other securities that did not yet exist. PPL adopted SFAS 149 as of July 1, 2003. The adoption of SFAS 149 did not have a significant impact on PPL or PPL Energy Supply.

    Management of Market Risk Exposures

    Market risk is the potential loss PPL and PPL Energy Supply may incur as a result of price changes associated with a particular financial or commodity instrument. PPL and PPL Energy Supply are exposed to market risk from:

    • commodity price risk for energy and energy-related products associated with the sale of electricity from its generating assets and other electricity marketing activities, the purchase of fuel for the generating assets and energy trading activities;

    • interest rate risk associated with variable-rate debt and the fair value of fixed-rate debt used to finance operations, as well as the fair value of debt securities invested in by PPL Energy Supply's nuclear decommissioning fund;

    • foreign currency exchange rate risk associated with investments in affiliates in Latin America and Europe, as well as purchases of equipment in currencies other than U.S. dollars; and

    • equity securities price risk associated with the fair value of equity securities invested in by PPL Energy Supply's nuclear decommissioning fund.

    PPL has a risk management policy approved by the Board of Directors to manage market risk and counterparty credit risk. The RMC, comprised of senior management and chaired by the Vice President-Risk Management, oversees the risk management function. Key risk control activities designed to ensure compliance with risk policies and detailed programs include, but are not limited to, credit review and approval, validation of transactions and market prices, verification of risk and transaction limits, sensitivity analyses, and daily portfolio reporting, including open positions, mark-to-market valuations, and other risk measurement metrics.

    PPL and PPL Energy Supply utilize forward contracts, futures contracts, options, swaps and tolling agreements as part of its risk management strategy to minimize unanticipated fluctuations in earnings caused by commodity price, interest rate and foreign currency volatility. All derivatives are recognized on the balance sheet at their fair value, unless they meet SFAS 133 criteria for exclusion (see discussion in "Accounting Designations" below).

    Fair Value Hedges

    PPL and PPL Energy Supply enter into financial or physical contracts to hedge a portion of the fair value of firm commitments of forward electricity sales. These contracts range in maturity through 2006. Additionally, PPL and PPL Energy Supply enter into financial contracts to hedge fluctuations in market value of existing debt issuances. These contracts range in maturity through 2029.

    PPL and PPL Energy Supply did not recognize significant gains or losses resulting from hedges of firm commitments that no longer qualified as fair value hedges for 2004, 2003 or 2002.

    PPL and PPL Energy Supply also did not recognize any gains or losses resulting from the ineffective portion of fair value hedges for these years.

    Cash Flow Hedges

    PPL and PPL Energy Supply enter into financial and physical contracts, including forwards, futures and swaps, to hedge the price risk associated with electric, gas and oil commodities. These contracts range in maturity through 2010. Additionally, PPL and PPL Energy Supply enter into financial interest rate swap contracts to hedge interest expense associated with both existing and anticipated debt issuances. These swaps range in maturity through 2015 for PPL. PPL Energy Supply was not a party to any financial interest rate swap contracts as of December 31, 2004. PPL and PPL Energy Supply also enter into foreign currency forward contracts to hedge the cash flows associated with foreign currency-denominated debt, the exchange rates associated with firm commitments denominated in foreign currencies and the net investment of foreign operations. These forward contracts range in maturity through 2028.

    Cash flow hedges may be discontinued if it is probable that the original forecasted transaction will not occur by the end of the originally specified time period. Due to the extinguishment of a consolidated trust's debt related to the Sundance and University Park generating facilities in June 2004, interest rate swaps that hedged the interest payments on the debt were terminated. Therefore, PPL and PPL Energy Supply reclassified a $3 million pre-tax loss ($2 million after-tax) from other comprehensive income to "Interest Expense" on the Statement of Income for the twelve months ended December 31, 2004. Additionally, PPL and PPL Energy Supply discontinued certain cash flow hedges for the years ended December 31, 2003 and 2002, which resulted in the reclassification of the following net gains or losses, after tax, from other comprehensive income (reported in "Wholesale energy marketing" revenues, "Energy purchases" and "Interest Expense" on the Statement of Income):

    	2004			2003			2002
    PPL	$	(2	)	$	(7	)	$	(9	)
    PPL Energy Supply		(2	)		(7	)

    Due to hedge ineffectiveness, PPL and PPL Energy Supply reclassified net gains and losses, after tax, that were not significant, from other comprehensive income (reported in "Wholesale energy marketing" revenues and "Energy purchases" on the Statement of Income) for the years ended December 31, 2004 and 2003. PPL and PPL Energy Supply reclassified a $2 million net loss, after tax, due to hedge ineffectiveness from other comprehensive income to income for the year ended December 31, 2002.

    Ineffectiveness associated with interest rate and foreign currency derivatives was not significant for 2004, 2003 and 2002.

    As of December 31, 2004, the deferred net loss, after tax, on derivative instruments in "Accumulated other comprehensive income" expected to be reclassified into earnings during the next twelve months was $42 million and $37 million for PPL and PPL Energy Supply.

    The following table shows the change in accumulated unrealized gains or losses on derivatives, after tax, in accumulated other comprehensive income for the following periods:

    		2004			2003
    PPL
    	Beginning accumulated derivative gain	$	36		$	7
    	Net change associated with current period hedging activities and other		(211	)		(42	)
    	Net change associated with net investment hedges		1			(6	)
    	Net change from reclassification into earnings		105			77
    	Ending accumulated derivative gain (loss)	$	(69	)	$	36

    PPL Energy Supply
    	Beginning accumulated derivative gain	$	56		$	23
    	Net change associated with current period hedging activities and other		(206	)		(44	)
    	Net change associated with net investment hedges		1			(6	)
    	Net change from reclassification into earnings		98			83
    	Ending accumulated derivative gain (loss)	$	(51	)	$	56

    Accounting Designations

    For energy contracts that meet the definition of a derivative, the circumstances and intent existing at the time that energy transactions are entered into determine their accounting designation, which is subsequently verified by an independent internal group on a daily basis. The following summarizes the electricity guidelines that have been provided to the marketers who are responsible for contract designation for derivative energy contracts in accordance with SFAS 149:

    • Any wholesale and retail contracts to sell electricity and the related capacity that are expected to be delivered from PPL's generation or that do not meet the definition of a derivative are considered "normal." These transactions are not recorded in the financial statements and have no earnings impact until delivery.

    • Physical electricity-only transactions can receive cash flow hedge treatment if all of the qualifications under SFAS 133 are met.

    • Any physical energy sale or purchase deemed to be a "market call" are considered speculative, with unrealized gains or losses recorded immediately through earnings.

    • Financial transactions, which can be settled in cash, cannot be considered "normal" because they do not require physical delivery. These transactions receive cash flow hedge treatment if they lock in the price PPL will receive or pay for energy expected to be generated or purchased in the spot market.

    • Physical and financial transactions for gas and oil to meet fuel and retail requirements can receive cash flow hedge treatment if they lock-in the price PPL will pay in the spot market.

    • Option contracts that do not meet the requirements of DIG Issue C15, "Scope Exceptions: Interpreting the Normal Purchases and Normal Sales Exception as an Election," do not receive hedge accounting treatment and are marked to market through earnings.

    Any unrealized gains or losses on transactions receiving cash flow hedge treatment are recorded in other comprehensive income. These unrealized gains and losses become realized when the contracts settle and are recognized in income when the hedged transactions occur.

    In addition to energy-related transactions, PPL enters into financial interest rate and foreign currency swap contracts to hedge interest expense associated with both existing and anticipated debt issuances. PPL and PPL Energy Supply also enter into foreign currency swap contracts to hedge the fair value of firm commitments denominated in foreign currency and net investments in foreign operations. As with energy transactions, the circumstances and intent existing at the time of the transaction determine a contract's accounting designation, which is subsequently verified by an independent internal group on a daily basis. The following is a summary of certain guidelines that have been provided to PPL's treasury department, which is responsible for contract designation:

    • Transactions to lock-in an interest rate prior to a debt issuance are considered cash flow hedges. Any unrealized gains or losses on transactions receiving cash flow hedge treatment are recorded in other comprehensive income and are amortized as a component of interest expense over the life of the debt.

    • Transactions entered into to hedge fluctuations in the value of existing debt are considered fair value hedges. To the extent that the change in the fair value of the derivative offsets the change in the fair value of the existing debt, there is no earnings impact, as both changes are reflected in interest expense. Realized gains and losses over the life of the hedge are reflected in interest expense.

    • Transactions entered into to hedge the value of a net investment of foreign operations are considered net investment hedges. To the extent that the derivatives are highly effective at hedging the value of the net investment, gains and losses are recorded in other comprehensive income/loss and will not be recorded in earnings until the investment is disposed of.

    • Derivative transactions which do not qualify for hedge accounting treatment are marked to market through earnings.

    Related Implementation Issues

    In June 2001, the FASB issued definitive guidance on DIG Issue C15, "Scope Exceptions: Normal Purchases and Normal Sales Exception for Certain Option-Type Contracts and Forward Contracts in Electricity." DIG Issue C15 provides additional guidance on the classification and application of derivative accounting rules relating to purchases and sales of electricity utilizing forward and option contracts. This guidance became effective as of July 1, 2001. In December 2001, the FASB revised the guidance in DIG Issue C15, principally related to the eligibility of options for the normal purchases and normal sales exception. The revised guidance was effective April 1, 2002. In November 2003, the FASB again revised the guidance in DIG Issue C15 to clarify the application of derivative accounting rules for contracts that may involve capacity. The guidance was effective January 1, 2004, for PPL and did not have a significant impact on its financial statements.

    In June 2003, the FASB issued DIG Issue C20, "Scope Exceptions: Interpretation of the Meaning of Not Clearly and Closely Related in Paragraph 10(b) Regarding Contracts with a Price Adjustment Feature," which became effective October 1, 2003. DIG Issue C20 addresses a requirement in SFAS 133 that contracts that qualify for normal treatment must feature pricing that is clearly and closely related to the asset being sold. Diversity in practice had developed among companies. DIG Issue C20 permits normal treatment if a price adjustment factor, such as a broad market index (e.g., Consumer Price Index), is not extraneous to both the cost and the fair value of the asset being sold and is not significantly disproportionate in terms of the magnitude and direction when compared with the asset being sold. However, DIG Issue C20 also stated that prior guidance did not permit the use of a broad market index to serve as a proxy for an ingredient or direct factor. Thus, DIG Issue C20 required that contracts that had been accounted for as normal, but were not eligible for normal treatment under prior guidance, be reflected on the balance sheet at their fair value, with an offsetting amount reflected in income as of the date of adoption. These contracts could then be evaluated under the provisions of DIG Issue C20 to determine whether they could qualify for normal treatment prospectively. PPL and PPL Energy Supply recorded a pre-tax charge to income of $2 million in the fourth quarter of 2003 to comply with the provisions of DIG Issue C20.

    PPL and PPL Energy Supply adopted the final provisions of EITF 02-3, "Issues Involved in Accounting for Derivative Contracts Held for Trading Purposes and Contracts Involved in Energy Trading and Risk Management Activities," during the fourth quarter of 2002. As such, PPL and PPL Energy Supply reflect their net realized and unrealized gains and losses associated with all derivatives that are held for trading purposes in the "Net energy trading margins" line on the Statement of Income. Non-derivative contracts that met the definition of energy trading activities as defined by EITF 98-10, "Accounting for Energy Trading and Risk Management Activities" are reflected in the financial statements using the accrual method of accounting. Under the accrual method of accounting, unrealized gains and losses are not reflected in the financial statements. Prior periods were reclassified. No cumulative effect adjustment was required upon adoption.

    PPL and PPL Energy Supply adopted the final provisions of EITF 03-11, "Reporting Realized Gains and Losses on Derivative Instruments That Are Subject to FASB Statement No. 133 and Not 'Held for Trading Purposes' as Defined in Issue No. 02-3," prospectively as of October 1, 2003. As a result of this adoption, non-trading bilateral sales of electricity at major market delivery points are netted with purchases that offset the sales at those same delivery points. A major market delivery point is any delivery point with liquid pricing available. The impact of adopting EITF 03-11 was a reduction in both "Wholesale energy marketing" revenues and "Energy purchases" by $277 million in PPL's and PPL Energy Supply's Statements of Income for the year ended December 31, 2004, and a reduction of $105 million for the year ended December 31, 2003.

    Credit Concentration

    (PPL and PPL Energy Supply)

    PPL and PPL Energy Supply enter into contracts with many entities for the purchase and sale of energy. Many of these contracts are considered a normal part of doing business and, as such, the mark-to-market value of these contracts is not reflected in the financial statements. However, the mark-to-market value of these contracts is considered when committing to new business from a credit perspective.

    PPL and PPL Energy Supply have credit exposures to energy trading partners. The majority of these exposures are the mark-to-market value of multi-year contracts for energy sales and purchases. Therefore, if these counterparties fail to perform their obligations under such contracts, PPL and PPL Energy Supply would not experience an immediate financial loss, but would experience lower revenues or higher costs in future years to the extent that replacement sales or purchases could not be made at the same prices as those under the defaulted contracts.

    At December 31, 2004, PPL had a credit exposure of $296 million to energy trading partners. Ten counterparties accounted for 69% of this exposure. No other individual counterparty accounted for more than 3% of the exposure. Eight of the ten counterparties had an investment grade credit rating from Standard & Poor's Ratings Services (S&P). Two non-investment grade counterparties have remained current on obligations under their respective contracts.

    At December 31, 2004, PPL Energy Supply had a credit exposure of $291 million to energy trading partners. Ten counterparties accounted for 70% of this exposure. No other individual counterparty accounted for more than 3% of the exposure. Eight of the ten counterparties had an investment grade credit rating from S&P. Two non-investment grade counterparties have remained current on obligations under their respective contracts.

    PPL and PPL Energy Supply have the right to request collateral from each of these counterparties, except for one government agency, in the event their credit ratings fall below investment grade. It is also the policy of PPL and PPL Energy Supply to enter into netting agreements with all of their counterparties to minimize credit exposure.

    (PPL Energy Supply and PPL Electric)

    In past years, PPL Energy Supply has had an exposure to PPL Electric under the long-term contract to provide PPL Electric's PLR load. However, increases in electricity prices during 2004 have reversed this position. PPL Electric estimates that, at December 31, 2004, the market price of electricity would exceed the contract price by approximately $1.5 billion. In accordance with the terms of one of the PLR contracts, PPL Energy Supply provided PPL Electric with cash collateral in the amount of $300 million, the maximum amount required under the contract. This is the only credit exposure for PPL Electric that has a mark-to-market element. No other counterparty accounts for more than 1% of PPL Electric's total exposure.

    Enron Bankruptcy

    (PPL and PPL Energy Supply)

    In connection with the December 2001 bankruptcy filings by Enron Corporation and its affiliates (collectively, Enron), two PPL subsidiaries terminated certain electricity, gas and other trading agreements with Enron. In October 2002, the PPL subsidiaries filed proofs of claim in Enron's bankruptcy proceedings in the aggregate of approximately $50 million, which reflected the fair value of the forward contracts at the time of termination, as well as any net unpaid receivables from completed transactions. These claims were against Enron North America and Enron Power Marketing (the Enron Subsidiaries), and against Enron Corporation, which had guaranteed the Enron Subsidiaries' performance (the Enron Corporation Guarantees). PPL established a reserve for uncollectible accounts for the total amount of the claim.

    During 2003, PPL and Enron engaged in discussions regarding the amount of claims that would be allowed against the Enron Subsidiaries. Although no formal agreement on such amounts was reached, PPL believed that its claims against the Enron Subsidiaries would eventually be allowed in the bankruptcy at approximately $46 million. Accordingly, PPL reduced its receivables from Enron, and the associated reserve for uncollectible accounts, by $4 million. PPL also determined that it is probable that its subsidiaries will recover approximately $10 million of these receivables from the Enron Subsidiaries, and may collect additional amounts under the Enron Corporation Guarantees. Therefore, PPL determined that it was appropriate to reduce its reserve by an additional $10 million.

    In September 2004, the PPL subsidiaries entered into an agreement with the Enron Subsidiaries pursuant to which the parties agreed that the PPL claims would be allowed in the bankruptcy at approximately $46 million. In January 2005, the bankruptcy court in the Enron case approved this agreement.

    Enron Corporation has filed suits against the PPL subsidiaries asserting that the Enron Corporation Guarantees should be voided as fraudulent transfers. If Enron Corporation were successful in these suits, the claims against Enron Corporation under the Enron Corporation Guarantees would not be allowed in the bankruptcy proceeding.

18. Restricted Cash

    (PPL, PPL Energy Supply and PPL Electric)

    The following table details the components of restricted cash by reporting entity and by type:

    			December 31, 2004
    			PPL		PPL Energy Supply		PPL Electric
    Current:
    Collateral for letters of credit (a)			$	42			$	42
    Miscellaneous				8	$	3
    	Restricted cash - current			50		3		42
    Noncurrent:
    Insurance subsidiary required reserves (b)				37		37
    PPL Transition Bond Company Indenture reserves (c)				22				22
    	Restricted cash - noncurrent			59		37		22
    		Total restricted cash	$	109	$	40	$	64

    			December 31, 2003
    			PPL		PPL Energy Supply		PPL Electric
    Current:
    Miscellaneous			$	10	$	3
    	Restricted cash - current			10		3
    Noncurrent:
    Insurance subsidiary required reserves (b)				19		19
    PPL Transition Bond Company Indenture reserves (c)				29			$	29
    	Restricted cash - noncurrent			48		19		29
    		Total restricted cash	$	58	$	22	$	29

    (a)	A deposit with a financial institution of funds from the asset-backed commercial paper program to fully collateralize $42 million of letters of credit. See Note 8 for further discussion on the asset-backed commercial paper program.
    (b)	Funds that WPD's insurance subsidiary is required to keep on deposit.
    (c)	Credit enhancement for PPL Transition Bond Company's $2.4 billion Series 1999-1 Bonds to protect against losses or delays in scheduled payments.

    
    
19. Goodwill and Other Intangible Assets

    Acquired Intangible Assets

    (PPL)

    The carrying amount and the accumulated amortization of acquired intangible assets were as follows:

    	December 31, 2004				December 31, 2003
    	Carrying Amount		Accumulated Amortization		Carrying Amount		Accumulated Amortization
    Land and transmission rights	$	275	$	98	$	269	$	94
    Emission allowances		78				49
    Licenses and other		71		11		51		4
    	$	424	$	109	$	369	$	98

    Current intangible assets are included in "Current Assets - Other," and long-term intangible assets are included in "Other intangibles" on the Balance Sheet.

    Amortization expense for 2004, 2003 and 2002 was approximately $6 million each year. Amortization expense is estimated at $7 million per year for 2005 through 2009.

    (PPL Energy Supply)

    The carrying amount and the accumulated amortization of acquired intangible assets were as follows:

    	December 31, 2004				December 31, 2003
    	Carrying Amount		Accumulated Amortization		Carrying Amount		Accumulated Amortization
    Land and transmission rights	$	61	$	16	$	58	$	15
    Emission allowances		78				49
    Licenses and other		70		11		50		4
    	$	209	$	27	$	157	$	19

    Current intangible assets are included in "Current Assets - Other," and long-term intangible assets are included in "Other intangibles" on the Balance Sheet.

    Amortization expense was approximately $3 million for 2004 and $2 million for 2003 and 2002. Amortization expense is estimated at $4 million per year for 2005 through 2009.

    (PPL Electric)

    The carrying amount and the accumulated amortization of acquired intangible assets were as follows:

    	December 31, 2004				December 31, 2003
    	Carrying Amount		Accumulated Amortization		Carrying Amount		Accumulated Amortization
    Land and transmission rights	$	196	$	79	$	193	$	77

    Intangible assets are shown as "Intangibles" on the Balance Sheet.

    Amortization expense was approximately $3 million for 2004 and $2 million for 2003 and 2002. Amortization expense is estimated at $3 million per year for 2005 through 2009.

    Goodwill (PPL and PPL Energy Supply)

    The changes in the carrying amounts of goodwill by segment were as follows:

    	PPL Energy Supply											PPL
    	Supply		International				Total			Delivery(a)		Total
    Balance as of December 31, 2002	$	85	$	334			$	419		$	55	$	474
    Effect of foreign currency exchange rates				92				92					92
    Purchase accounting adjustments (b)		8		500				508					508
    Discontinued operations				(6	)	(c)		(6	)				(6	)
    Balance as of December 31, 2003		93		920				1,013			55		1,068
    Effect of foreign currency exchange rates				93				93					93
    Purchase accounting adjustments		1		(35	)	(d)		(34	)				(34	)
    Balance as of December 31, 2004	$	94	$	978			$	1,072		$	55	$	1,127

    (a)	The Delivery segment is not part of PPL Energy Supply.
    (b)	See Note 9 for additional information on international goodwill adjustments.
    (c)	In December 2003, the PPL Global Board of Managers authorized the sale of its investment in a Latin American telecommunications company. As a result of this decision, PPL Global wrote off $6 million of goodwill. See Note 9 for additional information.
    (d)	Consists primarily of adjustments pursuant to EITF Issue 97-3, "Uncertainties Related to Income Taxes in a Purchase Business Combination."

    In accordance with SFAS 142, "Goodwill and Other Intangible Assets," which PPL and its subsidiaries adopted on January 1, 2002, the reporting units of the Supply, Delivery and International segments completed the transition impairment test in the first quarter of 2002. A transition goodwill impairment loss of $150 million was recognized in the Latin American reporting unit within the International segment, and is reported in "Cumulative Effects of Changes in Accounting Principles" on the Statement of Income. The fair value of the reporting unit was estimated using the expected present value of future cash flows.

20. Workforce Reduction

    (PPL, PPL Energy Supply and PPL Electric)

    In an effort to improve operational efficiency and reduce costs, PPL and its subsidiaries commenced a workforce reduction assessment in June 2002. The program was broad-based and impacted all employee groups, except certain positions that are key to providing high-quality service to PPL's electricity delivery customers.

    PPL recorded charges of $9 million and $75 million in 2003 and 2002. PPL Energy Supply recorded charges of $41 million in 2002. PPL Electric recorded charges of $9 million and $33 million in 2003 and 2002. These charges included employee terminations associated with implementation of the Automated Meter Reading project. There was no impact to earnings in 2004.

    As of December 31, 2004, 587 employees of PPL subsidiaries were terminated and four have committed to retire in early 2005, completing the workforce reduction plan. The program provided primarily for enhanced early retirement benefits and/or one-time special pension separation allowances based on an employee's age and years of service. These features of the program are paid from the PPL Retirement Plan pension trust and increased PPL's pension liabilities in 2002 and 2003 when recorded. Substantially all of the accrued non-pension benefits have been paid.

21. Asset Retirement Obligations

    (PPL and PPL Energy Supply)

    PPL and PPL Energy Supply adopted SFAS 143, "Accounting for Asset Retirement Obligations," effective January 1, 2003. In connection with the adoption of SFAS 143, PPL and PPL Energy Supply recorded a cumulative effect of adoption that increased net income by $63 million (net of tax of $44 million), or $0.36 per share.

    PPL and PPL Energy Supply identified various legal obligations to retire long-lived assets, the largest of which relates to the decommissioning of the Susquehanna station. PPL and PPL Energy Supply identified and recorded other asset retirement obligations related to significant interim retirements at the Susquehanna station, and various environmental requirements for coal piles, ash basins and other waste basin retirements.

    PPL and PPL Energy Supply also identified legal retirement obligations that were not measurable at this time. These items included the retirement of certain transmission assets and a reservoir. These retirement obligations were not measurable due to indeterminable dates of retirement.

    Amounts collected from PPL Electric's customers for decommissioning, less applicable taxes, are deposited in external trust funds for investment and can only be used for future decommissioning costs. The fair value of the nuclear decommissioning trust fund was $409 million and $357 million as of December 31, 2004 and 2003.

    The changes in the carrying amounts of asset retirement obligations were as follows:

    Asset retirement obligation at January 1, 2003	$	229
    Add: Accretion expense		18
    Less: Settlement		5
    Asset retirement obligation at December 31, 2003		242
    Add: Accretion expense		19
    Less: Settlement		4
    Asset retirement obligation at December 31, 2004	$	257

    (PPL Electric)

    PPL Electric adopted SFAS 143 effective January 1, 2003, and did not record any asset retirement obligations upon adoption. PPL Electric identified legal retirement obligations for the retirement of certain transmission assets that were not measurable at this time due to indeterminable dates of retirement.

22. Variable Interest Entities

    (PPL, PPL Energy Supply and PPL Electric)

    In January 2003, the FASB issued Interpretation No. 46, "Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51." FIN 46 clarified that variable interest entities, as defined therein, that do not disperse risks among the parties involved should be consolidated by the entity that is determined to be the primary beneficiary. In December 2003, the FASB revised FIN 46 by issuing Interpretation No. 46 (revised December 2003), "Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51," which is known as FIN 46(R) and replaces FIN 46. FIN 46(R) does not change the general consolidation concepts of FIN 46. Among other things, FIN 46(R) clarifies certain provisions of FIN 46 and provides additional scope exceptions for certain types of businesses. FIN 46 applied immediately to variable interest entities created after January 31, 2003, and to variable interest entities in which an enterprise obtained an interest after January 31, 2003. FIN 46(R) provides that a public entity that is not a small business issuer (i) should apply FIN 46 or FIN 46(R) to entities that are considered to be SPEs no later than the end of the first reporting period that ends after December 15, 2003 and (ii) should apply the provisions of FIN 46(R) to all entities no later than the end of the first reporting period that ends after March 15, 2004.

    As permitted by FIN 46(R), PPL and its subsidiaries adopted FIN 46 effective December 31, 2003, for entities created before February 1, 2003, that are considered to be SPEs. This adoption resulted in the consolidation of the lessors under the operating leases for the Sundance, University Park and Lower Mt. Bethel generation facilities, as well as the deconsolidation of two wholly owned trusts. See below for further discussion. Also, as permitted by FIN 46(R), PPL and its subsidiaries deferred the application of FIN 46 for other entities and adopted FIN 46(R) for all entities on March 31, 2004. The adoption of FIN 46(R) did not have a material impact on the results of PPL and its subsidiaries.

    (PPL and PPL Energy Supply)

    Additional Entities Consolidated

    In May 2001, a subsidiary of PPL Energy Supply entered into a lease arrangement, as lessee, for the development, construction and operation of commercial power generation facilities. The lessor was created for the sole purpose of owning the facilities and incurring the related financing costs. The $660 million operating lease arrangement covered the 450 MW gas-fired Sundance project near Coolidge, Arizona and the 540 MW gas-fired University Park project near University Park, Illinois. These facilities were substantially complete in July 2002, at which time the initial lease term commenced. In June 2004, PPL Energy Supply subsidiaries purchased the Sundance and University Park generation assets from the lessor. See Note 8 for further discussion of the purchase.

    In December 2001, another subsidiary of PPL Energy Supply entered into a $455 million operating lease arrangement, as lessee, for the development, construction and operation of a 582 MW gas-fired combined-cycle generation facility located in Lower Mt. Bethel Township, Northampton County, Pennsylvania. The lessor was created for the sole purpose of owning the facilities and incurring the related financing costs. The initial lease term commenced on the date of commercial operation, which occurred in May 2004, and ends in December 2013. The lease financing, which is included in "Long-term Debt," is secured by, among other things, the generation facility. As of December 31, 2004, the facility had a carrying value of $470 million, net of accumulated depreciation and amortization of $10 million, and was included in "Property, Plant and Equipment - net" and "Other intangibles" on the Balance Sheet. As of December 31, 2003, the facility had a carrying value of $442 million, which was included in "Construction work in progress" and "Other intangibles" on the Balance Sheet.

    PPL Energy Supply was required to consolidate the financial statements of the lessors under the operating leases for the Sundance, University Park and Lower Mt. Bethel generation facilities effective December 31, 2003, since it was the primary beneficiary of these entities. Upon initial consolidation, PPL Energy Supply recognized a charge of $27 million (net of a tax benefit of $18 million) as a cumulative effect of a change in accounting principle.

    Entities Deconsolidated

    Effective December 31, 2003, PPL deconsolidated PPL Capital Funding Trust I, and PPL Energy Supply deconsolidated SIUK Capital Trust I. These trusts were deconsolidated because PPL and PPL Energy Supply were not the primary beneficiaries of the trusts under interpretations of FIN 46. The deconsolidation of the trusts did not impact the earnings of PPL and PPL Energy Supply. See below for a discussion of PPL's and PPL Energy Supply's interest in the trusts. See Note 15 for a discussion of the presentation of the related party debt.

    (PPL)

    In May 2001, PPL and PPL Capital Funding Trust I, a wholly owned financing subsidiary of PPL, issued $575 million of 7.75% PEPS Units. Each PEPS Unit consisted of (i) a contract to purchase shares of PPL common stock on or prior to May 2004 and (ii) a trust preferred security of PPL Capital Funding Trust I with a maturity date of May 2006. The trust's sole source of funds for distributions were from payments of interest on 7.29% subordinated notes of PPL Capital Funding, due May 18, 2006, that were issued to the trust. PPL guaranteed the payment of principal and interest on the subordinated notes issued to the trust by PPL Capital Funding. PPL also fully and unconditionally guaranteed all of the trust's obligations under the trust preferred securities. All of the preferred securities of PPL Capital Funding Trust I were cancelled in 2004, and the trust was terminated in June 2004. See Note 8 for a discussion of the cancellation of the trust preferred securities.

    (PPL and PPL Energy Supply)

    SIUK Capital Trust I issued $82 million of 8.23% preferred securities maturing in February 2027 and invested the proceeds in 8.23% subordinated debentures maturing in February 2027 issued by SIUK Limited. Thus, the preferred securities are supported by a corresponding amount of subordinated debentures. SIUK Limited owned all of the common securities of SIUK Capital Trust I and guaranteed all of SIUK Capital Trust I's obligations under the preferred securities. In January 2003, SIUK Limited transferred its assets and liabilities, including the common securities of SIUK Capital Trust I and the obligations under the subordinated debentures, to WPD LLP. Therefore, WPD LLP currently guarantees all of SIUK Capital Trust I's obligations under the preferred securities. SIUK Capital Trust I may, at the discretion of WPD LLP, redeem the preferred securities, in whole or in part, at 104.115% of par beginning February 2007 and thereafter at an annually declining premium over par through January 2017, after which time they are redeemable at par.

23. New Accounting Standards

    SFAS 123(R) (PPL, PPL Energy Supply and PPL Electric)

    In December 2004, the FASB issued SFAS 123 (revised 2004), "Share-Based Payment," which is known as SFAS 123(R) and replaces SFAS 123, "Accounting for Stock-Based Compensation," as amended by SFAS 148, "Accounting for Stock-Based Compensation-Transition and Disclosure." Among other things, SFAS 123(R) eliminates the alternative to use the intrinsic value method of accounting for stock-based compensation. SFAS 123(R) requires public entities to recognize compensation expense for awards of equity instruments to employees based on the grant-date fair value of the awards. SFAS 123(R) is effective for public entities that do not file as small business issuers as of the beginning of the first interim or annual period that begins after June 15, 2005.

    SFAS 123(R) requires public entities to apply the modified prospective application transition method of adoption. Under this application, entities must recognize compensation expense based on the grant-date fair value for new awards granted or modified after the effective date and for unvested awards outstanding on the effective date. Additionally, public entities may choose to apply modified retrospective application to periods before the effective date of SFAS 123(R). This application may be applied either to all prior years for which SFAS 123 was effective or only to prior interim periods in the year of initial adoption of SFAS 123(R). Under modified retrospective application, prior periods would be adjusted to recognize compensation expense as though stock-based awards granted, modified or settled in cash in fiscal years beginning after December 15, 1994, had been accounted for under SFAS 123.

    PPL and its subsidiaries must adopt SFAS 123(R) no later than July 1, 2005. PPL and its subsidiaries do not plan to apply modified retrospective application to any periods prior to the date of adoption. In addition, PPL and its subsidiaries adopted the fair-value method of accounting for stock-based compensation under SFAS 123 effective January 1, 2003. Therefore, the adoption of SFAS 123(R) is not expected to have a material impact on PPL and its subsidiaries. See Note 1 for a discussion of the change in accounting for stock-based compensation as of January 1, 2003.

    FIN 46(R) (PPL, PPL Energy Supply and PPL Electric)

    See Note 22 for a discussion of FIN 46(R) "Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51," and the impact of its adoption.

    EITF Issue 03-1

    (PPL, PPL Energy Supply and PPL Electric)

    In March 2004, the FASB ratified certain consensuses in EITF Issue 03-1, "The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments." EITF Issue 03-1 provides guidance for determining when an investment in certain debt and equity securities is considered impaired, whether that impairment is other than temporary and the measurement of an impairment loss. EITF Issue 03-1 also contains disclosure requirements related to information about impairments that have not been recognized as other than temporary as well as disclosure requirements for investments accounted for under the cost method. The recognition and measurement provisions of EITF Issue 03-1 were originally required to be applied to other-than-temporary impairment evaluations as of the balance sheet date in reporting periods beginning after June 15, 2004. However, in September 2004 the FASB issued FSP EITF Issue 03-1-1, "Effective Date of Paragraphs 10-20 of EITF Issue No. 03-1, 'The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments'," which temporarily delayed the effective date for applying the recognition and measurement provisions. The disclosure provisions related to cost method investments are effective for annual financial statements for fiscal years ending after June 15, 2004, while all other disclosure provisions were effective for annual financial statements for fiscal years ending after December 15, 2003.

    The EITF is currently considering issuing additional guidance on assessing other-than-temporary impairments under EITF Issue 03-1. The potential impact of adopting the recognition and measurement provisions of EITF Issue 03-1 is not yet determinable, but could be material.

    (PPL and PPL Energy Supply)

    As of December 31, 2004, PPL Energy Supply's nuclear decommissioning trust fund contained investments with an aggregate unrealized loss position of approximately $3 million, of which $1 million was attributable to investments with an aggregate fair value of approximately $56 million that have been in a continuous unrealized loss position for less than 12 months and $2 million was attributable to investments with an aggregate fair value of approximately $29 million that have been in a continuous unrealized loss position for 12 months or longer. This minor decline in value is primarily due to interest rate changes on government securities. Currently, PPL Energy Supply believes it is reasonable to expect these securities to recover from this temporary decline in value.

    EITF Issue 03-6 (PPL)

    In March 2004, the FASB ratified EITF Issue 03-6, "Participating Securities and the Two-Class Method under FASB Statement No. 128, 'Earnings per Share'." EITF Issue 03-6 addresses a number of issues regarding the calculation of basic EPS by companies that have issued securities other than common stock that participate in dividends and earnings, which are known as participating securities. EITF Issue 03-6 requires participating securities to be included in the calculation of basic EPS using the two-class method and provides guidance in applying the two-class method. EITF Issue 03-6 is effective for reporting periods beginning after March 31, 2004, and it requires restatement of prior periods. PPL adopted EITF Issue 03-6 during the second quarter of 2004. The initial adoption did not have an impact on PPL.

    EITF Issue 03-16 (PPL, PPL Energy Supply and PPL Electric)

    In March 2004, the FASB ratified EITF Issue 03-16, "Accounting for Investments in Limited Liability Companies." EITF Issue 03-16 provides that an investment in a limited liability company (LLC) that maintains a specific ownership account for each investor should be viewed similarly to an investment in a limited partnership for purposes of determining whether a noncontrolling interest in the LLC should be accounted for using the cost or equity method. EITF Issue 03-16 is effective for reporting periods beginning after June 15, 2004, and is required to be applied as a change in accounting principle with a cumulative effect adjustment reflected in the period of adoption. PPL and its subsidiaries adopted EITF Issue 03-16 effective July 1, 2004. The adoption did not have a material impact on the results of PPL and its subsidiaries.

    EITF Issue 04-8 (PPL)

    In October 2004, the FASB ratified the consensuses in EITF Issue 04-8, "The Effect of Contingently Convertible Instruments on Diluted Earnings per Share." EITF Issue 04-8 requires contingently convertible instruments to be included in diluted EPS, if dilutive, regardless of whether the market price trigger for conversion has been met. EITF Issue 04-8 is effective for reporting periods ending after December 15, 2004, and it requires restatement of prior periods in certain circumstances. PPL adopted EITF Issue 04-8 effective December 31, 2004. Since PPL modified the terms of PPL Energy Supply's 2.625% Convertible Senior Notes due 2023 in November 2004, the adoption did not have a material impact on PPL's diluted EPS for 2004 and did not result in any changes to diluted EPS for prior periods. See Note 4 for a discussion of the modification of the terms of the Convertible Senior Notes and for the 2004 dilutive impact of the Convertible Senior Notes. See Note 8 for a discussion of the consent solicitation that effected the modifications.

    FSP FAS 106-1 and FSP FAS 106-2 (PPL, PPL Energy Supply and PPL Electric)

    See Note 12 for a discussion of FSP FAS 106-1 and FSP FAS 106-2, "Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003."

    FSP FAS 109-1 and FSP FAS 109-2 (PPL and PPL Energy Supply)

    In December 2004, the FASB issued FSP FAS 109-1, "Application of FASB Statement No. 109, 'Accounting for Income Taxes,' to the Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of 2004" and FSP FAS 109-2, "Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004." FSP FAS 109-1 requires companies to account for the tax deduction for qualified domestic production activities provided by the American Jobs Creation Act as a special deduction in accordance with SFAS 109. Thus, the impact of the deduction will be reported in the period in which the deduction is claimed on the tax return. FSP FAS 109-2 provides an exception to the SFAS 109 requirement to reflect in the period of enactment the effect of a new tax law. Under FSP FAS 109-2, a company is allowed time beyond the financial reporting period in which enactment occurred in order to evaluate the effect of the American Jobs Creation Act on its plan for reinvestment or repatriation of foreign earnings for purposes of applying SFAS 109. FSP FAS 109-2 provides that a company that is evaluating the repatriation provision of the American Jobs Creation Act shall apply the provisions of SFAS 109 as it decides on a plan for reinvestment or repatriation of its unremitted foreign earnings. Both FSP FAS 109-1 and FSP FAS 109-2 are effective December 21, 2004.

    FSP FAS 109-1 and FSP FAS 109-2 did not impact PPL and its subsidiaries' financial results for 2004. PPL and its subsidiaries are in the process of evaluating the impact on future years, and such impact could be material. See Note 5 for discussion of the American Jobs Creation Act and disclosures regarding potential future repatriation of earnings.
    

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
PPL Corporation
(Millions of Dollars)
Column A			Column B		Column C					Column D				Column E
			Balance at Beginning of Period
					Additions									Balance at End of Period
					Charged to Income		Other			Deductions
Description
Year Ended December 31, 2004
Reserves deducted from assets in the   Balance Sheet
		Uncollectible accounts including   unbilled revenues	$	96	$	25	$	1			$	33		$	89	(a)
		Obsolete inventory - Materials and   supplies		3		2						3			2
		Mark-to-market valuation reserves		4								2			2
		Deferred tax valuation allowance		293				24				153	(b)		164
Year Ended December 31, 2003
Reserves deducted from assets in the   Balance Sheet
		Uncollectible accounts including   unbilled revenues		112		31						47	(c)		96	(a)
		Obsolete inventory - Materials and   supplies		1		3						1			3
		Mark-to-market valuation reserves		3				2				1			4
		Deferred tax valuation allowance		327		4		53				91			293
Year Ended December 31, 2002
Reserves deducted from assets in the   Balance Sheet
		Uncollectible accounts including   unbilled revenues		125		32		7	(d)			52	(e)		112	(a)
		Obsolete inventory - Materials and   supplies		1											1
		Mark-to-market valuation reserves		7								4			3
		Deferred tax valuation allowance		132		30		182	(d)			17			327
(a)	Includes reserves for customer accounts receivable, California ISO, the Enron receivables and other.
(b)	Includes write-off of WPD $152 million acquired tax asset and associated 100% valuation allowance as it was determined that there was no likelihood of recovering the asset.
(c)	See Note 17 to the financial statements regarding a reduction in the Enron receivable reserve.
(d)	Includes the reserve recorded upon the acquisition of a controlling interest in WPD.
(e)	Includes the removal of reserves upon the deconsolidation of CEMAR.

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
PPL Energy Supply, LLC
(Millions of Dollars)
Column A			Column B		Column C					Column D			Column E
			Balance at Beginning of Period
					Additions								Balance at End of Period
					Charged to Income		Other			Deductions
Description
Year Ended December 31, 2004
Reserves deducted from assets in the   Balance Sheet
		Uncollectible accounts including   unbilled revenues	$	71	$	1	$	1		$	3		$	70	(a)
		Obsolete inventory - Materials and   supplies		3		2					3			2
		Mark-to-market valuation reserves		4							2			2
		Deferred tax valuation allowance		288				24			152	(b)		160
Year Ended December 31, 2003
Reserves deducted from assets in the   Balance Sheet
		Uncollectible accounts including   unbilled revenues		88		5					22	(c)		71	(a)
		Obsolete inventory - Materials and   supplies		1		3					1			3
		Mark-to-market valuation reserves		3				2			1			4
		Deferred tax valuation allowance		327		4		48			91			288
Year Ended December 31, 2002
Reserves deducted from assets in the   Balance Sheet
		Uncollectible accounts including   unbilled revenues		104		5		7	(d)		28	(e)		88	(a)
		Obsolete inventory - Materials and   supplies		1										1
		Mark-to-market valuation reserves		7							4			3
		Deferred tax valuation allowance		132		30		182	(d)		17			327
(a)	Includes reserves for customer accounts receivable, California ISO, the Enron receivables and other.
(b)	Includes write-off of WPD $152 million acquired tax asset and associated 100% valuation allowance as it was determined that there was no likelihood of recovering the asset.
(c)	See Note 17 to the financial statements regarding a reduction in the Enron receivable reserve.
(d)	Includes the reserve recorded upon the acquisition of a controlling interest in WPD.
(e)	Includes the removal of reserves upon the deconsolidation of CEMAR.

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
PPL Electric Utilities Corporation
(Millions of Dollars)
Column A		Column B		Column C			Column D		Column E
		Balance at Beginning of Period
				Additions					Balance at End of Period
				Charged to Income		Other	Deductions
Description
Year Ended December 31, 2004
Reserves deducted from assets in the   Balance Sheet
	Uncollectible accounts including unbilled revenues	$	24	$	22		$	28	$	18
Year Ended December 31, 2003
Reserves deducted from assets in the   Balance Sheet
	Uncollectible accounts including unbilled revenues		23		24			23		24
Year Ended December 31, 2002
Reserves deducted from assets in the   Balance Sheet
	Uncollectible accounts including unbilled revenues		19		25			21		23

QUARTERLY FINANCIAL, COMMON STOCK PRICE AND DIVIDEND DATA (Unaudited)
PPL Corporation and Subsidiaries
(Millions of Dollars, except per share data)
		For the Quarters Ended (a)
		March 31		June 30		Sept. 30		Dec. 31
	2004
Operating revenues		$	1,520	$	1,362	$	1,465	$	1,465
Operating income			366		298		382		341
Income from continuing operations			178		149		196		177
Net income			177		148		196		177
Basic earnings per common share: (b)
	Income from continuing operations		1.00		0.82		1.04		0.94
	Net income		1.00		0.81		1.04		0.94
Diluted earnings per common share: (b)
	Income from continuing operations		0.99		0.82		1.03		0.93
	Net income		0.99		0.81		1.03		0.93
Dividends declared per common share (c)			0.41		0.41		0.41		0.41
Price per common share
	High	$	47.23	$	46.97	$	48.39	$	54.15
	Low		42.73		39.83		44.70		47.14
	2003
Operating revenues as previously reported		$	1,488
	Reclassification related to net energy trading margins		8
	Operating revenues		1,496	$	1,339	$	1,462	$	1,299
Operating income			359		286		363		332
Income from continuing operations			176		117		171		255
Net income			239		116		171		208
Basic earnings per common share: (b)
	Income from continuing operations		1.06		0.68		0.97		1.44
	Net income		1.43		0.68		0.97		1.17
Diluted earnings per common share: (b)
	Income from continuing operations		1.06		0.67		0.97		1.44
	Net income		1.43		0.67		0.97		1.17
Dividends declared per common share (c)			0.385		0.385		0.385		0.385
Price per common share
	High	$	38.10	$	44.34	$	43.12	$	43.89
	Low		31.65		35.04		38.45		38.88
(a)	Quarterly results can vary depending on, among other things, weather and the forward pricing of power. In addition, earnings in 2004 and 2003 were affected by unusual items. Accordingly, comparisons among quarters of a year may not be indicative of overall trends and changes in operations.
(b)	The sum of the quarterly amounts may not equal annual earnings per share due to changes in the number of common shares outstanding during the year or rounding.
(c)	PPL has paid quarterly cash dividends on its common stock in every year since 1946. The dividends declared per share in 2004 were $1.64 and in 2003 were $1.54. In February 2005, PPL announced an increase to its quarterly common stock dividend, payable April 1, 2005, to 46 cents per share (equivalent to $1.84 per annum). Future dividends, declared at the discretion of the Board of Directors, will be dependent upon future earnings, cash flows, financial requirements and other factors.

QUARTERLY FINANCIAL DATA (Unaudited)
PPL Electric Utilities Corporation and Subsidiaries
(Millions of Dollars)
		For the Quarters Ended (a)
		March 31		June 30		Sept. 30			Dec. 31
2004
Operating revenues		$	773	$	661	$	704		$	709
Operating income			102		51		58			48
Income available to PPL			33		3		15			23
2003
Operating revenues		$	753	$	637	$	704		$	694
Operating income			99		54		41			57
Income (loss) available to PPL			29				(6	)		2
(a)	PPL Electric's business is seasonal in nature, with peak sales periods generally occurring in the winter and summer months. In addition, earnings in certain quarters were affected by unusual items. Accordingly, comparisons among quarters of a year may not be indicative of overall trends and changes in operations.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE

PPL Corporation, PPL Energy Supply, LLC and PPL Electric Utilities Corporation

None.

ITEM 9A. CONTROLS AND PROCEDURES
PPL Corporation, PPL Energy Supply, LLC and PPL Electric Utilities Corporation
(a)	Evaluation of disclosure controls and procedures.
	The registrants' principal executive officers and principal financial officers, based on their evaluation of the registrants' disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) have concluded that, as of December 31, 2004, the registrants' disclosure controls and procedures are adequate and effective to ensure that material information relating to the registrants and their consolidated subsidiaries is recorded, processed, summarized and reported within the time periods specified by the SEC's rules and forms, particularly during the period for which this annual report has been prepared.
(b)	Change in internal controls.
	The registrants' principal executive officers and principal financial officers have concluded that there were no changes in the registrants' internal controls over financial reporting during the registrants' fourth fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrants' internal control over financial reporting.
Management's Report on Internal Control over Financial Reporting
PPL Corporation
	PPL's management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). PPL's internal control over financial reporting is a process designed to provide reasonable assurance to PPL's management and Board of Directors regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in "Internal Control - Integrated Framework" issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in "Internal Control - Integrated Framework," our management concluded that our internal control over financial reporting was effective as of December 31, 2004. Our management's assessment of the effectiveness of our internal control over financial reporting as of December 31, 2004, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is included on Page 75.
PPL Energy Supply, LLC and PPL Electric Utilities Corporation
	Omitted since PPL Energy Supply and PPL Electric are not subject to the Sarbanes-Oxley 404 requirements for the year ended December 31, 2004.
ITEM 9B. OTHER INFORMATION
PPL Corporation, PPL Energy Supply, LLC and PPL Electric Utilities Corporation
	Exhibits 10(gg) and 10(hh) to this Form 10-K report include information concerning director and executive officer compensation that supplements information that PPL and PPL Electric are required to disclose from time to time under Form 8-K, Item 1.01 ("Entry into a Material Definitive Agreement"). Such Exhibits are incorporated into this Item 9B by reference.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

PPL Corporation

Additional information for this item will be set forth in the sections entitled "Nominees for Directors," "Directors Continuing in Office," "Section 16(a) Beneficial Ownership Reporting Compliance" and "Board Committees - Audit Committee" in PPL's 2005 Notice of Annual Meeting and Proxy Statement, which will be filed with the SEC not later than 120 days after December 31, 2004, and which information is incorporated herein by reference. Information required by this item concerning the executive officers of PPL is set forth at the end of Part I of this report.

PPL has adopted a code of ethics entitled "Standards of Conduct and Integrity" that applies to all directors, managers, trustees, officers (including the principal executive officers, principal financial officers and principal accounting officers (each, a "principal officer")), employees and agents of PPL and PPL's subsidiaries for which it has operating control (including PPL Energy Supply and PPL Electric). The "Standards of Conduct and Integrity" are posted on PPL's Internet Web site: www.pplweb.com/about/corporate+governance, and are available in print to any shareholder who requests them. A description of any amendment to the "Standards of Conduct and Integrity" (other than a technical, administrative or other non-substantive amendment) will be posted on PPL's Internet Web site within five business days following the date of the amendment. In addition, if a waiver constituting a material departure from a provision of the "Standards of Conduct and Integrity" is granted to one of the principal officers, a description of the nature of the waiver, the name of the person to whom the waiver was granted and the date of the waiver will be posted on PPL's Internet Web site within five business days following the date of the waiver.

PPL also has adopted its "Guidelines for Corporate Governance," which address, among other things, director qualification standards and director and board committee responsibilities. These guidelines, and the charters of each of the committees of PPL's board of directors, are posted on PPL's Internet Web site: www.pplweb.com/about/corporate+governance and are available in print to any shareholder who requests them.

PPL Energy Supply, LLC

Item 10 is omitted as PPL Energy Supply meets the conditions set forth in General Instruction (I)(1)(a) and (b) of Form 10-K.

PPL Electric Utilities Corporation

Information for this item will be set forth in the sections entitled "Nominees for Directors" and "Directors Continuing in Office" in PPL Electric's 2005 Notice of Annual Meeting and Information Statement, which will be filed with the SEC not later than 120 days after December 31, 2004, and which information is incorporated herein by reference. Information required by this item concerning the executive officers of PPL Electric is set forth at the end of Part I of this report.

ITEM 11. EXECUTIVE COMPENSATION

PPL Corporation

Information for this item will be set forth in the sections entitled "Compensation of Directors," "Board Committees - Audit Committee," "Summary Compensation Table," "Option Grants in Last Fiscal Year" and "Retirement Plans for Executive Officers" in PPL's 2005 Notice of Annual Meeting and Proxy Statement, which will be filed with the SEC not later than 120 days after December 31, 2004, and which information is incorporated herein by reference.

PPL Energy Supply, LLC

Item 11 is omitted as PPL Energy Supply meets the conditions set forth in General Instruction (I)(1)(a) and (b) of Form 10-K.

PPL Electric Utilities Corporation

Information for this item will be set forth in the sections entitled "Compensation of Directors," "Summary Compensation Table," "Option Grants in Last Fiscal Year" and "Retirement Plans for Executive Officers" in PPL Electric's 2005 Notice of Annual Meeting and Information Statement, which will be filed with the SEC not later than 120 days after December 31, 2004, and which information is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

PPL Corporation

Information for this item will be set forth in the section entitled "Stock Ownership" in PPL's 2005 Notice of Annual Meeting and Proxy Statement, which will be filed with the SEC not later than 120 days after December 31, 2004, and which information is incorporated herein by reference. In addition, provided below in tabular format is information as of December 31, 2004, with respect to compensation plans (including individual compensation arrangements) under which equity securities of PPL are authorized for issuance.

Equity Compensation Plan Information

	Number of securities to be issued upon exercise of outstanding options, warrants and rights (3)	Weighted-average exercise price of outstanding options, warrants and rights (3)	Number of securities remaining available for future issuance under equity compensation plans (4)
Equity compensation plans approved by security holders (1)	2,025,460 - ICP    955,515 - ICPKE 2,980,975 - Total	$38.74 - ICP $39.02 - ICPKE $38.83 - Combined	3,787,771 - ICP    6,717,919 - ICPKE    7,377,742 - DDCP  17,883,432 - Total
Equity compensation plans not approved by security holders (2)

(1)	Includes (a) the Amended and Restated Incentive Compensation Plan (ICP), under which stock options, restricted stock, restricted stock units, dividend equivalents and other stock-based awards may be awarded to executive officers of PPL; (b) the Amended and Restated Incentive Compensation Plan for Key Employees (ICPKE), under which stock options, restricted stock, restricted stock units, dividend equivalents and other stock-based awards may be awarded to non-executive key employees of PPL and its subsidiaries; and (c) the Directors Deferred Compensation Plan (DDCP), under which stock units may be awarded to directors of PPL. See Note 11 to the financial statements for additional information.
(2)	All of PPL's current compensation plans under which equity securities of PPL are authorized for issuance have been approved by PPL's shareholders.
(3)	Relates to common stock issuable upon the exercise of stock options awarded under the ICP and ICPKE as of December 31, 2004. In addition, as of December 31, 2004, the following other securities had been awarded and are outstanding under the ICP, ICPKE and DDCP: 156,240 shares of restricted stock and 84,520 restricted stock units under the ICP; 212,981 shares of restricted stock and 255,439 restricted stock units under the ICPKE; and 116,389 stock units under the DDCP.
(4)	Based upon the following aggregate award limitations under the ICP, ICPKE and DDCP: (a) under the ICP, 7,884,715 awards (i.e., 5% of the total PPL common stock outstanding as of April 23, 1999) granted after April 23, 1999; (b) under the ICPKE, 8,286,804 awards (i.e., 5% of the total PPL common stock outstanding as of January 1, 2003) granted after April 25, 2003, reduced by outstanding awards for which common stock was not yet issued as of such date; and (c) under the DDCP, 7,526,428 securities. In addition, each of the ICP and ICPKE includes an annual award limitation of 2% of total PPL common stock outstanding as of January 1 of each year.

PPL Energy Supply, LLC

Item 12 is omitted as PPL Energy Supply meets the conditions set forth in General Instruction (I)(1)(a) and (b) of Form 10-K.

PPL Electric Utilities Corporation

Information for this item will be set forth in the section entitled "Stock Ownership" in PPL Electric's 2005 Notice of Annual Meeting and Information Statement, which will be filed with the SEC not later than 120 days after December 31, 2004, and which information is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

PPL Corporation

None.

PPL Energy Supply, LLC

Item 13 is omitted as PPL Energy Supply meets the conditions set forth in General Instruction (I)(1)(a) and (b) of Form 10-K.

PPL Electric Utilities Corporation

None.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

PPL Corporation

Information for this item will be set forth in the section entitled "Fees to Independent Auditor for 2004 and 2003" in PPL's 2005 Notice of Annual Meeting and Proxy Statement, which will be filed with the SEC not later than 120 days after December 31, 2004, and which information is incorporated herein by reference.

PPL Energy Supply, LLC

The following table presents fees billed by PricewaterhouseCoopers LLP (PwC) for the fiscal years ended December 31, 2004, and December 31, 2003, for professional services rendered for the audit of PPL Energy Supply's annual financial statements and for fees billed for other services rendered by PwC.

	2004		2003
	(in thousands)
Audit fees (a)	$	1,657	$	1,586
Audit-related fees (b)		61		116
Tax fees (c)				792
All other fees (d)		3

(a)	Includes audit of annual financial statements and review of financial statements included in PPL Energy Supply's Quarterly Reports on Form 10-Q and for services in connection with statutory and regulatory filings or engagements, including comfort letters and consents for financings and filings made with the SEC.
(b)	Fees for audits of employee benefit plans and consultation to ensure appropriate accounting and reporting in connection with various business and financing transactions.
(c)	Fees for international tax consulting and advisory services. PwC no longer provides these types of services to PPL Energy Supply or any of its affiliates.
(d)	Fees for access to a research database licensed by PwC that provides authoritative accounting and reporting guidance.

Approval of Fees The Audit Committee of PPL has procedures for pre-approving audit and non-audit services to be provided by the independent auditor. The procedures are designed to ensure the continued independence of the independent auditor. More specifically, the use of the independent auditor to perform either audit or non-audit services is prohibited unless specifically approved in advance by the Audit Committee of PPL. As a result of this approval process, the Audit Committee of PPL has established specific categories of services and authorization levels. All services outside of the specified categories and all amounts exceeding the authorization levels are reviewed by the Chair of the Audit Committee of PPL, who serves as the Committee designee to review and approve audit and non-audit related services during the year. A listing of the approved audit and non-audit services is reviewed with the full Audit Committee of PPL no later than its next meeting.

The Audit Committee of PPL approved 100% of the 2004 and 2003 audit and non-audit related fees.

PPL Electric Utilities Corporation

Information for this item will be set forth in the section entitled "Fees to Independent Auditor for 2004 and 2003" in PPL Electric's 2005 Notice of Annual Meeting and Information Statement, which will be filed with the SEC not later than 120 days after December 31, 2004, and which information is incorporated herein by reference.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

PPL Corporation, PPL Energy Supply, LLC and PPL Electric Utilities Corporation
(a) The following documents are filed as part of this report:
	1.	Financial Statements - Refer to the "Index to Item 8. Financial Statements and Supplementary Data" for an index of the financial statements included in this report.
	2.	Supplementary Data and Supplemental Financial Statement Schedule - included in response to Item 8.
		Schedule II - Valuation and Qualifying Accounts and Reserves for the Three Years Ended December 31, 2004.
		All other schedules are omitted because of the absence of the conditions under which they are required or because the required information is included in the financial statements or notes thereto.
	3.	Exhibits
		Exhibit Index on page 173.

SHAREOWNER AND INVESTOR INFORMATION

Annual Meetings: The annual meeting of shareowners of PPL Corporation is held each year on the fourth Friday of April. The 2005 meeting for PPL Corporation will be held on Friday, April 22, 2005, at Lehigh University's Stabler Arena, at the Goodman Campus Complex located in Lower Saucon Township, outside Bethlehem, Pennsylvania. The 2005 meeting for PPL Electric will be held on Tuesday, April 19, 2005, at the offices of the company at Two North Ninth Street, Allentown, Pennsylvania.

Proxy and Information Statement Material: A proxy statement and information statement and notice of PPL's and PPL Electric's annual meetings are mailed to all shareowners of record as of February 28, 2005.

Dividends: Subject to the declaration of dividends on PPL common stock by the PPL Board of Directors or its Executive Committee and PPL Electric preferred stock by the PPL Electric Board of Directors, dividends are paid on the first day of April, July, October and January. Dividend checks are mailed in advance of those dates with the intention that they arrive as close as possible to the payment dates. The 2005 record dates for dividends are expected to be March 10, June 10, September 9, and December 9.

Direct Deposit of Dividends: Shareowners may choose to have their dividend checks deposited directly into their checking or savings account. Quarterly dividend payments are electronically credited on the dividend date, or the first business day thereafter.

Dividend Reinvestment Plan: Shareowners may choose to have dividends on their PPL common stock or PPL Electric preferred stock reinvested in PPL common stock instead of receiving the dividend by check.

Certificate Safekeeping: Shareowners participating in the Dividend Reinvestment Plan may choose to have their common stock certificates forwarded to PPL for safekeeping.

Lost Dividend or Interest Checks: Dividend or interest checks lost by investors, or those that may be lost in the mail, will be replaced if the check has not been located by the 10th business day following the payment date.

Transfer of Stock or Bonds: Stock or bonds may be transferred from one name to another or to a new account in the name of another person. Please contact Investor Services regarding transfer instructions.

Bondholder Information: Much of the information and many of the procedures detailed here for shareowners also apply to bondholders. Questions related to bondholder accounts should be directed to Investor Services.

Lost Stock or Bond Certificates: Please contact Investor Services for an explanation of the procedure to replace lost stock or bond certificates.

PPL Annual Report: Published and mailed in mid-March to all shareowners of record.

Periodic Mailings: Letters regarding new investor programs, special items of interest, or other pertinent information are mailed on a non-scheduled basis as necessary.

Duplicate Mailings: The annual report and other investor publications are mailed to each investor account. If you have more than one account, or if there is more than one investor in your household, you may contact Investor Services to request that only one publication be delivered to your address. Please provide account numbers for all duplicate mailings.

Shareowner Information Line: Shareowners can get detailed corporate and financial information 24 hours a day using the Shareowner Information Line. They can hear timely recorded messages about earnings, dividends and other company news releases; request information by fax; and request printed materials in the mail.

The toll-free Shareowner Information Line is 1-800-345-3085.

Other PPL publications, such as the annual and quarterly reports to the Securities and Exchange Commission (Forms 10-K and 10-Q) will be mailed upon request.

Shareowners can also obtain information free of charge from PPL's Internet home page (www.pplweb.com). Shareowners can access PPL Securities and Exchange Commission filings, corporate governance materials, news releases, stock quotes and historical performance. Visitors to our Web site can provide their E-mail address and indicate their desire to receive future earnings or news releases automatically.

Investor Services: For any questions you have or additional information you require about PPL and its subsidiaries, please call the Shareowner Information Line, or write to:

Manager-PPL Investor Services

Two North Ninth Street (GENTW8)

Allentown, PA 18101

Internet Access: For updated information throughout the year, check out our home page at www.pplweb.com. You may also contact Investor Services via E-mail at invserv@pplweb.com.

Registered shareowners can access account information by visiting shareowneronline.com.

Listed Securities:		Fiscal Agents:
New York Stock Exchange		Stock Transfer Agents and
		Registrars
	PPL Corporation:	Wells Fargo Bank Minnesota, N.A.
	Common Stock (Code: PPL)	Shareowner Services
		161 North Concord Exchange
	PPL Electric Utilities Corporation:	South St. Paul, MN 55075-1139
	4-1/2% Preferred Stock
	(Code: PPLPRB)	PPL Services Corporation
	4.40% Series Preferred Stock	Investor Services Department
	(Code: PPLPRA)
		Dividend Disbursing Office and
Philadelphia Stock Exchange		Dividend Reinvestment Plan Agent
		PPL Services Corporation
	PPL Corporation:	Investor Services Department
	Common Stock
		Mortgage Bond Trustee
		Deutsche Bank Trust Company Americas
		Attn: Security Transfer Unit
		648 Grassmere Park Road
		Nashville, TN 37211
		Indenture Trustee
		JPMorgan Chase Bank, N.A.
		4 New York Plaza
		New York, NY 10004
		Bond Interest Paying Agent
		PPL Services Corporation
		Investor Services Department

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

PPL Corporation
(Registrant)

By /s/ William F. Hecht
William F. Hecht -
Chairman, President
and Chief Executive
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated.
		TITLE
By /s/ William F. Hecht		Principal Executive Officer and Director
William F. Hecht -
Chairman, President
and Chief Executive
Officer
By /s/ John R. Biggar		Principal Financial Officer and Director
John R. Biggar -
Executive Vice President
and Chief Financial Officer
By /s/ Paul A. Farr		Principal Accounting Officer
Paul A. Farr -
Vice President and Controller
Directors:
Frederick M. Bernthal	Stuart Heydt
John W. Conway	W. Keith Smith
E. Allen Deaver	Susan M. Stalnecker
Louise K. Goeser
By /s/ William F. Hecht
William F. Hecht, Attorney-in-fact	Date: March 1, 2005

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

PPL Energy Supply, LLC
(Registrant)

By /s/ William F. Hecht
William F. Hecht -
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated.
	TITLE
By /s/ William F. Hecht	Principal Executive Officer and Manager
William F. Hecht -
President
By /s/ James E. Abel	Principal Financial Officer and Manager
James E. Abel -
Vice President and Treasurer
By /s/ Paul A. Farr	Principal Accounting Officer and Manager
Paul A. Farr -
Vice President and Controller
Managers:
/s/ John R. Biggar
John R. Biggar
/s/ Robert J. Grey
Robert J. Grey
/s/ James H. Miller
James H. Miller
Date: March 1, 2005

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

PPL Electric Utilities Corporation
(Registrant)

By /s/ John F. Sipics
John F. Sipics -
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated.
	TITLE
By /s/ John F. Sipics	Principal Executive Officer and Director
John F. Sipics -
President
By /s/ James E. Abel	Principal Financial Officer
James E. Abel -
Treasurer
By /s/ Paul A. Farr	Principal Accounting Officer
Paul A. Farr -
Vice President and Controller

Directors:
/s/ William F. Hecht	/s/ Dean A. Christiansen	/s/ James H. Miller
William F. Hecht	Dean A. Christiansen	James H. Miller
/s/ John R. Biggar	/s/ Robert J. Grey	/s/ Roger L. Petersen
John R. Biggar	Robert J. Grey	Roger L. Petersen
/s/ Paul T. Champagne	/s/ Rick L. Klingensmith	/s/ Bryce L. Shriver
Paul T. Champagne	Rick L. Klingensmith	Bryce L. Shriver
Date: March 1, 2005

EXHIBIT INDEX

The following Exhibits indicated by an asterisk preceding the Exhibit number are filed herewith. The balance of the Exhibits have heretofore been filed with the Commission and pursuant to Rule 12(b)-32 are incorporated herein by reference. Exhibits indicated by a [_] are filed or listed pursuant to Item 601(b)(10)(iii) of Regulation S-K.

3(a)-1	-	Articles of Incorporation of PPL Corporation (Exhibit B to Proxy Statement of PPL Electric Utilities Corporation and Prospectus of PPL Corporation, dated March 9, 1995)
3(a)-2	-	Articles of Amendment of PPL Corporation (Exhibit 3.2 to PPL Corporation Form S-3 (Registration Statement Nos. 333-54504, 333-54504-01 and 333-54504-02))
3(a)-3	-	Amended and Restated Articles of Incorporation of PPL Electric Utilities Corporation (Exhibit 3(a)-3 to PPL Electric Utilities Corporation Form 10-K Report (File No. 1-905) for the year ended December 31, 2001)
3(a)-4	-	Certificate of Formation of PPL Energy Supply, LLC (Exhibit 3.1 to PPL Energy Supply, LLC Form S-4 (Registration Statement No. 333-74794))
3(b)-1	-	Bylaws of PPL Corporation (Exhibit 3(ii)(a) to PPL Corporation Form 10-Q Report (File No. 1-11459) for the quarter ended September 30, 1998)
3(b)-2	-	Bylaws of PPL Electric Utilities Corporation, as amended effective July 16, 2004 (Exhibit 3 to PPL Electric Utilities Corporation Form 10-Q Report (File No. 1-905) for the quarter ended June 30, 2004)
3(b)-3	-	Limited Liability Company Agreement of PPL Energy Supply, LLC, dated March 20, 2001 (Exhibit 3.2 to PPL Energy Supply, LLC Form S-4 (Registration Statement No. 333-74794))
4(a)-1	-	Amended and Restated Employee Stock Ownership Plan, dated June 12, 2000 (Exhibit 4(a) to PPL Corporation Form 10-K Report (File No. 1-11459) for the year ended December 31, 2000)
4(a)-2	-	Amendment No. 1 to said Employee Stock Ownership Plan, dated September 10, 2001 (Exhibit 4(a)-2 to PPL Corporation Form 10-K Report (File No. 1-11459) for the year ended December 31, 2001)
4(a)-3	-	Amendment No. 2 to said Employee Stock Ownership Plan, dated October 8, 2002 (Exhibit 4(a)-3 to PPL Corporation Form 10-K Report (File No. 1-11459) for the year ended December 31, 2002)
4(a)-4	-	Amendment No. 3 to said Employee Stock Ownership Plan, dated April 1, 2003 (Exhibit 4(a)-4 to PPL Corporation Form 10-K Report (File No. 1-11459) for the year ended December 31, 2003)
4(a)-5	-	Amendment No. 4 to said Employee Stock Ownership Plan, dated May 7, 2003 (Exhibit 4(a)-5 to PPL Corporation Form 10-K Report (File No. 1-11459) for the year ended December 31, 2004)
4(b)-1	-	Mortgage and Deed of Trust, dated as of October 1, 1945, between PPL Electric Utilities Corporation and Bankers Trust Company (as successor Trustee) (Exhibit 2(a)-4 to Registration Statement No. 2-60291)
4(b)-2	-	Supplement, dated as of July 1, 1954, to said Mortgage and Deed of Trust (Exhibit 2(b)-5 to Registration Statement No. 219255)
4(b)-3	-	Supplement, dated as of July 1, 1991, to said Mortgage and Deed of Trust (Exhibit 4(a) to PPL Electric Utilities Corporation Form 8-K Report (File No. 1-905) dated July 29, 1991)
4(b)-4	-	Supplement, dated as of May 1, 1992, to said Mortgage and Deed of Trust (Exhibit 4(a) to PPL Electric Utilities Corporation Form 8-K Report (File No. 1-905) dated June 1, 1992)
4(b)-5	-	Supplement, dated as of November 1, 1992, to said Mortgage and Deed of Trust (Exhibit 4(b)-29 to PPL Electric Utilities Corporation Form 10-K Report (File 1-905) for the year ended December 31, 1992)
4(b)-6	-	Supplement, dated as of April 1, 1993, to said Mortgage and Deed of Trust (Exhibit 4(a) to PPL Electric Utilities Corporation Form 8-K Report (File No. 1-905) dated April 30, 1993)
4(b)-7	-	Supplement, dated as of February 15, 1994, to said Mortgage and Deed of Trust (Exhibit 4(a) to PPL Electric Utilities Corporation Form 8-K Report (File No. 1-905) dated March 11, 1994)
4(b)-8	-	Supplement, dated as of March 1, 1994, to said Mortgage and Deed of Trust (Exhibit 4(b) to PPL Electric Utilities Corporation Form 8-K Report (File No. 1-905) dated March 11, 1994)
4(b)-9	-	Supplement, dated as of March 15, 1994, to said Mortgage and Deed of Trust (Exhibit 4(a) to PPL Electric Utilities Corporation Form 8-K Report (File No. 1-905) dated March 30, 1994)
4(b)-10	-	Supplement, dated as of September 1, 1994, to said Mortgage and Deed of Trust (Exhibit 4(a) to PPL Electric Utilities Corporation Form 8-K (File No. 1-905) dated October 3, 1994)
4(b)-11	-	Supplement, dated as of October 1, 1994, to said Mortgage and Deed of Trust (Exhibit 4(a) to PPL Electric Utilities Corporation Form 8-K Report (File No. 1-905) dated October 3, 1994)
4(b)-12	-	Supplement, dated as of August 1, 1995, to said Mortgage and Deed of Trust (Exhibit 6(a) to PPL Electric Utilities Corporation Form 10-Q Report (File No. 1-905) for the quarter ended September 30, 1995)
4(b)-13	-	Supplement, dated as of April 1, 1997, to said Mortgage and Deed of Trust (Exhibit 4(b)-17 to PPL Electric Utilities Corporation Form 10-K Report (File No. 1-905) for the year ended December 31, 1997)
4(b)-14	-	Supplement, dated as of May 5, 1998, to said Mortgage and Deed of Trust (Exhibit 4.3 to PPL Electric Utilities Corporation Form 8-K Report (File No. 1-905) dated May 1, 1998)
4(b)-15	-	Supplement, dated as of June 1, 1999, to said Mortgage and Deed of Trust (Exhibit 4(b)-19 to PPL Electric Utilities Corporation Form 10-K Report (File No. 1-905) for the year ended December 31, 1999)
4(b)-16	-	Supplement, dated as of August 1, 2001, to said Mortgage and Deed of Trust (Exhibit 4.5 to PPL Electric Utilities Corporation Form 8-K Report (File No. 1-905) dated August 21, 2001)
4(b)-17	-	Supplement, dated as of January 1, 2002, to said Mortgage and Deed of Trust (Exhibit 4(b)-19 to PPL Electric Utilities Corporation Form 10-K Report (File No. 1-905) for the year ended December 31, 2001)
4(b)-18	-	Supplement, dated as of February 1, 2003, to said Mortgage and Deed of Trust (Exhibit 4(b)-20 to PPL Electric Utilities Corporation Form 10-K Report (File No. 1-905) for the year ended December 31, 2002)
4(b)-19	-	Supplement, dated as of May 1, 2003, to said Mortgage and Deed of Trust (Exhibit 10(c) to PPL Electric Utilities Corporation Form 10-Q Report (File No. 1-905) for quarter ended June 30, 2003)
*4(b)-20	-	Supplement, dated as of February 1, 2005, to said Mortgage and Deed of Trust
4(c)-1	-	Indenture, dated as of November 1, 1997, among PPL Corporation, PPL Capital Funding, Inc. and JPMorgan Chase Bank (formerly The Chase Manhattan Bank), as Trustee (Exhibit 4.1 to PPL Corporation Form 8-K Report (File No. 1-11459) dated November 12, 1997)
4(c)-2	-	Supplement, dated as of November 1, 1997, to said Indenture (Exhibit 4.2 to PPL Corporation Form 8-K Report (File No. 1-11459) dated November 12, 1997)
4(c)-3	-	Supplement, dated as of March 1, 1999, to said Indenture (Exhibit 4.3 to Registration Statement Nos. 333-87847, 333-87847-01 and 333-87847-02)
4(c)-4	-	Supplement, dated as of October 1, 1999, to said Indenture (Exhibit 4(c)-4 to PPL Corporation Form 10-K Report (File No. 1-11459) for the year ended December 31, 1999)
4(c)-5	-	Supplement, dated as of June 1, 2000, to said Indenture (Exhibit 4 to PPL Corporation Form 10-Q Report (File No. 1-11459) for the quarter ended June 30, 2000)
4(c)-6	-	Supplement, dated as of January 21, 2003, to said Indenture (Exhibit 99.1 to PPL Corporation Form 8-K Report (File No. 1-11459) dated January 22, 2003)
4(c)-7	-	Supplement, dated as of January 21, 2004, to said Indenture (Exhibit 4(a) to PPL Corporation Form 10-Q Report (File No. 1-11459) for the quarter ended March 31, 2004)
4(c)-8	-	Supplement, dated as of May 18, 2004, to said Indenture (Exhibit 4.7 to Registration Statement Nos. 333-116478, 333-116478-01 and 333-116478-02)
4(d)-1	-	Junior Subordinated Indenture, dated as of April 1, 1997, between PPL Electric Utilities Corporation and JPMorgan Chase Bank (formerly The Chase Manhattan Bank), as Trustee (Exhibit 4.1 to Registration Statement No. 333-20661)
4(d)-2	-	Amended and Restated Trust Agreement, dated as of April 8, 1997, among PPL Electric Utilities Corporation, JPMorgan Chase Bank (formerly The Chase Manhattan Bank), as Property Trustee, Chase Manhattan Bank (Delaware), as Delaware Trustee, and John R. Biggar and James E. Abel, as Administrative Trustees (Exhibit 4.4 to Registration Statement No. 333-20661)
4(d)-3	-	Guarantee Agreement, dated as of April 8, 1997, between PPL Electric Utilities Corporation and JPMorgan Chase Bank (formerly The Chase Manhattan Bank), as Trustee (Exhibit 4.6 to Registration Statement No. 333-20661)
4(e)-1	-	Amended and Restated Trust Agreement, dated as of June 13, 1997, among PPL Electric Utilities Corporation, JPMorgan Chase Bank (formerly The Chase Manhattan Bank), as Property Trustee, Chase Manhattan Bank (Delaware), as Delaware Trustee, and John R. Biggar and James E. Abel, as Administrative Trustees (Exhibit 4.4 to Registration Statement No. 333-27773)
4(e)-2	-	Guarantee Agreement, dated as of June 13, 1997, between PPL Electric Utilities Corporation and JPMorgan Chase Bank (formerly The Chase Manhattan Bank), as Trustee (Exhibit 4.6 to Registration Statement No. 333-27773)
4(f)-1	-	Subordinated Indenture, dated as of May 9, 2001, between PPL Capital Funding, Inc., PPL Corporation and JPMorgan Chase Bank (formerly The Chase Manhattan Bank), as Trustee (Exhibit 4.1 to PPL Corporation Form 8-K Report (File No. 1-11459) dated May 9, 2001)
4(f)-2	-	Supplement, dated as of May 9, 2001, to said Subordinated Indenture (Exhibit 4.2 to PPL Corporation Form 8-K Report (File No. 1-11459) dated May 9, 2001)
4(f)-3	-	Trust Securities Guarantee Agreement, dated as of May 9, 2001 (Exhibit 4.10 to PPL Corporation Form 8-K Report (File No. 1-11459) dated May 9, 2001)
4(f)-4	-	Amended and Restated Trust Agreement, dated as of May 9, 2001, among PPL Corporation, PPL Capital Funding, Inc., JPMorgan Chase Bank (formerly The Chase Manhattan Bank), as Property Trustee, Chase Manhattan Bank USA National Association, as Delaware Trustee, John R. Biggar and James E. Abel, as Administrative Trustees, and the several Holders of the Trust Securities (Exhibit 4.8 to PPL Corporation Form 8-K Report (File No. 1-11459) dated May 9, 2001)
4(g)-1	-	Indenture, dated as of August 1, 2001, by PPL Electric Utilities Corporation and JPMorgan Chase Bank (formerly The Chase Manhattan Bank), as Trustee (Exhibit 4.1 to PPL Electric Utilities Corporation Form 8-K Report (File No. 1-905) dated August 21, 2001)
4(g)-2	-	Supplement, dated as of August 1, 2001, to said Indenture (Exhibit 4.2 to PPL Electric Utilities Corporation Form 8-K Report (File No. 1-905) dated August 21, 2001)
4(g)-3	-	Supplement, dated as of February 1, 2003, to said Indenture (Exhibit 4(g)-3 to PPL Electric Utilities Corporation Form 10-K Report (File No. 1-905) for the year ended December 31, 2002)
4(g)-4	-	Supplement, dated as of May 1, 2003, to said Indenture (Exhibit 10(d) to PPL Electric Utilities Corporation Form 10-Q Report (File No. 1-905) for the quarter ended June 30, 2002)
*4(g)-5	-	Supplement, dated as of February 1, 2005, to said Indenture
4(h)-1	-	Indenture, dated as of October 1, 2001, by PPL Energy Supply, LLC and JPMorgan Chase Bank (formerly The Chase Manhattan Bank), as Trustee (Exhibit 4.1 to PPL Energy Supply, LLC Form S-4 (Registration Statement No. 333-74794))
4(h)-2	-	Supplement, dated as of October 1, 2001, to said Indenture (Exhibit 4.2 to PPL Energy Supply, LLC Form S-4 (Registration Statement No. 333-74794))
4(h)-3	-	Registration Rights Agreement, dated October 19, 2001, between PPL Energy Supply, LLC and the Initial Purchasers (Exhibit 4.5 to PPL Energy Supply, LLC Form S-4 (Registration Statement No. 333-74794))
*4(h)-4	-	Supplement, dated as of August 15, 2004, to said Indenture
4(i)-1	-	Indenture, dated as of May 21, 2003, by PPL Energy Supply, LLC, PPL Corporation and JPMorgan Chase Bank, as Trustee (Exhibit 4.3 to PPL Energy Supply, LLC and PPL Corporation Form S-4 (Registration Statement No. 333-106200))
4(i)-2	-	Registration Rights Agreement, dated as of May 21, 2003, by PPL Energy Supply, LLC, PPL Corporation and the Representatives of the Initial Purchasers (Exhibit 4.2 to PPL Energy Supply, LLC and PPL Corporation Form S-4 (Registration Statement No. 333-106200))
4(i)-3	-	Supplement, dated November 12, 2004, to said Indenture (Exhibit 99.1 to PPL Energy Supply, LLC Form 8-K Report (File No. 333-74794) dated November 17, 2004)
4(j)-1	-	Indenture, dated as of February 26, 2004, among PPL Corporation, PPL Capital Funding, Inc. and JPMorgan Chase Bank, as Trustee (Exhibit 4(b) to PPL Corporation Form 10-Q Report (File No. 1-11459) for the quarter ended March 31, 2004)
4(j)-2	-	Registration Rights Agreement, dated as of February 26, 2004, among PPL Corporation, PPL Capital Funding, Inc. and the Representatives of the Initial Purchasers (Exhibit 4(c) to PPL Corporation Form 10-Q Report (File No. 1-11459) for the quarter ended March 31, 2004)
*4(k)	-	Trust Deed, dated November 9, 1995, between Western Power Distribution (South Wales) plc and Bankers Trustee Company Limited
*4(l)-1	-	Indenture, dated as of November 21, 1996, among Western Power Distribution LLP and Western Power Distribution Holdings Limited (as successor co-obligors), Deutsche Bank Trust Company Americas (formerly Bankers Trust Company), as Trustee, and Deutsche Bank Luxembourg S.A. (formerly Bankers Trust Luxembourg S.A.), as Paying and Transfer Agent
*4(l)-2	-	Supplement, dated as of November 21, 1996, to said Indenture
*4(l)-3	-	Supplement, dated as of December 2, 1998, to said Indenture
*4(l)-4	-	Supplement, dated as of January 30, 2003, to said Indenture
*4(l)-5	-	Supplement, dated as of January 30, 2003, to said Indenture
*4(m)-1	-	Indenture, dated as of January 29, 1997, among Western Power Distribution LLP and Western Power Distribution Holdings Limited (as successor co-obligors), Deutsche Bank Trust Company Americas (formerly Bankers Trust Company), as Trustee, and Deutsche Bank Luxembourg S.A. (formerly Bankers Trust Luxembourg S.A.), as Paying and Transfer Agent
*4(m)-2	-	Supplement, dated as of December 2, 1998, to said Indenture
*4(m)-3	-	Supplement, dated as of January 30, 2003, to said Indenture
*4(m)-4	-	Supplement, dated as of January 30, 2003, to said Indenture
*4(n)-1	-	Indenture, dated as of March 16, 2001, among Western Power Distribution Holdings Limited (as successor obligor), Deutsche Bank Trust Company Americas (formerly Bankers Trust Company), as Trustee, and Deutsche Bank Luxembourg S.A. (formerly Bankers Trust Luxembourg S.A.), as Paying and Transfer Agent
*4(n)-2	-	Supplement, dated as of March 16, 2001, to said Indenture
*4(n)-3	-	Supplement, dated as of January 30, 2003, to said Indenture
*4(o)-1	-	Trust Deed, dated March 25, 2003, between Western Power Distribution (South West) plc and J.P. Morgan Corporate Trustee Services Limited
*4(o)-2	-	Supplement, dated as of May 27, 2003, to said Trust Deed
10(a)	-	$300 million Three-Year Credit Agreement, dated as of June 24, 2003, among PPL Energy Supply, LLC and the banks named therein (Exhibit 10(e) to PPL Energy Supply, LLC Form 10-Q Report (File No. 333-74794) for the quarter ended June 30, 2003)
10(b)	-	$800 million Five-Year Credit Agreement, dated as of June 22, 2004, among PPL Energy Supply, LLC and the banks named therein (Exhibit 10(b) to PPL Energy Supply, LLC Form 10-Q Report (File No. 333-74794) for the quarter ended June 30, 2004)
10(c)	-	$100 million Three-Year Credit Agreement, dated as of June 24, 2003, among PPL Electric Utilities Corporation and the banks named therein (Exhibit 10(f) to PPL Electric Utilities Corporation Form 10-Q Report (File No. 1-905) for the quarter ended June 30, 2003)
10(d)	-	$200 million Five-Year Credit Agreement, dated as of June 22, 2004, among PPL Electric Utilities Corporation and the banks named therein (Exhibit 10(c) to PPL Electric Utilities Corporation Form 10-Q Report (File No. 1-905) for the quarter ended June 30, 2004)
10(e)	-	$150 Million Credit and Reimbursement Agreement, dated as of April 25, 2001, among PPL Montana, LLC and the banks named therein (Exhibit 10(d) to PPL Montana, LLC Form 10-Q Report (File No. 333-50350) for the quarter ended June 30, 2001)
10(f)	-	Generation Supply Agreement, dated as of June 20, 2001, between PPL Electric Utilities Corporation and PPL EnergyPlus, LLC (Exhibit 10.5 to PPL Energy Supply, LLC Form S-4 (Registration Statement No. 333-74794))
10(g)	-	Master Power Purchase and Sale Agreement, dated as of October 15, 2001, between Northwestern Energy Division (successor in interest to The Montana Power Company) and PPL Montana, LLC (Exhibit 10(g) to PPL Montana, LLC Form 10-K Report (File No. 333-50350) for year ended December 31, 2001)
10(h)	-	Guaranty, dated as of December 21, 2001, from PPL Energy Supply, LLC in favor of LMB Funding, Limited Partnership (Exhibit 10(j) to PPL Energy Supply, LLC Form 10-K Report (File No. 333-74794) for the year ended December 31, 2001)
10(i)-1	-	Agreement for Lease, dated as of December 21, 2001, between LMB Funding, Limited Partnership and Lower Mt. Bethel Energy, LLC (Exhibit 10(m) to PPL Energy Supply, LLC Form 10-K Report (File No. 333-74794) for the year ended December 31, 2003)
10(i)-2	-	Amendment No. 1 to Agreement for Lease, dated as of September 16, 2002, between LMB Funding, Limited Partnership and Lower Mt. Bethel Energy, LLC (Exhibit 10(m)-1 to PPL Energy Supply, LLC Form 10-K Report (File No. 333-74794) for the year ended December 31, 2003)
10(j)-1	-	Lease Agreement, dated as of December 21, 2001, between LMB Funding, Limited Partnership and Lower Mt. Bethel Energy, LLC (Exhibit 10(n) to PPL Energy Supply, LLC Form 10-K Report (File No. 333-74794) for the year ended December 31, 2003)
10(j)-2	-	Amendment No. 1 to Lease Agreement, dated as of September 16, 2002, between LMB Funding, Limited Partnership and Lower Mt. Bethel Energy, LLC (Exhibit 10(n)-1 to PPL Energy Supply, LLC Form 10-K Report (File No. 333-74794) for the year ended December 31, 2003)
10(k)	-	Pollution Control Facilities Loan Agreement, dated as of May 1, 1973, between PPL Electric Utilities Corporation and the Lehigh County Industrial Development Authority (Exhibit 5(z) to Registration Statement No. 2-60834)
[_]10(l)-1	-	Amended and Restated Directors Deferred Compensation Plan, dated June 12, 2000 (Exhibit 10(h) to PPL Corporation Form 10-K Report (File No. 1-11459) for the year ended December 31, 2000)
[_]10(l)-2	-	Amendment No. 1 to Amended and Restated Directors Deferred Compensation Plan, dated December 18, 2002 (Exhibit 10(m)-1 to PPL Corporation Form 10-K Report (File No. 1-11459) for the year ended December 31, 2002)
[_]10(l)-3	-	Amendment No. 2 to Amended and Restated Directors Deferred Compensation Plan, dated December 4, 2003 (Exhibit 10(q)-2 to PPL Corporation Form 10-K Report (File No. 1-11459) for the year ended December 31, 2003)
[_]10(m)	-	Amended and Restated Officers Deferred Compensation Plan, dated December 8, 2003 (Exhibit 10(r) to PPL Corporation Form 10-K Report (File No. 1-11459) for the year ended December 31, 2003)
[_]10(n)-1	-	Amended and Restated Supplemental Executive Retirement Plan, dated December 8, 2003 (Exhibit 10(s) to PPL Corporation Form 10-K Report (File No. 1-11459) for the year ended December 31, 2003)
[_]10(n)-2	-	Amendment No. 1 to Supplemental Executive Retirement Plan, dated December 16, 2004 (Exhibit 99.1 to PPL Corporation Form 8-K Report (File No. 1-11459) dated December 17, 2004)
[_]10(o)-1	-	Incentive Compensation Plan, amended and restated effective January 1, 2003 (Exhibit 10(p) to PPL Corporation Form 10-K Report (File No. 1-11459) for the year ended December 31, 2002)
[_]10(o)-2	-	Form of Stock Option Agreement for stock option awards under the Incentive Compensation Plan (Exhibit 10(b) to PPL Corporation Form 10-Q Report (File No. 1-11459) for the quarter ended September 30, 2004)
[_]10(p)	-	Incentive Compensation Plan for Key Employees, amended and restated effective January 1, 2003 (Schedule B to Proxy Statement of PPL Corporation, dated March 17, 2003)
[_]10(q)	-	Short-term Incentive Plan (Schedule B to Proxy Statement of PPL Corporation, dated March 12, 1999)
[_]10(r)	-	Form of Severance Agreement entered into between PPL Corporation and the Executive Officers listed in this Form 10-K Report (Exhibit 10(r) to PPL Corporation Form 10-K Report (File No. 1-11459) for the year ended December 31, 2001)
[_]10(s)	-	Form for Retention Agreement entered into between PPL Corporation and Messrs. Champagne, Miller and Petersen (Exhibit 10(s) to PPL Corporation Form 10-K Report (File No. 1-11459) for the year ended December 31, 2001)
[_]10(t)	-	Agreement dated January 15, 2003 between PPL Corporation and Mr. Miller regarding Supplemental Pension Benefits (Exhibit 10(u) to PPL Corporation Form 10-K Report (File No. 1-11459) for the year ended December 31, 2002)
10(u)	-	Equity Contribution Agreement, among PPL Corporation, PPL Montana, LLC, and The Chase Manhattan Bank, as Trustee (Exhibit 10.15 to PPL Montana, LLC Form S-4 (Registration Statement No. 333-50350))
10(v)	-	Facility Lease Agreement (BA 1/2) between PPL Montana, LLC and Montana OL3, LLC (Exhibit 4.7a to PPL Montana, LLC Form S-4 (Registration Statement No. 333-50350))
10(w)	-	Facility Lease Agreement (BA 3) between PPL Montana, LLC and Montana OL4, LLC (Exhibit 4.8a to PPL Montana, LLC Form S-4 (Registration Statement No. 333-50350))
10(x)	-	Services Agreement, dated as of July 1, 2000, among PPL Corporation, PPL Energy Funding Corporation and its direct and indirect subsidiaries in various tiers, PPL Capital Funding, Inc., PPL Gas Utilities Corporation, PPL Services Corporation and CEP Commerce, LLC (Exhibit 10.20 to PPL Energy Supply, LLC Form S-4 (Registration Statement No. 333-74794))
10(y)	-	Pollution Control Facilities Loan Agreement, dated as of February 1, 2003, between PPL Electric Utilities Corporation and the Lehigh County Industrial Development Authority
10(z)-1	-	Asset Purchase Agreement, dated as of June 1, 2004, by and between PPL Sundance Energy, LLC, as Seller, and Arizona Public Service Company, as Purchaser (Exhibit 10(a) to PPL Corporation and PPL Energy Supply, LLC Form 10-Q Reports (File Nos. 1-11459 and 333-74794) for the quarter ended June 30, 2004)
10(z)-2	-	Amendment No. 1, dated December 14, 2004, to said Asset Purchase Agreement (Exhibit 99.1 to PPL Corporation and PPL Energy Supply, LLC Form 8-K Reports (File Nos. 1-11459 and 333-74794) dated December 15, 2004)
[_]10(aa)	-	Separation Agreement and General Release dated July 27, 2004 (Exhibit 10(a) to PPL Corporation Form 10-Q Report (File No. 1-11459) for the quarter ended September 30, 2004)
10(bb)	-	Receivables Sale Agreement, dated as of August 1, 2004, between PPL Electric Utilities Corporation, as Originator, and PPL Receivables Corporation, as Buyer (Exhibit 10(d) to PPL Electric Utilities Corporation Form 10-Q Report (File No. 1-905) for the quarter ended June 30, 2004)
10(cc)	-	Credit and Security Agreement, dated as of August 1, 2004, among PPL Receivables Corporation, as Borrower, PPL Electric Utilities Corporation, as Servicer, Blue Ridge Asset Funding Corporation, the Liquidity Banks from time to time party thereto and Wachovia Bank, National Association, as Agent (Exhibit 10(e) to PPL Electric Utilities Corporation Form 10-Q Report (File No. 1-905) for the quarter ended June 30, 2004)
*10(dd)	-	$300 Demand Loan Agreement, dated as of August 20, 2004, among CEP Lending, Inc. and PPL Energy Funding Corporation
*10(ee)	-	Amended and Restated £400,000,000 Credit Agreement, dated as of October 12, 2004, among Western Power Distribution (South West) plc and the banks named therein
*10(ff)	-	Pollution Control Facilities Loan Agreement, dated as of February 1, 2005, between PPL Electric Utilities Corporation and the Lehigh County Industrial Development Authority
*10(gg)	-	PPL Corporation Director and Named Executive Officer Compensation Matters
*10(hh)	-	PPL Electric Utilities Corporation Named Executive Officer Compensation Matters
*12(a)	-	PPL Corporation and Subsidiaries Computation of Ratio of Earnings to Fixed Charges
*12(b)	-	PPL Energy Supply, LLC and Subsidiaries Computation of Ratio of Earnings to Fixed Charges
*12(c)	-	PPL Electric Utilities Corporation and Subsidiaries Computation of Ratio of Earnings to Fixed Charges
*21(a)	-	Subsidiaries of PPL Corporation
*21(b)	-	Subsidiaries of PPL Electric Utilities Corporation
*23(a)	-	Consent of PricewaterhouseCoopers LLP - PPL Corporation
*23(b)	-	Consent of PricewaterhouseCoopers LLP - PPL Energy Supply, LLC
*24	-	Power of Attorney
*31(a)	-	Certificate of PPL's principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*31(b)	-	Certificate of PPL's principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*31(c)	-	Certificate of PPL Energy Supply's principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*31(d)	-	Certificate of PPL Energy Supply's principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*31(e)	-	Certificate of PPL Electric's principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*31(f)	-	Certificate of PPL Electric's principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*32(a)	-	Certificate of PPL's principal executive officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
*32(b)	-	Certificate of PPL's principal financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
*32(c)	-	Certificate of PPL Energy Supply's principal executive officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
*32(d)	-	Certificate of PPL Energy Supply's principal financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
*32(e)	-	Certificate of PPL Electric's principal executive officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
*32(f)	-	Certificate of PPL Electric's principal financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
*99	-	PPL Corporate Organization (Selected Subsidiaries)

EX-4

Exhibit 4(b)-20

PPL ELECTRIC UTILITIES CORPORATION
(formerly PP&L, Inc. and Pennsylvania Power & Light Company)

TO

DEUTSCHE BANK TRUST COMPANY AMERICAS

(formerly Bankers Trust Company,
successor to Morgan Guaranty Trust Company of New York,
formerly Guaranty Trust Company of New York)

As Trustee under PPL Electric Utilities Corporation's
Mortgage and Deed of Trust,
Dated as of October 1, 1945

_____________________________

Seventy-second Supplemental Indenture

Providing among other things for
First Mortgage Bonds, 4.70% Pollution Control Series due 2029

_____________________________

Dated as of February 1, 2005

SEVENTY-SECOND SUPPLEMENTAL INDENTURE

SEVENTY-SECOND SUPPLEMENTAL INDENTURE, dated as of the lst day of February, 2005 made and entered into by and between PPL ELECTRIC UTILITIES CORPORATION (formerly PP&L, Inc. and Pennsylvania Power & Light Company), a corporation of the Commonwealth of Pennsylvania, whose address is Two North Ninth Street, Allentown, Pennsylvania 18101 (hereinafter sometimes called the Company), and DEUTSCHE BANK TRUST COMPANY AMERICAS (formerly Bankers Trust Company), a corporation of the State of New York, whose address is 60 Wall Street, New York, New York 10005 (hereinafter sometimes called the Trustee), as Trustee under the Mortgage and Deed of Trust, dated as of October 1, 1945 (hereinafter called the Mortgage and, together with any indentures supplemental thereto, hereinafter called the Indenture), which Mortgage was executed and delivered by Pennsylvania Power & Light Company to secure the payment of bonds issued or to be issued under and in accordance with the provisions of the Mortgage, reference to which said Mortgage is hereby made, this instrument (hereinafter called the Seventy-second Supplemental Indenture) being supplemental thereto.

WHEREAS, said Mortgage was or is to be recorded in various Counties in the Commonwealth of Pennsylvania, which Counties include or will include all Counties in which this Seventy-second Supplemental Indenture is to be recorded; and

WHEREAS, by amendment to its Articles of Incorporation filed in the Office of the Secretary of State of Pennsylvania on September 12, 1997, the Company changed its name to PP&L, Inc.; and

WHEREAS, by an amendment to its Articles of Incorporation filed with the Office of the Secretary of State of Pennsylvania on February 14, 2001, the Company changed its name to PPL Electric Utilities Corporation; and

WHEREAS, an instrument, dated August 5, 1994, was executed by the Company appointing Bankers Trust Company as Trustee in succession to said Morgan Guaranty Trust Company of New York (resigned) under the Indenture, and by Bankers Trust Company accepting said appointment, which instrument was or is to be recorded in various Counties in the Commonwealth of Pennsylvania; and

WHEREAS, by an amendment to its Articles of Incorporation filed in the office of the Secretary of State of New York, effective April 15, 2002, the Trustee changed its name to Deutsche Bank Trust Company Americas; and

WHEREAS, by the Mortgage the Company covenanted that it would execute and deliver such supplemental indenture or indentures and such further instruments and do such further acts as might be necessary or proper to carry out more effectually the purposes of the Indenture and to make subject to the lien of the Indenture any property thereafter acquired and intended to be subject to the lien thereof; and

WHEREAS, the Company executed and delivered as supplements to the Mortgage, the following supplemental indentures:

Designation	Dated as of
First Supplemental Indenture	July 1, 1947
Second Supplemental Indenture	December 1, 1948
Third Supplemental Indenture	February 1, 1950
Fourth Supplemental Indenture	March 1, 1953
Fifth Supplemental Indenture	August 1, 1955
Sixth Supplemental Indenture	December 1, 1961
Seventh Supplemental Indenture	March 1, 1964
Eighth Supplemental Indenture	June 1, 1966
Ninth Supplemental Indenture	November 1, 1967
Tenth Supplemental Indenture	December 1, 1967
Eleventh Supplemental Indenture	January 1, 1969
Twelfth Supplemental Indenture	June 1, 1969
Thirteenth Supplemental Indenture	March 1, 1970
Fourteenth Supplemental Indenture	February 1, 1971
Fifteenth Supplemental Indenture	February 1, 1972
Sixteenth Supplemental Indenture	January 1, 1973
Seventeenth Supplemental Indenture	May 1, 1973
Eighteenth Supplemental Indenture	April 1, 1974
Nineteenth Supplemental Indenture	October 1, 1974
Twentieth Supplemental Indenture	May 1, 1975
Twenty-first Supplemental Indenture	November 1, 1975
Twenty-second Supplemental Indenture	December 1, 1976
Twenty-third Supplemental Indenture	December 1, 1977
Twenty-fourth Supplemental Indenture	April 1, 1979
Twenty-fifth Supplemental Indenture	April 1, 1980
Twenty-sixth Supplemental Indenture	June 1, 1980
Twenty-seventh Supplemental Indenture	June 1, 1980
Twenty-eighth Supplemental Indenture	December 1, 1980
Twenty-ninth Supplemental Indenture	February 1, 1981
Thirtieth Supplemental Indenture	February 1, 1981
Thirty-first Supplemental Indenture	September 1, 1981
Thirty-second Supplemental Indenture	April 1, 1982
Thirty-third Supplemental Indenture	August 1, 1982
Thirty-fourth Supplemental Indenture	October 1, 1982
Thirty-fifth Supplemental Indenture	November 1, 1982
Thirty-sixth Supplemental Indenture	February 1, 1983
Thirty-seventh Supplemental Indenture	November 1, 1983
Thirty-eighth Supplemental Indenture	March 1, 1984
Thirty-ninth Supplemental Indenture	April 1, 1984
Fortieth Supplemental Indenture	August 15, 1984
Forty-first Supplemental Indenture	December 1, 1984
Forty-second Supplemental Indenture	June 15, 1985
Forty-third Supplemental Indenture	October 1, 1985
Forty-fourth Supplemental Indenture	January 1, 1986
Forty-fifth Supplemental Indenture	February 1, 1986
Forty-sixth Supplemental Indenture	April 1, 1986
Forty-seventh Supplemental Indenture	October 1, 1986
Forty-eighth Supplemental Indenture	March 1, 1988
Forty-ninth Supplemental Indenture	June 1, 1988
Fiftieth Supplemental Indenture	January 1, 1989
Fifty-first Supplemental Indenture	October 1, 1989
Fifty-second Supplemental Indenture	July 1, 1991
Fifty-third Supplemental Indenture	May 1, 1992
Fifty-fourth Supplemental Indenture	November 1, 1992
Fifty-fifth Supplemental Indenture	February 1, 1993
Fifty-sixth Supplemental Indenture	April 1, 1993
Fifty-seventh Supplemental Indenture	June 1, 1993
Fifty-eighth Supplemental Indenture	October 1, 1993
Fifty-ninth Supplemental Indenture	February 15, 1994
Sixtieth Supplemental Indenture	March 1, 1994
Sixty-first Supplemental Indenture	March 15, 1994
Sixty-second Supplemental Indenture	September 1, 1994
Sixty-third Supplemental Indenture	October 1, 1994
Sixty-fourth Supplemental Indenture	August 1, 1995
Sixty-fifth Supplemental Indenture	April 1, 1997
Sixty-sixth Supplemental Indenture	May 1, 1998
Sixty-seventh Supplemental Indenture	June 1, 1999
Sixty-eighth Supplemental Indenture	August 1, 2001
Sixty-ninth Supplemental Indenture	January 1, 2002
Seventieth Supplemental Indenture	February 1, 2003
Seventy-first Supplemental Indenture	May 1, 2003

which supplemental indentures were or are to be recorded in various Counties in the Commonwealth of Pennsylvania; and

WHEREAS, the Company executed and delivered its Supplemental Indenture, dated July 1, 1954, creating a security interest in certain personal property of the Company, pursuant to the provisions of the Pennsylvania Uniform Commercial Code, as a supplement to the Mortgage, which Supplemental Indenture was filed in the Office of the Secretary of the Commonwealth of Pennsylvania on July 1, 1954, and all subsequent supplemental indentures were so filed; and

WHEREAS, in addition to the property described in the Mortgage, as heretofore supplemented, the Company has acquired certain other property, rights and interests in property; and

WHEREAS, the Company has heretofore issued, in accordance with the provisions of the Mortgage, as supplemented, the following series of First Mortgage Bonds:

Series	Principal Amount Issued	Principal Amount Outstanding
3% Series due 1975	$93,000,000	None
2-3/4% Series due 1977	20,000,000	None
3-1/4% Series due 1978	10,000,000	None
2-3/4% Series due 1980	37,000,000	None
3-1/2% Series due 1983	25,000,000	None
3-3/8% Series due 1985	25,000,000	None
4-5/8% Series due 1991	30,000,000	None
4-5/8% Series due 1994	30,000,000	None
5-5/8% Series due 1996	30,000,000	None
6-3/4% Series due 1997	30,000,000	None
6-1/2% Series due 1972	15,000,000	None
7% Series due 1999	40,000,000	None
8-1/8% Series due June 1, 1999	40,000,000	None
9% Series due 2000	50,000,000	None
7-1/4% Series due 2001	60,000,000	None
7-5/8% Series due 2002	75,000,000	None
7-1/2% Series due 2003	80,000,000	None
Pollution Control Series A	28,000,000	None
9-1/4% Series due 2004	80,000,000	None
10-1/8% Series due 1982	100,000,000	None
9-3/4% Series due 2005	125,000,000	None
9-3/4% Series due November 1, 2005	100,000,000	None
8-1/4% Series due 2006	150,000,000	None
8-1/2% Series due 2007	100,000,000	None
9-7/8% Series due 1983-1985	100,000,000	None
15-5/8% Series due 2010	100,000,000	None
11-3/4% Series due 1984	30,000,000	None
Pollution Control Series B	70,000,000	None
Pollution Control Series C	20,000,000	None
14% Series due December 1, 1990	125,000,000	None
15% Series due 1984-1986	50,000,000	None
14-3/4% Series A due 1986	30,000,000	None
14-3/4% Series B due 1986	20,000,000	None
16-1/2% Series due 1987-1991	$52,000,000	None
16-1/8% Series due 1992	100,000,000	None
16-1/2% Series due 1986-1990	92,500,000	None
13-1/4% Series due 2012	100,000,000	None
Pollution Control Series D	70,000,000	None
12-1/8% Series due 1989-1993	50,000,000	None
13-1/8% Series due 2013	125,000,000	None
Pollution Control Series E	37,750,000	None
13-1/2% Series due 1994	125,000,000	None
Pollution Control Series F	115,500,000	None
12-3/4% Series due 2014	125,000,000	None
Pollution Control Series G	55,000,000	None
12% Series due 2015	125,000,000	None
10-7/8% Series due 2016	125,000,000	None
9-5/8% Series due 1996	125,000,000	None
9% Series due 2016	125,000,000	None
9-1/2% Series due 2016	125,000,000	None
9-1/4% Series due 1998	125,000,000	None
9-5/8% Series due 1998	125,000,000	None
10% Series due 2019	125,000,000	None
9-1/4% Series due 2019	250,000,000	None
9-3/8% Series due 2021	150,000,000	None
7-3/4% Series due 2002	150,000,000	None
8-1/2% Series due 2022	150,000,000	None
Pollution Control Series H	90,000,000	None
6-7/8% Series due 2003	100,000,000	None
7-7/8% Series due 2023	200,000,000	None
5-1/2% Series due 1998	150,000,000	None
6-1/2% Series due 2005	125,000,000	69,434,000
6% Series due 2000	125,000,000	None
6-3/4% Series due 2023	150,000,000	None
Pollution Control Series I	53,250,000	53,250,000
6.55% Series due 2006	150,000,000	146,000,000
7.30% Series due 2024	150,000,000	None
6-7/8% Series due 2004	150,000,000	None
7-3/8% Series due 2014	100,000,000	10,290,000
Pollution Control Series J	115,500,000	115,500,000
7.70% Series due 2009	200,000,000	325,000
Pollution Control Series K	55,000,000	55,000,000
Short-Term Series A	800,000,000	None
6 1/8% REset Put Securities Series due 2006	200,000,000	None
Short-Term Series B	600,000,000	None
5-7/8% Series due August 15, 2007	300,000,000	254,866,000
6-1/4% Series due August 15, 2009	500,000,000	485,785,000
3.125% Pollution Control Series due 2008	90,000,000	90,000,000
4.30% Collateral Series due 2013	100,000,000	100,000,000

which bonds are also sometimes called bonds of the First through Seventy-ninth Series, respectively; and

WHEREAS, Section 8 of the Mortgage provides that the form of each series of bonds (other than the First Series) issued thereunder shall be established by Resolution of the Board of Directors of the Company and that the form of such series, as established by said Board of Directors, shall specify the descriptive title of the bonds and various other terms thereof, and may also contain such provisions not inconsistent with the provisions of the Indenture as the Board of Directors may, in its discretion, cause to be inserted therein expressing or referring to the terms and conditions upon which such bonds are to be issued and/or secured under the Indenture; and

WHEREAS, Section 120 of the Mortgage provides, among other things, that any power, privilege or right expressly or impliedly reserved to or in any way conferred upon the Company by any provision of the Indenture, whether such power, privilege or right is in any way restricted or is unrestricted, may be in whole or in part waived or surrendered or subjected to any restriction if at the time unrestricted or to additional restriction if already restricted, and the Company may enter into any future covenants, limitations or restrictions for the benefit of any one or more series of bonds issued thereunder, or the Company may cure any ambiguity contained therein or in any supplemental indenture or may establish the terms and provisions of any series of bonds other than said First Series, by an instrument in writing executed and acknowledged by the Company in such manner as would be necessary to entitle a conveyance of real estate to record in all of the States in which any property at the time subject to the lien of the Indenture shall be situated; and

WHEREAS, the Company now desires to create a new series of bonds and to add to its covenants and agreements contained in the Mortgage, as heretofore supplemented, certain other covenants and agreements to be observed by it and to alter and amend in certain respects the covenants and provisions contained in the Mortgage; and

WHEREAS, the execution and delivery by the Company of this Seventy-second Supplemental Indenture, and the terms of the bonds of the Eightieth Series, hereinafter referred to, have been duly authorized by the Board of Directors of the Company by appropriate Resolutions of said Board of Directors;

NOW, THEREFORE, THIS INDENTURE WITNESSETH: That PPL Electric Utilities Corporation, in consideration of the premises and of One Dollar to it duly paid by the Trustee at or before the ensealing and delivery of these presents, the receipt whereof is hereby acknowledged, and in further evidence of assurance of the estate, title and rights of the Trustee and in order further to secure the payment both of the principal of and interest and premium, if any, on the bonds from time to time issued under the Indenture, according to their tenor and effect and the performance of all the provisions of the Indenture (including any modification made as in the Mortgage provided) and of said bonds, hereby grants, bargains, sells, releases, conveys, assigns, transfers, mortgages, pledges, sets over and confirms (subject, however, to Excepted Encumbrances as defined in Section 6 of the Mortgage) unto Deutsche Bank Trust Company Americas, as Trustee under the Indenture, and to its successor or successors in said trust, and to said Trustee and its successors and assigns forever, all property, real, personal and mixed, of the kind or nature specifically mentioned in the Mortgage, as heretofore supplemented, or of any other kind or nature, acquired by the Company after the date of the execution and delivery of the Seventy-first Supplemental Indenture (except any herein or in the Mortgage, as heretofore supplemented, expressly excepted and except any which may not lawfully be mortgaged or pledged under the Indenture), now owned or, subject to the provisions of Section 87 of the Mortgage, hereafter acquired by the Company (by purchase, consolidation, merger, donation, construction, erection or in any other way) and wheresoever situated, including (without in anywise limiting or impairing by the enumeration of the same the scope and intent of the foregoing) all lands, power sites, flowage rights, water rights, water locations, water appropriations, ditches, flumes, reservoirs, reservoir sites, canals, raceways, dams, dam sites, aqueducts, and all other rights or means for appropriating, conveying, storing and supplying water; all rights of way and roads; all plants for the generation of electricity by steam, water and/or other power; all power houses, gas plants, street lighting systems, standards and other equipment incidental thereto, telephone, radio and television systems, air-conditioning systems and equipment incidental thereto, water works, water systems, steam heat and hot water plants, substations, lines, service and supply systems, bridges, culverts, tracks, ice or refrigeration plants and equipment, offices, buildings and other structures and the equipment thereof; all machinery, engines, boilers, dynamos, electric, gas and other machines, regulators, meters, transformers, generators, motors, electrical, gas and mechanical appliances, conduits, cables, water, steam heat, gas or other pipes, gas mains and pipes, service pipes, fittings, valves and connections, pole and transmission lines, wires, cables, tools, implements, apparatus, furniture and chattels; all municipal and other franchises, consents or permits; all lines for the transmission and distribution of electric current, gas, steam heat or water for any purpose including towers, poles, wires, cables, pipes, conduits, ducts and all apparatus for use in connection therewith; all real estate, lands, easements, servitudes, licenses, permits, franchises, privileges, rights of way and other rights in or relating to real estate or the occupancy of the same and (except as herein or in the Mortgage, as heretofore supplemented, expressly excepted) all the right, title and interest of the Company in and to all other property of any kind or nature appertaining to and/or used and/or occupied and/or enjoyed in connection with any property hereinbefore or in the Mortgage, as heretofore supplemented, described;

TOGETHER with all and singular the tenements, hereditaments, prescriptions, servitudes, and appurtenances belonging or in anywise appertaining to the aforesaid property or any part thereof, with the reversion and reversions, remainder and remainders and (subject to the provisions of Section 57 of the Mortgage) the tolls, rents, revenues, issues, earnings, income, product and profits thereof, and all the estate, right, title and interest and claim whatsoever, at law as well as in equity, which the Company now has or may hereafter acquire in and to the aforesaid property and franchises and every part and parcel thereof;

IT IS HEREBY AGREED by the Company that, subject to the provisions of Section 87 of the Mortgage and to the extent permitted by law, all the property, rights, and franchises acquired by the Company (by purchase, consolidation, merger, donation, construction, erection or in any other way) after the date hereof, except any herein or in the Mortgage, as heretofore supplemented, expressly excepted, shall be and are as fully granted and conveyed hereby and as fully embraced within the lien hereof and the lien of the Indenture, as if such property, rights and franchises were now owned by the Company and were specifically described herein and conveyed hereby; and

IT IS HEREBY DECLARED by the Company that all the property, rights and franchises now owned or hereafter acquired by the Company have been, or are, or will be owned or acquired with the intention to use the same in carrying on the business or branches of business of the Company, and it is hereby declared that it is the intention of the Company that all thereof, except any herein or in the Mortgage, as heretofore supplemented, expressly excepted, shall (subject to the provisions of Section 87 of the Mortgage and to the extent permitted by law) be embraced within the lien of this Seventy-second Supplemental Indenture and the lien of the Indenture;

PROVIDED that the following are not and are not intended to be now or hereafter granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged, pledged, set over or confirmed hereunder and are hereby expressly excepted from the lien and operation of this Seventy-second Supplemental Indenture and from the lien and operation of the Indenture, viz: (1) cash, shares of stock, bonds, notes and other obligations and other securities not hereafter specifically pledged, paid, deposited, delivered or held under the Indenture or covenanted so to be; (2) goods, wares, merchandise, equipment, apparatus, materials, or supplies held for the purpose of sale or other disposition in the usual course of business; fuel, oil and similar materials and supplies consumable in the operation of any of the properties of the Company; construction equipment acquired for temporary use; all aircraft, rolling stock, trolley coaches, buses, motor coaches, automobiles and other vehicles and materials and supplies held for the purposes of repairing or replacing (in whole or part) any of the same; all timber, minerals, mineral rights and royalties; (3) bills, notes and accounts receivable, judgments, demands and choses in action, and all contracts, leases and operating agreements not specifically pledged under the Indenture or covenanted so to be; the Company's contractual rights or other interest in or with respect to tires not owned by the Company; (4) the last day of the term of any lease or leasehold which may be or become subject to the lien of the Indenture; (5) electric energy, gas, steam, ice, and other materials or products generated, manufactured, produced or purchased by the Company for sale, distribution or use in the ordinary course of its business and (6) any property released from the lien of the Mortgage pursuant to Sections 58, 59, 60, 62 or 63 of the Mortgage; provided, however, that the property and rights expressly excepted from the lien and operation of the Indenture in the above subdivisions (2) and (3) shall (to the extent permitted by law) cease to be so excepted in the event and as of the date that the Trustee or a receiver or trustee shall enter upon and take possession of the Mortgaged and Pledged Property in the manner provided in Article XIII of the Mortgage by reason of the occurrence of a Default as defined in Section 65 thereof, as supplemented by the provisions of this Seventy-second Supplemental Indenture;

TO HAVE AND TO HOLD all such properties, real, personal and mixed, granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged, pledged, set over or confirmed by the Company as aforesaid, or intended so to be, unto Deutsche Bank Trust Company Americas, as Trustee, and its successors and assigns forever;

IN TRUST NEVERTHELESS for the same purposes and upon the same terms, trusts and conditions and subject to and with the same provisos and covenants as are set forth in the Mortgage, as heretofore supplemented, this Seventy-second Supplemental Indenture being supplemental to the Mortgage;

AND IT IS HEREBY COVENANTED by the Company that all the terms, conditions, provisos, covenants and provisions contained in the Mortgage, as heretofore supplemented, shall affect and apply to the property hereinbefore described and conveyed and to the estate, rights, obligations and duties of the Company and the Trustee and the beneficiaries of the trust with respect to said property, and to the Trustee and its successors as Trustee of said property in the same manner and with the same effect as if the said property had been owned by the Company at the time of the execution of the Mortgage, and had been specifically and at length described in and conveyed to the Trustee by the Mortgage as a part of the property therein stated to be conveyed.

The Company further covenants and agrees to and with the Trustee and its successors in said trust under the Indenture, as follows:

ARTICLE I.

Eightieth Series of Bonds

SECTION 1.There shall be a series of bonds designated "First Mortgage Bonds, 4.70% Pollution Control Series due 2029" (herein sometimes referred to as the "Eightieth Series"), each of which shall also bear the descriptive title First Mortgage Bonds, and the form thereof, which shall be established by Resolution of the Board of Directors of the Company, shall contain suitable provisions with respect to the matters hereinafter in this Section specified. Bonds of the Eightieth Series shall be limited to $115,500,000 in aggregate principal amount, except as provided in Section 16 of the Mortgage, and shall be issued as fully registered bonds in denominations of One Thousand Dollars and in any multiple or multiples of One Thousand Dollars; each bond of the Eightieth Series shall mature on September 1, 2029, shall bear interest at the rate of 4.70% per annum, payable semi-annually on March 1 and September 1 of each year; the principal of and interest on each said bond to be payable at the office or agency of the Company in the Borough of Manhattan, The City of New York, and interest on each said bond to be also payable at the office of the Company in the City of Allentown, Pennsylvania, in such coin or currency of the United States of America as at the time of payment is legal tender for public and private debts. Bonds of the Eightieth Series shall be dated as in Section 10 of the Mortgage provided.

The bonds of the Eightieth Series shall be issued by the Company, registered in the name of and delivered to JPMorgan Chase Bank, N.A., as trustee (the "2001 Trustee") under an Indenture dated as of August 1, 2001 (the "2001 Indenture"), to provide for the payment when due (whether at maturity, by acceleration or otherwise) of the principal and interest of the Securities (as defined in the 2001 Indenture) to be issued from time to time under the 2001 Indenture.

The bonds of the Eightieth Series shall not be transferable by the 2001 Trustee, except to a successor trustee under the 2001 Indenture. Bonds of the Eightieth Series so transferable to a successor trustee under the 2001 Indenture may be transferred at the principal office of the Trustee in the Borough of Manhattan, The City of New York.

Any payment by the Company under the 2001 Indenture of the principal of or premium, if any, or interest, if any on the securities (the "4.70% Securities") which shall been authenticated and delivered under the 2001 Indenture on the basis of the issuance and delivery to the 2001 Trustee of bonds of the Eightieth Series (other than by the application of the proceeds of a payment in respect of such bonds) shall, to the extent hereof, be deemed to satisfy and discharge the obligation of the Company, if any, to make a payment of principal of, or premium, or interest on such bonds, as the case may be, which is then due.

The Trustee may conclusively presume that the obligation of the Company to pay the principal of or interest on the bonds of the Eightieth Series as the same shall become due and payable shall have been fully satisfied and discharged unless and until it shall have received a written notice from the 2001 Trustee, signed by an authorized officer thereof, stating that the principal of or interest on specified bonds of the Eightieth Series has become due and payable and has not been fully paid, and specifying the amount of funds required to make such payment.

(I) Each holder of a bond of the Eightieth Series consents that the bonds of the Eightieth Series may be redeemable at the option of the Company or pursuant to the requirements of the Mortgage in whole at any time, or in part from time to time, prior to maturity, without notice provided in Section 52 of the Mortgage, at the principal amount of the bonds to be redeemed, in each case, together with accrued interest to the date fixed for redemption by the Company in a notice delivered on or before the date fixed for redemption by the Company to the Trustee and to the holders of the bonds to be redeemed.

(II) The bonds of the Eightieth Series shall also be redeemable, in whole at any time, or in part from time to time, prior to maturity, at a redemption price equal to the principal amount thereof, together with accrued and unpaid interest to the date of payment of such principal amount, upon receipt by the Trustee of a written notice from the 2001 Trustee (i) delivered to the Trustee and the Company, (ii) signed by its President or any Vice President, (iii)(A) stating that an Event of Default has occurred under the 2001 Indenture and is continuing and that, as a result, there then is due and payable a specified amount with respect to the Securities Outstanding under the 2001 Indenture, for the payment of which the 2001 Trustee has not received funds or (B) stating that the 4.70% Securities have become due and payable pursuant to the mandatory redemption provisions therein and in the 2001 Indenture, and the 2001 Indenture Trustee has not received funds for such payment, and (iv) specifying the principal amount of the bonds of the Eightieth Series to be redeemed. Delivery of such notice shall constitute a waiver by the 2001 Trustee of notice of redemption under the Indenture.

(III) At the option of the registered owner, any bonds of the Eightieth Series, upon surrender thereof, for cancellation, at the office or agency of the Company in the Borough of Manhattan, The City of New York, shall be exchangeable for a like aggregate principal amount of bonds of the same series, interest rate, maturity and other terms of other authorized denominations.

Subject to the provisions of the third paragraph of this Section 1, Bonds of the Eightieth Series shall be transferable, upon the surrender thereof for cancellation, together with a written instrument of transfer in form approved by the registrar duly executed by the registered owner or by his duly authorized attorney, at the office or agency of the Company in the Borough of Manhattan, The City of New York; provided that such transfer shall not result in any security being required to be registered under the Securities Act of 1933, as amended, and an opinion of counsel satisfactory to the Company to such effect shall have been provided to the Company.

The bonds of the Eightieth Series shall not be redeemable by the application of cash deposited with the Trustee pursuant to the provisions of Section 64.

Upon any transfer or exchange of bonds of the Eightieth Series, the Company may make a charge therefor sufficient to reimburse it for any tax or taxes or other governmental charge, as provided in Section 12 of the Mortgage, but the Company hereby waives any right to make a charge in addition thereto for any exchange or transfer of bonds of the Eightieth Series.

ARTICLE II.

Miscellaneous Provisions

SECTION 2.The Company reserves the right to make such amendments to the Mortgage, as supplemented, as shall be necessary in order to delete subsection (I) of Section 39 of the Mortgage, and each holder of bonds of the Eightieth Series hereby consents to such deletion without any other or further action by any holder of bonds of the Eightieth Series.

SECTION 3.The terms defined in the Mortgage, as heretofore supplemented, shall, for all purposes of this Seventy-second Supplemental Indenture, have the meanings specified in the Mortgage, as heretofore supplemented.

SECTION 4.Whenever in this Seventy-second Supplemental Indenture either of the parties hereto is named or referred to, this shall, subject to the provisions of Articles XVI and XVII of the Mortgage, be deemed to include the successors and assigns of such party, and all the covenants and agreements in this Seventy-second Supplemental Indenture contained by or on behalf of the Company, or by or on behalf of the Trustee shall, subject as aforesaid, bind and inure to the respective benefits of the respective successors and assigns of such parties, whether so expressed or not.

SECTION 5.So long as any bonds of the Eightieth Series and remain Outstanding, unless this provision shall have been waived in writing by the holders of a majority in aggregate principal amount of bonds of the Eightieth Series Outstanding at the time of such consent, subdivision (c) of Section 65 of the Mortgage shall read as follows:

"(c) Failure to pay interest or premium, if any, upon or principal (whether at maturity as therein expressed or by declaration, or otherwise) of any Outstanding Qualified Lien Bonds or of any outstanding indebtedness secured by any mortgage or other lien (not included in the term Excepted Encumbrances) prior to the lien of this Indenture, existing upon any property of the Company which is subject to the lien and operation of this Indenture continued beyond the period of grace, if any, specified in such mortgage or Qualified Lien or other lien securing the same;"

SECTION 6.A breach of a specified covenant or agreement of the Company contained in this Seventy-second Supplemental Indenture shall become a Default under the Indenture upon the happening of the events provided in Section 65(g) of the Mortgage with respect to such a covenant or agreement.

SECTION 7.The Trustee hereby accepts the trusts herein declared, provided, created or supplemented and agrees to perform the same upon the terms and conditions herein and in the Mortgage, as heretofore supplemented, set forth and upon the following terms and conditions:

The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Seventy-second Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made by the Company solely. Each and every term and condition contained in Article XVII of the Mortgage, as heretofore amended by said First through Seventieth Supplemental Indentures, shall apply to and form part of this Seventy-second Supplemental Indenture with the same force and effect as if the same were herein set forth in full with such omissions, variations and insertions, if any, as may be appropriate to make the same conform to the provisions of this Seventy-second Supplemental Indenture.

SECTION 8.Nothing in this Seventy-second Supplemental Indenture, expressed or implied, is intended, or shall be construed, to confer upon, or to give to, any person, firm or corporation, other than the parties hereto and the holders of the bonds and coupons Outstanding under the Indenture, any right, remedy or claim under or by reason of this Seventy-second Supplemental Indenture or by any covenant, condition, stipulation, promise or agreement hereof, and all the covenants, conditions, stipulations, promises and agreements in this Seventy-second Supplemental Indenture contained by or on behalf of the Company shall be for the sole and exclusive benefit of the parties hereto, and of the holders of the bonds and coupons Outstanding under the Indenture.

SECTION 9.This Seventy-second Supplemental Indenture shall be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

PPL ELECTRIC UTILITIES CORPORATION does hereby constitute and appoint JAMES E. ABEL, Treasurer of PPL ELECTRIC UTILITIES CORPORATION, to be its attorney for it, and in its name and as and for its corporate act and deed to acknowledge this Seventy-second Supplemental Indenture before any person having authority by the laws of the Commonwealth of Pennsylvania to take such acknowledgment, to the intent that the same may be duly recorded, and DEUTSCHE BANK TRUST COMPANY AMERICAS does hereby constitute and appoint Susan Johnson, a Vice President of DEUTSCHE BANK TRUST COMPANY AMERICAS, to be its attorney for it, and in its name and as and for its corporate act and deed to acknowledge this Seventy-second Supplemental Indenture before any person having authority by the laws of the Commonwealth of Pennsylvania to take such acknowledgment, to the intent that the same may be duly recorded.

IN WITNESS WHEREOF, PPL ELECTRIC UTILITIES CORPORATION has caused its corporate name to be hereunto affixed, and this instrument to be signed and sealed by its President, one of its Vice Presidents or its Treasurer, and its corporate seal to be attested by its Secretary or one of its Assistant Secretaries for and in its behalf, in the City of Allentown, Pennsylvania, and DEUTSCHE BANK TRUST COMPANY AMERICAS has caused its corporate name to be hereunto affixed, and this instrument to be signed and sealed by one of its Principals, Vice Presidents, Trust Officers or Associates, and its corporate seal to be attested by one of its Vice Presidents, Assistant Vice Presidents, Trust Officers or Associates, in The City of New York, as of the day and year first above written.

PPL ELECTRIC UTILITIES CORPORATION

By:  _____________________________________________________
        Name:  James E. Abel
        Title:     Treasurer

Attest:

__________________________________________
Assistant Secretary

DEUTSCHE BANK TRUST COMPANY AMERICAS

By:  _____________________________________________________
        Name:  Susan Johnson
        Title:     Vice President

Attest:

__________________________________________
Dorothy Robinson
Vice President

COMMONWEALTH OF PENNSYLVANIA	)
	) ss.:
COUNTY OF LEHIGH	)

On this ____ day of February, 2005, before me, a notary public, the undersigned, personally appeared JAMES E. ABEL, who acknowledged himself to be the Treasurer of PPL ELECTRIC UTILITIES CORPORATION, a corporation and that he, as such Treasurer, being authorized to do so, executed the foregoing instrument for the purposes therein contained, by signing the name of the corporation by himself as Treasurer.

In witness whereof, I hereunto set my hand and official seal.

                                                                                             _______________________________________________
                                                                                             Notary Public

STATE OF NEW YORK	)
	) ss.:
COUNTY OF NEW YORK	)

On this ___ day of February, 2005, before me, a notary public, the undersigned, personally appeared [Susan Johnson], who acknowledged herself to be a Vice President of DEUTSCHE BANK TRUST COMPANY Americas, a corporation and that she, as such Vice President, being authorized to do so, executed the foregoing instrument for the purposes therein contained, by signing the name of the corporation by herself as Vice President.

In witness whereof, I hereunto set my hand and official seal.

                                                                                             _______________________________________________
                                                                                             Notary Public

Deutsche Bank Trust Company Americas hereby certifies that its precise name and address as Trustee hereunder are:

DEUTSCHE BANK TRUST COMPANY AMERICAS

Trust & Securities Services
60 Wall Street, MS NYC60-2710
New York, New York 10005

DEUTSCHE BANK TRUST COMPANY AMERICAS

By:  _____________________________________________________
        Name:  Susan Johnson
        Title:     Vice President

EX-4

Exhibit 4(g)-5

PPL ELECTRIC UTILITIES CORPORATION

TO

JPMORGAN CHASE BANK, N.A.,
(formerly known as The Chase Manhattan Bank)
Trustee

_____________________________

Supplemental Indenture No. 4
Dated as of February 1, 2005

_____________________________

Supplemental to the Indenture
dated as of August 1, 2001

_____________________________

Establishing Terms of

Senior Secured Bonds, 4.70% Pollution Control Series due 2029

SUPPLEMENTAL INDENTURE NO. 4

SUPPLEMENTAL INDENTURE No. 4, dated as of the 1^st day of February, 2005 made and entered into by and between PPL ELECTRIC UTILITIES CORPORATION, a corporation of the Commonwealth of Pennsylvania, whose address is Two North Ninth Street, Allentown, Pennsylvania 18101 (hereinafter sometimes called the "Company"), and JPMORGAN CHASE BANK, N.A. (formerly known as The Chase Manhattan Bank), a national banking association, whose address is 4 New York Plaza, 15^th Floor, New York, New York 10004 (hereinafter sometimes called the "Trustee"), as Trustee under the Indenture, dated as of August 1, 2001 (hereinafter called the "Original Indenture"), this Supplemental Indenture No. 4 being supplemental thereto. The Original Indenture and any and all indentures and instruments supplemental thereto are hereafter sometimes collectively called the "Indenture."

Recitals of the Company

The Original Indenture was authorized, executed and delivered by the Company to provide for the issuance from time to time of its Securities (such term and all other capitalized terms used herein without definition having the meanings assigned to them in the Original Indenture), to be issued in one or more series as contemplated therein, and to provide security for the payment of the principal of and premium, if any, and interest, if any, on the Securities.

The Company has heretofore executed and delivered to the Trustee Supplemental Indentures for the purposes recited therein and for the purpose of creating series of securities as set forth in Schedule A hereto.

Pursuant to Article Three of the Original Indenture, the Company has established a fifth series of Securities, such series of Securities to be hereinafter sometimes called "Securities of the Fifth Series."

As contemplated in Section 301 of the Original Indenture, the Company wishes to establish the designation and certain terms of the Securities of the Fifth Series. The Company has duly authorized the execution and delivery of this Supplemental Indenture No. 4 to establish the designation and certain terms of the Securities of the Fifth Series and has duly authorized the issuance of such Securities; and all acts necessary to make this Supplemental Indenture No. 4 a valid agreement of the Company, and to make the Securities of the Fifth Series valid obligations of the Company, have been performed.

NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE NO. 4 WITNESSETH, that, for and in consideration of the premises and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is mutually covenanted and agreed, for the equal and proportionate benefit of the Holders of the Securities of the Fifth Series, as follows:

ARTICLE One

Fifth Series of Securities

SECTION 101. Securities of the Fifth Series. The Securities of the Fifth Series shall be designated Senior Secured Bonds, 4.70% Pollution Control Series due 2029, and shall have the terms provided therefor in this Article One of this Supplemental Indenture No. 4, shall be limited in aggregate principal amount (except as contemplated in Section 301(b) of the Original Indenture) to $115,500,000, and shall have such terms as are hereby established for such Securities of the Fifth Series as contemplated in Section 301 of the Original Indenture. The form or forms and additional terms of the Securities of the Fifth Series shall be established in an Officer's Certificate of the Company, as contemplated by Section 301 of the Original Indenture.

SECTION 102. Covenants.

So long as any Securities of the Fifth Series shall remain Outstanding, each of the following shall be an additional covenant of the Company under the Indenture:

(a)    After the date of the first authentication of Securities of the Fifth Series, the Company shall not issue additional Class A Bonds under the PPL 1945 Mortgage except for Class A Bonds (i) to replace mutilated, destroyed, lost or stolen Class A Bonds of the same series or to effect transfers, exchanges, or partial redemptions, payments or retirements of Class A Bonds; (ii) to be delivered to the Trustee under the Indenture; or (iii) to refund or refinance outstanding Class A Bonds.

(b)    The Securities of the Fifth Series shall have the benefit of the covenant of the Company contained in Section 707 of the Indenture.

(c)    The Company shall notify the Holders of the Securities of the Fifth Series of the discharge of the Lien of the Indenture pursuant to Section 1811 of the Original Indenture promptly after the recording of the instruments of discharge executed by the Trustee.

SECTION 103. Release of Mortgaged Property.

So long as any Securities of the Fifth Series shall remain Outstanding, any Officer's Certificate delivered pursuant to Section 1803(b) of the Original Indenture shall also state that (except in any case where a Governmental Authority has lawfully ordered the Company to divest itself of such property) such release is, in the judgment of the signers, desirable in the conduct of the business of the Company.

SECTION 104. Satisfaction and Discharge. The Company hereby agrees that, if the Company shall make any deposit of money and/or Eligible Obligations with respect to any Securities of the Fifth Series, or any portion of the principal amount thereof, as contemplated by Section 801 of the Indenture, the Company shall not deliver an Officer's Certificate described in clause (z) in the first paragraph of said Section 801 unless the Company shall also deliver to the Trustee, together with such Officer's Certificate, either:

(a)    an instrument wherein the Company, notwithstanding the satisfaction and discharge of its indebtedness in respect of such Securities, shall retain the obligation (which shall be absolute and unconditional) to irrevocably deposit with the Trustee or Paying Agent such additional sums of money, if any, or additional Eligible Obligations (meeting the requirements of Section 801), if any, or any combination thereof, at such time or times, as shall be necessary, together with the money and/or Eligible Obligations theretofore so deposited, to pay when due the principal of and premium, if any, and interest due and to become due on such Securities or portions thereof, all in accordance with and subject to the provisions of said Section 801; provided, however, that such instrument may state that the obligation of the Company to make additional deposits as aforesaid shall be subject to the delivery to the Company by the Trustee of a notice asserting the deficiency accompanied by an opinion of an independent public accountant of nationally recognized standing, selected by the Trustee, showing the calculation thereof (which opinion shall be obtained at the expense of the Company); or

(b)    an Opinion of Counsel to the effect that the Holders of such Securities, or portions of the principal and amount thereof, will not recognize income, gain or loss for United States federal income tax purposes as a result of the satisfaction and discharge of the Company's indebtedness in respect thereof and will be subject to United States federal income tax on the same amounts, at the same times and in the same manner as if such satisfaction and discharge had not been effected.

SECTION 105. Trustee to Hold Class A Bonds In New York. So long as any Securities of the Fifth Series remain Outstanding, the Trustee shall hold in the State of New York all Class A Bonds delivered to and to be held by it pursuant to Sections 1602 and 1701 of the Indenture; provided that the Trustee may hold such Class A Bonds in another jurisdiction if it receives an Opinion of Counsel to the effect that the perfection and priority of the security interest, if any, created by the last sentence of such Section 1701 will continue in such other jurisdiction and notifies the Company of such change in jurisdiction.

ARTICLE Two

Miscellaneous Provisions

SECTION 201. This Supplemental Indenture No. 4 is a supplement to the Original Indenture. As supplemented by this Supplemental Indenture No. 4, the Indenture is in all respects ratified, approved and confirmed, and the Original Indenture and this Supplemental Indenture No. 4 shall together constitute the Indenture.

SECTION 202. The recitals contained in this Supplemental Indenture No. 4 shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness and makes no representations as to the validity or sufficiency of this Supplemental Indenture No. 4.

This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture No. 4 to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first written above.

PPL ELECTRIC UTILITIES CORPORATION

By:  _____________________________________________________
        Name:  James E. Abel
        Title:     Treasurer

Attest:

__________________________________________
Assistant Secretary

JPMORGAN CHASE BANK, N.A

By:  _____________________________________________________
        Name:  Alfia Monastra
        Title:     Vice President

Attest:

__________________________________________
Taeko Fukaishi
Assistant Vice President

COMMONWEALTH OF PENNSYLVANIA	)
	)  ss.:
COUNTY OF LEHIGH	)

On this ___ day of February, 2005, before me, a notary public, the undersigned, personally appeared James E. Abel, who acknowledged himself to be the Treasurer of PPL ELECTRIC UTILITIES CORPORATION, a corporation of the Commonwealth of Pennsylvania and that he, as such Treasurer, being authorized to do so, executed the foregoing instrument for the purposes therein contained, by signing the name of the corporation by himself as Treasurer.

In witness whereof, I hereunto set my hand and official seal.

________________________________________
Notary Public

STATE OF NEW YORK	)
	)  ss.:
COUNTY OF NEW YORK	)

On this ____ day of February, 2005, before me, a notary public, the undersigned, personally appeared Alfia Monastra, who acknowledged herself to be a Vice President of JPMORGAN CHASE BANK, N.A., a corporation and that she, as such Vice President, being authorized to do so, executed the foregoing instrument for the purposes therein contained, by signing the name of the corporation by herself as Vice President.

        In witness whereof, I hereunto set my hand and official seal.

By:   ________________________________________
Notary Public

JPMorgan Chase Bank, N.A. hereby certifies that its precise name and address as Trustee hereunder are:

JPMorgan Chase Bank, N.A.
Institutional Trust Services
4 New York Plaza, 15^th Floor
New York, New York 10004
Attn: International/Project Finance Group

JPMORGAN CHASE BANK, N.A

By:  _____________________________________________________
     Vice President

SCHEDULE A

Supplemental Indenture No.	Dated as of	Series	Series Designation	Principal Amount Authorized	Principal Amount Issued	Principal Amount Outstanding 1
1	August 1, 2001	First	Senior Secured Bonds, 57/8% Series due 2007	$300,000,000	$300,000,000	$300,000,000
1	August 1, 2001	Second	Senior Secured Bonds, 61/4% Series due 2009	$500,000,000	$500,000,000	$500,000,000
2	February 1, 2003	Third	Senior Secured Bonds, 3.125% Pollution Control Series due 2008	$90,000,000	$90,000,000	$90,000,000
3	May 1, 2003	Fourth	Senior Secured Bonds, 4.30% Series due 2013	$100,000,000	$100,000,000	$100,000,000

1) as of February 1, 2005

EX-4

Exhibit 4(h)-4

________________________________________

PPL ENERGY SUPPLY, LLC,
Issuer

TO

JPMORGAN CHASE BANK
(formerly known as The Chase Manhattan Bank),
Trustee

_________

Supplemental Indenture No. 2

Dated as of August 15, 2004

Supplemental to the Indenture
dated as of October 1, 2001


Establishing a series of Securities designated
Senior Notes, 5.40% Series due 2014
limited in aggregate principal amount to $300,000,000

________________________________________

SUPPLEMENTAL INDENTURE NO. 2, dated as of August 15, 2004 between PPL ENERGY SUPPLY, LLC, a limited liability company duly organized and existing under the laws of the State of Delaware (herein called the "Company"), and JPMORGAN CHASE BANK, a New York banking corporation (formerly known as The Chase Manhattan Bank), as Trustee (herein called the "Trustee"), under the Indenture dated as of October 1, 2001 (hereinafter called the "Original Indenture"), this Supplemental Indenture No. 2 being supplemental thereto. The Original Indenture and any and all indentures and instruments supplemental thereto are hereinafter sometimes collectively called the "Indenture."

Recitals of the Company

The Original Indenture was authorized, executed and delivered by the Company to provide for the issuance by the Company from time to time of its Securities (such term and all other capitalized terms used herein without definition having the meanings assigned to them in the Original Indenture), to be issued in one or more series as contemplated therein.

As contemplated by Sections 301 and 1201(f) of the Original Indenture, the Company wishes to establish a series of Securities to be designated "Senior Notes, 5.40% Series due 2014" to be limited in aggregate principal amount (except as contemplated in Section 301(b) and the last paragraph of Section 301 of the Original Indenture) to $300,000,000, such series of Securities to be hereinafter sometimes called "Series No. 3."

The Company has duly authorized the execution and delivery of this Supplemental Indenture No. 2 to establish the Securities of Series No. 3 and has duly authorized the issuance of such Securities; and all acts necessary to make this Supplemental Indenture No. 2 a valid agreement of the Company and to make the Securities of Series No. 3 valid obligations of the Company have been performed.

NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE NO. 2 WITNESSETH:

For and in consideration of the premises and of the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities of Series No. 3, as follows:

ARTICLE ONE

Third Series of Securities

Section 1.     There is hereby created a series of Securities designated "Senior Notes, 5.40% Series due 2014" and limited in aggregate principal amount (except as contemplated in Section 301(b) and the last paragraph of Section 301 of the Original Indenture) to $300,000,000. The form and terms of the Securities of Series No. 3 shall be established in an Officer's Certificate of the Company, as contemplated by Section 301 of the Original Indenture.

Section 2.     The Company hereby agrees that, if the Company shall make any deposit of money and/or Eligible Obligations with respect to any Securities of Series No. 3, or any portion of the principal amount thereof, as contemplated by Section 701 of the Indenture, the Company shall not deliver an Officer's Certificate described in clause (z) in the first paragraph of said Section 701 unless the Company shall also deliver to the Trustee, together with such Officer's Certificate, either:

(A)     an instrument wherein the Company, notwithstanding the satisfaction and discharge of its indebtedness in respect of such Securities, shall assume the obligation (which shall be absolute and unconditional) to irrevocably deposit with the Trustee or Paying Agent such additional sums of money, if any, or additional Eligible Obligations (meeting the requirements of Section 701), if any, or any combination thereof, at such time or times, as shall be necessary, together with the money and/or Eligible Obligations theretofore so deposited, to pay when due the principal of and premium, if any, and interest due and to become due on such Securities or portions thereof, all in accordance with and subject to the provisions of said Section 701; provided, however, that such instrument may state that the obligation of the Company to make additional deposits as aforesaid shall arise only upon the delivery to the Company by the Trustee of a notice asserting the deficiency and showing the calculation thereof and shall continue only until the Company shall have delivered to the Trustee an opinion of an independent public accountant of nationally recognized standing to the effect that no such deficiency exists and showing the calculation of the sufficiency of the deposits then held by the Trustee; or

(B)     an Opinion of Counsel to the effect that the Holders of such Securities, or portions of the principal amount thereof, will not recognize income, gain or loss for United States federal income tax purposes as a result of the satisfaction and discharge of the Company's indebtedness in respect thereof and will be subject to United States federal income tax on the same amounts, at the same times and in the same manner as if such satisfaction and discharge had not been effected.

Section 3.     The Company agrees that for so long as any Securities of Series No. 3 shall remain Outstanding, without consent of the Holders of a majority in principal amount of the Outstanding Securities of such series, the Company shall not create, incur or assume any Lien (other than Permitted Liens) upon any property of the Company, whether now owned or hereafter acquired, in order to secure any Debt of the Company. The foregoing agreement shall not restrict the ability of Subsidiaries or Affiliates of the Company to create, incur or assume any Lien upon their properties or assets.

Section 4.     The provisions of Section 3 above shall not prohibit the creation, issuance, incurrence or assumption of any Lien if either

(A)     the Company shall make effective provision whereby all Securities of Series No. 3 then Outstanding shall be secured equally and ratably with all other Debt then outstanding under such Lien; or

(B)     the Company shall deliver to the Trustee bonds, notes or other evidences of indebtedness secured by the Lien which secures such Debt (hereinafter called "Secured Obligations") (I) in an aggregate principal amount equal to the aggregate principal amount of the Securities of Series No. 3 then Outstanding, (II) maturing (or being subject to mandatory redemption) on such dates and in such principal amounts that, at each Stated Maturity of the Outstanding Securities of Series No. 3, there shall mature (or be redeemed) Secured Obligations equal in principal amount to such Securities then to mature and (III) containing, in addition to any mandatory redemption provisions applicable to all Secured Obligations outstanding under such Lien and any mandatory redemption provisions contained therein pursuant to clause (II) above, mandatory redemption provisions correlative to the provisions, if any, for the mandatory redemption (pursuant to a sinking fund or otherwise) of the Securities of Series No. 3 or for the redemption thereof at the option of the Holder, as well as a provision for mandatory redemption upon an acceleration of the maturity of all Outstanding Securities of Series No. 3 following an Event of Default (such mandatory redemption to be rescinded upon the rescission of such acceleration); it being expressly understood that such Secured Obligations (X) may, but need not, bear interest, (Y) may, but need not, contain provisions for the redemption thereof at the option of the issuer, any such redemption to be made at a redemption price or prices not less than the principal amount thereof and (Z) shall be held by the Trustee for the benefit of the Holders of all Securities of Series No. 3 from time to time Outstanding subject to such terms and conditions relating to surrender to the Company, transfer restrictions, voting, application of payments of principal and interest and other matters as shall be set forth in an indenture supplemental hereto specifically providing for the delivery to the Trustee of such Secured Obligations.

Section 5.     If the Company shall elect either of the alternatives described in Section 4 above, the Company shall deliver to the Trustee:

(A)     an indenture supplemental to the Original Indenture (I) together with any appropriate inter-creditor arrangements, whereby such Securities of Series No. 3 then Outstanding shall be secured by the Lien referred to in Section 4 above equally and ratably with all other indebtedness secured by such Lien or (II) providing for the delivery to the Trustee of Secured Obligations; and

(B)     an Officer's Certificate (I) stating that, to the knowledge of the signer, (1) no Event of Default has occurred and is continuing and (2) no event has occurred and is continuing which entitles the secured party under such Lien to accelerate the maturity of the indebtedness outstanding thereunder and (II) stating the aggregate principal amount of indebtedness issuable, and then proposed to be issued, under and secured by such Lien; and

(C)     an Opinion of Counsel (I) if the Securities of Series No. 3 then Outstanding are to be secured by such Lien, to the effect that all such Securities then Outstanding are entitled to the benefit of such Lien equally and ratably with all other indebtedness outstanding under such Lien or (II) if Secured Obligations are to be delivered to the Trustee, to the effect that such Secured Obligations have been duly issued under such Lien and constitute valid obligations, entitled to the benefit of such Lien equally and ratably with all other indebtedness then outstanding under such Lien.

Section 6.     The Company agrees that for so long as any Securities of Series No. 3 shall remain Outstanding, and except for the sale of the properties and assets of the Company substantially as an entirety pursuant to Article Eleven of the Original Indenture, and other than assets required to be sold to conform with governmental requirements, the Company shall not, and shall not permit any of its Subsidiaries to, consummate any Asset Sale, if the aggregate net book value of all such Asset Sales consummated during the four calendar quarters immediately preceding any date of determination would exceed 15% of the consolidated assets of the Company and its consolidated Subsidiaries as of the beginning of the Company's most recently ended full fiscal quarter; provided, however, that any such Asset Sale will be disregarded for purposes of the 15% limitation specified above (i) if any such Asset Sale is in the ordinary course of business, (ii) to the extent that such assets are worn out or are no longer useful or necessary in connection with the operation of the business of the Company or its Subsidiaries, (iii) to the extent such assets are being transferred to a wholly-owned Subsidiary of the Company, (iv) to the extent any such assets subject to any such Asset Sale involve transfers of assets of or equity interests in connection with (a) the formation of any joint venture between the Company or any of its Subsidiaries and any other entity, or (b) any project development and acquisition activities, and (v) if the proceeds thereof (a) are, within 12 months of such Asset Sale, invested or reinvested by the Company or any Subsidiary in a Permitted Business, (b) are used by the Company or a Subsidiary to repay Debt of the Company or such Subsidiary, or (c) are retained by the Company or its Subsidiaries. Additionally, if prior to any Asset Sale that otherwise would cause the 15% limitation to be exceeded, Moody's and S&P confirm the then current long term debt rating of such Securities of Series No. 3 after giving effect to such Asset Sale, such Asset Sale shall also be disregarded for purposes of the foregoing limitations.

Section 7.     So long as any Securities of Series No. 3 shall remain Outstanding, the following event shall be an Event of Default with respect to the Securities of Series No. 3: the occurrence of a matured event of default, as defined in any instrument of the Company under which there may be issued or evidenced any Debt of the Company, that has resulted in the acceleration of such Debt in excess of $25,000,000, or any default in payment of Debt in excess of $25,000,000 at final maturity, after the expiration of any applicable grace or cure periods; provided, however, that the waiver or cure of any such default under any such instrument or Debt shall constitute a waiver and cure of the corresponding Event of Default under the Indenture and the rescission and annulment of the consequences thereof shall constitute a rescission and annulment of the corresponding consequences under the Indenture.

Section 8.     So long as any Securities of Series No. 3 shall remain Outstanding, for purposes of Section 1101(a) of the Indenture, "corporation" shall be deemed to refer to a corporation or limited liability company. For all other purposes, the definition of "corporation" in Section 101 of the Original Indenture shall govern.

Section 9.     For the purposes of this Article One, except as otherwise expressly provided or unless the context otherwise requires:

(A)     "Asset Sale" shall mean any sale of any assets of the Company or its Subsidiaries including by way of the sale by the Company or any of its Subsidiaries of equity interests in such Subsidiaries.

(B)     "Debt", with respect to any Person, means (A) indebtedness of such Person for borrowed money evidenced by a bond, debenture, note or other similar written instrument or agreement by which such Person is obligated to repay such borrowed money and (B) any guaranty by such Person of any such indebtedness of another Person. "Debt" does not include, among other things, (W) indebtedness of such Person under any installment sale or conditional sale agreement or any other agreement relating to indebtedness for the deferred purchase price of property or services, (X) any trade obligations (including obligations under agreements relating to the purchase and sale of any commodity, including power purchase or sale agreements, and any commodity hedges or derivatives regardless or whether such transaction is a "financial" or physical transaction) or other obligations of such Person in the ordinary course of business, (Y) obligations of such Person under any lease agreement (including any lease intended as security), whether or not such obligations are required to be capitalized on the balance sheet of such Person under generally accepted accounting principles, or (Z) liabilities secured by any Lien on any property owned by such Person if and to the extent that such Person has not assumed or otherwise become liable for the payment thereof.

(C)     "Lien" means any lien, mortgage, deed of trust, pledge or security interest, in each case, intended to secure the repayment of Debt, except for any Permitted Lien.

(D)     "Material Subsidiary" means PPL Global, LLC, a Delaware limited liability company, PPL EnergyPlus, LLC, a Delaware limited liability company, or PPL Generation, LLC, a Delaware limited liability company.

(E)     "Moody's" means Moody's Investors Service, Inc. and its successors and assigns, or absent a successor, or if such entity ceases to rate the Securities of Series No. 3, such other nationally recognized statistical rating organization as the Company may designate by notice to the Trustee.

(F)     "Permitted Business" means a business that is the same or similar to the business of the Company or any Subsidiary as of the date that Securities of Series No. 3 are first authenticated hereunder, or any business reasonably related thereto.

(G)     "Permitted Liens" means

     (i)     any Liens existing at August 19, 2004;

     (ii)     any vendors' Liens, purchase money Liens and other Liens on property at the time of acquisition thereof by the Company and Liens to secure or provide for the construction or improvement of property provided that no such Lien shall extend to or cover any other property of the Company;

     (iii)     any Liens on cash or securities (other than limited liability company interests issued by any Material Subsidiary) on hand or in banks or other financial institutions, deposit accounts and interests in general or limited partnerships;

     (iv)     any Liens on the equity interest of any Subsidiary that is not a Material Subsidiary;

     (v)     any Liens on property or shares of capital stock, or arising out of any Debt of any corporation existing at the time the corporation becomes or is merged or consolidated into the Company;

     (vi)     any Liens in connection with the issuance of tax-exempt industrial development or pollution control bonds or other similar bonds issued pursuant to Section 103(b) of the Internal Revenue Code of 1986, as amended (or any successor provision), to finance all or any part of the purchase price of or the cost of constructing, equipping or improving property, provided that such Liens are limited to the property acquired or constructed or improved and to substantially unimproved real property on which such construction or improvement is located; provided, further, that the Company may further secure all or any part of such purchase price or the cost of construction or improvement by an interest on additional property of the Company only to the extent necessary for the construction, maintenance and operation of, and access to, such property so acquired or constructed or such improvement;

     (vii)     any Liens on contracts, leases and other agreements of whatsoever kind and nature; any Liens on contract rights, bills, notes and other instruments; any Liens on revenues, income and earnings, accounts, accounts receivable and unbilled revenues, claims, credits, demands and judgments; any Liens on governmental and other licenses, permits, franchises, consents and allowances; and any Liens on patents, patent licenses and other patent rights, patent applications, trade names, trademarks, copyrights, claims, credits, choses in action and other intangible property and general intangibles including, but not limited to, computer software;

     (viii)     any Liens securing Debt which matures less than one year from the date of issuance or incurrence thereof and is not extendible at the option of the issuer, and any refundings, refinancings and/or replacements of any such Debt by or with similar secured Debt;

     (ix)     any Liens on automobiles, buses, trucks and other similar vehicles and movable equipment; vessels, boats, barges and other marine equipment; airplanes, helicopters, aircraft engines and other flight equipment; parts, accessories and supplies used in connection with any of the foregoing;

     (x)     any Liens on furniture and furnishings, and computers, data processing, data storage, data transmission, telecommunications and other equipment and facilities, equipment and apparatus, which, in any case, are used primarily for administrative or clerical purposes;

     (xi)     any Liens on property which is the subject of a lease agreement designating the Company as lessee and all right, title and interest of the Company in and to such property and in, to and under such lease agreement, whether or not such lease agreement is intended as security;

     (xii)     other Liens securing Debt the principal amount of which does not exceed 10% of the total assets of the Company and its consolidated Subsidiaries as shown on the Company's most recent audited consolidated balance sheet; and

     (xiii)     any Liens granted in connection with extending, renewing, replacing or refinancing, in whole or in part, the Debt secured by liens described in the foregoing clauses (i) through (xii), to the extent of such Debt so extended, renewed, replaced or refinanced.

(H)     "S&P" means Standard & Poor's Ratings Services, a division of The McGraw Hill Companies, Inc. and its successors and assigns, or absent a successor, or if such entity ceases to rate the Securities of Series No.3, such other nationally recognized statistical rating organization as the Company may designate by notice to the Trustee.

(I)     "Subsidiary" means any corporation a majority of the outstanding Voting Stock of which is owned, directly or indirectly, by the Company or by one or more other Subsidiaries of the Company.

(J)     "Voting Stock" means stock (or other interests) of a corporation having voting power for the election of directors, managers or trustees thereof, whether at all times or only so long as no senior class of stock has such voting power by reason of any contingency.

ARTICLE TWO

Miscellaneous Provisions

Section 1.     This Supplemental Indenture No. 2 is a supplement to the Original Indenture. As supplemented by this Supplemental Indenture No. 2, the Indenture is in all respects ratified, approved and confirmed, and the Original Indenture and this Supplemental Indenture No. 2 shall together constitute one and the same instrument.

Section 2.     The recitals contained in this Supplemental Indenture No. 2 shall be taken as the statements of the Company and the Trustee assumes no responsibility for their correctness and makes no representations as to the validity or sufficiency of this Supplemental Indenture No. 2.

Section 3.     This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture No. 2 to be duly executed, and their respective seals to be hereunto affixed and attested, all as of the day and year first written above.

PPL ENERGY SUPPLY, LLC

By:                                         
Name:
Title:

[SEAL] ATTEST:
	JPMORGAN CHASE BANK, as Trustee
	By:                                          Name: Title:
[SEAL] ATTEST:

EX-4

Exhibit 4k

THIS TRUST DEED is made on 9th November, 1995 BETWEEN:

(1)     SOUTH WALES ELECTRICITY plc, a company incorporated under the laws of England and Wales with company number 2366985, whose registered office is at Newport Road, St Mellons, Cardiff CF3 9XW (the "Issuer"); and

(2)     BANKERS TRUSTEE COMPANY LIMITED, a company incorporated under the laws of England and Wales with company number 338230, whose registered office is at 1 Appold Street, Broadgate, London EC2A 2HE, England (the "Trustee", which expression shall, wherever the context so admits, include such company and all other persons or companies for the time being the trustee or trustees of these presents) as trustee for the Holders and Couponholders (each as defined below).

WHEREAS:

(1)     By a resolution of the Board of Directors of the Issuer passed on 6th October, 1995 and resolutions of a duly authorised Committee thereof passed on 17th October, 1995 and 18th October, 1995, the Issuer has resolved to issue £150,000,000 9 1/4 per cent. Bonds due 2020 to be constituted by this Trust Deed.

(2)     The said Bonds in definitive form will be either in bearer form with Coupons attached or in registered form without Coupons but holders of definitive Bonds in bearer form will have the option to exchange such Bonds for definitive Bonds in registered form and vice versa, all upon and subject to the terms and conditions of these presents.

(3)     The Trustee has agreed to act as trustee of these presents for the benefit of the Holders and Couponholders upon and subject to the terms and conditions of these presents.

NOW THIS TRUST DEED WITNESSES AND IT IS AGREED AND DECLARED as follows:

1.     DEFINITIONS

(A)     IN these presents unless there is anything in the subject or context inconsistent therewith the following expressions shall have the following meanings:

"Agency Agreement" means, in relation to the Securities of any series, the agreement appointing the initial Paying Agents and, if applicable, Registrar and/or Transfer Agents in relation to such Securities and any other agreement for the time being in force appointing Successor paying agents and, if applicable, registrars or transfer agents in relation to such Securities, or in connection with their duties, the terms of which have previously been approved in writing by the Trustee, together with any agreement for the time being in force amending or modifying with the prior written approval of the Trustee any of the aforesaid agreements in relation to such Securities;

"Agent Bank" means, in relation to the Securities of any relevant series, the bank initially appointed as agent bank in relation to such Securities by the Issuer pursuant to the relative Agent Bank Agreement or, if applicable, any Successor agent bank in relation to such Securities;

"Agent Bank Agreement" means, in relation to the Securities of any relevant series, the agreement (which may, but need not, be the relative Agency Agreement) appointing the initial Agent Bank in relation to such Securities and any other agreement for the time being in force appointing any Successor agent bank in relation to such Securities, or in connection with its duties, the terms of which have previously been approved in writing by the Trustee, together with any agreement for the time being in force amending or modifying with the prior written approval of the Trustee any of the aforesaid agreements in relation to such Securities;

"Appointee" means any attorney, manager, agent, delegate or other person appointed by the Trustee under these presents;

"Auditors" means the auditors for the time being of the Issuer or, in the event of their being unable or unwilling to carry out any action requested of them pursuant to the provisions of these presents, such other firm of accountants as may be nominated or approved in writing by the Trustee for the purposes of these presents, after consultation with the Issuer where, in the opinion of the Trustee, such consultation is practicable;

"Bearer Securities" means those of the Securities which are for the time being in bearer form;

"Cedel" means Cedel Bank, société anonyme;

"Conditions" means:

(i)     in relation to the Original Bonds, the Conditions in the form set out in the Second Schedule as the same may from time to time be modified in accordance with these presents and any reference in these presents to a particular specified Condition or paragraph of a Condition shall in relation to the Original Bonds be construed accordingly; and

(ii)     in relation to the Further Securities of any series, the Conditions in the form set out or referred to in the supplemental Trust Deed relating thereto as the same may from time to time be modified in accordance with these presents and any reference in these presents to a particular specified Condition or paragraph of a Condition shall in relation to the Further Securities of any series, unless either referring specifically to a particular specified Condition or paragraph of a Condition of such Further Securities or the context otherwise requires, be construed as a reference to the provisions (if any) in the Conditions thereof which correspond to the provisions of the particular specified Condition or paragraph of a Condition of the Original Bonds;

"Couponholders" means the several persons who are for the time being holders of the Coupons;

"Coupons" means the bearer interest coupons appertaining to the Bearer Securities in definitive form or, as the context may require, a specific number thereof and includes any replacements for Coupons issued pursuant to Condition 15 and, where the context so permits, the Talons;

"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear System;

"Event of Default" means any of the conditions, events or acts provided in Condition 12 to be events upon the happening of which the Securities of any series would, subject only to notice by the Trustee as therein provided, become immediately due and repayable;

"Excluded Subsidiary" has the meaning set out in Condition 21;

"Extraordinary Resolution" has the meaning set out in paragraph 20 of the Fourth Schedule;

"Further Securities" means bonds or notes (whether in bearer or registered form) of the Issuer constituted by a Trust Deed supplemental to this Trust Deed pursuant to Clause 2(D) or the principal amount thereof for the time being outstanding or as the context may require a specific number thereof and includes any replacements for Further Securities issued pursuant to Condition 15 and where applicable any Global Security issued in respect thereof;

"Global Security" means the Original Global Bond and/or any other global bond or note issued in respect of the Further Securities of any series and includes any replacements for Global Securities issued pursuant to Condition 15;

"Group" means the Issuer and its Subsidiary Undertakings and "member of the Group" shall be construed accordingly;

"Holders" means the several persons who are for the time being holders of the Securities (being, in the case of Bearer Securities, the bearers thereof and, in the case of Registered Securities, the several persons whose names are entered in the register of holders of the Registered Securities as the holders thereof) and the words "holder" and "holders" and related expressions shall (where appropriate) be construed accordingly;

"indebtedness for borrowed money" has the meaning set out in Condition 21;

"Liability" means any loss, damage, cost, charge, claim, demand, expense, judgment, action, proceeding or other liability whatsoever (including, without limitation, in respect of taxes, duties, levies, imposts and other charges) and including any value added tax or similar tax charged or chargeable in respect thereof and legal fees and expenses on a full indemnity basis;

"Original Bearer Bonds" means those of the Original Bonds which are for the time being in bearer form;

"Original Bondholders" means the several persons who are for the time being holders of the Original Bonds;

"Original Bonds" means the bonds (whether in bearer or registered form) comprising the said £150,000,000 9 1/4 per cent. Bonds due 2020 of the Issuer hereby constituted or the principal amount thereof for the time being outstanding or, as the context may require, a specific number thereof and includes any replacements for Original Bonds (whether in bearer or registered form as the case may be) issued pursuant to Condition 15 and (except for the purposes of Clause 3) the Original Global Bond;

"Original Couponholders" means the several persons who are for the time being holders of the Original Coupons;

"Original Coupons" means the Coupons appertaining to the Original Bearer Bonds in definitive form;

"Original Global Bond" means the global bond in respect of the Original Bonds to be issued pursuant to Clause 3(A) in the form or substantially in the form set out in the First Schedule;

"Original Registered Bonds" means those of the Original Bonds which are for the time being in registered form;

"Original Talons" means the Talons appertaining to the Original Bearer Bonds;

"outstanding" means in relation to the Securities all the Securities issued other than:

(a)     those Securities which have been redeemed pursuant to these presents;

(b)     those Securities in respect of which the date for redemption in accordance with the Conditions has occurred and the redemption moneys (including premium (if any) and all interest payable thereon) have been duly paid to the Trustee or to the Principal Paying Agent in the manner provided in the Agency Agreement (and where appropriate notice to that effect has been given to the relative Holders in accordance with Condition 16) and remain available for payment against presentation and, where applicable, surrender of the relevant Securities and/or Coupons;

(c)     those Securities which have been purchased and cancelled in accordance with Condition 8 or 9;

(d)     those Securities which have become void under Condition 11;

(e)     those mutilated or defaced Securities which have been surrendered and cancelled and in respect of which replacements have been issued pursuant to Condition 15;

(f)     (for the purpose only of ascertaining the principal amount of the Securities outstanding and without prejudice to the status for any other purpose of the relevant Securities) those Securities which are alleged to have been lost, stolen or destroyed and in respect of which replacements have been issued pursuant to Condition 15;

(g)     any Global Security to the extent that it shall have been exchanged for another Global Security in respect of the Securities of the relevant series or for the Securities of the relevant series in definitive form pursuant to its provisions; and

(h)     those Bearer Securities which have been exchanged for Registered Securities and, where applicable, vice versa and which have been cancelled or, if permitted by the Conditions of such Securities, are for the time being retained by or on behalf of the Issuer, in each case pursuant to the provisions of these presents;

PROVIDED THAT for each of the following purposes, namely:

   (i)     the right to attend and vote at any meeting of the Holders or any of them;

   (ii)     the determination of how many and which Securities are for the time being outstanding for the purposes of Clause 8(A), Conditions 12, 13 and 17 and paragraphs 2, 5, 6 and 9 of the Fourth Schedule;

   (iii)     any discretion, power or authority (whether contained in these presents or vested by operation of law) which the Trustee is required, expressly or impliedly, to exercise in or by reference to the interests of the Holders or any of them; and

   (iv)     the determination by the Trustee whether any event, circumstance, matter or thing is, in its opinion, materially prejudicial to the interests of the Holders or any of them,

those Securities (if any) which are for the time being held by or on behalf of the Issuer, any Subsidiary Undertaking of the Issuer, any holding company of the Issuer or any other Subsidiary Undertaking of any such holding company, in each case as beneficial owner, shall (unless and until ceasing to be so held) be deemed not to remain outstanding;

"Paying Agents" means, in relation to the Securities of any series, the several institutions (including where the context permits the Principal Paying Agent) at their respective specified offices initially appointed as paying agent in relation to such Securities by the Issuer pursuant to the relative Agency Agreement and/or, if applicable, any Successor paying agents in relation to such Securities;

"PES Licence" has the meaning set out in Condition 21;

"PES Subsidiary" has the meaning set out in Condition 21;

"Potential Event of Default" means any condition, event or act which, with the lapse of time and/or the issue, making or giving of any notice, certification, declaration, demand, determination and/or request and/or the taking of any similar action and/or the fulfilment of any similar condition, would constitute an Event of Default;

"Principal Paying Agent" means, in relation to the Securities of any series, the institution at its specified office initially appointed as principal paying agent in relation to such Securities by the Issuer pursuant to the relative Agency Agreement or, if applicable, any Successor principal paying agent in relation to such Securities;

"Principal Subsidiary" means at any time a Subsidiary of the Issuer (not being an Excluded Subsidiary or any other Subsidiary of the Issuer whose only indebtedness for borrowed money is Project Finance Indebtedness):

(a)     whose net profits before tax (consolidated in the case of a Subsidiary which itself has Subsidiaries and which, in the normal course, prepares consolidated accounts) or whose gross assets (consolidated in the case aforesaid) represent in each case (or, in the case of a Subsidiary acquired after the end of the financial period to which the then latest relevant audited consolidated accounts of the Group relate, are equal to) 20 per cent. or more of the consolidated net profits before tax or, as the case may be, consolidated gross assets of the Group, all as calculated respectively by reference to the then latest audited accounts (consolidated or, as the case may be, unconsolidated) of such Subsidiary and the then latest audited consolidated accounts of the Group, provided that:

   (i)     in the case of a Subsidiary acquired after the end of the financial period to which the then latest relevant audited consolidated accounts relate, the reference to the then latest audited consolidated accounts for the purposes of the calculation above shall, until consolidated accounts for the financial period in which the acquisition is made have been prepared and audited as aforesaid, be deemed to be a reference to such first-mentioned accounts as if such Subsidiary had been shown in such accounts by reference to its then latest relevant audited accounts, adjusted as deemed appropriate by the Auditors; and

   (ii)     if, in the case of a Subsidiary which itself has Subsidiaries, no consolidated accounts are prepared and audited, its consolidated net profits before tax and consolidated gross assets shall be determined on the basis of pro forma consolidated accounts of the relevant Subsidiary and its Subsidiaries prepared and audited for this purpose by the Auditors or the auditors for the time being of the relevant Subsidiary; or

(b)     to which is transferred all or substantially all of the business, undertaking and assets of a Subsidiary of the Issuer which immediately prior to such transfer is a Principal Subsidiary, provided that the transferor Subsidiary shall upon such transfer forthwith cease to be a Principal Subsidiary and the transferee Subsidiary shall cease to be a Principal Subsidiary pursuant to this sub-paragraph (b) on the date on which the consolidated accounts of the Group for the financial period current at the date of such transfer have been prepared and audited as aforesaid but so that such transferor Subsidiary or such transferee Subsidiary may be a Principal Subsidiary on or at any time after the date on which such consolidated accounts have been prepared and audited as aforesaid by virtue of the provisions of sub-paragraph (a) above or before, on or at any time after such date by virtue of the provisions of this sub-paragraph (b) or sub-paragraph (c) below; or

(c)     to which is transferred a business, an undertaking or assets which, taken together with the business, undertaking and assets of the transferee Subsidiary, generated (or, in the case of the transferee Subsidiary being acquired after the end of the financial period to which the then latest relevant audited consolidated accounts of the Group relate, generate net profits before tax equal to) 20 per cent. or more of the consolidated net profits before tax, or represent (or, in the case aforesaid, are equal to) 20 per cent. or more of the consolidated gross assets, of the Group, all as calculated as referred to in sub-paragraph (a) above, provided that the transferor Subsidiary (if a Principal Subsidiary) shall upon such transfer forthwith cease to be a Principal Subsidiary unless immediately following such transfer its business, undertaking and assets generate (or, in the case aforesaid, generate net profits before tax equal to) 20 per cent. or more of the consolidated net profits before tax, or its assets represent (or, in the case aforesaid, are equal to) 20 per cent. or more of the consolidated gross assets, of the Group, all as calculated as referred to in sub-paragraph (a) above, and the transferee Subsidiary shall cease to be a Principal Subsidiary pursuant to this sub-paragraph (c) on the date on which the consolidated accounts of the Group for the financial period current at the date of such transfer have been prepared and audited but so that such transferor Subsidiary or such transferee Subsidiary may be a Principal Subsidiary on or at any time after the date on which such consolidated accounts have been prepared and audited as aforesaid by virtue of the provisions of sub-paragraph (a) above or before, on or at any time after such date by virtue of the provisions of this sub-paragraph (c) or sub-paragraph (b) above.

For the purposes of this definition if there shall at any time not be any relevant audited consolidated accounts of the Group, references thereto herein shall be deemed to refer to a consolidation by the Auditors of the relevant audited accounts of the Group.

A report by the Auditors that in their opinion a Subsidiary of the Issuer is or is not or was or was not at any particular time or throughout any specified period a Principal Subsidiary shall, in the absence of manifest error, be conclusive and binding on all parties;

"Project Finance Indebtedness" has the meaning set out in Condition 21;

"Reference Banks" means, in relation to the Securities of any relevant series, the several banks initially appointed as reference banks in relation to such Securities by the Issuer and referred to in the Conditions of such Securities and/or, if applicable, any Successor reference banks in relation to such Securities;

"Registered Securities" means those of the Securities which are for the time being in registered form;

"Registrar" means, in relation to the Securities of any relevant series (being, or which are exchangeable for, Registered Securities), the institution at its specified office initially appointed as registrar in relation to such Securities by the Issuer pursuant to the relative Agency Agreement or, if applicable, any Successor registrar in relation to such Securities;

"Relevant Date" has the meaning set out in Condition 10;

"Relevant Indebtedness" has the meaning set out in Condition 21;

"repay", "redeem" and "pay" shall each include both the others and cognate expressions shall be construed accordingly;

"Securities" means, as the context may require, the Original Bonds and/or any Further Securities and/or any series thereof;

Security" has the meaning set out in Condition 21;

"Subsidiary" has the meaning set out in Condition 21;

"Subsidiary Undertaking" has the meaning set out in Condition 21;

"Successor" means, in relation to the Agent Bank, the Principal Paying Agent, the other Paying Agents, the Reference Banks, the Registrar and the Transfer Agents, any successor to any one or more of them in relation to the Securities of the relevant series which shall become such pursuant to the provisions of these presents, the relative Agent Bank Agreement and/or the relative Agency Agreement (as the case may be) and/or such other or further agent bank, principal paying agent, paying agents, reference banks, registrar and/or transfer agents (as the case may be) in relation to such Securities as may (with the prior approval of, and on terms previously approved by, the Trustee in writing) from time to time be appointed as such, and/or, if applicable, such other or further specified offices (in the former case being within the same city as those for which they are substituted) as may from time to time be nominated, in each case by the Issuer, and (except in the case of the initial appointments and specified offices made under and specified in the Conditions, the relative Agent Bank Agreement and/or the relative Agency Agreement, as the case may be) notice of whose appointment or, as the case may be, nomination has been given to the relevant Holders pursuant to Clause 13(xiii) in accordance with Condition 16;

"serial number" shall, in the case of Registered Securities, be deemed to refer to the certificate number relating to any Registered Security;

"Talons" means the talons appertaining to, and exchangeable in accordance with the provisions therein contained for further Coupons appertaining to, the Bearer Securities of any relevant series and includes any replacements for Talons issued pursuant to Condition 15;

"The Stock Exchange" means, in relation to the Securities of any relevant series, the stock exchange or exchanges (if any) on which such Securities are quoted or listed on the issue thereof;

"these presents" means this Trust Deed and the Schedules and any Trust Deed supplemental hereto and the Schedules (if any) thereto and the Securities, the Coupons and the Conditions, all as from time to time modified in accordance with the provisions herein or therein contained;

"Transfer Agents" means, in relation to the Securities of any relevant series (being, or which are exchangeable for, Registered Securities), the institutions at their respective specified offices initially appointed as transfer agents in relation to such Securities by the Issuer pursuant to the relative Agency Agreement and/or, if applicable, any Successor transfer agents in relation to such Securities;

"Trust Corporation" means a corporation entitled by rules made under the Public Trustee Act 1906 of Great Britain or entitled pursuant to any other comparable legislation applicable to a trustee in any other jurisdiction to carry out the functions of a custodian trustee;

words denoting the singular shall include the plural and vice versa;

words denoting one gender only shall include the other genders; and

words denoting persons only shall include firms and corporations and vice versa.

(B)     (i)     All references in these presents to principal and/or premium and/or interest in respect of the Securities or to any moneys payable by the Issuer under these presents shall be deemed to include a reference to any additional amounts which may be payable under Condition 10 or, if applicable, under any undertaking or covenant given pursuant to Clause 13(xv) or Clause 20(A)(2)(ii).

   (ii)     All references in these presents to principal or principal amount shall, unless the context otherwise requires, be deemed to include the Redemption Price (as defined in Condition 8(b)(ii)).

   (iii)     All references in these presents to "pounds", "sterling", "pounds sterling" or the sign "£" shall be construed as references to the lawful currency for the time being of the United Kingdom.

   (iv)     All references in these presents to any statute or any provision of any statute shall be deemed also to refer to any statutory modification or re-enactment thereof or any statutory instrument, order or regulation made thereunder or under any such modification or re-enactment.

   (v)     All references in these presents to guarantees or to an obligation being guaranteed shall be deemed to include respectively references to indemnities or to an indemnity being given in respect thereof.

   (vi)     All references in these presents to any action, remedy or method of proceeding for the enforcement of the rights of creditors shall be deemed to include, in respect of any jurisdiction other than England, references to such action, remedy or method of proceeding for the enforcement of the rights of creditors available or appropriate in such jurisdiction as shall most nearly approximate to such action, remedy or method of proceeding described or referred to in these presents.

   (vii)     All references in these presents to taking proceedings against the Issuer shall be deemed to include references to proving in the winding up of the Issuer.

   (viii)     Unless the context otherwise requires words or expressions used in these presents shall bear the same meanings as in the Companies Act 1985 of Great Britain.

   (ix)     In this Trust Deed references to Schedules, Clauses, sub-clauses, paragraphs and sub-paragraphs shall be construed as references to the Schedules to this Trust Deed and to the Clauses, sub-clauses, paragraphs and sub-paragraphs of this Trust Deed respectively.

   (x)     In these presents tables of contents and Clause headings are included for ease of reference and shall not affect the construction of these presents.

2.     Covenant To Repay And To Pay Interest On Original bonds

(A)     THE aggregate principal amount of the Original Bonds is limited to £150,000,000.

(B)     The Issuer covenants with the Trustee that it will, in accordance with these presents, on the due date for the final maturity of the Original Bonds provided for in the Conditions, or on such earlier date as the same or any part thereof may become due and repayable thereunder, pay or procure to be paid unconditionally to or to the order of the Trustee in pounds sterling in London in immediately available funds the principal amount of the Original Bonds repayable on that date and shall in the meantime and until such date (both before and after any judgment or other order of a court of competent jurisdiction) pay or procure to be paid unconditionally to or to the order of the Trustee as aforesaid interest (which shall accrue from day to day) on the principal amount of the Original Bonds at the rate of 9 1/4 per cent. per annum payable annually in arrear on 9th November, the first such payment to be made on 9th November, 1996 and to represent a full year's interest PROVIDED THAT:

   (i)     every payment of principal or interest in respect of the Original Bearer Bonds and every payment of principal in respect of the Original Registered Bonds to or to the account of the Principal Paying Agent in the manner provided in the Agency Agreement shall operate in satisfaction pro tanto of the relative covenant by the Issuer in this Clause except to the extent that there is default in the subsequent payment thereof in accordance with the Conditions to the Original Bondholders or Original Couponholders (as the case may be);

   (ii)     every payment of interest in respect of the Original Registered Bonds to the relevant Original Bondholders as provided in the Conditions (whether by the Issuer or the Registrar) shall operate in satisfaction pro tanto of the relative covenant by the Issuer in this Clause;

   (iii)     in any case where any payment of principal is not made to the Trustee or the Principal Paying Agent on or before the due date, interest shall continue to accrue on the principal amount of the relevant Original Bonds (both before and after any judgment or other order of a court of competent jurisdiction) at the rate aforesaid (or, if higher, the rate of interest on judgment debts for the time being provided by English law) up to and including the date which the Trustee determines to be the date on and after which payment is to be made to the Original Bondholders in respect thereof as stated in a notice given to the Original Bondholders in accordance with Condition 16 (such date to be not later than 45 days after the day on which the whole of such principal amount, together with an amount equal to the interest which has accrued and is to accrue pursuant to this proviso up to and including that date, has been received by the Trustee or the Principal Paying Agent); and

   (iv)     in any case where payment of the whole or any part of the principal amount of any Original Bond is improperly withheld or refused upon due presentation thereof (other than in circumstances contemplated by proviso (iii) above) interest shall accrue on that principal amount payment of which has been so withheld or refused (both before and after any judgment or other order of a court of competent jurisdiction) at the rate aforesaid from and including the date of such withholding or refusal up to and including the date on which, upon further presentation of the relevant Original Bond, payment of the full amount (including interest as aforesaid) in pounds sterling payable in respect of such Original Bond is made or (if earlier) the seventh day after notice is given to the relevant Original Bondholder (either individually or in accordance with Condition 16) that the full amount (including interest as aforesaid) in pounds sterling payable in respect of such Original Bond is available for payment, provided that, upon further presentation thereof being duly made, such payment is made.

The Trustee will hold the benefit of this covenant on trust for the Original Bondholders and the Original Couponholders and itself in accordance with these presents.

         TRUSTEE'S REQUIREMENTS REGARDING PAYING AGENTS

(C)     At any time after an Event of Default or a Potential Event of Default shall have occurred or the Securities shall otherwise have become due and repayable or the Trustee shall have received any money which it proposes to pay in accordance with these presents under Clause 9 to the Holders and/or Couponholders, the Trustee may:

   (i)     by notice in writing to the Issuer, the Principal Paying Agent, the other Paying Agents, the Registrar and the Transfer Agents require the Principal Paying Agent, the other Paying Agents, the Registrar and the Transfer Agents pursuant to the Agency Agreement:

      (a)     to act thereafter as Principal Paying Agent, Paying Agents, Registrar and Transfer Agents respectively of the Trustee in relation to payments to be made by or on behalf of the Trustee under the provisions of these presents mutatis mutandis on the terms provided in the Agency Agreement (save that the Trustee's liability under any provisions thereof for the indemnification, remuneration and payment of out-of-pocket expenses of the Paying Agents, the Registrar and the Transfer Agents shall be limited to the amounts for the time being held by the Trustee on the trusts of these presents relating to the relative Securities and available for such purpose) and thereafter to hold all Securities and Coupons and all sums, documents and records held by them in respect of Securities and Coupons on behalf of the Trustee; or

      (b)     to deliver up all Securities and Coupons and all sums, documents and records held by them in respect of Securities and Coupons to the Trustee or as the Trustee shall direct in such notice provided that such notice shall be deemed not to apply to any documents or records which the relative Paying Agent, the Registrar or the relative Transfer Agent, as the case may be, is obliged not to release by any law or regulation; and

     (ii)     by notice in writing to the Issuer require it to make all subsequent payments in respect of the Securities and Coupons to or to the order of the Trustee and not to the Principal Paying Agent; with effect from the issue of any such notice to the Issuer and until such notice is withdrawn proviso (i) to sub-clause (B) of this Clause relating to the Original Bonds and any similar provisos relating to any Further Securities shall cease to have effect.

    FURTHER ISSUES

(D)     (i)     The Issuer shall be at liberty from time to time (but subject always to the provisions of these presents) without the consent of the Holders or Couponholders to create and issue further bonds or notes (whether in bearer or registered form) either (a) ranking pari passu in all respects (or in all respects save for the first payment of interest thereon), and so that the same shall be consolidated and form a single series, with the Original Bonds and/or the Further Securities of any series or (b) upon such terms as to ranking, interest, conversion, redemption and otherwise as the Issuer may at the time of issue thereof determine.

   (ii)     Any further bonds or notes which are to be created and issued pursuant to the provisions of paragraph (i) above so as to form a single series with the Original Bonds and/or the Further Securities of any series shall be constituted by a trust deed supplemental to this Trust Deed and any other further bonds or notes which are to be created and issued pursuant to the provisions of paragraph (i) above may (subject to the consent of the Trustee) be constituted by a trust deed supplemental to this Trust Deed. In any such case the Issuer shall prior to the issue of any further bonds or notes to be so constituted (being Further Securities) execute and deliver to the Trustee a trust deed supplemental to this Trust Deed (in relation to which all applicable stamp duties or other documentation fees, duties or taxes have been paid and, if applicable, duly stamped or denoted accordingly) and containing a covenant by the Issuer in the form mutatis mutandis of Clause 2(B) in relation to the principal, premium (if any) and interest in respect of such Further Securities and such other provisions (whether or not corresponding to any of the provisions contained in this Trust Deed) as the Trustee shall require.

   (iii)     A memorandum of every such supplemental Trust Deed shall be endorsed by the Trustee on this Trust Deed and by the Issuer on its duplicate of this Trust Deed.

   (iv)     Whenever it is proposed to create and issue any further bonds or notes the Issuer shall give to the Trustee not less than 14 days' notice in writing of its intention so to do stating the amount of further bonds or notes proposed to be created and issued.

(E)     Any Further Securities not forming a single series with the Original Bonds or Further Securities of any series shall form a separate series and accordingly, unless for any purpose the Trustee in its absolute discretion shall otherwise determine, the provisions of sub-clause (C) of this Clause and of Clauses 4 to 21 (both inclusive) and 22(B) and the Third and Fourth Schedules shall apply mutatis mutandis separately and independently to each series of the Securities and in such Clauses and Schedules the expressions "Securities", "Holders", "Coupons", "Couponholders" and "Talons" shall be construed accordingly.

3.     Form And Issue Of Original Bonds And Original Coupons

(A)     THE Original Bearer Bonds shall be represented initially by the Original Global Bond which the Issuer shall issue to a bank depositary common to both Euroclear and Cedel on terms that such depositary shall hold the same for the account of the persons who would otherwise be entitled to receive the Original Bearer Bonds in definitive form ("Definitive Original Bearer Bonds") (as notified to such depositary by UBS Limited, on behalf of the Managers of the issue of the Original Bonds) and the successors in title to such persons as appearing in the records of Euroclear and Cedel for the time being.

(B)     The Original Global Bond shall be printed or typed in the form or substantially in the form set out in the First Schedule and may be a facsimile. The Original Global Bond shall be in the aggregate principal amount of £150,000,000 and shall be signed manually or in facsimile by one of the Directors of the Issuer on behalf of the Issuer and shall be authenticated by or on behalf of the Principal Paying Agent. The Original Global Bond so executed and authenticated shall be a binding and valid obligation of the Issuer.

(C)     The Issuer shall issue the Definitive Original Bearer Bonds (together with the unmatured Original Coupons attached) in exchange for the Original Global Bond in accordance with the provisions thereof. Pending exchange of the entire principal amount of the Original Global Bond the holder thereof shall, subject to the terms thereof, be deemed to be the holder of the Original Bonds and the Original Coupons represented thereby for all purposes.

(D)     (i)     The Definitive Original Bearer Bonds and the Original Coupons shall be to bearer in the respective forms or substantially in the respective forms set out in the Second Schedule and the Definitive Original Bearer Bonds shall be issued in the denominations of £1,000, £10,000 and £100,000 each (serially numbered) and shall be endorsed with the Conditions. Title to the Definitive Original Bearer Bonds and the Original Coupons shall pass by delivery.

   (ii)     The Original Registered Bonds shall be issued in definitive registered form, shall be issued in the form or substantially in the form set out in the Second Schedule, shall be in the denomination and transferable in units of £1 each or integral multiples thereof, shall be serially numbered and shall be endorsed with a form of transfer in the form or substantially in the form also set out in the Second Schedule and with the Conditions. Title to the Original Registered Bonds shall pass upon the registration of transfers in respect thereof in accordance with the provisions of these presents.

(E)     The Definitive Original Bearer Bonds and the Original Registered Bonds shall be signed manually or in facsimile by one of the Directors of the Issuer on behalf of the Issuer and the Definitive Original Bearer Bonds shall be authenticated by or on behalf of the Principal Paying Agent. The Issuer may use the facsimile signature of any person who at the date such signature is affixed is a Director of the Issuer notwithstanding that at the time of issue of any of the Definitive Original Bearer Bonds or the Original Registered Bonds he may have ceased for any reason to be the holder of such office. The Original Coupons shall not be signed. The Definitive Original Bearer Bonds so executed and authenticated, the Original Registered Bonds so executed, and the Original Coupons, upon execution and authentication of the relevant Definitive Original Bearer Bonds, shall be binding and valid obligations of the Issuer.

4.     Fees, Duties And Taxes

THE Issuer will pay any stamp, issue, registration, documentary and other fees, duties and taxes, including interest and penalties, payable on or in connection with (i) the execution and delivery of these presents, (ii) the constitution and original issue of the Securities and the Coupons and (iii) any action taken by or on behalf of the Trustee or (where permitted under these presents so to do) any Holder or Couponholder to enforce, or to resolve any doubt concerning, or for any other purpose in relation to, these presents.

5.     Covenant Of Compliance

THE Issuer covenants with the Trustee that it will comply with and perform and observe all the provisions of these presents which are expressed to be binding on it. The Conditions shall be binding on the Issuer, the Holders and the Couponholders. The Trustee shall be entitled to enforce the obligations of the Issuer under the Securities and the Coupons as if the same were set out and contained in the Trust Deeds constituting the same, which shall be read and construed as one document with the Securities and the Coupons. The Trustee shall hold the benefit of this covenant upon trust for itself and the Holders and the Couponholders according to its and their respective interests.

6.     Cancellation Of Securities And Records

(A)     THE Issuer shall procure that all Securities (i) redeemed or (ii) purchased for cancellation by or on behalf of the Issuer or any Subsidiary Undertaking of the Issuer or (iii) which, being mutilated or defaced, have been surrendered and replaced pursuant to Condition 15 or (iv) exchanged as provided in these presents (together in each case with all unmatured Coupons attached thereto or delivered therewith) and all Coupons paid in accordance with the Conditions or which, being mutilated or defaced, have been surrendered and replaced pursuant to Condition 15 and all Talons exchanged in accordance with the Conditions for further Coupons shall forthwith be cancelled by or on behalf of the Issuer and a certificate stating:

(a)     the aggregate principal amount of Securities which have been redeemed and the aggregate amounts in respect of Coupons which have been paid;

(b)     the serial numbers of such Securities in definitive form distinguishing between Bearer Securities and Registered Securities;

(c)     the total numbers (where applicable, of each denomination) by maturity date of such Coupons;

(d)     the aggregate amount of interest paid (and the due dates of such payments) on Global Securities and/or on Registered Securities;

(e)     the aggregate principal amount of Securities (if any) which have been purchased by or on behalf of the Issuer or any Subsidiary Undertaking of the Issuer and cancelled and the serial numbers of such Securities in definitive form and the total number (where applicable, of each denomination) by maturity date of the Coupons attached thereto or surrendered therewith;

(f)     the aggregate principal amounts of Securities and the aggregate amounts in respect of Coupons which have been so exchanged or surrendered and replaced and the serial numbers of such Securities in definitive form and the total number (where applicable, of each denomination) by maturity date of such Coupons;

(g)     the total number (where applicable, of each denomination) by maturity date of unmatured Coupons missing from Securities in definitive form bearing interest at a fixed rate which have been redeemed or exchanged or surrendered and replaced and the serial numbers of the Bearer Securities in definitive form to which such missing unmatured Coupons appertained; and

(h)     the total number (where applicable, of each denomination) by maturity date of Talons which have been exchanged for further Coupons,

shall be given to the Trustee by or on behalf of the Issuer as soon as possible and in any event within four months after the date of such redemption, purchase, payment, exchange or replacement (as the case may be). The Trustee may accept such certificate as conclusive evidence of redemption, purchase, exchange or replacement pro tanto of the Securities or payment of interest thereon or exchange of the Talons respectively and of cancellation of the relative Securities and Coupons.

(B)     The Issuer shall procure (i) that the Principal Paying Agent shall keep a full and complete record of all Securities and Coupons (other than serial numbers of Coupons) and of their redemption, purchase for cancellation by or on behalf of the Issuer, any Subsidiary Undertaking of the Issuer, any holding company of the Issuer or any other Subsidiary Undertaking of any such holding company, cancellation, payment or exchange (as the case may be) and of all replacement securities or coupons or talons issued in substitution for lost, stolen, mutilated, defaced or destroyed Securities or Coupons (ii) that the Principal Paying Agent shall in respect of the Coupons of each maturity retain (in the case of Coupons other than Talons) until the expiry of 10 years from the Relevant Date in respect of such Coupons and (in the case of Talons) indefinitely either all paid or exchanged Coupons of that maturity or a list of the serial numbers of Coupons of that maturity still remaining unpaid or unexchanged and (iii) that such records and Coupons (if any) shall be made available to the Trustee at all reasonable times.

7.     ENFORCEMENT

(A)     THE Trustee may at any time when entitled so to do, at its discretion and without notice, take such proceedings and/or other action as it may think fit against or in relation to the Issuer to enforce its obligations under these presents.

(B)     Proof that as regards any specified Security or Coupon the Issuer has made default in paying any amount due in respect of such Security or Coupon shall (unless the contrary be proved) be sufficient evidence that the same default has been made as regards all other Securities or Coupons (as the case may be) in respect of which the relevant amount is due and payable.

(C)     References in the provisions of any Trust Deed supplemental to this Trust Deed corresponding to provisos (ii) and (iii) to Clause 2(B) to "the rate aforesaid" shall, in respect of any Securities bearing interest at a floating or variable rate, in the event of such Securities having become due and repayable, with effect from the expiry of the interest period during which such Securities become due and repayable, be construed as references to a rate of interest calculated mutatis mutandis in accordance with the Conditions except that no notices need be published in respect thereof.

8.     PROCEEDINGS, ACTION AND INDEMNIFICATION

(A)     THE Trustee shall not be bound to take any proceedings mentioned in Clause 7(A) or any other action in relation to these presents unless respectively directed or requested to do so (i) by an Extraordinary Resolution or (ii) in writing by the holders of at least one-quarter in principal amount of the Securities then outstanding and in either case then only if it shall be indemnified to its satisfaction against all Liabilities to which it may thereby render itself liable or which it may incur by so doing.

(B)     Only the Trustee may enforce the provisions of these presents. No Holder or Couponholder shall be entitled to proceed directly against the Issuer to enforce the performance of any of the provisions of these presents unless the Trustee having become bound as aforesaid to take proceedings fails to do so within a reasonable period and such failure is continuing.

9.     APPLICATION OF MONEYS

ALL moneys received by the Trustee under these presents shall, unless and to the extent attributable in the opinion of the Trustee to a particular series of the Securities, be apportioned pari passu and rateably between each series of the Securities, and all moneys received by the Trustee under these presents to the extent attributable in the opinion of the Trustee to a particular series of the Securities or which are apportioned to such series as aforesaid (including any moneys which represent principal, premium or interest in respect of Securities or Coupons which have become void under Condition 11) shall be held by the Trustee upon trust to apply them (subject to Clause 11):

FIRST in payment or satisfaction of all amounts then due and unpaid under Clauses 14 and/or 15(J) to the Trustee and/or any Appointee;

SECONDLY in or towards payment pari passu and rateably of all principal, premium (if any) and interest then due and unpaid in respect of the Securities of that series;

THIRDLY in or towards payment pari passu and rateably of all principal, premium (if any) and interest then due and unpaid in respect of the Securities of each other series; and

FOURTHLY in payment of the balance (if any) to the Issuer (without prejudice to, or liability in respect of, any question as to how such payment to the Issuer shall be dealt with as between the Issuer and any other person).

Without prejudice to this Clause 9, if the Trustee holds any moneys which represent principal, premium (if any) or interest in respect of Securities which have become void or in respect of which claims have been prescribed under Condition 11, the Trustee will hold such moneys on the above trusts.

10.     NOTICE OF PAYMENTS

THE Trustee shall give notice to the relevant Holders in accordance with Condition 16 of the day fixed for any payment to them under Clause 9. Such payment may be made in accordance with Condition 7 and any payment so made shall be a good discharge to the Trustee.

11.     INVESTMENT BY TRUSTEE

(A)     IF the amount of the moneys at any time available for the payment of principal, premium (if any) and interest in respect of the Securities under Clause 9 shall be less than 10 per cent. of the principal amount of the Securities then outstanding the Trustee may at its discretion invest such moneys in some or one of the investments authorised below. The Trustee at its discretion may vary such investments and may accumulate such investments and the resulting income until the accumulations, together with any other funds for the time being under the control of the Trustee and available for such purpose, amount to at least 10 per cent. of the principal amount of the Securities then outstanding and then such accumulations and funds shall be applied under Clause 9.

(B)     Any moneys which under the trusts of these presents ought to or may be invested by the Trustee may be invested in the name or under the control of the Trustee in any investments or other assets in any part of the world whether or not they produce income or by placing the same on deposit in the name or under the control of the Trustee at such bank or other financial institution and in such currency as the Trustee may think fit. If that bank or institution is the Trustee or a Subsidiary, holding or associated company of the Trustee, it need only account for an amount of interest equal to the amount of interest which would, at then current rates, be payable by it on such a deposit to an independent customer. The Trustee may at any time vary any such investments for or into other investments or convert any moneys so deposited into any other currency and shall not be responsible for any loss resulting from any such investments or deposits, whether due to depreciation in value, fluctuations in exchange rates or otherwise.

12.     PARTIAL PAYMENTS

UPON any payment under Clause 9 (other than payment in full against surrender of a Security or Coupon) the Security or Coupon in respect of which such payment is made shall be produced to the Trustee or the Paying Agent by or through whom such payment is made and the Trustee shall or shall cause such Paying Agent to enface thereon a memorandum of the amount and the date of payment but the Trustee may in any particular case or generally in relation to Registered Securities dispense with such production and enfacement upon such indemnity being given as it shall think sufficient.

13.     COVENANTS BY THE ISSUER

SO long as any of the Securities remains outstanding (or, in the case of paragraphs (viii), (ix), (xiii) to (xvi) inclusive and (xviii), so long as any of the Securities or Coupons remains liable to prescription) the Issuer covenants with the Trustee that it shall:

   (i)     at all times carry on and conduct its business and procure its Subsidiaries to carry on and conduct their respective businesses in a proper and efficient manner;

   (ii)     give or procure to be given to the Trustee, to the extent not prohibited by law or regulation, such opinions, certificates, information and evidence as it shall require and in such form as it shall require (including without limitation the procurement by the Issuer of all such certificates called for by the Trustee pursuant to Clauses 15(C) and 15(U)) for the purpose of the discharge or exercise of the duties, trusts, powers, authorities and discretions vested in it under these presents or by operation of law;

   (iii)     cause to be prepared and certified by the Auditors in respect of each financial accounting period accounts in such form as will comply with all relevant legal and accounting requirements, all requirements for the time being of The Stock Exchange and the provisions contained in the definition of Latest Consolidated Balance Sheet set out in Condition 21;

   (iv)     at all times keep and procure its Subsidiaries to keep proper accounting records and following the occurrence of an Event of Default or a Potential Event of Default or if the Trustee has grounds to believe that an Event of Default or a Potential Event of Default has occurred or is likely to occur, allow and procure its Subsidiaries to allow the Trustee and any person appointed by the Trustee to whom the Issuer or the relevant Subsidiary (as the case may be) shall have no reasonable objection free access to such accounting records at all reasonable times during normal business hours;

   (v)     send to the Trustee (in addition to any copies to which it may be entitled as a holder of any securities of the Issuer) two copies in English of every balance sheet, profit and loss account, report, circular and notice of general meeting and every other document issued or sent to its shareholders together with any of the foregoing, and every document issued or sent to holders of securities other than its shareholders (including the Holders) as soon as practicable after the issue or publication thereof;

   (vi)     forthwith give notice in writing to the Trustee of the coming into existence of any Security which would require any Security to be given to any series of the Securities pursuant to Condition 4 or of the occurrence of (a) any Event of Default or any Potential Event of Default or (b) any Put Event (as defined in Condition 21) or any event which is, or may be, capable of becoming a Put Event, including, without prejudice to the generality of the foregoing, any Restructuring Event, Negative Rating Event or Rating Downgrade (each as defined in Condition 21) PROVIDED ALWAYS THAT the Issuer shall be deemed not to have notice of a Put Event unless and until it shall have been notified in writing by the Trustee that the Trustee has received a Negative Certification (as defined in Condition 9) in respect of that Put Event;

   (vii)     give to the Trustee (a) within ten days after demand by the Trustee therefor and (b) (without the necessity for any such demand) promptly after the publication of its audited accounts in respect of each financial year commencing with the financial year ending 31st March, 1996 and in any event not later than 180 days after the end of each such financial year a certificate of the Issuer signed by two Directors of the Issuer to the effect that as at a date not more than seven days before delivering such certificate (the "relevant date") there did not exist and had not existed since the relevant date of the previous certificate (or in the case of the first such certificate the date hereof) any Event of Default or any Potential Event of Default (or if such exists or existed specifying the same) and that during the period from and including the relevant date of the last such certificate (or in the case of the first such certificate the date hereof) to and including the relevant date of such certificate the Issuer has complied with all its obligations contained in these presents or (if such is not the case) specifying the respects in which it has not complied;

   (viii)    so far as not prohibited by law or regulation, at all times execute and do all such further documents, acts and things as may be necessary at any time or times in the opinion of the Trustee to give effect to these presents;

   (ix)     at all times maintain an Agent Bank, Reference Banks, Paying Agents, a Registrar and Transfer Agents in accordance with the Conditions;

   (x)     procure the Principal Paying Agent in accordance with the provisions of the Agency Agreement to notify the Trustee forthwith if it does not, on or before the due date for any payment in respect of the Securities or any of them or any of the Coupons, receive unconditionally pursuant to the Agency Agreement payment of the full amount in the requisite currency of the moneys payable on such due date on all such Securities or Coupons as the case may be;

   (xi)     in the event of the unconditional payment to the Principal Paying Agent or the Trustee of any sum due in respect of the Securities or any of them or any of the Coupons being made after the due date for payment thereof forthwith give or procure to be given notice to the relevant Holders in accordance with Condition 16 that such payment has been made;

   (xii)    use all reasonable endeavours to maintain the listing of the Securities on The Stock Exchange or, if it is unable to do so having used all reasonable endeavours, or if the Issuer reasonably considers the maintenance of such listing to be unduly onerous and the Trustee so agrees, use all reasonable endeavours to obtain and maintain a quotation or listing of the Securities on such other stock exchange or exchanges or securities market or markets as the Issuer may (with the prior written approval of the Trustee) decide and shall also upon obtaining a quotation or listing of the Securities on such other stock exchange or exchanges or securities market or markets enter into a Trust Deed supplemental to this Trust Deed to effect such consequential amendments to these presents as the Trustee may require or as shall be requisite to comply with the requirements of any such stock exchange or securities market;

   (xiii)    give notice to the Holders in accordance with Condition 16 of any appointment, resignation or removal of any Agent Bank, Reference Bank, Paying Agent, Registrar or Transfer Agent (other than the appointment of the initial Agent Bank, Reference Banks, Paying Agents, Registrar and Transfer Agents) after having obtained the prior written approval of the Trustee thereto or any change of any Paying Agent's, Registrar's or Transfer Agent's specified office and (except as provided by the Agent Bank Agreement or the Agency Agreement or the Conditions) at least 30 days prior to such event taking effect; PROVIDED ALWAYS THAT so long as any of the Securities remains outstanding in the case of the termination of the appointment of the Agent Bank, the Registrar or a Transfer Agent or so long as any of the Securities or Coupons remains liable to prescription in the case of the termination of the appointment of the Principal Paying Agent no such termination shall take effect until a new Agent Bank, Registrar, Transfer Agent or Principal Paying Agent (as the case may be) has been appointed on terms previously approved in writing by the Trustee;

   (xiv)     obtain the prior written approval of the Trustee to, and promptly give to the Trustee two copies of, the form of every notice given to the Holders in accordance with Condition 16 (such approval, unless so expressed, not to constitute approval for the purposes of Section 57 of the Financial Services Act 1986 of the United Kingdom of any such notice which is an investment advertisement (as therein defined));

   (xv)    if payments of principal, premium or interest in respect of the Securities or the Coupons by the Issuer shall become subject generally to the taxing jurisdiction of any territory or any political sub-division thereof or any authority therein or thereof having power to tax other than or in addition to the United Kingdom or any such political sub-division thereof or any such authority therein or thereof, immediately upon becoming aware thereof notify the Trustee of such event and (unless the Trustee otherwise agrees) enter forthwith into a Trust Deed supplemental to this Trust Deed, giving to the Trustee an undertaking or covenant in form and manner satisfactory to the Trustee in terms corresponding to the terms of Condition 10 with the substitution for (or, as the case may be, the addition to) the references therein to the United Kingdom or any political sub-division thereof or any authority therein or thereof having power to tax of references to that other or additional territory or any political sub-division thereof or any authority therein or thereof having power to tax to whose taxing jurisdiction such payments shall have become subject as aforesaid such Trust Deed also (where applicable) to modify Condition 8(c) so that such Condition shall make reference to the other or additional territory, any political sub-division thereof and any authority therein or having power to tax;

   (xvi)    comply with and perform all its obligations under the Agent Bank Agreement and the Agency Agreement and use all reasonable endeavours to procure that the Agent Bank, the Paying Agents, the Registrar and the Transfer Agents comply with and perform all their respective obligations thereunder and (in the case of the Paying Agents) any notice given by the Trustee pursuant to Clause 2(C)(i) and not make any amendment or modification to either of such Agreements without the prior written approval of the Trustee;

   (xvii)   in order to enable the Trustee to ascertain the principal amount of Securities of each series for the time being outstanding for any of the purposes referred to in the proviso to the definition of "outstanding" in Clause 1, deliver to the Trustee as soon as practicable upon being so requested in writing by the Trustee a certificate of the Issuer in writing signed by two Directors of the Issuer setting out the total number and aggregate principal amount of Securities of each series which:

      (a)     up to and including the date of such certificate have been purchased by the Issuer, any Subsidiary Undertaking of the Issuer, any holding company of the Issuer or any other Subsidiary Undertaking of such holding company and cancelled; and

      (b)     are at the date of such certificate held by, for the benefit of, or on behalf of, the Issuer, any Subsidiary Undertaking of the Issuer, any holding company of the Issuer or any other Subsidiary Undertaking of such holding company;

   (xviii)   procure its Subsidiary Undertakings to comply with all (if any) applicable provisions of Condition 8(d);

   (xix)    procure that, in accordance with the provisions of the Agency Agreement, each of the Paying Agents makes available for inspection by Holders and Couponholders at its specified office copies of these presents, the Agency Agreement, the Agent Bank Agreement and the then latest audited balance sheet(s) and profit and loss account(s) (consolidated if applicable) of the Issuer;

   (xx)     if, in accordance with the provisions of the Conditions, interest in respect of Bearer Securities denominated in U.S. dollars becomes payable at the specified office of any Paying Agent in the United States of America promptly give notice thereof to the Holders in accordance with Condition 16;

   (xxi)    give to the Trustee at the same time as sending to it the certificates referred to in paragraph (vii) above and in any event not later than 180 days after the last day of each financial year of the Issuer, a certificate by the Auditors listing those Subsidiaries of the Issuer which as at the relevant date (as defined in paragraph (vii) above) of the relevant certificate given under paragraph (vii) above or, as the case may be, as at such last day were Principal Subsidiaries for the purposes of Condition 12;

   (xxii)    give to the Trustee, as soon as reasonably practicable after the acquisition or disposal of any company which thereby becomes or ceases to be a Principal Subsidiary or after any transfer is made to any Subsidiary of the Issuer which thereby becomes a Principal Subsidiary, a certificate by the Auditors to such effect;

   (xxiii)   upon due surrender in accordance with the Conditions, pay the face value of all Coupons (including Coupons issued in exchange for Talons) appertaining to all Securities purchased by the Issuer or any Subsidiary Undertaking of the Issuer, any holding company of the Issuer or any other Subsidiary Undertaking of any such holding company;

   (xxiv)   give to the Trustee a certificate of two Directors of the Issuer:

      (a)     specifying the aggregate amount of any Relevant Indebtedness of the Issuer or a PES Subsidiary or guaranteed by the Issuer or a PES Subsidiary and in respect of which Security has been created or is outstanding, such certificate to be provided before the Issuer or a PES Subsidiary creates or has outstanding any new Security in respect of any Relevant Indebtedness or guarantee as described in Condition 4;

      (b)     specifying details of any modification to the terms and conditions of the PES Licence, such certificate to be provided promptly upon any such modification being made; and

      (c)     specifying any higher figure determined by the Director (as defined in the PES Licence) as is mentioned in Condition 12, such certificate to be provided within 5 days of the Director determining such figure by notice in writing to the Secretary of State (as defined in the PES Licence) and the Issuer; and

   (xxv)   give notice to the Trustee as soon as practicable after its Directors or the Directors of any PES Subsidiary have resolved to give any Security in respect of any Relevant Indebtedness or guarantee as described in Condition 4.

14.     REMUNERATION AND INDEMNIFICATION OF TRUSTEE

(A)     THE Issuer shall pay to the Trustee remuneration for its services as trustee as from the date of this Trust Deed, such remuneration to be at such rate as may from time to time be agreed between the Issuer and the Trustee. Such remuneration shall be payable in advance on 9th November in each year, the first such payment to be made on the date hereof. Upon the issue of any Further Securities the rate of remuneration in force immediately prior thereto shall be increased by such amount as shall be agreed between the Issuer and the Trustee, such increased remuneration to be calculated from such date as shall be agreed as aforesaid. The rate of remuneration in force from time to time may upon the final redemption of the whole of the Securities of any series be reduced by such amount as shall be agreed between the Issuer and the Trustee, such reduced remuneration to be calculated from such date as shall be agreed as aforesaid. Such remuneration shall accrue from day to day and be payable (in priority to payments to the Holders and Couponholders) up to and including the date when, all the Securities having become due for redemption, the redemption moneys and interest thereon to the date of redemption have been paid to the Principal Paying Agent or the Trustee PROVIDED THAT if upon due presentation of any Security or Coupon or any cheque payment of the moneys due in respect thereof is improperly withheld or refused, remuneration will commence again to accrue.

(B)     In the event of the occurrence of an Event of Default or a Potential Event of Default or the Trustee considering it expedient or necessary or being requested by the Issuer to undertake duties which the Trustee and the Issuer agree to be of an exceptional nature or otherwise outside the scope of the normal duties of the Trustee under these presents the Issuer shall pay to the Trustee such additional remuneration as shall be agreed between them.

(C)     The Issuer shall in addition pay to the Trustee an amount equal to the amount of any value added tax or similar tax chargeable in respect of its remuneration under these presents.

(D)     In the event of the Trustee and the Issuer failing to agree:

(1)     (in a case to which sub-clause (A) above applies) upon the amount of the remuneration; or

(2)     (in a case to which sub-clause (B) above applies) upon whether such duties shall be of an exceptional nature or otherwise outside the scope of the normal duties of the Trustee under these presents, or upon such additional remuneration,

such matters shall be determined by a merchant bank (acting as an expert and not as an arbitrator) selected by the Trustee and approved by the Issuer or, failing such approval, nominated (on the application of the Trustee) by the President for the time being of The Law Society of England and Wales (the expenses involved in such nomination and the fees of such merchant bank being payable by the Issuer) and the determination of any such merchant bank shall, in the absence of manifest error, be final and binding upon the Trustee and the Issuer.

(E)     The Issuer shall also pay or discharge all Liabilities incurred by the Trustee in relation to the preparation and execution of, the proper exercise of its powers and the proper performance of its duties under, and in any other proper manner in relation to, these presents, including but not limited to travelling expenses and any stamp, issue, registration, documentary and other taxes or duties paid or payable by the Trustee in connection with any action properly taken or contemplated by or on behalf of the Trustee for enforcing, or resolving any doubt concerning, or for any other purpose in relation to, these presents.

(F)     All amounts payable pursuant to sub-clause (E) above and/or Clause 15(J) shall be payable by the Issuer on the date specified in a demand by the Trustee and in the case of payments actually made by the Trustee prior to such demand shall (if not paid within seven days after such demand and the Trustee so requires) carry interest at the rate of two per cent. per annum above the Base Rate from time to time of National Westminster Bank Plc from the date specified in such demand, and in all other cases shall (if not paid on the date specified in such demand or, if later, within seven days after such demand and, in either case, the Trustee so requires) carry interest at such rate from the seventh day after such demand. All remuneration payable to the Trustee shall carry interest at such rate from the due date therefor.

(G)     Unless otherwise specifically stated in any discharge of these presents the provisions of this Clause and Clause 15(J) shall continue in full force and effect notwithstanding such discharge.

(H)     The Trustee shall be entitled in its absolute discretion to determine in respect of which series of Securities any Liabilities incurred under these presents have been incurred or to allocate any such Liabilities between the Original Bonds and any Further Securities of any series.

15.     SUPPLEMENT TO TRUSTEE ACT 1925

THE Trustee shall have all the powers conferred upon trustees by the Trustee Act 1925 of England and Wales and by way of supplement thereto it is expressly declared as follows:

(A)     The Trustee may in relation to these presents act on the advice or opinion of or any information obtained from any lawyer, valuer, accountant, surveyor, banker, broker, auctioneer or other expert whether obtained by the Issuer, the Trustee or otherwise and shall not be responsible for any Liability occasioned by so acting.

(B)     Any such advice, opinion or information may be sent or obtained by letter, telex, telegram, facsimile transmission or cable and the Trustee shall not be liable for acting on any advice, opinion or information purporting to be conveyed by any such letter, telex, telegram, facsimile transmission or cable although the same shall contain some error or shall not be authentic.

(C)     The Trustee may call for and shall be at liberty to accept as sufficient evidence of any fact or matter or the expediency of any transaction or thing a certificate signed by any two Directors of the Issuer and the Trustee shall not be bound in any such case to call for further evidence or be responsible for any Liability that may be occasioned by it or any other person acting on such certificate.

(D)     The Trustee shall be at liberty to hold these presents and any other documents relating thereto or to deposit them in any part of the world with any banker or banking company or company whose business includes undertaking the safe custody of documents or lawyer or firm of lawyers considered by the Trustee to be of good repute and the Trustee shall not be responsible for or required to insure against any Liability incurred in connection with any such holding or deposit and may pay all sums required to be paid on account of or in respect of any such deposit.

(E)     The Trustee shall not be responsible for the receipt or application of the proceeds of the issue of any of the Securities by the Issuer, the exchange of any Global Security for another Global Security or definitive Securities, the delivery of any Global Security or definitive Securities to the person(s) entitled to it or them or the exchange of Bearer Securities for Registered Securities or of Registered Securities for Bearer Securities.

(F)     The Trustee shall not be bound to give notice to any person of the execution of any documents comprised or referred to in these presents or to take any steps to ascertain whether any Event of Default or any Potential Event of Default or any Put Event or any event which may be capable of becoming a Put Event, including, without prejudice to the generality of the foregoing, any Restructuring Event, Negative Rating Event or Rating Downgrade has happened and, until it shall have actual knowledge or express notice pursuant to these presents to the contrary, the Trustee shall be entitled to assume that no such events have happened or, where appropriate, may be capable of happening and that the Issuer is observing and performing all its obligations under these presents.

(G)     Save as expressly otherwise provided in these presents, the Trustee shall have absolute and uncontrolled discretion as to the exercise or non-exercise of its trusts, powers, authorities and discretions under these presents (the exercise or non-exercise of which as between the Trustee and the Holders and Couponholders shall be conclusive and binding on the Holders and Couponholders) and shall not be responsible for any Liability which may result from their exercise or non-exercise.

(H)     The Trustee shall not be liable to any person by reason of having acted upon any Extraordinary Resolution in writing or any Extraordinary Resolution or other resolution purporting to have been passed at any meeting of the Holders of Securities of all or any series in respect whereof minutes have been made and signed even though subsequent to its acting it may be found that there was some defect in the constitution of the meeting or the passing of the resolution, (in the case of an Extraordinary Resolution in writing) that not all Holders had signed the Extraordinary Resolution or that for any reason the resolution was not valid or binding upon such Holders and the relative Couponholders.

(I)     The Trustee shall not be liable to any person by reason of having accepted as valid or not having rejected any Security or Coupon purporting to be such and subsequently found to be forged or not authentic.

(J)     Without prejudice to the right of indemnity by law given to trustees, the Issuer shall indemnify the Trustee and every Appointee and keep it or him indemnified against all Liabilities to which it or he may be or become subject or which may be properly incurred by it or him in the execution or purported execution of any of its or his trusts, powers, authorities and discretions under these presents or its or his functions under any such appointment or in respect of any other matter or thing done or omitted in any way relating to these presents or any such appointment.

(K)     Any consent or approval given by the Trustee for the purposes of these presents may be given on such terms and subject to such conditions (if any) as the Trustee thinks fit and notwithstanding anything to the contrary in these presents may be given retrospectively.

(L)     The Trustee shall not (unless and to the extent ordered so to do by a court of competent jurisdiction) be required to disclose to any Holder or Couponholder any information (including, without limitation, information of a confidential, financial or price sensitive nature) made available to the Trustee by the Issuer or any other person in connection with these presents and no Holder or Couponholder shall be entitled to take any action to obtain from the Trustee any such information.

(M)     Where it is necessary or desirable for any purpose in connection with these presents to convert any sum from one currency to another it shall (unless otherwise provided by these presents or required by law) be converted at such rate or rates, in accordance with such method and as at such date for the determination of such rate of exchange, as may be agreed by the Trustee in consultation with the Issuer and any rate, method and date so agreed shall be binding on the Issuer, the Holders and the Couponholders.

(N)     The Trustee may certify whether or not any of the conditions, events and acts set out in sub-paragraphs (b), (c), (e), (f), (g) and (h) of Condition 12 (each of which conditions, events and acts shall, unless in any case the Trustee in its absolute discretion shall otherwise determine, for all the purposes of these presents be deemed to include the circumstances resulting therein and the consequences resulting therefrom) is in its opinion materially prejudicial to the interests of the Holders and any such certificate shall be conclusive and binding upon the Issuer, the Holders and the Couponholders.

(O)     The Trustee as between itself and the Holders and Couponholders may determine all questions and doubts arising in relation to any of the provisions of these presents. Every such determination, whether or not relating in whole or in part to the acts or proceedings of the Trustee, shall be conclusive and shall bind the Trustee and the Holders and Couponholders.

(P)     In connection with the exercise by it of any of its trusts, powers, authorities and discretions under these presents (including, without limitation, any modification, waiver, authorisation, determination or substitution), the Trustee shall have regard to the interests of the Holders as a class and, in particular but without limitation, shall not have regard to the consequences of such exercise for individual Holders or Couponholders resulting from their being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any particular territory or any political sub-division thereof and the Trustee shall not be entitled to require, nor shall any Holder or Couponholder be entitled to claim, from the Issuer, the Trustee or any other person any indemnification or payment in respect of any tax consequence of any such exercise upon individual Holders or Couponholders except to the extent already provided for in Condition 10 and/or any undertaking given in addition thereto or in substitution therefor under these presents.

(Q)     Any trustee of these presents being a lawyer, accountant, broker or other person engaged in any profession or business shall be entitled to charge and be paid all usual professional and other charges for business transacted and acts done by him or his firm in connection with the trusts of these presents and also his reasonable charges in addition to disbursements for all other work and business done and all time spent by him or his firm in connection with matters arising in connection with these presents.

(R)     The Trustee may whenever it thinks fit delegate by power of attorney or otherwise to any person or persons or fluctuating body of persons (whether being a joint trustee of these presents or not) all or any of its trusts, powers, authorities and discretions under these presents except that the Trustee may not delegate the right to give notice to the Issuer that the Securities are immediately due and repayable unless before such delegation the Trustee provides to the Issuer confirmation in writing that the Trustee has been advised by its legal advisers that it would be appropriate to delegate that right (with or without any other trusts, powers, authorities and discretions) to another person or persons or fluctuating body of persons because of a conflict of interest or possible conflict of interest, and/or any other similar circumstance which the Trustee might face or be subjected to as the Trustee of these presents if it were not to delegate that right. Such delegation may be made upon such terms (including power to sub-delegate) and subject to such conditions and regulations as the Trustee may in the interests of the Holders think fit. The Trustee shall not be under any obligation to supervise the proceedings or acts of any such delegate or sub-delegate or be in any way responsible for any Liability incurred by reason of any misconduct or default on the part of any such delegate or sub-delegate. The Trustee shall within a reasonable time after any such delegation or any renewal, extension or termination thereof give notice thereof to the Issuer.

(S)     The Trustee may in the conduct of the trusts of these presents instead of acting personally employ and pay an agent (whether being a lawyer or other professional person) to transact or conduct, or concur in transacting or conducting, any business and to do, or concur in doing, all acts required to be done in connection with these presents (including the receipt and payment of money). Provided that the Trustee shall not be entitled to appoint an agent to give notice to the Issuer that the Securities are immediately due and repayable in circumstances where it was not entitled to delegate such power by reason of the provisions of paragraph (R) above. The Trustee shall not be in any way responsible for any Liability incurred by reason of any misconduct or default on the part of any such agent or be bound to supervise the proceedings or acts of any such agent.

(T)     The Trustee shall not be responsible for the execution, delivery, legality, effectiveness, adequacy, genuineness, validity, enforceability or admissibility in evidence of these presents or any other document relating or expressed to be supplemental thereto and shall not be liable for any failure to obtain any licence, consent or other authority for the execution, delivery, legality, effectiveness, adequacy, genuineness, validity, performance, enforceability or admissibility in evidence of these presents or any other document relating or expressed to be supplemental thereto.

(U)     The Trustee may call for and shall be at liberty to accept as sufficient evidence of any relevant fact or matter a certificate of the Auditors specifying:

        (a)     that a Subsidiary of the Issuer satisfies the provisions of sub-paragraphs (a) and (b) of the definition of "Excluded Subsidiary" in Condition 21, such certificate to be provided before or at the same time as any written notice given to the Trustee by the Issuer under sub-paragraph (c) of that definition that a Subsidiary of the Issuer is an Excluded Subsidiary;

        (b)     the amount of the Capital and Reserves for the purposes of Condition 12(c), such certificate to be provided within 10 days of any request by the Trustee for its provision; and/or

        (c)     the ratio of the aggregate of the Consolidated Earnings Before Interest and Taxes to the aggregate of the Consolidated Interest Payable (each as defined in Condition 21) in respect of each relevant Accounting Period (as defined in Condition 21) for the purposes of Condition 6,

        and the Trustee shall not be bound in any such case to call for further evidence or be responsible for any Liability that may be occasioned by it or any other person acting on such certificate.

16.     TRUSTEE'S LIABILITY

NOTHING in these presents shall in any case in which the Trustee has failed to show the degree of care and diligence required of it as trustee having regard to the provisions of these presents conferring on it any trusts, powers, authorities or discretions exempt the Trustee from or indemnify it against any liability for breach of trust or any liability attaching to it in respect of any negligence, default, breach of duty or breach of trust which it may incur in relation to its duties under these presents.

17.     TRUSTEE CONTRACTING WITH ISSUER

NEITHER the Trustee nor any director or officer or holding, Subsidiary, Subsidiary Undertaking or associated company of a corporation acting as a trustee under these presents shall by reason of its or his fiduciary position be in any way precluded from:

   (i)     entering into or being interested in any contract or financial or other transaction or arrangement with the Issuer or any person or body corporate associated with the Issuer (including without limitation any contract, transaction or arrangement of a banking or insurance nature or any contract, transaction or arrangement in relation to the making of loans or the provision of financial facilities to, or the purchase, placing or underwriting of or the subscribing or procuring subscriptions for or otherwise acquiring, holding or dealing with the Securities or any other bonds, notes stocks, shares, debenture stock, debentures or other securities of, the Issuer or any person or body corporate associated as aforesaid); or

   (ii)     accepting or holding the trusteeship of any other trust deed constituting or securing any other securities issued by or relating to the Issuer or any such person or body corporate so associated or any other office of profit under the Issuer or any such person or body corporate so associated

and shall be entitled to retain and shall not be in any way liable to account for any profit made or share of brokerage or commission or remuneration or other benefit received thereby or in connection therewith.

18.     WAIVER, AUTHORISATION AND DETERMINATION

(A)     THE Trustee may without the consent or sanction of the Holders and without prejudice to its rights in respect of any subsequent breach, Event of Default or Potential Event of Default from time to time and at any time but only if and in so far as in its opinion the interests of the Holders shall not be materially prejudiced thereby waive or authorise any breach or proposed breach by the Issuer of any of the covenants or provisions contained in these presents or determine that any Event of Default or Potential Event of Default shall not be treated as such for the purposes of these presents PROVIDED ALWAYS THAT the Trustee shall not exercise any powers conferred on it by this Clause in contravention of any express direction given by Extraordinary Resolution or by a request under Condition 12 but so that no such direction or request shall affect any waiver, authorisation or determination previously given or made. Any such waiver, authorisation or determination may be given or made on such terms and subject to such conditions (if any) as the Trustee may determine, shall be binding on the Holders and the Couponholders and, if, but only if, the Trustee shall so require, shall be notified by the Issuer to the Holders in accordance with Condition 16 as soon as practicable thereafter.

        MODIFICATION

(B)     The Trustee may without the consent or sanction of the Holders or Couponholders at any time and from time to time concur with the Issuer in making any modification (i) to these presents (other than the proviso to paragraph 5 of the Fourth Schedule or any matters referred to in that proviso) which in the opinion of the Trustee it may be proper to make PROVIDED THAT the Trustee is of the opinion that such modification will not be materially prejudicial to the interests of the Holders or (ii) to these presents if in the opinion of the Trustee such modification is of a formal, minor or technical nature or to correct a manifest error. Any such modification may be made on such terms and subject to such conditions (if any) as the Trustee may determine, shall be binding upon the Holders and the Couponholders and, unless the Trustee agrees otherwise, shall be notified by the Issuer to the Holders in accordance with Condition 16 as soon as practicable thereafter.

19.     HOLDER OF DEFINITIVE BEARER SECURITY ASSUMED TO BE COUPONHOLDER

(A)     WHEREVER in these presents the Trustee is required or entitled to exercise a power, trust, authority or discretion under these presents, except as ordered by a court of competent jurisdiction or as required by applicable law, the Trustee shall, notwithstanding that it may have express notice to the contrary, assume that each Holder is the holder of all Coupons appertaining to each Bearer Security in definitive form of which he is the holder.

        NO NOTICE TO COUPONHOLDERS

(B)     Neither the Trustee nor the Issuer shall be required to give any notice to the Couponholders for any purpose under these presents and the Couponholders shall be deemed for all purposes to have notice of the contents of any notice given to the Holders in accordance with Condition 16.

        ENTITLEMENT TO TREAT HOLDER AS ABSOLUTE OWNER

(C)     The Issuer, the Trustee, the Paying Agents, the Registrar and the Transfer Agents may (to the fullest extent permitted by applicable laws) deem and treat the holder of any Security and the holder of any Coupon as the absolute owner of such Security or Coupon, as the case may be, for all purposes (whether or not such Security or Coupon shall be overdue and notwithstanding any notice of ownership thereof, any notice of loss or theft thereof or any writing thereon), and the Issuer, the Trustee, the Paying Agents, the Registrar and the Transfer Agents shall not be affected by any notice to the contrary. All payments made to any such holder shall be valid and, to the extent of the sums so paid, effective to satisfy and discharge the liability for the moneys payable in respect of such Security or Coupon, as the case may be.

20.     SUBSTITUTION

(A)     (1)     THE Trustee may without the consent of the Holders or Couponholders at any time agree with the Issuer to the substitution in place of the Issuer (or of the previous substitute under this Clause) as the principal debtor under these presents of any Subsidiary of the Issuer (such substituted company being hereinafter called the "New Company") provided that a Trust Deed is executed or some other form of undertaking is given by the New Company in form and manner satisfactory to the Trustee, agreeing to be bound by the provisions of these presents with any consequential amendments which the Trustee may deem appropriate as fully as if the New Company had been named in these presents as the principal debtor in place of the Issuer (or of the previous substitute under this Clause) and provided further that the Issuer unconditionally and irrevocably guarantees all amounts payable under these presents.

(2)     The following further conditions shall apply to (1) above:

   (i)     the Issuer and the New Company shall comply with such other requirements as the Trustee may direct in the interests of the Holders;

   (ii)     where the New Company is incorporated, domiciled or resident in, or subject generally to the taxing jurisdiction of, a territory other than or in addition to the United Kingdom or any political sub-division thereof or any authority therein or thereof having power to tax, undertakings or covenants shall be given by the New Company in terms corresponding to the provisions of Condition 10 with the substitution for (or, as the case may be, the addition to) the references to the United Kingdom of references to that other or additional territory in which the New Company is incorporated, domiciled or resident or to whose taxing jurisdiction it is subject and (where applicable) Condition 8(c) shall be modified accordingly;

   (iii)     without prejudice to the rights of reliance of the Trustee under the immediately following paragraph (iv), the Trustee is satisfied that the relevant transaction is not materially prejudicial to the interests of the Holders; and

   (iv)     if two Directors of the New Company (or other officers acceptable to the Trustee) shall certify that the New Company is solvent at the time at which the relevant transaction is proposed to be effected (which certificate the Trustee may rely upon absolutely) the Trustee shall not be under any duty to have regard to the financial condition, profits or prospects of the New Company or to compare the same with those of the Issuer or the previous substitute under this Clause as applicable.

(B)     Any such Trust Deed or undertaking shall, if so expressed, operate to release the Issuer or the previous substitute as aforesaid from all of its obligations qua principal debtor under these presents. Not later than 14 days after the execution of such documents and compliance with such requirements, the New Company shall give notice thereof in a form previously approved by the Trustee to the Holders in the manner provided in Condition 16. Upon the execution of such documents and compliance with such requirements, the New Company shall be deemed to be named in these presents as the principal debtor in place of the Issuer (or in place of the previous substitute under this Clause) under these presents and these presents shall be deemed to be amended in such manner as shall be necessary to give effect to the above provisions and, without limitation, references in these presents to the Issuer shall, where the context so requires, be deemed to be or include references to the New Company.

21.     CURRENCY INDEMNITY

THE Issuer shall indemnify the Trustee, every Appointee, the Holders and the Couponholders and keep them indemnified against:

(a)     any Liability incurred by any of them arising from the non-payment by the Issuer of any amount due to the Trustee or the Holders or Couponholders under these presents by reason of any variation in the rates of exchange between those used for the purposes of calculating the amount due under a judgment or order in respect thereof and those prevailing at the date of actual payment by the Issuer; and

(b)     any deficiency arising or resulting from any variation in rates of exchange between (i) the date as of which the local currency equivalent of the amounts due or contingently due under these presents (other than this Clause) is calculated for the purposes of any bankruptcy, insolvency or liquidation of the Issuer and (ii) the final date for ascertaining the amount of claims in such bankruptcy, insolvency or liquidation. The amount of such deficiency shall be deemed not to be reduced by any variation in rates of exchange occurring between the said final date and the date of any distribution of assets in connection with any such bankruptcy, insolvency or liquidation.

The above indemnity shall constitute an obligation of the Issuer separate and independent from its obligations under the other provisions of these presents and shall apply irrespective of any indulgence granted by the Trustee or the Holders or the Couponholders from time to time and shall continue in full force and effect notwithstanding the judgment or filing of any proof or proofs in any bankruptcy, insolvency or liquidation of the Issuer for a liquidated sum or sums in respect of amounts due under these presents (other than this Clause). Any such deficiency as aforesaid shall be deemed to constitute a loss suffered by the Holders and Couponholders and no proof or evidence of any actual loss shall be required by the Issuer or its liquidator or liquidators.

22.     NEW TRUSTEE

(A)     THE power to appoint a new trustee of these presents shall be vested in the Issuer but no person shall be appointed who shall not previously have been approved by an Extraordinary Resolution. One or more persons may hold office as trustee or trustees of these presents but such trustee or trustees shall be or include a Trust Corporation. Whenever there shall be more than two trustees of these presents the majority of such trustees shall be competent to execute and exercise all the duties, powers, trusts, authorities and discretions vested in the Trustee by these presents provided that a Trust Corporation shall be included in such majority. Any appointment of a new trustee of these presents shall as soon as practicable thereafter be notified by the Issuer to the Principal Paying Agent, the Registrar, the Transfer Agents and the Holders.

     SEPARATE AND CO-TRUSTEES

(B)     Notwithstanding the provisions of sub-clause (A) above, the Trustee may, upon giving prior notice to the Issuer (but without the consent of the Issuer, the Holders or the Couponholders), appoint any person established or resident in any jurisdiction (whether a Trust Corporation or not) to act either as a separate trustee or as a co-trustee jointly with the Trustee:

   (i)     if the Trustee considers such appointment to be in the interests of the Holders;

   (ii)     for the purposes of conforming to any legal requirements, restrictions or conditions in any jurisdiction in which any particular act or acts is or are to be performed; or

   (iii)     for the purposes of obtaining a judgment in any jurisdiction or the enforcement in any jurisdiction of either a judgment already obtained or any of the provisions of these presents against the Issuer.

The Issuer irrevocably appoints the Trustee to be its attorney in its name and on its behalf to execute any such instrument of appointment. Such a person shall (subject always to the provisions of these presents) have such trusts, powers, authorities and discretions (not exceeding those conferred on the Trustee by these presents) and such duties and obligations as shall be conferred or imposed by the instrument of appointment. The Trustee shall have power in like manner to remove any such person. Such reasonable remuneration as the Trustee may pay to any such person, together with any attributable Liabilities incurred by it in performing its function as such separate trustee or co-trustee, shall for the purposes of these presents be treated as Liabilities incurred by the Trustee.

23.     TRUSTEE'S RETIREMENT AND REMOVAL

A trustee of these presents may retire at any time on giving not less than three months' prior written notice to the Issuer without giving any reason and without being responsible for any Liabilities incurred by reason of such retirement. The Holders may by Extraordinary Resolution remove any trustee or trustees for the time being of these presents. The Issuer undertakes that in the event of the only trustee of these presents which is a Trust Corporation giving notice under this Clause or being removed by Extraordinary Resolution it will use its best endeavours to procure that a new trustee of these presents being a Trust Corporation is appointed as soon as reasonably practicable thereafter. The retirement or removal of any such trustee shall not become effective until a successor trustee being a Trust Corporation is appointed.

24.     TRUSTEE'S POWERS TO BE ADDITIONAL

THE powers conferred upon the Trustee by these presents shall be in addition to any powers which may from time to time be vested in the Trustee by the general law or as a holder of any of the Securities or Coupons.

25.     NOTICES

ANY notice or demand to the Issuer or the Trustee to be given, made or served for any purposes under these presents shall be given, made or served by sending the same by pre-paid post (first class if inland, first class airmail if overseas) or facsimile transmission or by delivering it by hand as follows:

to the Issuer:	Newport Road
	St Mellons
	Cardiff CF3 9XW
	(Attention: Group Treasury)
	Facsimile No. 01222 792897
to the Trustee:	1 Appold Street
	Broadgate
	London EC2A 2HE
	(Attention: the Managing Director)
	Facsimile No. (0171) 982 1149

or to such other address or facsimile number as shall have been notified (in accordance with this Clause) to the other party hereto and any notice or demand sent by post as aforesaid shall be deemed to have been given, made or served three days in the case of inland post or seven days in the case of overseas post after despatch and any notice or demand sent by facsimile transmission as aforesaid shall be deemed to have been given, made or served 24 hours after the time of despatch provided that in the case of a notice or demand given by facsimile transmission such notice or demand shall forthwith be confirmed by post. The failure of the addressee to receive such confirmation shall not invalidate the relevant notice or demand given by facsimile transmission.

26.     GOVERNING LAW

THESE presents are governed by and shall be construed in accordance with English law.

27.     COUNTERPARTS

THIS Trust Deed and any Trust Deed supplemental hereto may be executed and delivered in any number of counterparts, all of which, taken together, shall constitute one and the same deed and any party to this Trust Deed or any Trust Deed supplemental hereto may enter into the same by executing and delivering a counterpart.

IN WITNESS whereof this Trust Deed has been executed as a deed by the Issuer and the Trustee and delivered the day and year first above written.

THE FIRST SCHEDULE

- FORM OF ORIGINAL GLOBAL BOND -

SOUTH WALES ELECTRICITY plc

(Incorporated in England and Wales with limited liability under the
Companies Act 1985 with registered number 2366985)

TEMPORARY GLOBAL BOND

representing

£150,000,000 9 1/4 PER CENT. BONDS
DUE 2020

This Bond is a temporary Global Bond without interest coupons in respect of a duly authorised issue of Bonds of South Wales Electricity plc (the "Issuer"), designated as specified in the title hereof (the "Bonds"), limited to the aggregate principal amount of One Hundred and Fifty Million Pounds Sterling (£150,000,000) and constituted by a Trust Deed dated 9th November, 1995 (the "Trust Deed") between the Issuer and Bankers Trustee Company Limited as trustee (the trustee for the time being thereof being herein called the "Trustee"). References herein to the Conditions (or to any particular numbered Condition) shall be to the Conditions (or that particular one of them) set out in Part III of the Second Schedule to the Trust Deed.

1.     Promise to pay

Subject as provided in this temporary Global Bond the Issuer promises to pay to the bearer the principal amount of this temporary Global Bond (being at the date hereof One Hundred and Fifty Million Pounds Sterling (£150,000,000)) on 9th November, 2020 (or on such earlier date as the said principal amount may become repayable in accordance with the Conditions or the Trust Deed) and to pay interest annually in arrear on 9th November on the principal amount from time to time of this temporary Global Bond at the rate of 9 1/4 per cent. per annum together with such other amounts (if any) as may be payable, all subject to and in accordance with the Conditions and the provisions of the Trust Deed.

2.     Exchange for definitive Bonds and purchases

This temporary Global Bond is exchangeable in whole or in part upon the request of the bearer for definitive Bonds only on and subject to the terms and conditions set out below. The definitive Bonds to be issued on such exchange will be in bearer form ("Definitive Bearer Bonds") in the denominations of £1,000, £10,000 and £100,000 each with interest coupons and one talon ("Coupons") attached.

On and after 19th December, 1995 (the "Exchange Date") this temporary Global Bond may be exchanged in whole or in part at the specified office of the Principal Paying Agent (or such other place as the Trustee may agree) for Definitive Bearer Bonds and the Issuer shall procure that the Principal Paying Agent shall issue and deliver, in full or partial exchange for this temporary Global Bond, Definitive Bearer Bonds (together with the Coupons appertaining thereto) in an aggregate principal amount equal to the principal amount of this temporary Global Bond submitted for exchange Provided that Definitive Bearer Bonds will be so issued and delivered only if and to the extent that there shall have been presented to the Issuer a certificate from Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear System ("Euroclear") or from Cedel Bank, société anonyme ("Cedel") substantially in the form of the certificate attached as Exhibit A.

Any person who would, but for the provisions of this temporary Global Bond and the Trust Deed, otherwise be entitled to receive a Definitive Bearer Bond or Definitive Bearer Bonds shall not be entitled to require the exchange of an appropriate part of this temporary Global Bond for a Definitive Bearer Bond or Definitive Bearer Bonds unless and until he shall have delivered or caused to be delivered to Euroclear or Cedel a certificate substantially in the form of the certificate attached as Exhibit B (copies of which form of certificate will be available at the offices of Euroclear in Brussels and Cedel in Luxembourg and the specified office of each of the Paying Agents).

Upon (i) any exchange of a part of this temporary Global Bond for a Definitive Bearer Bond or Definitive Bearer Bonds or (ii) the purchase by or on behalf of the Issuer or any Subsidiary of the Issuer and cancellation of a part of this temporary Global Bond in accordance with the Conditions, the portion of the principal amount hereof so exchanged or so purchased and cancelled shall be endorsed by or on behalf of the Principal Paying Agent on behalf of the Issuer on Part II of the Schedule hereto, whereupon the principal amount hereof shall be reduced for all purposes by the amount so exchanged or so purchased and cancelled and, in each case, endorsed.

3.     Payments

Until the entire principal amount of this temporary Global Bond has been extinguished, this temporary Global Bond shall in all respects be entitled to the same benefits as the Definitive Bearer Bonds for the time being represented hereby and shall be entitled to the benefit of and be bound by the Trust Deed, except that the holder of this temporary Global Bond shall not (unless upon due presentation of this temporary Global Bond for exchange, delivery of the appropriate number of Definitive Bearer Bonds (together with the Coupons appertaining thereto) is improperly withheld or refused and such withholding or refusal is continuing at the relevant payment date) be entitled (i) (subject to (ii) below) to receive any payment of interest on this temporary Global Bond except upon certification as hereinafter provided or (ii) on and after the Exchange Date, to receive any payment on this temporary Global Bond. Upon any payment of principal or interest on this temporary Global Bond the amount so paid shall be endorsed by or on behalf of the Principal Paying Agent on behalf of the Issuer on Part I of the Schedule hereto.

Payments of interest in respect of Bonds for the time being represented by this temporary Global Bond shall be made to the bearer only upon presentation to the Issuer or its agent of a certificate from Euroclear or from Cedel substantially in the form of the certificate attached as Exhibit A. Any person who would, but for the provisions of this temporary Global Bond and of the Trust Deed, otherwise be beneficially entitled to a payment of interest on this temporary Global Bond shall not be entitled to require such payment unless and until he shall have delivered or caused to be delivered to Euroclear or Cedel a certificate substantially in the form of the certificate attached as Exhibit B (copies of which form of certificate will be available at the offices of Euroclear in Brussels and Cedel in Luxembourg and the specified office of each of the Paying Agents).

Upon any payment of principal and endorsement of such payment on Part I of the Schedule hereto, the principal amount of this temporary Global Bond shall be reduced for all purposes by the principal amount so paid and endorsed.

All payments of any amounts payable and paid to the bearer of this temporary Global Bond shall be valid and, to the extent of the sums so paid, effectual to satisfy and discharge the liability for the moneys payable hereon and on the relevant Definitive Bearer Bonds and Coupons.

4.     Authentication

This temporary Global Bond shall not be or become valid or obligatory for any purpose unless and until authenticated by or on behalf of the Principal Paying Agent.

5.     Governing law

This temporary Global Bond is governed by, and shall be construed in accordance with, the laws of England.

IN WITNESS whereof the Issuer has caused this temporary Global Bond to be signed manually by one of its Directors on its behalf.

SOUTH WALES ELECTRICITY plc

By: ..............................

Director

Issued in London, England on 9th November, 1995.

Certificate of authentication

This temporary Global Bond is duly authenticated.

..................................

Duly authorised
for and on behalf of
Union Bank of Switzerland, London branch,
as Principal Paying Agent

THE SCHEDULE

PART I

PAYMENTS OF PRINCIPAL AND INTEREST

The following payments on this temporary Global Bond have been made:

Date	Interest	Principal	Remaining principal	Notation
made	paid	paid	amount of this	made on
			temporary Global	behalf of
			Bond following	the Issuer
			such payment
	£	£	£
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________

PART II

EXCHANGES FOR DEFINITIVE BEARER BONDS AND

PURCHASES AND CANCELLATIONS

The following exchanges of a part of this temporary Global Bond for Definitive Bearer Bonds and/or purchases and cancellations of a part of this temporary Global Bond have been made:

Date made	Part of Principal amount of this temporary Global Bond exchanged for Definitive Bearer Bonds	Part of principal amount of this temporary Global Bond purchased and cancelled	Aggregate principal amount of this temporary Global Bond following such exchange or purchase and cancellation	Notation made on behalf of the Issuer
	£	£	£
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________
_______	__________	________________	___________________	__________

EXHIBIT A

SOUTH WALES ELECTRICITY plc

£150,000,000

9 1/4 per cent. Bonds due 2020
(the "Securities")

This is to certify that, based solely on certifications we have received in writing, by tested telex or by electronic transmission from member organisations appearing in our records as persons being entitled to a portion of the principal amount set forth below (our "Member Organisations") substantially to the effect set forth in the Trust Deed, as of the date hereof, £ principal amount of the above-captioned Securities (i) is owned by persons that are not citizens or residents of the United States, domestic partnerships, domestic corporations or any estate or trust the income of which is subject to United States Federal income taxation regardless of its source ("United States persons"), (ii) is owned by United States persons that (a) are foreign branches of United States financial institutions (as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(v)) ("financial institutions") purchasing for their own account or for resale, or (b) acquired the Securities through foreign branches of United States financial institutions and who hold the Securities through such United States financial institutions on the date hereof (and in either case (a) or (b), each such United States financial institution has agreed, on its own behalf or through its agent, that we may advise the Issuer or the Issuer's agent that it will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder), or (iii) is owned by United States or foreign financial institutions for purposes of resale during the restricted period (as defined in U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)), and to the further effect that United States or foreign financial institutions described in clause (iii) above (whether or not also described in clause (i) or (ii)) have certified that they have not acquired the Securities for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions.

If the Securities are of the category contemplated in Section 230.903(c)(3) of Regulation S under the Securities Act of 1933, as amended, then this is also to certify with respect to such principal amount of Securities set forth above that, except as set forth below, we have received in writing, by tested telex or by electronic transmission, from our Member Organisations entitled to a portion of such principal amount, certifications with respect to such portion, substantially to the effect set forth in the Trust Deed.

We further certify (i) that we are not making available herewith for exchange (or, if relevant, exercise of any rights or collection of any interest) any portion of the temporary global Security excepted in such certifications and (ii) that as of the date hereof we have not received any notification from any of our Member Organisations to the effect that the statements made by such Member Organisations with respect to any portion of the part submitted herewith for exchange (or, if relevant, exercise of any rights or collection of any interest) are no longer true and cannot be relied upon as of the date hereof.

We understand that this certification is required in connection with certain tax laws and, if applicable, certain securities laws of the United States. In connection therewith, if administrative or legal proceedings are commenced or threatened in connection with which this certification is or would be relevant, we irrevocably authorise you to produce this certification to any interested party in such proceedings.

*Dated

[Morgan Guaranty Trust Company of New York,

Brussels office, as operator of the

Euroclear System] [Cedel Bank, société anonyme]

By: ..............................................

Authorised Signatory

EXHIBIT B

SOUTH WALES ELECTRICITY plc

£150,000,000

9 1/4 per cent. Bonds due 2020
(the "Securities")

This is to certify that as of the date hereof, and except as set forth below, the above-captioned Securities held by you for our account (i) are owned by person(s) that are not citizens or residents of the United States, domestic partnerships, domestic corporations or any estate or trust the income of which is subject to United States Federal income taxation regardless of its source ("United States person(s)"), (ii) are owned by United States person(s) that (a) are foreign branches of United States financial institutions (as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(v)) ("financial institutions") purchasing for their own account or for resale, or (b) acquired the Securities through foreign branches of United States financial institutions and who hold the Securities through such United States financial institutions on the date hereof (and in either case (a) or (b), each such United States financial institution hereby agrees, on its own behalf or through its agent, that you may advise the Issuer or the Issuer's agent that it will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder), or (iii) are owned by United States or foreign financial institution(s) for purposes of resale during the restricted period (as defined in U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)), and in addition if the owner of the Securities is a United States or foreign financial institution described in clause (iii) above (whether or not also described in clause (i) or (ii)) this is further to certify that such financial institution has not acquired the Securities for the purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions.

If the Securities are of the category contemplated in Section 230.903(c)(3) of Regulation S under the Securities Act of 1933, as amended, (the "Act"), then this is also to certify that, except as set forth below (i) in the case of debt securities, the Securities are beneficially owned by (a) non-U.S. person(s) or (b) U.S. person(s) who purchased the Securities in transactions which did not require registration under the Act; or (ii) in the case of equity securities, the Securities are owned by (x) non-U.S. person(s) (and such person(s) are not acquiring the Securities for the account or benefit of U.S. person(s)) or (y) U.S. person(s) who purchased the Securities in a transaction which did not require registration under the Act. If this certification is being delivered in connection with the exercise of warrants pursuant to Section 230.902(m) of Regulation S under the Act, then this is further to certify that, except as set forth below, the Securities are being exercised by and on behalf of non-U.S. person(s). As used in this paragraph the term "U.S. person" has the meaning given to it by Regulation S under the Act.

As used herein, "United States" means the United States of America (including the States and the District of Columbia); and its "possessions" include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands.

We undertake to advise you promptly by tested telex on or prior to the date on which you intend to submit your certification relating to the Securities held by you for our account in accordance with your operating procedures if any applicable statement herein is not correct on such date, and in the absence of any such notification it may be assumed that this certification applies as of such date.

This certification excepts and does not relate to £        of such interest in the above Securities in respect of which we are not able to certify and as to which we understand exchange and delivery of definitive Securities (or, if relevant, exercise of any rights or collection of any interest) cannot be made until we do so certify.

We understand that this certification is required in connection with certain tax laws and, if applicable, certain securities laws of the United States. In connection therewith, if administrative or legal proceedings are commenced or threatened in connection with which this certification is or would be relevant, we irrevocably authorise you to produce this certification to any interested party in such proceedings.

* Dated

By: ......................

[Name of person giving certification]

(As, or as agent for, the beneficial

owner(s) of the Securities

to which this certification relates)

THE SECOND SCHEDULE

Part I

- FORM OF DEFINITIVE ORIGINAL BEARER BOND -

ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.

[1,000/10,000/100,000] XS0061222484 [SERIES] [Serial No.]

SOUTH WALES ELECTRICITY plc

(Incorporated in England and Wales with limited liability under the
Companies Act 1985 with registered number 2366985)

£150,000,000 9 1/4 PER CENT. BONDS DUE 2020

The issue of the Bonds was authorised by a resolution of the Board of Directors of South Wales Electricity plc (the "Issuer") passed on 6th October, 1995 and resolutions of a duly authorised Committee of such Board of Directors passed on 17th October, 1995 and 18th October, 1995.

This Bond forms one of a series of Bonds constituted by a Trust Deed (the "Trust Deed") dated 9th November, 1995 made between the Issuer and Bankers Trustee Company Limited as trustee for the holders of the Bonds and issued either as Bearer Bonds in the denominations of £1,000, £10,000 and £100,000 each with Coupons attached or as Registered Bonds in the denomination of £1 each or integral multiples thereof, in an aggregate principal amount of £150,000,000.

The Issuer for value received and subject to and in accordance with the Conditions endorsed hereon hereby promises to pay to the bearer on 9th November, 2020 (or on such earlier date as the principal sum hereunder mentioned may become repayable in accordance with the said Conditions) the principal sum of:

£[1,000/10,000/100,000] ([One/Ten/One Hundred] Thousand pounds sterling)

together with interest on the said principal sum at the rate of 9 1/4 per cent. per annum payable annually in arrear on 9th November and together with such other amounts (if any) as may be payable, all subject to and in accordance with the said Conditions and the provisions of the Trust Deed.

Neither this Bond nor the Coupons and Talon appertaining hereto shall be or become valid or obligatory for any purpose unless and until this Bond has been authenticated by or on behalf of the Principal Paying Agent.

IN WITNESS whereof this Bond has been executed on behalf of the Issuer.

SOUTH WALES ELECTRICITY plc

By: ..............................

Director

Dated as of 9th November, 1995.

Issued in London, England.

Certificate of authentication

This Bond is duly authenticated.

...............................

Duly authorised
for and on behalf of
Union Bank of Switzerland, London branch,
as Principal Paying Agent

- FORM OF ORIGINAL COUPON  - 

On the front:

ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.

SOUTH WALES ELECTRICITY plc

£150,000,000 9 1/4 PER CENT. BONDS DUE 2020

Coupon appertaining to a Bond in the denomination of £[1,000/10,000/100,000]

This Coupon is separately	Coupon for
negotiable, payable to bearer,	£[92.50/925.00/9,250.00]
and subject to the	due on
Conditions of the said Bonds.	9th November, [199[ ]/200[ ]]

[No.] [1,000/10,000/100,000] XS0061222484 [Series] [Serial No.]

On the back:

PRINCIPAL PAYING AGENT

Union Bank of Switzerland
100 Liverpool Street
London EC2M 2RH

OTHER PAYING AGENT

Union Bank of Switzerland
Bahnhofstrasse 45
8021 Zurich

- FORM OF ORIGINAL TALON -

On the front:

ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.

SOUTH WALES ELECTRICITY plc

£150,000,000 9 1/4 PER CENT. BONDS DUE 2020

Talon appertaining to a Bond in the denomination of [£1,000/10,000/100,000]

On and after               ,                    [ten/five] further Coupons [and a further Talon] will be issued at the specified office of any of the Paying Agents set out on the reverse hereof (and/or any other or further Paying Agents and/or specified offices as may from time to time be duly appointed and notified to the Bondholders) upon production and surrender of this Talon.

This Talon may, in certain circumstances, become void under the Conditions of the said Bond.

[No.] [1,000/10,000/100,000] XS0061222484 [Series] [Serial No.]

On the back:

PRINCIPAL PAYING AGENT

Union Bank of Switzerland
100 Liverpool Street
London EC2M 2RH

OTHER PAYING AGENT

Union Bank of Switzerland
Bahnhofstrasse 45
8021 Zurich

Part II

- FORM OF ORIGINAL REGISTERED BOND -

ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.

XS0061222484 [SERIES] [REGISTRATION DATE] [CERTIFICATE NO.]

SOUTH WALES ELECTRICITY plc

(Incorporated in England and Wales with limited liability
under the Companies Act 1985 with registered number 2366985)

£150,000,000 9 1/4 PER CENT. BONDS DUE 2020

The issue of the Bonds was authorised by a resolution of the Board of Directors of South Wales Electricity plc (the "Issuer") passed on 6th October, 1995 and resolutions of a duly authorised Committee of such Board of Directors passed on 17th October, 1995 and 18th October, 1995.

This Bond forms one of a series of Bonds constituted by a Trust Deed (the "Trust Deed") dated 9th November, 1995 made between the Issuer and Bankers Trustee Company Limited as trustee for the holders of the Bonds and issued either as Bearer Bonds in the denominations of £1,000, £10,000 and £100,000 each with Coupons attached or as Registered Bonds in the denominations of £1 each or integral multiples thereof, in an aggregate principal amount of £150,000,000.

THIS IS TO CERTIFY that                      

of

is/are the registered holder(s) of one of the above-mentioned Registered Bonds and is/are entitled on 9th November, 2020 (or on such earlier date as the principal sum hereinafter mentioned may become repayable in accordance with the Conditions endorsed hereon) to the repayment of such principal sum of:

£[            ]([           ]pounds sterling)

together with such other amounts (if any) as may be payable, all subject to and in accordance with the said Conditions and the provisions of the Trust Deed.

Interest at the rate of 9 1/4 per cent. per annum is payable on the said principal sum annually in arrear on 9th November in each year, subject to and in accordance with the said Conditions and the provisions of the Trust Deed.

IN WITNESS whereof this Registered Bond has been executed on behalf of the Issuer.

SOUTH WALES ELECTRICITY plc

By: ..............................

Director

This certificate must be surrendered before any transfer of the whole or part of the Registered Bonds herein mentioned can be registered.

- FORM OF TRANSFER OF REGISTERED BOND -

FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and transfer(s) to

...............................................................................................................

...............................................................................................................

...............................................................................................................

(Please print or type name and address (including postal code) of transferee)

£[           ] principal amount of this Bond and all rights hereunder, hereby irrevocably constituting and appointing ......................................................... as attorney to transfer such principal amount of this Registered Bond in the register maintained by South Wales Electricity plc with full power of substitution.

Signature(s) of Transferor(s)	......................
	......................

Date: ..............

N.B.:

1.     This form of transfer must be accompanied by such documents, evidence and information as may be required pursuant to the Conditions and must be executed under the hand of the transferor or, if the transferor is a corporation, either under its common seal or under the hand of two of its officers duly authorised in writing and, in such latter case, the document so authorising such officers must be delivered with this form of transfer.

2.     In each case the signature(s) must be guaranteed by a commercial bank with a correspondent bank in New York City, Luxembourg or London or by an institution which is a member of The New York Stock Exchange or The American Stock Exchange in New York City or the Luxembourg Stock Exchange or The International Stock Exchange of the United Kingdom and the Republic of Ireland Limited.

3.     The signature(s) on this form of transfer must correspond with the name(s) as it/they appear(s) on the face of this Registered Bond in every particular, without alteration or enlargement or any change whatever.

4.     Registered Bonds are only transferable in amounts of £1 or any integral multiples thereof.

Part III

- CONDITIONS OF THE ORIGINAL BONDS -

PRINCIPAL PAYING AGENT

Union Bank of Switzerland
100 Liverpool Street
London EC2M 2RH

OTHER PAYING AGENT

Union Bank of Switzerland
Bahnhofstrasse 45
8021 Zurich

REGISTRAR

Barclays Bank PLC
Bourne House
34 Beckenham Road
Beckenham
Kent BR3 4TU

and/or such other or further Principal Paying Agent and other Paying Agents and Registrar and/or specified offices as may from time to time be appointed by the Issuer with the approval of the Trustee and notice of which has been given to the Bondholders.

THE THIRD SCHEDULE

REGISTER AND TRANSFER OF REGISTERED SECURITIES

1.     The Issuer shall at all times ensure that the Registrar maintains in the United Kingdom, or at such other place as the Trustee may agree, a register showing the amount of the Registered Securities from time to time outstanding and the dates of issue and all subsequent transfers and changes of ownership thereof and the names and addresses of the holders of the Registered Securities. The Trustee and the holders of the Registered Securities or any of them and any person authorised by it or any of them may at all reasonable times during office hours inspect the register and take copies of or extracts from it. The register may be closed by the Issuer for such periods at such times (not exceeding in total 30 days in any one year) as it may think fit.

2.     Each Registered Security shall have an identifying serial number which shall be entered on the register.

3.     The Registered Securities are transferable by execution of the form of transfer endorsed thereon under the hand of the transferor or, where the transferor is a corporation, under its common seal or under the hand of two of its officers duly authorised in writing. In each case the signature(s) must be guaranteed by a commercial bank with a correspondent bank in New York City, Luxembourg or London or by an institution which is a member of The New York Stock Exchange or The American Stock Exchange in New York City or the Luxembourg Stock Exchange or The International Stock Exchange of the United Kingdom and the Republic of Ireland Limited.

4.     The Registered Securities to be transferred must be delivered for registration to the specified office of the Registrar or any Transfer Agent with the form of transfer endorsed thereon duly completed and executed and must be accompanied by such documents, evidence and information as may be required pursuant to the Conditions and such other evidence as the Issuer may reasonably require to prove the title of the transferor or his right to transfer the Registered Securities and, if the form of transfer is executed by some other person on his behalf or in the case of the execution of a form of transfer on behalf of a corporation by its officers, the authority of that person or those persons to do so.

5.     The executors or administrators of a deceased holder of Registered Securities (not being one of several joint holders) and in the case of the death of one or more of several joint holders the survivor or survivors of such joint holders shall be the only person or persons recognised by the Issuer as having any title to such Registered Securities.

6.     Any person becoming entitled to Registered Securities in consequence of the death or bankruptcy of the holder of such Registered Securities may upon producing such evidence that he holds the position in respect of which he proposes to act under this paragraph or of his title as the Issuer shall require be registered himself as the holder of such Registered Securities or, subject to the preceding paragraphs as to transfer, may transfer such Registered Securities. The Issuer shall be at liberty to retain any amount payable upon the Registered Securities to which any person is so entitled until such person shall be registered as aforesaid or shall duly transfer the Registered Securities.

7.     Unless otherwise requested by him, the holder of Registered Securities of any series shall be entitled to receive only one Registered Security in respect of his entire holding of such series.

8.     The joint holders of Registered Securities of any series shall be entitled to one Registered Security only in respect of their joint holding of such series which shall, except where they otherwise direct, be delivered to the joint holder whose name appears first in the register of the holders of Registered Securities in respect of such joint holding.

9.     Where a holder of Registered Securities has transferred part only of his holding of any series there shall be delivered to him without charge a Registered Security in respect of the balance of such holding.

10.     The Issuer shall make no charge to the Holders for the registration of any holding of Registered Securities or any transfer thereof or for the issue thereof or for the delivery thereof at the specified office of the Registrar or of any Transfer Agent or by post to the address specified by the Holder. If any Holder entitled to receive a Registered Security wishes to have the same delivered to him otherwise than at the specified office of the Registrar or of any Transfer Agent, such delivery shall be made, upon his written request to the Registrar or such Transfer Agent, at his risk and (except where sent by ordinary uninsured mail to the address specified by the Holder) at his expense.

11.     The holder of a Registered Security may (to the fullest extent permitted by applicable laws) be treated at all times, by all persons and for all purposes as the absolute owner of such Registered Security notwithstanding any notice any person may have of the right, title, interest or claim of any other person thereto. The Issuer and the Trustee shall not be bound to see to the execution of any trust to which any Registered Security may be subject and no notice of any trust shall be entered on the register. The holder of a Registered Security will be recognised by the Issuer as entitled to his Registered Security free from any equity, set-off or counterclaim on the part of the Issuer against the original or any intermediate holder of such Registered Security.

THE FOURTH SCHEDULE

PROVISIONS FOR MEETINGS OF HOLDERS

1.     (A)     As used in this Schedule the following expressions shall have the following meanings unless the context otherwise requires:

   (i)     "voting certificate" shall mean an English language certificate issued by a Paying Agent and dated in which it is stated:

      (a)     that on the date thereof Bearer Securities (not being Bearer Securities in respect of which a block voting instruction has been issued and is outstanding in respect of the meeting specified in such voting certificate or any adjourned such meeting) were deposited with such Paying Agent or (to the satisfaction of such Paying Agent) were held to its order or under its control and that no such Bearer Securities will cease to be so deposited or held until the first to occur of:

(1)     the conclusion of the meeting specified in such certificate or, if later, of any adjourned such meeting; and

(2)     the surrender of the certificate to the Paying Agent who issued the same; and

      (b)     that the bearer thereof is entitled to attend and vote at such meeting and any adjourned such meeting in respect of the Bearer Securities represented by such certificate;

   (ii)     "block voting instruction" shall mean an English language document issued by a Paying Agent and dated in which:

      (a)     it is certified that Bearer Securities (not being Bearer Securities in respect of which a voting certificate has been issued and is outstanding in respect of the meeting specified in such block voting instruction and any adjourned such meeting) have been deposited with such Paying Agent or (to the satisfaction of such Paying Agent) were held to its order or under its control and that no such Bearer Securities will cease to be so deposited or held until the first to occur of:

(1)     the conclusion of the meeting specified in such document or, if later, of any adjourned such meeting; and

(2)     the surrender to the Paying Agent not less than 48 hours before the time for which such meeting or any adjourned such meeting is convened of the receipt issued by such Paying Agent in respect of each such deposited Bearer Security which is to be released or (as the case may require) the Bearer Security or Bearer Securities ceasing with the agreement of the Paying Agent to be held to its order or under its control and the giving of notice by the Paying Agent to the Issuer in accordance with paragraph 17 below of the necessary amendment to the block voting instruction;

      (b)     it is certified that each holder of such Bearer Securities has instructed such Paying Agent that the vote(s) attributable to the Bearer Security or Bearer Securities so deposited or held should be cast in a particular way in relation to the resolution or resolutions to be put to such meeting or any adjourned such meeting and that all such instructions are during the period commencing 48 hours prior to the time for which such meeting or any adjourned such meeting is convened and ending at the conclusion or adjournment thereof neither revocable nor capable of amendment;

      (c)     the aggregate principal amount of the Bearer Securities so deposited or held are listed distinguishing with regard to each such resolution between those in respect of which instructions have been given as aforesaid that the votes attributable thereto should be cast in favour of the resolution and those in respect of which instructions have been so given that the votes attributable thereto should be cast against the resolution; and

      (d)     one or more persons named in such document (each hereinafter called a "proxy") is or are authorised and instructed by such Paying Agent to cast the votes attributable to the Bearer Securities so listed in accordance with the instructions referred to in (c) above as set out in such document;

   (iii)     "24 hours" shall mean a period of 24 hours including all or part of a day upon which banks are open for business in both the place where the relevant meeting is to be held and in each of the places where the Paying Agents have their specified offices (disregarding for this purpose the day upon which such meeting is to be held) and such period shall be extended by one period or, to the extent necessary, more periods of 24 hours until there is included as aforesaid all or part of a day upon which banks are open for business in all of the places as aforesaid; and

   (iv)     "48 hours" shall mean a period of 48 hours including all or part of two days upon which banks are open for business both in the place where the relevant meeting is to be held and in each of the places where the Paying Agents have their specified offices (disregarding for this purpose the day upon which such meeting is to be held) and such period shall be extended by one period or, to the extent necessary, more periods of 24 hours until there is included as aforesaid all or part of two days upon which banks are open for business in all of the places as aforesaid.

(B)     A holder of a Bearer Security may obtain a voting certificate in respect of such Bearer Security from a Paying Agent or require a Paying Agent to issue a block voting instruction in respect of such Bearer Security by depositing such Bearer Security with such Paying Agent or (to the satisfaction of such Paying Agent) by such Bearer Security being held to its order or under its control, in each case not less than 48 hours before the time fixed for the relevant meeting and on the terms set out in sub-paragraph (A)(i)(a) or (A)(ii)(a) above (as the case may be), and (in the case of a block voting instruction) instructing such Paying Agent to the effect set out in sub-paragraph (A)(ii)(b) above. The holder of any voting certificate or the proxies named in any block voting instruction shall for all purposes in connection with the relevant meeting or adjourned meeting of Holders be deemed to be the holder of the Bearer Securities to which such voting certificate or block voting instruction relates and the Paying Agent with which such Bearer Securities have been deposited or the person holding the same to the order or under the control of such Paying Agent shall be deemed for such purposes not to be the holder of those Bearer Securities.

(C)     (i)     A holder of Registered Securities may, by an instrument in writing in the English language (a "form of proxy") signed by the holder or, in the case of a corporation, executed under its common seal or signed on its behalf by an attorney or a duly authorised officer of the corporation and delivered to the specified office of the Registrar or any Transfer Agent not less than 48 hours before the time fixed for the relevant meeting, appoint any person (a "proxy") to act on his or its behalf in connection with any meeting of the Holders and any adjourned such meeting.

   (ii)     Any holder of Registered Securities which is a corporation may by resolution of its directors or other governing body authorise any person to act as its representative (a "representative") in connection with any meeting of the Holders and any adjourned such meeting.

   (iii)     Any proxy appointed pursuant to sub-paragraph (i) above or representative appointed pursuant to sub-paragraph (ii) above shall so long as such appointment remains in force be deemed, for all purposes in connection with the relevant meeting or adjourned meeting of the Holders, to be the holder of the Registered Securities to which such appointment relates and the holder of the Registered Securities shall be deemed for such purposes not to be the holder.

2.     The Issuer or the Trustee may at any time and the Issuer shall upon a requisition in writing signed by the holders of not less than one-tenth in principal amount of the Securities of any series for the time being outstanding convene a meeting of the Holders and if the Issuer makes default for a period of seven days in convening such a meeting the same may be convened by the Trustee or the requisitionists. Every such meeting shall be held at such time and place as the Trustee may appoint or approve.

3.     At least 21 days' notice (exclusive of the day on which the notice is given and the day on which the meeting is to be held) specifying the place, day and hour of meeting shall be given to the Holders prior to any meeting of the Holders in the manner provided by Condition 16. Such notice, which shall be in the English language, shall state generally the nature of the business to be transacted at the meeting thereby convened but (except for an Extraordinary Resolution) it shall not be necessary to specify in such notice the terms of any resolution to be proposed. Such notice shall include statements, if applicable, to the effect that (i) Bearer Securities may, not less than 48 hours before the time fixed for the meeting, be deposited with Paying Agents or (to their satisfaction) held to their order or under their control for the purpose of obtaining voting certificates or appointing proxies and (ii) the holders of Registered Securities may appoint proxies by executing and delivering a form of proxy in the English language to the specified office of the Registrar or any Transfer Agent not less than 48 hours before the time fixed for the meeting or, in the case of corporations, may appoint representatives by resolution of their directors or other governing body. A copy of the notice shall be sent by post to the Trustee (unless the meeting is convened by the Trustee) and to the Issuer (unless the meeting is convened by the Issuer).

4.     A person (who may but need not be a Holder) nominated in writing by the Trustee shall be entitled to take the chair at the relevant meeting or adjourned meeting but if no such nomination is made or if at any meeting or adjourned meeting the person nominated shall not be present within 15 minutes after the time appointed for holding the meeting or adjourned meeting the Holders present shall choose one of their number to be Chairman, failing which the Issuer may appoint a Chairman. The Chairman of an adjourned meeting need not be the same person as was Chairman of the meeting from which the adjournment took place.

5.     At any such meeting one or more persons present holding Securities or voting certificates or being proxies or representatives and holding or representing in the aggregate not less than one-twentieth of the principal amount of the Securities for the time being outstanding shall (except for the purpose of passing an Extraordinary Resolution) form a quorum for the transaction of business and no business (other than the choosing of a Chairman) shall be transacted at any meeting unless the requisite quorum be present at the commencement of the relevant business. The quorum at any such meeting for passing an Extraordinary Resolution shall (subject as provided below) be one or more persons present holding Securities or voting certificates or being proxies or representatives and holding or representing in the aggregate a clear majority in principal amount of the Securities for the time being outstanding PROVIDED THAT at any meeting the business of which includes any of the following matters (each of which shall, subject only to Clause 18(B)(ii), only be capable of being effected after having been approved by Extraordinary Resolution) namely:

   (i)     reduction or cancellation of the amount payable or, where applicable, modification, except where such modification is in the opinion of the Trustee bound to result in an increase, of the method of calculating the amount payable or modification of the date of payment or, where applicable, of the method of calculating the date of payment in respect of any principal, premium or interest in respect of the Securities;

   (ii)     alteration of the currency in which payments under the Securities and Coupons are to be made;

   (iii)     alteration of the majority required to pass an Extraordinary Resolution;

   (iv)     the sanctioning of any such scheme or proposal as is described in paragraph 18(I) below; and

   (v)     alteration of this proviso or the proviso to paragraph 6 below;

the quorum shall be one or more persons present holding Securities or voting certificates or being proxies or representatives and holding or representing in the aggregate not less than two-thirds of the principal amount of the Securities for the time being outstanding.

6.     If within 15 minutes (or such longer period not exceeding 30 minutes as the Chairman may decide) after the time appointed for any such meeting a quorum is not present for the transaction of any particular business, then, subject and without prejudice to the transaction of the business (if any) for which a quorum is present, the meeting shall if convened upon the requisition of Holders be dissolved. In any other case it shall stand adjourned to the same day in the next week (or if such day is a public holiday the next succeeding business day) at the same time and place (except in the case of a meeting at which an Extraordinary Resolution is to be proposed in which case it shall stand adjourned for such period, being not less than 13 clear days nor more than 42 clear days, and to such place as may be appointed by the Chairman either at or subsequent to such meeting and approved by the Trustee). If within 15 minutes (or such longer period not exceeding 30 minutes as the Chairman may decide) after the time appointed for any adjourned meeting a quorum is not present for the transaction of any particular business, then, subject and without prejudice to the transaction of the business (if any) for which a quorum is present, the Chairman may either (with the approval of the Trustee) dissolve such meeting or adjourn the same for such period, being not less than 13 clear days (but without any maximum number of clear days), and to such place as may be appointed by the Chairman either at or subsequent to such adjourned meeting and approved by the Trustee, and the provisions of this sentence shall apply to all further adjourned such meetings. At any adjourned meeting one or more persons present holding Securities or voting certificates or being proxies or representatives (whatever the principal amount of the Securities so held or represented by them) shall (subject as provided below) form a quorum and shall (subject as provided below) have power to pass any Extraordinary Resolution or other resolution and to decide upon all matters which could properly have been dealt with at the meeting from which the adjournment took place had the requisite quorum been present PROVIDED THAT at any adjourned meeting the quorum for the transaction of business comprising any of the matters specified in the proviso to paragraph 5 above shall be one or more persons present holding Securities or voting certificates or being proxies or representatives and holding or representing in the aggregate not less than one-third of the principal amount of the Securities for the time being outstanding.

7.     Notice of any adjourned meeting at which an Extraordinary Resolution is to be submitted shall be given in the same manner as notice of an original meeting but as if 10 were substituted for 21 in paragraph 3 above and such notice shall state the relevant quorum. Subject as aforesaid it shall not be necessary to give any notice of an adjourned meeting.

8.     Every question submitted to a meeting shall be decided in the first instance by a show of hands and in case of equality of votes the Chairman shall both on a show of hands and on a poll have a casting vote in addition to the vote or votes (if any) to which he may be entitled as a Holder or as a holder of a voting certificate or as a proxy or as a representative.

9.     At any meeting unless a poll is (before or on the declaration of the result of the show of hands) demanded by the Chairman, the Issuer, the Trustee or any person present holding a Security or a voting certificate or being a proxy or representative (whatever the principal amount of the Securities so held or represented by him) a declaration by the Chairman that a resolution has been carried or carried by a particular majority or lost or not carried by a particular majority shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against such resolution.

10.     Subject to paragraph 12 below, if at any such meeting a poll is so demanded it shall be taken in such manner and subject as hereinafter provided either at once or after an adjournment as the Chairman directs and the result of such poll shall be deemed to be the resolution of the meeting at which the poll was demanded as at the date of the taking of the poll. The demand for a poll shall not prevent the continuance of the meeting for the transaction of any business other than the motion on which the poll has been demanded.

11.     The Chairman may with the consent of (and shall if directed by) any such meeting adjourn the same from time to time and from place to place but no business shall be transacted at any adjourned meeting except business which might lawfully (but for lack of required quorum) have been transacted at the meeting from which the adjournment took place.

12.     Any poll demanded at any such meeting on the election of a Chairman or on any question of adjournment shall be taken at the meeting without adjournment.

13.     The Trustee and its lawyers and any director, officer or employee of a corporation being a trustee of these presents and any director or officer of the Issuer and its lawyers and any other person authorised so to do by the Trustee may attend and speak at any meeting. Save as aforesaid, but without prejudice to the proviso to the definition of "outstanding" in Clause 1, no person shall be entitled to attend and speak nor shall any person be entitled to vote at any meeting of the Holders or join with others in requesting the convening of such a meeting or to exercise the rights conferred on the Holders by Conditions 12 and 13 unless he either produces the Bearer Security or Bearer Securities of which he is the holder or a voting certificate or is a proxy or a representative or is the holder of a Registered Security or Registered Securities. No person shall be entitled to vote at any meeting in respect of Securities held by, for the benefit of, or on behalf of, the Issuer, any Subsidiary of the Issuer, any holding company of the Issuer or any other Subsidiary of such holding company. Nothing herein shall prevent any of the proxies named in any block voting instruction or form of proxy or any representative from being a director, officer or representative of or otherwise connected with the Issuer.

14.     Subject as provided in paragraph 13 above at any meeting:

(A)     on a show of hands every person who is present in person and produces a Bearer Security or voting certificate or is a holder of Registered Securities or is a proxy or representative shall have one vote; and

(B)     on a poll every person who is so present shall have one vote in respect of each £1 or such other amount as the Trustee may in its absolute discretion stipulate (or, in the case of meetings of holders of Securities denominated in another currency, such amount in such other currency as the Trustee in its absolute discretion may stipulate) in principal amount of the Securities so produced or represented by the voting certificate so produced or in respect of which he is a proxy or representative or in respect of which he is the holder.

Without prejudice to the obligations of the proxies named in any block voting instruction or form of proxy any person entitled to more than one vote need not use all his votes or cast all the votes to which he is entitled in the same way.

15.     The proxies named in any block voting instruction or form of proxy and representatives need not be Holders.

16.     Each block voting instruction together (if so requested by the Trustee) with proof satisfactory to the Trustee of its due execution on behalf of the relevant Paying Agent and each form of proxy shall be deposited by the relevant Paying Agent or (as the case may be) by the Registrar or the relevant Transfer Agent at such place as the Trustee shall approve not less than 24 hours before the time appointed for holding the meeting or adjourned meeting at which the proxies named in the block voting instruction or form of proxy propose to vote and in default the block voting instruction or form of proxy shall not be treated as valid unless the Chairman of the meeting decides otherwise before such meeting or adjourned meeting proceeds to business. A notarially certified copy of each block voting instruction and form of proxy shall be deposited with the Trustee before the commencement of the meeting or adjourned meeting but the Trustee shall not thereby be obliged to investigate or be concerned with the validity of or the authority of the proxies named in any such block voting instruction or form of proxy.

17.     Any vote given in accordance with the terms of a block voting instruction or form of proxy shall be valid notwithstanding the previous revocation or amendment of the block voting instruction or form of proxy or of any of the Holders' instructions pursuant to which it was executed provided that no intimation in writing of such revocation or amendment shall have been received from the relevant Paying Agent or in the case of a Registered Security from the holder thereof by the Issuer at its registered office (or such other place as may have been required or approved by the Trustee for the purpose) by the time being 24 hours and 48 hours respectively before the time appointed for holding the meeting or adjourned meeting at which the block voting instruction or form of proxy is to be used.

18.     A meeting of the Holders shall in addition to the powers hereinbefore given have the following powers exercisable only by Extraordinary Resolution (subject to the provisions relating to quorum contained in paragraphs 5 and 6 above) namely:

(A)     Power to sanction any compromise or arrangement proposed to be made between the Issuer, the Trustee, any Appointee and the Holders and Couponholders or any of them.

(B)     Power to sanction any abrogation, modification, compromise or arrangement in respect of the rights of the Trustee, any Appointee, the Holders, the Couponholders, the Issuer against any other or others of them or against any of their property whether such rights shall arise under these presents or otherwise.

(C)     Power to assent to any modification of the provisions of these presents which shall be proposed by the Issuer, the Trustee or any Holder.

(D)     Power to give any authority or sanction which under the provisions of these presents is required to be given by Extraordinary Resolution.

(E)     Power to appoint any persons (whether Holders or not) as a committee or committees to represent the interests of the Holders and to confer upon such committee or committees any powers or discretions which the Holders could themselves exercise by Extraordinary Resolution.

(F)     Power to approve of a person to be appointed a trustee and power to remove any trustee or trustees for the time being of these presents.

(G)     Power to discharge or exonerate the Trustee and/or any Appointee from all liability in respect of any act or omission for which the Trustee and/or such Appointee may have become responsible under these presents.

(H)     Power to authorise the Trustee and/or any Appointee to concur in and execute and do all such deeds, instruments, acts and things as may be necessary to carry out and give effect to any Extraordinary Resolution.

(I)     Power to sanction any scheme or proposal for the exchange or sale of the Securities for or the conversion of the Securities into or the cancellation of the Securities in consideration of shares, stock, bonds, notes, debentures, debenture stock and/or other obligations and/or securities of the Issuer or any other company formed or to be formed, or for or into or in consideration of cash, or partly for or into or in consideration of such shares, stock, bonds, notes, debentures, debenture stock and/or other obligations and/or securities as aforesaid and partly for or into or in consideration of cash.

19.     Any resolution passed at a meeting of the Holders duly convened and held in accordance with these presents shall be binding upon all the Holders whether present or not present at such meeting and whether or not voting and upon all Couponholders and each of them shall be bound to give effect thereto accordingly and the passing of any such resolution shall be conclusive evidence that the circumstances justify the passing thereof. Notice of the result of the voting on any resolution duly considered by the Holders shall be published in accordance with Condition 16 by the Issuer within 14 days of such result being known PROVIDED THAT the non-publication of such notice shall not invalidate such result.

20.     The expression "Extraordinary Resolution" when used in these presents means (a) a resolution passed at a meeting of the Holders duly convened and held in accordance with these presents by a majority consisting of not less than three-fourths of the persons voting thereat upon a show of hands or if a poll is duly demanded by a majority consisting of not less than three-fourths of the votes cast on such poll or (b) a resolution in writing signed by or on behalf of all the Holders, which resolution in writing may be contained in one document or in several documents in like form each signed by or on behalf of one or more of the Holders.

21.     Minutes of all resolutions and proceedings at every meeting of the Holders shall be made and entered in books to be from time to time provided for that purpose by the Issuer and any such Minutes as aforesaid if purporting to be signed by the Chairman of the meeting at which such resolutions were passed or proceedings transacted shall be conclusive evidence of the matters therein contained and until the contrary is proved every such meeting in respect of the proceedings of which Minutes have been made shall be deemed to have been duly held and convened and all resolutions passed or proceedings transacted thereat to have been duly passed or transacted.

22.     (A)     If and whenever the Issuer shall have issued and have outstanding Securities of more than one series the foregoing provisions of this Schedule shall have effect subject to the following modifications:

   (i)     a resolution which in the opinion of the Trustee affects the Securities of only one series shall be deemed to have been duly passed if passed at a separate meeting of the holders of the Securities of that series;

   (ii)     a resolution which in the opinion of the Trustee affects the Securities of more than one series but does not give rise to a conflict of interest between the holders of Securities of any of the series so affected shall be deemed to have been duly passed if passed at a single meeting of the holders of the Securities of all the series so affected;

   (iii)     a resolution which in the opinion of the Trustee affects the Securities of more than one series and gives or may give rise to a conflict of interest between the holders of the Securities of one series or group of series so affected and the holders of the Securities of another series or group of series so affected shall be deemed to have been duly passed only if passed at separate meetings of the holders of the Securities of each series or group of series so affected; and

   (iv)     to all such meetings all the preceding provisions of this Schedule shall mutatis mutandis apply as though references therein to Securities, Holders and holders were references to the Securities of the series or group of series in question or to the holders of such Securities, as the case may be.

(B)     If the Issuer shall have issued and have outstanding Securities which are not denominated in pounds sterling, in the case of any meeting of holders of Securities of more than one currency the principal amount of such Securities shall (i) for the purposes of paragraph 2 above be the equivalent in pounds sterling at the spot rate of a bank nominated by the Trustee for the conversion of the relevant currency or currencies into pounds sterling on the seventh dealing day prior to the day on which the requisition in writing is received by the Issuer and (ii) for the purposes of paragraphs 5, 6 and 14 above (whether in respect of the meeting or any adjourned such meeting or any poll resulting therefrom) be the equivalent at such spot rate on the seventh dealing day prior to the day of such meeting. In such circumstances, on any poll each person present shall have one vote for each £1 (or such other pound sterling amount as the Trustee may in its absolute discretion stipulate) in principal amount of the Securities (converted as above) which he holds or represents.

23.     Subject to all other provisions of these presents the Trustee may without the consent of the Issuer, the Holders or the Couponholders prescribe such further regulations regarding the requisitioning and/or the holding of meetings of Holders and attendance and voting thereat as the Trustee may in its sole discretion think fit.

EXECUTED as a deed by	)
SOUTH WALES ELECTRICITY plc	)
acting by A. AUER	)
and K. HOWARD

A. AUER

Director

K. HOWARD

Secretary

THE COMMON SEAL of BANKERS	)
TRUSTEE COMPANY LIMITED was	)	SEAL
affixed to this deed in the presence of:	)

A.G. BUCKLAND

Director

MARK JONES

Associate Director

ICM:73878.1

DATED 9TH NOVEMBER, 1995

SOUTH WALES ELECTRICITY plc

- and -

BANKERS TRUSTEE COMPANY LIMITED

__________________________________

TRUST DEED

constituting

£150,000,000

9 1/4 per cent. Bonds due 2020

(with authority to issue further

bonds or notes)

__________________________________

For the Issuer:

Herbert Smith

Exchange Square

Primrose Street

London EC2A 2HS

For the Trustee:

Allen & Overy

One New Change

London EC4M 9QQ

CONFORMED COPY

DATED 9TH NOVEMBER, 1995 

SOUTH WALES ELECTRICITY plc

- and -

BANKERS TRUSTEE COMPANY LIMITED

_______________________________

TRUST DEED

constituting

£150,000,000
9 1/4 per cent. Bonds due 2020

(with authority to issue further
bonds or notes)

__________________________________

For the Issuer:

Herbert Smith
Exchange House
Primrose Street
London EC2A 2HS

For the Trustee:

Allen & Overy
One New Change
London EC4M 9QQ

TABLE OF CONTENTS

CLAUSE		PAGE
1.	Definitions	1
2.	Covenant to Repay and to Pay Interest on Original Bonds	9
	Trustee's Requirements Regarding Paying Agents	10
	Further Issues	11
3.	Form and Issue of Original Bonds and Original Coupons	12
4.	Fees, Duties and Taxes	13
5.	Covenant of Compliance	13
6.	Cancellation of Securities and Records	13
7.	Enforcement	15
8.	Proceedings, Action and Indemnification	15
9.	Application of Moneys	15
10.	Notice of Payments	16
11.	Investment by Trustee	16
12.	Partial Payments	16
13.	Covenants by the Issuer	17
14.	Remuneration and Indemnification of Trustee	21
15.	Supplement to Trustee Act 1925	22
16.	Trustee's Liability	26
17.	Trustee Contracting with Issuer	26
18.	Waiver, Authorisation and Determination	27
	Modification	27
19.	Holder of Definitive Bearer Security Assumed to be Couponholder	27
	No Notice to Couponholders	28
	Entitlement to Treat Holder as Absolute Owner	28
20.	Substitution	28
21.	Currency Indemnity	29
22.	New Trustee	30
	Separate and Co-Trustees	30
23.	Trustee's Retirement and Removal	30
24.	Trustee's Powers to be Additional	31
25.	Notices	31
26.	Governing Law	31
27.	Counterparts	32

Schedules

The First Schedule	Form of Original Global Bond	33
The Second Schedule	Form of Definitive Original Bearer Bond	43
	Form of Original Coupon	45
	Form of Original Talon	47
	Form of Original Registered Bond	49
	Conditions of the Original Bonds	52
The Third Schedule	Register and Transfer of Registered Securities	71
The Fourth Schedule	Provisions for Meetings of Holders	73

EX-4

                                                                Exhibit 4(l)-1





===============================================================================


                          SOUTHERN INVESTMENTS UK PLC


                                      AND


                      BANKERS TRUST COMPANY, AS TRUSTEE,
             PRINCIPAL PAYING AGENT, REGISTRAR AND TRANSFER AGENT

                                      AND

                        BANKERS TRUST LUXEMBOURG S.A.,
                         AS PAYING AND TRANSFER AGENT



                                   INDENTURE


                          DATED AS OF NOVEMBER 21, 1996



                         ____________________________



                                DEBT SECURITIES


===============================================================================





        Reconciliation and tie between Trust Indenture Act of 1939 and
                  Indenture, dated as of November 21, 1996



Trust Indenture  Act Section                          Indenture Section
- - ----------------------------                          -----------------

(S) 310(a)(1)................................................609
          (a)(2).............................................609
          (a)(3).......................................Not Applicable
          (a)(4).......................................Not Applicable
          (b)................................................608
                                                             610
(S) 311(a)                                                   613(a)
          (b)................................................613(b)
          (b)(2).............................................703(a)(2)
                                                             703(b)
(S) 312(a)...................................................701
                                                             702(a)
          (b)................................................702(b)
          (c)................................................702(c)
(S) 313(a)...................................................703(a)
          (b)(1).......................................Not Applicable
          (b)(2).............................................703(b)
          (c)..........................................703(a), 703(b)
          (d)................................................703(c)
(S) 314(a)...................................................704
          (a)(4).............................................704
          (b)..........................................Not Applicable
          (c)(1).............................................102
          (c)(2).............................................102
          (c)(3).......................................Not Applicable
          (d)..........................................Not Applicable
          (e)................................................102
(S) 315(a)...................................................601(a)
          (b)................................................602
                                                             703(a)(7)
          (c)................................................601(b)
          (d)................................................601(c)
          (d)(1).............................................601(a)(1)
          (d)(2).............................................601(c)(1)
          (d)(3).............................................601(c)(3)
          (e)................................................514
(S) 316(a)(1)(A).............................................502
                                                             512
          (a)................................................513
          (a)(2)...................................Not Applicable
          (b)................................................508
          (c)................................................105
(S) 317(a)(1)................................................503
          (a)(2).............................................504
          (b)................................................100





(S) 318(a)...................................................107
_______________
NOTE:  This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.

                                      ii



                                        TABLE OF CONTENTS*


                                           ____________

                                                                        PAGE


RECITALS OF THE COMPANY...................................................1

ARTICLE ONE...............................................................1

DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION...................1
     SECTION 101. Definitions.............................................1
          Act.............................................................2
          Additional Amounts..............................................2
          Affiliate.......................................................2
          Authenticating Agent............................................2
          Bearer Security.................................................2
          Board of Directors..............................................2
          Board Resolution................................................2
          Book-Entry Depositary...........................................2
          Book-Entry Interest.............................................2
          Business Day....................................................2
          Cedel Bank......................................................2
          Commission......................................................2
          Company.........................................................3
          Company Request" or "Company Order..............................3
          Consolidated Net Tangible Assets................................3
          Corporate Trust Office..........................................3
          corporation.....................................................3
          Debt............................................................3
          Default.........................................................3
          Defaulted Interest..............................................3
          Deposit Agreement...............................................3
          Director........................................................3
          Discharged......................................................3
          Dollar" or "$"..................................................3
          DTC.............................................................4
          Euroclear Operator..............................................4
          Event of Default................................................4
          Exchange Act....................................................4

___________________________
     *NOTE:  THIS TABLE OF CONTENTS SHALL NOT, FOR ANY PURPOSE, BE DEEMED TO
BE A PART OF THE INDENTURE.







          Global Security...................................................4
          Holder............................................................4
          Indenture.........................................................4
          Indirect participant..............................................4
          interest..........................................................4
          Interest Payment Date.............................................4
          Letter of Representations.........................................4
          Lien..............................................................4
          Maturity..........................................................4
          Officers' Certificate.............................................4
          Opinion of Counsel................................................5
          Original Issue Discount Security..................................5
          Outstanding.......................................................5
          Participant.......................................................5
          Paying Agent......................................................5
          Permanent Global Security.........................................6
          Person............................................................6
          Place of Payment..................................................6
          Predecessor Security..............................................6
          Principal Paying Agent............................................6
          Redemption Date...................................................6
          Redemption Price..................................................6
          Registered Security...............................................6
          Regular Record Date...............................................6
          Relevant Date.....................................................6
          Responsible Officer...............................................6
          Securities........................................................6
          Securities Act....................................................7
          Security Register" and "Security Registrar........................7
          Significant Subsidiary............................................7
          Special Record Date...............................................7
          Stated Maturity...................................................7
          Subsidiary........................................................7
          Transfer Agent....................................................7
          Trustee...........................................................7
          Trust Indenture Act...............................................7
          United Kingdom....................................................7
          United Kingdom Taxes..............................................7
          United States.....................................................7
          U.S. Government Obligations.......................................7
          Voting Stock......................................................8
     SECTION 102. Compliance Certificates and Opinions......................8
     SECTION 103. Form of Documents Delivered to Trustee....................8
     SECTION 104. Acts of Holders...........................................9
     SECTION 105. Notices, Etc., to Trustee and Company....................11
     SECTION 106. Notice to Holders; Waiver................................11
     SECTION 107. Conflict with Trust Indenture Act........................12
     SECTION 108. Effect of Headings and Table of Contents.................12
     SECTION 109. Successors and Assigns...................................13
     SECTION 110. Separability Clause......................................13
     SECTION 111. Benefits of Indenture....................................13
     SECTION 112. Governing Law............................................13
     SECTION 113. Legal Holidays...........................................13

                                      ii






ARTICLE TWO.................................................................13

SECURITY FORMS..............................................................13
     SECTION 201. Forms Generally...........................................12
     SECTION 202. Form of Face of Security..................................14
     SECTION 203. Form of Reverse of Security...............................17
     SECTION 204. Form of Trustee's Certificate of Authentication...........23
     SECTION 205. Form of Trustee's Certificate of Authentication by an
                   Authenticating Agent.....................................23

ARTICLE THREE...............................................................24

THE SECURITIES..............................................................24
     SECTION 301. Amount Unlimited; Issuable in Series......................24
     SECTION 302. Denominations.............................................26
     SECTION 303. Execution, Authentication, Delivery and Dating............26
     SECTION 304. Transfer Agent and Paying Agent...........................27
     SECTION 305. Temporary Securities......................................27
     SECTION 306. Registration, Registration of Transfer and Exchange.......28
     SECTION 307. Mutilated, Destroyed, Lost and Stolen Securities..........30
     SECTION 308. Payment of Interest; Interest Rights Reserved.............30
     SECTION 309. Persons Deemed Owners.....................................32
     SECTION 310. Cancellation..............................................32
     SECTION 311. Computation of Interest...................................33
     SECTION 312. Global Securities.........................................33

ARTICLE FOUR................................................................34

SATISFACTION AND DISCHARGE..................................................34
     SECTION 401. Satisfaction and Discharge of Indenture...................34
     SECTION 402. Application of Trust Money................................35
     SECTION 403. Satisfaction, Discharge and Defiance of Securities of any
                    Series..................................................36

ARTICLE FIVE................................................................37

REMEDIES....................................................................37
     SECTION 501. Events of Default.........................................37
     SECTION 502. Acceleration of Maturity; Rescission and Annulment........38
     SECTION 503. Collection of Indebtedness and Suits for Enforcement by
                    Trustee.................................................39
     SECTION 504. Trustee May File Proofs of Claim..........................39
     SECTION 505. Trustee May Enforce Claims Without Possession of
                    Securities..............................................40
     SECTION 506. Application of Money Collected............................40
     SECTION 507. Limitation on Suits.......................................41
     SECTION 508. Unconditional Right of Holders to Receive Principal,
                    Premium and.............................................42
     SECTION 509. Restoration of Rights and Remedies........................42

                                      iii






     SECTION 510. Rights and Remedies Cumulative............................42
     SECTION 511. Delay or Omission Not Waiver..............................42
     SECTION 512. Control by Holders........................................42
     SECTION 513. Waiver of Past Defaults...................................43
     SECTION 514. Undertaking for Costs.....................................43

ARTICLE SIX.................................................................44

THE TRUSTEE.................................................................44
     SECTION 601. Certain Duties and Responsibilities.......................44
     SECTION 602. Notice of Defaults........................................45
     SECTION 603. Certain Rights of Trustee.................................45
     SECTION 604. Not Responsible for Recitals or Issuance of Securities....46
     SECTION 605. May Hold Securities.......................................46
     SECTION 606. Money Held in Trust.......................................46
     SECTION 607. Compensation and Reimbursement............................46
     SECTION 608. Disqualification; Conflicting Interests...................47
     SECTION 609. Corporate Trustee Required; Eligibility...................47
     SECTION 610. Resignation and Removal; Appointment of successor Trustee.47
     SECTION 611. Acceptance of Appointment by Successor....................48
     SECTION 612. Merger, Conversion, Consolidation or Succession to
                   Business.................................................49
     SECTION 613. Preferential Collecting of Claims Against Company.........50
     SECTION 614. Authenticating Agents.....................................53

ARTICLE SEVEN...............................................................54

HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY...........................54
     SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.54
     SECTION 702. Preservation of Information; Communications to Holders....55
     SECTION 703. Reports by Trustee........................................56
     SECTION 704. Reports by Company........................................57

ARTICLE EIGHT...............................................................58

CONSOLIDATION, MERGER, CONVEYANCE, SALE OR LEASE............................58
     SECTION 801. Company May Consolidate Etc., Only on Certain Terms.......58
     SECTION 802. Successor Corporation to be Substituted4..................58

ARTICLE NINE................................................................58

SUPPLEMENTAL INDENTURES.....................................................58
     SECTION 901. Supplemental Indentures without Consent of Holders........58
     SECTION 902. Supplemental Indentures with Consent of Holders...........59
     SECTION 903. Execution of Supplemental Indentures......................60
     SECTION 904. Effect of Supplemental Indentures.........................61

                                      iv






     SECTION 905. Conformity with Trust Indenture Act.......................61
     SECTION 906. Reference in Securities to Supplemental Indentures........61

ARTICLE TEN.................................................................61

COVENANTS...................................................................61
     SECTION 1001. Payment of Principal, Premium, if any, and Interest......61
     SECTION 1002. Maintenance of Office or Agency..........................61
     SECTION 1003. Money for Securities Payments to Be Held in Trust........62
     SECTION 1004. Limitation on Liens......................................63
     SECTION 1005. Limitation on Sale and Lease-Back Transactions...........65
     SECTION 1006. Statement by Officers as to Default......................66
     SECTION 1007. Modification or Waiver of Certain Covenants..............66
     SECTION 1008. Further Assurances.......................................67
     SECTION 1009. Payment of Additional Amounts............................67
     SECTION 1010. Copies Available to Holders..............................68

ARTICLE ELEVEN..............................................................69

REDEMPTION OF SECURITIES....................................................69
     SECTION 1101. Applicability of Article.................................69
     SECTION 1102. Election to Redeem; Notice to Trustee....................69
     SECTION 1103. Selection by Trustee of Securities to Be Redeemed........69
     SECTION 1104. Notice of Redemption.....................................70
     SECTION 1105. Deposit of Redemption Price..............................70
     SECTION 1106. Securities Payable on Redemption Date....................70
     SECTION 1107. Securities Redeemed in Part..............................71
     SECTION 1108. Optional Redemption in the Event of Change in United
                     Kingdom Tax Treatment..................................71

ARTICLE TWELVE..............................................................72

SINKING FUNDS...............................................................72
     SECTION 1201. Applicability of Article.................................72
     SECTION 1202. Satisfaction of Sinking Fund Payments with Securities....72
     SECTION 1203. Redemption of Securities for Sinking Fund................72

ARTICLE THIRTEEN............................................................73

MEETINGS OF HOLDERS OF SECURITIES...........................................73
     SECTION 1301 Purposes of Meetings:.....................................73
     SECTION 1302 Place of Meetings.........................................74
     SECTION 1303 Voting at Meetings........................................74
     SECTION 1304 Voting Rights, Conduct and Adjournment....................74
     SECTION 1305 Revocation of Consent by Holders..........................75

                                       v






ARTICLE FOURTEEN............................................................75

MISCELLANEOUS...............................................................75
     SECTION  1401. Consent to Jurisdiction; Appointment of Agent to
                      Accept Service of Process.............................75
     SECTION  1402 Counterparts.............................................77

                                      vi





          INDENTURE, dated as of November 21, 1996, among SOUTHERN INVESTMENTS
UK plc, a company duly organized and existing under the laws of England and
Wales (the "Company"), having its principal office at 800 Park Avenue, Aztec
West, Almondsbury, Bristol B512 4SE, England and BANKERS TRUST COMPANY, a New
York banking corporation , as trustee (the "Trustee") and BANKERS TRUST
LUXEMBOURG S.A., as Paying and Transfer Agent.

                            RECITALS OF THE COMPANY

          The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of certain of its
unsecured debentures, notes or other evidences of indebtedness (herein called
the "Securities"), to be issued in one or more series as provided in this
Indenture.

          All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.

                  NOW, THEREFORE, THIS INDENTURE WITNESSETH:

          For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities or of series
thereof, as follows:


                                  ARTICLE ONE

            DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

SECTION 101.  Definitions.
              -----------

          For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:

          (1) the terms defined in this Article have the respective meanings
     assigned to them in this Article and include the plural as well as the
     singular;

          (2) all other terms used herein which are defined in the Trust
     Indenture Act, either directly or by reference therein, have the meanings
     assigned to them therein;

          (3) all accounting terms not otherwise defined herein have the
     meanings assigned to them in accordance with generally accepted accounting
     principles in the United Kingdom and, except as otherwise herein expressly
     provided, the term "generally accepted accounting principles", with respect
     to any computation required or permitted hereunder shall mean such
     accounting principles as are generally accepted in the United Kingdom at
     the date of such computation; and

          (4) the words "herein", "hereof" and "hereunder" and other words of
     similar import refer to this Indenture as a whole and not to any particular
     Article, Section or other subdivision.





          Certain terms, used principally in Article Six, are defined in that
Article.

          "Act," when used with respect to any Holder, has the meaning specified
in Section 104.

          "Additional Amounts" has the meaning specified in Section 1009.

          "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person.  For the purposes of this definition,
"control", when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling", and "controlled" have meanings correlative to the
foregoing.

          "Authenticating Agent" means any Person authorized to authenticate and
deliver Securities on behalf of the Trustee pursuant to Section 614.

          "Bearer Security" means any Security that is payable to bearer.

          "Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that Board.

          "Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification.

          "Book-Entry Depositary" means, with respect to the Securities of any
series issuable or issued in whole or in part in the form of one or more Global
Securities, the Person designated as Book-Entry Depositary by the Company
pursuant to Section 301, and, if so provided pursuant to Section 301 with
respect to the Securities of a series, any successor to such Person.  If at any
time there is more than one such Person, "Book-Entry Depositary" shall mean,
with respect to any series of Securities, the qualifying entity which has been
appointed with respect to the Securities of that series.

          "Book-Entry Interest" means a certificateless depositary interest to
be issued by the Book-Entry Depositary to DTC.

          "Business Day", when used with respect to the Place of Payment of the
Securities of any series, means each day which is not a Saturday, a Sunday or a
day on which banking institutions in any Place of Payment for the Securities of
that series are authorized or obligated by law to remain closed.

          "Cedel Bank" means Cedel Bank, societe anonyme, or its successor.

          "Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934, or,
if at any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.

                                       2





          "Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor corporation shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor corporation.

          "Company Request" or "Company Order" means a written request or order
signed in the name of the Company by any Director of the Company and by any
other Director of the Company or the Treasurer, Secretary, any Assistant
Treasurer or Assistant Secretary or any other officer so authorized and
delivered to the Trustee.

          "Consolidated Net Tangible Assets" shall mean the total of all assets
(including revaluations thereof as a result of commercial appraisals, price
level restatement or otherwise) appearing on a consolidated balance sheet of the
Company, net of applicable reserves and deductions, but excluding goodwill,
trade names, trademarks, patents, unamortized debt discount and all other like
intangible assets (which term shall not be construed to include such
revaluations), less the aggregate of the consolidated current liabilities of the
Company appearing on such balance sheet.

          "Corporate Trust Office" means the principal office of the Trustee in
The City of New York, at which at any particular time its corporate trust
business shall be administered, which at the date hereof is Four Albany Street,
New York, New York, 10006, Attention: Corporate Trust and Agency Group-Public
Utilities Group.

          "corporation" includes corporations, associations, companies and
business trusts.

          "Debt" has the meaning specified in Section 1004.

          "Default" for purposes of Section 601 of this Indenture is defined to
mean an "Event of Default" as specified in Section 501 hereof, and for purposes
of Section 310(b) of the Trust Indenture Act, "default" shall mean an "Event of
Default" as specified in Section 501 hereof but exclusive of any period of grace
or requirement of notice.

          "Defaulted Interest" has the meaning specified in Section 307.

          "Deposit Agreement" means the deposit agreement among the Company, the
Book-Entry Depositary and the holders and beneficial owners from time to time of
interests in the Book-Entry Interest.

          "Director" means any member of the Board of Directors.

          "Discharged" means, with respect to the Securities of any series, the
discharge of the entire indebtedness represented by, and obligations of the
Company under, the Securities of such series and the satisfaction of all the
obligations of the Company under the Indenture relating to the Securities of
such series, except (A) the rights of Holders of the Securities of such series
to receive, from the trust fund described in Section 403 hereof, payment of the
principal of and interest and premium, if any, on the Securities of such series
when such payments are due, (B) the Company's obligations with respect to the
Securities of such series with respect to registration, transfer, exchange and
maintenance of a Place of Payment and (C) the rights, powers, trusts, duties,
protections and immunities of the Trustee under this Indenture.

          "Dollar" or "$" means a dollar or other equivalent unit in such coin
or currency of the United States of America as at the time shall be legal tender
for the payment of public and private debt.

                                       3





          "DTC" means The Depository Trust Company or its successors.

          "Euroclear Operator" means Morgan Guaranty Trust Company of New York,
Brussels office, or its successor as operator of the Euroclear System.

          "Event of Default" has the meaning specified in Section 501.

          "Exchange Act" means the Securities Exchange Act of 1934, as amended.

          "Global Security" means a Registered or Bearer Security evidencing all
or part of a series of Securities, issued to the Book-Entry Depositary for such
series or its nominee.

          "Holder" means, in the case of a Registered Security, the Person in
whose name a Security is registered in the Security Register and, in the case of
a Global  Bearer Security, the Book-Entry Depositary therefor.

          "Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof
and shall include the terms of particular series of Securities established as
contemplated by Section 301.

          "Indirect Participant" means a Person that holds interests in the
Book-Entry Interest through a Person that has an account with DTC.

          "interest", when used with respect to an Original Issue Discount
Security which by its terms bears interest only after Maturity, means interest
payable after Maturity at the rate prescribed in such Original Issue Discount
Security.

          "Interest Payment Date", when used with respect to any Security, means
the Stated Maturity of an installment of interest on such Security.

          "Letter of Representations" means, with respect to the capped
Securities of any series, the representation from the Company and the Trustee to
DTC with respect to the Securities of that series.

          "Lien" means any mortgage, lien, pledge, security interest or other
encumbrance; provided however, that the term "Lien" shall not mean any
             -------- -------
easements, rights-of-way, restrictions and other similar encumbrances and
encumbrances consisting of zoning restrictions, leases, subleases, licenses,
sublicenses, restrictions on the use of property or defects in title thereto.

          "Maturity", when used with respect to any Security, means the date on
which the principal of such Security or an installment of principal becomes due
and payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.

          "Officers' Certificate" means a certificate signed by any Director of
the Company and by any other Director of the Company or the Treasurer,
Secretary, any Assistant Treasurer or Assistant Secretary or any other officer
so authorized and delivered to the Trustee.

                                       4





          "Opinion of Counsel" means a written opinion of counsel, who, unless
otherwise required by the Trust Indenture Act, may be an employee of or regular
counsel for the Company, or may be other counsel reasonably acceptable to the
Trustee.

          "Original Issue Discount Security" means any Security which provides
for an amount less than the principal amount thereof to be due and payable upon
a declaration of acceleration of the Maturity thereof pursuant to Section 502.

          "Outstanding", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:

          (i)    Securities theretofore canceled by the Trustee or delivered to
     the Trustee for cancellation;

          (ii)   Securities, or portions thereof, for whose payment or
     redemption money or U.S. Governmental Obligations in the necessary amount
     has been theretofore deposited with the Trustee or any Paying Agent (other
     than the Company) in trust or set aside and segregated in trust by the
     Company (if the Company shall act as its own Paying Agent) for the Holders
     of such Securities; provided that, if such Securities are to be redeemed,
                         --------
     notice of such redemption has been duly given pursuant to this Indenture or
     provision therefor satisfactory to the Trustee has been made; and

          (iii)  Securities which have been paid pursuant to Section 306 or in
     exchange for or in lieu of which other Securities have been authenticated
     and delivered pursuant to this Indenture, other than any such Securities in
     respect of which there shall have been presented to the Trustee proof
     satisfactory to it that such Securities are held by a bona fide purchaser
     in whose hands such Securities are valid obligations of the Company;

provided, however, that in determining whether the Holders of the requisite
- - --------  -------
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, (a) the principal
amount of an Original Issue Discount Security that shall be deemed to be
outstanding for such purposes shall be the amount of the principal thereof that
would be due and payable as of the date of such determination upon a declaration
of acceleration of the Maturity thereof pursuant to Section 502, and (b)
Securities owned by the Company or any other obligor upon the Securities or any
Affiliate of the Company or of such other obligor shall be disregarded and
deemed not to be Outstanding, except that in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Securities which a Responsible
Officer of the Trustee actually knows to be so owned shall be so disregarded.
Securities so owned as described in (b) above which have been pledged in good
faith may be regarded as Outstanding if the pledgee certifies to the Trustee the
pledgee's right so to act with respect to such Securities and that the pledgee
is not the Company or any other obligor upon the Securities or any Affiliate of
the Company or of such other obligor.

          "Participant" means a Person that has an account with DTC.

          "Paying Agent" means Bankers Trust Luxembourg S.A. and any other
Person authorized by the Company to pay the principal of (and premium, if any)
or interest on any Securities on behalf of the Company hereunder, including,
without limitation, the Principal Paying Agent.

                                       5





          "Permanent Global Security" means a Global Security that is, at the
time of the initial issuance of the related series of Securities, issued in
permanent form.

          "Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.

          "Place of Payment", when used with respect to the Securities of any
series, means the place or places where the principal of (and premium, if any)
and interest, if any, on the Securities of that series are payable as specified
in or as contemplated by Section 301.

          "Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purpose of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen security.

          "Principal Paying Agent" means Bankers Trust Company until a successor
Principal Paying Agent shall have become such pursuant to the applicable
provisions of this Indenture and, thereafter, "Principal Paying Agent" shall
mean such successor Principal Paying Agent.

          "Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.

          "Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture, exclusive of accrued and unpaid interest.

          "Registered Security" means any Security that is payable to a
registered owner or registered assigns thereof as registered in the Security
Register.

          "Regular Record Date" for the interest payable on any Interest Payment
Date on the Securities of any series means the date specified for that purpose
as contemplated by Section 301.

          "Relevant Date" for any payment made with respect to the Securities of
any series means whichever is the later of (i) the date on which the relevant
payment first becomes due and (ii) if the full amount payable has not been
received in The City of New York by the Book-Entry Depositary or the Trustee on
or prior to such due date, the date on which, the full amount having been so
received, notice to that effect shall have been given to the Holders in
accordance with this Indenture.

          "Responsible Officer", when used with respect to the Trustee, means
any officer within the Corporate Trust Office including any vice president,
managing director, the secretary, assistant vice president, assistant secretary,
or any other officer of the Trustee, customarily performing functions similar to
those performed by any of the above-designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of his knowledge of and familiarity with the
particular subject.

          "Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Securities authenticated and delivered
under this Indenture.

                                       6





          "Securities Act" means the Securities Act of 1933, as amended.

          "Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.

          "Significant Subsidiary" means, at any particular time, any Subsidiary
whose gross assets or gross revenues (having regard to the Company's direct
and/or indirect beneficial interest in the shares, or the like, of that
Subsidiary) represent at least 25% of the consolidated gross assets or, as the
case may be, consolidated gross revenues of the Company.

          "Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 307.

          "Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable.

          "Subsidiary" means a corporation more than 50% of the outstanding
Voting Stock of which is owned, directly or indirectly, by the Company or by one
or more other Subsidiaries, or by the Company and one or more other
Subsidiaries.

          "Transfer Agent" means any Person authorized by the Company to
effectuate the exchange or transfer of any Security on behalf of the Company
hereunder.

          "Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee hereunder, and
if at any time there is more than one such Person, "Trustee" as used with
respect to the Securities of any series shall mean the Trustee with respect to
Securities of that series.

          "Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed, except as provided
in Section 905.

          "United Kingdom" means the United Kingdom of Great Britain and
Northern Ireland, its territories, its possessions and other areas subject to
its jurisdiction.

          "United Kingdom Taxes" has the meaning specified in Section 1009.

          "United States" means the United States of America (including the
States and the District of Columbia), its territories, its possessions and other
areas subject to its jurisdiction.

          "U.S. Government Obligations" means direct obligations of the United
States for the payment of which its full faith and credit is pledged, or
obligations of a person controlled or supervised by and acting as an agency or
instrumentality of the United States and the payment of which is unconditionally
guaranteed by the United States, and shall also include a depository receipt
issued by a bank or trust company as custodian with respect to any such U.S.
Government Obligation or a specific payment of interest on or principal of any
such U.S. Government Obligation held by such custodian for the account of a
holder of a depository receipt; provided that (except as required by law) such
custodian is not authorized to make any

                                       7





deduction from the amount payable to the holder of such depository receipt from
any amount received by the custodian in respect of the U.S. Government
obligation or the specific payment of interest on or principal of the U.S.
Government Obligation evidenced by such depository receipt.

          "Voting Stock" of any corporation means stock of the class or classes
having general voting power under ordinary circumstances to elect at least a
majority of the board of directors of a corporation (irrespective of whether or
not at the time stock of any other class or classes shall have or might have
voting power by reason of the happening of any contingency).

SECTION 102.  Compliance Certificates and Opinions
              ------------------------------------

          Except as otherwise expressly provided by this Indenture, upon any
application or request by the Company to the Trustee to take any action under
any provision of this Indenture, the Company shall furnish to the Trustee an
Officers' Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with
and an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.

          Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:

          (1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein relating
thereto;

          (2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;

          (3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
complied with; and

          (4) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.

SECTION 103.  Form of Documents Delivered to Trustee
              --------------------------------------

          In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.

          Any certificate or opinion of an officer or Director of the Company
may be based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such officer or Director
knows, or in the exercise of reasonable care should

                                       8





know, that the certificate or opinion or representations with respect to the
matters upon which his certificate or opinion is based are erroneous. Any such
certificate or opinion of Counsel may be based, insofar as it relates to factual
matters, upon a certificate or opinion of, or representations by, an officer or
officers or Director or Directors of the Company stating that the information
with respect to such factual matters is in the possession of the Company, unless
such counsel knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.

          Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.

SECTION 104.  Acts of Holders
              ---------------

          (a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in Person or by agent duly
appointed in writing, and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company.  Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments.  Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 601) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section 103.

          Without limiting the generality of the foregoing, unless otherwise
established in or pursuant to a Board Resolution or set forth or determined in
an Officers' Certificate, or established in one or more indentures supplemental
hereto, pursuant to Section 301, a Holder, including a Book-Entry Depositary
that is a Holder of a Global Security, may make, give or take, by a proxy, or
proxies, duly appointed in writing, any request, demand, authorization,
direction, notice, consent, waiver or other action provided in this Indenture to
be made, given or taken by Holders, and a Book-Entry Depositary that is a Holder
of a Global Security may provide its proxy or proxies to the beneficial owners
of interests in any such Global Security through such Book-Entry Depositary's
standing instructions and customary practices.

          (b) The fact and date of the execution by any Person of any such
instrument, writing or proxy may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument, writing or proxy acknowledged to him the execution thereof.

     Where such execution is by a signer acting in a capacity other than his
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority.  The fact and date of the execution of any
such instrument, writing or proxy, or the authority of the Person executing the
same, may also be proved in any other manner which the Trustee deems sufficient.

          (c) The ownership of Registered Securities shall be proved by the
Security Register.

                                       9





          (d) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Security.

          (e) The principal or face amount and serial numbers of Bearer
Securities of any series held by any Person, and the date of holding the same,
may be proved by the production of such Bearer Securities or by a certificate
executed by the Book-Entry Depositary for such Bearer Securities.

          (f) If the Company shall solicit from the Holders of Securities of any
series any request, demand, authorization, direction, notice, consent, waiver or
other Act, the Company may, at its option, by Board Resolution, fix in advance a
record date for purposes of determining the identity of Holders of Securities
entitled to give such request, demand, authorization, direction, notice,
consent, waiver or other Act, but the Company shall have no obligation to do so.
Any such record date shall be fixed at the Company's discretion.  If such a
record date is fixed, such request, demand, authorization, direction, notice,
consent, waiver or other Act may be sought or given before or after the record
date, but only the Holders of Securities of record at the close of business on
such record date shall be deemed to be Holders of Securities for the purpose of
determining whether Holders of the requisite proportion of Securities of such
series Outstanding have authorized or agreed or consented to such request,
demand, authorization, direction, notice, consent, waiver or other Act, and for
that purpose the Securities of such series Outstanding shall be computed as of
such record date.

          With regard to any record date set pursuant to this subsection, the
Holders of Outstanding Securities of the relevant series on such record date (or
their duly appointed agents), and only such Persons, shall be entitled to take
relevant action, whether or not such Holders remain Holders after such record
date.  With regard to any action that may be taken hereunder only by Holders of
a requisite principal amount of Outstanding Securities of any series (or their
duly appointed agents) and for which a record date is set pursuant to this
subsection, the Company may, at its option, set an expiration date after which
no such action purported to be taken by any Holder shall be effective hereunder
unless taken on or prior to such expiration date by Holders of the requisite
principal amount of Outstanding Securities of such series on such record date
(or their duly appointed agents).

     On or prior to any expiration date set pursuant to this subsection, the
Company may, on one or more occasions at its option, extend such expiration date
to any later date.  Nothing in this subsection shall prevent any Holder (or any
duly appointed agent thereof) from taking, at any time, any action contrary to
or different from, any action previously taken, or purported to have been taken,
hereunder by such Holder, in which event the Company may set a record date in
respect thereof pursuant to this subsection.  Notwithstanding the foregoing or
the Trust Indenture Act, the Company shall not set a record date for, and the
provisions of this paragraph shall not apply with respect to, any action to be
taken by Holders pursuant to Section 501, 502 or 512.

          Upon receipt by the Trustee of written notice of any default described
in Section 501, any declaration of acceleration, or any rescission and annulment
of any such declaration, pursuant to Section 502 or of any direction in
accordance with Section 512, a record date shall automatically and without any
other action by any Person be set for the purpose of determining the Holders of
outstanding Securities of the series entitled to join in such notice,
declaration, or

                                       10





rescission and annulment, or direction, as the case may be, which record date
shall be the close of business on the day the Trustee receives such notice,
declaration, rescission and annulment or direction, as the case may be. The
Holders of Outstanding Securities of such series on such record date (or their
duly appointed agent), and only such Persons, shall be entitled to join in such
notice, declaration, rescission and annulment, or direction, as the case may be,
whether or not such Holders remain Holders after such record date;
provided that, unless such notice, declaration, rescission and annulment, or
- - --------
direction, as the case may be, shall have become effective by virtue of Holders
of the requisite principal amount of outstanding Securities of such series on
such record date (or their duly appointed agents) having joined therein on or
prior to the 90th day after such record date, such notice of default,
declaration, or rescission and annulment or direction given or made by the
Holders, as the case may be, shall automatically and without any action by any
Person be canceled and of no further effect. Nothing in this paragraph shall
prevent a Holder (or a duly appointed agent thereof) from giving, before or
after the expiration of such 90-day period, a notice of default, a declaration
of acceleration, a rescission and annulment of a declaration of acceleration or
a direction in accordance with Section 512, contrary to or different from, or,
after the expiration of such period, identical to, a previously given notice,
declaration, rescission and annulment, or direction, as the case may be, that
has been canceled pursuant to the proviso to the preceding sentence, in which
event a new record date in respect thereof shall be set pursuant to this
paragraph.

SECTION 105.  Notices, Etc., to Trustee and Company
              -------------------------------------

          Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,

          (1) the Trustee by any Holder or by the Company shall be sufficient
     for every purpose hereunder if made, given, furnished or filed in writing
     to or with the Trustee at its Corporate Trust Office, or

          (2) the Company by the Trustee or by any Holder shall be sufficient
     for every purpose hereunder (unless otherwise herein expressly provided) if
     in writing and mailed, first-class postage prepaid, to the Company
     addressed to it at the address of its principal office specified in the
     first paragraph of this instrument or at any other address previously
     furnished in writing to the Trustee by the Company.

SECTION 106.  Notice to Holders; Waiver
              -------------------------

          Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, (i) in the case of a Holder of Registered Securities, at his
address as it appears in the Security Register, and (ii) in the case of a Holder
of Global Bearer Securities, at the address provided in or pursuant to the
relevant Deposit Agreement of the relevant Book-Entry Depositary or Depositaries
therefor, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice.  In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders.

          If, by reason of the suspension of regular mail service or by reason
of any other cause, it shall be impracticable to give such notice by mail, then
such notification as shall be

                                       11





made at the direction of the Company in a manner reasonably calculated, to the
extent practicable under the circumstances, to provide prompt notice shall
constitute a sufficient notification for every purpose hereunder.

          Except as otherwise expressly provided herein or otherwise specified
with respect to any Securities pursuant to Section 301, where this Indenture
provides for notice to Holders of Bearer Securities of any event and the rules
of any securities exchange on which such Bearer Securities are listed so
require, such notice shall be sufficiently given to Holders of such Bearer
Securities if published in such newspaper or newspapers as may be specified in
such Securities on a Business Day at least twice, the first such publication to
be not earlier than the earliest date, and not later than the latest date,
prescribed for the giving of such notice.  Any such notice by publication shall
be deemed to have been given on the date of the first such publication.  In
addition, notice to the Holder of any Global Bearer Security shall be given by
mail in the manner provided above.

          If by reason of any cause it shall be impracticable to publish any
notice to Holders of Bearer Securities as provided above, then such notification
to Holders of Bearer Securities as shall be given with the approval of the
Trustee shall constitute sufficient notice to such Holders for every purpose
hereunder.  Neither the failure to give notice by publication to Holders of
Bearer Securities as provided above, nor any defect in any notice so published,
shall affect the sufficiency of such notice with respect to other Holders of
Bearer Securities or the sufficiency of any notice to Holders of Registered
Securities given as provided herein.

          Any request, demand, authorization, direction, notice, consent, waiver
or Act required or permitted under this Indenture shall be in the English
language, except that any published notice may be in an official language of the
country of publication.

          Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice.  Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.

SECTION 107.  Conflict with Trust Indenture Act
              ---------------------------------

          If any provision hereof limits, qualifies or conflicts with any
provision of the Trust Indenture Act or another provision which is required or
deemed to be included in this Indenture by any of the provisions of the Trust
Indenture Act, the provision or requirement of the Trust Indenture Act shall
control.  If any provision of this Indenture modifies or excludes any provision
of the Trust Indenture Act that may be so modified or excluded, such provision
of the Trust Indenture Act shall be deemed to apply to this Indenture as so
modified or excluded, as the case may be.

SECTION 108.  Effect of Headings and Table of Contents
              ----------------------------------------

          The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.

                                       12





SECTION 109.  Successors and Assigns
              ----------------------

     All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not.

SECTION 110.  Separability Clause
              -------------------

          In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

SECTION 111.  Benefits of Indenture
              ---------------------

     Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person, other than the parties hereto and their successors hereunder
and the Holders, any benefit or any legal or equitable right, remedy or claim
under this Indenture.

SECTION 112.  Governing Law
              -------------

          This Indenture and the Securities shall be governed by and construed
in accordance with the laws of the State of New York.

SECTION 113.  Legal Holidays
              --------------

          In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day at any Place of Payment,
then (notwithstanding any other provision of this Indenture or of the
Securities) payment of interest, if any, or principal (and premium, if any) need
not be made at such Place of Payment on such date, but may be made on the next
succeeding Business Day at such Place of Payment with the same force and effect
as if made on the Interest Payment Date or Redemption Date, or at the Stated
Maturity, and no interest shall accrue for the period from and after such
Interest Payment Date, Redemption Date or Stated Maturity, as the case may be.


                                  ARTICLE TWO

                                 SECURITY FORMS

SECTION 201.  Forms Generally
              ---------------

          The Securities of each series shall be in substantially the form set
forth in this Article, or in such other form as shall be established by or
pursuant to a Board Resolution or in one or more indentures supplemental hereto,
in each case with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture, a Board
Resolution or one or more indentures supplemental hereto, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the
Director or Directors executing such Securities, as evidenced by the Director's
or Directors' execution of the Securities.  If the form of Securities of any
series is established by action taken pursuant to a Board Resolution, a copy of
an appropriate record of such action shall be certified by an authorized
Director or officer of the Company and delivered

                                       13





to the Trustee at or prior to the delivery of the Company Order contemplated by
Section 303 for the authentication and delivery of such securities.

          The Trustee's certificates of authentication shall be in substantially
the form set forth in this Article.

          The definitive Securities shall be printed, lithographed or engraved
on steel engraved borders or may be produced in any other manner, all as
determined by the Director or Directors executing such Securities, as evidenced
by the Director's or Directors' execution of such Securities.

SECTION 202.  Form of Face of Security
              ------------------------

          [If the Security is to be a Global Security, insert - This Security is
a Global Security within the meaning of the Indenture hereinafter referred to
and is [held by] [registered in the name] of a Book-Entry Depositary or a
nominee of a Book-Entry Depositary.  This Security is exchangeable for
Securities [held by] [registered in the name of] a person other than the Book-
Entry Depositary or its nominee only in the limited circumstances described in
the Indenture, and no transfer of this Security (other than a transfer of this
Security as a whole by the Book-Entry Depositary to a nominee of the Book-Entry
Depositary or by a nominee of the Book-Entry Depositary to the Book-Entry
Depositary or another nominee of the Book-Entry Depositary) may be [made]
[registered] except in limited circumstances.

          Unless this Global Security is presented by an authorized
representative of the Book-Entry Depositary to the issuer or its agent for
[registration of transfer], exchange or payment, and any definitive Security is
issued in the name or names as directed in writing by the Book-Entry Depositary,
ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL in as much as the [bearer] [registered owner] hereof, the
Book-Entry Depositary, has an interest herein.]

                          SOUTHERN INVESTMENTS UK plc
                            [Title of the Security]

No. ___________________                                          $_____________

          SOUTHERN INVESTMENTS UK plc, a company duly organized and existing
under the laws of England and Wales (herein called the "Company", which term
includes any successor corporation under the Indenture hereinafter referred to),
for value received, hereby promises to pay to [the bearer upon surrender hereof]
[name of registered owner or its registered assigns], the principal sum of
_____________________________________ Dollars on ________________________, and
to pay interest thereon from ______________________, or from the most recent
Interest Payment Date to which interest has been paid or duly provided for,
semi-annually on _______________ and ____________________ in each year,
commencing _____________________, at the rate per annum provided in the title
hereof, until the principal hereof is paid or made available for payment. The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in such Indenture, be paid to [the bearer on such
Interest Payment Date,] [the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the __________________ or
__________________ (whether or not a Business Day), as the case may be,
immediately preceding such Interest Payment Date.]  Any such interest not so
punctually paid or duly provided for will forthwith cease to be payable to [the
bearer on such Interest Payment Date] [the Person in whose name this Security
(or one or
                                       14





more Predecessor Securities) is registered on such Regular Record Date] and may
be paid to [the bearer at the time of payment of such Defaulted Interest] [the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Securities of this series not less than 10 days prior to
such Special Record Date], or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities of this series may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in said Indenture.

[If the Security is not to bear interest prior to Maturity, insert -- The
principal of this Security shall not bear interest except in the case of a
default in payment of principal upon acceleration, upon redemption or at Stated
Maturity and in such case the overdue principal of this Security shall bear
interest at the rate of [yield to maturity] % per annum (to the extent that the
payment of such interest shall be legally enforceable), which shall accrue from
the date of such default in payment to the date payment of such principal has
been made or duly provided for.  Interest on any overdue principal shall be
payable on demand.  Any such interest on any overdue principal that is not so
paid on demand shall bear interest at the rate of [yield to maturity]% per annum
(to the extent that the payment of such interest shall be legally enforceable),
which shall accrue from the date of such demand for payment to the date payment
of such interest has been made or duly provided for, and such interest shall
also be payable on demand.]

          Payment of the principal of (and premium, if any) and interest, if
any, on this Security will be made at the office or agency of the Company
maintained for that purpose in _______________ in such coin or currency of the
United States of America as at the time of payment is legal tender for the
payment of public and private debts; [If this Security is not a Global Security,
insert -- provided, however, that at the option of the Company payment of
          --------  -------
interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register]  [If this
Security is a Global Security, insert applicable manner of payment].

          All payments of principal and interest (including payments of discount
and premium, if any) in respect of this Security shall be made free and clear
of, and without withholding or deduction for or on account of, any present or
future taxes, duties, assessments or governmental charges of whatever nature
imposed, levied, collected, withheld or assessed by or within the United Kingdom
or by or within any political subdivision thereof or any authority therein or
thereof having power to tax ("United Kingdom Taxes"), unless such withholding or
deduction is required by law.  In the event of any such withholding or deduction
the Company shall pay to the Holder such additional amounts ("Additional
Amounts") as will result in the payment to such Holder of the amount that would
otherwise have been receivable by such Holder in the absence of such withholding
or deduction, except that no such Additional Amounts shall be payable:

          (a) to, or to a Person on behalf of, a Holder who is liable for such
     United Kingdom Taxes in respect of this Security, by reason of such Holder
     having some connection with the United Kingdom (including being a citizen
     or resident or national of, or carrying on a business or maintaining a
     permanent establishment in, or being physically present in, the United
     Kingdom) other than the mere holding of this Security or the receipt of
     principal and interest (including payments of discount and premium, if any)
     in respect thereof;

                                       15





          (b) to, or to a Person on behalf of, a Holder who presents this
     Security (where presentation is required) for payment more than 30 days
     after the Relevant Date except to the extent that the Holder would have
     been entitled to such Additional Amounts on presenting this Security for
     payment on the last day of such period of 30 days;

          (c) to, or to a Person on behalf of, a Holder who presents this
     Security (where presentation is required) in the United Kingdom;

          (d) to, or to a Person on behalf of, a Holder who would not be liable
     or subject to the withholding or deduction by making a declaration of non-
     residence or similar claim for exemption to the relevant tax authority; or

          (e) to, or to a Person on behalf of, a Holder of a definitive
     Registered Security issued pursuant to the request of owners of interests
     representing a majority in outstanding principal amount in the Book-Entry
     Interest following and during the continuance of an Event of Default if
     such Holder (or any predecessor Holder) was one of such owners requesting
     that definitive Registered Securities be so issued.

          Such Additional Amounts will also not be payable where, had the
beneficial owner of the Security (or any interest therein) been the Holder of
the Security, he would not have been entitled to payment of Additional Amounts
by reason of any one or more of clauses (a) through (e) above.  If the Company
shall determine that Additional Amounts will not be payable because of the
immediately preceding sentence, the Company will inform such Holder promptly
after making such determination setting forth the reason(s) therefor.

          References to principal, interest, discount or premium in respect of
this Security shall be deemed also to refer to any Additional Amounts which may
be payable as set forth in the Indenture or in this Security.

          The Company shall furnish to the Trustee the official receipts (or a
certified copy of the official receipts) evidencing payment of United Kingdom
Taxes.  Copies of such receipts shall be made available by the Trustee to the
Holder of this Security upon request.

[Insert any special notice provisions required by any stock exchanges upon which
the Securities of a series are to be listed.]

          Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

          Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.

          IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer or director duly authorized.
Date:

                                       16





                              SOUTHERN INVESTMENTS UK plc


                              By_____________________________________
                                    [Title]


SECTION 203.  Form of Reverse of Security
              ---------------------------

                          SOUTHERN INVESTMENTS UK plc
                            [Title of the Security]

          This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an Indenture, dated as of ________________ (herein called the
"Indenture"), among the Company and Bankers Trust Company, as trustee (herein
called the "Trustee", which term includes any successor trustee under the
Indenture) and Bankers Trust Luxembourg S.A., as paying and transfer agent
(herein called the "Paying and Transfer Agent," which term includes any
successor paying and transfer agent under the Indenture), [insert -- particulars
with respect to any indentures supplemental thereto pursuant to which the
Securities of this series are being issued] to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Securities and of the terms upon
which the Securities are, and are to be, authenticated and delivered.  Terms
defined in the Indenture which are not defined herein are used with the meanings
assigned to them in the Indenture.  This Security is one of the series
designated on the face hereof limited in aggregate principal amount to
$___________.

          [If applicable, insert -- This Security is not subject to redemption
prior to maturity.]  [If applicable, insert -- The Securities of this series are
subject to redemption upon not less than 30 or more than 60 days' notice to the
Holders of such Securities as provided in the Indenture.  [If applicable, insert
- - -- (1) on _______________ in any year commencing with the year ____ and ending
with the year ______ through operation of the sinking fund for this series at a
Redemption Price equal to 100% of the principal amount, and (2)] at any time [on
or after ____________, 19__], as a whole or in part, at the election of the
Company, at the following Redemption Prices (expressed as percentages of the
principal amount):

          If redeemed [if applicable, insert - - on or before ________, _____%,
and if redeemed] during the 12-month period beginning ______________, of the
years indicated:

 Year             Redemption Price           Year              Redemption Price
- - ------            ----------------           ----              --------------




and thereafter at a Redemption Price equal to ____% of the principal amount,
together in the case of any such redemption [if applicable, insert -- (whether
through operation of the sinking fund or otherwise)] with accrued and unpaid
interest to the Redemption Date, but interest installments whose Stated Maturity
is on or prior to such Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, all as provided in the
Indenture.]

                                       17





          [If applicable, insert -- The Securities of this series are subject to
redemption upon not less than 30 or more than 60 days' notice to the Holders of
such Securities, as provided in the Indenture (1) on _______________ in any year
commencing with the year ______ and ending with the year _______ through
operation of the sinking fund for this series at the Redemption Prices for
redemption through operation of the sinking fund (expressed as percentages of
the principal amount) set forth in the table below, and (2) at any time [on or
after         __________________], as a whole or in part, at the election of the
Company, at the Redemption Prices for redemption otherwise than through
operation of the sinking fund (expressed as percentages of the principal amount)
set forth in the table below:

          If redeemed during the 12-month period beginning __________ of the
years indicated:

      Redemption Price                       Redemption Price For
       for Redemption                        Redemption Otherwise
     Through Operation                           Than Through
            of                                    Operation
       Sinking Fund            Year          of the Sinking Fund
       ------------            ----          --------------------





and thereafter at a Redemption Price equal to ____% of the principal amount,
together in the case of any such redemption (whether through operation of the
sinking fund or otherwise) with accrued and unpaid interest to the Redemption
Date, but interest installments whose Stated Maturity is on or prior to such
Redemption Date will be payable to the Holders of such Securities, or one or
more Predecessor Securities, all as provided in the Indenture.]

          [If applicable, insert -- Notwithstanding the foregoing, the Company
may not, prior to ____________, redeem any Securities of this series as
contemplated by [Clause (2) of] the preceding paragraph as a part of, or in
anticipation of, any refunding operation by the application, directly or
indirectly, of moneys borrowed having an interest cost to the Company
(calculated in accordance with generally accepted financial practice) of less
than ___% per annum.]

          [The sinking fund for this series provides for the redemption on
___________ in each year beginning with the year ______ and ending with the year
_____ of [not less than] ______________ [("mandatory sinking fund") and, at the
option of the Company, not more than _____________] aggregate principal amount
of Securities of this series. [Securities of this series acquired or redeemed by
the Company otherwise than through [mandatory] sinking fund payments may be
credited against subsequent [mandatory] sinking fund payments otherwise required
to be made in the order in which they become due.]]

          [If applicable, insert --

          The Securities of this series will be redeemable in whole or in part,
at the option of the Company at any time, at a redemption price equal to the
greater of (i) 100% of the principal amount of the Securities of this series
being redeemed or (ii) the sum of the present values of the remaining scheduled
payments of principal of and interest on the Securities of this series being
redeemed discounted to the date of redemption on a semiannual

                                       18





basis (assuming a 360-day year consisting of twelve 30-day months) at a discount
rate equal to the Treasury Yield plus ___ basis points, plus, for (i) or (ii)
above, whichever is applicable, accrued interest on the Securities of this
series to the date of redemption.

          "Treasury Yield" means, with respect to any redemption date, the rate
per annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.

          "Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of Securities of this series to be redeemed that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of the Securities of this series.

          "Comparable Treasury Price" means, with respect to any redemption
date, (i) the average of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) on the
third Business Day in New York City preceding such redemption date, as set forth
in the daily statistical release (or any successor release) published by the
Federal Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations
for US Government Securities" or (ii) if such release (or any successor release)
is not published or does not contain such prices on such Business Day, the
Reference Treasury Dealer Quotation for such redemption date.

          "Independent Investment Banker" means an independent investment
banking institution of national standing appointed by the Company and reasonably
acceptable to the Trustee.

          "Reference Treasury Dealer Quotation" means, with respect to the
Reference Treasury Dealer and any redemption date, the average, as determined by
the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount and quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the
third Business Day in New York City preceding such redemption date).

          "Reference Treasury Dealer" means a primary US Government securities
dealer in New York City appointed by the Company and reasonably acceptable to
the Trustee.

          Notice of redemption shall be given as provided for in the Indenture
not less than 15 days nor more than 30 days prior to the date fixed for
redemption.

          If fewer than all the Securities of this series are to be redeemed,
selection of Securities of this series for redemption will be made by the
Trustee in any manner the Trustee deems fair and appropriate and that complies
with applicable legal and securities exchange requirements.

          Unless the Company defaults in payment of the redemption price, from
and after the redemption date, the Securities of this series or portions thereof
called for redemption will cease to bear interest, and the Holders thereof will
have no right in respect to such Securities of this series except the right to
receive the redemption price thereof.]

                                       19





          [In the event of redemption of this Security in part only, a new
Security or Securities of this series and of like tenor for the unredeemed
portion hereof will be issued to the Holder hereof upon the cancellation
hereof.]

          The Indenture contains provisions for defiance of (a) the entire
indebtedness of this security and (b) certain restrictive covenants upon
compliance by the Company with certain conditions set forth therein.

          If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.  At any time after such declaration of acceleration with respect to
Securities of this series has been made, but before a judgment or decree for
payment of money has been obtained by the Trustee as provided in the Indenture,
if all Events of Default with respect to Securities of this series have been
cured or waived (other than the non-payment of principal of the Securities of
this series which has become due solely by reason of such declaration of
acceleration) then such declaration of acceleration and its consequences shall
be automatically annulled and rescinded.

          [If the Security is an Original Issue Discount Security, insert -- If
an Event of Default with respect to Securities of this series shall occur and be
continuing, an amount of principal of the Securities of this series (the
"Acceleration Amount") may be declared due and payable in the manner and with
the effect provided in the Indenture.  In case of a declaration of acceleration
on or before ________________ in any year, the Acceleration Amount per
____________ principal amount at Stated Maturity of the Securities shall be
equal to the amount set forth in respect of such date below:

                                                          Acceleration
                                                            Amount
                                                           per ______
                                                        principal amount
              Date of declaration                       at Stated Maturity
              ---------------------                     ------------------





and in case of a declaration of acceleration on any other date, the Acceleration
Amount shall be equal to the Acceleration Amount as of the immediately preceding
date set forth in the table above, plus accrued original issue discount
(computed in accordance with the method used for calculating the amount of
original issue discount that accrues for Federal income tax purposes) from such
next preceding date to the date of declaration at the yield to maturity.  For
the purpose of this computation the yield to maturity is ____%.  Upon payment
(i) of the Acceleration Amount so declared due and payable and (ii) of interest
on any overdue principal and overdue interest (in each case to the extent that
the payment of such interest shall be legally enforceable), all of the Company's
obligations in respect of the payment of the principal of and interest, if any,
on the Securities of this series shall terminate.]

          The Securities of this series are subject to redemption in whole but
not in part upon not less than 15 nor more than 30 days' notice given as
provided in the Indenture to the Holders of Securities of this series at a price
equal to the outstanding principal amount thereof

                                       20





together with Additional Amounts, if any, and accrued interest, to the
Redemption Date if (a) the Company satisfies the Trustee prior to the giving of
such notice that it has or will become obliged to pay Additional Amounts as a
result of either (x) any change in, or amendment to, the laws or regulations of
the United Kingdom or any political subdivision or any authority or agency
thereof or therein having power to tax or levy duties, or any change in the
application or interpretation of such laws or regulations, which change or
amendment becomes effective on or after the [date of the underwriting agreement
with respect to the Securities of this series,] or (y) the issuance of
definitive Registered Securities pursuant to any of clauses (a), (b) or (d) of
the third following paragraph and (b) such obligation cannot be avoided by the
Company taking reasonable measures available to it, subject, as provided in the
Indenture, to the delivery by the Company of an Officers' Certificate stating
that the obligation referred to in (a) above cannot be avoided by the Company
taking reasonable measures available to it.

          The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the Indenture or any supplemental
indenture or the rights and obligations of the Company and rights of the Holders
of the Securities of each series to be affected under the Indenture at any time
by the Company and the Trustee with the consent of the Holders of a majority in
aggregate principal amount of the Securities at the time Outstanding of all
series to be affected (voting as a class).  The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities of each series at the time Outstanding, on behalf of the
Holders of all Securities of such series, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences.  Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the registration
of transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.

          No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of (and premium, if any) and
interest, if any, on this Security at the times, place and rate, and in the coin
or currency, herein prescribed.

          [If this Security is a Global Security, insert -- This Security shall
be exchangeable, in whole but not in part, for Securities of this series
registered in the names of Persons other than the Book-Entry Depositary with
respect to such series or its nominee only as provided in this paragraph.  This
Security shall be so exchangeable if (a) DTC notifies the Company and the Book-
Entry Depositary that it is unwilling or unable to continue to hold the Book-
Entry Interest or at any time it ceases to be a "clearing agency" registered
under the Exchange Act, and, in either case, a successor is not appointed by the
Company within 120 days, (b) the Book-Entry Depositary notifies the Company that
it is unwilling or unable to continue as Book-Entry Depositary with respect to
this Security and no successor is appointed within 120 days, (c) the Company
executes and delivers to the Trustee an Officers' Certificate providing that
this Security shall be so exchangeable or (d) there shall have occurred and be
continuing an Event of Default with respect to the Securities of this series and
the Holder, in such circumstance, shall have requested in writing that this
Security be exchanged for one or more definitive Registered Securities.
Securities so issued in exchange for this Security shall be of the same series,
having the same interest rate, if any, and maturity and having the same terms as
this Security, in authorized denominations and in the aggregate having the same
principal amount as this Security and registered in such names as the Book-Entry
Depositary for this Security shall direct.]

                                       21





          [If this Security is a Registered Security, insert - - As provided in
the Indenture and subject to certain limitations therein set forth, the transfer
of [if this Security is a Registered Global Security, insert -- a Security of
the series of which this Security is a part] [If this Security is a Registered
Security but not a Global Security, insert -- this Security] is registrable in
the Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in any place where the principal
of (and premium, if any) and interest, if any, on this Security are payable,
duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Securities of this series and of like tenor, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.]

          The Securities of the series of which this Security is a part and
which are not Global Securities are issuable only in registered form without
coupons in denominations of $__________  and any integral multiple thereof.  [If
this Security is a Global Bearer Security, insert -- The bearer of this Security
shall be treated as the owner of it for all purposes, subject to the terms of
the Indenture.]  As provided in the Indenture and subject to certain limitations
therein set forth, Securities of this series are exchangeable for a like
aggregate principal amount of Securities of this series and of like tenor of a
different authorized denomination as requested by the Holder surrendering the
same.

          No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.

          [If this Security is a Registered Security, insert -- Prior to due
presentment of this Security for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the Person in
whose name this Security is registered as the owner hereof for all purposes,
whether or not this Security be overdue, and neither the Company, the Trustee
nor any such agent shall be affected by notice to the contrary.]

          When a successor assumes all the obligations of its predecessor under
the Securities of this series and the Indenture in accordance with the terms of
the Indenture, the predecessor will be released from those obligations.

          The Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Securities of this series and may
otherwise deal with the Company, its Subsidiaries or their respective Affiliates
as if it were not the Trustee.

          No stockholder, director, officer, employee, incorporator or Affiliate
of the Company shall have any liability for any obligation of the Company under
the Securities of this series or the Indenture or for any claim based on, in
respect of or by reason of, such obligations or their creation.  Each Holder of
the Securities of this series by accepting a Security of this series waives and
releases all such liability.  The waiver and release are part of the
consideration for the issuance of the Securities of this series.

          This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on this Security.

          [Customary abbreviations may be used in the name of a Holder of a
Registered Security of this series or an assignee, such as:  TEN COM (= tenants
in common), TEN ENT

                                       22





(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).]

          Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company will cause CUSIP numbers to be
printed on the Securities of this series as a convenience to the Holders of the
Securities of this series.  No representation is made as to the accuracy of such
numbers as printed on the Securities of this series and reliance may be placed
only on the other identification numbers printed hereon.

          This Security shall be governed by and construed in accordance with
the laws of the State of New York.

          All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.

SECTION 204.  Form of Trustee's Certificate of Authentication
              -----------------------------------------------

          This is one of the Securities of the series designated herein and
referred to in the within-mentioned Indenture.


                                         BANKERS TRUST COMPANY
                                              as Trustee


                                         By:___________________________
                                              Authorized Signatory

SECTION 205.   Form of Trustee's Certificate of Authentication by an
               -----------------------------------------------------
               Authenticating Agent
               --------------------

          If at any time there shall be an Authenticating Agent appointed with
respect to any series of Securities, then the Trustee's Certificate of
Authentication by such Authenticating Agent to be borne by the Securities of
each such series shall be substantially as follows:

                    TRUSTEE'S CERTIFICATE OF AUTHENTICATION

          This is one of the Securities of the series designated herein and
referred to in the within-mentioned Indenture.

                                    BANKERS TRUST COMPANY
                                     as Trustee


                                    By: [NAME OF AUTHENTICATING
                                        ------------------------
                                          AGENT]
                                         ------
                                        Authenticating Agent


                                    By: __________________________________
                                        Authorized Signatory

                                       23





                                 ARTICLE THREE

                                THE SECURITIES

SECTION  301.  Amount Unlimited; Issuable in Series
               ------------------------------------

          The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited.

          The Securities may be issued in one or more series.  There shall be
established in or pursuant to a Board Resolution and, subject to Section 303,
set forth or determined in the manner provided in an Officers' Certificate, or
established in one or more indentures supplemental hereto, prior to the issuance
of Securities of any series:

          (1)  the title of the Securities of the series (which shall
     distinguish the Securities of the series from all other Securities);

          (2)  any limit upon the aggregate principal amount of the Securities
     of the series which may be authenticated and delivered under this Indenture
     (except for Securities authenticated and delivered upon registration of
     transfer of, or in exchange for, or in lieu of, other Securities of the
     series pursuant to Sections 305, 306, 307 or 906, and except for any
     Securities which, pursuant to Section 303, are deemed never to have been
     authenticated and delivered hereunder);

          (3)  the Person to whom any interest on a Security of the series shall
     be payable, if other than the bearer (in the case of a Global Bearer
     Security) or the Person in whose name the Security (or one or more
     Predecessor Securities) is registered at the close of business on the
     Regular Record Date for such interest (in the case of a Registered
     Security);

          (4)  the date or dates on which the principal of the Securities of the
     series is payable;

          (5)  the rate or rates at which the Securities of the series shall
     bear interest, if any, the date or dates from which such interest shall
     accrue, the Interest Payment Dates on which such interest shall be payable
     and the Regular Record Date for the interest payable on any Interest
     Payment Date;

          (6)  the place or places, if any, in addition to or in the place of
     the Corporate Trust Office, where the principal of (and premium, if any)
     and interest, if any, on Securities of the series shall be payable and (in
     the case of the Registered Securities) where such Securities may be
     registered or transferred;

          (7)  the period or periods within which, the price or prices at which
     and the terms and conditions upon which Securities of the series may be
     redeemed, in whole or in part, at the option of the Company;

          (8)  the obligation, if any, of the Company to redeem, repay or
     purchase Securities of the series pursuant to any sinking fund or analogous
     provisions or at the

                                       24





     option of a Holder thereof, and the period or periods within which, the
     price or prices at which and the terms and conditions upon which Securities
     of the series shall be redeemed, repaid or purchased, in whole or in part,
     pursuant to such obligation;

          (9)  if other than denominations of $1,000 and any integral multiple
     thereof, the denominations in which Securities of the series shall be
     issuable;

          (10) if other than the principal amount thereof, the portion of the
     principal amount of Securities of the series which shall be payable upon
     declaration of acceleration of the Maturity thereof pursuant to Section
     502;

          (11) if other than such coin or currency of the United States of
     America as at the time of payment is legal tender for payment of public or
     private debts, the coin or currency, including composite currencies such as
     the European Currency Unit, in which payment of the principal of (and
     premium, if any) and interest, if any, on the Securities of the series
     shall be payable;

          (12) if the principal of (and premium, if any) or interest, if any, on
     the Securities of the series are to be payable, at the election of the
     Company or a Holder thereof, in a coin or currency other than that in which
     the Securities are stated to be payable, the period or periods within
     which, and the terms and conditions upon which, such election may be made;

          (13) if the amount of payments of principal of (and premium, if any)
     or interest, if any, on the Securities of the series may be determined with
     reference to an index based on a coin or currency other than that in which
     the Securities are stated to be payable, the manner in which such amounts
     shall be determined;

          (14) any provisions permitted by this Indenture relating to Events of
     Default or covenants of the Company with respect to such series of
     Securities;

          (15) if the Securities of the series shall be issued in whole or in
     part in the form of one or more Global Securities, (i) whether beneficial
     owners of interests in any such Global Security may exchange such interests
     for Securities of such series of like tenor and of authorized form and
     denomination and the circumstances under which any such changes may occur,
     if other than in the manner provided in Section 306 and (ii) the Book-Entry
     Depositary for such Global Security or Securities;

          (16) if the Company ever wishes to issue definitive Bearer Securities
     then all provisions relating to or governing such Bearer Securities will be
     set forth in an indenture supplemental hereto; and

          (17) any other terms of the series (which terms shall not be
     inconsistent with the provisions of this Indenture).

          All Securities of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided in or pursuant
to the Board Resolution referred to above and set forth in the Officers'
Certificate referred to above or in any indenture supplemental hereto referred
to above.

          If any of the terms of the Securities of a series, including the form
of Security of such series, are established by action taken pursuant to a Board
Resolution, a copy of an

                                       25





appropriate record of such action shall be certified by the Secretary or an
Assistant Secretary or other authorized officer or Director of the Company, and
delivered to the Trustee at or prior to the delivery of the Company Order
contemplated by Section 303 for the authentication and delivery of such series
of Securities.

SECTION 302.   Denominations
               -------------

          The Securities of each series shall be issuable in bearer form or in
registered form without coupons, except as otherwise expressly provided in a
supplemental indenture hereto, in such denominations as shall be specified as
contemplated by Section 301. In the absence of any such provisions with respect
to the Securities of any series, the Securities of such series shall be issuable
in denominations of $1,000 and any integral multiple thereof.

SECTION 303.   Execution, Authentication, Delivery and Dating
               ----------------------------------------------

          The Securities shall be executed on behalf of the Company by any
Director, the Secretary or any other officer of the Company so authorized and
need not be attested.  Definitive Registered Securities of any series may have
the Company's seal reproduced thereon which need not be attested.  The
Securities of any series shall be executed by such additional Director or
officer, if any, as shall be specified pursuant to Section 301.  The signature
of any of these officers on the Securities may be manual or facsimile.

          Securities bearing the manual or facsimile signature of any individual
who was at any time the proper Director or officer of the Company shall bind the
Company, notwithstanding that such individual has ceased to hold such office
prior to the authentication and delivery of such Securities or did not hold such
office at the date of authentication of such Securities.

          At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities of any series executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities, and the Trustee in accordance
with the Company Order shall authenticate and deliver such Securities.  If the
form or terms of the Securities of the series have been established in or
pursuant to one or more Board Resolutions as permitted by Sections 201 and 301,
in authenticating such Securities, and accepting the additional responsibilities
under this Indenture in relation to such Securities, the Trustee shall be
entitled to receive, and (subject to Section 601) shall be fully protected in
relying upon, an Opinion of Counsel stating,

          (a)  if the form of such Securities has been established by or
     pursuant to Board Resolution as permitted by Section 201, that such form
     has been established in conformity with the provisions of this Indenture;

          (b)  if the terms of such Securities have been established by or
     pursuant to Board Resolution as permitted by Section 301, that such terms
     have been established in conformity with the provisions of this Indenture;
     and

          (c)  that such Securities, when authenticated and delivered by the
     Trustee and issued by the Company in the manner and subject to any
     conditions specified in such opinion of Counsel, will constitute valid and
     legally binding obligations of the Company, enforceable in accordance with
     their terms, subject to bankruptcy,

                                       26





     insolvency, reorganization and other laws of general applicability relating
     to or affecting the enforcement of creditors' rights and to general
     principles of equity.

          Notwithstanding the provisions of Section 301 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 301 or the Company Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or prior to the time
of authentication of each Security of such series if such documents are
delivered at or prior to the time of authentication upon original issuance of
the first Security of such series to be issued.

          Each Security shall be dated the date of its authentication.

          No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee or an Authenticating Agent by manual signature, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered hereunder
and is entitled to the benefits of this Indenture.  Notwithstanding the
foregoing, if any Security shall have been authenticated and delivered hereunder
but never issued and sold by the Company, and the Company shall deliver such
Security to the Trustee for cancellation as provided in Section 310 together
with a written statement (which need not be accompanied by an Opinion of
Counsel) stating that such Security has never been issued and sold by the
Company, for all purposes of this Indenture such Security shall be deemed never
to have been authenticated and delivered hereunder and shall never be entitled
to the benefits of this Indenture.

SECTION 304.   Transfer Agent and Paying Agent
               -------------------------------

          For so long as the Securities are listed on the Luxembourg Stock
Exchange and such stock exchange shall so require, the Company shall maintain a
Paying Agent and Transfer Agent in Luxembourg.

          The Company shall enter into an appropriate agency agreement with any
Registrar, Transfer Agent or Paying Agent not a party to this Indenture, which
shall implement the provisions of this Indenture that relate to such Person.
The Company shall notify the Trustee of the name and address of any such Person.
If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall
act as such and shall be entitled to appropriate compensation therefor pursuant
to Section 607.  The Company initially appoints the Trustee as Registrar,
Transfer Agent and Principal Paying Agent in The City of New York and Bankers
Trust Luxembourg S.A. as Paying Agent and Transfer Agent in Luxembourg in
connection with the Securities.

SECTION 305.   Temporary Securities
               --------------------

          Pending the preparation of a permanent Global Security or definitive
Securities of any series, the Company may execute, and upon Company Order the
Trustee or the Authenticating Agent shall authenticate and deliver, temporary
Securities which are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination, substantially of the tenor
of the definitive Securities in lieu of which they are issued, in registered
form or, if authorized, in bearer form, and with such appropriate

                                       27





insertions, omissions, substitutions and other variations as the [officer or
officers] executing such Securities may determine, as evidenced by their
execution of such Securities.

          If temporary Securities of any series are issued, the Company will
cause definitive Securities of that series to be prepared without unreasonable
delay.  After the preparation of definitive Securities of such series, the
temporary Securities of such series shall be exchangeable for definitive
Securities of such series upon surrender of the temporary securities of such
series at the office or agency of the Company in a Place of Payment for that
series, without charge to the Holder except as provided in Section 306 in
connection with a transfer and except that a Person receiving Definitive Bearer
Securities shall bear the cost of insurance, postage, transportation and the
like.  Upon surrender for cancellation of any one or more temporary Securities
of any series the Company shall execute and the Trustee or the Authenticating
Agent shall authenticate and deliver in exchange therefor a like principal
amount of definitive Securities of the same series and of like tenor of
authorized denominations.

          Upon any exchange of a portion of a temporary Global Security for a
definitive Global Security for the individual Securities represented thereby
pursuant to this Section 305 or Section 306, the temporary Global Security shall
be endorsed by the Trustee to reflect the reduction of the principal amount of
such temporary Global Security, and such principal amount shall be reduced for
all purposes by the amount so exchanged and endorsed.

SECTION 306.   Registration, Registration of Transfer and Exchange
               ---------------------------------------------------

          The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any other
office or agency of the Company in a Place of Payment being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Registered Securities and of transfers of Registered Securities.
The Trustee is hereby appointed "Security Registrar" for the purpose of
registering Registered Securities and transfers of Registered Securities as
herein provided.  The Company may have one or more coregistrars and the term
"Security Registrar" includes any coregistrar.

          Upon surrender for registration of transfer of any Registered Security
of any series at the office or agency in a Place of Payment for that series, the
Company shall execute, and the Trustee or the Authenticating Agent shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Registered Securities of the same series, of any
authorized denominations and of a like aggregate principal amount and tenor.

          At the option of the Holder, any Registered Security or Registered
Securities of any series, other than a Global Security, may be exchanged for
other Registered Securities of the same series, of any authorized denominations
and of a like aggregate principal amount and tenor, upon surrender of the
Registered Securities to be exchanged at such office or agency.  Whenever any
Securities are so surrendered for exchange, the Company shall execute, and upon
receipt of a Company Order the Trustee or the Authenticating Agent shall
authenticate and deliver, the Registered Securities which the Holder making the
exchange is entitled to receive.  Bearer Securities may not be delivered by the
Trustee, the Authenticating Agent or the Security Registrar in exchange for
Registered Securities.

                                       28





          All Securities issued upon any registration of transfer or exchange of
Registered Securities shall be the valid obligations of the Company, evidencing
the same debt, and entitled to the same benefits under this Indenture, as the
Registered Securities surrendered upon such registration of transfer or
exchange.

          Every Registered Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or the Trustee) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.

          Upon the exchange in whole of a Global Security for the definitive
Securities represented thereby, such Global Security shall be canceled by the
Trustee or delivered to the Trustee for cancellation.  Registered Securities
issued in exchange for a Global Security or any portion thereof pursuant to this
Section shall be registered in such names and in such authorized denominations
as the Book-Entry Depositary for such Global Security shall instruct in writing
the Trustee and the Security Registrar.  The Trustee or the Security Registrar
shall deliver such Registered Securities to the Persons in whose names such
Registered Securities are so registered.

          Interests in a Permanent Global Security may be exchanged for
definitive Registered Securities of the same series only under the circumstances
provided in this Indenture or in an indenture supplemental hereto pursuant to
which Securities of that series are issued or in the Securities of that Series.
In such event the Company will execute, and the Trustee or the Authenticating
Agent, upon receipt of a Company Order for the authentication and delivery of
definitive Registered Securities of such series will authenticate and deliver
such definitive Registered Securities.  Any such definitive Registered
Securities so issued shall be registered in the name of such Person or Persons
as the Book-Entry Depositary shall instruct the Trustee and the Security
Registrar in writing.  Upon the exchange in whole of a Permanent Global Security
for definitive Registered Securities in equal aggregate principal amount, such
Permanent Global Security shall be delivered to the Trustee for cancellation.
Interests in a Permanent Global Security may not be exchanged for definitive
Bearer Securities.  Notwithstanding the foregoing, interests in a Global
Security may not be exchanged for definitive Registered Securities during the
sixteen day period immediately prior to and including each Interest Payment
Date.

          No service charge shall be made to the Holder for any registration of
transfer or exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Securities, other
than exchanges pursuant to Sections 305, 906 or 1107 not involving any transfer.

          The Company shall not be required (i) to issue, register the transfer
of or exchange Securities of any series during a period beginning at the opening
of business 15 days before the day of the mailing of a notice of redemption
under Section 1103 and ending at the close of business on the day of such
mailing, (ii) to register the transfer of or exchange any Security so selected
for redemption in whole or in part, except the unredeemed portion of any
Security being redeemed in part or (iii) to exchange any Bearer Security so
selected for redemption except that such a Bearer Security may be exchanged for
a Registered Security of the series (but only if and under the circumstances for
which the Securities of such series are issuable as Registered Securities),
PROVIDED that such Registered Security shall be immediately
- - --------

                                       29





surrendered for redemption with written instructions for payment consistent with
the provisions of this Indenture.

          The provisions of this Section 306 are, with respect to any Global
Security, subject to Section 312 hereof.

SECTION 307.   Mutilated, Destroyed, Lost and Stolen Securities
               ------------------------------------------------

          If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of the same series and of like tenor and principal
amount and bearing a number not contemporaneously outstanding.

          If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any Security
and (ii) such Security or indemnity as may be required by them to save each of
them and any agent of either of them harmless, then, in the absence of notice to
the Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and upon its written request the Trustee
shall authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security of the same series and of like tenor and principal
amount and bearing a number not contemporaneously outstanding.

          In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.

          Upon the issuance of any new Security under this Section 307, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.

          Every new Security of any series issued pursuant to this Section 307
in lieu of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities of that series duly issued hereunder.

          The provisions of this Section 307 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.

SECTION 308.   Payment of Interest; Interest Rights Reserved
               ---------------------------------------------

          Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid (in the case of a
Bearer Security) to the bearer thereof and (in the case of a Registered
Security) to the Person in whose name that Registered Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest.

                                       30





          Payment of interest, if any, in respect of any Registered Security
will be made by check mailed to the address of the Person entitled thereto as
such person's address appearing in the Security Register. Payment of interest,
if any, in respect of any Registered Security may also be made, in the case of a
Holder of at least U.S. $1,000,000 aggregate principal amount of Registered
Securities, and payment of interest, if any, in respect of a Permanent Global
Security shall be made, by wire transfer to a U.S. Dollar account maintained by
the Holder with a bank in the United States; provided that such Holder elects
payment by wire transfer by giving written notice to the Trustee or a Paying
Agent to such effect designating such account no later than 15 days immediately
preceding the relevant due date for payment (or such other date as the Trustee
may accept in its discretion).

          Any interest on any Security of any series which is payable but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall, in the case of Registered Securities,
forthwith cease to be payable to the Holder thereof on the relevant Regular
Record Date by virtue of having been such Holder, and such Defaulted Interest
may be paid by the Company, at its election in each case, as provided in Clause
(1) or (2) below:

          (1)  The Company may elect to make payment of any Defaulted Interest
     to the Persons in whose names the Registered Securities of such series (or
     their respective Predecessor Securities) are registered at the close of
     business on a Special Record Date for the payment of such Defaulted
     Interest, which shall be fixed in the following manner.  The Company shall
     notify the Trustee in writing of the amount of Defaulted Interest proposed
     to be paid on each Registered Security of such series and the date of the
     proposed payment, and at the same time the Company shall deposit with the
     Trustee an amount of money equal to the aggregate amount proposed to be
     paid in respect of such Defaulted Interest or shall make arrangements
     satisfactory to the Trustee for such deposit prior to the date of the
     proposed payment, such money when deposited to be held in trust for the
     benefit of the Persons entitled to such Defaulted Interest as in this
     clause provided.  Thereupon the Trustee shall fix a Special Record Date for
     the payment of such Defaulted Interest which shall be not more than 15 days
     and not less than 10 days prior to the date of the proposed payment and not
     less than 10 days after the receipt by the Trustee of the notice of the
     proposed payment.  Unless the Trustee is acting as the Security Registrar,
     promptly after such Special Record Date, the Company shall furnish the
     Trustee with a list, or shall make arrangements satisfactory to the Trustee
     with respect thereto, of the names and addresses of, and respective
     principal amounts of such Registered Securities held by, the Holders
     appearing on the Security Register at the close of business on such Special
     Record Date.  The Trustee shall promptly notify the Company of such Special
     Record Date and, in the name and at the expense of the Company, shall cause
     notice of the proposed payment of such Defaulted Interest and the Special
     Record Date therefor to be mailed, first-class postage prepaid, to each
     Holder of Securities of such series at his address as it appears in the
     Security Register, not less than 10 days prior to such Special Record Date.
     Notice of the proposed payment of such Defaulted Interest and the Special
     Record Date therefor having been so mailed, such Defaulted Interest shall
     be paid to the Persons in whose names the Securities of such series (or
     their respective Predecessor Securities) are registered at the close of
     business on such Special Record Date and shall no longer be payable
     pursuant to the following clause (2).

          (2)  The Company may make payment of any Defaulted Interest on the
     Registered Securities of any series or any Permanent Global Security in any
     other lawful manner not inconsistent with the requirements of any
     securities exchange on

                                       31





     which such Registered Securities may be listed, and upon such notice as may
     be required by such exchange.

     Defaulted Interest on Global Bearer Securities shall be payable to the
bearer thereof at the time of payment of such Defaulted Interest by the Company.

          Subject to the foregoing provisions of this Section 308, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security, shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.

SECTION 309.   Persons Deemed Owners
               ---------------------

          Prior to due presentment of a Registered Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such Registered Security is registered as the
owner of such Registered Security for the purpose of receiving payment of
principal of (and premium, if any) and (subject to Section 308) interest, if
any, on such Registered Security and for all other purposes whatsoever, whether
or not such Registered Security be overdue, and neither the Company, the Trustee
nor any agent of the Company or the Trustee shall be affected by notice to the
contrary.  All such payments so made to any such person, or upon such person's
order, shall be valid, and, to the extent of the sums so paid, effectual to
satisfy and discharge the liability for monies payable upon any such Security.

          The Company, the Trustee and any agent of the Company or the Trustee
may treat the Book-Entry Depositary for a Global Bearer Security as the absolute
owner of such Bearer Security for the purpose of receiving payment thereof or on
account thereof and for all other purposes whatsoever, whether or not such
Global Bearer Security or coupon be overdue, and neither the Company or the
Trustee nor any agent of the Company or the Trustee shall be affected by notice
to the contrary.

          No holder of any beneficial interest in any Global Security held on
its behalf by a Book-Entry Depositary shall have any rights under this Indenture
with respect to such Global Security, and such Book-Entry Depositary may be
treated by the Company, the Trustee, and any agent of the Company or the Trustee
as the owner of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall impair, as between a Book-
Entry Depositary and such holders of beneficial interests, the operation of
customary practices governing the exercise of the rights of the Book-Entry
Depositary as holder of any Security.

SECTION 310.   Cancellation
               ------------

          All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly canceled by it.  The Company may at any time deliver to
the Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Securities so delivered shall be promptly canceled by the
Trustee.  No Securities shall be authenticated in lieu of or in exchange for any
Securities canceled as

                                       32





provided in this Section 310, except as expressly permitted by this Indenture.
All canceled Securities held by the Trustee shall be disposed of as directed by
a Company Order.

SECTION 311.   Computation of Interest
               -----------------------

          Except as otherwise specified as contemplated by Section 301 for
Securities of any series, interest, if any, on the Securities of each series
shall be computed on the basis of a 360-day year of twelve 30-day months.

SECTION 312.   Global Securities
               -----------------

          If the Company shall establish pursuant to Section 301 that the
Securities of a particular series are to be issued in the form of a Global
Security, then the Company shall execute and the Trustee shall, in accordance
with Section 303, authenticate and deliver, a Global Security or Securities
which (i) shall represent, and shall be denominated in an aggregate amount equal
to the aggregate principal amount of, all of the Outstanding Securities of such
series, (ii) shall be in bearer form or, if in registered form, registered in
the name of the Book-Entry Depositary or its nominee, (iii) shall be delivered
by the Trustee to the Book-Entry Depositary or pursuant to the Book-Entry
Depositary's instruction and (iv) shall bear a legend substantially to the
following effect:

               "This Security is a Global Security within the meaning of the
     Indenture hereinafter referred to and if this Security is in bearer form,
     is held by a Book-Entry Depositary or, if this Security is in registered
     form, is registered in the name of a Book-Entry Depositary or a nominee of
     a Book-Entry Depositary.  This Security is exchangeable for Securities
     registered in the name of a person other than the Book-Entry Depositary or
     its nominee only in the limited circumstances described in the Indenture,
     and no transfer of this Security (other than a transfer of this Security as
     a whole by the Book-Entry Depositary to a nominee of the Book-Entry
     Depositary or by a nominee of the Book-Entry Depositary to the Book-Entry
     Depositary or another nominee of the Book-Entry Depositary) may be made or
     registered, as the case may be, except in limited circumstances.

               Unless this Global Security is presented by an authorized
     representative of the Book-Entry Depositary to the Company or its agent for
     registration of transfer, exchange or payment, and any definitive Security
     is issued in the name or names as directed in writing by the Book-Entry
     Depositary, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
     BY OR TO ANY PERSON IS WRONGFUL in as much as the bearer or, if in
     registered form, the registered owner hereof, the Book-Entry Depositary,
     has an interest herein."

          Notwithstanding the provisions of Section 306, the Global Security of
a series may be transferred, in whole but not in part and in the manner provided
in Section 306, only to another nominee of the Book-Entry Depositary for such
series, or to a successor Book-Entry Depositary for such series selected or
approved by the Company or to a nominee of such successor Book-Entry Depositary.

          The circumstances, if any, under which the Global Security of a series
may be exchanged for definitive Registered Securities of such series shall be as
specified in an indenture supplemental hereto pursuant to which the Securities
of such series are issued.  In such event the Company will execute, and, subject
to Section 306, the Trustee, upon receipt of

                                       33





an Officers' Certificate evidencing such determination by the Company, will
authenticate and deliver Securities of such series in definitive registered form
without coupons, in authorized denominations, and in an aggregate principal
amount equal to the principal amount of the Global Securities of such series in
exchange for such Global Securities. Upon the exchange of the Global Securities
for such Securities in definitive registered form without coupons, in authorized
denominations, the Global Securities shall be canceled by the Trustee.  Such
Securities in definitive registered form issued in exchange for the Global
Securities pursuant to this Section 312, shall be registered in such names and
in such authorized denominations as the Book-Entry Depositary, pursuant to the
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee.  The Trustee shall deliver Securities to the Book-Entry
Depositary for delivery to the persons in whose names such Securities are so
registered.

          No Security that is not a Global Security may be payable to bearer
(except as otherwise provided in an indenture supplemental hereto pursuant to
Section 301(16).

                                 ARTICLE FOUR

                          SATISFACTION AND DISCHARGE

SECTION 401.   Satisfaction and Discharge of Indenture
               ---------------------------------------

          This Indenture shall upon Company Request cease to be of further
effect (except as to any surviving rights of registration of transfer or
exchange of Securities herein expressly provided for and rights to receive
payments of any principal, premium or interest in respect thereof and any right
to receive any Additional Amount as provided in Section 1009), and the Trustee
shall execute proper instruments acknowledging satisfaction and discharge of
this Indenture, when

          (1)  either (A) all Securities theretofore authenticated and delivered
     (other than (i) Securities which have been destroyed, lost or stolen and
     which have been replaced or paid as provided in Section 307 and (ii)
     Securities for whose payment money has theretofore been deposited in trust
     with the trustee or any paying agent or segregated and held in trust by the
     Company and thereafter repaid to the Company or discharged from such trust,
     as provided in Section 1003) have been delivered to the Trustee for
     cancellation; or

          (B)  all such Securities not theretofore delivered to the Trustee for
     cancellation

               (i)    have become due and payable, or

               (ii)   will become due and payable at their Stated Maturity
          within one year, or

               (iii)  are to be called for redemption within one year under
          arrangements for the giving of notice of redemption by the Trustee in
          the name, and at the expense, of the Company, or

               (iv)   are deemed paid and discharged pursuant to Section 403, as
          applicable.

                                       34





     and the Company, in the case of (i) or (ii) above, has deposited or caused
     to be deposited with the Trustee as trust funds in trust for the purpose an
     amount of (a) money in the currency or units of currency in which such
     Securities are payable, or (b) U.S. Government Obligations (denominated in
     the same currency or units of currency in which such Securities are
     payable) which through the payment of interest and principal in respect
     thereof in accordance with their terms will provide not later than one day
     before the Stated Maturity or Redemption Date, as the case may be, money in
     an amount, or (c) a combination of money or U.S. Government Obligations as
     provided in (d) above, in each case, sufficient to pay and discharge the
     entire indebtedness on such Securities not theretofore delivered to the
     Trustee for cancellation, for principal (and premium, if any) and interest,
     if any, to the date of such deposit (in the case of Securities which have
     become due and payable) or to the Stated Maturity or Redemption Date, as
     the case may be;

          (2)  the Company has paid or caused to be paid all other sums payable
     hereunder by the Company; and

          (3)  the Company has delivered to the Trustee an Officers' Certificate
     and an Opinion of Counsel, each stating that all conditions precedent
     herein provided for relating to the satisfaction and discharge of this
     Indenture have been complied with.

          Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607, the obligations of
the Trustee to any Authenticating Agent under Section 614 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section 401 or if money or U.S. Government Obligations shall have been
deposited with or received by the Trustee pursuant to Section 403, the
obligations of the Trustee under Section 402 and the last paragraph of Section
1003 shall survive.

SECTION 402.   Application of Trust Money
               --------------------------

          (a)  Subject to the provisions of the last paragraph of Section 1003,
all money or U.S. Government Obligations deposited with the Trustee pursuant to
Sections 401 or 403 and all money received by the Trustee in respect of U.S.
Government Obligations deposited with the Trustee pursuant to Sections 401 or
403, shall be held in trust and applied by it, in accordance with the provisions
of the Securities and this Indenture, to the payment, to the persons entitled
thereto, of the principal of (and premium, if any) and interest, if any, on the
Securities for whose payment such money has been deposited with or received by
the Trustee or to make mandatory sinking fund payments or analogous payments as
provided by Sections 401 or 403.

          (b)  The Company shall pay and shall indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against U.S. Government
Obligations deposited pursuant to Sections 401 or 403 or the interest and
principal received in respect of such obligations other than any payable by or
on behalf of Holders.

          (c)  The Trustee shall deliver or pay to the Company from time to time
upon Company Request any U.S. Government Obligations or money held by it as
provided in Sections 401 or 403 which, in the opinion of a nationally recognized
firm of independent certified public accountants expressed in a written
certification thereof delivered to the

                                       35





Trustee, are then in excess of the amount thereof which then would have been
required to be deposited for the purpose for which such U.S. Government
Obligations or money was deposited or received. This provision shall not
authorize the sale by the Trustee of any U.S. Government Obligations held under
this Indenture.

          (d)  Any monies paid by the Company to the Trustee or any Paying
Agent, or held by the Company in trust, for the payment of the principal of or
any interest or Additional Amounts on any Securities and remaining unclaimed at
the end of two years after such principal, interest or Additional Amounts become
due and payable will be repaid to the Company, or released from the trust, upon
its written request, and upon such repayment or release all liability of the
company, the Trustee and such Paying Agent with respect thereto will cease.

SECTION 403.   Satisfaction, Discharge and Defiance of Securities of any Series
               ----------------------------------------------------------------

          The Company, at its option, (a) will be discharged from any and all
obligations in respect of the Securities of a series  (except in each case for
the obligations to register the transfer or exchange of the Securities of that
series, replace stolen, lost or mutilated Securities of that series, maintain
paying agencies and hold moneys for payment in trust); or (b) omit to comply
with any term, provision or condition set forth in Sections 801, 1004 and 1005
with respect to the Securities of any series, provided that the following
conditions shall have been satisfied:

          (1)  The Company has deposited or caused to be irrevocably deposited
     (except as provided in Section [607], [402(c)] and the last paragraph of
     Section [1003]) with the Trustee (specifying that each deposit is pursuant
     to this Section 403) as trust funds in trust, specifically pledged as
     security for, and dedicated solely to, the benefit of the Holders of the
     Securities of such series, (i) money or (ii) U.S. Government Obligations
     which through the payment of interest and principal in respect thereof in
     accordance with their terms will provide money in an amount, or (iii) a
     combination thereof, in each case, sufficient to pay and discharge the
     principal and interest on the outstanding Securities of such series on the
     dates such payments are due in accordance with the terms of the Securities
     of such series, (or if the Company has designated a redemption date
     pursuant to the final sentence of this paragraph, to and including the
     redemption date so designated by the Company), and no Event of Default or
     event which with notice or lapse of time would become an Event of Default
     (including by reason of such deposit) with respect to the Securities of
     such series shall have occurred and be continuing on the date of such
     deposit.  To exercise any such option, the Company is required to deliver
     to the Trustee (x) an Opinion of Counsel to the effect that the Holders of
     the Securities of such series will not recognize income, gain or loss for
     federal income tax purposes as a result of such deposit, defeasance and
     discharge of certain obligations, which in the case of (a) must be based on
     a change in law or a ruling by the U.S. Internal Revenue Service and (y) an
     Officers' Certificate as to compliance with all conditions precedent
     provided for in the Indenture relating to the satisfaction and discharge of
     the Securities of such series.  If the Company shall wish to deposit or
     cause to be deposited money or U.S. Government Obligations to pay or
     discharge the principal of (and premium, if any) and interest, if any, on
     the outstanding Securities of such series to and including a Redemption
     Date on which all of the outstanding Securities of such series are to be
     redeemed, such Redemption Date shall be irrevocably designated by a Board
     Resolution delivered to the Trustee on or prior to the date of deposit of
     such money or U.S. Government Obligations, and such Board

                                       36





     Resolution shall be accompanied by an irrevocable Company Request that the
     Trustee give notice of such redemption in the name and at the expense of
     the Company not less than 15 nor more than 30 days prior to such Redemption
     Date in accordance with this Indenture.

                                 ARTICLE FIVE

                                   REMEDIES

SECTION  501.  Events of Default
               -----------------

          "Event of Default", wherever used herein with respect to Securities of
any series, means any one of the following events:

          (1)  default in the payment of any interest or any Additional Amounts
     upon any Security of that series when it becomes due and payable and
     continuance of such default for a period of 30 days; or

          (2)  default in the payment of the principal of (or premium, if any,
     on) any Security of that series at its Maturity; or

          (3)  default in the payment of any sinking fund installment, when and
     as due by the terms of a Security of that series and continuance of such
     default for a period of 15 days; or

          (4)  material default in the performance, or material breach, of any
     covenant or obligation of the Company in this Indenture (other than a
     covenant a default in whose performance or whose breach is elsewhere in
     this Section 501 specifically dealt with or which has expressly been
     included in this Indenture solely for the benefit of a series of Securities
     other than that series) and continuance of such material default or breach
     for a period of 60 days after there has been given, by registered or
     certified mail, to the Company by the Trustee or to the Company and the
     Trustee by the Holders of at least 25% in aggregate principal amount of the
     Outstanding Securities of that series a written notice specifying such
     default or breach and requiring it to be remedied and stating that such
     notice is a "Notice of Default" hereunder; or

          (5)  if this event shall be made to constitute an Event of Default
     with respect to the Securities of a particular series, a default in the
     payment of the principal of any bond, debenture, note or other evidence of
     indebtedness, in each case for money borrowed by the Company or any
     Significant Subsidiary, or in the payment of principal under any mortgage,
     indenture (including this Indenture) or instrument under which there may be
     issued or by which there may be secured or evidenced any indebtedness for
     money borrowed by the Company or any Significant Subsidiary, which default
     for payment of principal is in an aggregate principal amount exceeding
     $50,000,000 (or its equivalent in any other currency or currencies) when
     such indebtedness becomes due and payable (whether at maturity, upon
     redemption or acceleration or otherwise), if such default shall continue
     unremedied or unwaived for more than 30 Business Days and the time for
     payment of such amount has not been expressly extended; provided, however,
                                                             -----------------
     that, subject to the provisions of Sections 601 and 602, the Trustee shall
     not be deemed to have knowledge of such default unless either (A) a
     Responsible Officer of

                                       37





     the Trustee shall have actual knowledge of such default or (B) the Trustee
     shall have received written notice thereof from the Company, from any
     Holder, from the holder of any such indebtedness or from the trustee under
     any such mortgage, indenture or other instrument; and provided, further,
                                                           --------  -------
     that if such default under such indenture or instrument shall be remedied
     or cured by the Company or such Significant Subsidiary or waived by the
     holders of such indebtedness, then the Event of Default hereunder by reason
     thereof shall be deemed likewise to have been remedied, cured or waived
     without further action upon the part of the Trustee or any of the Holders;
     or

          (6)  The failure of the Company or a Significant Subsidiary generally
     to pay its debts as they become due, or the admission in writing of its
     inability to pay its debts generally, or the making of a general assignment
     for the benefit of its creditors, or the institution of any proceeding by
     or against the Company or a Significant Subsidiary (other than any such
     proceeding brought against the Company or a Significant Subsidiary that is
     dismissed within 180 days from the commencement thereof) seeking to
     adjudicate it  bankrupt or insolvent, or seeking liquidation (other than a
     solvent liquidation), winding up, reorganization, arrangement, adjustment,
     protection, relief or composition of it or its debts under any law relating
     to bankruptcy, insolvency, reorganization, moratorium or relief of debtors,
     or seeking the entry of an order for relief or appointment of an
     administrator, receiver, trustee, intervenor or other similar official for
     it or for any substantial part of its property, or the taking of any action
     by the Company or a Significant Subsidiary to authorize any of the actions
     set forth in this subparagraph (6); or

          (7)  Any other Event of Default provided in the supplemental indenture
     or provided in or pursuant to the Board Resolution under which such series
     of Securities is issued or in the form of Security for such series.

SECTION 502.   Acceleration of Maturity; Rescission and Annulment
               --------------------------------------------------

          If an Event of Default with respect to Securities of any series at the
time Outstanding occurs and is continuing, then in every such case the Trustee
or the Holders of not less than 25% in aggregate principal amount of the
Outstanding Securities of that series may declare the principal amount (or, if
any of the Securities of that series are Original Issue Discount Securities,
such portion of the principal amount of such Securities as may be specified in
the terms thereof) of all of the Securities of that series to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given
by Holders), and upon any such declaration such principal amount (or specified
amount) shall become immediately due and payable.

          At any time after such declaration of acceleration with respect to
Securities of any series has been made, but before a judgment or decree for
payment of money has been obtained by the Trustee as hereinafter in this Article
provided, if all Events of Default with respect to Securities of that series
have been cured or waived (other than the non-payment of principal of the
Securities which has become due solely by reason of such declaration of
acceleration) then such declaration of acceleration and its consequences shall
be automatically annulled and rescinded.

          No such rescission shall affect any subsequent default or impair any
right consequent thereon.

                                       38





          For all purposes under this Indenture, if a portion of the principal
of any Original Issue Discount Securities shall have been accelerated and
declared due and payable pursuant to the provisions hereof, then, from and after
such declaration, unless such declaration has been rescinded and annulled, the
principal amount of such Original Issue Discount Securities shall be deemed, for
all purposes hereunder, to be such portion of the principal thereof as shall be
due and payable as a result of such acceleration, and payment of such portion of
the principal thereof as shall be due and payable as a result of such
acceleration, together with interest, if any, thereon and all other amounts
owing thereunder, shall constitute payment in full of such Original Issue
Discount Securities.

SECTION 503.   Collection of Indebtedness and Suits for Enforcement by Trustee
               ---------------------------------------------------------------

          The Company covenants that if

          (1)  default is made in the payment of any interest on any Security of
     a series when such interest becomes due and payable and such default
     continues for a period of 30 days, or

          (2)  default is made in the payment of the principal of (or premium,
     if any, on) any Security of a series at the Stated Maturity thereof,

the Company will, upon written demand of the Trustee, pay to it, for the benefit
of the Holders of such Securities of such series, the whole amount then due and
payable on such Securities of such series for principal (and premium, if any)
and interest, if any, and, to the extent that payment of such interest shall be
legally enforceable, interest on any overdue principal (and premium, if any) and
any overdue interest, at the rate or rates prescribed therefor in such
Securities of such series, and, in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.

          If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon such Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon such Securities, wherever
situated.

          If any Event of Default with respect to Securities of any series
occurs and is continuing, the Trustee may in its discretion proceed to protect
and enforce its rights and the rights of the Holders of Securities of such
series by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights.

SECTION 504.   Trustee May File Proofs of Claim
               --------------------------------

          In case of the pendency of any receivership, insolvency, liquidation
(other than a solvent liquidation), bankruptcy, reorganization, arrangement,
adjustment, composition or other judicial proceeding relative to the Company or
any other obligor upon the Securities or the property of the Company or of such
other obligor or their creditors, the Trustee (irrespective of whether the
principal of the Securities shall then be due and payable as therein expressed
or by declaration or otherwise and irrespective of whether the Trustee shall
have

                                       39





made any demand on the Company for the payment of overdue principal or interest)
shall be entitled and empowered, by intervention in such proceeding or
otherwise,

          (i)    to file and prove a claim for the whole amount of principal
     (and premium, if any) and interest owing and unpaid in respect of the
     Securities and to file such other papers or documents as may be necessary
     or advisable in order to have the claims of the Trustee (including any
     claim for the reasonable compensation, expenses, disbursements and advances
     of the Trustee, its agents and counsel) and of the Holders allowed in such
     judicial proceeding, and

          (ii)   to collect and receive any moneys or other property payable or
     deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 607.

          Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.

SECTION 505.   Trustee May Enforce Claims Without Possession of Securities
               -----------------------------------------------------------

          All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.

SECTION 506.   Application of Money Collected
               ------------------------------

          Any money collected by the Trustee pursuant to this Article shall be
applied in the following order with respect to the Securities of any series, at
the date or dates fixed by the Trustee and, in case of the distribution of such
money on account of principal (or premium, if any) or interest, upon
presentation of the Securities and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:

          FIRST:  To the payment of all amounts due the Trustee under Section
     607;

          SECOND:  In case the principal and premium, if any, of the Securities
     of such series in respect of which moneys have been collected shall not
     have become and be then due and payable, to the payment of interest, if
     any, on the Securities of such a series in default in the order of the
     maturity of the installments of such interest, with interest (to the extent
     that such interest has been collected by the Trustee and to the

                                       40





     extent permitted by law) upon the overdue installments of interest at the
     rate prescribed therefor in such Securities, such payments to be made
     ratably to the Persons entitled thereto, without discrimination or
     preference;

          THIRD:  In case the principal or premium, if any, of the Securities of
     such series in respect of which moneys have been collected shall have
     become and shall be then due and payable, to the payment of the whole
     amount then owing and unpaid upon all the Securities of such series for
     principal and premium, if any, and interest, if any, with interest upon the
     overdue principal and premium, if any, and (to the extent that such
     interest has been collected by the Trustee and to the extent permitted by
     law) upon overdue installments of interest at the rate prescribed therefor
     in the Securities of such series; and in case such moneys shall be
     insufficient to pay in full the whole amount so due and unpaid upon the
     Securities of such series, then to the payment of such principal and any
     premium and interest, without preference or priority of principal over
     interest, or of interest over principal or premium, or of any installment
     of interest over any other installment of interest, or of any Security of
     such series over any other Security of such series, ratably to the
     aggregate of such principal and any premium and accrued and unpaid
     interest; and

          FOURTH:  To the payment of the remainder, if any, to the Company or
     any other Person lawfully entitled thereto.

SECTION 507.   Limitation on Suits
               -------------------

          No Holder of any Security of any series shall have any right to
institute any proceeding, judicial or otherwise, with respect to this Indenture,
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless

          (1)  such Holder has previously given written notice to the Trustee of
     a continuing Event of Default with respect to the Securities of that
     series;

          (2)  the Holders of not less than 25% in principal amount of the
     Outstanding Securities of that series shall have made written request to
     the Trustee to institute proceedings in respect of such Event of Default in
     its own name as Trustee hereunder;

          (3)  such Holder or Holders have offered to the Trustee indemnity
     satisfactory to the Trustee against the costs, expenses and liabilities to
     be incurred in compliance with such request;

          (4)  the Trustee for 60 days after its receipt of such notice, request
     and offer of indemnity has failed to institute any such proceeding; and

          (5)  no direction inconsistent with such written request has been
     given to the Trustee during such 60-day period by the Holders of a majority
     in principal amount of the outstanding Securities of that series;

it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this

                                       41





Indenture, except in the manner herein provided and for the equal and ratable
benefit of all such Holders.

SECTION 508.   Unconditional Right of Holders to Receive Principal, Premium and
               ----------------------------------------------------------------
               Interest
               --------

          Subject to Section 507, the Holder of any Security shall have the
right, which is absolute and unconditional, to receive payment of the principal
of (and premium, if any) and (subject to Section 307) interest, if any, on such
Security on the Stated Maturity or Maturities expressed in such Security (or, in
the case of redemption, on the Redemption Date) and to institute suit for the
enforcement of any such payment, and such rights shall not be impaired without
the consent of such Holder.

SECTION 509.   Restoration of Rights and Remedies
               ----------------------------------

          If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Company, the Trustee and the Holders
shall continue as though no such proceeding had been instituted.

SECTION 510.   Rights and Remedies Cumulative
               ------------------------------

          Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last paragraph
of Section 306, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.

SECTION 511.   Delay or Omission Not Waiver
               ----------------------------

          No delay or omission of the Trustee or of any Holder of any Securities
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article or by law
to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient by the Trustee or by the Holders, as the case
may be.

SECTION 512.   Control by Holders
               ------------------

          The Holders of a majority in principal amount of the Outstanding
Securities of any series shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the
Securities of such series, provided that
                           --------

                                       42





          (1)  such direction shall not be in conflict with any rule of law or
     with this Indenture,

          (2)  the Trustee may take any other action deemed proper by the
     Trustee which is not inconsistent with such direction, and

          (3)  the Trustee shall not determine that the action so directed would
     be prejudicial to Holders not taking part in such action.

SECTION 513.   Waiver of Past Defaults
               -----------------------

          The Holders of not less than a majority in aggregate principal amount
of the Outstanding Securities of any series may on behalf of the Holders of all
the Securities of such series waive any past default hereunder with respect to
such series and its consequences, except a default

          (1)  in the payment of the principal of (or premium, if any) or
     interest, if any, on any Security of such series, or

          (2)  in respect of a covenant or provision hereof which under Article
     Nine cannot be modified or amended without the consent of the Holder of
     each Outstanding Security of such series affected.

          Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.

SECTION 514.   Undertaking for Costs.
               ---------------------

          All parties to this Indenture agree, and each Holder of any Security
by his acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken or
omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant in such suit,
but the provisions of this Section 514 shall not apply to any suit instituted by
the Trustee, to any suit instituted by any Holder, or group of Holders, holding
in the aggregate more than 10% in principal amount of the outstanding Securities
of any series, or to any suit instituted by any Holder for the enforcement of
the payment of the principal of or interest, if any, on any Security on or after
the Stated Maturity or Maturities expressed in such Security.

                                       43





                                  ARTICLE SIX

                                  THE TRUSTEE

SECTION 601.   Certain Duties and Responsibilities
               -----------------------------------

          (a)  Except during the continuance of a default with respect to the
     Securities of any series,

               (1)  the Trustee undertakes to perform, such duties and only such
     duties as are specifically set forth in this Indenture, and no implied
     covenants or obligations shall be read into this Indenture against the
     Trustee; and

               (2)  in the absence of bad faith on its part, the Trustee may
     conclusively rely, as to the truth of the statements and the correctness of
     the opinions expressed therein, upon certificates or opinions furnished to
     the Trustee and conforming to the requirements of this Indenture; but in
     the case of any such certificates or opinions which by any provision hereof
     are specifically required to be furnished to the Trustee, the Trustee shall
     examine the same to determine whether or not they conform to the
     requirements of this Indenture.

          (b)  In case a default has occurred and is continuing, the Trustee
     shall exercise such of the rights and powers vested in it by this
     Indenture, and use the same degree of care and skill in their exercise, as
     a prudent man would exercise or use under the circumstances in the conduct
     of his own affairs.

          (c)  No provision of this Indenture shall be construed to relieve the
     Trustee from liability for its own negligent action, its own negligent
     failure to act, or its own willful misconduct, except that

               (1)  the Trustee shall not be liable for any error of judgment
     made in good faith by a Responsible Officer, unless the Trustee was
     negligent in ascertaining the pertinent facts; and

               (2)  no provision of this Indenture shall require the Trustee to
     spend or risk its own funds or otherwise incur any financial liability in
     the performance of any of its duties hereunder, or in the exercise of any
     of its rights or powers, if repayment of such funds or adequate indemnity
     against such risk or liability satisfactory to the Trustee has not been
     assured to it.

               (3)  the Trustee shall not be liable with respect to any action
     taken or omitted to be taken by it in good faith in accordance with the
     direction of the Holders of not less than a majority in principal amount of
     the outstanding Securities of any series, determined as provided in Section
     512, relating to the time, method and place of conducting any proceeding
     for any remedy available to the Trustee, or exercising any trust or power
     conferred upon the Trustee, under this Indenture with respect to the
     Securities of such series; and

          (d)  Whether or not therein expressly so provided, every provision of
     this Indenture relating to the conduct or affecting the liability of or
     affording protection to the Trustee shall be subject to the provisions of
     this Section 601.

                                       44





SECTION 602.   Notice of Defaults
               ------------------

          Within 90 days after the occurrence of any default hereunder with
respect to the Securities of any series, the Trustee shall transmit by mail to
all Holders of Securities of such series notice of such default hereunder known
to the Trustee, unless such default shall have been cured or waived; provided,
                                                                     --------
however, that, except in the case of a default in the payment of the principal
- - -------
of (or premium, if any) or interest, if any, on any Security of such series or
in the payment of any sinking fund installment with respect to Securities of
such series, the Trustee shall be protected in withholding such notice if and so
long as the board of directors, the executive committee or a trust committee of
directors or a Responsible Officer of the Trustee in good faith determine that
the withholding of such notice is in the interest of the Holders of Securities
of such series; and provided, further, that in the case of any default of the
                    --------- -------
character specified in [Section 501(4)] with respect to Securities of such
series, no such notice to Holders shall be given until at least 30 days after
the occurrence thereof.  For the purpose of this Section 602, the term "default"
means any event which is, or after notice or lapse of time or both would become,
an Event of Default with respect to Securities of such series.

SECTION 603.   Certain Rights of Trustee
               -------------------------

     Subject to the provisions of Section 601:

     (a)  the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;

     (b)  any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order or as otherwise
expressly provided herein and any resolution of the Board of Directors may be
sufficiently evidenced by a Board Resolution;

     (c)  whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate;

     (d)  the Trustee may consult with counsel, and the written advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon;

     (e)  the Trustee shall be under no obligation to expend or risk its own
funds or to exercise, at the request or direction of any of the Holders, any of
the rights or powers vested in it by this Indenture pursuant to this Indenture,
unless such Holders shall have offered to the Trustee security or indemnity
satisfactory to the Trustee against the costs, expenses and liabilities which
might be incurred by it in compliance with such request or direction;

     (f)  the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice,

                                       45





request, direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters as it may
see fit, and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled upon reasonable prior request and during
normal business hours to examine the books, records and premises of the Company,
personally or by agent or attorney; and

     (g)  the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and shall not be liable for the actions or omissions of such agents
appointed and supervised by it with due care.

SECTION 604.   Not Responsible for Recitals or Issuance of Securities
               ------------------------------------------------------

          The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and neither the Trustee nor any Authenticating Agent assumes any
responsibility for their correctness.  The Trustee makes no representations as
to the validity or sufficiency of this Indenture or of the Securities.  Neither
the Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of Securities or the proceeds thereof.

SECTION 605.   May Hold Securities
               -------------------

          The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
608 and 613, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Authenticating Agent, Paying Agent, Security
Registrar or such other agent.

SECTION 606.   Money Held in Trust
               -------------------

          Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed with the Company.

SECTION 607.   Compensation and Reimbursement
               ------------------------------

          The Company agrees

          (1)  to pay to the Trustee from time to time such compensation as is
     agreed upon in writing;

          (2)  except as otherwise expressly provided herein, to reimburse the
     Trustee upon its request for all reasonable expenses, disbursements and
     advances incurred or made by the Trustee in accordance with any provision
     of this Indenture (including the reasonable compensation and the expenses
     and disbursements of its agents and counsel, which compensation, expenses
     and disbursements shall be set forth in sufficient written detail to the
     satisfaction of the Company), except any such expense, disbursement or
     advance as may be attributable to its or their negligence or bad faith; and

          (3)  to indemnify the Trustee, its officers, directors and employees
     for, and to hold it harmless against, any loss, liability or expense
     incurred without negligence,

                                       46





     bad faith, or willful misconduct on its part, arising out of or in
     connection with the acceptance or administration of the trust or trusts
     hereunder, including the costs and expenses of defending itself against any
     claim or liability in connection with the exercise or performance of any of
     its powers or duties hereunder. [Obligations under this Section 607(3) will
     survive the satisfaction and discharge of this Indenture pursuant to
     Section 401 hereof.

SECTION 608.   Disqualification; Conflicting Interests
               ---------------------------------------

          If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.

SECTION 609.   Corporate Trustee Required; Eligibility
               ---------------------------------------

          There shall at all times be a Trustee hereunder which shall be
eligible to act as trustee under the Trust Indenture Act and which shall have a
combined capital and surplus of at least $50,000,000. If the Trustee does not
have an office in The City of New York, the Trustee may appoint an agent in The
City of New York reasonably acceptable to the Company to conduct any activities
which the Trustee may be required under this Indenture to conduct in The City of
New York. If the Trustee does not have an office in The City of New York or has
not appointed an agent in The City of New York, the Trustee shall be a
participant in The Depository Trust Company and FAST distribution systems. If
such corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of a United States federal, state, territorial or
District of Columbia supervising or examining authority, then for the purposes
of this Section 609, the combined capital and surplus of such corporation shall
be deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 609, the Trustee
shall resign immediately in the manner and with the effect hereinafter specified
in this Article.

SECTION 610.   Resignation and Removal; Appointment of Successor Trustee
               ---------------------------------------------------------

          (a)  No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 611.

          (b)  The Trustee may resign at any time with respect to the Securities
of one or more series by giving written notice thereof to the Company.  If the
instrument of acceptance by a successor Trustee required by Section 611 shall
not have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities of such series.

          (c)  The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal amount
of the Outstanding Securities of such series, delivered to the Trustee and to
the Company.

          (d)  If at any time:

                                       47





          (1)  the Trustee shall fail to comply with section 310(b) of the Trust
     Indenture Act pursuant to Section 608 with respect to any series of
     Securities after written request therefor by the Company or by any Holder
     who has been a bona fide Holder of a Security for at least six months, or

          (2)  the Trustee shall cease to be eligible under Section 609 and
     shall fail to resign after written request therefor by the Company or by
     any such Holder, or

          (3)  the Trustee shall become incapable of acting or shall be adjudged
     a bankrupt or insolvent or a receiver of the Trustee or of its property
     shall be appointed or any public officer shall take charge or control of
     the Trustee or of its property or affairs for the purpose of
     rehabilitation, conservation or liquidation,

then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee with respect to all Securities, or (ii) subject to Section 514, any
Holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee with respect to all
Securities and the appointment of a successor Trustee or Trustees.

          (e)  If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, with
respect to the Securities of one or more series, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee or Trustees with respect
to the Securities of that or those series (it being understood that any such
successor Trustee may be appointed with respect to the Securities of one or more
or all of such series and that at any time there shall be only one Trustee with
respect to the Securities of any particular series) and shall comply with the
applicable requirements of Section 611.  If no successor Trustee with respect to
the Securities of any series shall have been so appointed by the Company and
accepted appointment in the manner required by Section 611, any Holder who has
been a bona fide Holder of a Security of such series for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the appointment of a successor Trustee with
respect to the Securities of such series.

          (f)  The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Securities of any series and each
appointment of a successor Trustee with respect to the Securities of any series
by mailing written notice of such event by first-class mail, postage prepaid, to
all Holders of Securities of such series as their names and addresses appear in
the Security Register. Each notice shall include the name of the successor
Trustee with respect to the Securities of such series and the address of its
Corporate Trust Office.

SECTION 611.   Acceptance of Appointment by Successor
               --------------------------------------

          (a)  In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request
of the Company or the successor Trustee, such retiring Trustee shall, upon
payment of its charges,

                                       48





execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder.

          (b)  In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
retiring Trustee and each successor Trustee with respect to the Securities of
one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and which (1) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series to which the appointment of such successor Trustee relates, (2)
if the retiring Trustee is not retiring with respect to all Securities, shall
contain such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the retiring Trustee with
respect to the Securities of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the retiring Trustee, and
(3) shall add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein or
in such supplemental indenture shall constitute such Trustees co trustees of the
same trust and that each such Trustee shall be trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee; and upon the execution and delivery of such supplemental
indenture the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates; but on request of the company or any successor trustee, such
retiring Trustee shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder with
respect to the Securities of that or those series to which the appointment of
such successor Trustee relates.

          (c)  Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts referred
to in paragraph (a) or (b) of this Section 611, as the case may be.

          (d)  No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and eligible
under this Article.

SECTION 612.   Merger, Conversion, Consolidation or Succession to Business
               -----------------------------------------------------------

          Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
                                                                 --------
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto.  In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so

                                       49





authenticated with the same effect as if such successor Trustee had itself
authenticated such Securities.

SECTION 613.   Preferential Collecting of Claims Against Company
               -------------------------------------------------

          (a)  Subject to Subsection (b) of this Section 613, if the Trustee
shall be or shall become a creditor, directly or indirectly, secured or
unsecured, of the Company within three months prior to a default, as defined in
Subsection (c) of this Section 613, or subsequent to such a default, then,
unless and until such default shall be cured, the Trustee shall set apart and
hold in a special account for the benefit of the Trustee individually, the
Holders of the Securities and the holders of other indenture securities, as
defined in Subsection (c) of this Section 613:

          (1)  an amount equal to any and all reductions in the amount due and
     owing upon any claim as such creditor in respect of principal or interest
     effected after the beginning of such three months' period and valid as
     against the Company and its other creditors, except any such reduction
     resulting from the receipt or disposition of any property described in
     paragraph (2) of this Subsection, or from the exercise of any right of set-
     off which the Trustee could have exercised if a petition in bankruptcy had
     been applied by or against the Company upon the date of such default; and

          (2)  all property received by the Trustee in respect of any claims as
     such creditor, either as security therefor, or in satisfaction or
     composition thereof, or otherwise, after the beginning of such three
     months' period, or an amount equal to the proceeds of any such property, if
     disposed of, subject, however, to the rights, if any, of the Company and
                  -------  -------
     its other creditors in such property or such proceeds.

          Nothing herein contained, however, shall affect the right of the
     Trustee:

          (A)  to retain for its own account (i) payments made on account of any
     such claim by any Person (other than the Company) who is liable thereon,
     and (ii) the proceeds of the bona fide sale of any such claim by the
     Trustee to a third Person, and (iii) distributions made in cash, securities
     or other property in respect of claims filed against the Company in
     bankruptcy or receivership or in proceedings for reorganization pursuant to
     the Federal Bankruptcy Act or applicable State law;

          (B)  to realize, for its own account, upon any property held by it as
     security for any such claim, if such property was so held prior to the
     beginning of such three months' period;

          (C)  to realize, for its own account, but only to extent of the claim
     hereinafter mentioned, upon any property held by it as security for any
     such claim, if such claim was created after the beginning of such three
     months' period and such property was received as security therefor
     simultaneously with the creation thereof, and if the Trustee shall sustain
     the burden of proving that at the time such property was so received the
     Trustee had no reasonable cause to believe that a default, as defined in
     Subsection (c) of this Section 613, would occur within three months; or

          (D)  to receive payment on any claim referred to in paragraph (B) or
     (C) , against the release of any property held as security for such claim
     as provided in

                                       50





     paragraph (B) or (C) , as the case may be, to the extent of the fair value
     of such property.

          For the purposes of paragraphs (B), (C) and (D), property substituted
after the beginning of such three months' period for property held as security
at the time of such substitution shall, to the extent of the fair value of the
property released, have the same status as the property released, and, to the
extent that any claim referred to in any of such paragraphs is created in
renewal of or in substitution for or for the purpose of repaying or refunding
any pre-existing claim of the Trustee as such creditor, such claim shall have
the same status as such pre-existing claim.

          If the Trustee shall be required to account for the funds and property
held in such special account, the proceeds thereof shall be apportioned among
the Trustee, the Holders and the holders of other indenture securities in such
manner that the Trustee, the Holders and the holders of other indenture
securities realize, as a result of payments from such special account and
payments of dividends on claims filed against the Company in bankruptcy or
receivership or in proceedings for reorganization pursuant to the Federal
Bankruptcy Act or applicable State law or winding up or administration pursuant
to the insolvency laws of the United Kingdom, as applicable, the same percentage
of their respective claims, figured before crediting to the claim of the Trustee
anything on account of the receipt by it from the Company of the funds and
property in such special account and before crediting to the respective claims
of the Trustee and the Holders and the holders of other indenture securities
dividends on claims filed against the Company in bankruptcy or receivership or
in proceedings for reorganization pursuant to the Federal Bankruptcy Act or
applicable State law or winding up or administration pursuant to the insolvency
laws of the United Kingdom, as applicable, but after crediting thereon receipts
on account of the indebtedness represented by their respective claims from all
sources other than from such dividends and from the funds and property so held
in such special account.  As used in this paragraph, with respect to any claim,
the term "dividends" shall include any distribution with respect to such claim,
in bankruptcy or receivership or proceedings for reorganization pursuant to the
Federal Bankruptcy Act or applicable State law or winding up or administration
pursuant to the insolvency laws of the United Kingdom, as applicable, whether
such distribution is made in cash, securities or other property, but shall not
include any such distribution with respect to the secured portion, if any, of
such claim.

          Any Trustee which has resigned or been removed after the beginning of
such three months' period shall be subject to the provisions of this Subsection
as though such resignation or removal had not occurred.  If any Trustee has
resigned or been removed prior to the beginning of such three months' period, it
shall be subject to the provisions of this Subsection if and only if the
following conditions exist:

          (i)    the receipt of property or reduction of claim, which would have
     given rise to the obligation to account, if such Trustee had continued as
     Trustee, occurred after the beginning of such three months' period; and

          (ii)   such receipt of property or reduction of claim occurred within
     three months after such resignation or removal.

          (b)    There shall be excluded from the operation of Subsection (a) of
this Section 613 a creditor relationship arising from:

                                       51





          (1)  the ownership or acquisition of securities issued under any
     indenture, or any security or securities having a maturity of one year or
     more at the time of acquisition by the Trustee;

          (2)  advances authorized by a receivership or bankruptcy court of
     competent jurisdiction or by this Indenture, for the purpose of preserving
     any property which shall at any time be subject to the lien of this
     Indenture or of discharging tax liens or other prior liens or encumbrances
     thereon, if notice of such advances and of the circumstances surrounding
     the making thereof is given to the Holders at the time and in the manner
     provided in this Indenture;

          (3)  disbursements made in the ordinary course of business in the
     capacity of trustee under an indenture, transfer agent, registrar,
     custodian, paying agent, fiscal agent or depository, or other similar
     capacity;

          (4)  an indebtedness created as a result of services rendered or
     premises rented; or an indebtedness created as a result of goods or
     securities sold in a cash transaction, as defined in Subsection (c) of this
     Section 613;

          (5)  the ownership of stock or of other securities of a corporation
     organized under the provisions of Section 25 (a) of the Federal Reserve
     Act, as amended, which is directly or indirectly a creditor of the Company;
     and

          (6)  the acquisition, ownership, acceptance or negotiation of any
     drafts, bills of exchange, acceptances or obligations which fall within the
     classification of self-liquidating paper, as defined in Subsection (c) of
     this Section 613.

          (c)  For the purposes of this Section 613 only:

               (1)  the term "default" means any failure to make payment in full
          of the principal of or interest on any of the Securities or upon the
          other indenture securities when and as such principal or interest
          becomes due and payable;

               (2)  the term "other indenture securities" means securities upon
          which the Company is an obligor (as defined in the Trust Indenture
          Act) outstanding under any other indenture (i) under which the Trustee
          is also trustee, (ii) which contains provisions substantially similar
          to the provisions of this Section 613, and (iii) under which a default
          exists at the time of the apportionment of the funds and property held
          in such special account;

               (3)  the term "cash transaction" means any transaction in which
          full payment for goods or securities sold is made within seven days
          after delivery of the goods or securities in currency or in checks or
          other orders drawn upon banks or bankers and payable upon demand;

               (4)  the term "self-liquidating paper" means any draft, bill of
          exchange, acceptance or obligation which is made, drawn, negotiated or
          incurred by the Company for the purpose of financing the purchase,
          processing, manufacturing, shipment, storage or sale of goods, wares
          or merchandise and which is secured by documents evidencing title to,
          possession of, or a lien upon, the goods, wares or merchandise or the
          receivables or proceeds arising from the sale of the goods, wares or
          merchandise previously constituting the

                                       52





          security, provided the security is received by the Trustee
          simultaneously with the creation of the creditor relationship with the
          Company arising from the making, drawing, negotiating or incurring of
          the draft, bill of exchange, acceptance or obligation;

               (5)  the term "Company" means any obligor upon the Securities;
               and

               (6)  the term "Federal Bankruptcy Act" means the Bankruptcy Code
               or Title 11 of the United States Code.

SECTION 614.   Authenticating Agents
               ---------------------

          From time to time the Trustee, with the prior written approval of the
Company, may appoint one or more Authenticating Agents with respect to one or
more series of Securities with power to act on the Trustee's behalf and subject
to its direction in the authentication and delivery of Securities of such series
or in connection with transfers and exchanges under Sections 304, 305, 306, and
1104 as fully to all intents and purposes as though the Authenticating Agent had
been expressly authorized by those Sections of this Indenture to authenticate
and deliver Securities of such series. For all purposes of this Indenture, the
authentication and delivery of Securities by an Authenticating Agent pursuant to
this Section 614 shall be deemed to be authentication and delivery of such
Securities "by the Trustee". Each such Authenticating Agent shall be acceptable
to the Company and shall at all times be a corporation organized and doing
business under the laws of the United States, any State thereof or the District
of Columbia, authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least $50,000,000 and subject to
supervision or examination by Federal, State or District of Columbia authority.
If such corporation publishes reports of condition at leant annually pursuant to
law or the requirements of such authority, then for the purposes of this Section
614 the combined capital and surplus of such corporation shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section 614, such
Authenticating Agent shall resign immediately in the manner and with the effect
specified in this Section 614.

          Any corporation into which any Authenticating Agent may be merged or
with which it may be consolidated, or any corporation resulting from, any merger
or consolidation or to which any Authenticating Agent shall be a party, or any
corporation succeeding to the corporate trust business of any Authenticating
Agent, shall be the successor of the Authenticating Agent hereunder, if such
successor corporation is otherwise eligible under this Section 614, without the
execution or filing of any paper or any further act on the part of the parties
hereto or the Authenticating Agent or such successor corporation.

          An Authenticating Agent may resign at any time by giving written
notice of resignation to the Trustee and to the Company. The Trustee may at any
time terminate the agency of any Authenticating Agent by giving written notice
of termination to such Authenticating Agent and to the Company. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time
any Authenticating Agent shall cease to be eligible under this Section 614, the
Trustee may appoint a successor Authenticating Agent with the prior written
approval of the Company and shall mail notice of such appointment to all Holders
of Securities of the series with respect to which such Authenticating Agent will
serve, as the names and addresses of such Holders appear on the Security
Register. Any successor Authenticating Agent, upon acceptance of its appointment
hereunder, shall become vested with

                                       53





all the rights, powers and duties of its predecessor hereunder, with like effect
as if originally named as an Authenticating Agent. No successor Authenticating
Agent shall be appointed unless eligible under the provisions of this Section
614.

          The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section 614 as may be
agreed in a separate writing among the Company, the Trustee and such
Authenticating Agent, and the Trustee shall be entitled to be reimbursed for
such payments pursuant to Section 607.

          If an appointment with respect to one or more series of Securities is
made pursuant to this Section 614, the Securities of such series may have
endorsed thereon, in addition to the Trustee's certificate of authentication, an
alternate certificate of authentication in the following form:

          This is one of the Securities of the series designated herein referred
to in the within mentioned Indenture.

                                        BANKERS TRUST COMPANY
                                                   As Trustee


                                        [NAME OF AUTHENTICATING
                                        AGENT]
                                        -------------------------------------
                                                         Authenticating Agent


                                        By:__________________________________
                                                         Authorized Signatory


                                 ARTICLE SEVEN

               HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

SECTION  701.  Company to Furnish Trustee Names and Addresses of Holders
               ---------------------------------------------------------

          The Company will furnish or cause to be furnished to the Trustee with
respect to the Registered Securities of each series

          (a)  semi-annually, not later than 15 days after each Regular Record
     Date, or, in the case of any series of Registered Securities on which semi-
     annual interest is not payable, not more than 15 days after such semi-
     annual dates as may be specified by the Trustee, a list, in such form as
     the Trustee may reasonably require, of the names and addresses of the
     Holders as of such Regular Record Date or semi-annual date, as the case may
     be, and

          (b)  at such other times as the Trustee may request in writing, within
     30 days after the receipt by the Company of any such request, a list of
     similar form and content as of a date not more than 15 days prior to the
     time such list is furnished;

                                       54





provided, however, that if and so long as the Trustee is Security Registrar for
- - --------  -------
any series of Registered Securities, no such list shall be required to be
furnished with respect to any such series.

SECTION 702.   Preservation of Information; Communications to Holders
               ------------------------------------------------------

          (a)  The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar.  The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.

          (b)  If three or more Holders (herein referred to as "applicants")
apply in writing to the Trustee, and furnish to the Trustee reasonable proof
that each such applicant has owned a Security for a period of at least six
months preceding the date of such application, and such application states that
the applicants desire to communicate with other Holders with respect to their
rights under this Indenture or under the Securities and is accompanied by a copy
of the form of proxy or other communication which such applicants propose to
transmit, then the Trustee shall, within five business days after the receipt of
such application, at its election, either

          (i)    afford such applicants access to the information preserved at
     the time by the Trustee in accordance with Section 702(a), or

          (ii)   inform such applicants as to the approximate number of Holders
     whose names and addresses appear in the information preserved at the time
     by the Trustee in accordance with Section 702(a), and as to the approximate
     cost of mailing to such Holders the form of proxy or other communication,
     if any, specified in such application.

          If the Trustee shall elect not to afford such applicants access to
such information, the Trustee shall, upon the written request of such
applicants, mail to each Holder whose name and address appear in the information
preserved at the time by the Trustee in accordance with Section 702(a) a copy of
the form of proxy or other communication which is specified in such request,
with reasonable promptness after a tender to the Trustee of the material to be
mailed and of payment, or provision for the payment, of the reasonable expenses
of mailing, unless within five days after such tender the Trustee shall mail to
such applicants and file with the Commission, together with a copy of the
material to be mailed, a written statement to the effect that, in the opinion of
the Trustee, such mailing would be contrary to the beat interest of the Holders
or would be in violation of applicable law. Such written statement shall specify
the basis of such opinion. If the Commission, after opportunity for a hearing
upon the objections specified in the written statement so filed, shall enter an
order refusing to sustain any of such objections or if, after the entry of an
order sustaining one or more of such objections, the Commission shall find,
after notice and opportunity for hearing, that all the objections so sustained
have been met and shall enter an order so declaring, the Trustee shall mail
copies of such material to all such Holders with reasonable promptness after the
entry of such order and the renewal of such tender; otherwise the Trustee shall
be relieved of any obligation or duty to such applicants respecting their
application.

          (c)  Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of

                                       55





either of them shall be held accountable, by reason of the disclosure of any
such information as to the names and addresses of the Holders in accordance with
Section 702(b), regardless of the source from which such information was
derived, and that the Trustee shall not be held accountable by reason of mailing
any material pursuant to a request made under Section 702(b).

SECTION 703.   Reports by Trustee
               ------------------

          (a)  Within 60 days after ____ 1 of each year, commencing ____1, 1997,
the Trustee shall transmit by mail to all Holders of Securities a brief report
dated as of such ____ 1, of such year with respect to any of the following
events which may have occurred within the previous 12 months (but if no such
event has occurred within such period no report need be transmitted):

          (1)  any change to its eligibility under Section 609 and its
     qualifications under Section 608;

          (2)  the creation of or any material change to a relationship
     specified in Section 608;

          (3)  the character and amount of any advances (and if the Trustee
     elects so to state, the circumstances surrounding the making thereof) made
     by the Trustee (as such) which remain unpaid on the date of such report,
     and for the reimbursement of which it claims or may claim a lien or charge,
     prior to that of the Securities, on any property or funds held or collected
     by it as Trustee, except that the Trustee shall not be required (but may
     elect) to report such advances if such advances so remaining unpaid
     aggregate not more than one-half of one percentum of the principal amount
     of the Securities outstanding on the date of such report;

          (4)  any change to the amount, interest rate and maturity date of all
     other indebtedness owing by the Company (or by any other obligor on the
     Securities) to the Trustee in its individual capacity, on the date of such
     report, with a brief description of any property held as collateral
     security therefor, except an indebtedness based upon a creditor
     relationship arising in any manner described in Sections 613(b)(2), (3),
     (4) or (6);

          (5)  any change to the property and funds, if any, physically in the
     possession of the Trustee as such on the date of such report;

          (6)  any additional issue of Securities which the Trustee has not
     previously reported; and

          (7)  any action taken by the Trustee in the performance of its duties
     hereunder which it has not previously reported and which in its opinion
     materially affects the Securities, except action in respect of a default,
     notice of which has been or is to be withheld by the Trustee in accordance
     with Section 602.

          (b)  The Trustee shall transmit by mail to all Holders of Securities a
brief report with respect to the character and amount of any advances (and if
the Trustee elects so to state, the circumstances surrounding the making
thereof) made by the Trustee (as such) since the date of the last report
transmitted pursuant to Subsection (a) of this Section 703 (or if no

                                       56





such report has yet been so transmitted, since the date of execution of this
instrument) for the reimbursement of which it claims or may claim a lien or
charge, prior to that of the Securities, on property or funds held or collected
by it as Trustee and which it has not previously reported pursuant to this
Subsection, except that the Trustee shall not be required (but may elect) to
report such advances if such advances remaining unpaid at any time aggregate 10%
or less of the principal amount of the securities outstanding at such time, such
report to be transmitted within 90 days after such time.

          (c)  A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each U.S. stock exchange
upon which any Securities are listed, with the Commission and with the Company.
The Company will notify the Trustee when any Securities are listed on any U.S.
stock exchange.

SECTION 704.   Reports by Company
               ------------------

          The Company shall:

          (1)  file with the Trustee, within 15 days after the Company is
     required to file the same with the Commission, copies of the annual reports
     and of the information, documents and other reports (or copies of such
     portions of any of the foregoing as the Commission may from time to time by
     rules and regulations prescribe) which the Company may be required to file
     with the Commission pursuant to Section 13 or Section 15(d) of the
     Securities Exchange Act of 1934; or, if the Company is not required to file
     information, documents or reports pursuant to either of said Sections and
     one or more series of the Securities is listed on a U.S. national
     securities exchange, then it shall file with the Trustee and the
     Commission, in accordance with rules and regulations prescribed from time
     to time by the Commission, such of the supplementary and periodic
     information, documents and reports which may be required pursuant to
     Section 13 of the Securities Exchange Act of 1934 in respect of a security
     listed and registered on a U.S. national securities exchange as may be
     prescribed from time to time in such rules and regulations;

          (2)  file with the Trustee and the Commission, in accordance with
     rules and regulations prescribed from time to time by the Commission, such
     additional information, documents and reports with respect to compliance by
     the Company with the conditions and covenants of this Indenture as way be
     required from time to time by such rules and regulations; and

          (3)  transmit by mail to all Holders of Securities within 30 days
     after the filing thereof with the Trustee, such summaries of any
     information, documents and reports required to be filed by the Company
     pursuant to paragraphs (1) and (2) of this Section 704 as may be required
     by rules and regulations prescribed from time to time by the Commission.

                                       57





                                 ARTICLE EIGHT

               CONSOLIDATION, MERGER, CONVEYANCE, SALE OR LEASE

SECTION  801.  Company May Consolidate Etc., Only on Certain Terms
               ---------------------------------------------------

          Nothing contained in this Indenture shall prevent the Company from
consolidating with or merging into another corporation or conveying,
transferring or leasing its properties and assets substantially as an entirety
to any person, provided that (a) the successor entity assumes the Company's
applicable obligations on the Securities and (b) immediately after giving effect
to such transaction no Event of Default and; no event which, after notice or
lapse of time or both, would become an Event of Default, shall have happened and
be continuing. In addition, the Company may assign and delegate all of its
rights and obligations under this Indenture, the Securities, any supplemental
indenture relating to the Securities, the Deposit Agreement and all other
documents, agreements and instruments related thereto to any Person that owns
all of the ordinary shares of the Company or to any Person that owns all of the
ordinary shares of a Person that owns all of the ordinary shares of the Company,
and upon any such Person assuming such rights and obligations the Company shall
be automatically released from such obligations, provided that immediately after
giving effect to such transaction no Event of Default, and no event which, after
notice or lapse of time or both, would become an Event of Default shall have
happened and be continuing.

          In the event that any such successor entity is organized under the
laws of a country located outside of the United Kingdom and withholding or
deduction is required by law for or on account of any present or future taxes,
duties, assessments or governmental charges of whatever nature imposed, levied,
collected, withheld or assessed by or within such country in which the successor
entity is organized or by or within any political subdivision thereof or any
authority therein or thereof having power to tax, the successor entity shall pay
to the relevant Holder of the Global Securities or to the relevant Holders of
the Definitive Registered Securities, as the case may be, such additional
amounts, under the same circumstances and subject to the same limitations as are
specified for "United Kingdom Taxes," as is set forth under Section 1009 herein,
but substituting for the United Kingdom in each place the name of the country
under the laws of which such successor entity is organized. In addition, such
successor entity shall be entitled to effect optional tax redemptions under the
same circumstances and subject to the same limitations as are set forth under
Section 1108 herein, but substituting for the United Kingdom in each place the
name of the country under the laws of which such successor entity is organized.

SECTION 802.   Successor Corporation to be Substituted
               ---------------------------------------

          Upon any consolidation by the Company with or merger by the Company
into any other corporation or any conveyance, transfer or lease of the
properties and assets of the Company substantially as an entirety in accordance
with Section 801, the successor corporation formed by such consolidation or into
which the Company is merged or to which such conveyance, transfer or lease is
made shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor corporation had been named as the Company herein, and thereafter the
predecessor corporation shall be relieved of all obligations and covenants under
this Indenture and the Securities.


                                 ARTICLE NINE

                            SUPPLEMENTAL INDENTURES

SECTION 901.   Supplemental Indentures without Consent of Holders
               --------------------------------------------------

          Without the consent of any Holders, the Company and the Trustee, at
any time and from time to time, may enter into one or more indentures
supplemental hereto, in form satisfactory to the Trustee, for any of the
following purposes:

          (1)  to evidence the succession of another corporation to the Company
     and the assumption by any such successor of the covenants of the Company
     herein and in the Securities;

          (2)  to add to the covenants of the Company for the benefit of the
     Holders of all or any series of Securities (and if such covenants are to be
     for the benefit of less than all series of Securities, stating that such
     covenants are expressly being included solely for the benefit of such
     series) or to surrender any right or power herein conferred upon the
     Company;

          (3)  to add any additional Events of Default (and if such Events of
     Default are to be for the benefit of less than all series of Securities,
     stating that such Events of Default are expressly being included solely for
     the benefit of such series);

                                       58





          (4)  to add to or change any of the provisions of this Indenture to
     such extent as shall be necessary to permit or facilitate the issuance of
     securities in bearer form, registrable or not registrable as to principal,
     and with or without interest coupons, or to facilitate the issuance of
     Securities in uncertificated form, or to permit or facilitate the issuance
     of extendible Securities;

          (5)  to change or eliminate any of the provisions of this Indenture,
     provided that any such change or elimination shall become effective only as
     --------
     to the Securities of any series created by such supplemental indenture and
     Securities of any series subsequently created to which such change or
     elimination is made applicable by the subsequent supplemental indenture
     creating such series;

          (6)  to secure the Securities;

          (7)  to establish the form or terms of Securities of any series as
     permitted by Sections 201 and 301;

          (8)  to evidence and provide for the acceptance of appointment
     hereunder by a successor Trustee with respect to the Securities of one or
     more series and to add to or change any of the provisions of this Indenture
     as shall be necessary to provide for or facilitate the administration of
     the trusts hereunder by more than one Trustee, pursuant to the requirements
     of Section 611(b);

          (9)  to provide for any rights of the Holders of Securities of any
     series to require the repurchase of Securities of such series by the
     Company;

          (10) to cure any ambiguity, to correct or supplement any provision
     herein which may be inconsistent with any other provision herein to
     evidence the merger of the Company or the replacement of the Trustee, or to
     make any other provisions with respect to matters or questions arising
     under this Indenture, provided such action shall not materially and
                           --------
     adversely affect the interests of the Holders of Securities of any series;
     or

          (11) to modify, alter, amend or supplement this Indenture in any other
     respect which is not materially adverse to Holders, which does not involve
     a change described in clauses (1), (2) or (3) of Section 902 hereof and
     which, in the judgment of the Trustee, is not to the prejudice of the
     Trustee, or in order to provide for the duties, responsibilities and
     compensation of the Trustee as a transfer agent in the event one registered
     Security of any series is issued in the aggregate principal amount of all
     outstanding Securities of such series in which Holders will hold an
     interest.

SECTION 902.   Supplemental Indentures with Consent of Holders
               -----------------------------------------------

          With the consent of the Holders of a majority in aggregate principal
amount of the outstanding Securities of all series affected by such supplemental
indenture (voting as one class), by Act of said Holders delivered to the Company
and the Trustee, the Company, when authorized by or pursuant to a Board
Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this indenture or of
modifying in any manner the rights of the Holders of Securities of such series
under this Indenture; provided,
                      --------

                                       59





however, that no such supplemental indenture shall, without the consent of the
- - -------
Holder of each Outstanding Security affected thereby,

          (1)  change the Stated Maturity of the principal of, or any
     installment of principal of or interest, if any, on, any Security, or
     reduce the principal amount thereof or the rate of interest thereon
     (including Additional Amounts) or any premium payable upon the redemption
     thereof, or reduce the amount of the principal of an original Issue
     Discount Security that would be due and payable upon a declaration of
     acceleration of the maturity thereof pursuant to Section 502, or change any
     Place of Payment where, or the coin or currency in which, any Security or
     any premium or the interest thereon is payable, or impair the right to
     institute suit for the enforcement of any such payment on or after the
     Stated Maturity thereof (or, in the case of redemption, on or after the
     Redemption Date), or

          (2)  reduce the percentage in principal amount of the outstanding
     Securities of any series, the consent of whose Holders is required for any
     such supplemental indenture, or the consent of whose Holders is required
     for any waiver of compliance with certain provisions of this Indenture or
     certain defaults hereunder and their consequences provided for in this
     Indenture, or

          (3)  modify any of the provisions of this Section 902 or Section 513,
     except to increase any such percentage or to provide that certain other
     provisions of this Indenture cannot be modified or waived without the
     consent of the Holder of each Outstanding Security affected thereby,

     provided, however, that this clause shall not be deemed to require the
     --------  -------
     consent of any Holder with respect to changes in the references to "the
     Trustee" and concomitant changes in this Section 902, or the deletion of
     this proviso, in accordance with the requirements of Sections 611(b) and
     901(8).

A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.

          It shall not be necessary for any Act of Holders under this Section
902 to approve the particular form of any proposed supplemental indenture, but
it shall be sufficient if such Act shall approve the substance thereof.

SECTION 903.   Execution of Supplemental Indentures
               ------------------------------------

          In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture.  The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.

                                       60





SECTION 904.   Effect of Supplemental Indentures
               ---------------------------------

          Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.

SECTION 905.   Conformity with Trust Indenture Act
               -----------------------------------

          Every supplemental indenture executed pursuant to this Article shall,
if so required by the Trust Indenture Act, conform to the requirements of the
Trust Indenture Act as then in effect.

SECTION 906.   Reference in Securities to Supplemental Indentures
               --------------------------------------------------

          Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and shall
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture.  If the Company shall
so determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Company, to any such supplemental indenture may
be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities of such series.

                                  ARTICLE TEN

                                   COVENANTS

SECTION 1001. Payment of Principal, Premium, if any, and Interest
              ---------------------------------------------------

          The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of (and premium,
if any) and interest and Additional Amounts, if any, on the Securities of that
series in accordance with the terms of the Securities and this Indenture.  An
installment of principal of or interest on the Securities of a series shall be
considered paid on the date it is due if the Trustee or Paying Agent holds at
11:00 a.m. New York City time on that date money deposited by the Company in
immediately available funds and designated for, and sufficient to pay, the
installment in full.

          Neither the Company nor any agent of the Company will have any
responsibility or liability for any aspect relating to payments made or to be
made by the Book-Entry Depositary to DTC in respect of the Securities of a
series or the Book-Entry Interests.  None of the Company, the Trustee, the Book-
entry Depositary or any agent of any of the foregoing will have any
responsibility or liability for any aspect relating to payments made or to be
made by DTC on account of a Participant's or Indirect Participant's ownership of
an interest in the Book-Entry Interest or for maintaining, supervising or
reviewing any records relating to a Participant's interests in the Book-Entry
Interest.

SECTION 1002.  Maintenance of Office or Agency
               -------------------------------

          The Company will maintain (i) in the Borough of Manhattan, The City of
New York, an office or agency where Securities of any series may be presented or
surrendered for

                                       61





payment, and where notices and demands to or upon the Company in respect of the
Securities of such series and this Indenture may be served and if definitive
Registered Securities have been issued, an office or agency of a Transfer Agent
where Securities may be surrendered for registration of transfer or exchange,
and (ii) an office or agency of a Paying Agent where the Securities may be paid
in Luxembourg so long as the Securities are listed on the Luxembourg Stock
Exchange and the rules of such exchange so require.  The Company will give
prompt written notice to the Trustee of the location, and any change in the
location, of any such office or agency.  If at any time the Company shall fail
to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Trustee,
except that Bearer Securities of that series pursuant to Section 1001 may be
presented at the place specified for the purpose pursuant to Section 301, and
the Company hereby appoints the Paying Agent as its agent to receive all such
presentations, surrenders, notices and demands.

          The Company may also from time to time designate one or more other
offices or agencies (in or outside of such Place of Payment) where the
Securities of one or more series and any appurtenant coupons (subject to Section
1001) may be presented or surrendered for any or all of such purposes, and may
from time to time rescind such designations; provided, however, that no such
                                             --------  -------
designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in each Place of Payment for any
series of Securities for such purposes.  The Company will give prompt written
notice to the Trustee of any such designation and any change in the location of
any such other office or agency.  The Company will at all time maintain at least
one Paying Agent which is located outside the United Kingdom for each series of
Securities.

SECTION 1003.  Money for Securities Payments to Be Held in Trust
               -------------------------------------------------

          If the Company shall at any time act as its own Paying Agent with
respect to any series of Securities, it will, on or before each due date of the
principal of (and premium, if any) or interest, if any, on any of the Securities
of that series, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal (and premium, if any) or
interest, if any, so becoming due until such sums shall be paid to such Persons
or otherwise disposed of as herein provided and will promptly notify the Trustee
of its action or failure so to act.

          Whenever the Company shall have one or more Paying Agents for any
series of Securities, it will, no later than 10:00 a.m., New York Time, on or
prior to each due date of the principal of (and premium, if any) or interest, if
any, on any Securities of that series, deposit with a Paying Agent a sum in
immediately available funds sufficient to pay the principal and premium, if any)
or interest so becoming due, such sum to be held in trust for the benefit of the
Persons entitled to such principal, premium or interest.

          The Company will cause each Paying Agent for any series of Securities
other than the Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the provisions
of this Section 1003, that such Paying Agent will:

          (1)  hold all sums held by it for the payment of the principal of (and
     premium, if any) or interest, if any, on Securities of that series in trust
     for the benefit

                                       62





     of the Persons entitled thereto until such sums shall be paid to such
     Persons or otherwise disposed of as herein provided;

          (2)  give the Trustee notice of any default by the Company (or any
     other obligor upon the Securities of that series) in the making of any
     payment of principal (and premium, if any) or interest, if any, on the
     Securities of that series; and

          (3)  at any time during the continuance of any such default, upon the
     written request of the Trustee, forthwith pay to the Trustee all sums so
     held in trust by such Paying Agent.

          The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by the Company or by any Paying Agent
to the Trustee, the Company or such Paying Agent, as the case may be, shall be
released from all further liability with respect to such money.

          Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of (and premium, if
any) or interest, if any, on any Security of any series and remaining unclaimed
for two years after such principal (and premium, if any) or interest has become
due and payable shall be paid to the Company on Company Request, or (if then
held by the Company) shall be discharged from such trust; and the Holder of such
Security shall thereafter, as an unsecured general creditor, look only to the
Company for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease.

SECTION 1004.  Limitation on Liens
               -------------------

     If this covenant shall be made applicable to the Securities of a particular
series, neither the Company nor any Significant Subsidiary shall issue, assume
or guarantee any notes, bonds, debentures or other similar evidences of
indebtedness, in each case for money borrowed ("Debt"), secured by a Lien upon
any property or assets (other than cash) without effectively providing that the
outstanding Securities (together with, if the Company so determines, any other
indebtedness or obligation then existing or thereafter created ranking equally
with such Securities) shall be secured equally and ratably with (or prior to)
such Debt so long as such Debt shall be so secured.  The foregoing restriction
on Liens will not, however, apply to:

          (a)  Liens in existence on the date of original issue of such
     Securities;

          (b)  (i) any Lien created or arising over any property which is
     acquired, constructed or created by the Company or any of its Significant
     Subsidiaries, but only if (A) such Lien secures only principal amounts (not
     exceeding the cost of such acquisition, construction or creation) raised
     for the purposes of such acquisition, construction or creation, together
     with any costs, expenses, interest and fees incurred in relation thereto or
     a guarantee given in respect thereof, (B) such Lien is created or arises on
     or before 90 days after the completion of such acquisition, construction or
     creation and (C) such Lien is confined solely to the property so acquired,
     constructed or created; or (ii) any Lien to secure indebtedness for
     borrowed money incurred in

                                       63





     connection with a specifically identifiable project where the Lien relates
     to a property (including, without limitation, shares or other rights of
     ownership in the entity(ies) which own such property or project) involved
     in such project and acquired by the Company or a Significant Subsidiary
     after the date of original issue of the Securities and the recourse of the
     creditors in respect of such indebtedness is limited to any or all of such
     project and property (including as aforesaid);

          (c)  any Lien securing amounts not more than 90 days overdue or
     otherwise being contested in good faith;

          (d)  (i) rights of financial institutions to offset credit balances in
     connection with the operation of cash management programs established for
     the benefit of the Company and/or a Significant Subsidiary or in connection
     with the issuance of letters of credit for the benefit of the Company
     and/or a Significant Subsidiary; (ii) any Lien securing indebtedness of the
     Company and/or a Significant Subsidiary for borrowed money incurred in
     connection with the financing of accounts receivable; (iii) any Lien
     incurred or deposits made in the ordinary course of business, including,
     but not limited to, (A) any mechanics', materialmens', carriers',
     workmens', vendors' or other like Liens and (B) any Liens securing amounts
     in connection with workers' compensation, unemployment insurance and other
     types of social security; (iv) any Lien upon specific items of inventory or
     other goods and proceeds of the Company and/or a Significant Subsidiary
     securing obligations of the Company and/or a Significant Subsidiary in
     respect of bankers' acceptances issued or created for the account of such
     person to facilitate the purchase, shipment or storage of such inventory or
     other goods; (v) any Lien incurred or deposits made securing the
     performance of tenders, bids, leases, trade contracts (other than for
     borrowed money), statutory obligations, surety bonds, appeal bonds,
     government contracts, performance bonds, return-of-money bonds and other
     obligations of like nature incurred in the ordinary course of business;
     (vi) any Lien created by the Company or a Significant Subsidiary under or
     in connection with or arising out of any pooling and settlement agreements
     or pooling and settlement arrangements of the electricity industry or any
     transactions or arrangements entered into in connection with hedging or
     management of risks relating to the electricity industry; (vii) any Lien
     constituted by a right of set off or right over a margin call account or
     any form of cash or cash collateral or any similar arrangement for
     obligations incurred in respect of the hedging or management of risks under
     transactions involving any currency or interest rate swap, cap or collar
     arrangements, forward exchange transaction, option, warrant, forward rate
     agreement, futures contract or other derivative instrument of any kind;
     (viii) any Lien arising out of title retention or like provisions in
     connection with the purchase of goods and equipment in the ordinary course
     of business; and (ix) any Lien securing reimbursement obligations under
     letters of credit, guaranties and other forms of credit enhancement given
     in connection with the purchase of goods and equipment in the ordinary
     course of business;

          (e)  Liens in favor of the Company or a Significant Subsidiary;

          (f)  (i) Liens on any property or assets acquired from a corporation
     which is merged with or into the Company or a Significant Subsidiary, or
     any Liens on the property or assets of any corporation or other entity
     existing at the time such corporation or other entity becomes a Subsidiary
     of the Company and, in either such case, is not created in anticipation of
     any such transaction (unless such Lien is created to secure or provide for
     the payment of any part of the purchase price of such

                                       64





     corporation); (ii) any Lien on any property or assets existing at the time
     of acquisition thereof and which is not created in anticipation of such
     acquisition (unless such Lien was created to secure or provide for the
     payment of any part of the purchase price of such property or assets); and
     (iii) any Lien created or outstanding on or over any asset of any company
     which becomes a Significant Subsidiary on or after the date of the issuance
     of such Securities where such Lien is created prior to the date on which
     such company becomes a Significant Subsidiary;

          (g)  Liens required by any contract or statute in order to permit the
     Company or a Significant Subsidiary to perform any contract or subcontract
     made by it with or at the request of a governmental entity or any
     department, agency or instrumentality thereof, or to secure partial,
     progress, advance or any other payments by the Company or a Significant
     Subsidiary to such governmental unit pursuant to the provisions of any
     contract or statute; (ii) any Lien securing industrial revenue, development
     or similar bonds issued by or for the benefit of the Company or a
     Significant Subsidiary, provided that such industrial revenue, development
     or similar bonds are nonrecourse to the Company and/or such Significant
     Subsidiary; and (iii) any Lien securing taxes or assessments or other
     applicable governmental charges or levies;

          (h)  (i) any Lien which arises pursuant to any order of attachment,
     distraint or similar legal process arising in connection with court
     proceedings and any Lien which secures the reimbursement obligation for any
     bond obtained in connection with an appeal taken in any court proceeding,
     so long as the execution or other enforcement of such Lien arising pursuant
     to such legal process is effectively stayed and the claims secured thereby
     are being contested in good faith and, if appropriate, by appropriate legal
     proceedings, or any Lien in favor of a plaintiff or defendant in any action
     before a court or tribunal as security for costs and/or other expenses; or
     (ii) any Lien arising by operation of law or by order of a court or
     tribunal or any Lien arising by an agreement of similar effect, including,
     without limitation, judgment liens; or

          (i)  any extension, renewal or replacement (or successive extensions,
     renewals or replacements), as a whole or in part, of any Liens referred to
     in the foregoing clauses, for amounts not exceeding the principal amount of
     the Debt secured by the Lien so extended, renewed or replaced, provided
     that such extension, renewal or replacement Lien is limited to all or a
     part of the same property or assets that were covered by the Lien extended,
     renewed or replaced (plus improvements on such property or assets).

     Notwithstanding the foregoing, the Company and/or a Significant Subsidiary
may create or permit to subsist Liens over any property or assets , so long as
the aggregate amount of Debt secured by all such Liens (excluding therefrom the
amount of Debt secured by Liens set forth in clauses (a) through (i), inclusive,
above) does not exceed 10% of the Consolidated Net Tangible Assets.

     Nothing contained in this Indenture in any way restricts or prevents the
Company or any Subsidiary from incurring any indebtedness.

SECTION 1005.  Limitation on Sale and Lease-Back Transactions
               ----------------------------------------------

          If this covenant shall be made applicable to the Securities of a
particular series, the Company covenants and agrees that so long as any
Securities of such series remains

                                       65





outstanding neither it nor any Significant Subsidiary will enter into any
arrangement with any person (other than the Company or a Significant
Subsidiary), providing for the leasing to the Company or a Significant
Subsidiary of any assets which have been or are to be sold or transferred by the
Company or such Significant Subsidiary to such person (a "Sale and Lease-Back
Transaction") unless; (i) such transaction involves a lease for a temporary
period not to exceed three years; (ii) such transaction is between the Company
or a Significant Subsidiary and an affiliate of the Company; (iii) the Company
would be entitled to incur indebtedness secured by a Lien on the assets or
property involved in such transaction at least equal in amount to the
attributable debt with respect to such Sale and Lease-Back Transaction, without
equally and ratably securing the Securities, pursuant to the limitation on Liens
described above other than pursuant to the penultimate paragraph thereof; (iv)
such transaction is entered into within 60 days after the initial acquisition by
the Company of the assets or property subject to such transaction; (v) after
giving effect thereto, the aggregate amount of all attributable debt with
respect to all such Sale and Lease-Back Transactions does not exceed 10% of
Consolidated Net Tangible Assets; or (vi) the Company or a Significant
Subsidiary within the twelve months preceding the sale or transfer or the twelve
months following the sale or transfer, regardless of whether such sale or
transfer may have been made by the Company or such Significant Subsidiary,
applies in the case of a sale or transfer for cash, an amount equal to the net
proceeds thereof and, in the case of a sale or transfer otherwise than for cash,
an amount equal to the fair value of the assets so leased at the time of
entering into such arrangement (as determined by the Board of Directors of the
Company or such Significant Subsidiary), (a) to the retirement of indebtedness
for money borrowed, incurred or assumed by the Company or a Significant
Subsidiary, which by its terms matures at, or is extendible or renewable at the
option of the obligor to, a date more than twelve months after the date of
incurring, assuming or guaranteeing such debt or (b) to investment in any assets
of the Company or any Significant Subsidiary.

SECTION 1006.  Statement by Officers as to Default
               -----------------------------------

          The Company will deliver to the Trustee within 120 days after the end
of each fiscal year of the Company a certificate from the principal executive,
financial or accounting officer of the Company, stating that in the course of
the performance by such signer of his duties as an officer of the Company he
would normally have knowledge of any default by the Company in the performance
and observance of any of the covenants contained in Sections 1001 to 1008,
stating whether or not he has knowledge of any such default without regard to
any period of grace or requirement of notice and, if so, specifying each such
default of which such signer has knowledge and the nature thereof.

SECTION 1007.  Modification or Waiver of Certain Covenants
               -------------------------------------------

          The Company may omit in any particular instance to comply with any
term, provision or condition set forth in this Indenture with respect to the
Securities of any series if before the time for such compliance the Holders of
at least a majority in aggregate principal amount of the Outstanding Securities
of such series shall, by Act of such Holders, either modify the covenant or
waive such compliance in such instance or generally waive compliance with such
term, provision or condition, provided that no such modification shall without
the consent of each Holder (a) change the stated maturity upon which the
principal of or the interest on the Securities is due and payable, (b) reduce
the principal amount thereof or the rate of interest thereon, (c) change any
obligation of the Company to pay Additional Amounts, (d) change any place of
payment or the currency in which, the Securities or any premium or the interest
thereon is payable, (e) impair the right to institute suit for the enforcement
of any

                                       66





such payment on or after the stated maturity thereof  (or, in the case of
redemption, on or after redemption date) or (f) reduce the percentage in
principal amount of the outstanding Securities, the consent of whose Holders is
required for any waiver of compliance with certain provisions of the Indenture
or certain defaults hereunder and their consequences provided for in the
Indenture.  The Securities owned by the Company or any of its Affiliates shall
be deemed not to be outstanding for, among other purposes, consenting to any
such modification.

SECTION 1008.  Further Assurances.
               ------------------

          The Company and the Trustee shall execute and deliver all such other
documents, instruments and agreements and do all such other acts and things as
may be reasonably required to enable the Trustee to exercise and enforce its
rights under this Indenture and under the documents, instruments and agreements
required under this Indenture and to carry out the intent of this Indenture.

SECTION 1009.  Payment of Additional Amounts
               -----------------------------

          If the Securities of a particular series provide for payment of
Additional Amounts, all payments of principal and interest (including payments
of discount and premium, if any) in respect of the Securities of such series
shall be made free and clear of, and without withholding or deduction for or on
account, of any present or future taxes, duties, assessments or governmental
charges of whatever nature imposed, levied, collected, withheld or assessed by
or within the United Kingdom or by or within any political subdivision thereof
or any authority therein or thereof having power to tax ("United Kingdom
Taxes"), unless such withholding or deduction is required by law.  In that event
the Company shall pay to the Holder such additional amounts ("Additional
Amounts") as will result in the payment to such Holder of the amount that would
otherwise have been receivable by such Holder in the absence of such withholding
or deduction, except that no such Additional Amounts shall be payable:

          (a)  to, or to a Person on behalf of, a Holder who is liable for such
     United Kingdom Taxes in respect of Securities, by reason of such Holder
     having some connection with the United Kingdom (including being a citizen
     or resident or national of, or carrying on a business or maintaining a
     permanent establishment in, or being physically present in, the United
     Kingdom) other than the mere holding of a Security or the receipt of
     principal and interest (including payments of discount and premium, if any)
     in respect thereof; or

          (b)  to, or to a Person on behalf of, a Holder who presents a Security
     (where presentation is required) for payment more than 30 days after the
     Relevant Date except to the extent that such Holder would have been
     entitled to such Additional Amounts on presenting such Security for payment
     on the last day of such period of 30 days;

          (c)  to, or to a Person on behalf of, a Holder who presents a Security
     (where presentation is required) in the United Kingdom;

          (d)  to, or to a Person on behalf of, a Holder who would not be liable
     or subject to the withholding or deduction by making a declaration of non-
     residence or similar claim for exemption to the relevant tax authority; or

          (e)  to, or to a Person on behalf of, a Holder of a definitive
     Registered Security issued pursuant to the request of owners representing a
     majority in outstanding

                                       67





     principal amount in the Book-Entry Interest following and during the
     continuance of an Event of Default if such Holder (or any predecessor
     Holder) was one of such owners requesting that definitive Registered
     Securities be so issued.

          Such Additional Amounts will also not be payable where, had the
beneficial owner of the Security (or any interest therein) been the Holder of
the Security, he would not have been entitled to payment of Additional Amounts
by reason of any one or more of clauses (a) through (e) above.  If the Company
shall determine that Additional Amounts will not be payable because of the
immediately preceding sentence, the Company will inform such Holder promptly
after making such determination setting forth the reason(s) therefor.

          Reference to principal, interest, discount or premium in respect of
the Securities shall be deemed also to refer to any Additional Amounts which may
be payable as set forth in this Indenture or in the Securities.

          At least 10 Business Days prior to the first Interest Payment Date
(and at least 10 Business Days prior to each succeeding Interest Payment Date if
there has been any change with respect to the matters set forth in the below-
mentioned Officers' Certificate) the Company will furnish to the Trustee and the
Paying Agents an Officers' Certificate instructing the Trustee and the Paying
Agents whether payments of principal of or interest on the Securities due on
such Interest Payment Date shall be without deduction or withholding for or on
account of any United Kingdom Taxes.  If any such deduction or withholding shall
be required, prior to such Interest Payment Date the Company will furnish the
Trustee and the Paying Agents with an Officers' Certificate which specifies the
amount, if any, required to be withheld on such payment to Holders and certifies
that the Company shall pay such withholding or deduction.  The Company covenants
to indemnify the Trustee for, and to hold the Trustee harmless against, any
loss, liability or expense reasonably incurred without negligence, willful
misconduct or bad faith on their part, arising out of or in connection with
actions taken or omitted by the Trustee in reliance on any Officers' Certificate
furnished pursuant to this paragraph.  Any Officers' Certificate required by
this Section 1009 to be provided to the Trustee and any Paying Agent shall be
deemed to be duly provided if telecopied to the Trustee and such Paying Agent.

          The Company shall furnish to the Trustee the official receipts (or a
certified copy of the official receipts) evidencing payment of United Kingdom
Taxes.  Copies of such receipts shall be made available to the Holders of the
Securities upon request.

SECTION 1010.  Copies Available to Holders.
               ---------------------------

          Copies of this Indenture shall be available for inspection by the
Holders on a Business Day during normal business hours at the principal office
of the Company and at the Corporate Trust Office. In addition, if the Securities
of any series are listed on the London Stock Exchange, the Luxembourg Stock
Exchange or any other stock exchange located outside the United States and such
stock exchange shall so require, copies of this Indenture, the Deposit
Agreement, the DTC Agreement, the memorandum and articles of association of the
Company and the most recent publicly available annual report of the Company
shall be made available for inspection by the Holders of such Securities on a
Business Day during normal business hours at the offices of the paying agents
and at the office of the listing agent required to be maintained by such
exchange for so long as the Securities of such series are outstanding and are
listed on such stock exchange.

                                       68





                                ARTICLE ELEVEN

                           REDEMPTION OF SECURITIES

SECTION  1101. Applicability of Article
               ------------------------

          Securities of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified in or contemplated by Section 301 for Securities of any
series) in accordance with this Article Eleven.

SECTION 1102.  Election to Redeem; Notice to Trustee
               -------------------------------------

          The election of the Company to redeem any Securities shall be
authorized by a Board of Directors resolution and evidenced by an Officers'
Certificate.  In case of any redemption at the election of the Company of less
than all the Securities of any series, the Company shall, at least 15 days prior
to the Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date and of
the principal amount of Securities of such series to be redeemed.  In the case
of any redemption of Securities prior to the expiration of any restriction on
such redemption provided in the terms of such Securities or elsewhere in this
Indenture, or pursuant to an election by the Company which is subject to a
condition specified in the terms of such Securities or elsewhere in this
Indenture, the Company shall furnish the Trustee with an Officers' Certificate
evidencing compliance with such restriction or condition.

SECTION 1103.  Selection by Trustee of Securities to Be Redeemed
               -------------------------------------------------

          If less than all the Securities of any series are to be redeemed, the
particular securities to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities of
such series not previously called for redemption, by such method as the Trustee
shall deem fair and appropriate and which may provide for the selection for
redemption of portions equal to the minimum authorized denomination for
Securities of that series (or any integral multiple thereof) of the principal
amount of Securities of such series of a denomination larger than the minimum
authorized denomination for Securities of that series.

          Securities shall be excluded from eligibility for selection for
redemption if they are identified by certificate number in a written statement
signed by an authorized officer of the Company and delivered to the Security
Registrar at least 30 days prior to the Redemption Date as being owned of record
and beneficially by, and not pledged or hypothecated by either (a) the Company
or (b) an entity specifically identified in such written statement which is an
Affiliate of the Company.

          The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Securities selected
for partial redemption, the principal amount thereof to be redeemed.

          For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities

                                       69





redeemed or to be redeemed only in part, to the portion of the principal amount
of such Securities which has been or is to be redeemed.

SECTION 1104.  Notice of Redemption
               --------------------

          Notice of redemption shall be given not less than 15 days nor more
than 30 days prior to the Redemption Date to each Holder of Securities to be
redeemed.

          All notices of redemption shall state:

          (1)  the Redemption Date,

          (2)  the Redemption Price,

          (3)  if less than all the Outstanding Securities of any series are to
     be redeemed, the identification (and, in the case of partial redemption,
     the principal amounts) of the particular Securities to be redeemed,

          (4)  that on the Redemption Date the Redemption Price will become due
     and payable upon each such Security to be redeemed and, if applicable, that
     interest thereon will cease to accrue on and after said date,

          (5)  the place or places where such Securities are to be surrendered
     for payment of the Redemption Price, and

          (6)  that the redemption is for a sinking fund, if such is the case.

          Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.

SECTION 1105.  Deposit of Redemption Price
               ---------------------------

          On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Principal Paying Agent (or, if the Company is acting as its
own Paying Agent, segregate and hold in trust as provided in Section 1003) an
amount of money sufficient to pay the Redemption Price of, and (except if the
Redemption Date shall be an Interest Payment Date) accrued interest on, all the
Securities which are to be redeemed on that date (to the extent that such
amounts are not already on deposit at such time in accordance with the
provisions of Sections 401, 403 or 1007).

SECTION 1106.  Securities Payable on Redemption Date
               -------------------------------------

          Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued and
unpaid interest) such Securities shall cease to bear interest.  Upon surrender
of any such Security for redemption in accordance with said notice, such
Security shall be paid by the Company at the Redemption Price, together with
accrued and unpaid interest to the Redemption Date; provided, however, that
                                                    --------  -------
installments of interest whose Stated Maturity is on or prior to the Redemption
Date shall be payable to the

                                       70





Holders of such Securities, or one or more Predecessor Securities, and in the
case of Registered Securities, registered as such at the close of business on
the relevant Record Dates according to their terms and the provisions of Section
307.

          If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate prescribed
therefor in the Security.

SECTION 1107.  Securities Redeemed in Part
               ---------------------------

          Any Security (including any Global Security) which is to be redeemed
only in part shall be surrendered at a Place of Payment therefor (with, if the
Company or the Trustee so requires, due endorsement by, or a written instrument
of transfer in form satisfactory to the Company and the Trustee duly executed
by, the Holder thereof or his attorney duly authorized in writing), and the
Company shall execute, and the Trustee upon written direction shall authenticate
and deliver to the Holder of such Security without service charge, a new
Security or Securities of the same series, of any authorized denomination as
requested by such Holder, in aggregate principal amount equal to and in exchange
for the unredeemed portion of the principal of the security so surrendered;
provided, that if a Global Security is so surrendered, the new Global Security
- - --------
shall be in a denomination equal to the unredeemed portion of the principal of
the Global Security so surrendered.

SECTION 1108.  Optional Redemption in the Event of Change in United Kingdom Tax
               ----------------------------------------------------------------
               Treatment
               ---------

          The Securities of any series may be redeemed at the election of the
Company, as a whole, but not in part, by the giving of notice as provided in
Section 1104, at a price equal to the outstanding principal amount thereof,
together with Additional Amounts, if any, and accrued interest, if any, to the
Redemption Date, if (a) the Company satisfies the Trustee that it has or will
become obligated to pay Additional Amounts on the Securities of such series, as
a result of either (x) any change in, or amendment to, the laws or regulations
of the United Kingdom or any political subdivision or any authority or agency
thereof or therein having power to tax or levy duties, or any change in the
application or interpretation of such laws or regulations, which change or
amendment becomes effective on or after the date  of the relevant underwriting
agreement for the Securities of such series, or (y) the issuance of definitive
Registered Securities as the result of DTC having notified the Company and the
Book-Entry Depositary that it is unable or unwilling to continue to hold the
Book-Entry Interest or at any time ceasing to be a "clearing agency" registered
as such under the Exchange Act and, in either case, a successor not being
appointed by the Company within 120 days or the Book-entry Depositary notifying
the Company that it is unwilling or unable to continue as Book-Entry Depositary
with respect to the Securities of such series and a successor Book-Entry
Depositary not being appointed being within 120 days or there having occurred
and being continuing an Event of Default with respect to the Securities of such
series and the Holder, in such circumstances, having requested in writing a
definitive Registered Security, and (b) such obligation cannot be avoided by the
Company taking reasonable measures available to it; provided, however, that no
                                                    --------  -------
such notice of redemption shall be given earlier than 90 days prior to the
earliest date on which the Company would be obligated to pay such Additional
Amounts, were a payment in respect of the Securities then due.  Prior to the
giving of notice of redemption of such Securities pursuant to this Indenture,
the Company will deliver to the Trustee an Officers' Certificate stating that
the obligation to pay such Additional Amounts cannot be avoided by the Company
taking reasonable measures available to it, and

                                       71





the Trustee shall accept such certificate as sufficient evidence of such
condition, and such certificate shall be conclusive and binding on the Holders
of the Securities of such series.

                                ARTICLE TWELVE

                                 SINKING FUNDS

SECTION  1201. Applicability of Article
               ------------------------

          The provisions of this Article shall be applicable to any sinking fund
for the retirement of Securities of a series except as otherwise specified as
contemplated by Section 301 for Securities of such series.

          The minimum amount of any sinking fund payment provided for by the
terms of Securities of any series is herein referred to as a "mandatory sinking
fund payment", and any payment in excess of such minimum amount provided for by
the terms of Securities of any series is herein referred to as an "optional
sinking fund payment".  If provided for by the terms of Securities of any
series, the cash amount of any sinking fund payment may be subject to reduction
as provided in Section 1202.  Each sinking fund payment shall be applied to the
redemption of Securities of any series as provided for by the terms of
Securities of such series.

SECTION 1202.  Satisfaction of Sinking Fund Payments with Securities
               -----------------------------------------------------

          In lieu of making all or any part of any mandatory sinking fund
payment with respect to any series of Securities in cash, the Company may at its
option (a) deliver to the Trustee Securities of such series theretofore
purchased or otherwise acquired (except upon redemption pursuant to the
mandatory sinking fund) by the Company or receive credit for Securities of such
series (not previously so credited) theretofore purchased or otherwise acquired
(except as aforesaid) by the Company and delivered to the Trustee for
cancellation pursuant to Section 310, (b) receive credit for optional sinking
fund payments (not previously so credited) made pursuant to this Section 1202,
or (c) receive credit for Securities of such series (not previously so credited)
redeemed by the Company through any optional redemption provision contained in
the terms of such series.  Securities so delivered or credited shall be received
or credited by the Trustee at the sinking fund Redemption Price specified in
such Securities.

SECTION 1203.  Redemption of Securities for Sinking Fund
               -----------------------------------------

          Not less than 30 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying (a) the amount of the next ensuing sinking fund payment
for that series pursuant to the terms of that series, (b) whether or not the
Company intends to exercise its right, if any, to make an optional sinking fund
payment with respect to such series on the next ensuing sinking fund payment
date and, if so, the amount of such optional sinking fund payment, and (c) the
portion thereof, if any, which is to be satisfied by payment of cash and the
portion thereof, if any, which is to be satisfied by delivering and crediting
Securities of that series pursuant to Section 1202, and will also deliver to the
Trustee any Securities to be so delivered.  Such written statement shall be
irrevocable and upon its receipt by the Trustee the Company shall become
unconditionally obligated to make all the cash payments or payments therein
referred to, if any, on or before the next succeeding sinking fund payment date.
Failure of the Company, on

                                       72





or before any such 30th day, to deliver such written statement and Securities
specified in this paragraph, if any, shall not constitute a default but shall
constitute, on and as of such date, the irrevocable election of the Company (i)
that the mandatory sinking fund payment for such series due on the next
succeeding sinking fund payment date shall be paid entirely in cash without the
option to deliver or credit Securities of such series in respect therefor and
(ii) that the Company will make no optional sinking fund payment with respect to
such series as provided in this Section 1203.

          Not less than [30] days before each such sinking fund payment date the
Trustee shall select the Securities to be redeemed upon such sinking fund
payment date in the manner specified in Section 1103 and cause notice of the
redemption thereof to be given in the name of and at the expense of the Company
in the manner provided in Section 1104.  Such notice having been duly given, the
redemption of such Securities shall be made upon the terms and in the manner
stated in Sections 1105, 1106 and 1107.

          The Trustee shall not redeem or cause to be redeemed any Security of a
series with sinking fund moneys or mail any notice of redemption of Securities
of such series by operation of the sinking fund during the continuance of a
default in payment of interest with respect to Securities of that series or an
Event of Default with respect to the Securities of that series except that,
where the mailing of notice of redemption of any Securities shall theretofore
have been made, the Trustee shall redeem or cause to be redeemed such
Securities, provided that it shall have received from the Company a sum
sufficient for such redemption.  Except as aforesaid, any moneys in the sinking
fund for such series at the time when any such default or Event of Default,
shall occur, and any moneys thereafter paid into the sinking fund, shall, during
the continuance of such default or Event of Default, be deemed to have been
collected under Article Five and held for the payment of all such Securities.
In case such Event of Default shall have been waived as provided in Section 513
or the default or Event of Default cured on or before the 30th day preceding the
sinking fund payment date, such moneys shall thereafter be applied on the next
succeeding sinking fund payment date in accordance with this Section 1203 to the
redemption of such Securities.

                               ARTICLE THIRTEEN

                       MEETINGS OF HOLDERS OF SECURITIES

SECTION  1301  Purposes of Meetings:
               --------------------

          A meeting of the Holders may be called at any time from time to time
pursuant to this Article Thirteen for any of the following purposes.

          (1)  to give any notice to the Company or to the Trustee, or to
     consent to the waiving of any Default hereunder and its consequence, or to
     take any other action authorized to be taken by Holders pursuant to Article
     Nine hereof;

          (2)  to remove the Trustee and appoint a successor trustee pursuant to
     Article Six hereof;

          (3)  to consent to the execution of an indenture supplemental hereto
     pursuant to Section 902 hereof.

                                       73





SECTION 1302   Place of Meetings
               -----------------

          (a)  The Trustee may at any time (upon not less than 21 days' notice)
call a meeting of Holders to be held at such time and at such place in the
location determined by the Trustee pursuant to Section 1302 hereof.  Notice of
every meeting of Holders, setting forth the time and the place of such meeting
and in general terms the action proposed to be taken at such meeting, shall be
mailed to each Holder and published in the manner contemplated by Section [106]
hereof.

          (b)  In case at any time the Company, pursuant to a Board Resolution,
or the Holders of at least 10% in aggregate principal amount of the Securities
then outstanding, shall have requested the Trustee to call a meeting of the
Holders, by written request setting forth in reasonable detail the action
proposed to be taken at the meeting, and the Trustee shall not have made the
first giving of the notice of such meeting within 20 days after receipt of such
request, then the Company or the Holders in the amount above specified may
determine the time (not less than 21 days after notice is given) and the place
in the location determined by the Company or the Holders pursuant to this
Section 1302 for such meeting and may call such meeting to take any action
authorized in Section 1301 hereof by giving notice thereof as provided in
Section 1302(a) hereof.

SECTION 1303   Voting at Meetings.
               ------------------

          To be entitled to vote at any meeting of Holders, a Person shall be
(i) a Holder or (ii) a Person appointed by an instrument in writing as proxy for
a Holder or Holders by such Holder or Holders.  The only Persons who shall be
entitled to be present or to speak at any meeting of Holders shall be the
Persons so entitled to vote at such meeting and their counsel, any
representatives of the Trustee and its counsel, any representatives of the
Company and its counsel.

SECTION 1304   Voting Rights, Conduct and Adjournment.
               --------------------------------------

          (a)  Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Holders in regard to proof of the holding of Securities of a series
and of the appointment of proxies and in regard to the appointment and duties of
inspectors of votes, the submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall deem appropriate.  Except as otherwise
permitted or required by any such regulations, the holding of Securities of a
series  shall be proved in the manner specified in Article Two hereof and the
appointment of any proxy shall be proved in such manner as is deemed appropriate
by the Trustee or by having the signature of the person executing the proxy
witnessed or guaranteed by any bank, banker or trust company customarily
authorized to certify to the holding of a security such as a Global Note.

          (b)  At any meeting of Holders, the representative of Persons holding
or representing Securities of a series in an aggregate principal amount
sufficient under the appropriate provision of this Indenture to take action upon
the business for the transaction of which such meeting was called shall
constitute a quorum.  Any meetings of Holders duly called pursuant
to Section 1303 hereof may

                                       74





be adjourned form time to time by vote of the Holders (or proxies for the
Holders) of a majority of the Securities of a series represented at the meeting
and entitled to vote, whether or not a quorum shall be present; and the meeting
may be held as so adjourned without further notice. No action at a meeting of
Holders shall be effective unless approved by Persons holding or representing
Securities of a series in the aggregate principal amount required by the
provision of this Indenture pursuant to which such action is being taken.

          (c)  At any meeting of Holders, each Holder or proxy shall be entitled
to one vote for each $1,000 principal amount of outstanding Securities of a
series held or represented.

SECTION 1305   Revocation of Consent by Holders.
               --------------------------------

     At any time prior to (but not after) the evidencing the Trustee of the
taking of any action at a meeting of Holders by the Holders of the percentage in
aggregate principal amount of the Securities specified in this Indenture in
connection with such action, any Holder of a Security the serial number of which
is included in the Securities the Holders of which have consented to such action
may, by filing written notice with the Trustee at its principal corporate trust
office and upon proof of holding as provided herein, revoke such consent so far
as concerns such Securities.  Except as aforesaid any such consent given by the
Holder of any Securities shall be conclusive and binding upon such Holder and
upon all future Holders and owners of such Securities and of any Securities
issued in exchange therefore, in lieu thereof or upon transfer thereof,
irrespective of whether or not any notation in regard thereto is made upon such
Securities.  Any action taken by the Holders of the percentage in aggregate
principal amount of the Holders specified in this Indenture in connection with
such action shall be conclusively binding upon the Company, the Trustee and the
Holders of all the Securities.

                               ARTICLE FOURTEEN

                                 MISCELLANEOUS

SECTION  1401. Consent to Jurisdiction; Appointment of Agent to Accept Service
               ---------------------------------------------------------------
               of Process
               ----------

          (a)  The Company irrevocably consents and agrees, for the benefit of
the Holders from time to time of the Securities and the Trustee, that any legal
action, suit or proceeding against it with respect to its obligations,
liabilities or any other matter arising out of or in connection with this
Indenture or the Securities may be brought in the Supreme Court of New York, New
York County or the United States District Court for the Southern District of New
York and any appellate court from either thereof and, until amounts due and to
become due in respect of the Securities have been paid, hereby irrevocably
consents and submits to the non exclusive jurisdiction of each such court in
personam, generally and unconditionally with respect to any action, suit or
proceeding for itself and in respect of its properties, assets and revenues.

          (b)  The Company has irrevocably designated, appointed, and empowered
[CT Corporation,] as its designee, appointee and agent to receive, accept and
acknowledge for and on its behalf, and its properties, assets and revenues,
service of any and all legal process, summons, notices and documents which may
be served in any action, suit or proceeding brought against the Company in any
United States or State court.  If for any reason such designee, appointee and
agent hereunder shall cease to be available to act as such, the Company agrees
to designate a new designee, appointee and agent in the Borough of

                                       75





Manhattan, The City of New York on the terms and for the purposes of this
Section 1301 satisfactory to the Trustee.  The Company further hereby
irrevocably consents and agrees to the service of any and all legal process,
summons, notices and documents in any action, suit or proceeding against the
Company by serving a copy thereof upon the relevant agent for service of process
referred to in this Section 1301 (whether or not the appointment of such agent
shall for any reason prove to be ineffective or such agent shall accept or
acknowledge such service) or by mailing copies thereof by registered or
certified air mail, postage prepaid, to the Company at its address specified in
or designated pursuant to this Indenture.  The Company agrees that the failure
of any such designee, appointee and agent to give any notice of such service to
it shall not impair or affect in any way the validity of such service or any
judgment rendered in any action or proceeding based thereon.  Nothing herein
shall in any way be deemed to limit the ability of the holders of the Securities
and the Trustee, to serve any such legal process, summons, notices and documents
in any other manner permitted by applicable law or to obtain jurisdiction over
the Company or bring actions, suits or proceedings against the Company in such
other jurisdictions, and in such manner, as may be permitted by applicable law.
The Company irrevocably and unconditionally waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of venue of any of the aforesaid actions, suits or proceedings arising out of or
in connection with this Indenture brought in the Supreme Court of New York, New
York County or the United States District Court for the Southern District of New
York and any appellate court from either thereof and hereby further irrevocably
and unconditionally waives and agrees not to plead or claim in any such court
that any such action, suit or proceeding brought in any such court has been
brought in an inconvenient forum.

          If for the purpose of obtaining judgment in any court it is necessary
to convert a sum due hereunder to the holder of any Security from U.S. dollars
into another currency, the Company has agreed, and each holder by holding such
Security will be deemed to have agreed, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be that at which in
accordance with normal banking procedures such Holder could purchase U.S.
dollars with such other currency in The City of New York on the Business Day
preceding the day on which final judgment is given.

          The obligation of the Company in respect of any sum payable by it to
the holder of a Security shall, notwithstanding any judgment in a currency (the
"judgment currency") other than U.S. dollars, be discharged only to the extent
that on the Business Day following receipt by the Holder of such security of any
sum, adjudged to be so due in the judgment currency, the Holder of such Security
may in accordance with normal banking procedures purchase U.S. dollars with the
judgment currency; if the amount of U.S. dollars so purchased is less than the
sum originally due to the holder of such Security in the judgment currency
(determined in the manner set forth in the preceding paragraph), the Company
agrees, as a separate obligation and notwithstanding any such judgment, to
indemnify the Holder of such Security against such loss, and if the amount of
the U.S. dollars so purchased exceeds the sum originally due to the Holder of
such Security, such Holder agrees to remit to the Company such excess, provided
that such Holder shall have no obligation to remit any such excess as long as
the Company shall have failed to pay such Holder any obligations due and payable
under such Security, in which case such excess may be applied to such
obligations of the Company under such Security in accordance with the terms
thereof.

                                       76





SECTION  1402  Counterparts
               ------------

          This instrument may be executed in any number of Counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.


     IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed by their respective officers or directors duly authorized thereto,
all as of the day and year first above written.

                                    SOUTHERN INVESTMENTS UK plc


                                    By______________________________
                                      Title:
Attest:

______________________________


                                    BANKERS TRUST COMPANY, as
                                    Trustee, Principal Paying Agent,
                                    Security Registrar and Transfer Agent


                                    By______________________________
                                      Title:
Attest:

______________________________

                                    BANKERS TRUST LUXEMBOURG S.A.
                                    as Paying Agent and Transfer Agent


                                    By______________________________
                                      Title:

                                       77





STATE OF NEW YORK   )
                    )    ss.:
COUNTY OF NEW YORK  )


          On the 21st day of November, 1996, before me personally came
_____________, to me known, who, being by me duly sworn, did depose and say that
he is a of Southern Investments UK plc, one of the corporations described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.

                                                  ______________________________

                                       78

EX-4

                                                                  Exhibit 4(l)-2

                             SOUTHERN INVESTMENTS UK plc

                                       and

                              BANKERS TRUST COMPANY
                       as Trustee, Principal Paying Agent,
                          Registrar and Transfer Agent

                                       and

                         BANKERS TRUST LUXEMBOURG S.A.,
                       as Paying Agent and Transfer Agent


                          6.375% Senior Notes Due 2001

                          6.800% Senior Notes Due 2006



                          First Supplemental Indenture
                          Dated as of November 21, 1996





          FIRST SUPPLEMENTAL INDENTURE, dated as of November 21, 1996 (herein
called the "First Supplemental Indenture"), among Southern Investments UK plc, a
corporation duly organized and existing under the laws of England and Wales
(hereinafter called the "Company"), and BANKERS TRUST COMPANY, as Trustee
Principal Paying Agent, Registrar and Transfer Agent under the Original
Indenture referred to below (hereinafter called the "Trustee") and BANKERS TRUST
LUXEMBOURG S.A., as Paying and Transfer Agent under the Original Indenture.


                                   WITNESSETH:

          WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture dated as of November 21, 1996 (hereinafter called the
"Original Indenture"), to provide for the issuance from time to time of its
unsecured debentures, notes or other evidences of indebtedness (herein called
the "Securities"), the form and terms of which are to be established as set
forth in Sections 201 and 301 of the Original Indenture;

          WHEREAS, Section 901 of the Original Indenture provides, among other
things, that the Company and the Trustee may enter into indentures supplemental
to the Original Indenture for, among other things, the purpose of establishing
the form and terms of the Securities of any series as permitted in Sections 201
and 301 of the Original Indenture and of appointing an Authenticating Agent with
respect to the Securities of any series;

          WHEREAS, the Company desires to create two series of the Securities,
one series of Securities in an aggregate principal amount of $168,000,000 to be
designated the "6.375% Senior Notes Due 2001" and one series of the Securities
in an aggregate principal amount of $332,000,000 to be designated the "6.800%
Senior Notes Due 2006" (collectively the "Senior Notes"), and all action on the
part of the Company necessary to authorize the issuance of the Senior Notes
under the Original Indenture and this First Supplemental Indenture has been duly
taken; and

          WHEREAS, all acts and things necessary to make the Senior Notes, when
executed by the Company and authenticated and delivered by the Trustee as in the
Original Indenture provided, the valid and binding obligations of the Company
and to constitute these presents a valid and binding supplemental indenture and
agreement according to its terms, have been done and performed;

         NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:




          That in consideration of the premises and of the acceptance and
purchase of the Senior Notes by the holders thereof and of the acceptance of
this trust by the Trustee, the Company covenants and agrees with the Trustee,
for the equal benefit of holders of the Senior Notes, as follows:

                                   ARTICLE ONE

                                   Definitions

          The use of the terms and expressions herein is in accordance with the
definitions, uses and constructions contained in the Original Indenture and the
forms of Senior Notes attached hereto as Exhibits A, B, C, and D, respectively.
In addition, for all purposes of this First Supplemental Indenture, except as
otherwise expressly provided or unless the context otherwise expressly requires,
the following terms shall have the respective meanings assigned to them as
follows and shall be construed as if defined in Article One of the Original
Indenture:

          "Book-Entry Depositary" means the Book-Entry Depositary or its nominee
or the custodian of either, designated by the Company in the Deposit Agreement
until a successor Book-Entry Depositary shall have become such pursuant to the
applicable provisions of the Deposit Agreement, and thereafter "Book-Entry
Depositary" shall mean such successor Book-Entry Depositary or its nominee or
the custodian of either.

          "Definitive Registered Senior Note" means a registered Senior Note
substantially in the form of Exhibits B and D to this First Supplemental
Indenture.

          "Deposit Agreement" means the Deposit Agreement, dated as of the date
of this First Supplemental Indenture, between the Company and Bankers Trust
Company.

          "DTC" means The Depository Trust Company or its successors .

          "Global Senior Note" means a bearer Global Senior Note substantially
in the form of Exhibits A and C to this First Supplemental Indenture.

                                        2




                                   ARTICLE TWO
          Terms and Issuance of 6.375% Senior Notes Due 2001 and 6.800% Senior
Notes Due 2006

          Section 201. Issue of Senior Notes. Two series of Securities, which
shall be designated the 6.375% Senior Notes Due 2001" and the "6.800% Senior
Notes Due 2006" (collectively the "Senior Notes") shall be executed,
authenticated and delivered in accordance with the provisions of, and shall in
all respects be subject to, the terms, conditions and covenants of the Original
Indenture and this First Supplemental Indenture (including the forms of Senior
Notes set forth in Exhibits A, B, C and D hereto). The aggregate principal
amount of the 6.375% Senior Notes Due 2001 and the aggregate principal amount of
6.800% Senior Notes Due 2006 which may be authenticated and delivered under the
First Supplemental Indenture shall not, except as permitted by the provisions of
the Original Indenture, exceed $168,000,000 and $332,000,000, respectively.

          Section 202. Form of Senior Notes; Incorporation of Terms. The form of
the Senior Notes shall be substantially in the forms of Exhibits A, B, C and D
attached hereto, the terms of which are herein incorporated by reference and
which are part of this First Supplemental Indenture.

          Section 203. Limitation on Liens. The covenant provided by Section
1004 of the Original Indenture shall be applicable to the Senior Notes.

          Section 204. Limitation on Sale and Lease-Back Transactions. The
covenant provided by Section 1005 of the Original Indenture shall be applicable
to the Senior Notes.

          Section 205. Additional Amounts. The terms provided by Section 1010 of
the Original Indenture shall be applicable to the Senior Notes.

          Section 206. Event of Default. The event specified in Section 501(5)
of the Original Indenture shall constitute an Event of Default with respect to
the Senior Notes.

          Section 207.  Place of Payment.  The Place of Payment in respect of
the Senior Notes will be in The City of New York, initially the Corporate Trust
Office of Bankers Trust Company, and, for so long as the Senior Notes are listed
on the Luxembourg Stock Exchange, in Luxembourg, initially the corporate trust
office of _________ which at the date hereof, is located at _________________.

                                        3




          Section 208. Issuance of Global Senior Note. The 6.375% Senior Notes
Due 2001 shall be issued as one Bearer Global Senior Note and the 6.800% Senior
Notes Due 2006 shall be issued as one Bearer Global Senior Note (collectively
the "Global Senior Notes") and delivered by the Trustee to the Book-Entry
Depositary, as the Holder thereof, or a nominee or custodian therefor, to be
held by the Book-Entry Depositary pursuant to the Deposit Agreement.

          Section 209. Exchange of the Global Senior Note. Either of the Global
Senior Notes shall be exchangeable, in whole but not in part, for definitive
Registered Notes only as provided in this paragraph. A Global Senior Note shall
be so exchangeable if (a) DTC notifies the Company and the Book-Entry Depositary
that it is unwilling or unable to continue to hold the Book-Entry Interest or at
any time it ceases to be a "clearing agency" registered as such under the
Exchange Act, and, in either case, a successor is not appointed by the Company
within 120 days, (b) the Book-Entry Depositary notifies the Company that it is
unwilling or unable to continue as Book-Entry Depositary with respect to such
Global Senior Note and no successor is appointed within 120 days, (c) the
Company executes and delivers to the Trustee an Officers' Certificate providing
that such Global Senior Note shall be so exchangeable, or (d) there shall have
occurred and be continuing an Event of Default with respect to the Senior Notes
of the series represented by such Global Note and the Holder, in such
circumstance, shall have requested in writing that such Global Senior Note be
exchanged for one or more definitive Registered Notes. Definitive Registered
Notes so issued in exchange for such Global Senior Note shall be of the same
series, having the same interest rate, if any, and maturity and having the same
terms as such Global Senior Note, in authorized denominations of $1,000 and any
integral multiple thereof and in the aggregate having the same principal amount
as such Global Senior Note and registered in such names as the Book-Entry
Depositary for such Global Senior Note shall direct.

          Section 210. Regular Record Date for the Senior Notes. The Regular
Record Date for the Senior Notes shall be 15 calendar days immediately prior to
each Interest Payment Date.


                                  ARTICLE THREE
                  Authenticating Agent; Book-Entry Depositary

          Section 301. Authenticating Agent; Book-Entry Depositary. Bankers
Trust Company, a New York banking corporation, and its successors are hereby
appointed Authenticating Agent and Book-Entry Depositary with respect to the
Senior Notes.

                                        4




                                  ARTICLE FOUR
                                  Miscellaneous

          Section 401. Execution as Supplemental Indenture. This First
Supplemental Indenture is executed and shall be construed as an indenture
supplemental to the Original Indenture and, as provided in the Original
Indenture, this First Supplemental Indenture forms a part thereof.

          Section 402. Conflict with Trust Indenture Act. If any provision
hereof limits, qualifies or conflicts with another provision hereof which is
required to be included in this First Supplemental Indenture by any of the
provisions of the Trust Indenture Act, such required provision shall control.

          Section 403. Effect of Headings. The Article and Section headings
herein are for convenience only and shall not affect the construction hereof.

          Section 404. Successors and Assigns. All covenants and agreements in
this First Supplemental Indenture by the Company shall bind its successors and
assigns, whether so expressed or not.

          Section 405. Separability Clause. In case any provision in this First
Supplemental Indenture or in the Senior Notes shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

          Section 406. Benefits of First Supplemental Indenture. Nothing in this
First Supplemental Indenture or in the Senior Notes, express or implied, shall
give to any person, other than the parties hereto and their successors hereunder
and the Holders, any benefit or any legal or equitable right, remedy or claim
under this First Supplemental Indenture.

          Section 407. Execution and Counterparts. This First Supplemental
Indenture may be executed in any number of counterparts, each of which shall be
deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument.


                                        5




          IN WITNESS WHEREOF, the parties hereof have caused this First
Supplemental Indenture to be duly executed by their respective officers or
directors duly authorized thereto, all as of the day and year first above
written.

                              SOUTHERN INVESTMENTS UK plc


                              By
                                -----------------------------------------

                              BANKERS TRUST COMPANY
                              AS TRUSTEE


                              By
                                -----------------------------------------


                              BANKERS TRUST LUXEMBOURG S.A.
                              AS PAYING AND TRANSFER AGENT


                              By
                                -----------------------------------------

Attest:

- ------------------------



                                        6




STATE OF NEW YORK)
                              :SS
COUNTY OF NEW YORK)


          On this ___ day of ________, 1996, before me personally came
___________________, to me known, who, being by me duly sworn, did depose and
say that he is a ________________________ of Southern Investments UK plc, one of
the companies described in and which executed the foregoing instrument; and that
he signed his name thereto by like authority.



                                       -----------------------------------------


                                        7

EX-4

Exhibit 4(l)-3

SOUTHERN INVESTMENTS UK plc

and

SWEB HOLDINGS UK

and

BANKERS TRUST COMPANY, as Trustee,
Principal Paying Agent, Registrar and Transfer Agent

and

BANKERS TRUST LUXEMBOURG, S.A.,
as Paying and Transfer Agent

SECOND SUPPLEMENTAL INDENTURE

Dated as of December 2, 1998

Debt Securities

THIS SECOND SUPPLEMENTAL INDENTURE is made as of the 2^nd day of December, 1998, by and between SOUTHERN INVESTMENTS UK plc, a limited liability company incorporated under the laws of England and Wales, with UK Company Registration Number 3073865 (the "Company"), SWEB HOLDINGS UK, an unlimited liability company incorporated under the laws of England and Wales, with UK Company Registration Number 3585938 ("ULC"), BANKERS TRUST COMPANY, a New York banking corporation, as trustee, principal paying agent, registrar and transfer agent ("Bankers Trust") and BANKERS TRUST LUXEMBOURG S.A., as Paying and Transfer Agent (the "Agent").

WITNESSETH:

WHEREAS, the Company, Bankers Trust and the Agent have heretofore entered into an Indenture, dated as of November 21, 1996 (the "Original Indenture"), to provide for the issuance of unsecured securities;

WHEREAS, the Company, Bankers Trust and the Agent have heretofore entered into a First Supplemental Indenture, dated as of November 21, 1996 (the "First Supplemental Indenture"), to provide for the issuance of the 6.375% Senior Notes due 2001 (as defined therein) and the 6.8% Senior Notes due 2005 (as defined therein, and collectively with the 6.375% Senior Notes due 2001, the "Senior Notes");

WHEREAS, the Original Indenture and the First Supplemental Indenture are incorporated herein by this reference and the Original Indenture and the First Supplemental Indenture, as supplemented by this Second Supplemental Indenture, are herein called the "Indenture";

WHEREAS, Section 901(11) of the Original Indenture provides that the Company and Bankers Trust, as trustee, may at any time without the consent of the holders of the Senior Notes (the "Holders") modify, alter, amend or supplement the Original Indenture in certain respects which are not materially adverse to the Holders;

WHEREAS, the Company proposes to amend the Original Indenture;

WHEREAS, the Company desires to make ULC a co-obligor under the Indenture and ULC desires to become a co-obligor under the Indenture;

WHEREAS, all conditions necessary to authorize the execution and delivery of this Second Supplemental Indenture and to make it a valid and binding obligation of the parties have been done or performed.

NOW, THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE ONE

Section 101. Additional Obligor. As of the date hereof and pursuant to this Second Supplemental Indenture, ULC becomes a co-obligor of the Senior Notes under the Indenture in accordance with the terms and conditions of the Indenture and shall jointly and severally with the Company assume all rights and obligations of the Company thereunder.

Section 102. Event of Default. The events specified in Sections 501(4), (5) and (6) of the Original Indenture as regards the Company or ULC will also constitute an Event of Default with respect to the Senior Notes.

ARTICLE TWO

Miscellaneous

Section 201. Execution as Supplemental Indenture. This Second Supplemental Indenture is executed and shall be construed as an indenture supplemental to the Original Indenture and First Supplemental Indenture, as provided in the Original Indenture, and this Second Supplemental Indenture forms a part thereof. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect.

Section 202. Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with another provision hereof which is required to be included in this Section Supplemental Indenture by any of the provisions of the Trust Indenture Act, such required provision shall control.

Section 203. Effect of Headings. The Article and Section headings herein are for convenience only and shall not affect the construction hereof.

Section 204. Successors and Assigns. All covenants and agreements in this Second Supplemental Indenture by the Company and ULC shall bind their successors and assigns, whether so expressed or not.

Section 205. Separability Clause. In case any provision in this Second Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

Section 206. Benefits of Second Supplemental Indenture. Nothing in this Second Supplemental Indenture, express or implied, shall give to any person, other than the parties hereto and their successors hereunder and the Holders, any benefit or any legal or equitable right, remedy or claim under this Second Supplemental Indenture.

Section 207. Execution and Counterparts. This Second Supplemental Indenture may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed by their respective officers or directors duly authorized thereto, all as of the day and year first above written.

SOUTHERN INVESTMENTS UK plc

By: ROBERT A. SYMONS

SWEB HOLDINGS UK

By: C. PHILIP SAUNDERS

BANKERS TRUST COMPANY,

as Trustee, Principal Paying Agent, Registrar and

Transfer Agent

By: WILLIAM T. JENKINS

BANKERS TRUST LUXENBOURG, S.A.,

as Paying and Transfer Agent

By: WILLIAM T. JENKINS

EX-4

Exhibit 4(l)-4

SIUK LIMITED
(formerly known as "SIUK plc" and "Southern Investments UK plc")

and

WPD HOLDINGS UK
(formerly known as "SWEB Holdings UK")

and

Western Power Distribution LLP

and

DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Trustee, Principal Paying Agent, Security Registrar and Transfer Agent

and

DEUTSCHE BANK LUXEMBOURG S.A.,
as Paying and Transfer Agent

THIRD SUPPLEMENTAL INDENTURE

Dated as of January 30, 2003

     Debt Securities   THIS THIRD SUPPLEMENTAL INDENTURE is made as of the 30^th day of January, 2003, by and among SIUK LIMITED (formerly known as "SIUK plc" and "Southern Investments UK plc"), a private company limited by shares and registered under the laws of England and Wales, with UK Company Registration Number 3073865 (the "Company"), WPD HOLDINGS UK (formerly known as "SWEB Holdings UK"), an unlimited liability company registered under the laws of England and Wales, with UK Company Registration Number 3585938 ("ULC"), WESTERN POWER DISTRIBUTION LLP, a limited liability partnership formed under the laws of England and Wales, with registration pending ("WPD LLP"), DEUTSCHE BANK TRUST COMPANY AMERICAS (formerly known as "Bankers Trust Company"), a New York banking corporation, as trustee, principal paying agent, security registrar and transfer agent (the "Trustee") and DEUTSCHE BANK LUXEMBOURG S.A. (formerly known as "Bankers Trust Luxembourg S.A."), as Paying and Transfer Agent (the "Agent").

W I T N E S S E T H:

     WHEREAS, the Company, the Trustee and the Agent have heretofore entered into an Indenture, dated as of November 21, 1996 (the "Original Indenture"), to provide for the issuance of unsecured securities;

     WHEREAS, the Company, the Trustee and the Agent have heretofore entered into a First Supplemental Indenture, dated as of November 21, 1996 (the "First Supplemental Indenture"), to provide, among other things, for the issuance of 6.800% Senior Notes due 2006 (the "Senior Notes");

     WHEREAS, the Company, ULC, the Trustee and the Agent have heretofore entered into a Second Supplemental Indenture, dated as of December 2, 1998 (the "Second Supplemental Indenture"), establishing ULC as a co-obligor under the Indenture (as defined below);

     WHEREAS, the Original Indenture and the First and Second Supplemental Indentures are incorporated herein by reference and the Original Indenture and the First and Second Supplemental Indentures, as supplemented by this Third Supplemental Indenture, are herein called the "Indenture";

     WHEREAS, Section 801 of the Indenture permits the transfer or conveyance of the Company's properties and assets substantially as an entirety under the Indenture, the Senior Notes and all other documents, agreements and instruments related thereto to WPD LLP, as the successor entity, which hereby expressly assumes by this Third Supplemental Indenture the Company's applicable obligations under the Senior Notes;

     WHEREAS, upon the assumption of such obligations by WPD LLP in accordance with Section 802 of the Indenture, the Company shall be released from such obligations;

     WHEREAS, this Third Supplemental Indenture is being executed in connection with the transfer to and assumption by WPD LLP of the assets and liabilities of the Company as an entirety or substantially as an entirety (the "Sale");

     WHEREAS, Section 901(1) of the Indenture provides that the Company and the Trustee may at any time without the consent of the holders of the Senior Notes (the "Holders") supplement the Indenture to evidence the assumption by a successor entity of the covenants of the Company therein and in the Senior Notes; and

     WHEREAS, all conditions necessary to authorize the execution and delivery of this Third Supplemental Indenture and to make it a valid and binding obligation of the parties have been done or performed;

     NOW, THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE ONE
Transfer, Assumption and Release

     SECTION 101.    Transfer by the Company to WPD LLP. As of the date hereof, in connection with the Sale, the Company hereby transfers all of the Company's obligations under the Indenture, the Senior Notes and all other documents, agreements and instruments related thereto to WPD LLP.

     SECTION 102.    Assumption by WPD LLP; Release of the Company. As of the date hereof, WPD LLP hereby expressly assumes all rights and obligations of the Company under the Indenture, the Senior Notes and all other documents, agreements and instruments related thereto and shall succeed to, and be substituted for, and may exercise every right and power of, the Company under the Indenture, the Senior Notes and all other documents, agreements and instruments related thereto with the same effect as if WPD LLP had been named as the Company therein, and thereafter the Company shall be relieved of all rights and obligations under the Indenture and the Senior Notes.

ARTICLE TWO
Miscellaneous

     SECTION 201.    Execution as Supplemental Indenture. This Third Supplemental Indenture is executed and shall be construed as an indenture supplemental to the Original Indenture and First and Second Supplemental Indentures, as provided in the Original Indenture, and this Third Supplemental Indenture forms a part thereof. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect.

     SECTION 202.    Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with another provision hereof which is required to be included in this Third Supplemental Indenture by any of the provisions of the Trust Indenture Act, such required provision shall control.

     SECTION 203.    Effect of Headings. The Article and Section headings herein are for convenience only and shall not affect the construction hereof.

     SECTION 204.    Successors and Assigns. All covenants and agreements in this Third Supplemental Indenture by WPD LLP shall bind its successors and assigns, whether so expressed or not.

     SECTION 205.    Separability Clause. In case any provision in this Third Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

     SECTION 206.    Benefits of Third Supplemental Indenture. Nothing in this Third Supplemental Indenture, express or implied, shall give to any person, other than the parties hereto and their successors hereunder and the Holders, any benefit or any legal or equitable right, remedy or claim under this Third Supplemental Indenture.

     SECTION 207.    Execution and Counterparts. This Third Supplemental Indenture may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

     SECTION 208.   Governing law. This Third Supplemental Indenture shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York.

[Remainder of page intentionally left blank]

     IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental Indenture to be duly executed by their respective officers or directors duly authorized thereto, all as of the day and year first above written.

SIUK LIMITED

By:
Name:
Title:

WPD Holdings UK

By:
Name:
Title:

WESTERN POWER DISTRIBUTION LLP

By:
Name:
Title:

DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Trustee, Principal Paying Agent, Security
Registrar and Transfer Agent

By:
Name:
Title:

DEUTSCHE BANK LUXEMBOURG S.A.,
as Paying and Transfer Agent

By:
Name:
Title:

EX-4

Exhibit 4(l)-5

Western Power Distribution LLP

and

WPD HOLDINGS UK
(formerly known as "SWEB Holdings UK")

and

Western Power Distribution HOLDINGS LIMITED

and

DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Trustee, Principal Paying Agent, Security Registrar and Transfer Agent

and

DEUTSCHE BANK LUXEMBOURG S.A.,
as Paying and Transfer Agent

FOURTH SUPPLEMENTAL INDENTURE

Dated as of January 30, 2003

Debt Securities

   THIS FOURTH SUPPLEMENTAL INDENTURE is made as of the 30^th day of January, 2003, by and among Western Power Distribution LLP, a limited liability partnership formed under the laws of England and Wales, with registration pending ("WPD LLP"), WPD HOLDINGS UK (formerly known as "SWEB Holdings UK"), an unlimited liability company registered under the laws of England and Wales, with UK Company Registration Number 3585938 ("ULC"), WESTERN POWER DISTRIBUTION HOLDINGS LIMITED, a private company limited by shares and registered under the laws of England and Wales, with UK Company Registration Number [•]("WPDHL"), DEUTSCHE BANK TRUST COMPANY AMERICAS (formerly known as "Bankers Trust Company"), a New York banking corporation, as trustee, principal paying agent, security registrar and transfer agent (the "Trustee") and DEUTSCHE BANK LUXEMBOURG S.A. (formerly known as "Bankers Trust Luxembourg S.A."), as Paying and Transfer Agent (the "Agent").

W I T N E S S E T H:

     WHEREAS, SIUK Limited ("SIUK"), the Trustee and the Agent have heretofore entered into an Indenture, dated as of November 21, 1996 (the "Original Indenture"), to provide for the issuance of unsecured securities;

     WHEREAS, SIUK, the Trustee and the Agent have heretofore entered into a First Supplemental Indenture, dated as of November 21, 1996 (the "First Supplemental Indenture"), to provide, among other things, for the issuance of 6.800% Senior Notes due 2006 (the "Senior Notes");

     WHEREAS, SIUK, ULC, the Trustee and the Agent have heretofore entered into a Second Supplemental Indenture, dated as of December 2, 1998 (the "Second Supplemental Indenture"), establishing ULC as a co-obligor under the Indenture (as defined below);

     WHEREAS, SIUK, ULC, WPD LLP, the Trustee and the Agent have heretofore entered into a Third Supplemental Indenture, dated as of January 30, 2003 (the "Third Supplemental Indenture"), establishing WPD LLP as a co-obligor and releasing SIUK as a co-obligor under the Indenture (as defined below);

     WHEREAS, the Original Indenture and the First, Second and Third Supplemental Indentures are incorporated herein by reference and the Original Indenture and the First, Second and Third Supplemental Indentures, as supplemented by this Fourth Supplemental Indenture, are herein called the "Indenture";

     WHEREAS, Section 801 of the Indenture permits the transfer or conveyance of ULC's properties and assets substantially as an entirety under the Indenture, the Senior Notes and all other documents, agreements and instruments related thereto to WPDHL, as the successor entity, which hereby expressly assumes by this Fourth Supplemental Indenture ULC's applicable obligations under the Senior Notes;

     WHEREAS, upon the assumption of such obligations by WPDHL in accordance with Section 802 of the Indenture, ULC shall be released from such obligations;

     WHEREAS, this Fourth Supplemental Indenture is being executed in connection with the transfer to and assumption by WPDHL of the assets and liabilities of ULC as an entirety or substantially as an entirety (the "Sale");

     WHEREAS, Section 901(1) of the Indenture provides that SIUK or its successor WPD LLP and the Trustee may at any time without the consent of the holders of the Senior Notes (the "Holders") supplement the Indenture to evidence the assumption by a successor entity of the covenants of ULC therein and in the Senior Notes; and

     WHEREAS, all conditions necessary to authorize the execution and delivery of this Fourth Supplemental Indenture and to make it a valid and binding obligation of the parties have been done or performed;

     NOW, THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE ONE

Transfer, Assumption and Release

     SECTION 101. Transfer by ULC to WPDHL. As of the date hereof, ULC hereby transfers all of ULC's obligations under the Indenture, the Senior Notes and all other documents, agreements and instruments related thereto to WPDHL.

     SECTION 102. Assumption by WPDHL; Release of ULC. As of the date hereof, WPDHL hereby expressly assumes all rights and obligations of ULC under the Indenture, the Senior Notes and all other documents, agreements and instruments related thereto and shall succeed to, and be substituted for, and may exercise every right and power of, ULC under the Indenture, the Senior Notes and all other documents, agreements and instruments related thereto with the same effect as if WPDHL had been named as ULC therein, and thereafter ULC shall be relieved of all rights and obligations under the Indenture and the Senior Notes.

ARTICLE TWO

Miscellaneous

     SECTION 201. Execution as Supplemental Indenture. This Fourth Supplemental Indenture is executed and shall be construed as an indenture supplemental to the Original Indenture and First, Second and Third Supplemental Indentures, as provided in the Original Indenture, and this Fourth Supplemental Indenture forms a part thereof. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect.

     SECTION 202. Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with another provision hereof which is required to be included in this Fourth Supplemental Indenture by any of the provisions of the Trust Indenture Act, such required provision shall control.

     SECTION 203. Effect of Headings. The Article and Section headings herein are for convenience only and shall not affect the construction hereof.

     SECTION 204. Successors and Assigns. All covenants and agreements in this Fourth Supplemental Indenture by WPDHL shall bind its successors and assigns, whether so expressed or not.

     SECTION 205. Separability Clause. In case any provision in this Fourth Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

     SECTION 206. Benefits of Fourth Supplemental Indenture. Nothing in this Fourth Supplemental Indenture, express or implied, shall give to any person, other than the parties hereto and their successors hereunder and the Holders, any benefit or any legal or equitable right, remedy or claim under this Fourth Supplemental Indenture.

     SECTION 207. Execution and Counterparts. This Fourth Supplemental Indenture may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

     SECTION 208. Governing Law. This Fourth Supplemental Indenture shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York.

[Remainder of page intentionally left blank

     IN WITNESS WHEREOF, the parties hereto have caused this Fourth Supplemental Indenture to be duly executed by their respective officers or directors duly authorized thereto, all as of the day and year first above written.

WESTERN POWER DISTRIBUTION LLP

By:
                                             
Name:
Title:

WPD Holdings UK

By:
                                             
Name:
Title:

WESTERN POWER DISTRIBUTION HOLDINGS
LIMITED

By:
                                             
Name:
Title:

DEUTSCHE BANK TRUST COMPANY
AMERICAS,
as Trustee, Principal Paying Agent, Security
Registrar and Transfer Agent

By:
                                             
Name:
Title:

DEUTSCHE BANK LUXEMBOURG S.A.,
as Paying and Transfer Agent

By:
                                             
Name:
Title:

EX-4

                                                                  Exhibit 4(m)-1


                           SOUTHERN INVESTMENTS UK plc

                                       AND

                       BANKERS TRUST COMPANY, AS TRUSTEE,
              PRINCIPAL PAYING AGENT, REGISTRAR AND TRANSFER AGENT

                                       AND

                         BANKERS TRUST LUXEMBOURG S.A.,
                       AS PAYING AGENT AND TRANSFER AGENT




                        SUBORDINATED DEBENTURE INDENTURE

                          DATED AS OF JANUARY 29, 1997









                           SOUTHERN INVESTMENTS UK plc
         RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT OF 1939 AND
         SUBORDINATED DEBENTURE INDENTURE, DATED AS OF JANUARY 29, 1997

                    TRUST INDENTURE
                      ACT SECTION                      INDENTURE SECTION

(S)      310(a)(1).............................................609
            (a)(2).............................................609
            (a)(3)..................................Not Applicable
            (a)(4)..................................Not Applicable
            (b)................................................608
                                                               610
(S)  311(a)....................................................613
         311(b)(4)..........................................613(a)
            (b)(6)..........................................613(b)
(S)      312(a)................................................701
                                                            702(a)
            (c).............................................702(b)
(S)      313(a).............................................703(a)
         313(b).............................................703(b)
         313(c).............................................703(c)
                                                               704
            (d).............................................703(c)
(S)      314(a)..........................................704, 1007
            (b).....................................Not Applicable
            (c)(1).............................................102
            (c)(2).............................................102
            (c)(3)..................................Not Applicable
            (d).....................................Not Applicable
            (e)................................................102
(S)      315(a).............................................601(a)
            (b)................................................602
            (c).............................................601(b)
            (d).............................................601(c)
            (d)(1).......................................601(a)(1)
            (d)(2).......................................601(c)(2)
            (d)(3).......................................601(c)(3)
            (e)................................................514
(S)      316(a)................................................101
            (a)(1)(A)..........................................502
                                                               512
            (a)(1)(B)..........................................513
            (a)(2)..................................Not Applicable
            (b)................................................508
(S)      317(a)(1).............................................503
            (a)(2).............................................504
            (b)...............................................1003
(S)      318(a)................................................107









                                TABLE OF CONTENTS

                                                                     PAGE

Parties.................................................................1
Recitals of the Company.................................................1



ARTICLE ONE.............................................................2
  DEFINITIONS...........................................................2
     SECTION 101. DEFINITIONS...........................................2
        Act.............................................................3
        Additional Amounts..............................................3
        Additional Amounts..............................................3
        Affiliate.......................................................3
        Allocable Amounts...............................................3
        Authenticating Agent............................................4
        Bearer Security.................................................4
        Board of Directors..............................................4
        Board Resolution................................................4
        Book-Entry Depositary...........................................4
        Book-Entry Interest.............................................4
        Business Day....................................................4
        Capital Securities..............................................4
        Cedel Bank......................................................5
        Commission......................................................5
        Common Securities...............................................5
        Company.........................................................5
        Company Request" or "Company Order..............................5
        Corporate Trust Office..........................................5
        Corporation.....................................................5
        Declaration of Trust............................................5
        Defaulted Interest..............................................6
        Definitive Registered Securities................................6
        Deposit Agreement...............................................6
        Depositary......................................................6
        Distributions...................................................6
        Dollar or $.....................................................6
        DWAC............................................................6
        Euroclear.......................................................6
        Event of Default................................................6
        Exchange Act....................................................7
        Extension Period................................................7
        Global Security.................................................7
        Guarantee.......................................................7
        Holder..........................................................7
        Indenture.......................................................7
        Institutional Trustee...........................................7
        Interest Payment Date...........................................7
        Investment Company Act..........................................7
        Investment Company Event........................................7
        Issuer Trust....................................................8
        Maturity........................................................8
        New Subordinated Debentures.....................................8
        Notice of Default...............................................8
        Officers' Certificate...........................................8
        Opinion of Counsel..............................................8
        Outstanding.....................................................8
        Paying Agent....................................................9
        Person.........................................................10
        Predecessor Security...........................................10
        Principal Paying Agent.........................................10
        Proceeding.....................................................10
        Qualified Institutional Buyer or QIB...........................10
        Redemption Date................................................10
        Redemption Price...............................................10
        Regular Record Date............................................10
        Regular Trustee................................................10
        Regulation S...................................................11
        Regulation S Global Book-Entry Interest........................11
        Relevant Date..................................................11
        Resale Restriction Termination Date............................11
        Responsible Officer............................................11
        Restricted Global Security.....................................11
        Restricted Period..............................................11
        Restricted Securities Legend...................................11
        Restricted Security............................................12
        Rule 144A......................................................12
        Securities Act.................................................12
        Security.......................................................12
        Security Register and Security Registrar.......................12
        Senior Indebtedness............................................12
        Significant Subsidiary.........................................13
        Special Event..................................................13
        Special Record Date............................................13
        Stated Maturity................................................13
        Subordinated Debentures........................................13
        Subsidiary.....................................................13
        Tax Event......................................................14
        Transfer Agent.................................................14
        Trust Indenture Act............................................14
        Trust Securities...............................................15
        Trustee........................................................15
        U.S. Government Obligations....................................15
        Vice President.................................................15
     SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.................15
     SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE...............16
     SECTION 104. ACTS OF HOLDERS......................................17
     SECTION 105. NOTICES, ETC., TO TRUSTEE AND COMPANY................19
     SECTION 106. NOTICE TO HOLDERS OF SECURITIES; WAIVER..............19
     SECTION 107. CONFLICT WITH TRUST INDENTURE ACT....................21
     SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS.............21
     SECTION 109. SUCCESSORS AND ASSIGNS...............................21
     SECTION 110. SEPARABILITY CLAUSE..................................21
     SECTION 111. BENEFITS OF INDENTURE................................22
     SECTION 112. GOVERNING LAW........................................22
     SECTION 113. LEGAL HOLIDAYS.......................................22


ARTICLE TWO............................................................22
  SECURITY FORMS.......................................................22
     SECTION 201. SECURITY FORMS GENERALLY.............................22


ARTICLE THREE..........................................................24
  THE SECURITIES.......................................................24
     SECTION 301. TITLE AND TERMS; DENOMINATIONS.......................24
     SECTION 302. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.......25
     SECTION 303. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE..26
     SECTION 304. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES.....28
     SECTION 305. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.......29
     SECTION 306. PERSONS DEEMED OWNERS................................31
     SECTION 307. CANCELLATION.........................................32
     SECTION 308. COMPUTATION OF INTEREST..............................32
     SECTION 309. GLOBAL SECURITIES....................................32
     SECTION 310.  Restrictive Legend..................................36
     SECTION 311. Special Transfer Provisions..........................38
     SECTION 312. TEMPORARY SECURITIES.................................42
     SECTION 313. DEFERRALS OF INTEREST PAYMENT DATES..................43
     SECTION 314. NOTICE OF EXTENSION..................................44
     SECTION 316. CUSIP NUMBERS........................................44


ARTICLE FOUR...........................................................45
  SATISFACTION AND DISCHARGE...........................................45
     SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE..............45
     SECTION 402. Application of Trust Money...........................47
     SECTION 403. Satisfaction, Discharge and Defiance of Securities
                  of any Series........................................48


ARTICLE FIVE...........................................................49
  REMEDIES 49
     SECTION 501. EVENTS OF DEFAULT....................................49
     SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT...51
     SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT
                  BY TRUSTEE...........................................52
     SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM.....................53
     SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
                  SECURITIES...........................................54
     SECTION 506. APPLICATION OF MONEY COLLECTED.......................54
     SECTION 507. LIMITATION ON SUITS..................................55
     SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,
                  PREMIUM AND INTEREST.................................56
     SECTION 509. RESTORATION OF RIGHTS AND REMEDIES...................57
     SECTION 510. RIGHTS AND REMEDIES CUMULATIVE.......................57
     SECTION 511. DELAY OR OMISSION NOT WAIVER.........................57
     SECTION 512. CONTROL BY HOLDERS OF SECURITIES.....................58
     SECTION 513. WAIVER OF PAST DEFAULTS..............................58
     SECTION 514. UNDERTAKING FOR COSTS................................58
     SECTION 515. WAIVER OF STAY OR EXTENSION LAWS.....................59


ARTICLE SIX............................................................59
  THE TRUSTEE..........................................................59
     SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES..................60
     SECTION 602. NOTICE OF DEFAULTS...................................61
     SECTION 603. CERTAIN RIGHTS OF TRUSTEE............................61
     SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF
                  SECURITIES...........................................63
     SECTION 605. MAY HOLD SECURITIES..................................64
     SECTION 606. MONEY HELD IN TRUST..................................64
     SECTION 607. COMPENSATION AND REIMBURSEMENT.......................64
     SECTION 608. DISQUALIFICATION; CONFLICTING INTERESTS..............65
     SECTION 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY..............65
     SECTION 610. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR....66
     SECTION 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR...............67
     SECTION 612. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
                  BUSINESS.............................................68
     SECTION 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY....68
     SECTION 614. APPOINTMENT OF AUTHENTICATING AGENT..................69


ARTICLE SEVEN..........................................................71
  HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY....................71
     SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
                  HOLDERS..............................................71
     SECTION 702. PRESERVATION OF INFORMATION; COMMUNICATIONS TO
                  HOLDERS..............................................72
     SECTION 703. REPORTS BY TRUSTEE...................................72
     SECTION 704. REPORTS BY COMPANY...................................73


ARTICLE EIGHT..........................................................74
  CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE.................74
     SECTION 801. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.74
     SECTION 802. SUCCESSOR CORPORATION SUBSTITUTED....................75


ARTICLE NINE...........................................................75
  SUPPLEMENTAL INDENTURES..............................................75
     SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS...76
     SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS......77
     SECTION 903. GENERAL PROVISIONS REGARDING SUPPLEMENTAL INDENTURE..78
     SECTION 904. EXECUTION OF SUPPLEMENTAL INDENTURES.................78
     SECTION 905. EFFECT OF SUPPLEMENTAL INDENTURES....................79
     SECTION 906. CONFORMITY WITH TRUST INDENTURE ACT..................79
     SECTION 907. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES...79


ARTICLE TEN............................................................80
  COVENANTS............................................................80
     SECTION 1001. PAYMENT OF PRINCIPAL AND INTEREST...................80
     SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY.....................80
     SECTION 1003. MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST...81
     SECTION 1004. ADDITIONAL AMOUNTS..................................82
     SECTION 1005. CORPORATE EXISTENCE.................................84
     SECTION 1006. LIMITATIONS ON DIVIDEND AND CERTAIN OTHER PAYMENTS..84
     SECTION 1007. STATEMENT AS TO COMPLIANCE..........................85
     SECTION 1008. WAIVER OF CERTAIN COVENANTS.........................85
     SECTION 1009. COVENANTS REGARDING TRUST...........................86


ARTICLE ELEVEN.........................................................86
  REDEMPTION OF SECURITIES.............................................86
     SECTION 1101. OPTIONAL REDEMPTION; CONDITIONS TO OPTIONAL
                   REDEMPTION..........................................86
     SECTION 1102. ELECTION TO REDEEM; NOTICE TO TRUSTEE...............89
     SECTION 1103. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED...90
     SECTION 1104. NOTICE OF REDEMPTION................................91
     SECTION 1105. DEPOSIT OF REDEMPTION PRICE.........................91
     SECTION 1106. SECURITIES PAYABLE ON REDEMPTION DATE...............91
     SECTION 1107. SECURITIES REDEEMED IN PART.........................92
     SECTION 1108. APPLICABILITY OF ARTICLE............................92


ARTICLE THIRTEEN.......................................................93
  SUBORDINATION........................................................93
     SECTION 1201. SECURITIES SUBORDINATE TO SENIOR INDEBTEDNESS.......93
     SECTION 1202. PAYMENT OF PROCEEDS UPON DISSOLUTION, ETC...........93
     SECTION 1203. NO PAYMENT WHEN SENIOR INDEBTEDNESS IN DEFAULT......95
     SECTION 1204. PAYMENT PERMITTED IF NO DEFAULT.....................96
     SECTION 1205. SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR
                   INDEBTEDNESS........................................96
     SECTION 1206. PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS.........96
     SECTION 1207. TRUSTEE TO EFFECTUATE SUBORDINATION.................97
     SECTION 1208. NO WAIVER OF SUBORDINATION PROVISIONS...............97
     SECTION 1209. TRUST MONEYS NOT SUBORDINATED.......................98
     SECTION 1210. NOTICE TO THE TRUSTEE...............................99
     SECTION 1211. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF
                   LIQUIDATING AGENT..................................100
     SECTION 1212. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR
                   INDEBTEDNESS.......................................100
     SECTION 1213. RIGHTS OF TRUSTEE AS HOLDER OF SENIOR INDEBTEDNESS;
                   PRESERVATION OF TRUSTEE'S RIGHTS...................100
     SECTION 1214. ARTICLE APPLICABLE TO PAYING AGENTS................101
     SECTION 1215. RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS ON
                   SUBORDINATION PROVISIONS...........................101


ARTICLE THIRTEEN......................................................101
  SECURITYHOLDERS' MEETINGS...........................................102
     SECTION 1401.  PURPOSES OF MEETINGS..............................102
     SECTION 1302.  CALL OF MEETINGS BY TRUSTEE.......................102
     SECTION 1303.  CALL OF MEETINGS BY COMPANY OR HOLDERS............103
     SECTION 1304.  QUALIFICATIONS FOR VOTING.........................103
     SECTION 1305.  REGULATIONS.......................................103
     SECTION 1306.  VOTING............................................104


ARTICLE FOURTEEN......................................................105
  MISCELLANEOUS PROVISIONS............................................105
     SECTION 1401. NO RECOURSE AGAINST OTHERS.........................105
     SECTION 1402. SET-OFF............................................105
     SECTION 1403. ASSIGNMENT; BINDING EFFECT.........................106
     SECTION 1404. ADDITIONAL AMOUNTS AND ADDITIONAL SUMS.............106


ARTICLE FIFTEEN.......................................................106
  MISCELLANEOUS.......................................................106
     SECTION  1501. Consent to Jurisdiction; Appointment of Agent to
                    Accept Service of Process.........................106
     SECTION  1502 Counterparts.......................................109












                        SUBORDINATED DEBENTURE INDENTURE

         THIS SUBORDINATED DEBENTURE INDENTURE is made as of January 29, 1997,
between SOUTHERN INVESTMENTS UK plc, a public limited company incorporated under
the laws of England and Wales (herein called the "Company"), having its
principal office at 800 Park Avenue, Aztec West, Almondsbury, Bristol B512 45E
England, and BANKERS TRUST COMPANY, a banking corporation duly organized and
existing under the laws of the State of New York, having its principal corporate
trust office at Four Albany Street, New York, New York 10006, as Trustee (herein
called the "Trustee") and BANKERS TRUST LUXEMBOURG S.A., as Paying and Transfer
Agent.

                              W I T N E S S E T H:

         WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the execution and delivery of this Indenture to provide for the
issuance of its unsecured subordinated debentures (the "Subordinated
Debentures") and its new unsecured subordinated debentures (the "New
Subordinated Debentures," and together with the Subordinated Debentures, the
"Securities") to be issued in exchange for the Subordinated Debentures;

         WHEREAS, Southern Investments UK Capital Trust I (the "Issuer Trust")
has offered undivided preferred beneficial interests in the assets of such
Issuer Trust (the "Capital Securities") and undivided common beneficial
interests in the assets of such Issuer Trust (the "Common Securities" and,
collectively with the Capital Securities, the "Trust Securities");

         WHEREAS, to provide the terms and conditions upon which the Securities
are to be authenticated, issued and delivered, the Company has duly authorized
the execution of this Indenture; and

         WHEREAS, all things necessary to make this Indenture a valid agreement
of the Company, in accordance with its terms, have been done.

         NOW, THEREFORE, for and in consideration of the premises and the
purchase of the Securities by the Holders thereof, it is mutually covenanted and
agreed, for the equal and proportionate benefit of all Holders of the
Securities, as follows:

                                   ARTICLE ONE

                        DEFINITIONS AND OTHER PROVISIONS
                             OF GENERAL APPLICATION

SECTION 101.      DEFINITIONS.

         For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:

               (1) the terms defined in this Article have the meanings  assigned
          to  them  in  this  Article  and  include  the  plural  as well as the
          singular;

                  (2) all other terms used herein which are defined in the Trust
         Indenture Act, either directly or by reference therein, have the
         meanings assigned to them therein;

                  (3) all accounting terms not otherwise defined herein have the
         meanings assigned to them in accordance with generally accepted
         accounting principles in the United Kingdom, and, except as otherwise
         herein expressly provided, the term "generally accepted accounting
         principles" with respect to any computation required or permitted
         hereunder shall mean such accounting principles as are generally
         accepted in the United Kingdom at the date of such computation;

                  (4) the words "herein", "hereof" and "hereunder" and other
         words of similar import refer to this Indenture as a whole and not to
         any particular Article, Section or other subdivision;

               (5) a reference to any Person shall  include its  successors  and
          assigns;

                  (6) a reference to any agreement or instrument shall mean such
         agreement or instrument as supplemented, modified, amended or restated
         and in effect from time to time; and

                  (7) a reference to any statute, law, rule or regulation shall
         include any amendments thereto applicable to the relevant Person, and
         any successor statute, law, rule or regulation.

         Certain terms, used principally in Article Six, are defined in that
Article.

         "Act", when used with respect to any Holder of a Security, has the
meaning specified in Section 104.

         "Additional Amounts" shall have the meaning specified in Section 1004.

         "Additional Sums" " means the additional amounts as may be necessary in
order that the amount of any distribution then due and payable by the Issuer
Trust on the outstanding Trust Securities shall not be reduced as a result of
any additional taxes, duties and other governmental charges to which the Issuer
Trust has become subject as a result of a Tax Event.

         "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing. Notwithstanding the foregoing, the Issuer Trust shall not be deemed
to be an Affiliate of the Company.

         "Allocable Amounts," when used with respect to any Senior Indebtedness,
means all amounts due or to become due on such Senior Indebtedness less, if
applicable, any amount which would have been paid to, and retained by, the
holders of such Senior Indebtedness (whether as a result of the receipt of
payments by the holders of such Senior Indebtedness from the Company or any
other obligor thereon or from any holders of, or trustee in respect of, other
indebtedness that is subordinate and junior in right of payment to such Senior
Indebtedness pursuant to any provision of such indebtedness for the payment over
of amounts received on account of such indebtedness to the holders of such
Senior Indebtedness or otherwise) but for the fact that such Senior Indebtedness
is subordinate or junior in right of payment to (or subject to a requirement
that amounts received on such Senior Indebtedness be paid over to obligees on)
trade accounts payable or accrued liabilities arising in the ordinary course of
business.

     "Authenticating  Agent"  means any  Person  or  Persons  authorized  by the
Trustee to authenticate the Securities.

         "Bearer Security" means any Security that is payable to bearer.

         "Board of Directors" means either the board of directors of the Company
or any duly authorized committee of the officers and/or directors of the Company
appointed by that board.

         "Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.

         "Book-Entry Depositary" means, with respect to the Securities issuable
or issued in whole or in part in the form of one or more Global Securities, the
Person designated as Book-Entry Depositary by the Company pursuant to the
Deposit Agreement and, if so provided, to any successor to such Person.

         "Book-Entry Interest" means a certificateless depositary interest to be
issued by the Book-Entry Depositary to the Issuer Trust or DTC or its successor
as depositary of the Book-Entry Interests as provided in the Deposit Agreement.

         "Business Day" means a day other than (i) a Saturday or a Sunday, (ii)
a day on which banks in New York, New York or Bristol, England are authorized or
obligated by law or executive order to remain closed, or (iii) a day on which
the Trustee's Corporate Trust Office or Institutional Trustee's principal
corporate trust office is closed for business.

     "Capital  Securities"  has the meaning  specified  in the  recitals of this
Indenture.

         "Cedel Bank" means Cedel, Bank, societe anonyme.

         "Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Exchange Act or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.

     "Common  Securities"  has the  meaning  specified  in the  recitals of this
Indenture.

         "Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor corporation shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor corporation.

         "Company Request" or "Company Order" means a written request or order
signed in the name of the Company by any Director of the Company and by any
other Director of the Company or its Treasurer, an Assistant Treasurer, its
Secretary or an Assistant Secretary or any other officer so authorized, and
delivered to the Trustee.

         "Corporate Trust Office" means the office of the Trustee in the Borough
of Manhattan, New York City, at which at any particular time its corporate trust
business shall be principally administered, which office at the date of
execution of this Indenture is located at Four Albany Street, New York, New York
10006, Attention: Corporate Trust and Agency Group - Public Utilities Group.

         "Corporation" includes corporations, partnerships, limited liability
companies, associations, companies and business trusts.

         "Declaration of Trust" means the Amended and Restated Declaration of
Trust dated as of January 29, 1997 between the Company, as Sponsor, and the
Trustee, Bankers Trust Company, as Institutional Trustee, Bankers Trust
(Delaware), a Delaware corporation, as Delaware Trustee, and two individuals as
Regular Trustees.

         "Defaulted Interest" has the meaning specified in Section 305.

         "Definitive Registered Securities" means any Security that is payable
to a registered owner or registered assignee thereof as registered in the
Security Register.

         "Deposit Agreement" means the deposit agreement dated January 29, 1997,
among the Company, the Book-Entry Depositary and the holders and beneficial
owners from time to time of interests in the Book-Entry Interests.

         "Depositary" means, with respect to Securities issuable or issued as a
Global Security, the Book-Entry Depositary and, with respect to the Book-Entry
Interests the Issuer Trust and after its dissolution, The Depository Trust
Company, New York, New York, or any successor thereto registered as a clearing
agency under the Exchange Act or other applicable statute or regulation, which
in each case, shall be designated by the Company pursuant to Section 309.

         "Distributions," with respect to the Trust Securities issued by the
Issuer Trust, means amounts payable in respect of such Trust Securities as
provided in the Declaration of Trust and referred to therein as "Distributions."

         "Dollar" or "$" means the currency of the United States of America
that, as at the time of payment, is legal tender for the payment of public and
private debts.

         "DWAC" means Deposit and Withdrawal at Custodian Service.

         "Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, or its successor as operator of the Euroclear System.

         "Event of Default" has the meaning specified in Section 501.

     "Exchange  Act" means the  Securities  Exchange  Act of 1934 or any statute
successor thereto, in each case as amended from time to time.

         "Extension Period" has the meaning specified in Section 313.

         "Global Security" means a Security in bearer form that is executed by
the Company and authenticated and delivered by the Trustee to the Book-Entry
Depositary or pursuant to the Book-Entry Depositary's instruction.

         "Guarantee" means either of the Capital Securities Guarantee Agreement
or the Common Securities Guarantee Agreement dated as of the date hereof by the
Company for the benefit of the holders from time to time of all or a portion of
the Trust Securities.

         "Holder", when used with respect to any Security, means, in the case of
a Registered Security, the Person in whose name the Security is registered in
the Security Register and, in the case of a Global Security, the bearer thereof.

         "Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.

     "Institutional  Trustee"  means  the  Person  designated  as  such  in  the
Declaration of Trust.

         "Interest Payment Date", when used with respect to any installment of
interest on a Security, means the date specified in such Security as the fixed
date on which an installment of interest with respect to the Securities is due
and payable.

     "Investment  Company Act" means the  Investment  Company Act of 1940 or any
successor statute thereto, in each case as amended from time to time.

         "Investment Company Event" means the receipt by the Regular Trustees of
the Issuer Trust of an opinion of nationally recognized independent counsel
experienced in practice under the Investment Company Act to the effect that, as
a result of the occurrence of a change in law or regulation or a change
(including any announced prospective change) in interpretation or application of
law or regulation by any legislative body, court, governmental agency or
regulatory authority, there is more than an insubstantial risk that the Issuer
Trust is or will be considered an "investment company" which is required to be
registered under the Investment Company Act, which change or prospective change
becomes effective or would become effective, as the case may be, on or after
January 23, 1997.

     "Issuer Trust" has the meaning specified in the recitals of this Indenture.

         "Maturity", when used with respect to any Security, means the date on
which the principal of such Security or an installment of principal becomes due
and payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.

     "New Subordinated  Debentures" has the meaning specified in the recitals of
this Indenture.

     "Notice of Default" means a written notice of the kind specified in Section
501(3).

         "Officers' Certificate" means a certificate signed by any Director of
the Company and by any other Director of the Company or the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary or any other
officer so authorized, and delivered to the Trustee.

         "Opinion of Counsel" means a written opinion of counsel, who may be an
employee of or regular counsel for the Company, and who shall be reasonably
acceptable to the Trustee.

         "Outstanding", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:

               (i) Securities  theretofore  canceled by the Trustee or delivered
          to the Trustee for cancellation;

               (ii)  Securities  for whose  payment or  redemption  money in the
          necessary  amount has been  theretofore  deposited with the Trustee or
          any Paying  Agent  (other than the  Company) in trust or set aside and
          segregated  in trust by the Company  (if the Company  shall act as its
          own Paying Agent) for the Holders of such Securities; provided that if
          such Securities are to be redeemed, notice of such redemption has been
          duly  given   pursuant  to  this   Indenture  or  provision   therefor
          satisfactory to the Trustee has been made; and

               (iii)  Securities  that have been paid or in  exchange  for or in
          lieu of which other Securities have been  authenticated  and delivered
          pursuant to this Indenture,  other than any such Securities in respect
          of  which  there  shall  have  been  presented  to the  Trustee  proof
          satisfactory  to it that  such  Securities  are  held  by a bona  fide
          purchaser in whose hands such Securities are valid  obligations of the
          Company;

provided, however, that in determining, during any period in which any
Securities are owned by any Person other than the Company or any Affiliate
thereof, whether the Holders of the requisite principal amount of Outstanding
Securities have given any request, demand, authorization, direction, notice,
consent or waiver hereunder, Securities owned by the Company or any Affiliate
thereof shall be disregarded and deemed not to be Outstanding. In determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities that the
Trustee knows to be so owned by the Company or an Affiliate of the Company in
the above circumstances shall be so disregarded. Securities so owned that have
been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the Company or any
Affiliate of the Company.

     "Paying  Agent" means  Bankers Trust  Luxembourg  S.A. and any other Person
authorized  by the  Company to pay the  principal  of (and  premium,  if any) or
interest on any Securities on behalf of the Company hereunder, including without
limitation, the Principal Paying Agent.

         "Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.

         "Predecessor Security" of any particular Security means every Security
evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 304 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.

         "Principal Paying Agent" means Bankers Trust Company until a successor
Principal Paying Agent shall have become such pursuant to the applicable
provisions of this Indenture and, thereafter, "Principal Paying Agent" shall
mean such successor Principal Paying Agent.

         "Proceeding" has the meaning specified in Section 1202.

         "Qualified Institutional Buyer" or "QIB" shall have the meaning
specified in Rule 144A under the Securities Act.

         "Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.

         "Redemption Price", shall have the meaning specified in Section 1101 of
this Indenture.

         "Regular Record Date" for the interest payable on any Interest Payment
Date means the date next preceding such Interest Payment Date.

         "Regular Trustee", as provided for in the Declaration of Trust, means
the Trustee who is an employee, officer or affiliate of the Company.

         "Regulation S" means Regulation S under the Securities Act and any
successor regulation thereto.

         "Regulation S Global Book-Entry Interest" means any Global Book-Entry
Interests or Global Securities evidencing Book-Entry Interests that are to be
traded pursuant to Regulation S.

         "Relevant Date" means, with respect to any payment made with respect to
the Securities, the later of (i) the date on which such payment first becomes
due and (ii) if the full amount payable has not been received in The City of New
York by the Book-Entry Depositary or the Trustee on or prior to such due date,
the date on which, the full amount having been so received, notice to that
effect shall have been given to the Holders in accordance with this Indenture.

         "Resale Restriction Termination Date" shall have the meaning specified
in Section 310 of this Indenture.

         "Responsible Officer" when used with respect to the Trustee, means any
Managing Director, vice president, any assistant vice president, any assistant
secretary, the treasurer, any assistant treasurer, any trust officer or
assistant trust officer or any other officer in the Corporate Trust and Agency
Group of the Trustee customarily performing functions similar to those performed
by any of the above designated officers and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of that officer's knowledge of and familiarity with the
particular subject.

         "Restricted Global Book-Entry Interest" means any Global Book-Entry
Interest or Book-Entry Interests evidencing Global Book-Entry Interests that are
to be traded pursuant to Rule 144A.

         "Restricted Period" shall have the meaning specified in Section 311 of
this Indenture.

         "Restricted Securities Legend" shall have the meaning specified in
Section 310 of this Indenture.

         "Restricted Security" means each Security required pursuant to Section
310 to bear a Restricted Securities Legend.

         "Rule 144A" means Rule 144A under the Securities Act.

     "Securities Act" means the Securities Act of 1933 or any successor  statute
thereto, in each case as amended from time to time.

         "Security" has the meaning stated in the recitals of this Indenture and
more particularly means any Securities authenticated and delivered under this
Indenture.

         "Security Register" and "Security Registrar" have the respective
meanings specified in Section 303.

         "Senior Indebtedness" means, (a) the principal of and premium, if any,
and interest on all indebtedness of the Company, whether outstanding on the date
of this Indenture or thereafter created, (i) for money borrowed by the Company,
(ii) for money borrowed by, or obligations of, others and either assumed or
guaranteed, directly or indirectly, by the Company, (iii) in respect of letters
of credit and acceptances issued or made by banks, or (iv) constituting purchase
money indebtedness, or indebtedness secured by property included in the
property, plant and equipment accounts of the Company at the time of the
acquisition of such property by the Company, for the payment of which the
Company is directly liable, (b) all deferrals, renewals, extensions and
refundings of, and amendments, modifications and supplements to, any such
indebtedness, and (c) all other general unsecured obligations and liabilities of
the Company, including without limitation, trade payables. As used in the
preceding sentence the term "purchase money indebtedness" means indebtedness
evidenced by a note, debenture, bond or other instrument (whether or not secured
by any lien or other security interest) issued or assumed as all or a part of
the consideration for the acquisition of property, whether by purchase, merger,
consolidation or otherwise. Notwithstanding anything to the contrary in this
Indenture or the Securities, Senior Indebtedness shall not include (i) any
indebtedness of the Company which, by its terms or the terms of the instrument
creating or evidencing it or by the law governing it, is subordinate in right of
payment to or pari passu with the Securities, as the case may be, and, in
particular, the Securities shall rank pari passu with all other debt securities
and guarantees in respect of those debt securities, issued to any other Southern
Investments Capital Trust or (ii) any indebtedness of the Company to a
subsidiary.

         "Significant Subsidiary" means, at any particular time, any Subsidiary
whose gross assets or gross revenues (having regard to the Company's direct
and/or indirect beneficial interest in the shares, or the like, of that
Subsidiary) represent at least 25% of the consolidated gross assets or, as the
case may be, consolidated gross revenues of the Company.

     "Special Event" means either an Investment Company Event or a Tax Event.

         "Special Record Date" for the payment of any Defaulted Interest on the
Securities means a date fixed by the Trustee pursuant to Section 305.

         "Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable, as such date may,
in the case of any installment of interest, be subject to the deferral of any
such date in the case of any Extension Period.

     "Subordinated Debentures" has the meaning specified in the recitals of this
Indenture.

         "Subsidiary" means a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Company or by one
or more other Subsidiaries, or by the Company and one or more other
Subsidiaries. For purposes of this definition, "voting stock" means stock that
ordinarily has voting power for the election of directors, whether at all times
or only so long as no senior class of stock has such voting power by reason of
any contingency.

         "Tax Event" means the receipt by the Regular Trustees of the Issuer
Trust of an opinion of nationally recognized independent tax counsel experienced
in such matters to the effect that as a result of (a) any amendment to, or
change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States, the United Kingdom or any
political subdivision or taxing authority thereof or therein, (b) any amendment
to, or change in, an interpretation or application of any such laws or
regulations by any legislative body, court, governmental agency or regulatory
authority (including the enactment of any legislation and the publication of any
judicial decision or regulatory determination), (c) any interpretation or
pronouncement that provides for a position with respect to such laws or
regulations that differs from the theretofore generally accepted position or (d)
any action taken by any governmental agency or regulatory authority, which
amendment or change is enacted, promulgated, issued or announced or which
interpretation or pronouncement is issued or announced or which action is taken,
in each case on or after January 23, 1997, there is more than an insubstantial
risk that (i) the Issuer Trust is, or will be within 90 days of the date of such
opinion, subject to United States federal or United Kingdom income tax with
respect to income accrued or received on the Securities, (ii) the Issuer Trust
is, or will be within 90 days of the date of such opinion, subject to more than
a de minimis amount of other taxes, duties or other governmental charges or
(iii) interest payable by the Company to the Issuer Trust on the Securities is
not, or within 90 days of the date of such opinion will not be, deductible by
the Company for United States earnings and profits purposes or United Kingdom
income tax purposes.

         "Transfer Agent" means any Person authorized by the Company to
effectuate the exchange or transfer of any Security on behalf of the Company
hereunder.

         "Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended, and any reference herein to the Trust Indenture Act or a particular
provision thereof shall mean such Trust Indenture Act or provision, as the case
may be, as amended or replaced from time to time.

     "Trust  Securities"  has the  meaning  specified  in the  recitals  of this
Indenture.

         "Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.

         "U.S. Government Obligations" means direct obligations of the United
States for the payment of which its full faith and credit is pledged, or
obligations of a person controlled or supervised by and acting as an agency or
instrumentality of the United States and the payment of which is unconditionally
guaranteed by the United States, and shall also include a depository receipt
issued by a bank or trust company as custodian with respect to any such U.S.
Government Obligation or a specific payment of interest on or principal of any
such U.S. Government Obligation held by such custodian for the account of a
holder of a depository receipt; provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the U.S. Government obligation or the specific payment of interest on
or principal of the U.S. Government Obligation evidenced by such depository
receipt.

         "Vice President", when used with respect to the Trustee, means any vice
president, whether or not designated by a number or a word or words added before
or after the title "vice president."

SECTION 102.      COMPLIANCE CERTIFICATES AND OPINIONS.

         Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee an Officers' Certificate stating that all conditions precedent, if
any, provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.

         Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include

               (i) a statement that each individual  signing such certificate or
          opinion has read such covenant or condition and the definitions herein
          relating thereto;

               (ii)  a  brief  statement  as to  the  nature  and  scope  of the
          examination  or  investigation  upon which the  statements or opinions
          contained in such certificate or opinion are based;

               (iii) a statement  that, in the opinion of each such  individual,
          he has made such  examination  or  investigation  as is  necessary  to
          enable him to express  an  informed  opinion as to whether or not such
          covenant or condition has been complied with; and

               (iv) a  statement  as to  whether,  in the  opinion  of each such
          individual, such condition or covenant has been complied with.

SECTION 103.      FORM OF DOCUMENTS DELIVERED TO TRUSTEE.

         In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be certified or covered by only one document, but one such
Person may certify or give an opinion with respect to some matters and one or
more other such Persons as to other matters, and any such Person may certify or
give an opinion as to such matters in one or several documents.

         Any certificate or opinion of an officer or Director of the Company may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer or Director knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or Opinion of Counsel may
be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers or Director or
Directors of the Company stating that the information with respect to such
factual matters is in the possession of the Company, unless such counsel knows,
or in the exercise of reasonable care should know, that the certificate or
opinion or representations with respect to such matters are erroneous.

         Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.

SECTION 104.      ACTS OF HOLDERS.

         (a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent or
agents duly appointed in writing. Except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent, shall be sufficient for
any purpose of this Indenture and (subject to Section 601) conclusive in favor
of the Trustee and the Company, if made in the manner provided in this Section.

         Without limiting the generality of the foregoing, a Holder, including a
Book-Entry Depositary that is a Holder of a Global Security, may make, give or
take, by a proxy, or proxies, duly appointed in writing, any request, demand,
authorization, direction, notice, consent, waiver or other action provided in
this Indenture to be made, given or taken by Holders, and a Book-Entry
Depositary that is a Holder of a Global Security may provide its proxy or
proxies to the beneficial owners of interests in any such Global Security
through such Book-Entry Depositary's standing instructions and customary
practices.

         (b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority.

         (c) The principal or face amount and serial numbers of Bearer
Securities held by any Person, and the date of holding the same, may be proved
by the production of such Bearer Securities or by a certificate executed by the
Book-Entry Depositary for such Bearer Securities.

         (d) If Securities are issued in registered form the principal amount
and serial numbers of such Securities held by any Person, and the date of
holding the same, shall be proved by the Security Register.

         (e) Any request, demand, authorization, direction, notice, consent,
election, waiver or other Act of the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Trustee or
the Company in reliance thereon, whether or not notation of such action is made
upon such Security.

         (f) The fact and date of execution of any such instrument or writing
and the authority of the Person executing the same may also be proved in any
other manner which the Trustee deems sufficient; and the Trustee may in any
instance require further proof with respect to any of the matters referred to in
this Section.

         (g) The Company may, in the circumstances permitted by the Trust
Indenture Act, at its option, by Board Resolution, fix in advance a record date
for the determination of Holders of Securities entitled to take such Act, but
the Company shall have no obligation to do so. Any such record date shall be
fixed at the Company's discretion. If such a record date is fixed, such Act may
be sought or given before or after the record date, but only the Holders of
record at the close of business on such record date shall be deemed to be
Holders of Securities for the purpose of determining whether Holders of the
requisite proportion of Securities Outstanding have authorized or agreed or
consented to such Act, and for that purpose the Securities Outstanding shall be
computed as of such record date.

SECTION 105.      NOTICES, ETC., TO TRUSTEE AND COMPANY.

         Any request, demand, authorization, direction, notice, consent,
election, waiver or Act of Holders or other document provided or permitted by
this Indenture to be made upon, given or furnished to, or filed with,

                  (1) the Trustee by any Holder of a Security or by the Company
         shall be sufficient for every purpose hereunder if made, given,
         furnished or filed in writing to or with the Trustee at its Corporate
         Trust Office, or

                  (2) the Company by the Trustee or by any Holder shall be
         sufficient for every purpose hereunder (unless otherwise herein
         expressly provided) if in writing and mailed, first-class postage
         prepaid, to the Company addressed to it at the address of its principal
         office specified in the first paragraph of this Indenture (to the
         attention of its Chief Financial and Accounting Officer) or at any
         other address previously furnished in writing to the Trustee by the
         Company.

SECTION 106.      NOTICE TO HOLDERS OF SECURITIES; WAIVER.

         Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, (i) in the case of a Holder of Registered Securities, at his
address as it appears in the Security Register, and (ii) in the case of a Holder
of Global Securities, at the address provided in or pursuant to the relevant
Deposit Agreement of the relevant Book-Entry Depositary or Depositaries
therefor, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders.

         If, by reason of the suspension of regular mail service or by reason of
any other cause, it shall be impracticable to give such notice by mail, then
such notification as shall be made at the direction of the Company in a manner
reasonably calculated, to the extent practicable under the circumstances, to
provide prompt notice shall constitute a sufficient notification for every
purpose hereunder.

         Except as otherwise expressly provided herein, where this Indenture
provides for notice to Holders of Bearer Securities of any event and the rules
of any securities exchange on which such Bearer Securities are listed so
require, such notice shall be sufficiently given to Holders of such Bearer
Securities if published in such newspaper or newspapers as may be specified in
such Securities on a Business Day at least twice, the first such publication to
be not earlier than the earliest date, and not later than the latest date,
prescribed for the giving of such notice. Any such notice by publication shall
be deemed to have been given on the date of the first such publication. In
addition, notice to the Holder of any Global Bearer Security shall be given by
mail in the manner provided above.

         If by reason of any cause it shall be impracticable to publish any
notice to Holders of Bearer Securities as provided above, then such notification
to Holders of Bearer Securities as shall be given with the approval of the
Trustee shall constitute sufficient notice to such Holders for every purpose
hereunder. Neither the failure to give notice by publication to Holders of
Bearer Securities as provided above, nor any defect in any notice so published,
shall affect the sufficiency of such notice with respect to other Holders of
Bearer Securities or the sufficiency of any notice to Holders of Registered
Securities given as provided herein.

         Any request, demand, authorization, direction, notice, consent, waiver
or Act required or permitted under this Indenture shall be in the English
language, except that any published notice may be in an official language of the
country of publication.

         Where this Indenture provides for notice in any manner, such notice may
be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.

SECTION 107.      CONFLICT WITH TRUST INDENTURE ACT.

         Prior to the effectiveness of a registration statement under the
Securities Act relating to the New Subordinated Debentures, this Indenture shall
incorporate and be governed by the provisions of the TIA. Upon effectiveness of
a registration statement under the Securities Act relating to the New
Subordinated Debentures, this Indenture shall be subject to the provisions of
the TIA that are required to be a part of this Indenture and shall, to the
extent applicable, be governed by such provisions. If any provision hereof
limits, qualifies or conflicts with a provision of the Trust Indenture Act that
is required to be a part of and govern this Indenture, such required provision
shall control.

SECTION 108.      EFFECT OF HEADINGS AND TABLE OF CONTENTS.

         The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.

SECTION 109.      SUCCESSORS AND ASSIGNS.

         All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.

SECTION 110.      SEPARABILITY CLAUSE.

         In case any provision in this Indenture or the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

SECTION 111.      BENEFITS OF INDENTURE.

         Nothing in this Indenture or the Securities, express or implied, shall
give to any Person, other than the parties hereto, their successors hereunder
and the Holders of Securities and, to the extent provided in Section 1503, the
holders of Senior Indebtedness or Capital Securities, any benefit or any legal
or equitable right, remedy or claim under this Indenture.

SECTION 112.      GOVERNING LAW.

         THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.

SECTION 113.      LEGAL HOLIDAYS.

         In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day, then (notwithstanding any
other provision of this Indenture or of the Securities) payment of interest or
principal (and premium, if any) need not be made on such date, but may be made
on the next succeeding Business Day (and without any interest or other payment
in respect of such delay), except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such Interest Payment Date or Redemption Date, or at the Stated Maturity.


                                   ARTICLE TWO

                                 SECURITY FORMS

SECTION 201.      SECURITY FORMS GENERALLY.

         The Securities in bearer form shall be in the form attached hereto as
Exhibit A.

         The Securities in definitive form shall be in the form attached hereto
as Exhibit B; provided that the New Subordinated Debentures will not contain any
of the provisions with respect to transfer restrictions under the Securities Act
following the Trustee's authentication.

         If the Securities are distributed to the holders of Capital Securities
and Common Securities, the record holder (including the Depositary) of any
Capital Securities or Common Securities shall be issued Securities in the same
form (i.e., Book-Entry Interests or Definitive Registered Securities) as the
securities held by the Issuer Trust at the time of distribution with the legends
in substantially the form of the legends existing on the security representing
the Capital Securities or Common Securities to be exchanged (in all cases, with
such changes thereto as the officers or Directors executing such Securities
determine to be necessary or appropriate, as evidenced by their execution of the
Securities) and such other legends as may be required by Section 310 or Section
311 hereof), duly executed by the Company and authenticated by the Trustee or
the authenticating agent as provided herein, which Securities, if to be held in
global form by any Depositary, may be deposited on behalf of the holders of the
Securities represented thereby with the Trustee, as custodian for the
Depositary.

         Any Global Security shall represent such of the outstanding Securities
as shall be specified therein and shall provide that it shall represent the
aggregate amount of outstanding Securities from time to time endorsed thereon
and that the aggregate amount of outstanding Securities represented thereby may
from time to time be increased or reduced to reflect transfers or exchanges
permitted hereby. Any endorsement of a Global Security to reflect the amount of
any increase or decrease in the amount of outstanding Securities represented
thereby shall be made by the Trustee in such manner and upon instructions given
by the holder of such Securities in accordance with this Indenture. Payment of
principal of and interest and premium, if any, on any Global Security shall be
made to the holder of such Global Security.

         The Securities shall have such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture, and may have such letters, numbers or other marks of identification
and such notations, legends or endorsements placed thereon as may be required to
comply with any law, stock exchange rule, agreements to which the Company is
subject or usage.

         The Securities shall be printed, lithographed or engraved or produced
by any combination of there or other methods, all as determined by the officers
executing such Securities, as evidenced by their execution of such Securities.


                                  ARTICLE THREE

                                 THE SECURITIES

SECTION 301.      TITLE AND TERMS; DENOMINATIONS.

         The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is limited to (i) the aggregate liquidation
amount of the Capital Securities issued by the Issuer Trust and (ii) the
proceeds received by the Issuer Trust upon issuance of the Common Securities to
the Company, except for Securities authenticated and delivered upon registration
of transfer of, or in exchange for, or in lieu of, other Securities pursuant to
the exchange of the New Subordinated Debentures for Subordinated Debentures
pursuant to Section 303, 304, 312, 907 or 1107.

         The Securities' Stated Maturity shall be February 1, 2027.

         The Securities shall bear interest at a rate of 8.23% per annum, from
January 29, 1997 or from the most recent Interest Payment Date to which interest
has been paid or duly provided for, as the case may be, payable semi-annually
(subject to deferral as set forth in Section 313 hereof), in arrears, on
February 1 and August 1 of each year, commencing August 1, 1997, until the
principal thereof is paid or made available for payment. Interest will compound
semi-annually and will accrue at the rate of 8.23% per annum on any interest
installment in arrears for more than one semi-annual period or during an
extension of an interest payment period as set forth below in Section 313. In
the event that any date on which interest is payable on the Securities is not a
Business Day, then a payment of the interest payable on such date will be made
on the next succeeding day which is a Business Day (and without any interest or
other payment in respect of any such delay) except that if such Business Day is
in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date.

         Payments of principal, premium and interest on Securities will be
payable, the transfer of the Definitive Registered Securities will be
registrable, and Definitive Registered Securities will be exchangeable for
Securities of other denominations of a like aggregate principal amount, at the
corporate trust office of the Trustee in The City of New York; provided that
payments of interest on Definitive Registered Securities may be made at the
option of the Company by check mailed to the address of the Persons entitled
thereto and that the payment of principal with respect to any Security will be
made only upon surrender of such Security to the Trustee. So long as the
Securities are listed on the Luxembourg Stock Exchange and the rules of such
exchange so require, the Company will maintain a paying and transfer agent in
Luxembourg, which will initially be Bankers Trust Luxembourg S.A. Payments of
principal of, premium and interest on and the transfer of the Securities in
Luxembourg will be through the Luxembourg paying and transfer agent.

         The Securities shall be subordinated in right of payment to Senior
Indebtedness as provided in Article Thirteen.

         The Securities shall be redeemable as provided in Article Eleven.

         The Securities shall be issuable in bearer form or registered form,
without coupons, and only in denominations of $1,000 and any integral multiple
thereof.

SECTION 302.      EXECUTION, AUTHENTICATION, DELIVERY AND DATING.

         The Securities shall be executed on behalf of the Company by any of its
Directors, attested by its Secretary or one of its Assistant Secretaries. The
signature of any of these Directors or officers on the Securities may be manual
or facsimile.

         Securities bearing the manual or facsimile signatures of individuals
who were at the time relevant to the authorization thereof the proper Directors
or officers of the Company shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Securities or did not hold such offices at
the date of such Securities.

         At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities executed by the Company to
the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities, and the Trustee, in accordance
with the Company Order, shall authenticate and deliver such Securities as in
this Indenture provided and not otherwise.

         Each Security shall be dated the date of its authentication.

         No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder and is entitled to the
benefits of this Indenture.

SECTION 303.      REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.

         The Company shall cause to be kept at the office of the Security
Registrar designated pursuant to this Section 303 or Section 1002 a register
(referred to as the "Security Register") in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration
of Securities and of transfers of Registered Securities. The Trustee is hereby
initially appointed as Security Registrar for the purpose of registering
Registered Securities and transfers of Registered Securities as herein provided.

         Upon surrender for registration of transfer of any Registered Security
at the office or agency maintained for such purpose, the Company shall execute,
and the Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Registered Securities of any
authorized denominations and of like tenor and aggregate principal amount.

         Securities other than a Global Security may be exchanged, at the option
of the Holder, for Securities of any authorized denominations and of like tenor
and aggregate principal amount, upon surrender of the Securities to be exchanged
at any such office or agency.

         Whenever any Securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Securities
that the Holder making the exchange is entitled to receive.

         All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.

         Every Security presented or surrendered for registration of transfer or
for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.

         No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 312, 907 or 1107 not involving any transfer.

         The Company shall not be required (i) to issue, to register the
transfer of or to exchange Securities during a period of 15 days immediately
preceding the date notice is given identifying the serial numbers of the
Securities called for redemption, or (ii) to issue, to register the transfer of
or to exchange any Securities so selected for redemption in whole or in part,
except the unredeemed portion of any Security being redeemed in part.

         None of the Company, the Trustee, any Paying Agent or the Security
Registrar will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of a Global Security or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.

SECTION 304.      MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES.

         If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of like tenor and principal amount and bearing a number
not contemporaneously outstanding.

         If there shall be delivered to the Company and the Trustee (i) evidence
to their satisfaction of the destruction, loss or theft of any Security and (ii)
such security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and upon its request the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen Security
of like tenor and principal amount and bearing a number not contemporaneously
outstanding.

         In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.

         Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.

         Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and any such new
Security shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder.

         The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.

SECTION 305.      PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.

         Interest (including Additional Amounts and Additional Sums) on any
Security that is payable, and is punctually paid or duly provided for, on any
Interest Payment Date shall be paid (in the case of a Bearer Security) to the
bearer thereof and (in the case of a Registered Security) to the Person in whose
name that Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest.

         Payment of interest, if any, in respect of any Registered Security will
be made by check mailed to the address of the Person entitled thereto as such
person's address appearing in the Security Register. Payment of interest, if
any, in respect of any Registered Security may also be made, in the case of a
Holder of at least U.S. $1,000,000 aggregate principal amount of Registered
Securities, and payment of interest, if any, in respect of a Global Security
shall be made, by wire transfer to a U.S. Dollar account maintained by the
Holder with a bank in the United States; provided that such Holder elects
payment by wire transfer by giving written notice to the Trustee or a Paying
Agent to such effect designating such account no later than 15 days immediately
preceding the relevant due date for payment (or such other date as the Trustee
may accept in its discretion).

         During such time as the Issuer Trust is the holder of any Securities,
the Company shall pay any Additional Amounts and Additional Sums.

         Any interest (including Additional Sums) on any Security that is
payable, but is not punctually paid or duly provided for on any Interest Payment
Date (herein called "Defaulted Interest") shall, in the case of Registered
Securities, forthwith cease to be payable to the Holder thereof on the relevant
Regular Record Date by virtue of having been such Holder, and such Defaulted
Interest may be paid by the Company, at its election in each case, as provided
in Clause (1) or (2) below:

                  (1) The Company may elect to make payment of any Defaulted
         Interest to the Persons in whose names the Registered Securities (or
         their respective Predecessor Securities) are registered at the close of
         business on a Special Record Date for the payment of such Defaulted
         Interest, which shall be fixed in the following manner. The Company
         shall notify the Trustee in writing of the amount of Defaulted Interest
         proposed to be paid on each Registered Security and the date of the
         proposed payment, and at the same time the Company shall deposit with
         the Trustee an amount of money equal to the aggregate amount proposed
         to be paid in respect of such Defaulted Interest or shall make
         arrangements satisfactory to the Trustee for such deposit prior to the
         date of the proposed payment, such money when deposited to be held in
         trust for the benefit of the Persons entitled to such Defaulted
         Interest as in this Clause provided. Thereupon the Trustee shall fix a
         Special Record Date for the payment of such Defaulted Interest which
         shall be not more than 15 days and not less than 10 days prior to the
         date of the proposed payment and not less than 10 days after the
         receipt by the Trustee of the notice of the proposed payment. The
         Trustee shall promptly notify the Company of such Special Record Date
         and, in the name and at the expense of the Company, shall cause notice
         of the proposed payment of such Defaulted Interest and the Special
         Record Date therefor to be mailed, first-class postage prepaid, to each
         Holder at the address of such Holder as it appears in the Security
         Register, not less than 10 days prior to such Special Record Date.
         Notice of the proposed payment of such Defaulted Interest and the
         Special Record Date therefor having been so mailed, such Defaulted
         Interest shall be paid to the Persons in whose names the registered
         Securities (or their respective Predecessor Securities) are registered
         at the close of business on such Special Record Date and shall no
         longer be payable pursuant to the following clause (2).

                  (2) The Company may make payment of any Defaulted Interest
         (including Additional Amounts and Additional Sums, if any) on the
         Securities in any other lawful manner not inconsistent with the
         requirements of any securities exchange on which the Securities may be
         listed, and upon such notice as may be required by such exchange, if,
         after notice given by the Company to the Trustee of the proposed
         payment pursuant to this Clause, such manner of payment shall be deemed
         practicable by the Trustee.

         Defaulted Interest on Global Bearer Securities shall be payable to the
bearer thereof at the time of payment of such Defaulted Interest by the Company.

         Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
(including Additional Amounts and Additional Sums, if any) and unpaid, and to
accrue (including Additional Amounts and Additional Sums, if any), which were
carried by such other Security.

SECTION 306.      PERSONS DEEMED OWNERS.

         The Company, the Trustee and any agent of the Company or the Trustee
may treat the Book-Entry Depositary for a Global Bearer Security as the absolute
owner of such Bearer Security for the purpose of receiving payment thereof or on
account thereof and for all other purposes whatsoever, whether or not such
Global Bearer Security or coupon be overdue, and neither the Company or the
Trustee nor any agent of the Company or the Trustee shall be affected by notice
to the contrary.

         Prior to due presentment of a Registered Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such Registered Security is registered as the
owner of such Registered Security for the purpose of receiving payment of
principal of (and premium, if any) and (subject to Section 305) interest
(including Additional Sums, if any) on such Registered Security and for all
other purposes whatsoever, whether or not such Registered Security be overdue,
and neither the Company, the Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary. All such payments so made to any
such Person, or upon such Person's order, shall be valid and, to the extent of
the sums so paid, effectual to satisfy and discharge the liability or monies
payable on any such Registered Security.

         No holder of any beneficial interest in any Global Security held on its
behalf by a Book-Entry Depositary shall have any rights under this Indenture
with respect to such Global Security, and such Book-Entry Depositary may be
treated by the Company, the Trustee, and any agent of the Company or the Trustee
as the owner of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall impair, as between a
Book-Entry Depositary and such holders of beneficial interests, the operation of
customary practices governing the exercise of the rights of the Book-Entry
Depositary as holder of any Security.

SECTION 307.      CANCELLATION.

         All Securities surrendered for payment, redemption, registration of
transfer or exchange shall, if surrendered to any Person other than the Trustee,
be delivered to the Trustee and shall be promptly canceled by the Trustee. The
Company may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Securities so delivered shall be
canceled by the Trustee. No Securities shall be authenticated in lieu of or in
exchange for any Securities canceled as provided in this Section, except as
expressly permitted by this Indenture. All canceled Securities held by the
Trustee shall be disposed of in accordance with a Company Order and the Trustee
shall promptly deliver a certificate of disposition to the Company.

SECTION 308.      COMPUTATION OF INTEREST.

         Interest on the Securities shall be computed on the basis of a 360-day
year consisting of twelve 30-day months.

SECTION 309.      GLOBAL SECURITIES.

         If the Securities are distributed to the holders of Trust Securities,
Book-Entry Interests distributed in respect of Trust Securities that are held in
global form by a Depositary will initially be issued as a Global Book-Entry
Interest, unless such transfer cannot be effected through book-entry settlement.
If the Company shall establish that the Book-Entry Interests are to be issued in
the form of one or more Global Book-Entry Interests, then the Company shall
execute and the Trustee shall, in accordance with Section 302 and the Company
Order, authenticate and deliver one or more Global Securities that (i) shall
represent and shall be denominated in an amount equal to the aggregate principal
amount of all of the Securities to be issued in the form of Global Securities
and not yet canceled, (ii) shall be in bearer form, and (iii) shall be delivered
by the Trustee to the Depositary or pursuant to the Depositary's instructions.
Global Securities shall bear a legend substantially to the following effect:

         "This Security is a Global Security within the meaning of the Indenture
hereinafter referred to and is registered in the name of a Depositary or a
nominee of a Depositary. Notwithstanding the provisions of Section 303, unless
and until it is exchanged in whole or in part for Securities in definitive
registered form, a Global Security representing all or a part of the Securities
may not be transferred in the manner provided in Section 303 except as a whole
by the Depositary to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by such
Depositary or any such nominee to a successor Depositary or a nominee of such
successor Depositary. Every Security delivered in exchange for, or in lieu of,
this Global Security shall be a Global Security subject to the foregoing, except
in the limited circumstances described above. Unless this certificate is
presented by an authorized representative of The Depository Trust Company, a New
York corporation ("DTC"), to the Company or its agent for exchange or payment,
and any certificate issued is Cede & Co. or such other Person as is requested by
an authorized representative of DTC (and any payment is to be made to Cede & Co.
or to such other entity as is requested by an authorized representative of DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL inasmuch as the bearer hereof, Cede & Co., has an interest
herein."

         Definitive Securities issued in exchange for all or a part of a Global
Security pursuant to this Section 309 shall be registered in such names and in
such authorized denominations as the Depositary, pursuant to instructions from
its direct or indirect participants or otherwise, shall instruct the Trustee.
Upon execution and authentication, the Trustee shall deliver such definitive
Securities to the persons in whose names such definitive Securities are so
registered.

         At such time as all interests in Global Securities have been redeemed,
repurchased or canceled, such Global Securities shall be, upon receipt thereof,
canceled by the Trustee in accordance with standing procedures and instructions
existing between the Depositary and the Trustee. At any time prior to such
cancellation, if any interest in Global Securities is exchanged for definitive
Securities, redeemed, canceled or transferred to a transferee who receives
definitive Securities therefor or any definitive Security is exchanged or
transferred for part of Global Securities, the principal amount of such Global
Securities shall, in accordance with the standing procedures and instructions
existing between the Depositary and the Trustee, be reduced or increased, as the
case may be, and an endorsement shall be made on such Global Securities by the
Trustee to reflect such reduction or increase.

         The Company and the Trustee may for all purposes, including the making
of payments due on the Securities, deal with the Depositary as the authorized
representative of the Holders for the purposes of exercising the rights of
Holders hereunder. The rights of the owner of any beneficial interest in a
Global Book-Entry Interest shall be limited to those established by law and
agreements between such owners and depository participants or Euroclear and
Cedel Bank; provided, that no such agreement shall give any rights to any person
against the Company or the Trustee without the written consent of the parties so
affected. Multiple requests and directions from and votes of the Depositary as
holder of Securities in global form with respect to any particular matter shall
not be deemed inconsistent to the extent they do not represent an amount of
Securities in excess of those held in the name of the Depositary or its nominee.

         If at any time the Depositary for any Securities represented by one or
more Global Securities notifies the Company that it is unwilling or unable to
continue as Depositary for such Securities or if at any time the Depositary for
such Securities shall no longer be eligible under this Section 309, the Company
shall appoint a successor Depositary with respect to such Securities. If a
successor Depositary for such Securities is not appointed by the Company within
90 days after the Company receives such notice or becomes aware of such
ineligibility, the Company's election that such Securities be represented by one
or more Global Securities shall no longer be effective and the Company shall
execute, and the Trustee, upon receipt of a Company Order for the authentication
and delivery of definitive Securities, will authenticate and deliver Securities
in definitive registered form, in any authorized denominations, in an aggregate
principal amount equal to the principal amount of the Global Security or
Securities representing such Securities in exchange for such Global Security or
Securities.

         The Company may at any time and in its sole discretion determine that
the Securities issued in the form of one or more Global Securities shall no
longer be represented by a Global Security or Securities. In such event the
Company shall execute, and the Trustee upon receipt of a Company Order or an
Officers' Certificate for the authentication and delivery of definitive
Securities, shall authenticate and deliver, Securities in definitive registered
form, in any authorized denominations, in an aggregate principal amount equal to
the principal amount of the Global Security or Securities representing such
Securities, in exchange for such Global Security or Securities.

         Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in Section 310(a)), Global Securities may not be
transferred as a whole except by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary.

         Interests of beneficial owners in a Global Security may be transferred
or exchanged for definitive Securities and definitive Securities may be
transferred or exchange for Global Securities in accordance with rules of the
Depositary and the provisions of Section 311.

         Any Security in global form may be endorsed with or have incorporated
in the text thereof such legends or recitals or changes not inconsistent with
the provisions of this Indenture as may be required by the Depositary or by the
National Association of Securities Dealers, Inc. in order for the Securities to
be tradeable on the PORTAL Market or as may be required for the Securities to be
tradeable on any other market developed for trading of securities pursuant to
Rule 144A or required to comply with any applicable law or any regulation
thereunder or with Regulation S or with the rules and regulations of any
securities exchange upon which the Securities may be listed or traded or to
conform with any usage with respect thereto, or to indicate any special
limitations or restrictions to which any particular Securities are subject.

SECTION 310.  Restrictive Legend.

         (a) Each Global Security and definitive Security that constitutes a
restricted Security shall bear the following legend (the "Restricted Securities
Legend") on the face thereof until three years after the later of the date of
original issue and the last date on which the Company or any Affiliate of the
Company was the owner of such Security (or any predecessor thereto) (the "Resale
Restriction Termination Date"), unless otherwise agreed by the Company and the
Holder thereof:

                           THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
                  SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
                  ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY
                  INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
                  ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
                  DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
                  TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE
                  REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF
                  THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL
                  OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE WHICH
                  IS THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE
                  HEREOF AND THE LAST DATE ON WHICH SOUTHERN INVESTMENTS UK PLC
                  (THE "COMPANY") OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER
                  OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) (THE
                  "RESALE RESTRICTION TERMINATION DATE") ONLY (A) TO THE
                  COMPANY, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
                  UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES
                  ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
                  SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY
                  BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
                  RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
                  ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
                  GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
                  144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS
                  THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
                  REGULATION S UNDER THE SECURITIES ACT, OR (E) TO AN
                  INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF
                  SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE
                  SECURITIES ACT THAT IS ACQUIRING THIS SUBORDINATED DEBENTURE
                  FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
                  INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND
                  NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH,
                  ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F)
                  PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
                  REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S
                  AND THE TRANSFER AGENT'S RIGHT PRIOR TO ANY SUCH OFFER, SALE
                  OR TRANSFER (i) PURSUANT TO CLAUSES (D),(E) OR (F) TO REQUIRE
                  THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR
                  OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii) IN
                  EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF
                  TRANSFER IN THE FORM APPEARING ON THIS SECURITY IS COMPLETED
                  AND DELIVERED BY THE TRANSFEROR TO THE TRANSFER AGENT. THIS
                  LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE
                  RESALE RESTRICTION TERMINATION DATE.

         Any Security (or security issued in exchange or substitution therefor)
as to which such restrictions on transfer shall have expired in accordance with
their terms may, upon satisfaction of the requirements of Section 310(b) and
surrender of such Security for exchange to the Security Registrar in accordance
with the provisions of this Section 310, be exchanged for a new Security or
Securities, of like tenor and aggregate principal amount, which shall not bear
the restrictive legend required by this Section 310(a).

         (b) Upon any sale or transfer of any Restricted Security (including any
interest in a Global Security) (i) that is effected pursuant to an effective
registration statement under the Securities Act or (ii) in connection with which
the Trustee receives certificates and other information (including an opinion of
counsel, if requested) reasonably acceptable to the Company and the Trustee to
the effect that such security will no longer be subject to the resale
restrictions under federal and state securities laws, then (A) in the case of a
Restricted Security in definitive form, the Security Registrar shall permit the
holder thereof to exchange such Restricted Security for a security that does not
bear the legend set forth in Section 310(a), and shall rescind any such
restrictions on transfer and (B) in the case of Restricted Securities
represented by a Global Security, such Security shall no longer be subject to
the restrictions contained in the legend set forth in Section 310(a) (but still
subject to the other provisions hereof). In addition, any Security (or security
issued in exchange or substitution therefor) as to which the restrictions on
transfer described in the legend set forth in Section 310(a) have expired by
their terms may, upon surrender thereof (in accordance with the terms of this
Indenture) together with such certifications and other information (including an
opinion of counsel having substantial experience in practice under the
Securities Act and otherwise reasonably acceptable to the Company, addressed to
the Company and the Trustee and in a form acceptable to the Company, to the
effect that the transfer of such Restricted Security has been made in compliance
with Rule 144 or such successor provision) acceptable to the Company and the
Trustee as either of them may reasonably require, be exchanged for a new
Security or Securities of like tenor and aggregate principal amount, which shall
not bear the restrictive legends set forth in Section 310(a).

SECTION 311. Special Transfer Provisions.

         Any transfer of a beneficial interest in a Security in global form
which cannot be effected through book-entry settlement must be effected by the
delivery to the transferee (or its nominee) of a definitive Security or
Securities registered in the name of the transferee (or its nominee) on the
books maintained by the Trustee. With respect to any such transfer, the Trustee
will cause, in accordance with the standing instructions and procedures existing
between the Depositary and the Trustee, the aggregate principal amount of the
Security in global form to be reduced and, following such reduction, the Company
will execute and the Trustee will authenticate and deliver to the transferee (or
such transferee's nominee, as the case may be) a Security or Securities in the
appropriate aggregate principal amount in the name of such transferee (or its
nominee) and bearing such restrictive legends as may be required by this
Indenture. In connection with any such transfer, the Trustee may request such
representations and agreements relating to the restrictions on transfer of such
Security or Securities from such transferee (or such transferee's nominee) as
the Trustee may reasonably require.

         So long as the Securities are eligible for book-entry settlement, or
unless otherwise required by law, upon any transfer of a definitive Security to
a QIB in accordance with Rule 144A, unless otherwise requested by the
transferor, and upon receipt of the definitive Security or Securities being so
transferred, together with a certification from the transferor that the
transferor reasonably believes the transferee is a QIB (or other evidence
satisfactory to the Trustee), the Trustee shall make an endorsement on the
Restricted Global Book-Entry Interest to reflect an increase in the aggregate
principal amount of the Securities represented by the Restricted Global
Book-Entry Interest, the Trustee shall cancel such definitive Security or
Securities and cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Trustee, the aggregate
principal amount of Securities represented by the Restricted Global Book-Entry
Interest to be increased accordingly.

         So long as the Securities are eligible for book-entry settlement, or
unless otherwise required by law, upon any transfer of a definitive Security in
accordance with Regulation S, if requested by the transferor, and upon receipt
of the definitive Security or Securities being so transferred, together with a
certification from the transferor that the transfer was made in accordance with
Rule 903 or 904 of Regulation S or Rule 144 under the Securities Act (or other
evidence satisfactory to the Trustee), the Trustee shall make an endorsement on
the Regulation S Global Book-Entry Interest to reflect an increase in the
aggregate principal amount of the Securities represented by the Regulation S
Global Book-Entry Interest, the Trustee shall cancel such definitive Security or
Securities and cause the aggregate principal amount of Securities represented by
the Regulation S Global Book-Entry Interest to be increased accordingly.

         If a holder of a beneficial interest in the Restricted Global
Book-Entry Interest wishes at any time to exchange its interest in the
Restricted Global Book-Entry Interest for an interest in the Regulation S Global
Book-Entry Interest, or to transfer its interest in the Restricted Global
Book-Entry Interest to a person who wishes to take delivery thereof in the form
of an interest in the Regulation S Global Book-Entry Interest, such holder may,
subject to the rules and procedures of the Depositary and to the requirements
set forth in the following sentence, exchange or cause the exchange or transfer
or cause the transfer of such interest for an equivalent beneficial interest in
the Regulation S Global Book-Entry Interest. Upon receipt by the Trustee, as
transfer agent, of (1) instructions given in accordance with the Depositary's
procedures from or on behalf of a holder of a beneficial interest in the
Restricted Global Book-Entry Interest, directing the Trustee (via DWAC), as
transfer agent, to credit or cause to be credited a beneficial interest in the
Regulation S Global Book-Entry Interest in an amount equal to the beneficial
interest in the Restricted Global Book-Entry Interest to be exchanged or
transferred, (2) a written order given in accordance with the Depositary's
procedures containing information regarding the Euroclear or Cedel Bank account
to be credited with such increase and the name of such account, and (3) a
certificate given by the holder of such beneficial interest stating that the
exchange or transfer of such interest has been made pursuant to and in
accordance with Rule 903 or Rule 904 of Regulation S or Rule 144 under the
Securities Act (or other evidence satisfactory to the Trustee), the Trustee, as
transfer agent, shall promptly deliver appropriate instructions to the
Depositary (via DWAC), its nominee, or the custodian for the Depositary, as the
case may be, to reduce or reflect on its records a reduction of the Restricted
Global Book-Entry Interest by the aggregate principal amount of the beneficial
interest in such Restricted Global Book-Entry Interest to be so exchanged or
transferred from the relevant participant, and the Trustee, as transfer agent,
shall promptly deliver appropriate instructions (via DWAC) to the Depositary,
its nominee, or the custodian for the Depositary, as the case may be,
concurrently with such reduction, to increase or reflect on its records an
increase of the principal amount of such Regulation S Global Book-Entry Interest
by the aggregate principal amount of the beneficial interest in such Restricted
Global Book-Entry Interest to be so exchanged or transferred, and to credit or
cause to be credited to the account of the person specified in such instructions
(who may be Morgan Guaranty Trust Company of New York, Brussels office, as
operator of Euroclear or Cedel Bank or another agent member of Euroclear or
Cedel Bank, or both, as the case may be, acting for and on behalf of them) a
beneficial interest in such Regulation S Global Book-Entry Interest equal to the
reduction in the principal amount of such Restricted Global Book-Entry Interest.

         If a holder of a beneficial interest in the Regulation S Global
Book-Entry Interest wishes at any time to exchange its interest in the
Regulation S Global Book-Entry Interest for an interest in the Restricted Global
Book-Entry Interest, or to transfer its interest in the Regulation S Global
Book-Entry Interest to a person who wishes to take delivery thereof in the form
of an interest in the Restricted Global Book-Entry Interest, such holder may,
subject to the rules and procedures of Euroclear or Cedel Bank and the
Depositary, as the case may be, and to the requirements set forth in the
following sentence, exchange or cause the exchange or transfer or cause the
transfer of such interest for an equivalent beneficial interest in such
Restricted Global Book-Entry Interest. Upon receipt by the Trustee, as transfer
agent of (1) instructions given in accordance with the procedures of Euroclear
or Cedel Bank and the Depositary, as the case may be, from or on behalf of a
beneficial owner of an interest in the Regulation S Global Book-Entry Interest
directing the Trustee, as transfer agent, to credit or cause to be credited a
beneficial interest in the Restricted Global Book-Entry Interest in an amount
equal to the beneficial interest in the Regulation S Global Book-Entry Interest
to be exchanged or transferred, (2) a written order given in accordance with the
procedures of Euroclear or Cedel Bank and the Depositary, as the case may be,
containing information regarding the account with the Depositary to be credited
with such increase and the name of such account, and (3) prior to the expiration
of the Restricted Period, a certificate given by the holder of such beneficial
interest and stating that the person transferring such interest in such
Regulation S Global Book-Entry Interest reasonably believes that the person
acquiring such interest in the Restricted Global Book-Entry Interest is a QIB
and is obtaining such beneficial interest in a transaction meeting the
requirements of Rule 144A and any applicable securities laws of any state of the
United States or any other jurisdiction (or other evidence satisfactory to the
Trustee), the Trustee, as transfer agent, shall promptly deliver (via DWAC)
appropriate instructions to the Depositary, its nominee, or the custodian for
the Depositary, as the case may be, to reduce or reflect on its records a
reduction of the Regulation S Global Book-Entry Interest by the aggregate
principal amount of the beneficial interest in such Regulation S Global
Book-Entry Interest to be exchanged or transferred, and the Trustee, as transfer
agent, shall promptly deliver (via DWAC) appropriate instructions to the
Depositary, its nominee, or the custodian for the Depositary, as the case may
be, concurrently with such reduction, to increase or reflect on its records an
increase of the principal amount of the Restricted Global Book-Entry Interest by
the aggregate principal amount of the beneficial interest in the Regulation S
Global Book-Entry Interest to be so exchanged or transferred, and to credit or
cause to be credited to the account of the person specified in such instructions
a beneficial interest in the Restricted Global Book-Entry Interest equal to the
reduction in the principal amount of the Regulation S Global Book-Entry
Interest. After the expiration of the Restricted Period (as defined below), the
certification requirement set forth in clause (3) of the second sentence of the
above paragraph will no longer apply to such exchanges and transfers.

         Any beneficial interest in one of the Global Book-Entry Interests that
is transferred to a person who takes delivery in the form of an interest in the
other Global Security will, upon transfer, cease to be an interest in such
Global Security and become an interest in the other Global Security and,
accordingly, will thereafter be subject to all transfer restrictions and other
procedures applicable to beneficial interests in such other Global Security for
as long as it remains such an interest.

         Prior to or on the 40th day after the later of the commencement of the
offering of the Capital Securities and the Closing Date (the "Restricted
Period"), beneficial interests in a Regulation S Global Book-Entry Interest may
only be held through Morgan Guaranty Trust Company of New York, Brussels Office,
as operator of Euroclear or Cedel Bank or another agent member of Euroclear and
Cedel Bank acting for and on behalf of them, unless delivery is made through the
Restricted Global Book-Entry Interest in accordance with the certification
requirements hereof. During the Restricted Period, interests in the Regulation S
Global Book-Entry Interest, if any, may be exchanged for interests in the
Restricted Global Book-Entry Interest or for definitive Securities only in
accordance with the certification requirements described above.

SECTION 312. TEMPORARY SECURITIES.

         Pending the preparation of definitive Securities, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as evidenced by their
execution of such Securities.

         If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at any office
or agency of the Company designated pursuant to Section 1002, without charge to
the Holder. Upon surrender for cancellation of any one or more temporary
Securities, the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a like principal amount of definitive Securities of
authorized denominations. Until so exchanged the temporary Securities shall in
all respects be entitled to the same benefits under this Indenture as definitive
Securities.

SECTION 313. DEFERRALS OF INTEREST PAYMENT DATES.

         So long as the Company shall not be in default in the payment of
interest on the Securities, the Company shall have the right, at any time and
from time to time during the term of the Securities, to defer the payment of
interest by extending the interest payment period of such Securities for a
period not exceeding 10 consecutive semi-annual periods, including the first
such semi-annual period during such extension period (each, an "Extension
Period"), during which Extension Periods no interest shall be due and payable;
provided that no Extension Period may extend beyond the Maturity. No Extension
Period shall end on a date other than an Interest Payment Date. At the end of
any such Extension Period the Company shall pay all interest then accrued and
unpaid on the Securities (together with Additional Sums thereon, if any, at the
rate specified for the Securities to the extent permitted by applicable law);
provided that during any such Extension Period, the Company (i) shall not
declare or pay dividends on, make distributions with respect to, or redeem,
purchase or acquire, or make a liquidation payment with respect to, any of its
capital stock except for dividends, payments or distributions payable in shares
of its capital stock, reclassifications of its capital stock and conversions or
exchanges of capital stock of one class or series into capital stock of another
class or series and except for a redemption, purchase or other acquisition of
shares of its capital stock made for the purpose of an employee incentive plan
or benefit plan or other similar arrangement of the Company or any of its
subsidiaries, (ii) shall not make any payment of interest, principal of or
premium, if any, on, or repay, repurchase or redeem any debt securities issued
by the Company that rank pari passu with or junior to the Securities (except by
conversion into or exchange for shares of its capital stock), and (iii) shall
not make any guarantee payments with respect to the foregoing. Prior to the
termination of any such Extension Period, the Company may further defer the
payment of interest, provided that no Extension Period shall exceed the period
or periods specified in such Securities, extend beyond the Stated Maturity of
the principal of such Securities or end on a date other than an Interest Payment
Date. Upon the termination of any such Extension Period and upon the payment of
all accrued and unpaid interest (including interest on such interest) and any
Additional Sums then due on any Interest Payment Date, the Company may elect to
begin a new Extension Period, subject to the above conditions. The Company may
also pay on any Interest Payment Date all or any portion of the interest accrued
during an Extension Period. No interest or Additional Amounts and Additional
Sums shall be due and payable during an Extension Period, except at the end
thereof, but each installment of interest that would otherwise have been due and
payable during such Extension Period shall bear Additional Amounts and
Additional Sums as and to the extent as may be specified as contemplated by
Sections 305 and 1104.

SECTION 314. NOTICE OF EXTENSION.

         (a) If the Issuer Trust is the only registered holder of the Securities
at the time the Company selects an Extension Period, the Company shall give
written notice to the Issuer Trust and the Trustee of its selection of such
Extension Period at least one (1) Business Day before the earlier of (i) the
next succeeding date on which distributions on the Trust Securities issued by
the Issuer Trust are payable or (ii) the date the Company is required to give
notice to the holders of the Capital Securities issued by the Issuer Trust of
the record date or the date such distribution is payable.

         (b) If the Institutional Trustee is not the only holder of the
Securities at the time the Company selects an Extension Period, the Company
shall give the holders of the Securities and the Trustee written notice of its
selection of such Extension Period at least 10 Business Days before the earlier
of (i) the next succeeding Interest Payment Date, or (ii) the date the Company
is required to give notice to holder of the Securities of the record or payment
date of such interest payment.

SECTION 315. CUSIP NUMBERS.

         The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption and other similar or related materials as a convenience to
Holders; provided that any such notice or other materials may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of redemption or other materials
and that reliance may be placed only on the other identification numbers printed
on the Securities, and any such redemption shall not be affected by any defect
in or omission of such numbers.


                                  ARTICLE FOUR

                           SATISFACTION AND DISCHARGE

SECTION 401.      SATISFACTION AND DISCHARGE OF INDENTURE


                  This Indenture shall upon Company Request cease to be of
further effect (except as to any surviving rights of registration of transfer or
exchange of Securities herein expressly provided for and rights to receive
payments of any principal, premium or interest in respect thereof and any right
to receive any Additional Amounts as provided in Section 1004 or Additional Sums
as provided for in Section 305), and the Trustee shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture, when

                  (1) either (A) all Securities theretofore authenticated and
         delivered (other than (i) Securities which have been destroyed, lost or
         stolen and which have been replaced or paid as provided in Section 304
         and (ii) Securities for whose payment money has theretofore been
         deposited in trust with the Trustee or any Paying Agent or segregated
         and held in trust by the Company and thereafter repaid to the Company
         or discharged from such trust, as provided in Section 1003) have been
         delivered to the Trustee for cancellation; or

                    (B) all such  Securities  not  theretofore  delivered to the
               Trustee for cancellation

                         (i) have become due and payable, or

                         (ii)  will  become  due and  payable  at  their  Stated
                    Maturity within one year, or

                         (iii) are to be called for  redemption  within one year
                    under arrangements for the giving of notice of redemption by
                    the Trustee in the name, and at the expense, of the Company,
                    or

                         (iv) are deemed paid and discharged pursuant to Section
                    403, as applicable.

         and the Company, in the case of (i) or (ii) above, has deposited or
         caused to be deposited with the Trustee as trust funds in trust for the
         purpose an amount of U.S. Government Obligations (denominated in the
         same currency or units of currency in which such Securities are
         payable) which through the payment of interest and principal in respect
         thereof in accordance with their terms will provide not later than one
         day before the Stated Maturity, money in an amount sufficient to pay
         and discharge the entire indebtedness on such Securities not
         theretofore delivered to the Trustee for cancellation, for principal
         (and premium, if any) and interest, if any, to the date made available
         for payment (in the case of Securities which have become due and
         payable) or to the Stated Maturity, as the case may be;

          (2) the Company  has paid or caused to be paid all other sums  payable
     hereunder by the Company; and

          (3) The Company has delivered to the Trustee, an Officers' Certificate
     and an Opinion of  Counsel,  each  stating  that all  conditions  precedent
     herein  provided for  relating to the  satisfaction  and  discharge of this
     Indenture have been complied with.

                  Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the Trustee under Section 607, the
obligations of the Trustee to any Authenticating Agent under Section 614 and,
U.S. Government Obligations shall have been deposited with the Trustee pursuant
to subclause (B) of clause (1) of this Section 401 or if money or U.S.
Government Obligations shall have been deposited with or received by the Trustee
pursuant to Section 403, the obligations of the Trustee under Section 402 and
the last paragraph of Section 1003 shall survive.

SECTION 402.      Application of Trust Money

                  (a) Subject to the provisions of the last paragraph of Section
1003, all money or U.S. Government Obligations deposited with the Trustee
pursuant to Sections 401 or 403 and all money received by the Trustee in respect
of U.S. Government Obligations deposited with the Trustee pursuant to Sections
401 or 403, shall be held in trust and applied by it, in accordance with the
provisions of the Securities and this Indenture, to the payment, to the Persons
entitled thereto, of the principal of (and premium, if any) and interest, if
any, on the Securities for whose payment such money has been deposited with or
received by the Trustee or to make payments as provided by Sections 401 or 403.

                  (b) The Company shall pay and shall indemnify the Trustee
against any tax, fee or other charge imposed on or assessed against U.S.
Government Obligations deposited pursuant to Sections 401 or 403 or the interest
and principal received in respect of such obligations other than any payable by
or on behalf of Holders.

                  (c) The Trustee shall deliver or pay to the Company from time
to time upon Company Request any U.S. Government Obligations or money held by it
as provided in Sections 401 or 403 which, in the opinion of a nationally
recognized firm of independent certified public accountants expressed in a
written certification thereof delivered to the Trustee, are then in excess of
the amount thereof which then would have been required to be deposited for the
purpose for which such U.S. Government Obligations or money was deposited or
received. This provision shall not authorize the sale by the Trustee of any U.S.
Government Obligations held under this Indenture.

                  (d) Any monies paid by the Company to the Trustee or any
Paying Agent, or held by the Company in trust, for the payment of the principal,
premium of or any interest or Additional Amounts on any Securities and remaining
unclaimed at the end of two years after such principal, interest or Additional
Amounts or Additional Sums become due and payable will be repaid to the Company,
or released from the trust, upon its written request, and upon such repayment or
release all liability of the Company, the Trustee and such Paying Agent with
respect thereto will cease.

SECTION 403.  Satisfaction, Discharge and Defeasance of Securities of any Series

                  The Company, at its option, (a) will be discharged from any
and all obligations in respect of the Securities (except in each case for the
obligations to register the transfer or exchange of the Securities, replace
stolen, lost or mutilated Securities, maintain paying agencies and hold moneys
for payment in trust); or (b)will be released from its obligations with respect
to the Securities (except for the obligations set forth in the preceding clause
(a) and except for the obligations to pay the principal of, premium, if any, and
any interest on the Securities, to compensate and indemnify the Trustee and
appoint a successor Trustee, provided that the following conditions shall have
been satisfied:

                  (1) The Company has deposited or caused to be irrevocably
         deposited (except as provided in Section [607], [402(c)] and the last
         paragraph of Section [1003]) with the Trustee (specifying that each
         deposit is pursuant to this Section 403) as trust funds in trust,
         specifically pledged as security for, and dedicated solely to, the
         benefit of the Holders of the Securities, U.S. Government Obligations
         which through the payment of interest and principal in respect thereof
         in accordance with their terms will provide money in an amount
         sufficient to pay and discharge the principal and interest on the
         outstanding Securities on the dates such payments are due in accordance
         with the terms of the Securities (or if the Company has designated a
         redemption date pursuant to the final sentence of this paragraph, to
         and including the redemption date so designated by the Company), and no
         Event of Default or event which with notice or lapse of time would
         become an Event of Default (including by reason of such deposit) with
         respect to the Securities of such series shall have occurred and be
         continuing on the date of such deposit. To exercise any such option,
         the Company is required to deliver to the Trustee (x) an Opinion of
         Counsel to the effect that the Holders of the Securities will not
         recognize income, gain or loss for federal income tax purposes as a
         result of such deposit, defeasance and discharge of certain
         obligations, which in the case of (a) must be based on a change in law
         or a ruling by the U.S. Internal Revenue Service and (y) an Officers'
         Certificate as to compliance with all conditions precedent provided for
         in the Indenture relating to the satisfaction and discharge of the
         Securities. If the Company shall wish to deposit or cause to be
         deposited money or U.S. Government Obligations to pay or discharge the
         principal of (and premium, if any) and interest, if any, on the
         outstanding Securities to and including a Redemption Date on which all
         of the outstanding Securities are to be redeemed, such Redemption Date
         shall be irrevocably designated by a Board Resolution delivered to the
         Trustee on or prior to the date of deposit of U.S. Government
         Obligations, and such Board Resolution shall be accompanied by an
         irrevocable Company Request that the Trustee give notice of such
         redemption in the name and at the expense of the Company not less than
         15 nor more than 30 days prior to such Redemption Date in accordance
         with this Indenture.


                                  ARTICLE FIVE

                                    REMEDIES

SECTION 501.      EVENTS OF DEFAULT.

         "Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body or occasioned by the operation of
Article Thirteen):

                  (1) default in the payment of any interest upon the Securities
         when it becomes due and payable, and continuance of such default for a
         period of thirty (30) days (subject to the deferral of any due date in
         the case of an Extension Period); provided, however, that no such
         default shall be deemed to exist if, on or prior to the date on which
         such interest became due, the Company shall have made a payment
         sufficient to pay such interest pursuant to the Guarantee, and shall
         have delivered a notice to the Trustee to that effect; or

                  (2) default in the payment of the principal of, (or premium,
         if any) on the Securities at Maturity; provided, however, that no such
         default in the payment of principal (or premium, if any) shall be
         deemed to exist if, on or prior to the date such principal (and
         premium, if any) became due, the Company shall have made a payment
         sufficient to pay such principal (and premium, if any) pursuant to the
         Guarantee, and shall have delivered a notice to the Trustee to that
         effect; or

                  (3) material default in the performance or material breach of
         any covenant or warranty of the Company in this Indenture (other than a
         covenant or warranty a default in whose performance or whose breach is
         elsewhere in this Section specifically dealt with), and continuance of
         such material default or material breach for a period of 90 days after
         there has been given, by registered or certified mail, to the Company
         by the Trustee, or to the Company and the Trustee by the Holders of at
         least 25% in principal amount of the Outstanding Securities, a written
         notice specifying such default or breach and requiring it to be
         remedied and stating that such notice is a "Notice of Default"
         hereunder; or

                  (4) if this event shall be made to constitute an Event of
         Default with respect to the Securities, a default in the payment of the
         principal of any bond, debenture, note or other evidence of
         indebtedness, in each case for money borrowed by the Company or any
         Significant Subsidiary, or in the payment of principal under any
         mortgage, indenture (including this Indenture) or instrument under
         which there may be issued or by which there may be secured or evidenced
         any indebtedness for money borrowed by the Company or any Significant
         Subsidiary, which default for payment of principal is in an aggregate
         principal amount exceeding $50,000,000 (or its equivalent in any other
         currency or currencies) when such indebtedness becomes due and payable
         (whether at maturity, upon redemption or acceleration or otherwise), if
         such default shall continue unremedied or unwaived for more than 30
         Business Days and the time for payment of such amount has not been
         expressly extended; provided, however, that, subject to the provisions
         of Sections 601 and 602, the Trustee shall not be deemed to have
         knowledge of such default unless either (A) a Responsible Officer of
         the Trustee shall have actual knowledge of such default or (B) the
         Trustee shall have received written notice thereof from the Company,
         from any Holder, from the holder of any such indebtedness or from the
         trustee under any such mortgage, indenture or other instrument; and
         provided, further, that if such default under such indenture or
         instrument shall be remedied or cured by the Company or such
         Significant Subsidiary or waived by the holders of such indebtedness,
         then the Event of Default hereunder by reason thereof shall be deemed
         likewise to have been remedied, cured or waived without further action
         upon the part of the Trustee or any of the Holders; or

                  (5) The failure of the Company or a Significant Subsidiary
         generally to pay its debts as they become due, or the admission in
         writing of its inability to pay its debts generally, or the making of a
         general assignment for the benefit of its creditors, or the institution
         of any proceeding by or against the Company or a Significant Subsidiary
         (other than any such proceeding brought against the Company or a
         Significant Subsidiary that is dismissed within 180 days from the
         commencement thereof) seeking to adjudicate it bankrupt or insolvent,
         or seeking liquidation, winding up, reorganization, arrangement,
         adjustment, protection, relief or composition (in each case, other than
         a solvent liquidation, winding up, reorganization, arrangement,
         adjustment, protection, relief or composition) of it or its debts under
         any law relating to bankruptcy, insolvency, reorganization, moratorium
         or relief of debtors, or seeking the entry of an order for relief or
         appointment of an administrator, receiver, trustee, intervenor or other
         similar official for it or for any substantial part of its property, or
         the taking of any action by the Company or a Significant Subsidiary to
         authorize any of the actions set forth in this subparagraph (5);

SECTION 502.      ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.

         If an Event of Default occurs and is continuing, then in every such
case the Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities may declare the principal amount of the Securities to be
due and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by Holders), and upon any such declaration such principal
amount (or specified amount) shall become immediately due and payable.

         At any time after such a declaration of acceleration has been made, but
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter in this Article provided, if all Events of Default,
other than the non-payment of the principal of Securities which has become due
solely by such declaration of acceleration, have been cured or waived as
provided in Section 513.

then such declaration of acceleration and its consequences shall be
automatically annulled and rescinded. No such rescission shall affect any
subsequent default or impair any right consequent thereon.

SECTION 503.    COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.

         The Company covenants that if an Event of Default occurs under Section
501(1), (2), (3) or (4) with respect to any Securities the Company will, upon
demand of the Trustee, pay to it, for the benefit of the Holders of such
Securities, the whole amount then due and payable on such Securities for
principal (and premium, if any) and interest (including Additional Sums, if any)
and, to the extent that payment of such interest shall be legally enforceable,
interest on any overdue principal (and premium, if any) and on any overdue
interest (including Additional Sums, if any), at the rate or rates prescribed
therefor in such Securities, and, in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due to the Trustee under Section
607.

         If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon such Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon such Securities, wherever
situated.

         If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.

SECTION 504.      TRUSTEE MAY FILE PROOFS OF CLAIM.

         In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise,

               (1) to file and prove a claim for the whole  amount of  principal
          (and premium,  if any) and interest owing and unpaid in respect of the
          Securities  and to file  such  other  papers  or  documents  as may be
          necessary  or  advisable  in order to have the  claims of the  Trustee
          (including  any  claim  for  the  reasonable  compensation,  expenses,
          disbursements and advances of the Trustee, its agents and counsel, and
          any other  amounts due to the Trustee  under  Section  607) and of the
          Holders of Securities allowed in such judicial proceeding, and

               (2) to collect and receive any moneys or other  property  payable
          or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder of Securities to make such payments to the Trustee and, in the event
that the Trustee shall consent to the making of such payments directly to the
Holders of Securities, to pay to the Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due the Trustee under Section 607.

         Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a Security
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder of a Security in any such proceeding.

SECTION 505.      TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES.

         All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.

SECTION 506.      APPLICATION OF MONEY COLLECTED.

         Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal (or premium,
if any) or interest, upon presentation of the Securities, and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:

                    First:  To the payment of all amounts due the Trustee  under
               Section 607; and

                    Second:  Subject to Article Thirteen,  to the payment of the
               amounts  then due and unpaid for  principal of (and  premium,  if
               any) and interest (including  Additional Additional Sums, if any)
               on the Securities in respect of which or for the benefit of which
               such money has been  collected,  ratably,  without  preference or
               priority of any kind, according to the amounts due and payable on
               such Securities for principal (and premium,  if any) and interest
               (including Additional Sums, if any), respectively; and

                    Third:  The  balance,  if  any,  to the  Person  or  Persons
               entitled thereto.

SECTION 507.      LIMITATION ON SUITS.

         No Holder of any Security shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder (except
actions for payment of overdue principal or interest, provided that a
declaration of a valid Extension Period by the Company shall not constitute a
failure to pay interest for this purpose), unless:

                    (1) such Holder has  previously  given written notice to the
               Trustee of a continuing Event of Default;

                    (2) the Holders of not less than 25% in principal  amount of
               the Outstanding Securities shall have made written request to the
               Trustee  to  institute  proceedings  in  respect of such Event of
               Default in its own name as Trustee hereunder;

                    (3) such  Holder or  Holders  have  offered  to the  Trustee
               reasonable indemnity against the costs,  expenses and liabilities
               to be incurred in compliance with such request;

                    (4)  the  Trustee  for 60 days  after  its  receipt  of such
               notice,  request and offer of  indemnity  has failed to institute
               any such proceeding; and

                    (5) no direction  inconsistent with such written request has
               been  given to the  Trustee  during  such  60-day  period  by the
               Holders  of a majority  in  principal  amount of the  Outstanding
               Securities;

it being understood and intended that no one or more of such Holders shall have
any right in any manner whatsoever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other of such Holders or to obtain or to seek to obtain priority or preference
over any other of such Holders or to enforce any right under this Indenture,
except in the manner herein provided and for the equal and ratable benefit of
all of such Holders.

SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM AND
             INTEREST.

         Notwithstanding any other provision in this Indenture but subject to
Article Thirteen and Section 507, the Holder of any Securities shall have the
right, which is absolute and unconditional, to receive payment of the principal
of (and premium, if any) and (subject to Section 305) interest (including any
Additional Sums) on such Security on the due dates expressed in such Security
(or, in the case of redemption, on the Redemption Date) and to institute suit
for the enforcement of any such payment, and such rights shall not be impaired
without the consent of such Holder. If an Event of Default constituting a
failure to pay interest or principal on the Securities on the date such interest
or principal is otherwise payable has occurred and is continuing, then a
registered holder of Capital Securities may institute a legal proceeding
directly against the Company, without first instituting a legal proceeding
directly against or requesting or directing that action be taken by the
Institutional Trustee of the Issuer Trust or any other Person, for enforcement
of payment to such registered holder of principal of or interest on Securities
having a principal amount equal to the aggregate stated liquidation amount of
the Capital Securities of such registered holder on or after the due dates
therefor specified or provided for in the Securities.

SECTION 509.      RESTORATION OF RIGHTS AND REMEDIES.

         If the Trustee or any Holder of a Security has instituted any
proceeding to enforce any right or remedy under this Indenture and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then and in every such
case, subject to any determination in such proceeding, the Company, the Trustee
and the Holders of Securities shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.

SECTION 510.      RIGHTS AND REMEDIES CUMULATIVE.

         Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Securities in the last paragraph of
Section 304, no right or remedy herein conferred upon or reserved to the Trustee
or to the Holders of Securities is intended to be exclusive of any other right
or remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.

SECTION 511.      DELAY OR OMISSION NOT WAIVER.

         No delay or omission of the Trustee or of any Holder of any Security to
exercise any right or remedy upon any Event of Default shall impair any such
right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders of Securities may be exercised from time to time,
and as often as may be deemed expedient, by the Trustee or by the Holders of
Securities.

SECTION 512.      CONTROL BY HOLDERS OF SECURITIES.

         The Holders of not less than a majority in principal amount of the
Outstanding Securities shall have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, provided that

                  (1) such direction shall not be in conflict with any rule of
         law or with this Indenture, and could not involve the Trustee in
         personal liability in circumstances where reasonable indemnity would
         not be adequate, and

                  (2) the Trustee may take any other action deemed proper by the
         Trustee which is not inconsistent with such direction.

SECTION 513.      WAIVER OF PAST DEFAULTS.

         The Holders of not less than a majority in principal amount of the
Outstanding Securities may, on behalf of the Holders of all the Securities,
waive any past default hereunder and its consequences, except a default

                    (1) in the payment of the principal of (or premium,  if any)
               or interest (including Additional Sums) on any Security, or

                    (2) in respect of a covenant or provision hereof which under
               Article Nine cannot be modified or amended without the consent of
               the Holder of each Outstanding Security affected.

         Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.

SECTION 514.      UNDERTAKING FOR COSTS.

         All parties to this Indenture agree, and each Holder of any Security by
his acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Company, to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 10% in principal
amount of the Outstanding Securities, or to any suit instituted by any Holder of
any Security for the enforcement of the payment of the principal of (or premium,
if any) or interest (including Additional Sums) on any Security on or after the
Stated Maturity or Maturities expressed in such Security (or, in the case of
redemption, on or after the Redemption Date).

SECTION 515.      WAIVER OF STAY OR EXTENSION LAWS.

         The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.


                                   ARTICLE SIX

                                   THE TRUSTEE

SECTION 601.      CERTAIN DUTIES AND RESPONSIBILITIES.

         (a)      Except during the continuance of an Event of Default,

                  (1) the Trustee undertakes to perform such duties with respect
         to the Securities and only such duties as are specifically set forth in
         this Indenture, and no implied covenants or obligations shall be read
         into this Indenture against the Trustee; and

                  (2) in the absence of bad faith on its part, the Trustee may
         conclusively rely, as to the truth of the statements and the
         correctness of the opinions expressed therein, upon certificates or
         opinions furnished to the Trustee and conforming to the requirements of
         this Indenture; but in the case of any such certificates or opinions
         which by any provision hereof are specifically required to be furnished
         to the Trustee, the Trustee shall be under a duty to examine the same
         to determine whether or not they conform to the requirements of this
         Indenture.

         (b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.

         (c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that

               (1) this Subsection shall not be construed to limit the effect of
          Subsection (a) of this Section;

               (2) the  Trustee  shall not be liable  for any error of  judgment
          made in good faith by a Responsible Officer, unless it shall be proved
          that the Trustee was negligent in ascertaining the pertinent facts;

               (3) the Trustee  shall not be liable  with  respect to any action
          taken or omitted to be taken by it in good  faith in  accordance  with
          the direction of the Holders of a majority in principal  amount of the
          Outstanding  Securities  relating  to the  time,  method  and place of
          conducting any proceeding for any remedy available to the Trustee,  or
          exercising any trust or power  conferred upon the Trustee,  under this
          Indenture with respect to the Securities; and

               (4) no provision of this  Indenture  shall require the Trustee to
          expend  or  risk  its own  funds  or  otherwise  incur  any  financial
          liability in the performance of any of its duties hereunder, or in the
          exercise of any of its rights or powers,  if it shall have  reasonable
          grounds  for  believing  that  repayment  of such  funds  or  adequate
          indemnity against such risk or liability is not reasonably  assured to
          it.

         (d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.

SECTION 602.      NOTICE OF DEFAULTS.

         Within 90 days after the occurrence of any default, the Trustee shall
transmit in the manner provided for in Section 105, to all Holders of Securities
entitled to receive reports pursuant to Section 313(c) of the Trust Indenture
Act, notice of all defaults hereunder known to the Trustee, unless such default
shall have been cured or waived; provided, however, that, except in the case of
a default in the payment of the principal of (or premium, if any) or interest
(including Additional Sums) on any Security, the Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee or a trust committee of directors or Responsible Officers of the
Trustee in good faith determine that the withholding of such notice is in the
interest of the Holders of Securities; and provided, further, that in the case
of any default of the character specified in Section 501(5) with respect to
Securities, no such notice to Holders shall be given until at least 45 days
after the occurrence thereof. For the purpose of this Section, the term
"default" means any event which is, or after notice or lapse of time or both
would become, an Event of Default.

SECTION 603.      CERTAIN RIGHTS OF TRUSTEE.

         Subject to the provisions of Section 601:

                  (a) the Trustee may rely and shall be protected in acting or
         refraining from acting upon any resolution, certificate, statement,
         instrument, opinion, report, notice, request, direction, consent,
         order, bond, debenture, note, other evidence of indebtedness or other
         paper or document believed by it to be genuine and to have been signed
         or presented by the proper party or parties;

                  (b) any request or direction of the Company mentioned herein
         shall be sufficiently evidenced by a Company Request or Company Order
         and a resolution of the Board of Directors may be sufficiently
         evidenced by a Board Resolution;

                  (c) whenever in the administration of this Indenture the
         Trustee shall deem it desirable that a matter be proved or established
         prior to taking, suffering or omitting any action hereunder, the
         Trustee (unless other evidence be herein specifically prescribed) may,
         in the absence of bad faith on its part, rely upon an Officers'
         Certificate;

                  (d) the Trustee may consult with counsel and the written
         advice of such counsel or any Opinion of Counsel shall be full and
         complete authorization and protection in respect of any action taken,
         suffered or omitted by it hereunder in good faith and in reliance
         thereon;

                  (e) the Trustee shall be under no obligation to exercise any
         of the rights or powers vested in it by this Indenture at the request
         or direction of any of the Holders of Securities pursuant to this
         Indenture, unless such Holders shall have offered to the Trustee
         reasonable security or indemnity against the costs, expenses and
         liabilities which might be incurred by it in compliance with such
         request or direction;

                  (f) the Trustee shall not be bound to make any investigation
         into the facts or matters stated in any resolution, certificate,
         statement, instrument, opinion, report, notice, request, direction,
         consent, order, bond, debenture, note, other evidence of indebtedness
         or other paper or document, but the Trustee, in its discretion, may
         make such further inquiry or investigation into such facts or matters
         as it may see fit, and, if the Trustee shall determine to make such
         further inquiry or investigation, it shall be entitled to examine the
         books, records and premises of the Company, personally or by agent or
         attorney;

                  (g) the Trustee may execute any of the trusts or powers
         hereunder or perform any duties hereunder either directly or by or
         through agents or attorneys and the Trustee shall not be responsible
         for any misconduct or negligence on the part of any agent or attorney
         appointed with due care by it hereunder; and

                  (h) the Trustee shall not be charged with knowledge of any
         Event of Default unless either (1) a Responsible Officer of the Trustee
         assigned to the Corporate Trust Office of the Trustee (or any successor
         division or department of the Trustee) shall have actual knowledge of
         the Event of Default or (2) written notice of such Event of Default
         shall have been given to the Trustee by the Company, any other obligor
         on such Securities or by any Holder of such Securities.

SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.

         The recitals contained herein and in the Securities (except the
Trustee's certificates of authentication) shall be taken as the statements of
the Company, and the Trustee or any Authenticating Agent assumes no
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Indenture or of the Securities. The Trustee
or any Authenticating Agent shall not be accountable for the use or application
by the Company of Securities or the proceeds thereof.

         The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Trust Securities and shall be entitled to rely on the delivery to it
of a written notice by a Person representing himself to be a holder of a Trust
Security to establish that such Person is such a holder. The Trustee may
conclusively rely on an Officers' Certificate as evidence that the holders of
the necessary percentage of liquidation preference of Trust Securities have
taken any action contemplated hereunder and shall have no duty to investigate
the truth or accuracy of any statement contained therein.

SECTION 605.      MAY HOLD SECURITIES.

         The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
608 and 613, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Authenticating Agent, Paying Agent, Security
Registrar or such other agent.

SECTION 606.      MONEY HELD IN TRUST.

         Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed with the Company.

SECTION 607.      COMPENSATION AND REIMBURSEMENT.

         The Company agrees

               (1) to pay to the Trustee from time to time such  compensation as
          is agreed upon in writing;

               (2) except as otherwise  expressly  provided herein, to reimburse
          the   Trustee   upon  its  request   for  all   reasonable   expenses,
          disbursements  and  advances  incurred  or  made  by  the  Trustee  in
          accordance  with  any  provision  of  this  Indenture  (including  the
          reasonable  compensation  and the  expenses and  disbursements  of its
          agents and counsel), except any such expense,  disbursement or advance
          as may be attributable to its  negligence,  willful  misconduct or bad
          faith; and

               (3)  to  indemnify  the  Trustee,  its  officers,  directors  and
          employees for, and to hold it harmless against, any loss, liability or
          expense incurred without  negligence,  willful misconduct or bad faith
          on its part,  arising out of or in connection  with the  acceptance or
          administration of the trust or trusts  hereunder,  including the costs
          and  expenses of  defending  itself  against any claim or liability in
          connection  with the exercise or  performance  of any of its powers or
          duties  hereunder.  Obligations under this section 607(3) will survive
          the satisfaction  and discharge of this Indenture  pursuant to Section
          401 hereof.

         As security for the performance of the obligations of the Company under
this Section the Trustee shall have a lien prior to the Securities upon all
property and funds held or collected by the Trustee as such, except funds held
in trust for the payment of principal of, premium, if any, or interest, if any,
on particular Securities.

SECTION 608.      DISQUALIFICATION; CONFLICTING INTERESTS.

         If the Trustee has or shall acquire any conflicting interest, within
the meaning of the Trust Indenture Act, it shall, within 90 days after
ascertaining that it has such conflicting interest, either eliminate such
conflicting interest or resign, to the extent and in the manner provided by, and
subject to the provisions of, the Trust Indenture Act and this Indenture.

SECTION 609.      CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.

         There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America, any State thereof or the District of Columbia, authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus
of at least $50,000,000, subject to supervision or examination by federal or
state authority and qualified and eligible under this Article and otherwise
permitted by the Trust Indenture Act to act as Trustee under an Indenture
qualified under the Trust Indenture Act. If such corporation publishes reports
of condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately in the manner
and with the effect hereinafter specified in this Article.

SECTION 610.      RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.

         (a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 611.

         (b) The Trustee may resign at any time by giving written notice thereof
to the Company. If the instrument of acceptance by a successor Trustee required
by Section 611 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee.

         (c) The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the Outstanding Securities delivered to the
Trustee and to the Company.

         (d)      If at any time:

                  (1) the Trustee shall fail to comply with Section 608 after
         written request therefor by the Company or by any Holder of a Security
         who has been a Holder of a Security for at least six months, or

                  (2) the Trustee shall cease to be eligible under Section 609
         and shall fail to resign after written request therefor by the Company
         or by any such Holder, or

                  (3) the Trustee shall become incapable of acting or shall be
         adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
         property shall be appointed or any public officer shall take charge or
         control of the Trustee or of its property or affairs for the purpose of
         rehabilitation, conservation or liquidation,

then, in any such case, (i) the Company, by a Board Resolution, may remove the
Trustee with respect to all Securities, or (ii) subject to Section 514, any
Holder of a Security who has been a bona fide Holder of a Security for at least
six months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the removal of the Trustee with respect
to all Securities and the appointment of a successor Trustee or Trustees.

         (e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Trustee or
Trustees and shall comply with the applicable requirements of Section 611. If,
within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Securities
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment in accordance
with the applicable requirements of Section 611, become the successor Trustee
and to that extent supersede the successor Trustee appointed by the Company. If
no successor Trustee shall have been so appointed by the Company or the Holders
of Securities and accepted appointment in the manner required by Section 611,
any Holder of a Security who has been a bona fide Holder of a Security for at
least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a successor
Trustee.

         (f) The Company shall give notice of each resignation and each removal
of the Trustee and each appointment of a successor Trustee in accordance with
Section 105.

SECTION 611.      ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.

         (a) Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on the request of the
Company or the successor Trustee, such retiring Trustee shall, upon payment of
its charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder.

         (b) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts referred
to in paragraph (a) of this Section.

         (c) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and eligible
under this Article.

SECTION 612.      MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.

         Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.

SECTION 613.      PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY

         If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor). For purposes of Section 311(b)(4) and
(6) of the Trust Indenture Act.

         (a) "cash transaction" means any transaction in which full payment for
goods or securities sold is made within seven days after delivery of the goods
or securities in currency or in checks or other orders drawn upon banks or
bankers and payable upon demand; and

         (b) "self-liquidating paper" means any draft, bill of exchange,
acceptance or obligation which is made, drawn, negotiated or incurred by the
Company (or any such obligor) for the purpose of financing the purchase,
processing, manufacturing, shipment, storage or sale of goods, wares or
merchandise and which is secured by documents evidencing title to, possession
of, or a lien upon, the goods, wares or merchandise or the receivables or
proceeds arising from the sale of the goods, wares or merchandise previously
constituting the security, provided the security is received by the Trustee
simultaneously with the creation of the creditor relationship with the Company
(or any such obligor) arising from the making, drawing, negotiating or incurring
of the draft, bill of exchange, acceptance or obligation.

SECTION 614.      APPOINTMENT OF AUTHENTICATING AGENT.

         At any time when any of the Securities remain Outstanding the Trustee
may appoint an Authenticating Agent or Agents that shall be authorized to act on
behalf of the Trustee to authenticate Securities issued upon exchange,
registration of transfer or partial redemption thereof or pursuant to Section
304, and Securities so authenticated shall be entitled to the benefits of this
Indenture and shall be valid and obligatory for all purposes as if authenticated
by the Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a corporation organized and doing business
under the laws of the United States of America, any State thereof or the
District of Columbia, authorized under such laws to act as Authenticating Agent,
having a combined capital and surplus of not less than $50,000,000 and subject
to supervision or examination by federal or state authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.

         Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.

         An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment by first-class mail, postage prepaid, to all Holders of
Securities, if any, with respect to which such Authenticating Agent will serve,
as their names and addresses appear in the Security Register. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible under the provisions of
this Section.

         The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 607.

         The provisions of Sections 306, 604 and 605 shall be applicable to each
Authenticating Agent.

         If an appointment is made pursuant to this Section, the Securities may
have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternate certificate of authentication in the following
form:

                  This is one of the Securities referred to in the
within-mentioned Indenture.

                                                Bankers Trust Company
                                                     As Trustee

                                           By
                                               As Authenticating Agent

                                           By
                                                Authorized Signatory


                                  ARTICLE SEVEN

                HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

SECTION 701.      COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.

     The Company  will  furnish or cause to be  furnished  to the  Trustee  with
respect to the Registered Securities

                  (a) semi-annually, not later than 15 days after such Regular
         Record Date, in each year, a list, in such form as the Trustee may
         reasonably require, containing all the information in the possession or
         control of the Company, or any of its Paying Agents other than the
         Trustee, as to the names and addresses of the Holders of Securities as
         of the preceding May 15 or November 15, as the case may be, and

                  (b) at such other times as the Trustee may request in writing,
         within 30 days after the receipt by the Company of any such request, a
         list of similar form and content as of the most recent Regular Record
         Date;

excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.

SECTION 702. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.

     (a) The Trustee shall comply with the obligations imposed on it pursuant to
Section 312 of the Trust Indenture Act.

     (b) Every Holder of Securities,  by receiving and holding the same,  agrees
with the Company and the  Trustee  that  neither the Company nor the Trustee nor
any  agent  of  either  of them  shall  be held  accountable  by  reason  of the
disclosure of any such  information as to the names and addresses of the Holders
of Securities  in accordance  with Section  312(b) of the Trust  Indenture  Act,
regardless of the source from which such  information was derived,  and that the
Trustee shall not be held accountable by reason of mailing any material pursuant
to a request made under Section 312(b) of the Trust Indenture Act.

SECTION 703.      REPORTS BY TRUSTEE.

     (a) Within 60 days after May 15 of each year  commencing with May 15, 1997,
if required by Section  313(a) of the Trust  Indenture  Act,  the Trustee  shall
transmit  a brief  report  dated  as of such May 15 with  respect  to any of the
events  specified in such Section  313(a) that may have occurred since the later
of the immediately preceding May 15 and the date of this Indenture.

     (b) The Trustee shall  transmit the reports  required by Section  313(b) of
the Trust Indenture Act at the times specified therein.

     (c) Reports pursuant to this Section shall be transmitted in the manner and
to the Persons required by Sections 313(c) and (d) of the Trust Indenture Act.

SECTION 704.      REPORTS BY COMPANY.

         The Company, pursuant to Section 314(a) of the Trust Indenture Act,
shall:

                  (1) file with the Trustee, within 15 days after the Company is
         required to file the same with the Commission, copies of the annual
         reports and of the information, documents and other reports (or copies
         of such portions of any of the foregoing as the Commission may from
         time to time by rules and regulations prescribe) that the Company may
         be required to file with the Commission pursuant to Section 13 or
         Section 15(d) of the Exchange Act; or, if the Company is not required
         to file information, documents or reports pursuant to either of said
         Sections, then it shall file with the Trustee and the Commission, in
         accordance with rules and regulations prescribed from time to time by
         the Commission, such of the supplementary and periodic information,
         documents and reports which may be required pursuant to Section 13 of
         the Exchange Act, in respect of a security listed and registered on a
         national securities exchange as may be prescribed from time to time in
         such rules and regulations;

                  (2) file with the Trustee and the Commission, in accordance
         with rules and regulations prescribed from time to time by the
         Commission, such additional information, documents and reports with
         respect to compliance by the Company with the conditions and covenants
         of this Indenture as may be required from time to time by such rules
         and regulations;

                  (3) transmit, within 30 days after the filing thereof with the
         Trustee, to the Holders of Securities, in the manner and to the extent
         provided in Section 313(c) of the Trust Indenture Act, such summaries
         of any information, documents and reports required to be filed by the
         Company pursuant to paragraphs (1) and (2) of this Section 704 as may
         be required by rules and regulations prescribed from time to time by
         the Commission; and

               (4) notify the Trustee when and as the Securities become admitted
          to trading on any national securities exchange.


                                  ARTICLE EIGHT

              CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

SECTION 801.      COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.

         Nothing contained in this Indenture or in the Securities will prevent
any consolidation of the Company with, or merger of the Company with or into,
any other corporation or corporations (whether or not affiliated with the
Company), or successive consolidations or mergers to which the Company or its
successor will be a party, or will prevent any sale, lease or conveyance of the
property of the Company, as an entirety or substantially as an entirety;
provided that upon any such consolidation, merger, sale, lease or conveyance to
which the Company is a party and in which the Company is not the surviving
corporation, the due and punctual performance and observance of all of the
covenants and conditions of the Indenture to be performed or observed by the
Company and the due and punctual payment of the principal of, premium, if any,
and interest on all of the Securities, according to their tenor, shall be
expressly assumed by supplemental indenture satisfactory in form to the Trustee,
executed and delivered to the Trustee, by the corporation formed by such
consolidation, or into which the Company shall have been merged, or which shall
have acquired such property. In addition, the Company may assign and delegate
all of its rights and obligations under this Indenture, the Securities, any
supplemental indenture relating to the Securities, the Deposit Agreement and all
other documents, agreements and instruments related thereto to any Person that
owns all of the ordinary shares of the Company or to any Person that owns all of
the ordinary shares of a Person that owns all of the ordinary shares of the
Company, and upon any such Person assuming such rights and obligations the
Company shall be automatically released from such obligations, provided that
immediately after giving effect to such transaction no Event of Default, and no
event which, after notice or lapse of time or both, would become an Event of
Default shall have happened and be continuing.

         In the event that any such successor entity is organized under the laws
of a country located outside of the United Kingdom and withholding or deduction
is required by law for or on account of any present or future taxes, duties,
assessments or governmental charges of whatever nature imposed, levied,
collected, withheld or assessed by or within such country in which the successor
entity is organized or by or within any political subdivision thereof or any
authority therein or thereof having power to tax, the successor entity shall pay
to the relevant Holder of the Global Securities or to the relevant Holders of
the Definitive Registered Securities, as the case may be, such additional
amounts, under the same circumstances and subject to the same limitations as are
specified for "United Kingdom Taxes," as is set forth under Section 1004 herein,
but substituting for the United Kingdom in each place the name of the country
under the laws of which such successor entity is organized. In addition such
successor entity shall be entitled to effect optional tax redemptions under the
same circumstances and subject to the same limitations as are set forth under
Section 1101 herein, but substituting for the United Kingdom in each place the
name of the country under the laws of which such successor entity is organized.

SECTION 802.      SUCCESSOR CORPORATION SUBSTITUTED.

         Upon any consolidation by the Company with or merger by the Company
into any corporation or any conveyance, transfer or lease of the properties and
assets of the Company substantially as an entirety in accordance with Section
801, the successor corporation formed by such consolidation or into which the
Company is merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
corporation had been named as the Company herein, and thereafter, except in the
case of a lease, the predecessor corporation shall be relieved of all
obligations and covenants under this Indenture and the Securities.


                                  ARTICLE NINE

                             SUPPLEMENTAL INDENTURES

SECTION 901.      SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.

         Without the consent of any Holders of Securities, the Company, when
authorized by a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:

               (1) to evidence  the  succession  of another  corporation  to the
          Company and the  assumption by any such  successor of the covenants of
          the Company herein and in the Securities; or

               (2) to add to the covenants of the Company for the benefit of the
          Holders,  or to surrender any right or power herein conferred upon the
          Company; or

               (3) to add any additional Events of Default; or

               (4) to add to or change any of the provisions of this  Indenture,
          to change or eliminate  any  restrictions  on the payment of principal
          (or  premium,  if any) on  Securities  or to permit  the  issuance  of
          Securities in uncertificated  form, provided any such action shall not
          adversely affect the interests of the Holders in any material respect;
          or

               (5) to secure the Securities; or

               (6) to evidence  and provide for the  acceptance  of  appointment
          hereunder  by a  successor  Trustee and to add to or change any of the
          provisions  of this  Indenture as shall be necessary to provide for or
          facilitate the administration of the trusts hereunder by more than one
          Trustee; or

               (7) to cure any ambiguity, to correct or supplement any provision
          herein which may be inconsistent  with any other provision  herein, or
          to make provisions with respect to matters or questions  arising under
          this  indenture,  provided such action shall not adversely  affect the
          interests of the Holders or holders of outstanding Trust Securities in
          any material respect; or

               (8)  subject  to  Section  903(a),  to make any change in Article
          Thirteen that would limit or terminate  the benefits  available to any
          holder of Senior Indebtedness under such Article; or

               (9)  to  modify,  eliminate  or add to  the  provisions  of  this
          Indenture  to  such  extent  as  shall  be  necessary  to  effect  the
          qualification of this Indenture under the Trust Indenture Act or under
          any similar  federal  statute  hereafter  enacted,  and to add to this
          Indenture  such other  provisions as may be expressly  required by the
          Trust Indenture Act.

SECTION 902.      SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.

         With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities, by Act of said Holders delivered
to the Company and the Trustee, the Company, when authorized by a Board
Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders under this Indenture;
provided, however, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Security affected thereby,

                  (1) extend the Stated Maturity of the principal of, or any
         installment of principal of, any Security, or reduce the principal
         amount thereof, or reduce the rate or extend the time of payment of
         interest thereon (except that a declaration of a valid extension by the
         Company shall not constitute an extension of time of payment of
         interest for this purpose) or reduce any amount payable upon the
         redemption thereof, or change the currency in which the principal
         thereof, premium, if any, or any interest thereon is payable, or impair
         the right to institute suit for the enforcement of any payment on any
         Security when due, or

                  (2) reduce the percentage in principal amount of the
         Outstanding Securities, the consent of whose Holders is required for
         any such supplemental indenture, or the consent of whose Holders is
         required for any waiver (of compliance with certain provisions of this
         Indenture or certain defaults hereunder and their consequences)
         provided for in this Indenture, or

                  (3) modify any of the provisions of this Section 902, Section
         513 or Section 1008, except to increase any such percentage or to
         provide that certain other provisions of this Indenture cannot be
         modified or waived without the consent of the Holder of each
         Outstanding Security affected thereby, provided, however, that this
         clause shall not be deemed to require the consent of any Holder of a
         Security with respect to changes in the references to "the Trustee" and
         concomitant changes in this Section and Section 1008, or the deletion
         of this proviso, in accordance with the requirements of Sections 611(b)
         and 901(8), or

                  (4) modify the provisions of this Indenture with respect to
         the subordination of the Securities in a manner adverse to such Holder.

SECTION 903.               GENERAL PROVISIONS REGARDING SUPPLEMENTAL INDENTURE.

         (a) A supplemental indenture entered into pursuant to Section 901 or
Section 902 may not make any change that adversely affects the rights under
Article Thirteen of any holder of Senior Indebtedness then outstanding unless
the holders of such Senior Indebtedness (or any group or representative thereof
authorized to give a consent) consent to such change.

         (b) It shall not be necessary for any Act of Holders of Securities
under this Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act or action shall approve the
substance thereof.

SECTION 904.      EXECUTION OF SUPPLEMENTAL INDENTURES.

         In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties, immunities or liabilities under this Indenture or
otherwise.

SECTION 905.      EFFECT OF SUPPLEMENTAL INDENTURES.

         Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.

SECTION 906.      CONFORMITY WITH TRUST INDENTURE ACT.

         Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.

SECTION 907.      REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.

         Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.

                                   ARTICLE TEN

                                    COVENANTS

SECTION 1001.     PAYMENT OF PRINCIPAL AND INTEREST.

         The Company will duly and punctually pay the principal of (and premium,
if any) and interest, including Additional Sums (subject to the right of the
Company to extend an interest payment period), on the Securities in accordance
with the terms of the Securities and this Indenture.

SECTION 1002.     MAINTENANCE OF OFFICE OR AGENCY.

         The Company will maintain (i) in the Borough of Manhattan, The City of
New York, an office or agency where Securities may be presented or surrendered
for payment, and where notices and demands to or upon the Company in respect of
the Securities and this Indenture may be served and if definitive Registered
Securities have been issued, an office or agency of a Transfer Agent where
Securities may be surrendered for registration of transfer or exchange, and (ii)
an office or agency of a Paying Agent where the Securities may be paid in
Luxembourg so long as the Securities are listed on the Luxembourg Stock Exchange
and the rules of such exchange so require. The Company will give prompt written
notice to the Trustee of the location, and any change in the location, of any
such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office of the Trustee, except that Bearer
Securities of that series pursuant to Section 1001 may be presented at the place
specified for the purpose pursuant to Section 301, and the Company hereby
appoints the Paying Agent as its agent to receive all such presentations,
surrenders, notices and demands.

         The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.

SECTION 1003.     MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST.

         If the Company or one of its Affiliates shall at any time act as its
own Paying Agent, it will, on or before each due date of the principal of (and
premium, if any) or interest (including Additional Sums, if any) on any of the
Securities, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal (and premium, if any) or interest
(including Additional Sums, if any) so becoming due until such sums shall be
paid to such Persons or otherwise disposed of as herein provided and will
promptly notify the Trustee of its action or failure so to act.

         Whenever the Company shall have one or more Paying Agents, it will,
prior to each due date of the principal of (and premium, if any) or interest
(including Additional Sums,, if any) on any Securities, deposit with a Paying
Agent a sum sufficient to pay the principal (and premium, if any) or interest
(including Additional Amounts and Additional Sums, if any) so becoming due, such
sum to be held in trust for the benefit of the Persons entitled to such
principal, premium or interest (including Additional Sums, if any), and (unless
such Paying Agent is the Trustee) the Company will promptly notify the Trustee
of its action or failure so to act.

         The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:

                  (1) hold all sums held by it for the payment of the principal
         of (and premium, if any) or interest (including Additional Sums, if
         any) on Securities in trust for the benefit of the Persons entitled
         thereto until such sums shall be paid to such Persons or otherwise
         disposed of as herein provided;

                  (2) give the Trustee notice of any default by the Company (or
         any other obligor upon the Securities) in the making of any payment of
         principal of (and premium, if any) or interest (including Additional
         Sums, if any) on the Securities; and

                  (3) at any time during the continuance of any such default,
         upon the written request of the Trustee, forthwith pay to the Trustee
         all sums so held in trust by such Paying Agent.

         The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.

         Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of (and premium, if
any) or interest (including Additional Sums, if any) on any Security and
remaining unclaimed for two years after such principal (and premium, if any) or
interest (including Additional Sums, if any) has become due and payable shall be
paid to the Company on Company Request, or (if then held by the Company) shall
be discharged from such trust; and the Holder of such Security shall thereafter,
as an unsecured general creditor, look only to the Company for payment thereof,
and all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in a newspaper of general circulation in New York City and
Luxembourg notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
publication, any unclaimed balance of such money then remaining will be repaid
to the Company.

SECTION 1004.     ADDITIONAL AMOUNTS.

         All payments of principal, premium, if any, and interest in respect of
the Securities shall be made free and clear of, and without withholding or
deduction for or on account of, any present or future taxes, duties, assessments
or governmental charges of whatever nature imposed, levied, collected, withheld
or assessed by or within the UK or by or within any political subdivision
thereof or any authority therein or thereof having power to tax ("UK Taxes"),
unless such withholding or deduction is required by law. In the event of any
such withholding or deduction the Company shall pay to the relevant Holder of
Securities such additional amounts ("Additional Amounts") as will result in the
payment to each such Holder of the amount that would otherwise have been
receivable by such Holder in the absence of such withholding or deduction,
except that no such Additional Amounts shall be payable:

         (a) to, or to a Person on behalf of, a Holder who is liable for such UK
Taxes in respect of the Security by reason of such Holder having some connection
with the UK (including being a citizen or resident or national of, or carrying
on a business or maintaining a permanent establishment in, or being physically
present in, the UK) other than the mere holding of a Security or the receipt of
principal, premium, if any, and interest in respect thereof;

         (b) to, or to a Person on behalf of, a Holder who presents a Security
(where presentation is required) for payment more than 30 days after the
Relevant Date(as defined below) except to the extent that such Holder would have
been entitled to such Additional Amounts on presenting such Security for payment
on the last day of such period of 30 days;

     (c) to, or to a Person on  behalf  of, a Holder  who  presents  a  Security
(where presentation is required) in the United Kingdom;

     (d) to, or to a Person on  behalf  of, a Holder  who would not be liable or
subject to the withholding or deduction by making a declaration of non-residence
or similar claim for exemption to the relevant tax authority; or

         (e) to, or to a Person on behalf of, a Holder of a Definitive
Registered Security issued pursuant to the request of owners of interests
representing a majority in outstanding principal amount in Book-Entry Interest
following and during the continuance of an Event of Default if such Holder (or
any predecessor Holder) was one of such owners requesting that Definitive
Registered Securities be so issued.

         Such Additional Amounts will also not be payable where, had the
beneficial owner of the Security (or any interest therein) been the Holder of
the Security, he would not have been entitled to payment of Additional Amounts
by reason of any one or more of the clauses (a) through (e) above. If the
Company shall determine that Additional Amounts will not be payable because of
the immediately preceding sentence, the Company will inform such Holder promptly
after making such determination setting forth the reason(s) therefor.

SECTION 1005.     CORPORATE EXISTENCE.

         Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and the rights (charter and statutory) and franchises of the Company;
provided, however, that the Company shall not be required to preserve any such
right or franchise if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company, and that the loss thereof is not disadvantageous in any material
respect to the Holders.

SECTION 1006.     LIMITATIONS ON DIVIDEND AND CERTAIN OTHER PAYMENTS.

         The Company covenants that it will not (a) declare or pay any dividends
on, or redeem, purchase, acquire or make a distribution or liquidation payment
with respect to, any of its capital stock except for dividends, payments or
distributions payable in shares of its capital stock and conversions or
exchanges of capital stock, reclassifications of its capital stock of one class
or series for capital stock of another class or series and except for a
redemption, purchase or other acquisition of shares of its capital stock made
for the purpose of an employee incentive plan or benefit plan or similar
arrangement of the Company or any of its subsidiaries or (b) make any payment of
interest, principal of or premium, if any, on, or repay, repurchase or redeem
any debt securities issued by the Company that rank pari passu with or junior to
the Securities (except by conversion into or exchange for shares of its capital
stock) or (c) make any guarantee payment with respect to the foregoing, if at
such time (i) the Company shall be in default with respect to its guarantee
payments or other payment obligations under the Capital Securities Guarantee,
(ii) there shall have occurred and be continuing any Event of Default, or (iii)
the Company shall have given notice of its selection of an Extension Period as
provided in this Indenture and such period, or any extension thereof, is
continuing.

SECTION 1007.     STATEMENT AS TO COMPLIANCE.

         (a) The Company shall deliver to the Trustee, within 120 days after the
end of each fiscal year, a written statement, which need not comply with Section
102, signed by the principal executive officer, the principal financial officer
or the principal accounting officer of the Company, as to his or her knowledge
of the Company's compliance with all conditions and covenants under this
Indenture. For purposes of this Section 1007, such compliance shall be
determined without regard to any period of grace or requirement of notice under
this Indenture.

         (b) The Company shall deliver to the Trustee, no later than the
Business Day on which the event occurs, written notice of the liquidation,
dissolution or winding-up of the Issuer Trust if such liquidation, dissolution
or winding-up would occur earlier than the Stated Maturity of the Securities.

         (c) The Company shall deliver to the Trustee, within five days after
the occurrence thereof, written notice of any event which after notice or lapse
of time or both would become an Event of Default pursuant to Section 501.

SECTION 1008.     WAIVER OF CERTAIN COVENANTS.

         Except as otherwise specified in Section 301 for Securities, the
Company may omit in any particular instance to comply with any term, provision
or condition set forth in Sections 1005 and 1006 if before the time for such
compliance the Holders of at least a majority in principal amount of the
Outstanding Securities shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such term,
provision or condition, but no such waiver shall extend to or affect such term,
provision or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company and the duties of
the Trustee in respect of any such term, provision or condition shall remain in
full force and effect.

SECTION 1009.     COVENANTS REGARDING TRUST.

         For so long as the Capital Securities remain outstanding, the Company
covenants (i) not to cause or permit the Common Securities to be transferred
except to the extent permitted by the Declaration of Trust; provided, however,
that any permitted successor of the Company hereunder may succeed to the
Company's ownership of such Common Securities, (ii) to comply fully with all of
its obligations and agreements contained in the Declaration of Trust and (iii)
not to take any action which would cause the Trust to be treated as a grantor
trust for United States federal income tax purposes except in connection with a
distribution of the Securities.


                                 ARTICLE ELEVEN

                            REDEMPTION OF SECURITIES

SECTION 1101.     OPTIONAL REDEMPTION; CONDITIONS TO OPTIONAL REDEMPTION.

         (a) At any time after February 1, 2007, the Company shall have the
right to redeem the Securities, in whole or in part, from time to time, at the
applicable Redemption Price plus any accrued but unpaid interest to the
Redemption Date.

         (b) If a Special Event has occurred and is continuing, the Company
shall have the right prior to February 1, 2007, upon not less than 15 nor more
than 60 days written notice to the Holders and the Trustee, to redeem the
Securities, in whole (but not in part),upon the occurrence and continuance of
such Special Event at the applicable Redemption Price.

         (c) If the Company has become obligated to pay Additional Amounts as
described under Section 1004, then, the Company shall have the right, upon not
less than 15 nor more than 60 days written notice to the Holders and the
Trustee, to redeem the Securities, in whole (but not in part), at the applicable
Redemption Price plus any accrued but unpaid interest to the Redemption Date.

         (d) (1) "Redemption Price" in a case of a redemption pursuant to
paragraph (a) means the amount equal to the percentages specified below of the
principal amount of the Security to be redeemed, plus any accrued and unpaid
interest, to the Redemption Date, including interest accrued during any
Extension Periods if redeemed during the 12-month period beginning February 1 of
the years indicated below:

        Year                                        Percentage
        ----                                        ----------
        2007                                        104.115%
        2008                                        103.704
        2009                                        103.292
        2010                                        102.881
        2011                                        102.469
        2012                                        102.058
        2013                                        101.646
        2014                                        101.235
        2015                                        100.823
        2016                                        100.412
        2017 and thereafter                         100.000

                  (2) "Redemption Price" in a case of a redemption pursuant to
paragraph (b) means the greater of (A) the amount equal to 100% of the principal
amount of the Securities being redeemed or (B) the amount equal to the sum of
the present values of the remaining scheduled payments of principal and premium
of and interest on the Securities being redeemed through February 1, 2007
discounted to the date of redemption on a semi-annual basis (assuming a 360-day
year consisting of twelve 30-day months) at a discount rate equal to the
Treasury Yield plus 110 basis points, in the case of such a redemption before
February 1, 1998 and the Treasury Yield plus 50 basis points, in the case of
such a redemption on or after February 1, 1998 but prior to February 1, 2007,
plus, for (A) or (B) above, whichever is applicable, accrued interest on the
Securities to the Redemption Date, including interest accrued during any
Extension Period.

                  "Treasury Yield" means, with respect to any Redemption Date,
the rate per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such Redemption Date.

                  "Comparable Treasury Issue" means the United States Treasury
security selected by an Independent Investment Banker as having a maturity
comparable to the remaining term through February 1, 2007 of the Securities to
be redeemed that would be utilized, at the time of selection and in accordance
with customary financial practice, in pricing new issues of corporate debt
securities of comparable maturity to the remaining term through February 1, 2007
of the Securities.

                  "Comparable Treasury Price" means, with respect to any
Redemption Date, (i) the average of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
on the third Business Day in New York City preceding such redemption date, as
set forth in the most recent weekly statistical release (or any successor
release) published by the Federal Reserve Bank of New York and designated
"H.15(519)" or (ii) if such release (or any successor release) is not published
or does not contain such prices on such business day, the Reference Treasury
Dealer Quotation for such redemption date.

                  "Independent Investment Banker" means an independent
investment banking institution of national standing appointed by the Company and
reasonably acceptable to the Trustee.

                  "Reference Treasury Dealer Quotation" means, with respect to
the Reference Treasury Dealer and any Redemption Date, the average, as
determined by the Trustee, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount
and quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00
p.m. on the third Business Day preceding such Redemption Date).

                  "Reference Treasury Dealer" means a primary US Government
securities dealer in New York City appointed by the Company and reasonably
acceptable to the Trustee.

                  (3) "Redemption Price" in a case of a redemption pursuant to
paragraph (c) means a price equal to the outstanding principal amount thereof,
together with Additional Amounts, if any, and accrued interest, if any, to the
Redemption Date, if (a) the Company satisfies the Trustee that it has or will
become obligated to pay Additional Amounts on the Securities, as a result of
either (x) any change in, or amendment to, the laws or regulations of the United
Kingdom or any political subdivision or any authority or agency thereof or
therein having power to tax or levy duties, or any change in the application or
interpretation of such laws or regulations, which change or amendment becomes
effective on or after January 23, 1997, or (y) the issuance of definitive
Registered Securities as the result of DTC having notified the Company and the
Book-Entry Depositary that it is unable or unwilling to continue to hold the
Book-Entry Interest or at any time ceasing to be a "clearing agency" registered
as such under the Exchange Act and, in either case, a successor not being
appointed by the Company within 120 days or the Book-Entry Depositary notifying
the Company that it is unwilling or unable to continue as Book-Entry Depositary
with respect to the Securities and a successor Book-Entry Depositary not being
appointed being within 120 days or there having occurred and being continuing an
Event of Default with respect to the Securities and the Holder, in such
circumstances, having requested in writing a definitive Registered Security, and
(b) such obligation cannot be avoided by the Company taking reasonable measures
available to it; provided, however, that no such notice of redemption shall be
given earlier than 90 days prior to the earliest date on which the Company would
be obligated to pay such Additional Amounts, were a payment in respect of the
Securities then due. Prior to the giving of notice of redemption of such
Securities pursuant to this Indenture, the Company shall deliver to the Trustee
an Officers' Certificate stating that the obligation to pay such Additional
Amounts cannot be avoided by the Company taking reasonable measures available to
it, and the Trustee shall accept such certificate as sufficient evidence of such
condition, in which event such certificate shall be conclusive and binding on
the Holders of the Securities.

SECTION 1102.     ELECTION TO REDEEM; NOTICE TO TRUSTEE.

         The election of the Company to redeem any Securities shall be evidenced
by a Board Resolution. In case of any redemption at the election of the Company
of all of the Securities, the Company shall, at least 20 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee and the related Institutional Trustee), notify the
Trustee and the related Institutional Trustee in writing of such Redemption
Date. In case of any redemption at the election of the Company of less than all
the Securities, the Company shall, at least 25 days prior to the Redemption Date
fixed by the Company (unless a shorter notice shall be satisfactory to the
Trustee and the related Institutional Trustee), notify the Trustee and the
related Institutional Trustee in writing of such Redemption Date and of the
principal amount of Securities to be redeemed. In the case of any redemption of
Securities (i) prior to the expiration of any restriction on such redemption
provided in the terms of such Securities or elsewhere in this Indenture, or (ii)
pursuant to an election of the Company which is subject to a condition specified
in the terms of such Securities, the Company shall furnish the Trustee with an
Officers' Certificate evidencing compliance with such restriction or condition.

SECTION 1103.     SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED.

         If the Securities are registered in the name of only one Holder, any
partial redemptions shall be pro rata. If the Securities are held in definitive
form by more than one Holder and if less than all the Securities are to be
redeemed, the particular Securities to be redeemed shall be selected not more
than 60 days prior to the Redemption Date by the Trustee, from the Outstanding
Securities not previously called for redemption, by lot or other such method as
the Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions (equal to the minimum authorized
denomination for the Securities or any integral multiple thereof) of the
principal amount of Securities of a denomination larger than the minimum
authorized denomination for Securities.

         The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Securities selected
for partial redemption, the principal amount thereof to be redeemed.

         For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.

SECTION 1104.     NOTICE OF REDEMPTION.

         Notice of redemption shall be given in the manner provided in Section
106 to the Holders of Securities to be redeemed not less than 15 nor more than
60 days prior to the Redemption Date.

         All notices of redemption shall state:

                    (1) the Redemption Date,

                    (2) the Redemption Price,

                    (3) if less than all the  Outstanding  Securities  are to be
               redeemed,  the  identification  (and,  in  the  case  of  partial
               redemption,  the principal amounts) of the particular  Securities
               to be redeemed,

                    (4) that on the Redemption  Date the  Redemption  Price will
               become due and  payable  upon each such  Security  to be redeemed
               and, if applicable, that interest thereon will cease to accrue on
               and after said date, and

                    (5) the  place or places  where  such  Securities  are to be
               surrendered for payment of the Redemption Price.

         Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.

SECTION 1105.     DEPOSIT OF REDEMPTION PRICE.

         Prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company or its Affiliate is acting as
its own Paying Agent, segregate and hold in trust as provided in Section 1003)
an amount of money sufficient to pay the Redemption Price of and accrued
interest, if any, on all the Securities which are to be redeemed on that date.

SECTION 1106.              SECURITIES PAYABLE ON REDEMPTION DATE.

         Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified together with any accrued interest (including
any Additional Amounts and Additional Sums) thereon, and from and after such
date (unless the Company shall default in the payment of the Redemption Price
and accrued interest) such Securities shall cease to bear interest. Upon
surrender of any such Security for redemption in accordance with such notice,
such Security shall be paid by the Company at the Redemption Price, together
with accrued interest, if any, and any Additional Amounts and Additional Sums to
the Redemption Date; provided, however, that, installments of interest on
Securities whose Stated Maturity is on or prior to the Redemption Date shall be
payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant Record
Dates according to their terms and the provisions of Section 305.

         If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate prescribed
therefor in the Security.

SECTION 1107.     SECURITIES REDEEMED IN PART.

         Any Security including any Global Security that is to be redeemed only
in part shall be surrendered at an office or agency of the Company therefor
(with, if the Company or the Trustee so requires, due endorsement by, or a
written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or his attorney duly authorized in
writing), and the Company shall execute, and the Trustee shall authenticate and
deliver to the Holder of such Security without service charge, a new Security of
any authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered; provided that if a Global Security is so
surrendered, the new Global Security shall be in a denomination equal to the
unredeemed portion of the principal of the Global Security so surrendered.

SECTION 1108.     APPLICABILITY OF ARTICLE.

         Securities which are redeemable before their Stated Maturity shall be
redeemable in accordance with their terms and in accordance with this Article.





                                 ARTICLE TWELVE

                                  SUBORDINATION

SECTION 1201.     SECURITIES SUBORDINATE TO SENIOR INDEBTEDNESS.

         The Company covenants and agrees, and each Holder of a Security, by his
acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article (subject to Article Four), the
payment of the principal of, premium, if any, and interest (including Additional
Amounts and Additional Sums) on each and all of the Securities are hereby
expressly made subordinate and subject in right of payment to the prior payment
in full in cash of all Senior Indebtedness.

SECTION 1202.     PAYMENT OF PROCEEDS UPON DISSOLUTION, ETC.

         Upon any payment or distribution of assets of the Company to creditors
upon any liquidation, dissolution, winding-up, reorganization, assignment for
the benefit of creditors, marshalling of assets or liabilities or any
bankruptcy, insolvency or similar proceedings of the Company (each such event,
if any, referred to as a "Proceeding"), the holders of Senior Indebtedness shall
be entitled to receive payment in full of all amounts due on or to become due on
or in respect of all Senior Indebtedness (including any interest accruing
thereon after the commencement of any such Proceeding, whether or not allowed as
a claim against the Company in such Proceeding), before the Holders of the
Securities are entitled to receive any payment or distribution (excluding any
payment described in Section 1209) on account of the principal of, premium, if
any, or interest (including Additional Amounts and Additional Sums, if any) on
the Securities or on account of any purchase, redemption or other acquisition of
Securities by the Company (all such payments, distributions, purchases,
redemptions and acquisitions, whether or not in connection with a Proceeding,
herein referred to, individually and collectively, as a "Payment").

         In the event of the acceleration of the maturity of the Securities,
then no payment shall be made by the Company with respect to the principal
(including redemption payments) of or premium, if any, or interest on the
Securities until the holders of all Senior Indebtedness outstanding at the time
of such acceleration shall receive payment in full of all Allocable Amounts due
in respect of such Senior Indebtedness (including any amounts due upon
acceleration).

         In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, prohibited by the foregoing shall be received by the
Trustee before all Senior Indebtedness is paid in full, or provision is made for
such payment in money in accordance with its terms, such payment or distribution
shall be held in trust for the benefit of and shall be paid over or delivered to
the holders of Senior Indebtedness or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any such Senior
Indebtedness may have been issued, as their respective interests may appear, as
calculated by the Company, for application to the payment of all Senior
Indebtedness remaining unpaid to the extent necessary to pay all Senior
Indebtedness in full in accordance with its terms, after giving effect to any
concurrent payment or distribution to or for the holders of such Senior
Indebtedness.

         For purposes of this Article, "assets of the Company" shall not be
deemed to include shares of stock of the Company as reorganized or readjusted,
or securities of the Company or any other corporation provided for by a plan of
reorganization or readjustment, the payment of which is subordinated at least to
the extent provided in this Article with respect to the Securities to the
payment of all Senior Indebtedness that may at the time be outstanding,
provided, however, that (i) the Senior Indebtedness is assumed by the new
corporation, if any, resulting from any such reorganization or readjustment, and
(ii) the rights of the holders of the Senior Indebtedness are not, without the
consent of such holders, altered by such reorganization or readjustment. The
consolidation of the Company with, or the merger of the Company into, another
corporation or the liquidation or dissolution of the Company following the
conveyance or transfer of its property as an entirety, or substantially as an
entirety, to another corporation upon the terms and conditions provided for in
Article Eight hereof shall not be deemed a dissolution, winding-up, liquidation
or reorganization for the purposes of this Section 1202 if such other
corporation shall, as a part of such consolidation, merger, conveyance or
transfer, comply with the conditions stated in Article Eight hereof. Nothing in
Section 1203 or in this Section 1202 shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 607.

SECTION 1203.     NO PAYMENT WHEN SENIOR INDEBTEDNESS IN DEFAULT.

         No payment of any principal, including redemption payments, if any,
premium, if any, or interest on (including Additional Amounts and Additional
Sums) the Securities shall be made if

               (i) any Senior  Indebtedness  is not paid when due whether at the
          stated  maturity of any such payment or by call for redemption and any
          applicable  grace period with respect to such default has ended,  with
          such default remaining uncured and such default has not been waived or
          otherwise ceased to exist;

               (ii) the maturity of any Senior Indebtedness has been accelerated
          because of a default; or

               (iii)  notice  has been  given of the  exercise  of an  option to
          require repayment, mandatory payment or prepayment or otherwise.

         In the event that, notwithstanding the foregoing, the Company shall
make any Payment to the Trustee or any Holder prohibited by the foregoing
provisions of this Section, then in such event such Payment shall be held in
trust and paid over and delivered forthwith to the holders of the Senior
Indebtedness.

     The  provisions of this Section shall not apply to any Payment with respect
to which Section 1202 hereof would be applicable.

SECTION 1204.     PAYMENT PERMITTED IF NO DEFAULT.

         Nothing contained in this Article or elsewhere in this Indenture or in
any of the Securities shall prevent the Company, at any time except during the
pendency of any Proceeding referred to in Section 1202 hereof or under the
conditions described in Section 1203 hereof, from making Payments. Nothing in
this Article shall have any effect on the right of the Holders or the Trustee to
accelerate the maturity of the Securities upon the occurrence of an Event of
Default, but, in that event, no payment may be made in violation of the
provisions of this Article with respect to the Securities. If payment of the
Securities is accelerated because of an Event of Default, the Company shall
promptly notify the holders of the Senior Indebtedness (or their
representatives) of such acceleration.

SECTION 1205.     SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS.

         The rights of the Holders of the Securities shall be subrogated to the
rights of the holders of such Senior Indebtedness to receive payments and
distributions of cash, property and securities applicable to the Senior
Indebtedness until the principal of, premium, if any, and interest (including
Additional Sums) on the Securities shall be paid in full. For purposes of such
subrogation, no payments or distributions to the holders of the Senior
Indebtedness of any cash, property or securities to which the Holders of the
Securities or the Trustee would be entitled except for the provisions of this
Article, and no payments pursuant to the provisions of this Article to the
holders of Senior Indebtedness by Holders of the Securities or the Trustee,
shall, as among the Company, its creditors other than holders of Senior
Indebtedness and the Holders of the Securities, be deemed to be a payment or
distribution by the Company to or on account of the Senior Indebtedness.

SECTION 1206.     PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS.

         The provisions of this Article are and are intended solely for the
purpose of defining the relative rights of the Holders on the one hand and the
holders of Senior Indebtedness on the other hand. Nothing contained in this
Article or elsewhere in this Indenture or in the Securities is intended to or
shall (a) impair, as among the Company, its creditors other than holders of
Senior Indebtedness and the Holders of the Securities, the obligation of the
Company, which is absolute and unconditional (and which, subject to the rights
under this Article of the holders of Senior Indebtedness, is intended to rank
equally with all other general obligations of the Company), to pay to the
Holders of the Securities the principal of, premium, if any, and interest
(including Additional Sums) on the Securities as and when the same shall become
due and payable in accordance with their terms; or (b) affect the relative
rights against the Company of the Holders of the Securities and creditors of the
Company other than the holders of Senior Indebtedness; or (c) prevent the
Trustee or the Holder of any Security from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, under this Article of the holders of Senior Indebtedness to
receive cash, property and securities otherwise payable or deliverable to the
Trustee or such Holder or, under the conditions specified in Section 1203, to
prevent any payment prohibited by such Section or enforce their rights pursuant
to the penultimate paragraph in Section 1203.

SECTION 1207.     TRUSTEE TO EFFECTUATE SUBORDINATION.

         Each Holder of a Security by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such purposes,
including, in the event of any dissolution, winding-up, liquidation or
reorganization of the Company, whether in bankruptcy, insolvency, receivership
proceedings, or otherwise, the timely filing of a claim for the unpaid balance
of the indebtedness of the Company owing to such Holder in the form required in
such proceedings and the causing of such claim to be approved.

SECTION 1208.     NO WAIVER OF SUBORDINATION PROVISIONS.

         No right of any present or future holder of any Senior Indebtedness to
enforce the subordination provisions provided herein shall at any time in any
way be prejudiced or impaired by any act or failure to act on the part of the
Company or by any act or any failure to act, in good faith, by any such holder,
or by any noncompliance by the Company with the terms, provisions and covenants
of this Indenture, regardless of any knowledge thereof any such holder may have
or be otherwise charged with.

         Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article or
the obligations hereunder of the Holders of the Securities to the holders of
Senior Indebtedness, do any one or more of the following: (i) change the manner,
place or terms of payment or extend the time of payment of, or renew or alter,
Senior Indebtedness, or otherwise amend or supplement in any manner Senior
Indebtedness or any instrument evidencing the same or any agreement under which
Senior Indebtedness is outstanding; (ii) permit the Company to borrow, repay and
then reborrow any or all of the Senior Indebtedness; (iii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing Senior Indebtedness; (iv) release any Person liable in any manner for
the collection of Senior Indebtedness; (v) exercise or refrain from exercising
any rights against the Company and any other Person; or (vi) apply any sums
received by them to Senior Indebtedness.

SECTION 1209.     TRUST MONEYS NOT SUBORDINATED.

         Notwithstanding anything contained herein to the contrary, payments
from money held in trust by the Trustee under Article Four for the payment of
the principal of, premium, if any, and interest (including Additional Sums) on
the Securities shall not be subordinated to the prior payment of any Senior
Indebtedness or subject to the restrictions set forth in this Article and no
Holder of such Securities nor the Trustee shall be obligated to pay over such
amount to the Company, any holder of Senior Indebtedness (or a designated
representative of such holder) or any other creditor of the Company.

SECTION 1210.     NOTICE TO THE TRUSTEE.

         The Company shall give prompt written notice to a Responsible Officer
of the Trustee of any fact known to the Company that would prohibit the making
of any payment of monies to or by the Trustee in respect of the Securities
pursuant to the provisions of this Article. Notwithstanding the provisions of
this Article or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts that would prohibit the
making of any payment of monies to or by the Trustee in respect of the
Securities pursuant to the provisions of this Article unless and until a
Responsible Officer of the Trustee shall have received written notice thereof at
the Corporate Trust Office of the Trustee from the Company or a holder or
holders of Senior Indebtedness or from any trustee therefor; and before the
receipt of any such written notice, the Trustee, subject to the provisions of
Section 601, shall be entitled in all respects to assume that no such facts
exist; provided, however, that if the Trustee shall not have received the notice
provided for in this Section 1210 at least two Business Days prior to the date
upon which, by the terms hereof, any money may become payable for any purpose
(including, without limitation, the payment of the principal of (or premium, if
any) or interest on any Security), then, anything herein contained to the
contrary notwithstanding, the Trustee shall have full power and authority to
receive such money and to apply the same to the purposes for which they were
received, and shall not be affected by any notice to the contrary that may be
received by it within two Business Days prior to such date.

         The Trustee, subject to the provisions of Section 601, shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness (or a trustee on
behalf of such holder) to establish that such notice has been given by a holder
of Senior Indebtedness or a trustee on behalf of any such holder or holders. In
the event that the Trustee determines in good faith that further evidence is
required with respect to the right of any Person as a holder of Senior
Indebtedness to participate in any payment or distribution pursuant to this
Article, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such Person under this Article, and if such evidence is not furnished the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment.

SECTION 1211.    RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGENT.

         Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee, subject to the provisions of Section 601 hereof,
and the Holders of the Securities shall be entitled to rely upon any order or
decree entered by any court of competent jurisdiction in which such Proceeding
is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee for the benefit of creditors, agent or other Person
making such payment or distribution, delivered to the Trustee or to the Holders
of Securities, for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of the Senior
Indebtedness, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article,
provided that the foregoing shall apply only if such court has been apprised of
the provisions of this Article.

SECTION 1212.     TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS.

         Subject to the provisions of Section 601, the Trustee shall not be
deemed to owe any fiduciary duty to the holders of Senior Indebtedness and shall
not be liable to any such holders if it shall in good faith mistakenly pay over
or distribute to Holders of Securities or to the Company or to any other Person
cash, property or securities to which any holders of Senior Indebtedness shall
be entitled by virtue of this Article or otherwise.

SECTION 1213. RIGHTS OF TRUSTEE AS HOLDER OF SENIOR INDEBTEDNESS; PRESERVATION
              OF TRUSTEE'S RIGHTS.

         The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior Indebtedness which
may at any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.

         Nothing in this Article shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 607 hereof.

SECTION 1214.     ARTICLE APPLICABLE TO PAYING AGENTS.

         In case at any time any Paying Agent other than the Trustee (or the
Company or an Affiliate of the Company) shall have been appointed by the Company
and be then acting hereunder, the term "Trustee" as used in this Article shall
in such case (unless the context otherwise requires) be construed as extending
to and including such Paying Agent within its meaning as fully for all intents
and purposes as if such Paying Agent were named in this Article in addition to
or in place of the Trustee.

SECTION 1215. RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS ON SUBORDINATION
              PROVISIONS.
         Each Holder by accepting a Security acknowledges and agrees that the
foregoing subordination provisions are, and are intended to be, an inducement
and a consideration to each holder of any Senior Indebtedness, whether such
Senior Indebtedness was created or acquired before or after the issuance of the
Securities, to acquire and continue to hold, or to continue to hold, such Senior
Indebtedness and such holder of Senior Indebtedness shall be deemed conclusively
to have relied on such subordination provisions in acquiring and continuing to
hold, or to continue to hold, such Senior Indebtedness.


                                ARTICLE THIRTEEN

                            SECURITYHOLDERS' MEETINGS

SECTION 1301.  PURPOSES OF MEETINGS.

         A meeting of Holders may be called at any time and from time to time
pursuant to the provisions of this Article Thirteen for any of the following
purposes:

               (a)  to give any notice to the Company or to the  Trustee,  or to
                    give any  directions  to the  Trustee,  or to consent to the
                    waiving of any default hereunder and its consequences, or to
                    take any  other  action  authorized  to be taken by  Holders
                    pursuant to any of the provisions of Article Five;

               (b)  to remove  the  Trustee  and  nominate a  successor  trustee
                    pursuant to the provisions of Article Six;

               (c)  to consent to the  execution of an  indenture or  indentures
                    supplemental  hereto  pursuant to the  provisions of Section
                    902; or

               (d)  to take any  other  action  authorized  to be taken by or on
                    behalf of the holders of any specified  aggregate  principal
                    amount of such Securities  under any other provision of this
                    Indenture or under applicable law.

SECTION 1302.  CALL OF MEETINGS BY TRUSTEE.

         The Trustee may at any time call a meeting of Holders to take any
action specified in Section 1301, to be held at such time and at such place in
the Borough of Manhattan, The City of New York, as the Trustee shall determine.
Notice of every meeting of the Holders, setting forth the time and the place of
such meeting and in general terms the action proposed to be taken at such
meeting, shall be mailed to holders of Securities at their addresses as they
shall appear on the Securities Register. Such notice shall be mailed not less
than 20 nor more than 180 days prior to the date fixed for the meeting.

SECTION 1303.  CALL OF MEETINGS BY COMPANY OR HOLDERS.

         In case at any time the Company pursuant to a resolution of the Board
of Directors, or the holders of at least 10% in aggregate principal amount of
the Securities then outstanding, shall have requested the Trustee to call a
meeting of Holders, by written request setting forth in reasonable detail the
action proposed to be taken at the meeting, and the Trustee shall not have
mailed the notice of such meeting within 20 days after receipt of such request,
then the Company or such Holders may determine the time and the place in said
Borough of Manhattan for such meeting and may call such meeting to take any
action authorized in Section 1301, by mailing notice thereof as provided in
Section 1302.

SECTION 1304.  QUALIFICATIONS FOR VOTING.

         To be entitled to vote at any meeting of Holders a person shall (a) be
a holder of one or more Securities or (b) a person appointed by an instrument in
writing as proxy by a holder of one or more Securities. The only persons who
shall be entitled to be present or to speak at any meeting of Holders shall be
the persons entitled to vote at such meeting and their counsel and any
representatives of the Trustee and its counsel and any representatives of the
Company and its counsel.

SECTION 1305.  REGULATIONS.

         Notwithstanding any other provisions of this Indenture, the Trustee may
make such reasonable regulations as it may deem advisable for any meeting of
Holders, in regard to proof of the holding of Securities and of the appointment
of proxies, and in regard to the appointment and duties of inspectors of votes,
the submission and examination of proxies, certificates and other evidence of
the right to vote, and such other matters concerning the conduct of the meeting
as it shall think fit.

         The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Holders as provided in Section 1303, in which case the Company or
the Holders calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and a permanent secretary of
the meeting shall be elected by majority vote of the meeting.

         Subject to the provisions of Section 1304, at any meeting each holder
of Securities or proxy therefor shall be entitled to one vote for each $1,000
principal amount of Securities held or represented by him; provided, however,
that no vote shall be cast or counted at any meeting in respect of any Security
challenged as not outstanding and ruled by the chairman of the meeting to be not
outstanding. The chairman of the meeting shall have no right to vote other than
by virtue of Securities held by him or instruments in writing as aforesaid duly
designating him as the person to vote on behalf of other Holders. Any meeting of
Holders duly called pursuant to the provisions of Section 1302 or 1303 may be
adjourned from time to time by a majority of those present, whether or not
constituting a quorum, and the meeting may be held as so adjourned without
further notice.

SECTION 1306.  VOTING.

         The vote upon any resolution submitted to any meeting of holders of
Securities shall be by written ballots on which shall be subscribed the
signatures of such holders or of their representatives by proxy and the serial
number or numbers of the Securities held or represented by them. The permanent
chairman of the meeting shall appoint two inspectors of votes who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports in
triplicate of all votes cast at the meeting. A record in duplicate of the
proceedings of each meeting of Holders shall be prepared by the secretary of the
meeting and there shall be attached to said record the original reports of the
inspectors of votes on any vote by ballot taken thereat and affidavits by one or
more persons having knowledge of the facts setting forth a copy of the notice of
the meeting and showing that said notice was mailed as provided in Section 1302.
The record shall show the serial numbers of the Securities voting in favor of or
against any resolution. The record shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one of the
duplicates shall be delivered to the Company and the other to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting. The holders of the Capital Securities shall vote for all
purposes as a single class.

         Any record so signed and verified shall be conclusive evidence of the
matters therein stated.


                                ARTICLE FOURTEEN

                            MISCELLANEOUS PROVISIONS

SECTION 1401.     NO RECOURSE AGAINST OTHERS.

         An incorporator or any past, present or future director, officer,
employee or stockholder, as such, of the Company shall not have any liability
for any obligations of the Company under the Securities or this Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Holder shall waive and release all such
liability. Such waiver and release shall be part of the consideration for the
issue of the Securities.

SECTION 1402.     SET-OFF.

         Notwithstanding anything to the contrary in this Indenture or in any
Security, prior to the dissolution of the Issuer Trust, the Company shall have
the right to set-off and apply against any payment it is otherwise required to
make hereunder or thereunder with respect to the principal of or interest
(including any Additional Amounts and Additional Sums) on the Securities with
and to the extent the Company has theretofore made, or is concurrently on the
date of such payment making, a payment with respect to the Trust Securities
under the Guarantee. Contemporaneously with, or as promptly as practicable
after, any such payment under such Guarantee, the Company shall deliver to the
Trustee an Officers' Certificate (upon which the Trustee shall be entitled to
rely conclusively without any requirement to investigate the facts contained
therein) to the effect that such payment has been made and that, as a result of
such payment, the corresponding payment under the Securities has been set-off in
accordance with this Section 1402.

SECTION 1403.     ASSIGNMENT; BINDING EFFECT.

         The Company shall have the right at all times to assign any of its
rights or obligations under this Indenture to a direct or indirect wholly-owned
subsidiary of the Company, provided that, in the event of any such assignment,
the Company shall remain primarily liable for the performance of all such
obligations. This Indenture may also be assigned by the Company in connection
with a transaction described in Article Eight. This Indenture shall be binding
upon and inure to the benefit of the Company, the Trustee, the Holders, any
Security Registrar, Paying Agent, and Authenticating Agent and, to the extent
specifically set forth herein, the holders of Senior Indebtedness and their
respective successors and assigns. The provisions of clause (2) of Section 508
and Section 1006 are for the benefit of the holders of the Trust Securities
referred to therein and, prior to the dissolution of the Issuer Trust, may be
enforced by such holders. A holder of a Trust Security shall not have the right,
as such a holder, to enforce any other provision of this Indenture.

SECTION 1404.     ADDITIONAL AMOUNTS AND ADDITIONAL SUMS.

         Whenever there is mentioned in this Indenture, in any context, the
payment of the principal of, premium, if any, or interest on, or in respect of,
any Security, such mention shall be deemed to include mention of the payment of
Additional Amounts and Additional Sums provided for by the terms of the
Securities to the extent that, in such context, Additional Amounts and
Additional Sums is, were or would be payable in respect thereof pursuant to such
terms, and express mention of the payment of Additional Amounts and Additional
Sums in any provisions hereof shall not be construed as excluding Additional
Amounts and Additional Sums in those provisions hereof where such express
mention is not made.


                                 ARTICLE FIFTEEN

                                  MISCELLANEOUS

SECTION  1501. Consent to Jurisdiction; Appointment of Agent to Accept Service
               of Process

                  (a) The Company irrevocably consents and agrees, for the
benefit of the Holders from time to time of the Securities and the Trustee, that
any legal action, suit or proceeding against it with respect to its obligations,
liabilities or any other matter arising out of or in connection with this
Indenture or the Securities may be brought in the Supreme Court of New York, New
York County or the United States District Court for the Southern District of New
York and any appellate court from either thereof and, until amounts due and to
become due in respect of the Securities have been paid, hereby irrevocably
consents and submits to the nonexclusive jurisdiction of each such court in
personam, generally and unconditionally with respect to any action, suit or
proceeding for itself and in respect of its properties, assets and revenues.

                  (b) The Company has irrevocably designated, appointed, and
empowered CT Corporation System, as its designee, appointee and agent to
receive, accept and acknowledge for and on its behalf, and its properties,
assets and revenues, service of any and all legal process, summons, notices and
documents which may be served in any action, suit or proceeding brought against
the Company in any United States or State court. If for any reason such
designee, appointee and agent hereunder shall cease to be available to act as
such, the Company agrees to designate a new designee, appointee and agent in the
Borough of Manhattan, The City of New York on the terms and for the purposes of
this Section 1501 satisfactory to the Trustee. The Company further hereby
irrevocably consents and agrees to the service of any and all legal process,
summons, notices and documents in any action, suit or proceeding against the
Company by serving a copy thereof upon the relevant agent for service of process
referred to in this Section 1501 (whether or not the appointment of such agent
shall for any reason prove to be ineffective or such agent shall accept or
acknowledge such service) or by mailing copies thereof by registered or
certified air mail, postage prepaid, to the Company at its address specified in
or designated pursuant to this Indenture. The Company agrees that the failure of
any such designee, appointee and agent to give any notice of such service to it
shall not impair or affect in any way the validity of such service or any
judgment rendered in any action or proceeding based thereon. Nothing herein
shall in any way be deemed to limit the ability of the Holders of the Securities
and the Trustee, to serve any such legal process, summons, notices and documents
in any other manner permitted by applicable law or to obtain jurisdiction over
the Company or bring actions, suits or proceedings against the Company in such
other jurisdictions, and in such manner, as may be permitted by applicable law.
The Company irrevocably and unconditionally waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of venue of any of the aforesaid actions, suits or proceedings arising out of or
in connection with this Indenture brought in the Supreme Court of New York, New
York County or the United States District Court for the Southern District of New
York and any appellate court from either thereof and hereby further irrevocably
and unconditionally waives and agrees not to plead or claim in any such court
that any such action, suit or proceeding brought in any such court has been
brought in an inconvenient forum.

                  If for the purpose of obtaining judgment in any court it is
necessary to convert a sum due hereunder to the holder of any Security from U.S.
dollars into another currency, the Company has agreed, and each holder by
holding such Security will be deemed to have agreed, to the fullest extent that
they may effectively do so, that the rate of exchange used shall be that at
which in accordance with normal banking procedures such Holder could purchase
U.S. dollars with such other currency in The City of New York on the Business
Day preceding the day on which final judgment is given.

                  The obligation of the Company in respect of any sum payable by
it to the holder of a Security shall, notwithstanding any judgment in a currency
(the "judgment currency") other than U.S. dollars, be discharged only to the
extent that on the Business Day following receipt by the Holder of such security
of any sum, adjudged to be so due in the judgment currency, the Holder of such
Security may in accordance with normal banking procedures purchase U.S. dollars
with the judgment currency; if the amount of U.S. dollars so purchased is less
than the sum originally due to the holder of such Security in the judgment
currency (determined in the manner set forth in the preceding paragraph), the
Company agrees, as a separate obligation and notwithstanding any such judgment,
to indemnify the Holder of such Security against such loss, and if the amount of
the U.S. dollars so purchased exceeds the sum originally due to the Holder of
such Security, such Holder agrees to remit to the Company such excess, provided
that such Holder shall have no obligation to remit any such excess as long as
the Company shall have failed to pay such Holder any obligations due and payable
under such Security, in which case such excess may be applied to such
obligations of the Company under such Security in accordance with the terms
thereof.

SECTION  1502     Counterparts

                  This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.









         IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.


                                     SOUTHERN INVESTMENTS UK plc


                                     By       ________________________
                                              ========================

Attest:








                                     BANKERS TRUST COMPANY,
                                     Trustee, Principal Paying
                                     Agent Registrar and
                                     Transfer Agent


                                     By       ________________________
                                              ========================
Attest:




                                     BANKERS TRUST LUXEMBOURG S.A.,
                                     Paying Agent and Transfer
                                     Agent


                                     By       ________________________
                                              ========================














STATE OF _______           )
                           )        SS.:
COUNTY OF _______          )

         On the ____ day of ________, 1997, before me personally came
______________, to me known, who, being by me duly sworn, did depose and say
that he is _______________________________ of SOUTHERN INVESTMENTS UK plc, one
of the corporations described herein and which executed the foregoing
instrument; that he knows the seal of said corporation; that the seal affixed to
said instrument is such corporate seal; that it was so affixed by authority of
the Board of Directors of said corporation, and that he signed his name thereto
by like authority.



                                                     Notary Public
[SEAL]
                             My Commission Expires:


STATE OF NEW YORK          )
                           )        SS.:
CITY OF NEW YORK           )

         On the ____ day of ________, 1997, before me personally came
___________, to me known, who, being by me duly sworn, did depose and say that
he is ___________________ of BANKERS TRUST COMPANY, one of the corporations
described herein and which executed the foregoing instrument; that he knows the
seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by authority of the Board of Directors of
said corporation, and that he signed his name thereto by like authority.



                                                     Notary Public
[SEAL]
                             My Commission Expires:





                                  Exhibit A

                   EXCHANGE SUBORDINATED DEBENTURE CERTIFICATE

                  This Security is a Global Security within the meaning of the
Indenture hereinafter referred to and is held by a Book-Entry Depositary or a
nominee of a Book-Entry Depositary. This Security is exchangeable for Securities
held by or registered in the name of a person other than the Book-Entry
Depositary or its nominee only in the limited circumstances described in the
Indenture, and no transfer of this Security (other than a transfer of this
Security as a whole by the Book-Entry Depositary to a nominee of the Book-Entry
Depositary or by a nominee of the Book-Entry Depositary to the Book-Entry
Depositary or another nominee of the Book-Entry Depositary) may be made except
in limited circumstances.

                  Unless this Global Security is presented by an authorized
representative of the Book-Entry Depositary, to the issuer or its agent for
exchange or payment, and any definitive Security is issued in the name or names
as directed in writing by the Book-Entry Depositary, ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the bearer hereof, the Book-Entry Depositary, has an interest herein.




                           SOUTHERN INVESTMENTS UK plc
                 8.23% Exchange Subordinated Debenture Due 2027

No. ______                                                         $84,537,000
                                                           CUSIP No. _________

                  SOUTHERN INVESTMENTS UK plc, a company duly organized and
existing under the laws of the England and Wales (herein called the "Company",
which term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to the bearer upon
surrender hereof, the principal sum of 84,537,000 on February 1, 2027 ("Maturity
Date"), unless previously redeemed, and to pay interest on the outstanding
principal amount hereof from January 29, 1997, or from the most recent interest
payment date (each such date, an "Interest Payment Date") to which interest has
been paid or duly provided for, semi-annually (subject to deferral as set forth
herein) in arrears on February 1 and August 1 of each year, commencing August 1,
1997, at the rate of 8.23% per annum, until the principal hereof shall have
become due and payable, and at the same rate per annum on any overdue principal
and premium, if any, and (without duplication and to the extent that payment of
such interest is enforceable under applicable law) on any overdue installment of
interest at the same rate per annum compounded semi-annually. The amount of
interest payable on any Interest Payment Date shall be computed on the basis of
a 360-day year of twelve 30-day months. The amount of interest payable for any
period shorter than a full semi-annual period for which interest is computed
will be computed on the basis of actual number of days elapsed in such a 30-day
month. In the event that any date on which the principal of (or premium, if any)
or interest on this Security is payable is not a Business Day, then the payment
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year, such
payment will be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date. A "Business Day" shall
mean any day other than a Saturday or a Sunday or a day on which banking
institutions in New York, New York or Bristol, England are authorized or
required by law or executive order to remain closed or a day on which the
Corporate Trust Office of the Trustee, or the principal office of the
Institutional Trustee under the Declaration, is closed for business.

                  The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in such Indenture, be paid
to the bearer on such Interest Payment Date. Any such interest not so punctually
paid or duly provided for will forthwith cease to be payable to the bearer on
such Interest Payment Date and may be paid to the bearer hereof at the time of
payment of such Defaulted Interest or be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which the Securities may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in said Indenture.

                  Payment of the principal of (and premium, if any) and
interest, if any, on this Security will be made at the office or agency of the
Company maintained for that purpose in the Borough of Manhattan, The City of New
York, in such coin or currency of the United States of America as at the time of
payment is legal tender for the payment of public and private debt. In addition,
the Company will, so long as Subordinated Debentures are listed on the
Luxembourg Stock Exchange and the rules of such Stock Exchange so require,
maintain a Paying Agent in Luxembourg.

                  All payments of principal and interest (including payments of
discount and premium, if any) in respect of this Security shall be made free and
clear of, and without withholding or deduction for or on account of any present
or future taxes, duties, assessments or governmental charges of whatever nature
imposed, levied, collected, withheld or assessed by or within the United Kingdom
or by or within any political subdivision thereof or any authority therein or
thereof having power to tax ("United Kingdom Taxes"), unless such withholding or
deduction is required by law. In the event of any such withholding or deduction,
the Company shall pay to the Holder such additional amounts ("Additional
Amounts") as will result in the payment to such Holder of the amount that would
otherwise have been receivable by such Holder in the absence of such withholding
or deduction, except that no such Additional Amounts shall be payable:

                  (a) to, or to a Person on behalf of, a Holder who is liable
for such United Kingdom Taxes in respect of this Security by reason of such
Holder having some connection with the United Kingdom (including being a citizen
or resident or national of, or carrying on a business or maintaining a permanent
establishment in, or being physically present in, the United Kingdom) other than
the mere holding of this Security or the receipt of principal and interest
(including payments of premium, if any) in respect thereof;

                  (b) to, or to a Person on behalf of, a Holder who presents
this Security (where presentation is required) for payment more than 30 days
after the Relevant Date except to the extent that the Holder would have been
entitled to such Additional Amounts on presenting this Security for payment on
the last day of such period of 30 days;

     (c) to, or to a Person on behalf of, a Holder who  presents  this  Security
(where presentation is required) in the United Kingdom;

     (d) to, or to a Person on  behalf  of, a Holder  who would not be liable or
subject to the withholding or deduction by making a declaration of non-residence
or similar claim for exemption to the relevant tax authority; or

                  (e) to, or to a Person on behalf of, a Holder of a definitive
Registered Security issued pursuant to the request of owners of interests
representing a majority in outstanding principal amount in the Book-Entry
Interest (as defined in the Indenture) following and during the continuance of
an Event of Default if such Holder (or any predecessor Holder) was one of such
owners requesting that definitive Registered Securities be so issued.

                  Such Additional Amounts will also not be payable where, had
the beneficial owner of the Security (or any interest therein) been the Holder
of the Security, he would not have been entitled to payment of Additional
Amounts by reason of any one or more of clauses (a) through (e) above. If the
Company shall determine that Additional Amounts will not be payable because of
the immediately preceding sentence, the Company will inform such Holder promptly
after making such determination setting forth the reason(s) therefor.

                  "Relevant Date" means whichever is the later of (i) the date
on which such payment first becomes due and (ii) if the full amount payable has
not been received in The City of New York by the Trustee or the bearer on or
prior to such due date, the date on which, the full amount having been so
received, notice to that effect shall have been given to the bearer hereof in
accordance with the Indenture.

                  References to principal, interest, or premium in respect of
this Security shall be deemed also to refer to any Additional Amounts which may
be payable as set forth in the Indenture or in this Security.

                  The Company shall furnish to the Trustee the official receipts
(or a certified copy of the official receipts) evidencing payment of United
Kingdom Taxes. Copies of such receipts shall be made available to the Holder of
this Security upon request.

                  So long as the Securities are listed on the Luxembourg Stock
Exchange and the rules of the Luxembourg Stock Exchange so require, notices to
Holders of Securities will be published in a leading newspaper having general
circulation in Luxembourg (which is expected to be the Luxemburger Wort).

                  The indebtedness evidenced by this Security is, to the extent
provided in the Indenture, subordinate and junior in right of payment to the
Senior Indebtedness, and this Security is issued subject to the provisions of
the Indenture with respect thereto. Each Holder of this Security, by accepting
the same, (a) agrees to and shall be bound by such provisions, (b) authorizes
and directs the Trustee on his or her behalf to take such action as may be
necessary or appropriate to acknowledge or effectuate the subordination so
provided and (c) appoints the Trustee his or her attorney-in-fact for any and
all such purposes. Each Holder hereof, by his or her acceptance hereof, hereby
waives all notice of the acceptance of the subordination provisions contained
herein and in the Indenture by each Holder of Senior Indebtedness, whether now
outstanding or hereafter incurred, and waives reliance by each such Holder upon
said provisions.

                  This Security shall not be entitled to any benefit under the
Indenture hereinafter referred to, or be valid or become obligatory for any
purpose, until the Certificate of Authentication hereon shall have been manually
signed by or on behalf of the Trustee.

                  REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS
SECURITY SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL
PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.

                  Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual signature,
this Security shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.









         IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer or director of the Company duly authorized.

Dated:  __________, 1997

                                                     SOUTHERN INVESTMENTS UK plc


                                                     By:
                                                              Name:
                                                              Title:







                          CERTIFICATE OF AUTHENTICATION

                  This is one of the Securities referred to in the
within-mentioned Indenture.

Dated

BANKERS TRUST COMPANY,
as Trustee


By
  Authorized Officer




                                    Exhibit A

                  This Security is a Global Security within the meaning of the
Indenture hereinafter referred to and is held by a Book-Entry Depositary or a
nominee of a Book-Entry Depositary. This Security is exchangeable for Securities
held by or registered in the name of a person other than the Book-Entry
Depositary or its nominee only in the limited circumstances described in the
Indenture, and no transfer of this Security (other than a transfer of this
Security as a whole by the Book-Entry Depositary to a nominee of the Book-Entry
Depositary or by a nominee of the Book-Entry Depositary to the Book-Entry
Depositary or another nominee of the Book-Entry Depositary) may be made except
in limited circumstances.

                  Unless this Global Security is presented by an authorized
representative of the Book-Entry Depositary, to the issuer or its agent for
exchange or payment, and any definitive Security is issued in the name or names
as directed in writing by the Book-Entry Depositary, ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the bearer hereof, the Book-Entry Depositary, has an interest herein.

                  THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS OR ANY
OTHER APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY,
PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS THREE
YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON
WHICH THE COMPANY OR ANY "AFFILIATE" OF THE COMPANY WAS THE OWNER OF THIS
SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) (THE "RESALE RESTRICTION
TERMINATION DATE") ONLY (A) TO THE COMPANY, (B) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES
ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS
AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7)
OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS SUBORDINATED
DEBENTURE FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT, SUBJECT TO THE RIGHT OF THE
COMPANY PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E)
OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR
OTHER INFORMATION SATISFACTORY TO THE COMPANY. SUCH HOLDER FURTHER AGREES THAT
IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. THIS LEGEND WILL BE REMOVED UPON THE
REQUEST OF A HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.


                           SOUTHERN INVESTMENTS UK plc
                      8.23% Subordinated Debenture Due 2027

No. 0001                                                           $84,537,000
                                                          CUSIP No. 843234 AC 9

                  SOUTHERN INVESTMENTS UK plc, a company duly organized and
existing under the laws of the England and Wales (herein called the "Company",
which term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to the bearer upon
surrender hereof, the principal sum of 84,537,000 on February 1, 2027 ("Maturity
Date"), unless previously redeemed, and to pay interest on the outstanding
principal amount hereof from January 29, 1997, or from the most recent interest
payment date (each such date, an "Interest Payment Date") to which interest has
been paid or duly provided for, semi-annually (subject to deferral as set forth
herein) in arrears on February 1 and August 1 of each year, commencing August 1,
1997, at the rate of 8.23% per annum, until the principal hereof shall have
become due and payable, and at the same rate per annum on any overdue principal
and premium, if any, and (without duplication and to the extent that payment of
such interest is enforceable under applicable law) on any overdue installment of
interest at the same rate per annum compounded semi-annually. The amount of
interest payable on any Interest Payment Date shall be computed on the basis of
a 360-day year of twelve 30-day months. The amount of interest payable for any
period shorter than a full semi-annual period for which interest is computed
will be computed on the basis of actual number of days elapsed in such a 30-day
month. In the event that any date on which the principal of (or premium, if any)
or interest on this Security is payable is not a Business Day, then the payment
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year, such
payment will be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date. A "Business Day" shall
mean any day other than a Saturday or a Sunday or a day on which banking
institutions in New York, New York or Bristol, England are authorized or
required by law or executive order to remain closed or a day on which the
Corporate Trust Office of the Trustee, or the principal office of the
Institutional Trustee under the Declaration, is closed for business.

                  The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in such Indenture, be paid
to the bearer on such Interest Payment Date. Any such interest not so punctually
paid or duly provided for will forthwith cease to be payable to the bearer on
such Interest Payment Date and may be paid to the bearer hereof at the time of
payment of such Defaulted Interest or be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which the Securities may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in said Indenture.

                  Payment of the principal of (and premium, if any) and
interest, if any, on this Security will be made at the office or agency of the
Company maintained for that purpose in the Borough of Manhattan, The City of New
York, in such coin or currency of the United States of America as at the time of
payment is legal tender for the payment of public and private debt. In addition,
the Company will, so long as Subordinated Debentures are listed on the
Luxembourg Stock Exchange and the rules of such Stock Exchange so require,
maintain a Paying Agent in Luxembourg.

                  All payments of principal and interest (including payments of
discount and premium, if any) in respect of this Security shall be made free and
clear of, and without withholding or deduction for or on account of any present
or future taxes, duties, assessments or governmental charges of whatever nature
imposed, levied, collected, withheld or assessed by or within the United Kingdom
or by or within any political subdivision thereof or any authority therein or
thereof having power to tax ("United Kingdom Taxes"), unless such withholding or
deduction is required by law. In the event of any such withholding or deduction,
the Company shall pay to the Holder such additional amounts ("Additional
Amounts") as will result in the payment to such Holder of the amount that would
otherwise have been receivable by such Holder in the absence of such withholding
or deduction, except that no such Additional Amounts shall be payable:

                  (a) to, or to a Person on behalf of, a Holder who is liable
for such United Kingdom Taxes in respect of this Security by reason of such
Holder having some connection with the United Kingdom (including being a citizen
or resident or national of, or carrying on a business or maintaining a permanent
establishment in, or being physically present in, the United Kingdom) other than
the mere holding of this Security or the receipt of principal and interest
(including payments of premium, if any) in respect thereof;

                  (b) to, or to a Person on behalf of, a Holder who presents
this Security (where presentation is required) for payment more than 30 days
after the Relevant Date except to the extent that the Holder would have been
entitled to such Additional Amounts on presenting this Security for payment on
the last day of such period of 30 days;

     (c) to, or to a Person on behalf of, a Holder who  presents  this  Security
(where presentation is required) in the United Kingdom;

     (d) to, or to a Person on  behalf  of, a Holder  who would not be liable or
subject to the withholding or deduction by making a declaration of non-residence
or similar claim for exemption to the relevant tax authority; or

                  (e) to, or to a Person on behalf of, a Holder of a definitive
Registered Security issued pursuant to the request of owners of interests
representing a majority in outstanding principal amount in the Book-Entry
Interest (as defined in the Indenture) following and during the continuance of
an Event of Default if such Holder (or any predecessor Holder) was one of such
owners requesting that definitive Registered Securities be so issued.

                  Such Additional Amounts will also not be payable where, had
the beneficial owner of the Security (or any interest therein) been the Holder
of the Security, he would not have been entitled to payment of Additional
Amounts by reason of any one or more of clauses (a) through (e) above. If the
Company shall determine that Additional Amounts will not be payable because of
the immediately preceding sentence, the Company will inform such Holder promptly
after making such determination setting forth the reason(s) therefor.

                  "Relevant Date" means whichever is the later of (i) the date
on which such payment first becomes due and (ii) if the full amount payable has
not been received in The City of New York by the Trustee or the bearer on or
prior to such due date, the date on which, the full amount having been so
received, notice to that effect shall have been given to the bearer hereof in
accordance with the Indenture.

                  References to principal, interest, or premium in respect of
this Security shall be deemed also to refer to any Additional Amounts which may
be payable as set forth in the Indenture or in this Security.

                  The Company shall furnish to the Trustee the official receipts
(or a certified copy of the official receipts) evidencing payment of United
Kingdom Taxes. Copies of such receipts shall be made available to the Holder of
this Security upon request.

                  So long as the Securities are listed on the Luxembourg Stock
Exchange and the rules of the Luxembourg Stock Exchange so require, notices to
Holders of Securities will be published in a leading newspaper having general
circulation in Luxembourg (which is expected to be the Luxemburger Wort).

                  The indebtedness evidenced by this Security is, to the extent
provided in the Indenture, subordinate and junior in right of payment to the
Senior Indebtedness, and this Security is issued subject to the provisions of
the Indenture with respect thereto. Each Holder of this Security, by accepting
the same, (a) agrees to and shall be bound by such provisions, (b) authorizes
and directs the Trustee on his or her behalf to take such action as may be
necessary or appropriate to acknowledge or effectuate the subordination so
provided and (c) appoints the Trustee his or her attorney-in-fact for any and
all such purposes. Each Holder hereof, by his or her acceptance hereof, hereby
waives all notice of the acceptance of the subordination provisions contained
herein and in the Indenture by each Holder of Senior Indebtedness, whether now
outstanding or hereafter incurred, and waives reliance by each such Holder upon
said provisions.

                  This Security shall not be entitled to any benefit under the
Indenture hereinafter referred to, or be valid or become obligatory for any
purpose, until the Certificate of Authentication hereon shall have been manually
signed by or on behalf of the Trustee.

                  REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS
SECURITY SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL
PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.

                  Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual signature,
this Security shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.









         IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer or director of the Company duly authorized.

Dated:  January 29, 1997

                                                     SOUTHERN INVESTMENTS UK plc


                                                     By:
                                                              Name:
                                                              Title:







                          CERTIFICATE OF AUTHENTICATION

                  This is one of the Securities referred to in the
within-mentioned Indenture.

Dated

BANKERS TRUST COMPANY,
as Trustee


By
  Authorized Officer












                           SOUTHERN INVESTMENTS UK plc
                      8.23% Subordinated Debenture Due 2027


                  This Security is one of the Securities of the Company (herein
sometimes referred to as the "Securities"), specified in the Indenture, all
issued or to be issued under and pursuant to an Indenture, dated as of January
29, 1997 (the "Indenture"), duly executed and delivered between the Company and
Bankers Trust Company, as Trustee (the "Trustee") and Bankers Trust Luxembourg
S.A., as paying and transfer agent, to which Indenture and any indenture or
indentures supplemental thereto as therein provided reference is hereby made for
a description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Company and the Holders of the
Securities.

                  Except as herein provided, this Security may not be redeemed
prior to February 1, 2007. This Security will be redeemable in whole or in part,
from time to time, at the option of the Company on or after February 1, 2007,
upon not less than 15 nor more than 60 days' notice, at a redemption price equal
to the percentages specified below of the principal amount of the Security to be
redeemed, plus any accrued and unpaid interest, to the redemption date,
including interest accrued during any Extension Period if redeemed during the
12-month period beginning February 1 of the years indicated below:

                  Year                               Percentage
                  ----                               ----------
                  2007                               104.115%
                  2008                               103.704
                  2009                               103.292
                  2010                               102.881
                  2011                               102.469
                  2012                               102.058
                  2013                               101.646
                  2014                               101.235
                  2015                               100.823
                  2016                               100.412
                  2017 and thereafter                100.000

                  The Company will also have the right to redeem this Security
at any time prior to February 1, 2007 upon not less than 15 nor more than 60
days' notice upon the occurrence and continuation of a Special Event as
described in the Indenture at a redemption price being the greater of (i) the
amount equal to 100% of the principal amount of the Securities being redeemed or
(ii) the amount equal to the sum of the present values of the remaining
scheduled payments of principal of and premium and interest on the Securities
being redeemed through February 1, 2007 discounted to the date of redemption on
a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months)
at a discount rate equal to the Treasury Yield plus 110 basis points, in the
case of such a redemption before February 1, 1998 and the Treasury Yield plus 50
basis points, in the case of such a redemption on or after February 1, 1998 but
prior to February 1, 2007, plus, for (i) or (ii) above, whichever is applicable,
accrued interest on the Securities to Redemption, including interest accrued
during any Extension Period.

                  "Treasury Yield" means, with respect to any Redemption Date,
the rate per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such Redemption Date.

                  "Comparable Treasury Issue" means the United States Treasury
security selected by an Independent Investment Banker as having a maturity
comparable to the remaining term through February 1, 2007 of the Securities to
be redeemed that would be utilized, at the time of selection and in accordance
with customary financial practice, in pricing new issues of corporate debt
securities of comparable maturity to the remaining term through February 1, 2007
of the Securities.

                  "Comparable Treasury Price" means, with respect to any
Redemption Date, (i) the average of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
on the third Business Day in New York City preceding such Redemption Date, as
set forth in the most recent weekly statistical release (or any successor
release) published by the Federal Reserve Bank of New York and designated
"H.15(519)" or (ii) if such release (or any successor release) is not published
or does not contain such prices on such Business Day, the Reference Treasury
Dealer Quotation for such Redemption Date.

                  "Independent Investment Banker" means an independent
investment banking institution of national standing appointed by the Company and
reasonably acceptable to the Trustee.

                  "Reference Treasury Dealer Quotation" means, with respect to
the Reference Treasury Dealer and any Redemption Date, the average, as
determined by the Trustee, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount
and quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00
p.m. on the third Business Day preceding such Redemption Date).

                  "Reference Treasury Dealer" means a primary US Government
securities dealer in New York City appointed by the Company and reasonably
acceptable to the Trustee.

     "Special Event" means either an Investment Company Event or a Tax Event.

                  "Investment Company EventInvestment Company Event" means the
receipt by the Regular Trustees of the Issuer Trust (as defined in the
Indenture) of an opinion of nationally recognized independent counsel
experienced in practice under the Investment Company Act of 1940, as amended
(the "Investment Company Act"), that, as a result of the occurrence of a change
in law or regulation or a change (including any announced prospective change) in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in 1940 Act Law"),
there is more than an insubstantial risk that the Issuer Trust is or will be
considered an "investment company" which is required to be registered under the
Investment Company Act, which Change in 1940 Act Law becomes effective on or
after January 23, 1997.

                  "Tax EventTax Event" means the receipt by the Regular Trustees
of the Issuer Trust (as defined in the Indenture) of an opinion of nationally
recognized independent tax counsel experienced in such matters to the effect
that as a result of (a) any amendment to, or change (including any announced
prospective change) in, the laws (or any regulations thereunder) of the United
States, the United Kingdom or any political subdivision or taxing authority
thereof or therein, (b) any amendment to, or change in, an interpretation or
application of any such laws or regulations by any legislative body, court,
governmental agency or regulatory authority (including the enactment of any
legislation and the publication of any judicial decision or regulatory
determination), (c) any interpretation or pronouncement that provides for a
position with respect to such laws or regulations that differs from the
theretofore generally accepted position or (d) any action taken by any
governmental agency or regulatory authority, which amendment or change is
enacted, promulgated, issued or announced or which interpretation or
pronouncement is issued or announced or which action is taken, in each case on
or after January 23, 1997, there is more than an insubstantial risk that (i) the
Issuer Trust is, or will be within 90 days of the date of such opinion, subject
to United States federal or United Kingdom income tax with respect to income
accrued or received on the Securities, (ii) the Issuer Trust is, or will be
within 90 days of the date of such opinion, subject to more than a de minimis
amount of other taxes, duties or other governmental charges or (iii) interest
payable by the Company to the Issuer Trust on the Securities is not, or within
90 days of the date of such opinion will not be, deductible by the Company for
United States earnings and profits purposes or United Kingdom income tax
purposes.

                  If the Securities are only partially redeemed by the Company
pursuant to an Optional Redemption, the Securities will be redeemed pro rata or
by lot or by any other method utilized by the Trustee.

                  The Securities are also subject to redemption in whole but not
in part upon not less than 15 nor more than 60 days' notice given as provided in
the Indenture, at a price equal to the outstanding principal amount thereof,
together with Additional Amounts, if any, and accrued interest, if any, to the
Redemption Date if, (a) the Company satisfies the Trustee prior to the giving of
such notice that it has or will become obliged to pay Additional Amounts as a
result of either (x) any change in, or amendment to, the laws or regulations of
the United Kingdom or any political subdivision or any authority or agency
thereof or therein having power to tax or levy duties, or any change in the
application or interpretation of such laws or regulations, which change or
amendment becomes effective on or after January 23, 1997, or (y) the issuance of
Definitive Registered Securities pursuant to any of clauses (a), (b) or (d) of
the ninth following paragraph and (b) such obligation cannot be avoided by the
Company taking reasonable measures available to it, subject, as provided in the
Indenture, to the delivery by the Company of an Officers' Certificate stating
that such obligation to pay Additional Amounts cannot be avoided by the Company
taking reasonable measures available to it.

                  Notice of redemption shall be given as provided in the
Indenture not less than 15 days nor more than 60 days prior to the date fixed
for redemption.

                  Unless the Company defaults in payment of the redemption
price, from and after the redemption date, the Securities or portions thereof
called for redemption will cease to bear interest, and the Holders thereof will
have no right in respect to such Securities except the right to receive the
redemption price thereof.

         The Holders of the Securities are entitled to the benefits of the
Registration Rights Agreement (the "Registration Rights Agreement") for the
benefit of the Holders of the Trust Securities and the Securities wherein the
Company and the Issuer Trust have agreed, for the benefit of Holders of Trust
Securities and Securities, (i) to use their reasonable best efforts to file with
the Commission within 150 days after the initial issuance of the Capital
Securities the Exchange Offer Registration Statement relating to the Exchange
Offer for (1) the Exchange Capital Securities, which will have terms identical
to the Capital Securities (except that the Exchange Capital Securities will not
contain terms with respect to transfer restrictions under the Securities Act and
will not provide for any increase in the distribution rate thereon under the
circumstances described below), (2) the Exchange Guarantee, which will have
terms identical tot he Capital Securities Guarantee and (3) the Exchange
Debentures, which will have terms identical to the Subordinated Debentures
(except that the Exchange Debentures will not contain terms with respect to
transfer restrictions under the Securities Act and will not provide for any
increase in the interest rate thereon under the circumstances described below)
and (ii) to use their reasonable best efforts to cause the Exchange Offer
Registration Statement to be declared effective under the Securities Act with in
180 days after the initial issuance of the Securities.

         If the Company or the Trust fails to comply with the Registration
Rights Agreement or if the Exchange Offer Registration Statement or the Shelf
Registration Statement, as defined in the Registration Rights Agreement, fails
to become effective, then, as liquidated damages, additional interest (the
"Additional Interest") shall become payable in respect of the Securities as
follows:

         (i) if (A) neither the Exchange Offer Registration Statement nor a
Shelf Registration Statement is filed with the Commission on or prior the 150th
day after the initial issuance of the Securities or (B) notwithstanding that the
Company and the Issuer Trust have consumated or will consumate an Exchange
Offer, the Company and the Issuer Trust are required to file a Shelf
Registration Statement and such Shelf Registration Statement is not filed on or
prior to the date required by the Registration Rights Agreement, then commencing
on the date after either such required filing date, Additional Interest shall
accrue on the principal amount of the Securities at a rate of .25% per annum; or

         (ii) if (A) neither the Exchange Offer Registration Statement nor a
Shelf Registration Statement is declared effective by the Commission on or prior
to the 30th day after the applicable required filing date or (B) notwithstanding
that the Company and the Issuer Trust have consummated or will consummate an
Exchange Offer, the Company and the Trust are required to file a Shelf
Registration Statement and such Shelf Registration Statement is not declared
effective by the Commission on or prior to the 30th day after the date such
Shelf Registration Statement was required to be filed, then, commencing on the
31st day after the applicable required filing date, Additional Interest shall
accrue on the principal amount of the Securities, at a rate of .25% per annum;
or

         (iii) If (A) the Trust has not exchanged Exchange Capital Securities
for all Capital Securities or the Company has not exchanged the Exchange
Guarantee or Exchange Debentures for the Capital Securities Guarantee or all
Securities validly tendered, in accordance wit the terms of the Exchange Offer
on or prior the 40th day after the date on which the Exchange Offer Registration
Statement was declared effective or (B) if applicable, the Shelf Registration
Statement has been declared effective and such Shelf Registration Statement
ceases to be effective at any time prior to the third anniversary of the initial
issuance of the Capital Securities (other than after such time as all Capital
Securities have been disposed of thereunder or otherwise cease to be registrable
securities within the meaning of the Registration Rights Agreement), then
Additional Interest shall accrue on the principal amount of the Securities at a
rate of .25% per annum commencing on (x) the 41st day after such effective date,
in the case of (A) above or (y) the day such Shelf Registration Statement ceases
to be effective in the case of (B) above;

provided, however, that the Additional Interest rate on the Securities may not
exceed in the aggregate of .25% per annum; provided further that (1) upon the
filing of the Exchange Offer Registration Statement or a Shelf Registration
Statement (in the case of clause (i) above), (2) upon the effectiveness of the
Exchange Offer Registration Statement or a Shelf Registration Statement (in the
case of clause (ii) above), (3) upon the exchange of Exchange Capital
Securities, Exchange Guarantee and Exchange Debentures for all Capital
Securities, Capital Securities Guarantee and Securities tendered (in the case of
clause (iii)(A) above), or upon the effectiveness of the Shelf Registration
Statement which had ceased to remain effective (in the case of clause (iii)(B)
above), or (4) upon the expiration of three years (or such shorter period as may
hereafter be provided in Rule 144(k), under the Securities Act) (or similar
successor rule)) commencing on the date of the initial issuance of the Capital
Securities, Additional Interest on the Securities as a result of such clause (or
the relevant subclause thereof), as the case may be, shall cease to accrue.

                  This Security shall be exchangeable, in whole but not in part,
for Securities registered in the names of Persons other than the Book-Entry
Depositary or its nominee only as provided in this paragraph. This Security
shall be so exchangeable if (a) DTC notifies the Company and the Book-Entry
Depositary that it is unwilling or unable to continue to hold the Book-Entry
Interest or at any time it ceases to be a "clearing agency" registered as such
under the Exchange Act and in either case, a successor is not appointed by the
Company within 120 days, (b) the Book-Entry Depositary for the Securities
notifies the Company that it is unwilling or unable to continue as Book-Entry
Depositary with respect to this Security and no successor is appointed within
120 days, (c) the Company executes and delivers to the Trustee an Officers'
Certificate providing that this Security shall be so exchangeable, or (d) there
shall have occurred and be continuing an Event of Default with respect to the
Securities and the Holder, in such circumstance, shall have requested in writing
that this Security be exchanged for one or more definitive Registered
Securities. Securities so issued in exchange for this Security, have the same
interest rate, if any, and maturity and having the same terms as this Security,
in authorized denominations and in the aggregate having the same principal
amount as this Security and registered in such names as the Book-Entry
Depositary for this Security shall direct.

                  If an Event of Default with respect to Securities shall occur
and be continuing, the principal of the Securities may be declared due and
payable in the manner and with the effect provided in the Indenture. At any time
after such declaration of acceleration with respect to Securities has been made,
but before a judgment or decree for payment of money has been obtained by the
Trustee as provided in the Indenture, if all Events of Default with respect to
Securities have been cured or waived (other than the non-payment of principal of
the Securities which has become due solely by reason of such declaration of
acceleration) then such declaration of acceleration and its consequences shall
be automatically annulled and rescinded.

                  The Indenture contains provisions for defeasance of (a) the
entire indebtedness of this Security and (b) certain restrictive covenants upon
compliance by the Company with certain conditions set forth therein.

                  The Indenture contains provisions permitting the Company and
the Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Securities at the time outstanding, to add any
provisions to, or change in any manner or eliminate any of the provisions of the
Indenture or modify in any manner the rights of the Holders of the Securities so
affected; provided that the Company and the Trustee may not, without the consent
of each Holder of Securities then outstanding and affected thereby, (i) extend
the Stated Maturity of any Securities, or reduce the principal amount thereof,
or reduce any amount payable on redemption thereof, or reduce the rate or extend
the time of payment of interest thereon (subject to Section 313 of the
Indenture), or make the principal of, or interest or premium on, the Securities
payable in any coin or currency other than U.S. dollars, or impair or affect the
right of any Holder of Securities to institute suit for the payment thereof, or
(ii) reduce the aforesaid percentage of Securities, the Holders of which are
required to consent to any such supplemental indenture. The Indenture also
contains provisions permitting the Holders of a majority in aggregate principal
amount of the Securities at the time outstanding, on behalf of all of the
Holders of the Securities, to waive any past default in the performance of any
of the covenants contained in the Indenture, or established pursuant to the
Indenture, and its consequences, except a default in the payment of the
principal of or premium, if any, or interest on any of the Securities or a
default in respect of any covenant or provision which under the Indenture cannot
be modified or amended without the consent of each Holder of Securities then
outstanding. Any such consent or waiver by the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders and owners
of this Security and of any Security issued in exchange herefor or in place
hereof (whether by registration of transfer or otherwise), irrespective of
whether or not any notation of such consent or waiver is made upon this
Security.

                  No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest, if any, on this Security at the times, place and
rate, and in the coin or currency, herein prescribed.

                  So long as the Company shall not be in default in the payment
of interest on the Securities, the Company shall have the right, at any time and
from time to time during the term of the Securities, to defer the payment of
interest by extending the interest payment period of such Securities for a
period not exceeding 10 consecutive semi-annual periods, including the first
such semi-annual period during such extension period (each, an "Extension
Period"), during which Extension Periods no interest shall be due and payable;
provided that no Extension Period may extend beyond the Maturity. No Extension
Period shall end on a date other than an Interest Payment Date. At the end of
any such Extension Period the Company shall pay all interest then accrued and
unpaid on the Securities (together with Additional Amounts, Additional Sums
thereon, if any, and interest on such interest at the rate specified for the
Securities to the extent permitted by applicable law); provided that during any
such Extension Period, the Company (i) shall not declare or pay dividends on,
make distributions with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of its capital stock except for
dividends, payments or distributions payable in shares of its capital stock,
reclassifications of its capital stock and conversions or exchanges of capital
stock of one class or series into capital stock of another class or series and
except for a redemption, purchase or other acquisition of shares of its capital
stock made for the purpose of an employee incentive plan or benefit plan or
other similar arrangement of the Company or any of its subsidiaries, (ii) shall
not make any payment of interest, principal of or premium, if any, on, or repay,
repurchase or redeem any debt securities issued by the Company that rank pari
passu with or junior to the Securities (except by conversion into or exchange
for shares of its capital stock), and (iii) shall not make any guarantee
payments with respect to the foregoing. Prior to the termination of any such
Extension Period, the Company may further defer the payment of interest,
provided that no Extension Period shall exceed the period or periods specified
in such Securities, extend beyond the Stated Maturity of the principal of such
Securities or end on a date other than an Interest Payment Date. Upon the
termination of any such Extension Period and upon the payment of all accrued and
unpaid interest and any Additional Amounts and Additional Sums then due on any
Interest Payment Date, the Company may elect to begin a new Extension Period,
subject to the above conditions. The Company may also pay on any Interest
Payment Date all or any portion of the interest accrued during an Extension
Period. No interest, Additional Amounts or Additional Sums shall be due and
payable during an Extension Period, except at the end thereof, but each
installment of interest that would otherwise have been due and payable during
such Extension Period shall bear interest at the specified rate to the extent
specified as contemplated by the Indenture.

                  The bearer of this Security shall be treated as the owner of
it for all purposes, subject to the terms of the Indenture. As provided in the
Indenture and subject to certain limitations therein set forth, Securities are
exchangeable for a like aggregate principal amount of Securities and of like
tenor of a different authorized denomination, as requested by the Holder
surrendering the same.

                  No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.

                  When a successor assumes all the obligations of its
predecessor under the Securities and the Indenture in accordance with the terms
of the Indenture, the predecessor will be released from those obligations.

                  The Trustee under the Indenture, in its individual or any
other capacity, may become the owner or pledgee of Securities and may otherwise
deal with the Company, its Subsidiaries or their respective Affiliates as if it
were not the Trustee.

                  No stockholder, director, officer, employee, incorporator or
Affiliate of the Company shall have any liability for any obligation of the
Company under the Securities or the Indenture or for any claim based on, in
respect of or by reason of, such obligations of their creation. Each Holder of
the Securities by accepting Securities this series waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Securities.

                  This Security shall not be valid until the Trustee or
authenticating agent signs the certificate of authentication on this Security.

                  Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company will cause CUSIP numbers
to be printed on the Securities as a convenience to the Holders of the
Securities. No representation is made as to the accuracy of such numbers as
printed on the Securities and reliance may be placed only on the other
identification numbers printed hereon.

                  All terms used in this Security that are defined in the
Indenture shall have the meanings assigned to them in the Indenture.

                  THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICT OF LAW PROVISIONS THEREOF.

EX-4

Exhibit 4(m)-2

SOUTHERN INVESTMENTS UK plc

and

SWEB HOLDINGS UK

and

BANKERS TRUST COMPANY, as Trustee,
Principal Paying Agent, Registrar and Transfer Agent

and

BANKERS TRUST LUXEMBOURG S.A.,
as Paying and Transfer Agent

FIRST SUPPLEMENTAL INDENTURE

Dated as of December 2, 1998

Debt Securities

      THIS FIRST SUPPLEMENTAL INDENTURE is made as of the 2^nd day of December, 1998, by and between SOUTHERN INVESTMENTS UK plc, a limited liability company incorporated under the laws of England and Wales, with UK Company Registration Number 3073865 (the "Company"), SWEB HOLDINGS UK, an unlimited liability company incorporated under the laws of England and Wales, with UK Company Registration Number 3585938 ("ULC"), BANKERS TRUST COMPANY, a New York banking corporation, as trustee, principal paying agent, registrar and transfer agent ("Bankers Trust") and BANKERS TRUST LEXEMBOURG S.A. as Paying and Transfer Agent (the "Agent").

WITNESSETH:

      WHEREAS, the Company, Bankers Trust and the Agent have heretofore entered into a Subordinated Debenture Indenture, dated as of January 29, 1997 (the "Original Indenture") to provide for 8.23% Subordinated Debenture Indenture, dated as of February 1, 2027 (the "Subordinated Debentures");

      WHEREAS, the Original Indenture is incorporated herein by this reference and the Original Indenture, as supplemented by this First supplemental Indenture, is herein called the "Indenture";

      WHEREAS, Section 901(4) of the Original Indenture provides that the Company and Bankers Trust, as trustee, may at any time without the consent of the holders of the Subordinated Debentures (the "Holders") modify, alter, amend or supplement the Original Indenture in certain respects which are not materially adverse to the Holders;

      WHEREAS, the Company proposes to amend the Original Indenture;

      WHEREAS, the Company desires to make ULC a co-obligor under the Indenture and ULC desires to become a co-obligor under the Indenture;

      WHEREAS, all conditions necessary to authorize the execution and delivery of this First Supplemental Indenture and to make it a valid and binding obligation of the parties have been done or performed.

      NOW, THEREFORE, in consideration of the agreement and obligations set forth herein and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE ONE

      Section 101. Additional Obligor. As of the date hereof and pursuant to this First Supplemental Indenture, ULC becomes a co-obligor of the Subordinated Debentures under the Indenture in accordance with the terms and conditions of the Indenture and shall jointly and severally with the Company assume all rights and obligations of the Company thereunder.

      Section 102. Event of Default. The events specified in Sections 501(3), (4) and (5) of the Original Indenture as regards the Company or ULC shall also constitute an Event of Default with respect to the Subordinated Debentures.

ARTICLE TWO

Miscellaneous

      Section 201. Execution as Supplemental Indenture. This First Supplemental Indenture is executed and shall be construed as an indenture supplemental to the Original Indenture, as provided in the Original Indenture, and this First Supplemental Indenture forms a part thereof. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect.

      Section 202. Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with another provision hereof which is required to be included in this First Supplemental Indenture by any of the provisions of the Trust Indenture Act, such required provision shall control.

      Section 203. Effect of Headings. The Article and Section headings herein are for convenience only and shall not affect the construction hereof.

      Section 204. Successors and Assigns. All convenants and agreements in this First Supplemental Indenture by the Company and ULC shall bind their successors and assigns, whether so expressed or not.

      Section 205. Separability Clause. In case any provision in this First Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

      Section 206. Benefits of First Supplemental Indenture. Nothing in this First Supplemental Indenture, express or implied, shall give to any person, other than the parties hereto and their successors hereunder and the Holders, any benefit or any legal or equitable right, remedy or claim under this First Supplemental Indenture.

]

      Section 207. Execution and Counterparts. This First Supplemental Indenture may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

      IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly-executed by their respective officers or directors duly authorized thereto, all as of the day and year first above written.

SOUTHERN INVESTMENTS UK plc

By:  ROBERT A. SYMONS

SWEB HOLDINGS UK

By:  C. PHILIP SAUNDERS

BANKERS TRUST COMPANY,

As Trustee, Principal Paying Agent,

Registrar and Transfer Agent

By:  WILLIAM T. JENKINS

BANKERS TRUST LUXENBOURG, S.A.

As Paying and Transfer Agent

By:  WILLIAM T. JENKINS

EX-4

Exhibit 4(m)-3

SIUK LIMITED
(formerly known as "SIUK plc" and "Southern Investments UK plc")

and

WPD HOLDINGS UK
(formerly known as "SWEB Holdings UK")

and

WESTERN POWER DISTRIBUTION LLP

and

DEUTSCHE BANK TRUST COMPANY AMERICAS, as Trustee,
Principal Paying Agent, Security Registrar and Transfer Agent

and

DEUTSCHE BANK LUXEMBOURG S.A.,
as Paying and Transfer Agent

SECOND SUPPLEMENTAL INDENTURE

Dated as of January 30, 2003

Debt Securities

     THIS SECOND SUPPLEMENTAL INDENTURE is made as of the 30^th day of January, 2003, by and among SIUK LIMITED (formerly known as "SIUK plc" and "Southern Investments UK plc"), a private company limited by shares and registered under the laws of England and Wales, with UK Company Registration Number 3073865 (the "Company"), WPD HOLDINGS UK (formerly known as "SWEB Holdings UK"), an unlimited liability company registered under the laws of England and Wales, with UK Company Registration Number 3585938 ("ULC"), WESTERN POWER DISTRIBUTION LLP, a limited liability partnership formed under the laws of England and Wales, with registration pending ("WPD LLP"), DEUTSCHE BANK TRUST COMPANY AMERICAS (formerly known as "Bankers Trust Company"), a New York banking corporation, as trustee, principal paying agent, security registrar and transfer agent (the "Trustee") and DEUTSCHE BANK LUXEMBOURG S.A. (formerly known as "Bankers Trust Luxembourg S.A."), as Paying and Transfer Agent (the "Agent").

W I T N E S S E T H:

     WHEREAS, the Company, the Trustee and the Agent have heretofore entered into a Subordinated Debenture Indenture, dated as of January 29, 1997 (the "Original Indenture"), to provide, among other things, for the issuance of 8.23% Original Subordinated Debentures due February 1, 2027 and 8.23% Exchange Subordinated Debentures due February 1, 2027 (collectively, the "Subordinated Debentures");

     WHEREAS, the Company, ULC, the Trustee and the Agent have heretofore entered into a First Supplemental Indenture, dated as of December 2, 1998 (the "First Supplemental Indenture"), establishing ULC as a co-obligor under the Indenture (as defined below);

     WHEREAS, the Original Indenture and the First Supplemental Indenture are incorporated herein by reference and the Original Indenture and the First Supplemental Indenture, as supplemented by this Second Supplemental Indenture, are herein called the "Indenture";

     WHEREAS, Section 801 of the Indenture permits the sale or conveyance of the Company as an entirety or substantially as an entirety under the Indenture, the Subordinated Debentures and all other documents, agreements and instruments related thereto to WPD LLP, as the successor entity, which hereby expressly assumes by this Second Supplemental Indenture the due and punctual performance and observance of all of the covenants and conditions of the Indenture to be performed or observed and the due and punctual payment of the principal of, premium, if any, and interest on the Subordinated Debentures and all other obligations under the Subordinated Debentures;

     WHEREAS, upon the assumption of such obligations by WPD LLP in accordance with Section 802 of the Indenture, the Company shall be released from such obligations;

     WHEREAS, this Second Supplemental Indenture is being executed in connection with the transfer to and assumption by WPD LLP of the assets and liabilities of the Company as an entirety or substantially as an entirety (the "Sale");

     WHEREAS, Section 901(1) of the Indenture provides that the Company and the Trustee may at any time without the consent of the holders of the Subordinated Debentures (the "Holders") supplement the Indenture to evidence the assumption by a successor entity of the covenants of the Company therein and in the Subordinated Debentures; and

     WHEREAS, all conditions necessary to authorize the execution and delivery of this Second Supplemental Indenture and to make it a valid and binding obligation of the parties have been done or performed;

     NOW, THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE ONE

Transfer, Assumption and Release

     SECTION 101. Transfer by the Company to WPD LLP. As of the date hereof, in connection with the Sale, the Company hereby transfers all of the Company's obligations under the Indenture, the Subordinated Debentures and all other documents, agreements and instruments related thereto to WPD LLP.

     SECTION 102. Assumption by WPD LLP; Release of the Company. As of the date hereof, WPD LLP hereby expressly assumes all obligations of the Company under the Indenture, the Subordinated Debentures and all other documents, agreements and instruments related thereto and shall succeed to, and be substituted for, and may exercise every right and power of, the Company under the Indenture, the Subordinated Debentures and all other documents, agreements and instruments related thereto with the same effect as if WPD LLP had been named as the Company therein, and thereafter the Company shall be relieved of all rights and obligations under the Indenture and the Subordinated Debentures.

ARTICLE TWO

Miscellaneous

     SECTION 201.   Execution as Supplemental Indenture. This Second Supplemental Indenture is executed and shall be construed as an indenture supplemental to the Original Indenture and the First Supplemental Indenture, as provided in the Original Indenture, and this Second Supplemental Indenture forms a part thereof. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect.

     SECTION 202.    Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with another provision hereof which is required to be included in this Second Supplemental Indenture by any of the provisions of the Trust Indenture Act, such required provision shall control.

     SECTION 203.    Effect of Headings. The Article and Section headings herein are for convenience only and shall not affect the construction hereof.

     SECTION 204.    Successors and Assigns. All covenants and agreements in this Second Supplemental Indenture by WPD LLP shall bind its successors and assigns, whether so expressed or not.

     SECTION 205.    Separability Clause. In case any provision in this Second Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

     SECTION 206.    Benefits of Second Supplemental Indenture. Nothing in this Second Supplemental Indenture, express or implied, shall give to any person, other than the parties hereto and their successors hereunder and the Holders, any benefit or any legal or equitable right, remedy or claim under this Second Supplemental Indenture.

     SECTION 207.    Execution and Counterparts. This Second Supplemental Indenture may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

     SECTION 208.    Governing law. This Second Supplemental Indenture shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York.

[Remainder of page intentionally left blank]

IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed by their respective officers or directors duly authorized thereto, all as of the day and year first above written.

SIUK LIMITED

By:                                                  
Name:
Title:

WPD Holdings UK

By:                                                  
Name:
Title:

WESTERN POWER DISTRIBUTION LLP

By:                                                  
Name:
Title:

DEUTSCHE BANK TRUST COMPANY
AMERICAS
as Trustee, Principal Paying Agent, Security
aRegistrarnd Transfer Agent

By:                                                  
Name:
Title:

DEUTSCHE BANK LUXEMBOURG S.A.,
as Trustee, Principal Paying Agent, Security
Registrar and Transfer Agent

By:                                                  
Name:
Title:

EX-4

Exhibit 4(m)-4

WESTERN POWER DISTRIBUTION LLP

and

WPD HOLDINGS UK
(formerly known as "SWEB Holdings UK")

and

WESTERN POWER DISTRIBUTION HOLDINGS LIMITED

and

DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Trustee, Principal Paying Agent, Security Registrar and Transfer Agent

and

DEUTSCHE BANK LUXEMBOURG S.A.,
as Paying and Transfer Agent

THIRD SUPPLEMENTAL INDENTURE

Dated as of January 30, 2003

Debt Securities

     THIS THIRD SUPPLEMENTAL INDENTURE is made as of the 30^th day of January, 2003, by and among WESTERN POWER DISTRIBUTION LLP, a limited liability partnership formed under the laws of England and Wales, with registration pending ("WPD LLP"), WPD HOLDINGS UK (formerly known as "SWEB Holdings UK"), an unlimited liability company registered under the laws of England and Wales, with UK Company Registration Number 3585938 ("ULC"), WESTERN POWER DISTRIBUTION HOLDINGS LIMITED, a private company limited by shares and registered under the laws of England and Wales, with UK Company Registration Number [?] ("WPDHL"), DEUTSCHE BANK TRUST COMPANY AMERICAS (formerly known as "Bankers Trust Company"), a New York banking corporation, as trustee, principal paying agent, security registrar and transfer agent (the "Trustee") and DEUTSCHE BANK LUXEMBOURG S.A. (formerly known as "Bankers Trust Luxembourg S.A."), as Paying and Transfer Agent (the "Agent").

W I T N E S S E T H:

     WHEREAS, SIUK Limited ("SIUK"), the Trustee and the Agent have heretofore entered into a Subordinated Debenture Indenture, dated as of January 29, 1997 (the "Original Indenture"), to provide, among other things, for the issuance of 8.23% Original Subordinated Debentures due February 1, 2027, and 8.23% Exchange Subordinated Debentures due February 1, 2027 (collectively, the "Subordinated Debentures");

     WHEREAS, SIUK, ULC, the Trustee and the Agent have heretofore entered into a First Supplemental Indenture, dated as of December 2, 1998 (the "First Supplemental Indenture"), establishing ULC as a co-obligor under the Indenture (as defined below);

     WHEREAS, SIUK, ULC, WPD LLP, the Trustee and the Agent have heretofore entered into a Second Supplemental Indenture, dated as of January 30, 2003 (the "Second Supplemental Indenture"), establishing WPD LLP as a co-obligor and releasing SIUK as a co-obligor under the Indenture (as defined below);

     WHEREAS, the Original Indenture, the First Supplemental Indenture and the Second Supplemental Indenture are incorporated herein by reference and the Original Indenture, the First Supplemental Indenture and the Second Supplemental Indenture, as supplemented by this Third Supplemental Indenture, are herein called the "Indenture";

     WHEREAS, Section 801 of the Indenture permits the sale or conveyance of ULC as an entirety or substantially as an entirety under the Indenture, the Subordinated Debentures and all other documents, agreements and instruments related thereto to WPDHL, as the successor entity, which hereby expressly assumes all of the covenants and conditions of the Indenture to be performed or observed and the due and punctual payment of the principal of, premium, if any, and interest on the Subordinated Debentures and all other obligations under the Subordinated Debentures;

     WHEREAS, upon the assumption of such obligations by WPDHL in accordance with Section 802 of the Indenture, ULC shall be released from such obligations;

     WHEREAS, this Third Supplemental Indenture is being executed in connection with the transfer to and assumption by WPDHL of the assets and liabilities of ULC as an entirety or substantially as an entirety (the "Sale");

     WHEREAS, Section 901(1) of the Indenture provides that WPD LLP and the Trustee may at any time without the consent of the holders of the Subordinated Debentures (the "Holders") supplement the Indenture to evidence the assumption by a successor entity of the covenants of ULC therein and in the Subordinated Debentures; and

     WHEREAS, all conditions necessary to authorize the execution and delivery of this Third Supplemental Indenture and to make it a valid and binding obligation of the parties have been done or performed;

     NOW, THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE ONE

Transfer, Assumption and Release

     SECTION 101.   Transfer by ULC to WPDHL. As of the date hereof, in connection with the Sale, ULC hereby transfers all of ULC's obligations under the Indenture, the Subordinated Debentures and all other documents, agreements and instruments related thereto to WPDHL.

     SECTION 102.    Assumption by WPDHL; Release of ULC. As of the date hereof, WPDHL hereby expressly assumes all obligations of ULC under the Indenture, the Subordinated Debentures and all other documents, agreements and instruments related thereto and shall succeed to, and be substituted for, and may exercise every right and power of, ULC under the Indenture, the Subordinated Debentures and all other documents, agreements and instruments related thereto with the same effect as if WPDHL had been named as ULC therein, and thereafter ULC shall be relieved of all rights and obligations under the Indenture and the Subordinated Debentures.

ARTICLE TWO

Miscellaneous

     SECTION 201.    Execution as Supplemental Indenture. This Third Supplemental Indenture is executed and shall be construed as an indenture supplemental to the Original Indenture, the First Supplemental Indenture and the Second Supplemental Indenture, as provided in the Original Indenture, and this Third Supplemental Indenture forms a part thereof. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect.

     SECTION 202.    Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with another provision hereof which is required to be included in this Third Supplemental Indenture by any of the provisions of the Trust Indenture Act, such required provision shall control.

     SECTION 203.    Effect of Headings. The Article and Section headings herein are for convenience only and shall not affect the construction hereof.

     SECTION 204.    Successors and Assigns. All covenants and agreements in this Third Supplemental Indenture by WPDHL shall bind its successors and assigns, whether so expressed or not.

     SECTION 205.    Separability Clause. In case any provision in this Third Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

     SECTION 206.    Benefits of Third Supplemental Indenture. Nothing in this Third Supplemental Indenture, express or implied, shall give to any person, other than the parties hereto and their successors hereunder and the Holders, any benefit or any legal or equitable right, remedy or claim under this Third Supplemental Indenture.

     SECTION 207.    Execution and Counterparts. This Third Supplemental Indenture may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

     SECTION 208.    Governing Law. This Third Supplemental Indenture shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York.

[Remainder of page intentionally left blank]

     IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental Indenture to be duly executed by their respective officers or directors duly authorized thereto, all as of the day and year first above written.

WESTERN POWER DISTRIBUTION LLP

By:
Name:
Title:

WPD HOLDINGS UK

By:
Name:
Title:

WESTERN POWER DISTRIBUTION HOLDINGS
LIMITED

By:
Name:
Title:

DEUTSCHE BANK TRUST COMPANY
AMERICAS
as Trustee, Principal Paying Agent, Security
Registrar and Transfer Agent

By:
Name:
Title:

DEUTSCHE BANK LUXEMBOURG S.A.,
as Paying and Transfer Agent

By:
Name:
Title:

EX-4

Exhibit 4(n)-1

WPD HOLDINGS UK

and

BANKERS TRUST COMPANY,
as Trustee, Principal Paying Agent, and Transfer Agent

and

DEUTSCHE BANK LUXEMBOURG S.A.,
as Paying and Transfer Agent

INDENTURE

Dated as of March 16, 2001

Debt Securities

TABLE OF CONTENTS 

		Page
ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
	SECTION 101.   Definitions		1
	SECTION 102.   Compliance Certificates and Opinions		8
	SECTION 103.   Form of Documents Delivered to Trustee		9
	SECTION 104.   Acts of Holders		10
	SECTION 105.   Notices, Etc., to the Trustee and the Company		12
	SECTION 106.   Notice to Holders; Waiver		12
	SECTION 107.   Conflict with Trust Indenture Act		13
	SECTION 108.   Effect of Headings and Table of Contents		14
	SECTION 109.   Successors and Assigns		14
	SECTION 110.   Separability Clause		14
	SECTION 111.   Benefits of Indenture		14
	SECTION 112.   Governing Law		14
	SECTION 113.   Legal Holidays		14
	SECTION 114.   No Personal Liability of Directors, Officers, Employees & Stockholders		14
ARTICLE II SECURITY FORMS
	SECTION 201.   Forms Generally		15
	SECTION 202.   Form of Face of Security		16
	SECTION 203.   Form of Reverse of Security		20
	SECTION 204.   Form of Trustee's Certificate of Authentication		32
	SECTION 205.   Form of Trustee's Certificate of Authentication by an Authenticating Agent		32
	SECTION 206.   Form of Regulation S Certificate		33
ARTICLE III THE SECURITIES
	SECTION 301.   Amount Unlimited; Issuable in Series		34
	SECTION 302.   Denominations		36
	SECTION 303.   Execution, Authentication, Delivery and Dating		36
	SECTION 304.   Transfer Agent and Paying Agent		38
	SECTION 305.   Temporary Securities		38
	SECTION 306.   Registration, Registration of Transfer and Exchange		39
	SECTION 307.   Mutilated, Destroyed, Lost and Stolen Securities		40
	SECTION 308.   Payment of Interest; Interest Rights Reserved		41
	SECTION 309.   Persons Deemed Owners		43
	SECTION 310.   Cancellation		43
	SECTION 311.   Computation of Interest		44
	SECTION 312.   Global Securities		44
	SECTION 313.   Special Transfer Provisions.		45
	SECTION 314.   Form of Certificate to Be Delivered in Connection with Transfers Pursuant to Regulation S		47
ARTICLE IV SATISFACTION AND DISCHARGE
	SECTION 401.   Satisfaction and Discharge of Indenture		48
	SECTION 402.   Application of Trust Money		50
	SECTION 403.   Satisfaction, Discharge and Defeasance of Securities of any Series		50
ARTICLE V REMEDIES
	SECTION 501.   Events of Default		51
	SECTION 502.   Acceleration of Maturity; Rescission and Annulment		53
	SECTION 503.   Collection of Indebtedness and Suits for Enforcement by Trustee		53
	SECTION 504.   Trustee May File Proofs of Claim		54
	SECTION 505.   Trustee May Enforce Claims Without Possession of Securities		55
	SECTION 506.   Application of Money Collected		55
	SECTION 507.   Limitation on Suits		56
	SECTION 508.   Unconditional Right of Holders to Receive Principal, Premium and Interest		56
	SECTION 509.   Restoration of Rights and Remedies		57
	SECTION 510.   Rights and Remedies Cumulative		57
	SECTION 511.   Delay or Omission Not Waiver		57
	SECTION 512.   Control by Holders		57
	SECTION 513.   Waiver of Past Defaults		58
	SECTION 514.   Undertaking for Costs		58
ARTICLE VI THE TRUSTEE
	SECTION 601.   Certain Duties and Responsibilities		59
	SECTION 602.   Notice of Defaults		60
	SECTION 603.   Certain Rights of Trustee		60
	SECTION 604.   Trustee Not Responsible for Recitals or Issuance of Securities		61
	SECTION 605.   May Hold Securities		61
	SECTION 606.   Money Held in Trust		62
	SECTION 607.   Compensation and Reimbursement		62
	SECTION 608.   Disqualification; Conflicting Interests		63
	SECTION 609.   Corporate Trustee Required; Eligibility		63
	SECTION 610.   Resignation and Removal; Appointment of Successor Trustee		63
	SECTION 611.   Acceptance of Appointment by Successor		64
	SECTION 612.   Merger, Conversion, Consolidation or Succession to Business		65
	SECTION 613.   Preferential Collecting of Claims Against Company		66
	SECTION 614.   Authenticating Agents		69
	SECTION 615.   The Principal Paying Agent, the Paying and Transfer Agent and Transfer Agent		70
ARTICLE VII HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
	SECTION 701.   Company to Furnish Trustee Names and Addresses of Holders		70
	SECTION 702.   Preservation of Information; Communications to Holders		71
	SECTION 703.   Reports by Trustee		72
ARTICLE VIII CONSOLIDATION, MERGER, CONVEYANCE, SALE OR LEASE
	SECTION 801.   Company May Consolidate Etc., Only on Certain Terms		73
	SECTION 802.   Successor Corporation to be Substituted		74
ARTICLE IX SUPPLEMENTAL INDENTURES
	SECTION 901.   Supplemental Indentures without Consent of Holders		74
	SECTION 902.   Supplemental Indentures with Consent of Holders		75
	SECTION 903.   Execution of Supplemental Indentures		76
	SECTION 904.   Effect of Supplemental Indentures		76
	SECTION 905.   Conformity with Trust Indenture Act		77
	SECTION 906.   Reference in Securities to Supplemental Indentures		77
ARTICLE X COVENANTS
	SECTION 1001.   Payment of Principal, Premium, if any, and Interest		77
	SECTION 1002.   Maintenance of Office or Agency		77
	SECTION 1003.   Money for Securities Payments to Be Held in Trust		78
	SECTION 1004.   Limitation on Liens		79
	SECTION 1005.   Limitation on Sale and Lease-Back Transactions		82
	SECTION 1006.   Statement by Officers as to Default		82
	SECTION 1007.   Modification or Waiver of Certain Covenants		83
	SECTION 1008.   Further Assurances		83
	SECTION 1009.   Payment of Additional Amounts		83
	SECTION 1010.   Copies Available to Holders		85
	SECTION 1011.   Limitation on the Incurrence of Additional Indebtedness by Certain Subsidiaries		85
ARTICLE XI REDEMPTION OF SECURITIES
	SECTION 1101.   Applicability of Article		85
	SECTION 1102.   Election to Redeem; Notice to Trustee		85
	SECTION 1103.   Selection by Trustee of Securities to Be Redeemed		86
	SECTION 1104.   Notice of Redemption		86
	SECTION 1105.   Deposit of Redemption Price		87
	SECTION 1106.   Securities Payable on Redemption Date		87
	SECTION 1107.   Securities Redeemed in Part		87
	SECTION 1108.   Optional Redemption in the Event of Change in United Kingdom Tax Treatment		88
ARTICLE XII SINKING FUNDS
	SECTION 1201.   Applicability of Article		88
	SECTION 1202.   Satisfaction of Sinking Fund Payments with Securities		89
	SECTION 1203.   Redemption of Securities for Sinking Fund		89
	ARTICLE XIII MEETINGS OF HOLDERS OF SECURITIES
	SECTION 1301.   Purposes of Meetings		90
	SECTION 1302.   Place of Meetings		90
	SECTION 1303.   Voting at Meetings		91
	SECTION 1304.   Voting Rights, Conduct and Adjournment		91
	SECTION 1305.   Revocation of Consent by Holders		91
ARTICLE XIV MISCELLANEOUS
	SECTION 1401.   Consent to Jurisdiction; Appointment of Agent to Accept Service of Process		92
	SECTION 1402.   Counterparts		93

INDENTURE, dated as of March 16, 2001, among WPD HOLDINGS UK, a private unlimited liability company duly organized and existing under the laws of England and Wales (the "Company"), having its principal office at Avonbank, Feeder Road, Bristol BS2 0TB, England, BANKERS TRUST COMPANY, a New York banking corporation, as trustee, principal paying agent, and transfer agent (the "Trustee") and DEUTSCHE BANK LUXEMBOURG, S.A., a company organized under the laws of Luxembourg, as paying and transfer agent (the "Paying Agent").

RECITALS OF THE COMPANY

The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of certain of its unsecured debentures, notes or other evidences of indebtedness (herein called the "Securities"), to be issued in one or more series as provided in this Indenture.

All things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done.

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities or of series thereof, as follows:

ARTICLE I

DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION/p>

SECTION 101.   Definitions

For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:

(i)    the terms defined in this Article have the respective meanings assigned to them in this Article and include the plural as well as the singular;

(ii)    all other terms used herein that are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein;

(iii)    all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles in the United States and, except as otherwise herein expressly provided, the term "generally accepted accounting principles," with respect to any computation required or permitted hereunder, shall mean such accounting principles as are generally accepted in the [United Kingdom] at the date of such computation; and

(iv)    the words "herein," "hereof," and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision.

Certain terms, used principally in Article VI, are defined in that Article.

"Act," when used with respect to any Holder, has the meaning specified in Section 104.

"Additional Amounts" has the meaning specified in Section 1009.

"Affiliate" of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control," when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms "controlling" and "controlled" have meanings correlative to the foregoing.

"Authenticating Agent" means any Person authorized to authenticate and deliver Securities on behalf of the Trustee pursuant to Section 614.

"Bearer Security" means any Security that is payable to the bearer.

"Board of Directors" means either the board of directors of the Company or any duly authorized committee of that Board of Directors.

"Board Resolution" means a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification.

"Book-Entry Depositary" means, with respect to the Securities of any series issuable or issued, in whole or in part, in the form of one or more Global Securities, the Person designated as Book-Entry Depositary by the Company pursuant to Section 301, and, if so provided pursuant to Section 301 with respect to the Securities of a series, any successor to such Person. If at any time there is more than one such Person, "Book-Entry Depositary" shall mean, with respect to any series of Securities, the qualifying entity which has been appointed with respect to the Securities of that series.

"Book-Entry Interest" means a certificateless depositary interest to be issued by the Book-Entry Depositary to DTC.

"Business Day," when used with respect to the Place of Payment of the Securities of any series, means each day that is not a Saturday, a Sunday or a day on which banking institutions in any Place of Payment for the Securities of that series are authorized or obligated by law to remain closed.

"Clearstream" means Clearstream Banking, société anonyme, or its successor.

"Commission" means the U.S. Securities and Exchange Commission, as from time to time constituted, created under the U.S. Securities Exchange Act of 1934, as amended, or, if at any time after the execution of this instrument such commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time.

"Company" means the Person named as the "Company" in the first paragraph of this instrument until a successor corporation shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor corporation.

"Company Request" or "Company Order" means a written request or order signed in the name of the Company by any Director and any other Director, or the Treasurer, Secretary, any Assistant Treasurer or Assistant Secretary, or any other officer so authorized, and delivered to the Trustee.

"Consolidated Net Tangible Assets" means the total of all assets (including revaluations thereof as a result of commercial appraisals, price level restatements or otherwise) appearing on a consolidated balance sheet of the Company, net of applicable reserves and deductions, but excluding goodwill, trade names, trademarks, patents, unamortized debt discount, and all other like intangible assets (which term shall not be construed to include such revaluations), less the aggregate of the consolidated current liabilities of the Company appearing on such balance sheet.

"Corporate Trust Office" means the principal office of the Trustee in The City of New York, at which at any particular time its corporate trust business shall be administered, which at the date hereof is Four Albany Street, New York, New York, 10006, Attention: Manager, Project Finance, or at any other time at such address as the Trustee may designate from time to time by written notice to the Company at its principal office at Avonbank, Feeder Road, Bristol BS2 0TB, England.

"Corporation" includes corporations, associations, companies, and business trusts.

"Debt" has the meaning specified in Section 1004.

"Default," for purposes of Section 601 of this Indenture, means an "Event of Default" as specified in Section 501 hereof, and for purposes of Section 310(b) of the Trust Indenture Act, "default" means an "Event of Default" as specified in Section 501 hereof, but exclusive of any period of grace or requirement of notice.

"Defaulted Interest" has the meaning specified in Section 308.

"Deposit Agreement" means the deposit agreement among the Company, the Book-Entry Depositary, and the holders and beneficial owners from time to time of interests in the Book-Entry Interest.

"Director" means any member of the Board of Directors.

"Discharged" means, with respect to the Securities of any series, the discharge of the entire indebtedness represented by, and obligations of the Company under, the Securities of such series and the satisfaction of all the obligations of the Company under the Indenture relating to the Securities of such series, except the rights of Holders of the Securities of such series to receive, from the trust fund described in Section 403 hereof, payment of the principal of and interest and premium, if any, on the Securities of such series when such payments are due, the Company's obligations with respect to the Securities of such series with respect to registration, transfer, exchange, and maintenance of a Place of Payment, and the rights, powers, trusts, duties, protections, and immunities of the Trustee under this Indenture.

"Dollar" or "$" means a dollar or other equivalent unit in such coin or currency of the United States of America as at the time shall be legal tender for the payment of public and private debt.

"DTC" means The Depository Trust Company or its successors.

"Euroclear" means Euroclear Bank S.A./N.V., or its successor, as operator of the Euroclear System.

"Event of Default" has the meaning specified in Section 501.

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"Global Security" means a Registered or Bearer Security evidencing all or part of a series of Securities, issued to the Book-Entry Depositary for such series or its nominee.

"Holder" means, in the case of a Registered Security, the Person in whose name a Security is registered in the Security Register and, in the case of a Global Bearer Security, the Book-Entry Depositary therefor.

"Indenture" means this instrument as originally executed or as it may, from time to time, be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof, and shall include the terms of particular series of Securities established as contemplated by Section 301.

"Indirect Participant" means a Person that holds an interest in a Book-Entry Interest through a Person that has an account with DTC.

"Interest," when used with respect to an Original Issue Discount Security that by its terms bears interest only after Maturity, means interest payable after Maturity at the rate prescribed in such Original Issue Discount Security.

"Interest Payment Date," when used with respect to any Security, means the Stated Maturity of an installment of interest on such Security.

"Letter of Representations" means, with respect to the Securities of any series, the representation from the Company and the Trustee to DTC with respect to the Securities of that series.

"Lien" means any mortgage, lien, pledge, security interest or other encumbrance; provided, however, that the term "Lien" shall not mean any easements, rights-of-way, restrictions, and other similar encumbrances, and encumbrances consisting of zoning restrictions, leases, subleases, licenses, sublicenses, restrictions on the use of property or defects in title thereto.

"Maturity," when used with respect to any Security, means the date on which the principal of such Security or an installment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.

"Officers' Certificate" means a certificate signed by any Director and any other Director, or the Treasurer, Secretary, any Assistant Treasurer or Assistant Secretary, or any other officer so authorized, and delivered to the Trustee.

"Opinion of Counsel" means a written opinion of counsel, who, unless otherwise required by the Trust Indenture Act, may be an employee of or regular counsel for the Company, or may be other counsel reasonably acceptable to the Trustee.

"Original Issue Discount Security" means any Security which provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502.

"Outstanding," when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except:

(i)    Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation;

(ii)    Securities, or portions thereof, for whose payment or redemption money or U.S. Governmental Obligations in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities; provided that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; and

(iii)    Securities that have been paid pursuant to Section 306 or in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a bona fide purchaser in whose hands such Securities are valid obligations of the Company;

provided, however, that in determining whether the Holders of the requisite principal amount of the Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, (a) the principal amount of an Original Issue Discount Security that shall be deemed to be outstanding for such purposes shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon a declaration of acceleration of the Maturity thereof pursuant to Section 502, and (b) Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be Outstanding, except that in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities that a Responsible Officer of the Trustee actually knows to be so owned shall be so disregarded. Securities so owned as described in (b) above which have been pledged in good faith may be regarded as Outstanding if the pledgee certifies to the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor.

"Participant" means a Person that has an account with DTC.

"Paying Agent" means Deutsche Bank Luxembourg S.A. and any other Person authorized by the Company to pay the principal of (and premium, if any) or interest on any Securities on behalf of the Company hereunder, including, without limitation, the Principal Paying Agent.

"Permanent Global Security" means a Global Security that is, at the time of the initial issuance of the related series of Securities, issued in permanent form.

"Person" means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.

"Place of Payment," when used with respect to the Securities of any series, means the place or places where the principal of (and premium, if any) and interest, if any, on the Securities of that series are payable as specified in or as contemplated by Section 301.

"Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purpose of this definition, any Security authenticated and delivered under Section 306 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security.

"Principal Paying Agent" means Bankers Trust Company until a successor Principal Paying Agent shall have become such pursuant to the applicable provisions of this Indenture and, thereafter, "Principal Paying Agent" shall mean such successor Principal Paying Agent.

"Redemption Date," when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture.

"Redemption Price," when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture, exclusive of accrued and unpaid interest.

"Registered Security" means any Security that is payable to a registered owner or registered assigns thereof as registered in the Security Register.

"Regular Record Date" for the interest payable on any Interest Payment Date on the Securities of any series means the date specified for that purpose as contemplated by Section 301.

"Relevant Date" for any payment made with respect to the Securities of any series means whichever is the later of the date on which the relevant payment first becomes due and if the full amount payable has not been received in The City of New York by the Book-Entry Depositary or the Trustee on or prior to such due date, the date on which, the full amount having been so received, notice to that effect shall have been given to the Holders in accordance with this Indenture.

"Resale Restriction Termination Date" means the date which is two years after the later of the date such Securities are originally issued by the Company or the last date on which the Company or any Affiliate of the Company was the owner of such Security.

"Responsible Officer," when used with respect to the Trustee, means any officer within the Corporate Trust Office, including any vice president, managing director, the secretary, the treasurer, assistant vice president, assistant secretary, assistant treasurer, or any other officer of the Trustee customarily performing functions similar to those performed by any of the above-designated officers with responsibility for the administration of this Indenture, and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject.

"Restricted Period " with respect to any Regulation S Security, shall mean the first 40 days following the date on which such Securities are originally issued by the Company.

"Securities" has the meaning stated in the first recital of this Indenture and, more particularly, means any Securities authenticated and delivered under this Indenture.

"Securities Act" means the Securities Act of 1933, as amended.

"Security Register" and "Security Registrar" have the respective meanings specified in Section 306.

"Special Record Date" for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 308.

"Stated Maturity," when used with respect to any Security or any installment of principal thereof or interest thereon, means the date specified in such Security as the fixed date on which the principal of such Security or such installment of principal or interest is due and payable.

"Subsidiary" means a corporation more than 50% of the outstanding Voting Stock of which is owned, directly or indirectly, by the Company.

"Transfer Agent" means any Person authorized by the Company to effectuate the exchange or transfer of any Security on behalf of the Company hereunder.

"Trustee" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean or include each Person that is then a Trustee hereunder, and if at any time there is more than one such Person, "Trustee" as used with respect to the Securities of any series shall mean the Trustee with respect to Securities of that series.

"Trust Indenture Act" means the Trust Indenture Act of 1939, as in force at the date as of which this instrument was executed, except as provided in Section 905.

"United Kingdom" means the United Kingdom of Great Britain and Northern Ireland, its territories, its possessions, and other areas subject to its jurisdiction.

"United Kingdom Taxes" has the meaning specified in Section 1009.

"United States" means the United States of America (including the States and the District of Columbia), its territories, its possessions, and other areas subject to its jurisdiction.

"U.S. Government Obligations" means direct obligations of the United States for the payment of which the full faith and credit of the United States of America is pledged, or obligations of a person controlled or supervised by and acting as an agency or instrumentality of the United States and the payment of which is unconditionally guaranteed by the United States, and shall also include a depository receipt issued by a bank or trust company as custodian with respect to any such U.S. Government Obligation or a specific payment of interest on or principal of any such U.S. Government Obligation held by such custodian for the account of a holder or a depository receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of interest on or principal of the U.S. Government Obligation evidenced by such depository receipt.

"Voting Stock" of any corporation means stock of the class or classes having general voting power under ordinary circumstances to elect at least a majority of the board of directors of a corporation (irrespective of whether at the time stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency).

SECTION 102.   Compliance Certificates and Opinions

Except as otherwise expressly provided by this Indenture, upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished.

Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include:

(i)    a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto;

(ii)    a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

(iii)    a statement that, in the opinion of each such individual, or such firm he, she or it has made such examination or investigation as is necessary to enable him, her or it to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(iv)    a statement as to whether, in the opinion of each such individual or such firm, such condition or covenant has been complied with.

SECTION 103.   Form of Documents Delivered to Trustee

In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

Any certificate or opinion of an officer or Director of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer or Director knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or opinion of counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers or Director or Directors of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous.

Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.

SECTION 104.   Acts of Holders

(a)    Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agent duly appointed in writing, and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 601) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section 104.

Without limiting the generality of the foregoing, unless otherwise established in or pursuant to a Board Resolution or set forth or determined in an Officers' Certificate, or established in one or more indentures supplemental hereto, pursuant to Section 301, a Holder, including a Book-Entry Depositary that is a Holder of a Global Security, may make, give or take, by a proxy, or proxies, duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided in this Indenture to be made, given or taken by Holders, and a Book-Entry Depositary that is a Holder of a Global Security may provide its proxy or proxies to the beneficial owners of interests in any such Global Security through such Book-Entry Depositary's standing instructions and customary practices.

(b)    The fact and date of the execution by any Person of any such instrument, writing or proxy may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument, writing or proxy acknowledged to him the execution thereof.

Where such execution is by a signer acting in a capacity other than his or her individual capacity, such certificate or affidavit shall also constitute sufficient proof of his or her authority. The fact and date of the execution of any such instrument, writing or proxy, or the authority of the Person executing the same, may also be proved in any other manner that the Trustee deems sufficient.

(c)    The ownership of Registered Securities shall be proved by the Security Register.

(d)    Any Request, demand, authorization, direction, notice, consent, waiver or other Act of the Holders of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security.

(e)    The principal or face amount and serial numbers of Bearer Securities of any series held by any Person, and the date of holding the same, may be proved by the production of such Bearer Securities or by a certificate executed by the Book-Entry Depositary for such Bearer Securities.

(f)    If the Company shall solicit from the Holders of Securities of any series any request, demand, authorization, direction, notice, consent, waiver or other Act, the Company may, at its option, by Board Resolution, fix in advance a record date for purposes of determining the identity of Holders of Securities entitled to give such request, demand, authorization, direction, notice, consent, waiver or other Act, but the Company shall have no obligation to do so. Any such record date shall be fixed at the Company's discretion. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other Act may be sought or given before or after the record date, but only the Holders of Securities of record at the close of business on such record date shall be deemed to be Holders of Securities for the purpose of determining whether Holders of the requisite proportion of Securities of such series Outstanding have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other Act, and for that purpose the Securities of such series Outstanding shall be computed as of such record date.

With regard to any record date set pursuant to this subsection, the Holders of Outstanding Securities of the relevant series on such record date (or their duly appointed agents), and only such Persons, shall be entitled to take relevant action, whether or not such Holders remain Holders after such record date. With regard to any action that may be taken hereunder only by Holders of a requisite principal amount of Outstanding Securities of any series (or their duly appointed agents), and for which a record date is set pursuant to this subsection, the Company may, at its option, set an expiration date after which no such action purported to be taken by any Holder shall be effective hereunder unless taken on or prior to such expiration date by Holders of the requisite principal amount of Outstanding Securities of such series on such record date (or their duly appointed agents).

On or prior to any expiration date set pursuant to this subsection, the Company may, on one or more occasions at its option, extend such expiration date to any later date. Nothing in this subsection shall prevent any Holder (or any duly appointed agent thereof) from taking, at any time, any action contrary to or different from, any action previously taken, or purported to have been taken, hereunder by such Holder, in which event the Company may set a record date in respect thereof pursuant to this subsection. Notwithstanding the foregoing or the Trust Indenture Act, the Company shall not set a record date for, and the provisions of this paragraph shall not apply with respect to, any action to be taken by Holders pursuant to Sections 501, 502 or 512.

Upon receipt by the Trustee of written notice of any default described in Section 501, any declaration of acceleration, of any rescission and annulment of any such declaration, pursuant to Section 502, or of any direction in accordance with Section 512, a record date shall automatically and without any other action by any Person be set for the purpose of determining the Holders of outstanding Securities of the series entitled to join in such notice, declaration, rescission and annulment, or direction, as the case may be, which record date shall be the close of business on the day the Trustee receives such notice, declaration, rescission and annulment, or direction, as the case may be. The Holders of Outstanding Securities of such series on such record date (or their duly appointed agent), and only such Persons, shall be entitled to join in such notice, declaration, rescission and annulment, or direction, as the case may be, whether or not such Holders remain Holders after such record date; provided that, unless such notice, declaration, rescission and annulment, or direction, as the case may be, shall have become effective by virtue of Holders of the requisite principal amount of outstanding Securities of such series on such record date (or their duly appointed agents) having joined therein on or prior to the 90^th day after such record date, such notice of default, declaration, rescission and annulment, or direction given or made by the Holders, as the case may be, shall automatically and without any action by any Person be canceled and of no further effect. Nothing in this paragraph shall prevent a Holder (or a duly appointed agent thereof) from giving, before or after the expiration of such 90-day period, a notice of default, a declaration of acceleration, a rescission and annulment of a declaration of acceleration, or a direction in accordance with Section 512, contrary to or different from, or, after the expiration of such period, identical to, a previously given notice, declaration, rescission and annulment, or direction, as the case may be, that has been canceled pursuant to the proviso to the preceding sentence, in which event a new record date in respect thereof shall be set pursuant to this paragraph.

SECTION 105.   Notices, Etc., to the Trustee and the Company

Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with:

(i)    the Trustee by any Holder or by the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust Office; or

(ii)    the Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, or delivered by recognized overnight courier, to the Company addressed to it at the address of its principal office specified in the first paragraph of this Indenture or at any other address previously furnished in writing to the Trustee by the Company.

SECTION 106.   Notice to Holders; Waiver

Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, (i) in the case of a Holder of Registered Securities, at his address as it appears in the Security Register, and (ii) in the case of a Holder of Global Bearer Securities, at the address provided in or pursuant to the relevant Deposit Agreement of the relevant Book-Entry Depositary or Depositaries therefor, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Any notice mailed to a Holder in the manner herein prescribed shall be conclusively deemed to have been received by such Holder, whether or not such Holder actually receives such notice.

If, by reason of the suspension of regular mail service or by reason of any other cause, it shall be impracticable to give such notice by mail, then such notification as shall be made at the direction of the Company in a manner reasonably calculated, to the extent practicable under the circumstances, to provide prompt notice shall constitute a sufficient notification for every purpose hereunder.

Except as otherwise expressly provided herein or otherwise specified with respect to any Securities pursuant to Section 301, where this Indenture provides for notice to Holders of Bearer Securities of any event and the rules of any securities exchange on which such Bearer Securities are listed so require, such notice shall be sufficiently given to Holders of such Bearer Securities if published in such newspaper or newspapers as may be specified in such Securities on a Business Day at least twice, the first such publication to be not earlier than the earliest date, and not later than the latest date, prescribed for the giving of such notice. Any such notice by publication shall be deemed to have been given on the date of the first such publication. In addition, notice to the Holder of any Global Bearer Security shall be given by mail in the manner provided above.

If by reason of any cause, it shall be impracticable to publish any notice to Holders of Bearer Securities as provided above, then such notification to Holders of Bearer Securities as shall be given with the approval of the Trustee shall constitute sufficient notice to such Holders for every purpose hereunder. Neither the failure to give notice by publication to Holders of Bearer Securities as provided above, nor any defect in any notice so published, shall affect the sufficiency of such notice with respect to other Holders of Bearer Securities or the sufficiency of any notice to Holders of Registered Securities given as provided herein.

Any request, demand, authorization, direction, notice, consent, waiver or Act required or permitted under this Indenture shall be in the English language, except that any published notice may be in an official language of the country of publication.

Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.

SECTION 107.   Conflict with Trust Indenture Act

If any provision hereof limits, qualifies or conflicts with any provision of the Trust Indenture Act or another provision that is required or deemed to be included in this Indenture by any of the provisions of the Trust Indenture Act, the provision or requirement of the Trust Indenture Act shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, such provision of the Trust Indenture Act shall be deemed to apply to this Indenture as so modified or excluded, as the case may be.

SECTION 108.   Effect of Headings and Table of Contents

The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.

SECTION 109.   Successors and Assigns

All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not.

SECTION 110.   Separability Clause

In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

SECTION 111.   Benefits of Indenture

Nothing in this Indenture or in the securities, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder and the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture.

SECTION 112.   Governing Law

This Indenture and the Securities shall be governed by and construed in accordance with the laws of the State of New York.

SECTION 113.   Legal Holidays

In any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day at any Place of Payment, then (notwithstanding any other provision of this Indenture or of the Securities) payment of interest, if any, or principal (and premium, if any) need not be made at such Place of Payment on such date, but may be made on the next succeeding Business Day at such Place of Payment with the same force and effect as if made on the Interest Payment Date, Redemption Date, or at the Stated Maturity, and no interest shall accrue for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be.

SECTION 114.   No Personal Liability of Directors, Officers, Employees & Stockholders

No Director, officer, employee or stockholder, as such, of the Company shall have any liability for any obligations of the Company under this Indenture or the Securities or for any claim based on, or in respect of, or by reason of, such obligations on their creations. Each holder of a Security waives and releases all such liability. Such waiver and release are part of the consideration for the issuance of the Securities.

ARTICLE II

SECURITY FORMS

SECTION 201.   Forms Generally

The Securities of each series shall be in substantially the form set forth in this Article, or in such other form as shall be established by or pursuant to a Board Resolution or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, a Board Resolution or one or more indentures supplemental hereto, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the Director or Directors executing such Securities, as evidenced by the Director's or Directors' execution of the Securities. If the form of Securities of any series is established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by an authorized Director or officer of the Company and delivered to the Trustee at or prior to the delivery of the Company Order contemplated by Section 303 for the authentication and delivery of such securities.

The Trustee's certificates of authentication shall be in substantially the form set forth in this Article.

Securities of any series offered and sold to qualified institutional buyers (as defined in Rule 144A under the Securities Act) (any such buyer, a "QIB") in the United States of America ("Rule 144A Securities") will be issued in the form of a permanent global bearer note, without interest coupons, substantially in the form set forth in Sections 202 and 203 (a "Rule 144A Global Security") duly executed by the Company and authenticated by the Trustee as hereinafter provided. The Rule 144A Global Security may be represented by more than one certificate. The aggregate principal amount of the Rule 144A Global Security may from time to time be increased or decreased by adjustments made on the records of the Trustee, as hereinafter provided.

Securities of any series offered and sold outside the United States of America ("Regulation S Securities") in reliance on Regulation S shall be issued in the form of a temporary global bearer note, without interest coupons, substantially in the form set forth in Sections 202 and 203 (a "Regulation S Temporary Global Security"). Beneficial interests in a Regulation S Temporary Global Security will be exchangeable for beneficial interests in a single permanent global bearer security (the "Regulation S Permanent Global Security," together with the Regulation S Temporary Global Security, the "Regulation S Global Security") on or after the expiration of the Restricted Period (the "Release Date") upon the receipt by the Trustee or its agent of a certificate certifying that the Holder of the beneficial interest in the Regulation S Temporary Global Security is a non-United States Person within the meaning of Regulation S (a "Regulation S Certificate"), substantially in the form set forth in Section 206. Upon receipt by the Trustee or Paying Agent of a Regulation S Certificate, with respect to the first such Regulation S Certificate, the Company shall execute and upon receipt of a Company Order for authentication, the Authenticating Agent shall authenticate and deliver to the Trustee or its agent, the applicable Regulation S Permanent Global Security, and (ii) with respect to the first and all subsequent Regulation S Certificates, the Trustee or its agent shall exchange on behalf of the applicable beneficial owners the portion of the applicable Regulation S Temporary Global Security covered by such Regulation S Certificates for a comparable portion of the applicable Regulation S Permanent Global Security. Upon any exchange of a portion of a Regulation S Temporary Global Security for a comparable portion of a Regulation S Permanent Global Security, the Trustee or its agent shall endorse on the schedules affixed to each of such Regulation S Global Security (or on continuations of such schedules affixed to each of such Regulation S Global Security and made parts thereof) appropriate notations evidencing the date of transfer and (x) with respect to the applicable Regulation S Temporary Global Security, a decrease in the principal amount thereof equal to the amount covered by the applicable certification and (y) with respect to the applicable Regulation S Permanent Global Security, an increase in the principal amount thereof equal to the principal amount of the decrease in the applicable Regulation S Temporary Global Security pursuant to clause (x) above. The Regulation S Global Security will be duly executed by the Company and authenticated by the Trustee as hereinafter provided. The Regulation S Global Security may be represented by more than one certificate. The aggregate principal amount of the Regulation S Global Security may from time to time be increased or decreased by adjustments made on the records of the Trustee, as hereinafter provided.

The Rule 144A Global Security and the Regulation S Global Security are sometimes collectively herein referred to as the "Global Securities."

The definitive Securities shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the Director or Directors executing such Securities, as evidenced by the Director's or Directors' execution of such Securities.

SECTION 202.   Form of Face of Security

[If the Security is to be a Rule 144A Global Security, insert X This Security is a Global Security within the meaning of the Indenture hereinafter referred to and is [held by][registered in the name] of a Book-Entry Depositary or a nominee of a Book-Entry Depositary. This Security is exchangeable for securities [held by][registered in the name of] a person other than the Book-Entry Depositary or its nominee only in the limited circumstances described in the Indenture, and no transfer of this Security (other than a transfer of this Security as a whole by the Book-Entry Depositary to a nominee of the Book-Entry Depositary or by a nominee of the Book-Entry Depositary to the Book-Entry Depositary or another nominee of the Book-Entry Depositary) may be [made][registered], except in limited circumstances.

Unless this Global Security is presented by an authorized representative of the Book-Entry Depositary to the issuer or its agent for [registration of transfer], exchange or payment, and any definitive security is issued in the name or names as directed in writing by the Book-Entry Depositary, ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the [bearer][registered owner] hereof, the Book-Entry Depositary, has an interest herein.]

[If the security is a Global Security, insert X

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE ISSUANCE HEREOF (OR A PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN TO THE COMPANY, SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE LAWS OF ANY STATE OF THE UNITED STATES.]

[If the Security is a Regulation S Temporary Global Security, insert X

THIS GLOBAL NOTE IS A TEMPORARY GLOBAL NOTE FOR PURPOSES OF REGULATION S UNDER THE SECURITIES ACT. NEITHER THIS TEMPORARY GLOBAL NOTE NOR ANY INTEREST HEREIN MAY BE OFFERED, SOLD OR DELIVERED, EXCEPT AS PERMITTED UNDER THE INDENTURE HEREINAFTER REFERRED TO.

NO BENEFICIAL OWNERS OF THIS TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF PRINCIPAL OR INTEREST HEREON UNLESS THE REQUIRED CERTIFICATIONS HAVE BEEN DELIVERED PURSUANT TO THE TERMS OF THE INDENTURE.]

WPD HOLDINGS UK
[Title of the Security]

No. [____________]    $[____________]

WPD HOLDINGS UK, a company duly organized and existing under the laws of England and Wales (herein called the "Company," which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay [the bearer upon surrender hereof] [name of registered owner or its registered assigns], the principal sum of [_______] Dollars on [_______], and to pay interest thereon from [_______], or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on [_______] and [_______] of each year, commencing on [_______], at the rate per annum provided in the title hereof, until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to [the bearer on such Interest Payment Date,] [the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the [_______] or [_______] (whether or not a Business Day), as the case may be, immediately preceding such Interest Payment Date]. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to [the bearer on such Interest Payment Date] [the Person in whose name this Security (or one or more Predecessor Securities) is registered on such Regular Records Date] and may be paid to [the bearer at the time of payment of such Defaulted Interest] [the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date], or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture.

[If the Security is not to bear interest prior to maturity, insert - The principal of this Security shall not bear interest except in the case of a default in payment of principal upon acceleration, upon redemption or at Stated Maturity and in such case the overdue principal of this Security shall bear interest at the rate of [yield to maturity] % per annum (to the extent that the payment of such interest shall be legally enforceable), which shall accrue from the date of such default in payment to the date payment of such principal has been made or duly provided for. Interest on any overdue principal shall be payable on demand. Any such interest on any overdue principal that is not so paid on demand shall bear interest at the rate of [yield to maturity]% per annum (to the extent that the payment of such interest shall be legally enforceable), which shall accrue from the date of such demand for payment to the date payment of such interest has been made or duly provided for, and such interest shall also be payable on demand.]

Payment of the principal of (and premium, if any) and interest, if any, on this Security will be made at the office or agency of the Company maintained for that purpose in [______________] in such coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts [If this Security is not a Global Security, insert -; provided, however, that at the option of the Company payment of interest may be made by check mailed to the address of the person entitled thereto as such address shall appear in the Security Register] [If this Security is a Global Security, insert applicable manner of payment].

All payments of principal and interest (including payments of discount and premium, if any) in respect of this Security shall be made free and clear of, and without withholding or deduction for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or within the United Kingdom or by or within any political subdivision thereof or any authority therein or thereof having power to tax ("United Kingdom Taxes"), unless such withholding or deduction is required by law. In the event of any such withholding or deduction, the Company shall pay to the Holder such additional amounts (the "Additional Amounts") as will result in the payment to such Holder of the amount that would otherwise have been receivable by such Holder in the absence of such withholding or deduction, except that no such Additional Amounts shall be payable:

(i)    to, or to a Person on behalf of, a Holder who is liable for such United Kingdom Taxes in respect of this Security by reason of such Holder having some connection with the United Kingdom (including being a citizen or resident or national of, or carrying on a business or maintaining a permanent establishment in, or being physically present in, the United Kingdom) other than the mere holding of this Security or the receipt of principal and interest (including payments of discount and premium, if any) in respect thereof;

(ii)    to, or to a Person on behalf of, a Holder who presents this Security (where presentation is required) for payment more than 30 days after the Relevant Date (as defined below), except to the extent that such Holder would have been entitled to such Additional Amounts on presenting this Security for payment on the last day of such period of 30 days;

(iii)    to, or to a Person on behalf of, a Holder who presents this Security (where presentation is required) in the United Kingdom; or

(iv)    to, or to a Person on behalf of, a Holder who would not be liable or subject to the withholding or deduction by making a declaration of non-residence or similar claim for exemption to the relevant tax authority.

Such Additional Amounts will also not be payable where, had the beneficial owner of this Security (or any interest therein) been the Holder of the Security, he or she would not have been entitled to payment of Additional Amounts by reason of any one or more of clauses (i) through (iv) above. If the Company shall determine that Additional Amounts will not be payable because of the immediately preceding sentence, the Company will inform such holder promptly after making such determination setting forth the reason(s) therefor.

"Relevant Date" means whichever is the later of (i) the date on which such payment first becomes due and (ii) if the full amount payable has not been received in The City of New York by the Book-Entry Depositary or the Trustee on or prior to such due date, the date on which, the full amount having been so received, notice to that effect shall have been given to the Holders in accordance with the Indenture.

[Insert any special notice provisions required by any stock exchanges upon which the Securities of a series are to be listed.]

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer or director duly authorized.

Date:

WPD HOLDINGS UK

By_____________________________

              [Title]

SECTION 203.   Form of Reverse of Security

WPD HOLDINGS UK
[Title of the Security]

This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture, dated as of March [__], 2001 (herein called the "Indenture"), among the Company, Bankers Trust Company, as trustee (herein called the "Trustee," which term includes any successor trustee under the Indenture,) and Deutsche Bank Luxembourg S.A., as paying and transfer agent (herein called the "Paying Agent," which term includes any successor paying and transfer agent under the Indenture), [insert - particulars with respect to any indentures supplemental thereto pursuant to which the Securities of this series are being issued] to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee, the Paying Agent, and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. Terms defined in the Indenture that are not defined herein are used with the meanings assigned to them in the Indenture. This Security is one of the series designated on the face hereof limited in aggregate principal amount to $[___________].

[If applicable, insert X This Security is not subject to redemption prior to maturity.] [If applicable, insert X The Securities of this series are subject to redemption upon not less than 30 or more than 60 days' notice to the Holders of such Securities as provided in the Indenture. [If applicable, insert X (1) on [____________] in any year commencing with the year [____] and ending with the year [____] through operation of the sinking fund for this series at a Redemption Price equal to 100% of the principal amount, and (2)] at any time [on or after ____________, 20__], as a whole or in part, at the election of the Company, at the following Redemption Prices (expressed as percentages of the principal amount):

If redeemed [if applicable, insert X on or before [____________], [____]%, and if redeemed] during the 12-month period beginning [____________], of the years indicated:

Year                 Redemption Price                 Year                 Redemption Price

and thereafter at a Redemption Price equal to [____]% of the principal amount, together in the case of any such redemption [if applicable, insert X (whether through operation of the sinking fund or otherwise)] with accrued and unpaid interest to the Redemption Date, but interest installments whose Stated Maturity is on or prior to such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, all as provided in the Indenture.]

[If applicable, insert X The Securities of this series are subject to redemption upon not less than 30 or more than 60 days' notice to the Holders of such Securities, as provided in the Indenture (1) on [____________] in any year commencing with the year [____] and ending with the year [____] through operation of the sinking fund for this series at the Redemption Prices for redemption through operation of the sinking fund (expressed as percentages of the principal amount) set forth in the table below, and (2) at any time [on or after [____________]], as a whole or in part, at the election of the Company, at the Redemption Prices for redemption otherwise than through operation of the sinking fund (expressed as percentages of the principal amount) set forth in the table below:

If redeemed during the 12-month period beginning [_____________] of the years indicated:

Redemption Price for Redemption Through Operation of Sinking Fund Year Redemption Price For Redemption Otherwise Than Through Operation of the Sinking Fund

and thereafter at a Redemption Price equal to b[__]% of the principal amount, together in the case of any such redemption (whether through operation of the sinking fund or otherwise) with accrued and unpaid interest to the Redemption Date, but interest installments whose Stated Maturity is on or prior to such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, all as provided in the Indenture.]

[If applicable, insert X Notwithstanding the foregoing, the Company may not, prior to [_______________], redeem any Securities of this series as contemplated by [Clause (2) of] the preceding paragraph as a part of, or in anticipation of, any refunding operation by the application, directly or indirectly, of moneys borrowed having an interest cost to the Company (calculated in accordance with generally accepted financial practice) of less than [___]% per annum.]

[The sinking fund for this series provides for the redemption on [_____________] in each year beginning with the year [____] and ending with the year [____] of [not less than] [____________] [("mandatory sinking fund") and, at the option of the Company, not more than [____________] aggregate principal amount of Securities of this series. [Securities of this series acquired or redeemed by the Company otherwise than through [mandatory] sinking fund payments may be credited against subsequent [mandatory] sinking fund payments otherwise required to be made in the order in which they become due.]]

[If applicable, insert X The Securities of this series will be redeemable in whole or in part, at the option of the Company at any time, at a redemption price equal to the greater of (i) 100% of the principal amount of the Securities of this series being redeemed or (ii) the sum of the present values of the remaining scheduled payments of principal of and interest on the Securities of this series being redeemed discounted to the date of redemption on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at a discount rate equal to the Treasury Yield plus [____] basis points, plus, for (i) or (ii) above, whichever is applicable, accrued interest on the Securities of this series to the date of redemption.

        "Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker (as defined below) as having a maturity comparable to the remaining term of the Securities of this series to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Securities of this series.

        "Comparable Treasury Price" means, with respect to any Redemption Date (as defined below), (i) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third Business Day preceding such Redemption Date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S. Government Securities," or (ii) if such release (or any successor release) is not published or does not contain such prices on such Business Day, the Reference Treasury Dealer Quotation (as defined below) for such Redemption Date.

        "Independent Investment Banker" means an independent investment banking institution of national standing in the U.S. appointed by the Company and reasonably acceptable to the Trustee.

        "Reference Treasury Dealer Quotation" means, with respect to the Reference Treasury Dealer (as defined below) and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount and quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third Business Day preceding such Redemption Date).

        "Reference Treasury Dealer" means a primary U.S. Government securities dealer in New York City appointed by the Company and reasonably acceptable to the Trustee.

        "Treasury Yield" means, with respect to any date on which the Securities are redeemed (each, a "Redemption Date") the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.

Notice of redemption shall be given in accordance neither less than 15 days nor more than 30 days prior to the date fixed for redemption.

If fewer than all the Securities of this series are to be redeemed, selection of Securities of this series for redemption will be made by the Trustee in any manner the Trustee deems fair and appropriate and that complies with applicable legal and securities exchange requirements.

Unless the Company defaults in payment of the redemption price, from and after the Redemption Date, the Securities of this series or portions thereof called for redemption will cease to bear interest, and the Holders thereof will have no right in respect to such Securities of this series except the right to receive the redemption price thereof.]

[If applicable, insert - In the event of redemption of this Security in part only, a new Security or Securities of this series and of like tenor for the unredeemed portion hereof will be issued to the Holder hereof upon the cancellation hereof.]

The Indenture contains provisions for defeasance of (i) the entire indebtedness of this security and (ii) certain restrictive covenants upon compliance by the Company with certain conditions set forth therein.

If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. At any time after such declaration of acceleration with respect to Securities of this series has been made, but before a judgment or decree for payment of money has been obtained by the Trustee as provided in the Indenture, if all Events of Default with respect to Securities of this series have been cured or waived (other than the non-payment of principal of the Securities of this series which has become due solely by reason of such declaration of acceleration) then such declaration of acceleration and its consequences shall be automatically annulled and rescinded.

[If the Security is Issued with a Discount, insert - If an Event of Default with respect to Securities of this series shall occur and be continuing, an amount of principal of the Securities of this series (the "Acceleration Amount") may be declared due and payable in the manner and with the effect provided in the Indenture. In case of a declaration of acceleration on or before [______] in any year, the Acceleration Amount per $[_____] principal amount at Stated Maturity of the Securities shall be equal to the amount set forth in respect of such date below:

Date of declaration Acceleration Amount per $[____] principal amount at Stated Maturity

and in case of a declaration of acceleration on any other date, the Acceleration Amount shall be equal to the Acceleration Amount as of the immediately preceding date set forth in the table above, plus accrued original issue discount (computed in accordance with the method used for calculating the amount of original issue discount that accrues for U.S. Federal income tax purposes) from such next preceding date to the date of declaration at the yield to maturity. For the purpose of this computation, the yield to maturity is [___]%. Upon payment (i) of the Acceleration Amount so declared due and payable and (ii) of interest on any overdue principal and overdue interest (in each case to the extent that the payment of such interest shall be legally enforceable), all of the Company's obligations in respect of the payment of the principal of and interest, if any, on the Securities of this series shall terminate.]

The Securities of this series are subject to redemption, in whole but not in part, upon not less than 15 nor more than 30 days' notice given as provided in the Indenture to the Holders of Securities of this series at a price equal to the outstanding principal amount thereof together with Additional Amounts, if any, and accrued interest, to the Redemption Date if:

(i)    the Company satisfies the Trustee prior to the giving of such notice that it has or will become obliged to pay Additional Amounts as a result of either (x) any change in, or amendment to, the laws or regulations of the United Kingdom or any political subdivision or any authority or agency thereof or therein having power to tax or levy duties, or any change in the application or interpretation of such laws or regulations, which change or amendment becomes effective on or after the B [[date of issuance] or, if applicable, the date of the underwriting agreement with respect to the Securities of this series,] or (y) the issuance of definitive Registered Securities pursuant to any of clauses (i), (ii) or (iv) of the third following paragraph: and

(ii)    such obligation cannot be avoided by the Company taking reasonable measures available to it,

subject, as provided in the Indenture, to the delivery by the Company of an Officers' Certificate stating that the obligation referred to in clause (i) above cannot be avoided by the Company taking reasonable measures available to it.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the Indenture or any supplemental indenture or the rights and obligations of the Company and rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Securities at the time Outstanding of all series to be affected (voting as a class). The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest, if any, on this Security at the times, place, and rate, and in the coin or currency, herein prescribed.

[If this Security is a Global Security, insert X This Security shall be exchangeable, in whole but not in part, for Securities of this series registered in the names of Persons other than the Book-Entry Depositary with respect to such series or its nominee only as provided in this paragraph. This Security shall be so exchangeable if (i) DTC notifies the Company and the Book-Entry Depositary that it is unwilling or unable to continue to hold the Book-Entry Interest or at any time it ceases to be a "clearing agency" registered under the Exchange Act and, in either case, a successor is not appointed by the Company within 120 days, (ii) the Book-Entry Depositary for the securities of this series notifies the Company that it is unwilling or unable to continue as Book-Entry Depositary with respect to this Security and no successor is appointed within 120 days, (iii) the Company executes and delivers to the Trustee an Officers' Certificate providing that this Security shall be so exchangeable, or (iv) there shall have occurred and be continuing an Event of Default with respect to the Securities of this series and the Holder, in such circumstance, acting upon instructions from owners of interests representing a majority of outstanding principal amount of the Book-Entry Interests relating to this Security shall have requested in writing that this Security be exchanged for one or more definitive Registered Securities. Securities so issued in exchange for this Security shall be of the same series, having the same interest rate, if any, and maturity and having the same terms as this Security, in authorized denominations and in the aggregate having the same principal amount as this Security and registered in such names as the Book-Entry Depositary for this Security shall direct.]

[If this Security is a Registered Security, insert X As provided in the Indenture and subject to certain limitations therein set forth, the transfer of [if this Security is a Registered Global Security, insert - a Security of the series of which this Security is a part] [If this Security is a Registered Security but not a Global Security, insert - this Security] is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of (and premium, if any) and interest, if any, on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.]

The Securities of the series of which this Security is a party and which are not Global Securities are issuable only in registered form without coupons in denominations of $[__________] and any integral multiple thereof. [If this Security is a Global Bearer Security, insert X The bearer of this Security shall be treated as the owner of it for all purposes, subject to the terms of the Indenture.] As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination as requested by the Holder surrendering the same.

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

[If this Security is a Registered Security, insert X Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.]

When a successor assumes all the obligations of its predecessor under the Securities of this series and the Indenture in accordance with the terms of the Indenture, the predecessor will be released from those obligations.

The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities of this series and may otherwise deal with the Company, its Subsidiaries or their respective Affiliates as if it were not the Trustee.

No stockholder, director, officer, employee, incorporator or Affiliate of the Company shall have any liability for any obligation of the Company under the Securities of this series or the Indenture or for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of the Securities of this series, by accepting a Security of this series, waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Securities of this series.

This Security shall not be valid until the Trustee or Authenticating Agent signs the certificate of authentication on this Security.

[Customary abbreviations may be used in the name of a Holder of a Registered Security of this series or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).]

Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company will cause CUSIP numbers to be printed on the Securities of this series as a convenience to the Holders of the Securities of this series. No representation is made as to the accuracy of such numbers as printed on the Securities of this series and reliance may be placed only on the other identification numbers printed hereon.

This Security shall be governed by and construed in accordance with the laws of the State of New York.

All terms used in this Security that are defined in the Indenture shall have the meanings assigned to them in the Indenture.

ASSIGNMENT FORM

To assign this Security, fill in the form below:

     I or we assign and transfer this Security to

          (Print or type assignee's name, address and zip code)

               (Insert assignee's soc. sec. or tax I.D. No.)

and irrevocably appoint him, her or it as agent to transfer this Security on the books of the Company. The agent may substitute another act for him, her or it.

___________________________________________________________________________

___________________________________________________________________________

    Date: _______________

    Your Signature: _______________________

    Signature Guarantee: _____________________________________
     (Signature must be guaranteed)

___________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in the Securities Transfer Agents Medallion Program ("STAMP") or such other signature guarantee medallion program as may be approved by the Registrar in addition to or substitution for, STAMP), pursuant to S.E.C. Rule 17Ad-15.

[In connection with any transfer or exchange of any of the Securities evidenced by this certificate occurring prior to the date that is two years after the later of the date of original issuance of such Securities and the last date, if any, on which such Securities were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Securities are being:

CHECK ONE BOX BELOW:

    1  [_]        acquired for the undersigned's own account, without transfer;

    2  [_]        transferred to the Company;

3  [_]    transferred pursuant to and in compliance with Rule 144A under the Securities Act of 1933;

4  [_]    transferred pursuant to an effective registration statement under the Securities Act;

5  [_]    transferred pursuant to and in connection with Regulation S under the Securities Act of 1933; or

6  [_]    transferred pursuant to another available exemption from the registration requirements of the Securities Act of 1933.

Unless one of the boxes is checked, the Trustee may refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered holder thereof; provided, however, that if box (5) or (6) is checked, the Trustee or the Company may require, prior to registering any such transfer of the Securities, in their sole discretion, such legal opinions, certifications and other information as the Trustee or the Company may reasonably request to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act.

_________________________________
Signature

Signature Guarantee:

________________________________________________________
(Signature must be guaranteed)

________________________________________________________
Signature

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions) with membership in the Securities Transfer Agents Medallion Program ("STAMP") or such other signature guarantee medallion program as may be approved by the Security Registrar in addition to or substitution for STAMP, pursuant to S.E.C. Rule 17Ad-15.]

[TO BE ATTACHED TO GLOBAL SECURITIES]

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITIES

The following increases or decreases in this Global Security have been made:

Date of Exchange Amount of decrease in Principal Amount of this Global Security Amount of increase in Principal Amount of this Global Security Principal Amount of this Global Security following such decrease or increase Signature of authorized signatory of Trustee or Security Custodian

[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL 144A CERTIFICATES]

In connection with any transfer of this Security occurring prior to [____________], the undersigned confirms that without utilizing any general solicitation or general advertising that:

[Check One]

[_]    (a)    this Security is being transferred in compliance with the exemption from registration under the Securities Act of 1933, as amended, provided by Rule 144A thereunder.

[_]    (b)    this Security is being transferred other than in accordance with (a) above and documents are being furnished that comply with the conditions of transfer set forth in this Security and the Indenture.

If neither of the foregoing boxes is checked, the Trustee or other Registrar shall not be obligated to register this Security in the name of any Person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein and in Section [307] of the Indenture shall have been satisfied.

Date: _____________________ ______________________________________________ NOTICE: The signature must correspond with the name as written upon the face of the within-mentioned instrument in every particular, without alteration or any change whatsoever.

Signature Guarantee: ________________________________________

TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.

The undersigned represents and warrants that it is purchasing this Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, as amended, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A.

Date: _____________________ ______________________________________________
NOTICE:   To be executed by an executive officer.

SECTION 204.   Form of Trustee's Certificate of Authentication

This is one of the Securities of the series designated herein and referred to in the within-mentioned Indenture.

Date: [___________]

BANKERS TRUST COMPANY
          as Trustee

By: ___________________________________
            Authorized Signatory

SECTION 205.   Form of Trustee's Certificate of Authentication by an Authenticating Agent

If at any time there shall be an Authenticating Agent provided with respect to any series of Securities, then the Trustee's Certificate of Authentication by such Authenticating Agent to be borne by the Securities of each such series shall be substantially as follows:

TRUSTEE'S CERTIFICATE OF AUTHENTICATION

This is one of the Securities of the series designated herein and referred to in the within-mentioned Indenture.

Date: [___________]

BANKERS TRUST COMPANY
          as Trustee

By: [NAME OF AUTHENTICATING AGENT]
            Authorized Signatory

By: ___________________________________
            Authorized Signatory

SECTION 206.   Form of Regulation S Certificate

[date on or after Release Date]

Bankers Trust Company, as Trustee

[Four Albany Street

New York, New York, 10006]

Attention: [Corporate Trust Agency Group - Public Utilities Group]

Re:	WPD Holdings UK
	[Title of Security] (the "Notes")
	[CUSIP No. ______] [ISIN No. _______]

Ladies and Gentlemen:

Reference is hereby made to the Indenture, dated as of March [___], 2001 (the "Indenture"), between the Company, Bankers Trust Company, as Trustee, and Deutsche Bank Luxembourg S.A., as Paying Agent. Capitalized terms used herein and not otherwise defined have the meanings set forth in the Indenture.

[For purposes of acquiring a beneficial interest in the Regulation S Permanent Global Security upon the expiration of the Restricted Period] [For purposes of receiving payments under the Regulation S Temporary Global Security], the undersigned holder of a beneficial interest in the Regulation S Temporary Global Security issued under the Indenture certifies that it is not a U.S. person as defined by Regulation S under the Securities Act of 1933, as amended.

We understand that this certificate is required in connection with certain securities laws of the United States. In connection therewith, if administrative or legal proceedings are commenced or threatened in connection with which this certificate is or would be relevant, we irrevocably authorize you to produce this certificate to any interested party in such proceedings.

Yours truly,

[Name of Holder]

By:  ___________________________

           Authorized Signatory

ARTICLE III

THE SECURITIES/p>

SECTION 301.   Amount Unlimited; Issuable in Series

The aggregate principal amount of Securities that may be authenticated and delivered under this Indenture is unlimited.

The Securities may be issued in one or more series. There shall be established in or pursuant to a Board Resolution and, subject to Section 303, set forth or determined in the manner provided in an Officers' Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Securities of any series:

(i)    the title of the Securities of the series (which shall distinguish the Securities of the series from all other Securities);

(ii)    any limit upon the aggregate principal amount of the Securities of the series that may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Sections 305, 306, 307 or 906, and except for any Securities that, pursuant to Section 303, are deemed never to have been authenticated and delivered hereunder);

(iii)    the Person to whom any interest on a Security of the series shall be payable, if other than the bearer (in the case of a Global Bearer Security) or the Person in whose name the Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest (in the case of a Registered Security);

(iv)    the date or dates on which the principal of the Securities of the series is payable;

(v)    the rate or rates at which the Securities of the series shall bear interest, if any, the date or dates from which such interest shall accrue, the Interest Payment Dates on which such interest shall be payable, and the Regular Record Date for the interest payable on any Interest Payment Date;

(vi)    the place or places, if any, in addition to or in the place of the Corporate Trust Office, where the principal of (and premium, if any) and interest, if any, on Securities of the series shall be payable and (in the case of the Registered Securities) where such Securities may be registered or transferred;

(vii)    the period or periods within which, the price or prices at which, and the terms and conditions upon which, Securities of the series may be redeemed, in whole or in part, at the option of the Company;

(viii)    the obligation, if any, of the Company to redeem, repay or repurchase Securities of the series pursuant to any sinking fund or analogous provisions or at the option of a Holder thereof, and the period or periods within which, the price or prices at which, and the terms and conditions upon which, Securities of the series shall be redeemed, repaid or repurchased, in whole or in part, pursuant to such obligation;

(ix)    if other than denominations of $1,000 and any integral multiple thereof, the denominations in which Securities of the series shall be issuable;

(x)    if other than the principal amount thereof, the portion of the principal amount of Securities of the series which shall be payable upon declaration of acceleration of the Maturity thereof pursuant to Section 502;

(xi)    if other than such coin or currency of the United States of America as at the time of payment is legal tender for payment of public or private debts, the coin or currency in which payment of the principal of (and premium, if any) and interest, if any, on the Securities of the series shall be payable;

(xii)    if the principal of (and premium, if any) or interest, if any, on the Securities of the series are to be payable, at the election of the Company or a Holder thereof, in a coin or currency other than that in which the Securities are stated to be payable, the period or periods within which, and the terms and conditions upon which, such election may be made;

(xiii)    if the amount of payments of principal of (and premium, if any) or interest, if any, on the Securities of the series may be determined with reference to an index based on a coin or currency other than that in which the Securities are stated to be payable, the manner in which such amounts shall be determined;

(xiv)    any provisions permitted by this Indenture relating to Events of Default or covenants of the Company with respect to such series of Securities;

(xv)    if the Securities of the series shall be issued in whole or in part in the form of one or more Global Securities, (i) whether beneficial owners of interests in any such Global Security may exchange such interests for Securities of such series of like tenor and of authorized form and denomination and the circumstances under which any such changes may occur, if other than in the manner provided in Section 306, and (ii) the Book-Entry Depositary for such Global Security or Securities;

(xvi)    if the Company ever wishes to issue definitive Bearer Securities, then all provisions relating to or governing such Bearer Securities will be set forth in an indenture supplemental hereto; and

(xvii)    any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture).

All Securities of any one series shall be substantially identical, except as to denomination and except as may otherwise be provided in or pursuant to the Board Resolution referred to above and set forth in the Officers' Certificate referred to above, or in any indenture supplemental hereto referred to above.

If any of the terms of the Securities of a series, including the form of Security of such series, are established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or an Assistant Secretary or other authorized officer or Director of the Company, and delivered to the Trustee at or prior to the delivery of the Company Order contemplated by Section 303 for the authentication and delivery of such series of Securities.

SECTION 302.   Denominations

The Securities of each series shall be issuable in bearer form or in registered form without coupons, except as otherwise expressly provided in a supplemental indenture hereto, in such denominations as shall be specified as contemplated by Section 301. In the absence of any such provisions with respect to the Securities of any series, the Securities of such series shall be issuable in denominations of $1,000 and any integral multiple thereof.

SECTION 303.   Execution, Authentication, Delivery and Dating

Any Director, the Secretary or any other officer of the Company so authorized shall execute the Securities on behalf of the Company and need not be attested. Definitive Registered Securities of any series may have the Company's seal reproduced thereon and need not be attested. Such additional Director or officer, if any, as shall be specified pursuant to Section 301 shall execute the Securities of any series. The signature of any of these officers on the Securities may be manual or facsimile.

Securities bearing the manual or facsimile signature of any individual who was at any time the proper Director or officer of the Company shall bind the Company, notwithstanding that such individual has ceased to hold such office prior to the authentication and delivery of such Securities or did not hold such office at the date of authentication of such Securities.

At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with the Company Order shall authenticate and deliver such Securities. If the form of terms of the Securities of the series have been established in or pursuant to one or more Board Resolutions as permitted by Sections 201 and 301, in authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and (subject to Section 601) shall be fully protected in relying upon, an Opinion of Counsel stating:

(i)    if the form of such Securities has been established by or pursuant to Board Resolution as permitted by Section 201, that such form has been established in conformity with the provisions of this Indenture;

(ii)    if the terms of such Securities have been established by or pursuant to Board Resolution as permitted by Section 301, that such terms have been established in conformity with the provisions of this Indenture; and

(iii)    that such Securities, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such opinion of Counsel, will constitute valid and legally binding obligations of the Company, enforceable in accordance with their terms, subject to bankruptcy, insolvency, reorganization, and other laws of general applicability relating to or affecting the enforcement of creditors' rights and to general principles of equity.

Notwithstanding the provisions of Section 301 and of the preceding paragraph, if all Securities of a series are not to be originally issued at one time, it shall not be necessary to deliver the Officers' Certificate otherwise required pursuant to Section 301 or the Company Order and Opinion of Counsel otherwise required pursuant to such preceding paragraph at or prior to the time of authentication of each Security of such series if such documents are delivered at or prior to the time of authentication upon original issuance of the first Security of such series to be issued.

Each Security shall be dated the date of its authentication.

No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication, substantially in the form provided for herein, executed by the Trustee or an Authenticating Agent by manual signature, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder and is entitled to the benefits of this Indenture. Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustee for cancellation as provided in Section 310 together with a written statement (which need not be accompanied by an Opinion of Counsel) stating that such Security has never been issued and sold by the Company, for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture.

In case the Company, pursuant to Article VIII, shall be consolidated or merged with or into any other Person or shall convey, transfer, lease or otherwise dispose of its properties and assets substantially as an entirety to any Person, and the successor Person resulting from such consolidation, or surviving such merger, or into which the Company shall have been merged, or the Person which shall have received a conveyance, transfer, lease or other disposition as aforesaid, shall have executed an Indenture supplemental hereto with the Trustee pursuant to Article VIII, any of the Securities authenticated or delivered prior to such consolidation, merger, conveyance, transfer, lease or other disposition may, from time to time, at the request of the successor Person, be exchanged for other Securities executed in the name of the successor Person with such changes in phraseology and form as may be appropriate, but otherwise in substance of like tenor as the Securities surrendered for such exchange and of like principal amount; and the Trustee, upon Company Request of the successor Person, shall authenticate and deliver Securities as specified in such request for the purpose of such exchange. If Securities shall at any time be authenticated and delivered in any new name of a successor Person pursuant to this Section 303 in exchange or substitution for or upon registration of transfer of any Securities, such successor Person, at the option of the Holders but without expense to them, shall provide for the exchange of all Securities at the time Outstanding for Securities authenticated and delivered in such new name.

SECTION 304.   Transfer Agent and Paying Agent

For so long as the Securities are listed on the Luxembourg Stock Exchange and such stock exchange shall so require, the Company shall maintain a Paying Agent and Transfer Agent in Luxembourg.

The Company shall enter into an appropriate agency agreement with any Registrar, Transfer Agent or Paying Agent not a party to this Indenture, which shall implement the provisions of this Indenture that relate to such Person. The Company shall notify the Trustee of the name and address of any such Person. If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be entitled to appropriate compensation therefor pursuant to Section 607. The Company initially appoints the Trustee as Registrar, Transfer Agent and Principal Paying Agent in The City of New York and Deutsche Bank Luxembourg S.A. as Paying Agent and Transfer Agent in Luxembourg in connection with the Securities.

SECTION 305.   Temporary Securities

Pending the preparation of a permanent Global Security or definitive Securities of any series, the Company may execute, and upon Company Order the Trustee or the Authenticating Agent shall authenticate and deliver, temporary Securities that are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued, in registered form or, if authorized, in bearer form, and with such appropriate insertions, omissions, substitutions and other variations as the Director(s) or officer(s) executing such Securities may determine, as evidenced by their execution of such Securities.

If temporary Securities of any series are issued, the Company will cause definitive Securities of that series to be prepared without unreasonable delay. After the preparation of definitive Securities of such series, the temporary Securities of such series shall be exchangeable for definitive Securities of such series upon surrender of the temporary securities of such series at the office or agency of the Company in a Place of Payment for that series, without charge to the Holder except as provided in Section 306 in connection with a transfer, and except that a Person receiving definitive Bearer Securities shall bear the cost of insurance, postage, transportation, and the like. Upon surrender for cancellation of any one or more temporary Securities of any series, the Company shall execute and the Trustee or the Authenticating Agent shall authenticate and deliver in exchange thereof a like principal amount of definitive Securities of the same series and of like tenor of authorized denominations. Until so exchanged, the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as definitive Securities.

Upon any exchange of a portion of a temporary Global Security for a definitive Global Security for the individual Securities represented thereby pursuant to this Section 305 or Section 306, the temporary Global Security shall be endorsed by the Trustee to reflect the reduction of the principal amount of such temporary Global Security, and such principal amount shall be reduced for all purposes by the amount so exchanged and endorsed.

SECTION 306.   Registration, Registration of Transfer and Exchange

The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in such office and in any other office or agency of the Company in a Place of Payment being herein sometimes collectively referred to as the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Registered Securities and of transfers of Registered Securities. The Trustee is hereby appointed "Security Registrar" for the purpose of registering Registered Securities and transfers of Registered Securities as herein provided. The Company may have one or more co-registrars and the term "Security Registrar" includes any co-registrar.

Upon surrender for registration of transfer of any Registered Security of any series at the office or agency in a Place of Payment for that series, the Company shall execute, and the Trustee or the Authenticating Agent shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Registered Securities of the same series, of any authorized denominations and of a like aggregate principal amount and tenor.

Furthermore, each Holder of a Global Security shall, by acceptance of such Global Security, agree that transfers of beneficial interest in such Global Security may be effected only through a book-entry system maintained by the Holder of such Global Security (or its agent), and that ownership of a beneficial interest in the Global Security shall be required to be reflected in a book-entry.

At the option of the Holder, any Registered Security or Registered Securities of any series, other than a Global Security, may be exchanged for other Registered Securities of the same series, of any authorized denominations and of a like aggregate principal amount and tenor, upon surrender of the Registered Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and upon receipt of a Company Order the Trustee or the Authenticating Agent shall authenticate and deliver, the Registered Securities that the Holder making the exchange is entitled to receive. None of the Trustee, the Authenticating Agent or the Security Registrar may deliver Bearer Securities in exchange for Registered Securities.

All Securities issued upon any registration of transfer or exchange of Registered Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Registered Securities surrendered upon such registration of transfer or exchange.

Every Registered Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing.

Upon the exchange in whole of a Global Security for the definitive Securities represented thereby, such Global Security shall be canceled by the Trustee or delivered to the Trustee for cancellation. Registered Securities issued in exchange for a Global Security or any portion thereof pursuant to this Section shall be registered in such names and in such authorized denominations as the Book-Entry Depositary for such Global Security shall instruct in writing the Trustee and the Security Registrar. The Trustee or the Security Registrar shall deliver such Registered Securities to the Persons in whose names such Registered Securities are so registered.

Interests in a Permanent Global Security may be exchanged for definitive Registered Securities of the same series only under the circumstances provided in this Indenture or in an indenture supplemental hereto pursuant to which Securities of that series are issued or in the Securities of that Series. In such event the Company will execute, and the Trustee or the Authenticating Agent, upon receipt of a Company Order for the authentication and delivery of definitive Registered Securities of such series, will authenticate and deliver such definitive Registered Securities. Any such definitive Registered Securities so issued shall be registered in the name of such Person or Persons as the Book-Entry Depositary shall instruct the Trustee and the Security Registrar in writing. Upon the exchange in whole of a Permanent Global Security for definitive Registered Securities in equal aggregate principal amount, such Permanent Global Security shall be delivered to the Trustee for cancellation. Interests in a Permanent Global Security may not be exchanged for definitive Bearer Securities. Notwithstanding the foregoing, interests in a Global Security may not be exchanged for definitive Registered Securities during the 16-day period immediately prior to and including each Interest Payment Date.

No service charge shall be made to the Holder for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Sections 305, 906 or 1107 not involving any transfer.

The Company shall not be required (i) to issue, register the transfer of or exchange Securities of any series during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption under Section 1104 and ending at the close of business on the day of such mailing, (ii) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part, or (iii) to exchange any Bearer Security so selected for redemption, except that such a Bearer Security may be exchanged for a Registered Security of the series (but only if and under the circumstances for which the Securities of such series are issuable as Registered Securities); provided that such Registered Security shall be immediately surrendered for redemption with written instructions for payment consistent with the provisions of this Indenture.

The provisions of this Section 306 are, with respect to any Global Security, subject to Section 312 hereof.

SECTION 307.   Mutilated, Destroyed, Lost and Stolen Securities

If any mutilated Security is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange thereof a new Security of the same series and of like tenor and principal amount and bearing a number not contemporaneously outstanding.

If there shall be delivered to the Company and the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon its written request the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of the same series and of like tenor and principal amount and bearing a number not contemporaneously outstanding.

In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security.

Upon the issuance of any new Security under this Section 307, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.

Every new Security of any series issued pursuant to this Section 307 in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of that series duly issued hereunder.

The provisions of this Section 307 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.

SECTION 308.   Payment of Interest; Interest Rights Reserved

Interest on any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid in the case of a Bearer Security, to the bearer thereof, and in the case of a Registered Security, to the Person in whose name that Registered Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest.

Payment of interest, if any, in respect of any Registered Security will be made by check mailed to the address of the Person entitled thereto as such Person's address appears in the Security Register. Payment of interest, if any, in respect of any Registered Security may also be made, in the case of a Holder of at least U.S. $1,000,000 aggregate principal amount of Registered Securities, and payment of interest, if any, in respect of a Permanent Global Security shall be made, by wire transfer to a U.S. Dollar account maintained by the Holder with a bank in the United States; provided that such Holder elects payment by wire transfer by giving written notice to the Trustee or a Paying Agent to such effect designating such account no later than 15 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion).

Any interest on any Security of any series which is payable but is not punctually paid or duly provided for on any Interest Payment Date (herein called "Defaulted Interest") shall, in the case of Registered Securities, forthwith cease to be payable to the Holder thereof on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in Clause (i) or (ii) below:

(i)    The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Registered Securities of such series (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Registered Security of such series and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment, and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. Unless the Trustee is acting as the Security Registrar, promptly after such Special Record Date, the Company shall furnish the Trustee with a list, or shall make arrangements satisfactory to the Trustee with respect thereto, of the names and addresses of, and respective principal amounts of such Registered Securities held by, the Holders appearing on the Security Register at the close of business on such Special Record Date. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder of Securities of such series at his address as it appears in the Security Register, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (ii).

(ii)    The Company may make payment of any Defaulted Interest on the Registered Securities of any series of any Permanent Global Security in any other lawful manner not inconsistent with the requirements of any securities exchange on which such Registered Securities may be listed, and upon such notice as may be required by such exchange.

Defaulted Interest on Global Bearer Securities shall be payable to the bearer thereof at the time of payment of such Defaulted Interest by the Company.

Subject to the foregoing provisions of this Section 308, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security, shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security.

SECTION 309.   Persons Deemed Owners

Prior to due presentment of a Registered Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Registered Security is registered as the owner of such Registered Security for the purpose of receiving payment of principal of (and premium, if any) and (subject to Section 308) interest, if any, on such Registered Security and for all other purposes whatsoever, whether or not such Registered Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. All such payments so made to any such person, or upon such person's order, shall be valid, and, to the extent of the sums so paid, effectual to satisfy and discharge the liability for monies payable upon any such Security.

The Company, the Trustee, and any agent of the Company or the Trustee may treat the Book-Entry Depositary for a Global Bearer Security as the absolute owner of such Bearer Security for the purpose of receiving payment thereof or on account thereof and for all other purposes whatsoever, whether or not such Global Bearer Security or coupon be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary.

No holder of any beneficial interest in any Global Security held on its behalf by a Book-Entry Depositary shall have any rights under this Indenture with respect to such Global Security, and such Book-Entry Depositary may be treated by the Company, the Trustee, and any agent of the Company or the Trustee as the owner of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall impair, as between a Book-Entry Depositary and such holders of beneficial interests, the operation of customary practices governing the exercise of the rights of the Book-Entry Depositary as holder of any Security.

SECTION 310.   Cancellation

All Securities surrendered for payment, redemption, registration of transfer or exchange or for credit against any sinking fund payment shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly canceled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder that the Company may have acquired in any manner whatsoever, and the Trustee shall promptly cancel all Securities so delivered. No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this Section 310, except as expressly permitted by this Indenture. All canceled Securities held by the Trustee shall be disposed of as directed by a Company Order.

SECTION 311.   Computation of Interest

Except as otherwise specified as contemplated by Section 301 for Securities of any series, interest, if any, on the Securities of each series shall be computed on the basis of a 360-day year of twelve 30-day months.

SECTION 312.   Global Securities

(a)    If the Company shall establish pursuant to Section 301 that the Securities of a particular series are to be issued in the form of a Global Security, then the Company shall execute and the Trustee shall, in accordance with Section 303, authenticate and deliver, a Global Security or Securities that (i) shall represent, and shall be denominated in an aggregate amount equal to the aggregate principal amount of, all of the Outstanding Securities of such series, (ii) shall be in bearer form or, if in registered form, registered in the name of the Book-Entry Depositary or its nominee, (iii) shall be delivered by the Trustee to the Book-Entry Depositary or pursuant to the Book-Entry Depositary's instruction, and (iv) shall bear the legends set forth in Section 202, as applicable.

(b)    Participants in DTC shall have no rights under this Indenture with respect to any Global Securities held on their behalf by DTC, or the Trustee as its custodian, or the Book-Entry Depositary, or under the Global Security, and DTC, as the case may be, or the Book-Entry Depositary, may be treated by the Company, the Trustee, and any agent of the Company or the Trustee as the absolute owner of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by DTC or shall impair, as between DTC and its Participants, the operation of customary practices governing the exercise of the rights of a Holder of any Security.

(c)    Notwithstanding the provisions of Section 306, the Global Security of a series may be transferred, in whole but not in part and in the manner provided in Section 306, only to another nominee of the Book-Entry Depositary for such series, or to a successor Book-Entry Depositary for such series selected or approved by the Company or to a nominee of such successor Book-Entry Depositary. Interests of beneficial owners in Global Securities may be transferred in accordance with the rules and procedures of DTC and the provisions of Section 313.

(d)    The circumstances, if any, under which the Global Security of a series may be exchanged for definitive Registered Securities of such series shall be as specified in an indenture supplemental hereto pursuant to which the Securities of such series are issued. In such event, the Company will execute, and, subject to Section 306, the Trustee, upon receipt of an Officers' Certificate evidencing such determination by the Company, will authenticate and deliver Securities of such series in definitive registered form without coupons, in authorized denominations, and in an aggregate principal amount equal to the principal amount of the Global Securities of such series in exchange for such Global Securities. Upon the exchange of the Global Securities for such Securities in definitive registered form without coupons, in authorized denominations, the Trustee shall cancel the Global Securities. Such securities in definitive registered form issued in exchange for the Global Securities pursuant to this Section 312, shall be registered in such names and in such authorized denominations as the Book-Entry Depositary, pursuant to the instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. The Trustee shall deliver Securities to the Book-Entry Depositary for delivery to the persons in whose names such Securities are so registered.

(e)    No Security that is not a Global Security may be payable to bearer (except as otherwise provided in an indenture supplemental hereto pursuant to Section 301(xvi)).

(f)    The Holder of a Global Security may grant proxies and otherwise authorize any person, including Participants and Persons that may hold interest through Participants, to take any action which a Holder is entitled to take under this Indenture or the Securities.

SECTION 313.   Special Transfer Provisions.

(a)    Prior to the expiration of the Resale Restriction Termination Date, a transfer of a Rule 144A Security or a beneficial interest therein to a QIB shall be made upon the representation of the transferee that it is purchasing the Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A.

A transfer of a Rule 144A Security or a beneficial interest therein to a Non-U.S. Person shall be made upon receipt by the Trustee or its agent of a certificate substantially in the form set forth in Section 314 hereof from the proposed transferee and, if requested by the Company or the Trustee, the delivery of an opinion of counsel, certification and/or other information satisfactory to each of them.

(b)    The following provisions shall apply with respect to any proposed transfer of a Regulation S Security prior to the expiration of the Restricted Period:

(i)    a transfer of a Regulation S Security or a beneficial interest therein to a QIB shall be made upon the representation of the transferee that it is purchasing the Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such accountant is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A; and

(ii)    a transfer of a Regulation S Security or a beneficial interest therein to a Non-U.S. Person shall be made upon, if requested by the Company or the Trustee, receipt by the Trustee or its agent of an opinion of counsel, certification and/or other information satisfactory to each of them.

Prior to or on the expiration of the Restricted Period, beneficial interests in a Regulation S Global Security may only be held through Euroclear or Clearstream (as indirect participants in DTC) or another agent member of Euroclear and Clearstream acting for and on behalf of them, unless exchanged for interests in the Rule 144A Global Security in accordance with the certification requirements hereof. During the Restricted Period, interests in the Regulation S Global Security, if any, may be exchanged for interests in the Rule 144A Global Security or for definitive Securities only in accordance with the certification requirements described in Section 201.

After the expiration of the Restricted Period, interests in the Regulation S Security may be transferred without requiring certification.

(c)    Upon the transfer, exchange or replacement of Securities not bearing a private placement legend, the Security Registrar shall deliver Securities that do not bear a private placement legend. Upon the transfer, exchange or replacement of Securities bearing a private placement legend, the Security Registrar shall deliver only Securities that bear the placement legend unless there is delivered to the Security Registrar an opinion of counsel reasonably satisfactory to the Company and the Trustee to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act.

(d)    By its acceptance, of any Security bearing a private placement legend, each Holder of such a Security acknowledges the restrictions on transfer of such Security set forth in this Indenture and in the private placement legend and agrees that it will transfer such Security only as provided in this Indenture.

(e)    The Company shall deliver to the Trustee an Officer's Certificate setting forth the dates on which the Restricted Period terminates (the "Resale Restriction Termination Date").

The Security Registrar shall retain copies of all letters, notices and other written communications received pursuant to this Article. The Company shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Security Registrar.

(f)    The Trustee:

(i)     shall have no responsibility or obligation to any beneficial owner of a Global Security, a Participant in DTC or other Person with respect to any ownership interest in the Securities, with respect to the accuracy of the records of DTC or its nominee or of any Participant or member thereof or with respect to the delivery to any Participant, member, beneficial owner or other Person (other than DTC) of any notice (including any notice of redemption) or the payment of any amount, under or with respect to such Securities. All notices and communications to be given to the Holders and all payments to be made to Holders under the Securities shall be given or made only to the registered Holders (which shall be DTC or its nominee in the case of a Global Security). The rights of beneficial owners in any Global Security in global form shall be exercised only through DTC subject to the applicable rules and procedures of DTC. The Trustee may rely and shall be fully protected and indemnified pursuant to Section 607 in relying upon information furnished by DTC with respect to any beneficial owners, its members and participants; and

(ii)    the Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Security (including without limitation any transfers between or among Participants, members or beneficial owners in any Global Security) other than to required deliver of such certificates and other documentation of evidence as are expressly required by, and to do so if an when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

SECTION 314.   Form of Certificate to Be Delivered in Connection with Transfers Pursuant to Regulation S

[date]

Bankers Trust Company, as Trustee
Four Albany Street
New York, New York, 10006
Attention: Manager, Project Finance

Re:    WPD Holdings UK (the "Company")

[Name of Security] (the "Notes")

Ladies and Gentlemen:

In connection with our proposed sale of $___________ aggregate principal amount of the Notes, we confirm that such sale has been effected pursuant to and in accordance with Regulation S under the United States Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we represent that:

(a)    the offer of the Notes was not made to a person in the United States;

(b)    either at the time the buy order was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States or the transaction was executed in, on or through the facilities of a designated off-shore securities market and neither we nor any person acting on our behalf knows that the transaction has been pre-arranged with a buyer in the United States;

(c)    no directed selling efforts have been made in the United States in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable; and

(d)    the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act.

In addition, if the sale is made during a restricted period and the provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable thereto, we confirm that such sale has been made in accordance with the applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be.

You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S.

Very truly yours,
[Name of Transferor]
By:	_________________________	___________________________
	Authorized Signature	Signature Medallion Guaranteed

ARTICLE IV

SATISFACTION AND DISCHARGE

SECTION 401.   Satisfaction and Discharge of Indenture

This Indenture shall upon Company Request cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Securities herein expressly provided for and rights to receive payments of any principal, premium or interest in respect thereof and any right to receive any Additional Amount as provided in Section 1009), and the Trustee shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when:

(i)    either:

(a)    all Securities theretofore authenticated and delivered (other than (1) Securities that have been destroyed, lost or stolen and that have been replaced or paid as provided in Section 307 and (2) Securities for whose payment money has theretofore been deposited in trust with the trustee or any paying agent or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 1003) have been delivered to the Trustee for cancellation; or

(b)    all such Securities not theretofore delivered to the Trustee for cancellation:

(1)    have become due and payable,

(2)    will become due and payable at their Stated Maturity within one year,

(3)    are to be called for redemption within one year under arrangements for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, or

(4)    are deemed paid and discharged pursuant to Section 403, as applicable,

and the Company, in the case of (1) or (2) above, has deposited or caused to be deposited with the Trustee as trust funds, in trust for the purpose, an amount of (w) money in the currency or units of currency in which such Securities are payable, (x) U.S. Government Obligations (denominated in the same currency or units of currency in which such Securities are payable) that through the payment of interest and principal in respect thereof in accordance with their terms will provide not later than one day before the Stated Maturity or Redemption Date, as the case may be, money in an amount, (y) a combination of money or U.S. Government Obligations as provided in (4) above, in each case, sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal (and premium, if any) and interest, if any, to the date of such deposit (in the case of Securities that have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be;

(ii)    the Company has paid or caused to be paid all other sums payable hereunder by the Company; and

(iii)    the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with.

Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 607, the obligations of the Trustee to any Authenticating Agent under Section 614, and, if money shall have been deposited with the Trustee pursuant to sub-clause (b) of clause (i) of this Section 401 or if money or U.S. Government Obligations shall have been deposited with or received by the Trustee pursuant to Section 403, the obligations of the Trustee under Section 402 and the last paragraph of Section 1003 shall survive.

SECTION 402.   Application of Trust Money

(a)    Subject to the provisions of the last paragraph of Section 1003, all money or U.S. Government Obligations deposited with the Trustee pursuant to Sections 401 or 403, and all money received by the Trustee in respect of U.S. Government Obligations deposited with the Trustee pursuant to Sections 401 or 403, shall be held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, to the Persons entitled thereto, of the principal of (and premium, if any) and interest, if any, on the Securities for whose payment such money has been deposited with or received by the Trustee or to make mandatory sinking fund payments or analogous payments as provided by Sections 401 or 403.

(b)    The Company shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against U.S. Government Obligations deposited pursuant to Sections 401 or 403, or the interest and principal received in respect of such obligations, other than any such tax, fee or other charge payable by or on behalf of Holders.

(c)    The Trustee shall deliver or pay to the Company from time to time upon Company Request any U.S. Government Obligations or money held by it as provided in Sections 401 or 403 that, in the opinion of a nationally recognized firm of independent certified public accountants expressed in a written certification thereof delivered to the Trustee, are then in excess of the amount thereof that then would have been required to be deposited for the purpose for which such U.S. Government Obligations or money was deposited or received. This provision shall not authorize the sale by the Trustee of any U.S. Government Obligations held under this Indenture.

(d)    Any monies paid by the Company to the Trustee or any Paying Agent, or held by the Company in trust, for the payment of the principal of or any interest or Additional Amounts on any Securities and remaining unclaimed at the end of two years after such principal, interest or Additional Amounts become due and payable will be repaid to the Company, or released from the trust, upon its written request, and upon such repayment or release all liability of the Company, the Trustee and such Paying Agent with respect thereto will cease.

SECTION 403.   Satisfaction, Discharge and Defeasance of Securities of any Series

The Company, at its option, (i) will be discharged from any and all obligations in respect of the Securities of a series (except, in each case, for the obligations to register the transfer or exchange of the Securities of that series, replace stolen, lost or mutilated Securities of that series, maintain paying agencies, and hold moneys for payment in trust), or (ii) can omit to comply with any term, provision or condition set forth in Sections 1004, 1005 and 1011 with respect to the Securities of any series, provided that the following conditions shall have been satisfied:

(i)    the Company has deposited or caused to be irrevocably deposited (except as provided in Sections 607, 402(c), and the last paragraph of Section 1003) with the Trustee (specifying that each deposit is pursuant to this Section 403) as trust funds in trust, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of the Securities of such series, (i) money, (ii) U.S. Government Obligations which through the payment of interest and principal in respect thereof in accordance with their terms will provide money in an amount, or (iii) a combination thereof, in each case, sufficient to pay and discharge the principal (and premium, if any) and interest, if any, on the outstanding Securities of such series on the dates such payments are due in accordance with the terms of the Securities of such series (or, if the Company has designated a Redemption Date pursuant to the final sentence of this paragraph, to and including the Redemption Date so designated by the Company); and

(ii)    no Event of Default or event that with notice or lapse of time would become an Event of Default (including by reason of such deposit) with respect to the Securities of such series shall have occurred and be continuing on the date of such deposit.

To exercise any such option, the Company is required to deliver to the Trustee (x) an Opinion of Counsel to the effect that the Holders of the Securities of such series will not recognize income, gain or loss for federal income tax purposes as a result of such deposit, defeasance and discharge of certain obligations, which in the case of clause (i) above must be based on a change in law or a ruling by the U.S. Internal Revenue Service, and (y) an Officers' Certificate as to compliance with all conditions precedent provided for in the Indenture relating to the satisfaction and discharge of the Securities of such series. If the Company shall wish to deposit or cause to be deposited money or U.S. Government Obligations to pay or discharge the principal of (and premium, if any) and interest, if any, on the outstanding Securities of such series to and including a Redemption Date on which all of the outstanding Securities of such series are to be redeemed, such Redemption Date shall be irrevocably designated by a Board Resolution delivered to the Trustee on or prior to the date of deposit of such money or U.S. Government Obligations, and such Board Resolution shall be accompanied by an irrevocable Company Request that the Trustee give notice of such redemption, in the name and at the expense of the Company, not less than 15 or more than 30 days prior to such Redemption Date in accordance with this Indenture.

ARTICLE V

REMEDIES

SECTION 501.   Events of Default

"Event of Default," wherever used herein with respect to Securities of any series, means any one of the following events:

(i)    default in the payment of any interest or any Additional Amounts upon any Security of that series when it becomes due and payable and continuance of such default for a period of 30 days;

(ii)    default in the payment of the principal of (or premium, if any, on) any Security of that series at Maturity;

(iii)    material default in the performance, or material breach, of any covenant or obligation of the Company in this Indenture (other than a covenant or default in whose performance or whose breach is elsewhere in this Section 501 specifically dealt with or which has expressly been included in this Indenture solely for the benefit of a series of Securities other than that series) and continuance of such material default or breach for a period of 60 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in aggregate principal amount of the Outstanding Securities of that series a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder;

(iv)    if this event shall be made to constitute an Event of Default with respect to the Securities of a particular series, a default in the payment of the principal of any bond, debenture, note or other evidence of indebtedness, in each case for money borrowed by the Company, or in the payment of principal under any mortgage, indenture (including this Indenture) or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Company, which default for payment of principal is in an aggregate principal amount exceeding $50,000,000 (or its equivalent in any other currency or currencies) when such indebtedness becomes due and payable (whether at maturity, upon redemption or acceleration or otherwise), if such default shall continue unremedied or unwaived for more than 30 Business Days and the time for payment of such amount has not been expressly extended; provided, however, that, subject to the provisions of Sections 601 and 602, the Trustee shall not be deemed to have knowledge of such default unless either (a) a Responsible Officer of the Trustee shall have actual knowledge of such default or (b) the Trustee shall have received written notice thereof from the Company, from any Holder, from the holder of any such indebtedness or from the trustee under any such mortgage, indenture or other instrument; and provided, further, that if such default under such indenture or instrument shall be remedied or cured by the Company or waived by the holders of such indebtedness, then the Event of Default hereunder by reasons thereof shall be deemed likewise to have been remedied, cured or waived without further action upon the part of the Trustee or any of the Holders;

(v)    the failure of the Company generally to pay its debts as they become due, or the admission in writing of its inability to pay its debts generally, or the making of a general assignment for the benefit of its creditors, or the institution of any proceeding by or against the Company (other than any such proceeding brought against the Company that is dismissed within 180 days from the commencement thereof) seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition (in each case, other than a solvent liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition) of it or its debts under any law relating to bankruptcy, insolvency, reorganization, moratorium or relief of debtors, or seeking the entry of an order for relief or appointment of an administrator, receiver, trustee, intervenor or other similar official for it or for any substantial part of its property, or the taking of any action by the Company to authorize any of the actions set forth in this clause (vi); or

(vi)    any other Event of Default provided in the supplemental indenture or provided in or pursuant to the Board Resolution under which such series of Securities is issued or in the form of Security for such series.

SECTION 502.   Acceleration of Maturity; Rescission and Annulment

If an Event of Default with respect to Securities of any series at the time Outstanding occurs and is continuing, then in every such case the Trustee or the Holders of not less than 25% in aggregate principal amount of the Outstanding Securities of that series may declare the principal amount (or, if any of the Securities of that series are Original Issue Discount Securities, such portion of the principal amount of such Securities as may be specified in the terms thereof) of all of the Securities of that series to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration such principal amount (or specified amount) shall become immediately due and payable.

At any time after such declaration of acceleration with respect to Securities of any series has been made, but before a judgment or decree for payment of money has been obtained by the Trustee as hereinafter in this Article provided, if all Events of Default with respect to Securities of that series have been cured or waived (other than the non-payment of principal of the Securities that has become due solely by reason of such declaration of acceleration) then such declaration of acceleration, and its consequences shall be automatically annulled and rescinded.

No such rescission shall affect any subsequent default or impair any right consequent thereon.

For all purposes under this Indenture, if a portion of the principal of any Original Issue Discount Securities shall have been accelerated and declared due and payable pursuant to the provisions hereof, then, from and after such declaration, unless such declaration has been rescinded and annulled, the principal amount of such Original Issue Discount Securities shall be deemed, for all purposes hereunder, to be such portion of the principal thereof as shall be due and payable as a result of such acceleration, and payment of such portion of the principal thereof as shall be due and payable as a result of such acceleration, together with interest, if any, thereon and all other amounts owing thereunder, shall constitute payment in full of such Original Issue Discount Securities.

SECTION 503.   Collection of Indebtedness and Suits for Enforcement by Trustee

The Company covenants that if:

(i)    default is made in the payment of any interest on any Security of a series when such interest becomes due and payable and such default continues for a period of 30 days, or

(ii)    default is made in the payment of the principal of (or premium, if any, on) any Security of a series at the Stated Maturity thereof,

the Company will, upon written demand of the Trustee, pay to it, for the benefit of the Holders of such Securities of such series, the whole amount then due and payable on such Securities of such series for principal (and premium, if any) and interest, if any, and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal (and premium, if any) and any overdue interest, at the rate or rates prescribed therefor in such Securities of such series, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents, and its counsel.

If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, (i) may institute a judicial proceeding for the collection of the sums so due and unpaid, (ii) may prosecute such proceeding to judgment or final decree, and (iii) may enforce the same against the Company or any other obligor upon such Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon such Securities, wherever situated.

If any Event of Default with respect to Securities of any series occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities of such series by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, subject, however, to Section 512.

SECTION 504.   Trustee May File Proofs of Claim

In case of the pendency of any receivership, insolvency, liquidation (other than a solvent liquidation), bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Securities or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the principal of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and, irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal or interest), shall be entitled and empowered, by intervention in such proceeding or otherwise,

(i)    to file and provide a claim for the whole amount of principal (and premium, if any) and interest owing and unpaid in respect of the Securities and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements, and advances of the Trustee, its agents, and its counsel) and of the Holders allowed in such judicial proceeding, and

(ii)    to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 607.

Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan or reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or, to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

SECTION 505.   Trustee May Enforce Claims Without Possession of Securities

All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements, and advances of the Trustee, its agents, and its counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered.

SECTION 506.   Application of Money Collected

Any money collected by the Trustee pursuant to this Article shall be applied in the following order with respect to the Securities of any series, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal (or premium, if any) or interest, upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:

FIRST: To the payment of all amounts due the Trustee under Section 607;

SECOND: In case the principal and premium, if any, of the Securities of such series in respect of which moneys have been collected shall not have become and be then due and payable, to the payment of interest, if any, on the Securities of such a series in default in the order of the maturity of the installments of such interest, with interest (to the extent that such interest has been collected by the Trustee and to the extent permitted by law) upon the overdue installments of interest at the rate prescribed therefor in such Securities, such payments to be made ratably to the Persons entitled thereto, without discrimination or preference;

THIRD: In case the principal or premium, if any, of the Securities of such series in respect of which moneys have been collected shall have become and shall be then due and payable, to the payment of the whole amount then owing and unpaid upon all the Securities of such series for principal and premium, if any, and interest, if any, with interest upon the overdue principal and premium, if any, and (to the extent that such interest has been collected by the Trustee and to the extent permitted by law) upon overdue installments of interest at the rate prescribed therefor in the Securities of such series; and in case such money shall be insufficient to pay in full the whole amount so due and unpaid upon the Securities of such series, then to the payment of such principal and any premium and interest, without preference or priority of principal over interest, or of interest over principal or premium, or of any installment of interest over any other installment of interest, or of any Security of such series over any other Security of such series, ratably to the aggregate of such principal and any premium and accrued and unpaid interest; and

FOURTH: To the payment of the remainder, if any, to the Company or any other Person lawfully entitled thereto.

SECTION 507.   Limitation on Suits

No Holder of any Security of any series shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless:

(i)    such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities of that series;

(ii)    the Holders of not less than 25% in principal amount of the Outstanding Securities of that series shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;

(iii)    such Holder or Holders have offered to the Trustee indemnity satisfactory to the Trustee against the costs, expenses, and liabilities to be incurred in compliance with such request;

(iv)    the Trustee for 60 days after its receipt of such notice, request, and offer of indemnity has failed to institute any such proceeding; and

(v)    no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the outstanding Securities of that series;

it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all such Holders.

SECTION 508.   Unconditional Right of Holders to Receive Principal, Premium and Interest

The Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of (and premium, if any) and (subject to Section 308) interest, if any, on such Security on the Stated Maturity or Maturities expressed in such Security (or, in the case of redemption, on the Redemption Date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder.

SECTION 509.   Restoration of Rights and Remedies

If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee, and the Holders shall be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Company, the Trustee, and the Holders shall continue as though no such proceeding had been instituted.

SECTION 510.   Rights and Remedies Cumulative

Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of Section 307, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

SECTION 511.   Delay or Omission Not Waiver

No delay or omission of the Trustee or of any Holder of any Securities to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy, or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient by the Trustee or by the Holders, as the case may be.

SECTION 512.   Control by Holders

The Holders of a majority in principal amount of the Outstanding Securities of any series shall have the right to direct the time, method, and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Securities of such series, provided that:

(i)    such direction shall not be in conflict with any rule of law or with this Indenture;

(ii)    subject to provisions of Section 315 of the Trust Indenture Act, the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction;

(iii)    the Trustee shall not determine that the action so directed would be prejudicial to Holders not taking part in such action; and

(iv)    the Trustee has been furnished by such Holders an indemnity or security satisfactory to it against costs, expenses and liabilities which it might incur in connection therewith.

SECTION 513.   Waiver of Past Defaults

Subject to Sections 508 and 902, the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities of any series may, on behalf of the Holders of all the Securities of such series, waive any past default hereunder with respect to such series and its consequences, except a default

(i)    in the payment of the principal of (or premium, if any) or interest, if any, on any Security of such series, or

(ii)    in respect of a covenant or provision hereof which under Article IX cannot be modified or amended without the consent of the Holder of each Outstanding Security of such series affected.

Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; provided, however, that no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.

SECTION 514.   Undertaking for Costs

All parties to this Indenture agree, and each Holder of any Security by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant in such suit; provided, however, that the provisions of this Section 514 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the outstanding Securities of any series, or to any suit instituted by any Holder for the enforcement of the payment of the principal of or interest, if any, on any Security on or after the Stated Maturity or Maturities expressed in such Security.

ARTICLE VI

THE TRUSTEE

SECTION 601.   Certain Duties and Responsibilities

(a)    Except during the continuance of a default with respect to the Securities of any series;

(i)    the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

(ii)    in the absence of bad faith or willful misconduct on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; provided that in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall examine the same to determine whether or not they conform to the requirements of this Indenture, but not to verify the contents thereof.

(b)    In case a default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs.

(c)    No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

(i)    the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless the Trustee was negligent in ascertaining the pertinent facts;

(ii)    no provision of this Indenture shall require the Trustee to spend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if repayment of such funds or adequate indemnity against such risk or liability satisfactory to the Trustee has not been assured to it; and

(iii)    the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a majority in principal amount of the Outstanding Securities of any series, determined as provided in Section 512, relating to the time, method, and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture with respect to the Securities of such series.

(d)    Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 601.

SECTION 602.   Notice of Defaults

Within 90 days after the occurrence of any default hereunder of which a Responsible Officer of the Trustee has actual knowledge with respect to the Securities of any series, the Trustee shall transmit by mail to all Holders of Securities of such series notice of such default hereunder known to the Trustee, unless such default shall have been cured or waived; provided, however, that, except in the case of a default in the payment of the principal of (or premium, if any) or interest, if any, on any Security of such series or in the payment, if any, of any sinking fund installment with respect to Securities of such series, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or a Responsible Officer of the Trustee in good faith determine that the withholding of such notice is in the interest of the Holders of Securities of such series; and provided, further, that in the case of any default of the character specified in Section 501(iv) with respect to Securities of such series, no such notice to Holders shall be given until at least 30 days after the occurrence thereof. For the purpose of this Section 602, the term "default" means any event that is, or after notice or lapse of time or both would become, an Event of Default with respect to Securities of such series.

SECTION 603.   Certain Rights of Trustee

Subject to the provisions of Section 601:

(i)    the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;

(ii)    any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order or as otherwise expressly provided herein, and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution;

(iii)    whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith or willful misconduct on its part, rely upon an Officers' Certificate;

(iv)    the Trustee may consult with counsel, and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;

(v)    the Trustee shall be under no obligation to expend or risk its own funds or to exercise, at the request or direction of any of the Holders, any of the rights or powers vested in it by this Indenture pursuant to this Indenture, unless such Holders shall have offered to the Trustee security or indemnity satisfactory to the Trustee against the costs, expenses, and liabilities that might be incurred by it in compliance with such request or direction;

(vi)    the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document; provided, however, that the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled upon reasonable prior request and during normal business hours to examine the books, records, and premises of the Company, personally or by agent or attorney; and

(vii)    the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or though agents or attorneys and shall not be liable for the actions or omissions of such agents appointed and supervised by it with due care.

(viii)    Neither the Trustee nor any of its officers, directors, employees or agents shall be liable for any action taken or omitted under this Agreement or in connection therewith except to the extent caused by the Trustee's negligence, bad faith or willful misconduct, as determined by a court of competent jurisdiction.

SECTION 604.   Trustee Not Responsible for Recitals or Issuance of Securities

The recitals contained herein and in the Securities, except the Trustee's certificates of authentication, shall be taken as the statements of the Company, and neither the Trustee nor any Authenticating Agent assumes any responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities or any offering materials related thereto, except that the Trustee represents that it is duly authorized to execute and deliver this Indenture, authenticate the Securities, and perform its obligations hereunder. Neither the Trustee nor any Authenticating Agent shall be accountable for the use or application by the Company of Securities or the proceeds thereof.

SECTION 605.   May Hold Securities

The Trustee, any Authenticating Agent, any Paying Agent, any Security Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Sections 608 and 613, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Security Registrar or such other agent.

SECTION 606.   Money Held in Trust

Money held by the Trustee in trust hereunder need not be segregated from other funds, except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed with the Company.

SECTION 607.   Compensation and Reimbursement

(a)    The Company agrees:

(i)    to pay to the Trustee from time to time such compensation as is agreed upon in writing;

(ii)    except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements, and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents, and its counsel, which compensation, expenses, and disbursements shall be set forth in sufficient written detail to the satisfaction of the Company), except any such expense, disbursement or advance as may be attributable to its or their negligence or bad faith;

(iii)    to indemnify the Trustee, its officers, directors, and employees for, and to hold it harmless against, any loss, liability or expense incurred without negligence, bad faith, or willful misconduct on its part, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. Obligations under this Section 607(iii) will survive the satisfaction and discharge of this Indenture pursuant to Section 401 hereof or the earlier resignation or removal of the Trustee; and

(b)     To secure the Company's payment obligations in this Section 607, the Trustee shall have a lien prior to the Securities on all money and property held or collected by the Trustee, in its capacity as Trustee, except money or property held in trust to pay principal of, and interest on particular Securities.

(c)     The obligations of the Company under this Section to compensate and indemnify the Trustee and to pay or reimburse the Trustee for expenses, disbursements and advances shall constitute additional indebtedness hereunder and shall survive the satisfaction and discharge of this Indenture or the rejection or termination of this Indenture under bankruptcy law. Such additional indebtedness shall be a senior claim to that of the Securities upon all property and funds held or collected by the Trustee as such, and the Securities are hereby subordinated to such senior claim. If the Trustee renders services and incurs expenses following an Event of Default under Section 501(vi) hereof, the parties hereto and the Holders by their acceptance of the Securities hereby agree that such expenses are intended to constitute expenses of administration under any bankruptcy law.

SECTION 608.   Disqualification; Conflicting Interests

If the Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture.

SECTION 609.   Corporate Trustee Required; Eligibility

There shall at all times be a Trustee hereunder that shall be eligible to act as trustee under the Trust Indenture Act and that shall have a combined capital and surplus of at least $50,000,000. If the Trustee does not have an office in The City of New York, the Trustee may appoint an agent in The City of New York reasonably acceptable to the Company to conduct any activities that the Trustee may be required under this Indenture to conduct in The City of New York. If the Trustee does not have an office in The City of New York or has not appointed an agent in The City of New York, the Trustee shall be a participant in DTC and FAST distribution systems. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of a United States federal, state, territorial or District of Columbia supervising or examining authority, then for the purposes of this Section 609, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 609, the Trustee shall resign immediately in the manner and with the effect hereinafter specified in this Article.

SECTION 610.   Resignation and Removal; Appointment of Successor Trustee

(a)    No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 611.

(b)    The Trustee may resign at any time with respect to the Securities of one or more series by giving written notice thereof to the Company. If the instrument of acceptance by a successor Trustee required by Section 611 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series.

(c)    The Trustee may be removed at any time with respect to the Securities of any series by an Act of the Holders of a majority in principal amount of the Outstanding Securities of such series, delivered to the Trustee and to the Company.

(d)    If at any time:

(i)    the Trustee shall fail to comply with Section 310(b) of the Trust Indenture Act with respect to any series of Securities after written request by the Company or by any Holder who has been a bona fide Holder of a Security for at least six months,

(ii)    the Trustee shall cease to be eligible under Section 609 and shall fail to resign after written request by the Company or by any such Holder, or

(iii)    the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation,

then, in any such case, (A) the Company by a Board Resolution may remove the Trustee with respect to all Securities, or (B) subject to Section 514, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee with respect to all Securities and the appointment of a successor Trustee or Trustees.

        (e)    If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, with respect to the Securities of one or more series, the Company, by a Board Resolution, shall promptly appoint a successor Trustee or Trustees with respect to the Securities of that or those series (it being understood that any such successor Trustee may be appointed with respect to the Securities of one or more or all of such series and that at any time there shall be only one Trustee with respect to the Securities of any particular series) and shall comply with the applicable requirements of Section 611. If no successor Trustee with respect to the Securities of any series shall have been so appointed by the Company and accepted appointment in the manner required by Section 611, any Holder who has been a bona fide Holder of a Security of such series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series.

        (f)    The Company shall give notice of each resignation and each removal of the Trustee with respect to the Securities of any series and each appointment of a successor Trustee with respect to the Securities of any series by mailing written notice of such event by first-class mail, postage prepaid, to all Holders of Securities of such series as their names and addresses appear in the Security Register. Each notice shall include the name of the successor Trustee with respect to the Securities of such series and the address of its Corporate Trust Office.

SECTION 611.   Acceptance of Appointment by Successor

(a)    In case of the appointment hereunder of a successor Trustee with respect to all Securities, every such successor Trustee so appointed shall execute, acknowledge, and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts, and duties of the retiring Trustee; provided that, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers, and trusts of the retiring Trustee and shall duly assign, transfer, and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder.

(b)    In case of the appointment hereunder of a successor Trustee with respect to the Securities of one or more (but not all) series, the Company, the retiring Trustee, and each successor Trustee with respect to the Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and that (i) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts, and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates, (ii) if the retiring Trustee is not retiring with respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts, and duties of the retiring Trustee with respect to the Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (iii) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee; and, upon the execution and delivery of such supplemental indenture, the resignation or removal of the retiring Trustee shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts, and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates; provided that on request of the company or any successor trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor Trustee relates.

(c)    Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and conforming to such successor Trustee all such rights, powers, and trusts referred to in paragraph (a) or (b) of this Section 611, as the case may be.

(d)    No successor Trustee shall accept its appointment unless, at the time of such acceptance, such successor Trustee shall be qualified and eligible under this Article.

SECTION 612.   Merger, Conversion, Consolidation or Succession to Business

Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities.

SECTION 613.   Preferential Collecting of Claims Against Company

(a)    Subject to Subsection (b) of this Section 613, if the Trustee shall be or shall become a creditor, directly or indirectly, secured or unsecured, of the Company within three months prior to a default, as defined in Subsection (c) of this Section 613, or subsequent to such a default, then, unless and until such default shall be cured, the Trustee shall set apart and hold in a special account for the benefit of the Trustee individually, the Holders of the Securities, and the holders of other indenture securities, as defined in Subsection (c) of this Section 613:

(i)    an amount equal to any and all reductions in the amount due and owing upon any claim as such creditor in respect of principal or interest effected after the beginning of such three months' period and valid as against the Company and its other creditors, except any such reduction resulting from the receipt or disposition of any property described in paragraph (ii) of this Subsection, or from the exercise of any right of set-off which the Trustee could have exercised if a petition in bankruptcy had been applied by or against the Company upon the date of such default; and

(ii)    all property received by the Trustee in respect of any claims as such creditor, either as security therefor, or in satisfaction or composition thereof, or otherwise, after the beginning of such three months' period, or an amount equal to the proceeds of any such property, if disposed of, subject, however, to the rights, if any, of the Company and its other creditors in such property or such proceeds.

Nothing herein contained, however, shall affect the right of the Trustee:

(i)    to retain for its own account (A) payments made on account of any such claim by any Person (other than the Company) who is liable thereon, (B) the proceeds of the bona fide sale of any such claim by the Trustee to a third Person, and (C) distributions made in cash, securities or other property in respect of claims filed against the Company in bankruptcy or receivership or in proceedings for reorganization pursuant to the Federal Bankruptcy Act or applicable State law;

(ii)    to realize, for its own account, upon any property held by it as security for any such claim, if such property was so held prior to the beginning of such three months' period;

(iii)    to realize, for its own account, but only to the extent of the claim hereinafter mentioned, upon any property held by it as security for any such claim, if such claim was created after the beginning of such three months' period and such property was received as security therefor simultaneously with the creation thereof, and if the Trustee shall sustain the burden of proving that at the time such property was so received the Trustee had no reasonable cause to believe that a default, as defined in Subsection (c) of this Section 613, would occur within three months; or

(iv)    to receive payment on any claim referred to in paragraph (ii) or (iii), against the release of any property held as security for such claim as provided in paragraph (ii) or (iii), as the case may be, to the extent of the fair value of such property.

For the purposes of paragraphs (ii), (iii) and (iv), property substituted after the beginning of such three months' period for property held as security at the time of such substitution shall, to the extent of the fair value of the property released, have the same status as the property released, and, to the extent that any claim referred to in any of such paragraphs is created in renewal of or in substitution for or for the purpose of repaying or refunding any pre-existing claim of the Trustee as such creditor, such claim shall have the same status as such pre-existing claim.

If the Trustee shall be required to account for the funds and property held in such special account, the proceeds thereof shall be apportioned among the Trustee, the Holders, and the holders of other indenture securities in such manner that the Trustee, the Holders, and the holders of other indenture securities realize, as a result of payments from such special account and payments of dividends on claims filed against the Company in bankruptcy or receivership or in proceedings for reorganization pursuant to the Federal Bankruptcy Act or applicable State law or winding up or administration pursuant to the insolvency laws of the United Kingdom, as applicable, the same percentage of their respective claims, figured before crediting to the claim of the Trustee anything on account of the receipt by it from the Company of the funds and property in such special account and before crediting to the respective claims of the Trustee and the Holders and the holders of other indenture securities dividends on claims filed against the Company in bankruptcy or receivership or in proceedings for reorganization pursuant to the Federal Bankruptcy Act or applicable State law or winding up or administration pursuant to the insolvency laws of the United Kingdom, as applicable, but after crediting thereon receipts on account of the indebtedness represented by their respective claims from all sources other than from such dividends and from the funds and property so held in such special account. As used in this paragraph, with respect to any claim, the term "dividends" shall include any distribution with respect to such claim, in bankruptcy or receivership or proceedings for reorganization pursuant to the Federal Bankruptcy Act or applicable State law or winding up or administration pursuant to the insolvency laws of the United Kingdom, as applicable, whether such distribution is made in cash, securities or other property, but shall not include any such distribution with respect to the secured portion, if any, of such claim.

Any Trustee that has resigned or been removed after the beginning of such three months' period shall be subject to the provisions of this Subsection as though such resignation or removal had not occurred. If any Trustee has resigned or been removed prior to the beginning of such three months' period, it shall be subject to the provisions of this Subsection if and only if the following conditions exist:

(i)    the receipt of property or reduction of claim, which would have given rise to the obligation to account, if such Trustee had continued as Trustee, occurred after the beginning of such three months' period; and

(ii)    such receipt of property or reduction of claim occurred within three months after such resignation or removal.

(b)    There shall be excluded from the operation of Subsection (a) of this Section 613 a creditor relationship arising from:

(i)    the ownership or acquisition of securities issued under any indenture, or any security or securities having a maturity of one year or more at the time of acquisition by the Trustee;

(ii)    advances authorized by a receivership or bankruptcy court of competent jurisdiction or by this Indenture, for the purpose of preserving any property that shall at any time be subject to the lien of this Indenture or of discharging tax liens or other prior liens or encumbrances thereon, if notice of such advances and of the circumstances surrounding the making thereof is given to the Holders at the time and in the manner provided in this Indenture;

(iii)    disbursements made in the ordinary course of business in the capacity of trustee under an indenture, transfer agent, registrar, custodian, paying agent, fiscal agent or depository, or other similar capacity;

(iv)    an indebtedness created as a result of services rendered or premises rented; or an indebtedness created as a result of goods or securities sold in a cash transaction, as defined in Subsection (c) of this Section 613;

(v)    the ownership of stock or of other securities of a corporation organized under the provisions of Section 25(a) of the Federal Reserve Act, as amended, that is directly or indirectly a creditor of the Company; and

(vi)    the acquisition, ownership, acceptance or negotiation of any drafts, bills of exchange, acceptances or obligations that fall within the classification of self-liquidating paper, as defined in Subsection (c) of this Section 613.

(c)    For the purposes of this Section 613 only:

(i)    the term "default" means any failure to make payment in full of the principal of or interest on any of the Securities or upon the other indenture securities when and as such principal or interest becomes due and payable;

(ii)    the term "other indenture securities" means securities upon which the Company is an obligor (as defined in the Trust Indenture Act) outstanding under any other indenture (A) under which the Trustee is also trustee, (B) that contains provisions substantially similar to the provisions of this Section 613, and (C) under which a default exists at the time of the apportionment of the funds and property held in such special account;

(iii)    the term "cash transaction" means any transaction in which full payment for goods or securities sold is made within seven days after delivery of the goods or securities in currency or in checks or other orders drawn upon banks or bankers and payable upon demand;

(iv)    the term "self-liquidating paper" means any draft, bill of exchange, acceptance or obligation that is made, drawn, negotiated or incurred by the Company for the purpose of financing the purchase, processing, manufacturing, shipment, storage or sale of goods, wares or merchandise and that is secured by documents evidencing title to, possession of, or a lien upon, the goods, wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or merchandise previously constituting the security, provided the security is received by the Trustee simultaneously with the creation of the creditor relationship with the Company arising from the making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation;

(v)    the term "Company" means any obligor upon the Securities; and

(vi)    the term "Federal Bankruptcy Act" means the Bankruptcy Code or Title 11 of the United States Code.

SECTION 614.   Authenticating Agents

From time to time the Trustee, with the prior written approval of the Company, may appoint one or more Authenticating Agents with respect to one or more series of Securities with power to act on the Trustee's behalf and subject to its direction in the authentication and delivery of Securities of such series, or in connection with transfers and exchanges under Sections 304, 305, 306 and 1104, as fully to all intents and purposes as though the Authenticating Agent had been expressly authorized by those Sections of this Indenture to authenticate and deliver Securities of such series. For all purposes of this Indenture, the authentication and delivery of Securities by an Authenticating Agent pursuant to this Section 614 shall be deemed to be authentication and delivery of such Securities "by the Trustee." Each such Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States, any State thereof or the District of Columbia, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000, and subject to supervision or examination by Federal, State or District of Columbia authority. If such corporation publishes reports of condition at least annually pursuant to law or the requirements of such authority, then for the purposes of this Section 614 the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 614, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section 614.

Any corporation into which any Authenticating Agent may be merged or with which it may be consolidated, or any corporation resulting from any merger or consolidation or to which any Authenticating Agent shall be a party, or any corporation succeeding to the corporate trust business of any Authenticating Agent, shall be the successor of the Authenticating Agent hereunder, if such successor corporation is otherwise eligible under this Section 614, without the execution or filing of any paper or any further act on the part of the parties hereto or the Authenticating Agent or such successor corporation.

An Authenticating Agent may resign at any time by giving written notice of resignation to the Trustee and to the Company. The Trustee may at any time terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in the case at any time any Authenticating Agent shall cease to be eligible under this Section 614, the Trustee may appoint a successor Authenticating Agent with the prior written approval of the Company and shall mail notice of such appointment to all Holders of Securities of the series with respect to which such Authenticating Agent will serve, as the names and addresses of such Holders appear on the Security Register. Any successor Authenticating Agent, upon acceptance of its appointment hereunder, shall become vested with all the rights, powers, and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section 614.

The Trustee agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section 614 as may be agreed in a separate writing among the Company, the Trustee, and such Authenticating Agent, and the Trustee shall be entitled to be reimbursed for such payments pursuant to Section 607.

If an appointment with respect to one or more series of Securities is made pursuant to this Section 614, the Securities of such series may have endorsed thereon, in addition to the Trustee's certificate of authentication, an alternate certificate of authentication in the form set forth in Section 205.

SECTION 615.   The Principal Paying Agent, the Paying and Transfer Agent and Transfer Agent

The Principal Paying Agent, the Paying and Transfer Agent and Transfer Agent shall be afforded the same rights, protections, immunities and indemnities as the Trustee is afforded hereto.

ARTICLE VII

HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

SECTION 701.   Company to Furnish Trustee Names and Addresses of Holders

The Company will furnish or cause to be furnished to the Trustee with respect to the Registered Securities of each series:

(i)    semi-annually, not later than 15 days after each Regular Record Date, or, in the case of any series of Registered Securities on which semi-annual interest is not payable, not more than 15 days after such semi-annual dates as may be specified by the trustee, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of such Regular Record Date or semi-annual date, as the case may be; and

(ii)    at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished;

provided, however, that if and so long as the Trustee is the Security Registrar for any series of Registered Securities, no such list shall be required to be furnished with respect to any such series.

SECTION 702.   Preservation of Information; Communications to Holders

(a)    The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 701 and the names and addresses of Holders received by the Trustee in its capacity as Security Registrar. The Trustee may destroy any list furnished to it as provided in Section 701 upon receipt of a new list so furnished.

(b)    If three or more Holders (herein referred to as "applicants") apply in writing to the Trustee and furnish to the Trustee reasonable proof that each such applicant has owned a Security for a period of at least six months preceding the date of such application, and such application states that the applicants desire to communicate with other Holders with respect to their rights under this Indenture or under the Securities and is accompanied by a copy of the form of proxy or other communication which such applicants propose to transmit, then the Trustee shall, within five Business Days after the receipt of such application, at its election, either:

(i)    afford such applicants access to the information preserved at the time by the Trustee in accordance with Section 702(a); or

(ii)    inform such applicants as to the approximate number of Holders whose names and addresses appear in the information preserved at the time by the Trustee in accordance with Section 702(a), and as to the approximate cost of mailing to such Holders the form of proxy or other communication, if any, specified in such application.

If the Trustee shall elect not to afford such applicants access to such information, the Trustee shall, upon the written request of such applicants, mail to each Holder whose name and address appear in the information preserved at the time by the Trustee in accordance with Section 702(a), a copy of the form of proxy or other communication that is specified in such request, with reasonable promptness after a tender to the Trustee of the material to be mailed and of payment, or provision for the payment, of the reasonable expenses of mailing, unless within five days after such tender the Trustee shall mail to such applicants a written statement to the effect that, in the opinion of the Trustee, such mailing would be contrary to the best interest of the Holders or would be in violation of applicable law. Such written statement shall specify the basis of such opinion.

(c)    Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable, by reason of the disclosure of any such information as to the names and addresses of the Holders in accordance with Section 702(b), regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under Section 702(b).

SECTION 703.   Reports by Trustee

(a)    Within 60 days after May 15 of each year, commencing May 15, 2002, the Trustee shall transmit by mail to Holders of Securities a brief report dated as of such May 15 of such year with respect to any of the following events which may have occurred within the previous 12 months (but if no such event has occurred within such period no report need be transmitted):

(i)    any change to its eligibility under Section 609 and its qualifications under Section 608;

(ii)    the creation of or any material change to a relationship specified in Section 608;

(iii)    the character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding the making thereof) made by the Trustee (as such) that remain unpaid on the date of such report, and for the reimbursement of which it claims or may claim a lien or charge, prior to that of the Securities, on any property or funds held or collected by it as Trustee, except that the Trustee shall not be required (but may elect) to report such advances if such advances so remaining unpaid aggregate not more than one-half of one percent of the principal amount of the Securities outstanding on the date of such report;

(iv)    any change to the amount, interest rate and maturity date of all other indebtedness owing by the Company (or by any other obligor on the Securities) to the Trustee in its individual capacity, on the date of such report, with a brief description of any property held as collateral security therefor, except an indebtedness based upon a creditor relationship arising in any manner described in Sections 613(b)(ii), (iii), (iv) or (vi);

(v)    any change to the property and funds, if any, physically in the possession of the Trustee as such on the date of such report;

(vi)    any additional issue of Securities that the Trustee has not previously reported; and

(vii)    any action taken by the Trustee in the performance of its duties hereunder that it has not previously reported and that in its opinion materially affects the Securities, except action in respect of a default, notice of which has been or is to be withheld by the Trustee in accordance with Section 602.

(b)    The Trustee shall transmit by mail to all Holders of Securities a brief report with respect to the character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding the making thereof) made by the Trustee (as such) since the date of the last report transmitted pursuant to Subsection (a) of this Section 703 (or if no such report has yet been so transmitted, since the date of execution of this instrument) for the reimbursement of which it claims or may claim a lien or charge, prior to that of the Securities, on property or funds held or collected by it as Trustee and which it has not previously reported pursuant to this Subsection, except that the Trustee shall not be required (but may elect) to report such advances if such advances remaining unpaid at any time aggregate 10% or less of the principal amount of the Securities outstanding at such time, such report to be transmitted within 90 days after such time.

(c)    A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each U.S. stock exchange upon which any Securities are listed, if any, and with the Company. The Company will notify the Trustee when any Securities are listed on any U.S. stock exchange.

ARTICLE VIII

CONSOLIDATION, MERGER, CONVEYANCE, SALE OR LEASE

SECTION 801.   Company May Consolidate Etc., Only on Certain Terms

Nothing contained in this Indenture shall prevent the Company from consolidating with or merging into another corporation or conveying, transferring or leasing its properties and assets substantially as an entirety to any Person; provided that (i) the successor entity assumes the Company's applicable obligations on the Securities and (ii) immediately after giving effect to such transaction, no Event of Default and no event that, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing. In addition, the Company may assign and delegate all of its rights and obligations under this Indenture, the Securities, any supplemental indenture relating to the Securities, the Deposit Agreement and all other documents, agreements, and instruments related thereto to any Person that owns all of the ordinary shares of the Company or to any Person that owns all of the ordinary shares of a Person that owns all of the ordinary shares of the Company, and upon any such Person assuming such rights and obligations, the Company shall be automatically released from such obligations; provided that immediately after giving effect to such transaction no Event of Default and no event that, after notice or lapse of time or both, would become an Event of Default shall have happened and be continuing.

In the event that any such successor entity is organized under the laws of a country located outside of the United Kingdom and withholding or deduction is required by law for or on account of any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or within such country in which the successor entity is organized or by or within any political subdivision thereof or any authority therein thereof having power to tax, the successor entity shall pay to the relevant Holder of the Global Securities or to the relevant Holders of the definitive Registered Securities, as the case may be, such Additional Amounts, under the same circumstances and subject to the same limitations as are specified for "United Kingdom Taxes," as is set forth under Section 1009 herein, but substituting for the United Kingdom in each place the name of the country under the laws of which such successor entity is organized. In addition, such successor entity shall be entitled to effect optional tax redemptions under the same circumstances and subject to the same limitations as are set forth under Section 1108 herein, but substituting for the United Kingdom in each place the name of the country under the laws of which such successor entity is organized.

SECTION 802.   Successor Corporation to be Substituted

Upon any consolidation by the Company with or merger by the Company into any other corporation or any conveyance, transfer or lease of the properties and assets of the Company substantially as an entirety in accordance with Section 801, the successor corporation formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor corporation had been named as the Company herein, and thereafter the predecessor corporation shall be relieved of all obligations and covenants under this Indenture and the Securities.

ARTICLE IX

SUPPLEMENTAL INDENTURES

SECTION 901.   Supplemental Indentures without Consent of Holders

Without the consent of any Holders, the Company and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes:

(i)    to evidence the succession of another corporation to the Company and the assumption by any such successor of the covenants of the Company herein and in the Securities;

(ii)    to add to the covenants of the Company for the benefit of the Holders of all or any series of Securities (and if such covenants are to be for the benefit of less than all series of Securities, stating that such covenants are expressly being included solely for the benefit of such series) or to surrender any right or power herein conferred upon the Company;

(iii)    to add any additional Events of Default (and if such Events of Default are to be for the benefit of less than all series of Securities, stating that such Events of Default are expressly being included solely for the benefit of such series);

(iv)    to add or to change any of the provisions of this Indenture to such extent as shall be necessary to permit or facilitate the issuance of securities in bearer form, registrable or not registrable as to principal, and with or without interest coupons, or to facilitate the issuance of Securities in uncertificated form, or to permit or facilitate the issuance of extendible Securities;

(v)    to change or eliminate any of the provisions of this Indenture, provided that any such change or elimination shall become effective only as to the Securities of any series created by such supplemental indenture and Securities of any series subsequently created to which such change or elimination is made applicable by the subsequent supplemental indenture creating such series;

(vi)    to secure the Securities;

(vii)    to establish the form or terms of Securities of any series as permitted by Sections 201 and 301;

(viii)    to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 611(b);

(ix)    to provide for any rights of the Holders of Securities of any series to require the repurchase of Securities of such series by the Company;

(x)    to cure any ambiguity, to correct or supplement any provision herein that may be inconsistent with any other provision herein to evidence the merger of the Company or the replacement of the Trustee, or to make any other provisions with respect to matters or questions arising under this Indenture, provided that such action shall not materially and adversely affect the interests of the Holders of Securities of any series; or

(xi)    to modify, alter, amend or supplement this Indenture in any other respect that is not materially adverse to Holders, that does not involve a change described in clauses (i), (ii) or (iii) of Section 902 hereof, and that, in the reasonable judgment of the Trustee, is not to the prejudice of the Trustee, or in order to provide for the duties, responsibilities and compensation of the Trustee as a transfer agent in the event one registered Security of any series is issued in the aggregate principal amount of all outstanding Securities of such series in which Holders will hold an interest.

SECTION 902.   Supplemental Indentures with Consent of Holders

With the consent of the Holders of a majority in aggregate principal amount of the Outstanding Securities of all series affected by such supplemental indenture (voting as one class), by an Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by or pursuant to a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this indenture or of modifying in any manner the rights of the Holders of Securities of such series under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security affected thereby;

(i)    change the Stated Maturity of the principal of, or any installment of principal of or interest, if any, on, any Security, or reduce the principal amount thereof or the rate of interest thereon (including Additional Amounts) or any premium payable upon the redemption thereof, or reduce the amount of the principal of an Original Issue Discount Security that would be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502, or change any Place of Payment where, or the coin or currency in which, any Security or any premium or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date);

(ii)    reduce the percentage in principal amount of the Outstanding Securities of any series, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences provided for in this Indenture; or

(iii)    modify any of the provisions of this Section 902 or Section 513, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby; provided, however, that this clause shall not be deemed to require the consent of any Holder with respect to changes in the references to "the Trustee" and concomitant changes in this Section 902, or the deletion of this proviso, in accordance with the requirements of Sections 611(b) and 901(viii).

A supplemental indenture that changes or eliminates any covenant or other provision of this Indenture that has expressly been included solely for the benefit of one or more particular series of Securities, or that modifies the rights of the Holders of Securities of such series with respect to such covenant or other provision, shall be deemed not to affect their rights under this Indenture of the Holders of Securities of any other series.

It shall not be necessary for any Act of Holders under this Section 902 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.

SECTION 903.   Execution of Supplemental Indentures

In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 601) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise.

SECTION 904.   Effect of Supplemental Indentures

Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.

SECTION 905.   Conformity with Trust Indenture Act

Every supplemental indenture executed pursuant to this Article shall, if so required by the Trust Indenture Act, conform to the requirements of the Trust Indenture Act as then in effect.

SECTION 906.   Reference in Securities to Supplemental Indentures

Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities of any series so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities of such series.

ARTICLE X

COVENANTS

SECTION 1001.   Payment of Principal, Premium, if any, and Interest

The Company covenants and agrees for the benefit of each series of Securities that it will duly and punctually pay the principal of (and premium, if any) and interest and Additional Amounts, if any, on the Securities of that series in accordance with the terms of the Securities and this Indenture. An installment of principal of or interest on the Securities of a series shall be considered paid on the date it is due if the Trustee or Paying Agent holds at 11:00 a.m., New York City time, on that date money deposited by the Company in immediately available funds and designated for, and sufficient to pay, the installment in full.

Neither the Company nor any agent of the Company will have any responsibility or liability for any aspect relating to payment made or to be made by the Book-Entry Depositary to DTC in respect of the Securities of a series or the Book-Entry Interests. None of the Company, the Trustee, the Book-Entry Depositary or any agent of any of the foregoing will have any responsibility or liability for any aspect relating to payments made or to be made by DTC on account of a Participant's or Indirect Participant's ownership of an interest in the Book-Entry Interest or for maintaining, supervising or reviewing any records relating to a Participant's interests in the Book-Entry Interest.

SECTION 1002.   Maintenance of Office or Agency

The Company will maintain (i) in the Borough of Manhattan, The City of New York, an office or agency where Securities of any series may be presented or surrendered for payment, and where notices and demands to or upon the Company in respect of the Securities of such series and this Indenture may be served and if definitive Registered Securities have been issued, an office or agency of a Transfer Agent where securities may be surrendered for registration of transfer or exchange, and (ii) an office or agency of a Paying Agent where the Securities may be paid in Luxembourg so long as the Securities are listed on the Luxembourg Stock Exchange and the rules of such exchange so require. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of any such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices, and demands may be made or served at the Corporate Trust Office of the Trustee, except that Bearer Securities of that series pursuant to Section 1001 may be presented at the place specified for the purpose pursuant to Section 301, and the Company hereby appoints the Paying Agent as its agent to receive all such presentations, surrenders, notices, and demands.

The Company may also from time to time designate one or more other offices or agencies (in or outside of such Place of Payment) where the Securities of one or more series and any appurtenant coupons (subject to Section 1001) may be presented or surrendered for any or all of such purposes, and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in each Place of Payment for any series of Securities for such purposes. The Company will give prompt written notice to the Trustee of any such designation and any change in the location of any such other office or agency. The Company will at all time maintain at least one Paying Agent that is located outside the United Kingdom for each series of Securities.

SECTION 1003.   Money for Securities Payments to Be Held in Trust

If the Company shall at any time act as its own Paying Agent with respect to any series of Securities, it will, on or before each due date of the principal of (and premium, if any) or interest, if any, on any of the Securities of that series, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal (and premium, if any) or interest, if any, so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act.

Whenever the Company shall have one or more Paying Agents for any series of Securities, it will, no later than 10:00 a.m., New York Time, on or prior to each due date of the principal of (and premium, if any) or interest, if any, on any Securities of that series, deposit with a Paying Agent a sum in immediately available funds sufficient to pay the principal (and premium, if any) or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal, premium or interest.

The Company will cause each Paying Agent for any series of Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section 1003, that such Paying Agent will:

(i)    hold all sums held by it for the payment of the principal of (and premium, if any) or interest, if any, on Securities of that series in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided;

(ii)    give the Trustee notice of any default by the Company (or any other obligor upon the Securities of that series) in the making of any payment of principal (and premium, if any) or interest, if any, on the Securities of that series; and

(iii)    at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent.

The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by the Company or by any Paying Agent to the Trustee, the Company or such Paying Agent, as the case may be, shall be released from all further liability with respect to such money.

Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of (and premium, if any) or interest, if any, on any Security of any series and remaining unclaimed for two years after such principal (and premium, if any) or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease.

SECTION 1004.   Limitation on Liens

If this covenant shall be made applicable to the Securities of a particular series, the Company shall not issue, assume or guarantee any notes, bonds, debentures or other similar evidences of indebtedness of a kind typically traded on a stock exchange, in each case for money borrowed ("Debt"), secured by a Lien upon any property or assets (other than cash) without effectively providing that the outstanding Securities (together with, if the Company so determines, any other indebtedness or obligation then existing or thereafter created ranking equally with such Securities) shall be secured equally and ratably with (or prior to) such Debt so long as such Debt shall be so secured. The foregoing restriction on Liens will not, however, apply to:

(i)    Liens in existence on the date of original issue of such Securities;

(ii)    (A) any Lien created or arising over any property which is acquired, constructed or created by the Company, but only if (1) such Lien secures only principal amounts (not exceeding the cost of such acquisition, construction or creation) raised for the purposes of such acquisition, construction or creation, together with any costs, expenses, interest and fees incurred in relation thereto or a guarantee given in respect thereof, (2) such Lien is created or arises on or before 90 days after the completion of such acquisition, construction or creation, and (3) such Lien is confined solely to the property so acquired, constructed or created; or (B) any Lien to secure indebtedness for borrowed money incurred in connection with a specifically identifiable project where the Lien relates to a property (including, without limitation, shares or other rights of ownership in the entity(ies) which own such property or project) involved in such project and acquired by the Company after the date of original issue of the Securities and the recourse of the creditors in respect of such indebtedness is limited to any or all of such project and property (including as aforesaid);

(iii)    any Lien securing amounts not more than 90 days overdue or otherwise being contested in good faith;

(iv)    (A) rights of financial institutions to offset credit balances in connection with the operation of cash management programs established for the benefit of the Company or in connection with the issuance of letters of credit for the benefit of the Company; (B) any Lien securing indebtedness of the Company for borrowed money incurred in connection with the financing of accounts receivable; (C) any Lien incurred or deposits made in the ordinary course of business, including, but not limited to, (1) any mechanics', materialmens', carriers', workmens', vendors' or other like Liens and (2) any Liens securing amounts in connection with workers' compensation, unemployment insurance, and other types of social security; (D) any Lien upon specific items of inventory or other goods and proceeds of the Company securing obligations of the Company in respect of bankers' acceptances issued or created for the account of such person to facilitate the purchase, shipment or storage of such inventory or other goods; (E) any Lien incurred or deposits made securing the performance of tenders, bids, leases, trade contracts (other than for borrowed money), statutory obligations, surety bonds, appeal bonds, government contracts, performance bonds, return-of-money bonds, and other obligations of like nature incurred in the ordinary course of business; (F) any Lien created by the Company under or in connection with or arising out of any pooling and settlement agreements or pooling and settlement arrangements of the electricity industry or any transactions or arrangements entered into in connection with hedging or management of risks relating to the electricity industry; (G) any Lien constituted by a right of set off or right over a margin call account or any form of cash or cash collateral or any similar arrangement for obligations incurred in respect of the hedging or management of risks under transactions involving any currency or interest rate swap, cap or collar arrangements, forward exchange transaction, option, warrant, forward rate agreement, futures contract or other derivative instrument of any kind; (H) any Lien arising out of title retention or like provisions in connection with the purchase of goods and equipment in the ordinary course of business; and (I) any Lien securing reimbursement obligations under letters of credit, guaranties and other forms of credit enhancement given in connection with the purchase of goods and equipment in the ordinary course of business;

(v)    Liens in favor of the Company or one of its subsidiaries;

(vi)    (A) Liens on any property or assets acquired from a corporation which is merged with or into the Company, or any Liens on the property or assets of any corporation or other entity existing at the time such corporation or other entity becomes a Subsidiary of the Company and, in either such case, is not created in anticipation of any such transaction (unless such Lien is created to secure or provide for the payment of any part of the purchase price of such corporation); (B) any Lien on any property or assets existing at the time of acquisition thereof and which is not created in anticipation of such acquisition (unless such Lien was created to secure or provide for the payment of any part of the purchase price of such property or assets); and (C) any Lien created or outstanding on or over any asset of any company which becomes a Subsidiary on or after the date of the issuance of such Securities where such Lien is created prior to the date on which such company becomes a Subsidiary;

(vii)    Liens required by any contract or statute in order to permit the Company to perform any contract or subcontract made by it with or at the request of a governmental entity or any department, agency or instrumentality thereof, or to secure partial, progress, advance or any other payments by the Company to such governmental unit pursuant to the provisions of any contract or statute; (B) any Lien securing industrial revenue, development or similar bonds issued by or for the benefit of the Company, provided that such industrial revenue, development or similar bonds are non-recourse to the Company; and (C) any Lien securing taxes or assessments or other applicable governmental charges or levies;

(viii)    (A) any Lien which arises pursuant to any order of attachment, distraint or similar legal process arising in connection with court proceedings and any Lien which secures the reimbursement obligation for any bond obtained in connection with an appeal taken in any court proceeding, so long as the execution or other enforcement of such Lien arising pursuant to such legal process is effectively stayed and the claims secured thereby are being contested in good faith and, if appropriate, by appropriate legal proceedings, or any Lien in favor of a plaintiff or defendant in any action before a court or tribunal as security for costs and/or other expenses; or (B) any Lien arising by operation of law or by order of a court or tribunal or any Lien arising by an agreement of similar effect, including, without limitation, judgment Liens; or

(ix)    any extension, renewal or replacement (or successive extensions, renewals or replacements), as a whole or in part, of any Liens referred to in the foregoing clauses, for amounts not exceeding the principal amount of the Debt secured by the Lien so extended, renewed or replaced, provided that such extension, renewal or replacement Lien is limited to all or a part of the same property or assets that were covered by the Lien extended, renewed or replaced (plus improvements on such property or assets).

Notwithstanding the foregoing, the Company may create or permit to subsist Liens over any property or assets, so long as the aggregate amount of Debt secured by all such Liens (excluding therefrom the amount of Debt secured by Liens set forth in clauses (i) through (ix), inclusive, above) does not exceed 10% of the Consolidated Net Tangible Assets.

Nothing contained in this Indenture in any way restricts or prevents the Company or any Subsidiary from incurring any indebtedness.

SECTION 1005.   Limitation on Sale and Lease-Back Transactions

If this covenant shall be made applicable to the Securities of a particular series, the Company covenants and agrees that, so long as any Securities of such series remain outstanding, it will not enter into any arrangement with any Person providing for the leasing by the Company of any assets which have been or are to be sold or transferred by the Company to such Person (a "Sale and Lease-Back Transaction") unless:

(i)    such transaction involves a lease for a temporary period not to exceed three years;

(ii)    such transaction is between the Company and a subsidiary or affiliate of the Company;

(iii)    the Company would be entitled to incur indebtedness secured by a Lien on the assets or property involved in such transaction at least equal in amount to the attributable debt with respect to such Sale and Lease-Back Transaction, without equally and ratably securing the Securities, pursuant to the limitation on Liens described above, other than pursuant to the penultimate paragraph thereof;

(iv)    such transaction is entered into within 60 days after the initial acquisition by the Company of the assets or property subject to such transaction;

(v)    after giving effect thereto, the aggregate amount of all attributable debt with respect to all such Sale and Lease-Back Transactions does not exceed 10% of the Consolidated Net Tangible Assets; or

(vi)    the Company, within the 12 months preceding the sale or transfer or the 12 months following the sale or transfer, regardless of whether such sale or transfer may have been made by the Company, applies, in the case of a sale or transfer for cash, an amount equal to the net proceeds thereof, and, in the case of a sale or transfer otherwise than for cash, an amount equal to the fair value of the assets so leased at the time of entering into such arrangement (as determined by the Board of Directors of the Company), (A) to the retirement of indebtedness for money borrowed, incurred or assumed by the Company which by its terms matures at, or is extendible or renewable at the option of the obligor to, a date more than 12 months after the date of incurring, assuming or guaranteeing such debt, or (B) to investment in any assets of the Company.

SECTION 1006.   Statement by Officers as to Default

The Company will deliver to the Trustee within 120 days after the end of each fiscal year of the Company a certificate from the principal executive, financial or accounting officer of the Company, stating that in the course of the performance by each signer of his or her duties as an officer of the Company he or she would normally have knowledge of any default by the Company in the performance and observance of any of the covenants contained in this Indenture, stating whether or not he or she has knowledge of any such default without regard to any period of grace of requirement of notice and, if so, specifying each such default of which such signer has knowledge and the nature thereof.

SECTION 1007.   Modification or Waiver of Certain Covenants

The Company may omit in any particular instance to comply with any term, provision or condition set forth in this Indenture with respect to the Securities of a series if, before the time for such compliance, the Holders of a least a majority in aggregate principal amount of the Outstanding Securities of such series shall, by Act of such Holders, either modify the covenant or waive such compliance in such instance or generally waive compliance with such term, provision or condition; provided that no such modification shall, without the consent of each Holder of Securities of such series, (i) change the stated maturity upon which the principal of or the interest on the Securities of such series is due and payable, (ii) reduce the principal amount thereof or the rate of interest thereon, (iii) change any obligation of the Company to pay Additional Amounts with respect to such services, (iv) change any Place of Payment or the currency in which the Securities of such series or any premium or the interest thereon is payable, (v) impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of the redemption, on or after the Redemption Date), (vi) reduce the percentage in principal amount of the outstanding Securities of such series, the consent of whose holders is required for any waiver of compliance with certain provisions of the Indenture or certain defaults thereunder and their consequences provided for in the Indenture or (vii) reduce the requirements contained in the Indenture for quorum or voting with respect to such series. The Securities owned by the Company or any of its affiliates shall be deemed not to be outstanding for, among other purposes, consenting to any such modification.

SECTION 1008.   Further Assurances

The Company and the Trustee will execute and deliver all such documents, instruments and agreements, and do all such other acts and things as may be reasonably required to enable the Trustee to exercise and enforce its rights under the Indenture and under the documents, instruments and agreements required under the Indenture, and to carry out the intent of the Indenture.

SECTION 1009.   Payment of Additional Amounts

If the Securities of a particular series provide for payment of Additional Amounts, all payments of principal and interest (including payments of discount and premium, if any) in respect of the Securities of such series shall be made free and clear of, and without withholding or deduction for or on account, of any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or within the United Kingdom or by or within any political subdivision thereof or any authority therein or thereof having power to tax ("United Kingdom Taxes"), unless such withholding or deduction is required by law. In that event the Company shall pay to the Holder such additional amounts (the "Additional Amounts") as will result in the payment to such Holder of the amount that would otherwise have been receivable by such Holder in the absence of such withholding or deduction, except that no such Additional Amounts shall be payable:

(i)    to, or to a Person on behalf of, a Holder who is liable for such United Kingdom Taxes in respect of Securities by reason of such Holder having some connection with the United Kingdom (including being a citizen or resident or national of, or carrying on a business or maintaining a permanent establishment in, or being physically present in, the United Kingdom) other than the mere holding of a Security or the receipt of principal and interest (including payments of discount and premium, if any) in respect thereof;

(ii)    to, or to a Person on behalf of, a Holder who presents a Security (where presentation is required) for payment more than 30 days after the Relevant Date, except to the extent that such Holder would have been entitled to such Additional Amounts on presenting such Security for payment on the last day of such period of 30 days;

(iii)    to, or to a Person on behalf of, a Holder who presents a Security (where presentation is required) in the United Kingdom; or

(iv)    to, or to a Person on behalf of, a Holder who would not be liable or subject to the withholding or deduction by making a declaration of non-residence or similar claim for exemption to the relevant tax authority.

Such Additional Amounts will also not be payable where, had the beneficial owner of the Security (or any interest therein) been the Holder of the Security, he or she would not have been entitled to payment of Additional Amounts by reason of any one or more of clauses (i) through (iv) above. If the Company shall determine that Additional Amounts will not be payable because of the immediately preceding sentence, the Company will inform such Holder promptly after making such determination setting forth the reason(s) therefor.

Reference to principal, interest, discount or premium in respect of the Securities shall be deemed also to refer to any Additional Amounts that may be payable as set forth in this Indenture or in the Securities.

At least 10 Business Days prior to the first Interest Payment Date (and at least 10 Business Days prior to each succeeding Interest Payment Date if there has been any change with respect to the matters set forth in the below-mentioned Officers' Certificate), the Company will furnish to the Trustee and the Paying Agents an Officers' Certificate instructing the Trustee and the Paying Agents whether payments of principal of or interest on the Securities due on such Interest Payment Date shall be without deduction or withholding for or on account of any United Kingdom. If any such deduction or withholding shall be required, prior to such Interest Payment Date, the Company will furnish the Trustee and the Paying Agents with an Officers' Certificate that specifies the amount, if any, required to be withheld on such payment to Holders and certifies that the Company shall pay such withholding or deduction. The Company covenants to indemnify the Trustee for, and to hold the Trustee harmless against, any loss, liability or expense reasonably incurred without negligence, willful misconduct or bad faith on their part, arising out of or in connection with actions taken or omitted by the Trustee in reliance on any Officers' Certificate furnished pursuant to this paragraph. Any Officers' Certificate required by this Section 1009 to be provided to the Trustee and any Paying Agent shall be deemed to be duly provided if telecopied to the Trustee and such Paying Agent.

The Company shall furnish to the Trustee the official receipts (or a certified copy of the official receipts) evidencing payment of United Kingdom Taxes. Copies of such receipts shall be made available to the Holders of the Securities upon request.

SECTION 1010.   Copies Available to Holders

Copies of this Indenture shall be available for inspection by the Holders upon receipt of written request on a Business Day during normal business hours at the principal office of the Company and at the Corporate Trust Office. In addition, if the Securities of any series are listed on the London Stock Exchange, the Luxembourg Stock Exchange or any other stock exchange located outside the United States and such stock exchange shall so require, copies of this Indenture, the Deposit Agreement, the Letter of Representations, the memorandum and articles of association of the Company, and the most recent publicly available annual report of the Company shall be made available for inspection by the Holders of such Securities upon receipt of written request on a Business Day during normal business hours at the offices of the paying agents and at the office of the listing agent required to be maintained by such exchange for so long as the Securities of such series are Outstanding and are listed on such stock exchange.

SECTION 1011.   Limitation on the Incurrence of Additional Indebtedness by Certain Subsidiaries

If this covenant shall be made applicable to the Securities of a particular series, the Company covenants and agrees that, so long as any Securities of such series remain outstanding, it shall prevent any Subsidiary, whether currently in existence or formed after the date hereof, that is a direct or indirect parent of Southern Investments UK plc, from incurring any indebtedness for borrowed money under any circumstances, excluding any indebtedness that exists as of the date hereof.

ARTICLE XI

REDEMPTION OF SECURITIES

SECTION 1101.   Applicability of Article

Securities of any series that are redeemable before their Stated Maturity shall be redeemable in accordance with their terms and (except as otherwise specified in or contemplated by Section 301 for Securities of any series) in accordance with this Article XI.

SECTION 1102.   Election to Redeem; Notice to Trustee

The election of the Company to redeem any Securities shall be authorized by a Board of Directors resolution and evidenced by an Officers' Certificate. In case of any redemption at the election of the Company of less than all the Securities of any series, the Company shall, at least 15 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount of Securities of such series to be redeemed. In the case of any redemption of Securities prior to the expiration of any restriction on such redemption provided in the terms of such Securities or elsewhere in this Indenture, or pursuant to an election by the Company that is subject to a condition specified in the terms of such Securities or elsewhere in this Indenture, the Company shall furnish the Trustee with an Officers' Certificate evidencing compliance with such restriction or condition.

SECTION 1103.   Selection by Trustee of Securities to Be Redeemed

If less than all the Securities of any series are to be redeemed, the particular securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and that may provide for the selection for redemption of portions equal to the minimum authorized denomination for Securities of that series (or any integral multiple thereof) of the principal amount of Securities of such series of a denomination larger than the minimum authorized denomination for Securities of that series.

Securities shall be excluded from eligibility for selection for redemption if they are identified by certificate number in a written statement signed by an authorized officer of the Company and delivered to the Security Registrar at least 30 days prior to the Redemption Date as being owned of record and beneficially by, and not pledged or hypothecated by either (i) the Company or (ii) an entity specifically identified in such written statement which is an Affiliate of the Company.

The Trustee shall promptly notify the Company in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed.

For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities which has been or is to be redeemed.

SECTION 1104.   Notice of Redemption

Notice of redemption shall be given not less than 15 days nor more than 30 days prior to the Redemption Date to each Holder of Securities to be redeemed.

All notices of redemption shall state:

(i)    the Redemption Date;

(ii)    the Redemption Price;

(iii)    if less than all the Outstanding Securities of any series are to be redeemed, the identification (and, in the case of partial redemption, the principal amounts) of the particular Securities to be redeemed;

(iv)    that on the Redemption Date the Redemption Price will become due and payable upon each such Security to be redeemed, and, if applicable, that interest thereon will cease to accrue on and after said date;

(v)    the place or places where such Securities are to be surrendered for payment of the Redemption Price; and

(vi)    that the redemption is for a sinking fund, if such is the case.

Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company.

SECTION 1105.   Deposit of Redemption Price

On or prior to any Redemption Date, the Company shall deposit with the Trustee or with a Principal Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 1003) an amount of money sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued interest on, all the Securities that are to be redeemed on that date (to the extent that such amounts are not already on deposit at such time in accordance with the provisions of Sections 401, 403 or 1007).

SECTION 1106.   Securities Payable on Redemption Date

Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued and unpaid interest) such Securities shall cease to bear interest. Upon surrender of any such Security for redemption in accordance with said notice, such Security shall be paid by the Company at the Redemption Price, together with accrued and unpaid interest to the Redemption Date; provided, however, that installments of interest whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, and in the case of Registered Securities, registered as such at the close of business on the relevant Record Dates according to their terms and the provisions of Section 308.

If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Security.

SECTION 1107.   Securities Redeemed in Part

Any Security (including any Global Security) that is to be redeemed only in part shall be surrendered at a Place of Payment therefor (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee upon written direction shall authenticate and deliver to the Holder of such Security without service charge, a new Security or Securities of the same series, of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the security so surrendered; provided, that if a Global Security is so surrendered, the new Global Security shall be in a denomination equal to the unredeemed portion of the principal of the Global Security so surrendered.

SECTION 1108.   Optional Redemption in the Event of Change in United Kingdom Tax Treatment

The Company may, at its option, by giving notice as provided in Section 1104, redeem all, but not less than all, of the Securities of any series, at a price equal to the outstanding principal amount thereof, together with accrued and unpaid interest, if any, to the Redemption Date, if:

(i)    the Company satisfies the Trustee prior to the giving of a notice that it has or will become obliged to pay Additional Amounts with respect to the Securities of such series as a result of any change in, or amendment to, the laws or regulations of the United Kingdom or any political subdivision or any authority or agency thereof or therein having power to tax or levy duties, or any change in the application or interpretation of such laws or regulations, which change or amendment becomes effective on or after February 9, 2001; and

(ii)    such obligation cannot be avoided by the Company's taking reasonable measures available to it;

provided, however, that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Company would be obliged to pay such Additional Amounts were a payment in respect of the Company's Securities of such series due.

Prior to the publication of any notice of redemption pursuant to this paragraph, the Company will deliver to the Trustee an Officers' Certificate stating that the obligation referred to in clause (i) above cannot be avoided by the Company's taking reasonable measures available to it, and the Trustee shall accept such certificate as sufficient evidence of the satisfaction of the condition precedent set out in clause (ii) above, in which event it shall be conclusive and binding on the Holders.

ARTICLE XII

SINKING FUNDS

SECTION 1201.   Applicability of Article

The provisions of this Article shall be applicable to any sinking fund for the retirement of Securities of a series, except as otherwise specified as contemplated by Section 301 for Securities of such series.

The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a "mandatory sinking fund payment," and any payment in excess of such minimum amount provided for by the terms of Securities of any series is herein referred to as an "optional sinking fund payment." If provided for by the terms of Securities of any series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 1202. Each sinking fund payment shall be applied to the redemption of Securities of any series as provided for by the terms of Securities of such series.

SECTION 1202.   Satisfaction of Sinking Fund Payments with Securities

In lieu of making all or any part of any mandatory sinking fund payment with respect to any series of Securities in cash, the Company may, at its option, (i) deliver to the Trustee Securities of such series theretofore purchased or otherwise acquired (except upon redemption pursuant to the mandatory sinking fund) by the Company or receive credit for Securities of such series (not previously so credited) theretofore purchased or otherwise acquired (except as aforesaid) by the Company and delivered to the Trustee for cancellation pursuant to Section 310, (ii) receive credit for optional sinking fund payments (not previously so credited) made pursuant to this Section 1202, or (iii) receive credit for Securities of such series (not previously so credited) redeemed by the Company through any optional redemption provision contained in the terms of such series. Securities so delivered or credited shall be received or credited by the Trustee at the sinking fund Redemption Price specified in such Securities.

SECTION 1203.   Redemption of Securities for Sinking Fund

Not less than 30 days prior to each sinking fund payment date for any series of Securities, the Company will deliver to the Trustee an Officers' Certificate specifying (i) the amount of the next ensuing sinking fund payment for that series pursuant to the terms of that series, (ii) whether or not the Company intends to exercise its right, if any, to make an optional sinking fund payment with respect to such series on the next ensuing sinking fund payment date and, if so, the amount of such optional sinking fund payment, and (c) the portion thereof, if any, which is to be satisfied by payment of cash and the portion thereof, if any, which is to be satisfied by delivering and crediting Securities of that series pursuant to Section 1202, and will also deliver to the Trustee any Securities to be so delivered. Such written statement shall be irrevocable and, upon its receipt by the Trustee, the Company shall become unconditionally obligated to make all the cash payments or payments therein referred to, if any, on or before the next succeeding sinking fund payment date. Failure of the Company, on or before any such 30^th day, to deliver such written statement and Securities specified in this paragraph, if any, shall not constitute a default but shall constitute, on and as of such date, the irrevocable election of the Company (A) that the mandatory sinking fund payment for such series due on the next succeeding sinking fund payment date shall be paid entirely in cash without the option to deliver or credit Securities of such series in respect therefor, and (B) that the Company will make no optional sinking fund payment with respect to such series as provided in this Section 1203.

Not less than 30 days before each such sinking fund payment date, the Trustee shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 1103 and shall cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 1104. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Sections 1105, 1106, and 1107.

The Trustee shall not redeem or cause to be redeemed any Security of a series with sinking fund moneys or mail any notice of redemption of Securities of such series by operation of the sinking fund during the continuance of a default in payment of interest with respect to Securities of that series or an Event of Default with respect to the Securities of that series, except that, where the mailing of notice of redemption of any Securities shall theretofore have been made, the Trustee shall redeem or cause to be redeemed such Securities, provided that it shall have received from the Company a sum sufficient for such redemption. Except as aforesaid, any moneys in the sinking fund for such series at the time when any such default or Event of Default shall occur, and any moneys thereafter paid into the sinking fund, shall, during the continuance of such default or Event of Default, be deemed to have been collected under Article V and be held for the payment of all such Securities. In case such Event of Default shall have been waived as provided in Section 513 or the default or Event of Default cured on or before the 30^th day preceding the sinking fund payment date, such moneys shall thereafter be applied on the next succeeding sinking fund payment date in accordance with this Section 1203 to the redemption of such Securities.

ARTICLE XIII

MEETINGS OF HOLDERS OF SECURITIES

SECTION 1301.   Purposes of Meetings

A meeting of the Holders may be called at any time, from time to time, pursuant to this Article XIII for any of the following purposes:

(i)    to give any notice to the Company or to the Trustee, or to consent to the waiving of any default hereunder and its consequence, or to take any other action authorized to be taken by Holders pursuant to Article IX hereof;

(ii)    to remove the Trustee and appoint a successor trustee pursuant to Article VI hereof; and

(iii)    to consent to the execution of an supplemental indenture hereto pursuant to Section 902 hereof.

SECTION 1302.   Place of Meetings

(a)    The Trustee may at any time (upon not less than 21 days' notice) call a meeting of Holders to be held at such time and at such place as determined by the Trustee. Notice of every meeting of Holders, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be mailed to each Holder and published in the manner contemplated by Section 106 hereof.

(b)    In case at any time the Company, pursuant to a Board Resolution, or the Holders of at least 10% in aggregate principal amount of the Securities then outstanding, shall have requested the Trustee to call a meeting of the Holders, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have made the first giving of the notice of such meeting within 20 days after receipt of such request, then the Company or the Holders in the amount above specified may determine the time (not less than 21 days after notice is given) and the place for such meeting, and may call such meeting to take any action authorized in Section 1301 hereof by giving notice thereof as provided in Section 1302(a) hereof.

SECTION 1303.   Voting at Meetings

To be entitled to vote at any meeting of Holders, a Person shall be (i) a Holder or (ii) a Person appointed by an instrument in writing as proxy for a Holder or Holders by such Holder or Holders. The only Persons who shall be entitled to be present or to speak at any meeting of Holders shall be the Persons so entitled to vote at such meeting and their counsel, any representatives of the Trustee and its counsel, and any representatives of the Company and its counsel.

SECTION 1304.   Voting Rights, Conduct and Adjournment

(a)    Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Holders in regard to (i) proof of the holding of Securities of a series and of the appointment of proxies (ii) the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates, and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall deem appropriate. Except as otherwise permitted or required by any such regulations, the holding of Securities of a series shall be proved in the manner specified in Article II hereof, and the appointment of any proxy shall be proved in such manner as is deemed appropriate by the Trustee or by having the signature of the person executing the proxy witnessed or guaranteed by any bank, banker or trust company customarily authorized to certify to the holding of a security such as a Global Security.

(b)    At any meeting of Holders, the representative of Persons holding or representing Securities of a series in an aggregate principal amount sufficient under the appropriate provision of this Indenture to take action upon the business for the transaction of which such meeting was called shall constitute a quorum. Any meetings of Holders duly called pursuant to Section 1302 hereof may be adjourned from time to time by vote of the Holders (or proxies for the Holders) of a majority of the Securities of a series represented at the meeting and entitled to vote, whether or not a quorum shall be present; and the meeting may be held as so adjourned without further notice. No action at a meeting of Holders shall be effective unless approved by Persons holding or representing Securities of a series in the aggregate principal amount required by the provision of this Indenture pursuant to which such action is being taken.

(c)    At any meeting of Holders, each Holder or proxy shall be entitled to one vote for each $1,000 principal amount of outstanding Securities of a series held or represented.

SECTION 1305.   Revocation of Consent by Holders

At any time prior to (but not after) the evidencing to the Trustee of the taking of any action at a meeting of Holders by the Holders of the percentage in aggregate principal amount of the Securities specified in this Indenture in connection with such action, any Holder of a Security, the serial number of which is included in the Securities the Holders of which have consented to such action, may, by filing written notice with the Trustee at its principal corporate trust office and upon proof of holding as provided herein, revoke such consent so far as concerns such Securities. Except as aforesaid, any such consent given by the Holder of any Securities shall be conclusive and binding upon such Holder and upon all future Holders and owners of such Securities and of any Securities issued in exchange therefor, in lieu thereof or upon transfer thereof, irrespective of whether or not any notation in regard thereto is made upon such Securities. Any action taken by the Holders of the percentage in aggregate principal amount of the Holders specified in this Indenture in connection with such action shall be conclusively binding upon the Company, the Trustee, and the Holders of all the Securities.

ARTICLE XIV

MISCELLANEOUS

SECTION 1401.   Consent to Jurisdiction; Appointment of Agent to Accept Service of Process

(a)    The Company irrevocably consents and agrees, for the benefit of the Holders from time to time of the Securities and the Trustee, that any legal action, suit or proceeding against it with respect to its obligations, liabilities or any other matter arising out of or in connection with this Indenture or the Securities may be brought in the Supreme Court of New York, New York County or the United States District Court for the Southern District of New York and any appellate court from either thereof and, until amounts due and to become due in respect of the Securities have been paid, hereby irrevocably consents and submits to the nonexclusive jurisdiction of each such court in personam, generally and unconditionally with respect to any action, suit or proceeding for itself and in respect of its properties, assets, and revenues.

(b)    The Company has irrevocably designated, appointed, and empowered CT Corporation System, as its designee, appointee, and agent to receive, accept, and acknowledge for and on its behalf, and its properties, assets, and revenues, service of any and all legal process, summons, notices, and documents that may be served in any action, suit or proceeding brought against the Company in any United States or State court. If for any reason such designee, appointee, and agent hereunder shall cease to be available to act as such, the Company agrees to designate a new designee, appointee, and agent in the Borough of Manhattan, The City of New York on the terms and for the purposes of this Section 1401 satisfactory to the Trustee. The Company further hereby irrevocably consents and agrees to the service of any and all legal process, summons, notices, and documents in any action, suit or proceeding against the Company by serving a copy thereof upon the relevant agent for service of process referred to in this Section 1401 (whether or not the appointment of such agent shall for any reason prove to be ineffective or such agent shall accept or acknowledge such service) or by mailing copies thereof by registered or certified air mail, postage prepaid, to the Company at its address specified in or designated pursuant to this Indenture. The Company agrees that the failure of any such designee, appointee, and agent to give any notice of such service to it shall not impair or affect in any way the validity of such service or any judgment rendered in any action or proceeding based thereon. Nothing herein shall in any way be deemed to limit the ability of the Holders of the Securities and the Trustee, to serve any such legal process, summons, notices, and documents in any other manner permitted by applicable law or to obtain jurisdiction over the Company or bring actions, suits or proceedings against the Company in such other jurisdictions, and in such manner, as may be permitted by applicable law. The Company irrevocably and unconditionally waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions, suits or proceedings arising out of or in connection with this Indenture brought in the Supreme Court of New York, New York County or the United States District Court for the Southern District of New York and any appellate court from either thereof and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

If for the purpose of obtaining judgment in any court it is necessary to convert a sum due hereunder to the holder of any Security from U.S. dollars into another currency, the Company has agreed, and each Holder by holding such Security will be deemed to have agreed, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures such Holder could purchase U.S. dollars with such other currency in The City of New York on the Business Day preceding the day on which final judgment is given.

The obligation of the Company in respect of any sum payable by it to the Holder of a Security shall, notwithstanding any judgment in a currency (the "judgment currency") other than U.S. dollars, be discharged only to the extent that on the Business Day following receipt by the Holder of such Security of any sum, adjudged to be so due in the judgment currency, the Holder of such Security may in accordance with normal banking procedures purchase U.S. dollars with the judgment currency; if the amount of U.S. dollars so purchased is less than the sum originally due to the Holder of such Security in the judgment currency (determined in the manner set forth in the preceding paragraph), the Company agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Holder of such Security against such loss, and if the amount of the U.S. dollars so purchased exceeds the sum originally due to the Holder of such Security, such Holder agrees to remit to the Company such excess; provided that such Holder shall have no obligation to remit any such excess as long as the Company shall have failed to pay such Holder any obligations due and payable under such Security, in which case such excess may be applied to such obligations of the Company under such Security in accordance with the terms thereof.

SECTION 1402.   Counterparts

This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

[Remainder of page intentionally left blank.]

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed by their respective officers or directors duly authorized thereto, all as of the day and year first above written.

	WPD HOLDINGS UK
	By	____________________________________
		Title:
Attest:
____________________________________
	BANKERS TRUST COMPANY, as Trustee, Principal Paying Agent, Security Registrar and Transfer Agent
	By	____________________________________
		Title:
Attest:
____________________________________
	DEUTSCHE BANK LUXEMBOURG S.A., as Paying Agent and Transfer Agent
	By	____________________________________
		Title:

EX-4

Exhibit 4(n)-2

WPD HOLDINGS UK

and

BANKERS TRUST COMPANY
as Trustee, Principal Paying Agent,
Registrar and Transfer Agent

and

DEUTSCHE BANK LUXEMBOURG. S.A.,
as Paying Agent and Transfer Agent

6.75% Notes Due 2004

6.875% Notes Due 2007

6.50% Notes Due 2008

7.25% Notes Due 2017

7.375% Notes Due 2028

First Supplemental Indenture
Dated as of March 16, 2001

FIRST SUPPLEMENTAL INDENTURE, dated as of March 16, 2001 (herein called the "First Supplemental Indenture"), among WPD Holdings UK, a corporation duly organized and existing under the laws of England and Wales (hereinafter called the "Company"), and BANKERS TRUST COMPANY, as Trustee, Principal Paying Agent, Registrar and Transfer Agent under the Original Indenture referred to below (hereinafter called the "Trustee") and DEUTSCHE BANK LUXEMBOURG S.A., as Paying and Transfer Agent under the Original Indenture, as defined below.

WITNESSETH:

WHEREAS, the Company has heretofore executed and delivered to the Trustee an indenture dated as of March 16, 2001 (hereinafter called the "Original Indenture"), to provide for the issuance from time to time of its unsecured debentures, notes or other evidences of indebtedness (herein called the "Securities"), the form and terms of which are to be established as set forth in Section 201 and 301 of the Original Indenture;

WHEREAS, Section 901 of the Original Indenture provides, among other things, that the Company and the Trustee may enter into supplemental indentures to the Original Indenture for, among other things, the purpose of establishing the form and terms of the Securities of any series as permitted in Sections 201 and 301 of the Original Indenture and of appointing an Authenticating Agent with respect to the securities of any series;

WHEREAS, the Company desires to create five series of the Securities, one series of Securities in an aggregate principal amount of two hundred million dollars ($200,000,000) to be designated the "6.75% Notes Due 2004," one series of Securities in an aggregate principal amount of $200,000,000 to be designated the "6.875% Notes Due 2007," one series of Securities in an aggregate principal amount of $225,000,000 to be designated the "6.50% Notes Due 2008," one series of Securities in an aggregate principal amount of $100,000,000 to be designated the "7.25% Notes Due 2017," and one series of Securities in an aggregate principal amount of $300,000,000 to be designated the "7.375% Notes Due 2028" (collectively, the "Notes"), and all action on the part of the Company necessary to authorize the issuance of the Notes under the Original Indenture and this First Supplemental Indenture has been duly taken; and

WHEREAS, all acts and things necessary to make the Notes, when executed by the Company and authenticated and delivered by the Trustee as in the Original Indenture provided, valid and binding obligations of the Company and to constitute this First Supplemental Indenture a valid and binding agreement of the Company, according to its terms, have been done and performed;

NOW, THEREFOR, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:

That in consideration of the premises and of the acceptance and purchase of the Notes by the Holders thereof and of the acceptance of this trust by the Trustee, the Company covenants and agrees with the Trustee, for the equal benefit of Holders of the Notes, as follows:

ARTICLE I

DEFINITIONS

Section 1.01    Definitions. The use of the terms and expressions herein is in accordance with the definitions, uses, and constructions contained in the Original Indenture and the forms of Notes attached hereto as Exhibits A, B, C, D, E, and F, respectively. In addition, for all purposes of this First Supplemental Indenture, except as otherwise expressly provided or unless the context otherwise expressly requires, the following terms shall have the respective meanings assigned to them as follows and shall be construed as if defined in Article I of the Original Indenture:

"Book-Entry Depositary" means the Book-Entry Depositary or its nominee or the custodian of either, designated by the Company in the Deposit Agreement until a successor Book-Entry Depositary shall have become such pursuant to the applicable provisions of the Deposit Agreement, and thereafter "Book-Entry Depositary" shall mean such successor Book-Entry Depositary or its nominee or the custodian of either.

"Definitive Registered Note" means a registered Note substantially in the form of Exhibit F to this First Supplemental Indenture.

"Deposit Agreement" means the Deposit Agreement, dated as of the date of this First Supplemental Indenture, between the Company and Bankers Trust Company as Book-Entry Depositary.

"DTC" means The Depository Trust Company or its successors.

"Global Note" means a bearer Global Note as defined in Section 2.09.

ARTICLE II

TERMS AND ISSUANCE OF THE NOTES

Section 2.01     Issue of Notes. Five series of Securities, which shall be designated the "6.75% Notes Due 2004", the "6.875% Notes Due 2007," the "6.50% Notes Due 2008," the "7.25% Notes Due 2017," and the "7.375% Notes Due 2028" shall be executed, authenticated, and delivered in accordance with the provisions of, and shall in all respects be subject to, the terms, conditions and covenants of the Original Indenture and this First Supplemental Indenture (including the forms of Notes set forth in Exhibits A, B, C, D, E and F, hereto). The aggregate principal amount of the 6.75% Notes Due 2004, the 6.875% Notes Due 2007, the 6.50% Notes Due 2008, the 7.25% Notes Due 2017, and the 7.375% Notes Due 2028 that may be authenticated and delivered under the First Supplemental Indenture shall not, except as permitted by the provisions of the Original Indenture, exceed $200,000,000, $200,000,000, $225,00 0,000, $100,000,000, and $300,000,000, respectively.

Section 2.02     Form of Notes; Incorporation of Terms. Each series of Notes shall be issued in the form of a Rule 144A Global Note (as defined below), a Regulation S Temporary Global Note (as defined below), and, after the expiration of the Restricted Period, a Regulation S Permanent Global Note (as defined below). The 6.75% Notes Due 2004 shall be issued as a Rule 144A Global Note, a Regulation S Temporary Global Note and a Regulation S Permanent Global Note substantially in the form of, respectively, Exhibit A-1, Exhibit A-2 and Exhibit A-3 attached hereto. The 6.875% Notes Due 2007 shall be issued as a Rule 144A Global Note, a Regulation S Temporary Global Note and a Regulation S Permanent Global Note substantially in the form of, respectively, Exhibit B-1, Exhibit B-2 and Exhibit B-3 attached hereto. The 6.50% Notes Due 2008 shall be issued as a Rule 144A Global Note, a Regulation S Temporary Global Note and a Regulation S Permanent Global Note substantially in the form of, respectively, Exhibit C-1, Exhibit C-2 and Exhibit C-3 attached hereto. The 7.25% Notes Due 2017 shall be issued as a Rule 144A Global Note, a Regulation S Temporary Global Note and a Regulation S Permanent Global Note substantially in the form of, respectively, Exhibit D-1, Exhibit D-2 and Exhibit D-3 attached hereto. The 7.375% Notes Due 2028 shall be issued as a Rule 144A Global Note, a Regulation S Temporary Global Note and a Regulation S Permanent Global Note substantially in the form of, respectively, Exhibit E-1, Exhibit E-2 and Exhibit E-3 attached hereto. In the event that any of the Notes are, in accordance with the terms of the Original Indenture, issued as definitive registered notes, the form of each such Note shall be substantially in the form of Exhibit F attached hereto, with such legends and other amendments as are required by the terms of the Original Indenture to be contained in the specific form of Note, the terms of which are herein incorporated by reference and that are part of this First Supplemental Indenture.

Section 2.03     Limitation on Liens. The covenant provided by Section 1004 of the Original Indenture shall be applicable to the Notes.

Section 2.04     Limitation on Sale and Lease-Back Transactions. The covenant provided by Section 1005 of the Original Indenture shall be applicable to the Notes.

Section 2.05     Limitation on the Incurrence of Additional Indebtedness by Certain Subsidiaries. The covenant provided by Section 1011 of the Original Indenture shall be applicable to the Notes.

Section 2.06     Additional Amounts. The terms provided by Section 1009 of the Original Indenture shall be applicable to the Notes.

Section 2.07     Event of Default. The events specified in Section 501 of the Original Indenture shall constitute Events of Default with respect to the Notes.

Section 2.08     Place of Payment. The Place of Payment in respect of the Notes will be in The City of New York, initially the Corporate Trust Office of Bankers Trust Company, and, for so long as the Notes are listed on the Luxembourg Stock Exchange, in Luxembourg, initially the principal office of Deutsche Bank Luxembourg S.A., which at the date hereof, is located at 2 Bld Konrad Adenauer, L-1115 Luxembourg.

Section 2.09     Issuance of Global Notes. Each series of Notes will be issued only in the form of (i) a global bearer note in respect of each such series representing Notes offered and sold to Qualified Institutional Buyers (as defined in Rule 144A under the Securities Act ("QIBs")) pursuant to Rule 144A (each, a "Rule 144A Global Note"), (ii) a temporary global bearer note in respect of each such series representing Notes offered and sold to U.S. Persons (as defined in Rule 902 of the Securities Act) in offshore transactions in reliance on Regulation S under the Securities Act (each, a "Regulation S Temporary Global Note"), and (iii) after the expiration of the Restricted Period, a permanent global bearer note in respect of each such series (each, a "Regulation S Permanent Global Note," and, together with each Rule 144A Global Note and Regulation S Temporary Global Note, a "Global Note"). Be neficial interests in each Regulation S Temporary Note will be exchanged for beneficial interests in the corresponding Regulation S Permanent Global Note within a reasonable time of the expiration of the Restricted Period upon certification that the beneficial interest in such Regulation S Temporary Global Note is owned by a non-U.S. Person, in accordance with Sections 201 and 206 of the Original Indenture. Each Global Note shall be delivered by the Trustee to the Book-Entry Depositary, as the Holder thereof, or a nominee or custodian therefore, to be held by the Book-Entry Depositary pursuant to the Deposit Agreement.

Section 2.10     Exchange of the Global Notes. Each of the Global Notes shall be exchangeable, in whole but not in part, for Definitive Registered Notes only as provided in this paragraph. A Global Note representing a series of Notes shall be so exchangeable if (i) DTC notifies the Company and the Book-Entry Depositary that it is unwilling or unable to continue to hold the relevant Book-Entry Interests or at any time it ceases to be a "clearing agency" registered as such under the Exchange Act, and, in either case, a successor is not appointed by the Company within 120 days, (ii) the Book-Entry Depositary notifies the Company that is it unwilling or unable to continue as Book-Entry Depositary with respect to the Global Note and no successor is appointed by the Company within 120 days, (iii) the Company executes and delivers to the Trustee an Officers' Certificate providing that the Global Note shall be so exchanged, or (iv) there shall have occurred and be continuing an Event of Default with respect to the Notes of the series represented by the Global Note and the Holder, in such circumstance, acting upon instructions from owners of interests representing a majority of outstanding principal amount of the Book-Entry Interests relating to the Global Note, shall have requested in writing that the Global Note be exchanged for one or more Definitive Registered Notes. Definitive Registered Notes so issued in exchange for the Global Note shall be of the same series, having the same interest rate, if any, and maturity and having the same terms as such Global Note, in authorized denominations of $1,000 and any integral multiple thereof and in the aggregate having the same principal amount as such Global Note and registered in such names as the Book-Entry Depositary for such Global Note shall direct.

Section 2.11    Regular Record Date for the Notes. The Regular Record Date for the Notes shall be 15 calendar days immediately prior to each Interest Payment Date.

ARTICLE III

AUTHENTICATING AGENT; BOOK-ENTRY DEPOSITARY

Section 3.01     Authenticating Agent; Book-Entry Depositary. Bankers Trust Company, a New York banking corporation, and its successors are hereby appointed Authenticating Agent and Book-Entry Depositary with respect to the Notes.

ARTICLE IV

MISCELLANEOUS

Section 4.01     Execution as Supplemental Indenture. This First Supplemental Indenture is executed and shall be construed as an indenture supplemental to the Original Indenture and, as provided in the Original Indenture, this first Supplemental Indenture forms a part thereof.

Section 4.02     Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with another provision hereof that is required to be included in this First Supplemental Indenture by any of the provisions of the Trust Indenture Act, such required provision shall control.

Section 4.03     Effect of Headings. The Article and Section headings herein are for convenience only and shall not affect the construction hereof.

Section 4.04     Successors and Assigns. All covenants and agreements in this First Supplemental Indenture by the Company shall bind its successors and assigns, whether so expressed or not.

Section 4.05     Separability Clause. In case any provision in this First Supplemental Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

Section 4.06     Benefits of First Supplemental Indenture. Nothing in this First Supplemental Indenture or in the Notes, express or implied, shall give to any person, other than the parties hereto and their successors hereunder and the Holders, any benefit or any legal or equitable right, remedy or claim under this First Supplemental Indenture.

Section 4.07     Execution and Counterparts. This First Supplemental Indenture may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

[Remainder of page intentionally left blank.]

IN WITNESS WHEREOF, the parties hereof have caused this First Supplemental Indenture to be duly executed by their respective officers or directors duly authorized thereto, all as of the day and year first above written.

WPD HOLDINGS UK

By:                                                        
   Name:
   Title:

BANKERS TRUST COMPANY,
   as Trustee

By:                                                        
   Name:
   Title:

DEUTSCHE BANK LUXEMBOURG S.A.,
   as Paying and Transfer Agent

By:     

Name:

Title:

Attest:

____________________________

Exhibit A-1

[FORM OF RULE 144A GLOBAL NOTE]

This Security is a Global Security within the meaning of the Indenture hereinafter referred to and is held by a Book-Entry Depositary or a nominee of a Book-Entry Depositary. This Security is exchangeable for securities held by or registered in the name of a person other than the Book-Entry Depositary or its nominee only in the limited circumstances described in the Indenture, and no transfer of this Security (other than a transfer of this Security as a whole by the Book-Entry Depositary to a nominee of the Book-Entry Depositary or by a nominee of the Book-Entry Depositary to the Book-Entry Depositary or another nominee of the Book-Entry Depositary) may be made, except in limited circumstances.

Unless this Global Security is presented by an authorized representative of the Book-Entry Depositary to the issuer or its agent for exchange or payment, and any definitive security is issued in the name or names as directed in writing by the Book-Entry Depositary, ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the bearer hereof, the Book-Entry Depositary, has an interest herein.

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE ISSUANCE HEREOF (OR A PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN TO THE COMPANY, SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY THE BO X CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE LAWS OF ANY STATE OF THE UNITED STATES.

WPD HOLDINGS UK
6.75% Notes Due December 15, 2004

No. [________]                                                               [$____________]
CUSIP No. [_______]
ISIN No. [________]

WPD HOLDINGS UK, a company duly organized and existing under the laws of England and Wales (herein called the "Company," which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay the bearer upon surrender hereof, the principal sum of [____________________________] on December 15, 2004, and to pay interest thereon from December 15, 2000, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on June 15 and December 15 of each year, commencing on June 15, 2001, at the rate per annum provided in the title hereof, until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the bearer on such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the bearer on such Interest Payment Date and may be paid to the bearer at the time of payment of such Defaulted Interest, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture.

Payment of the principal of (and premium, if any) and interest, if any, on this Security will be made at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, the City of New York, and/or in Luxembourg in such coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts. Payments of any amounts in respect of this Security will be made through the Paying Agents to the Book-Entry Depositary, as the holder thereof. The Book-Entry Depositary will pay an amount equal to such payment to DTC, which will distribute such payment to its Participants in amounts proportionate to their respective ownership of interests in the Book-Entry Interests as shown on the records of DTC. The Company expects that payments by Participants to owners of interests in Book-Entry Interests held through such Participants will be governed by standing customer instructions and customary practices and will be the responsibil ity of such Participants.

The Company will not have any responsibility or liability for any aspect relating to payments made or to be made by the Book-Entry Depositary to DTC in respect of this Security or the Book-Entry Interests. None of the Company, the Trustee, the Book-Entry Depositary or any agent of any of the foregoing will have any responsibility or liability for any aspect relating to payments made or to be made by DTC on account of a Participant's or Indirect Participant's ownership of an interest in the Book-Entry Interests or for maintaining, supervising or reviewing any records relating to a Participant's or Indirect Participant's interests in the Book-Entry Interests.

All payments of principal and interest (including payments of discount and premium, if any) in respect of this Security shall be made free and clear of, and without withholding or deduction for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or within the United Kingdom or by or within any political subdivision thereof or any authority therein or thereof having power to tax ("United Kingdom Taxes"), unless such withholding or deduction is required by law. In the event of any such withholding or deduction, the Company shall pay to the Holder such additional amounts (the "Additional Amounts") as will result in the payment to such Holder of the amount that would otherwise have been receivable by such Holder in the absence of such withholding or deduction, except that no such Additional Amounts shall be payable:

(i)    to, or to a Person on behalf of, a Holder who is liable for such United Kingdom Taxes in respect of this Security by reason of such Holder having some connection with the United Kingdom (including being a citizen or resident or national of, or carrying on a business or maintaining a permanent establishment in, or being physically present in, the United Kingdom) other than the mere holding of this Security or the receipt of principal and interest (including payments of discount and premium, if any) in respect thereof;

(ii)    to, or to a Person on behalf of, a Holder who presents this Security (where presentation is required) for payment more than 30 days after the Relevant Date (as defined below), except to the extent that such Holder would have been entitled to such Additional Amounts on presenting this Security for payment on the last day of such period of 30 days;

(iii)    to, or to a Person on behalf of, a Holder who presents this Security (where presentation is required) in the United Kingdom; or

(iv)    to, or to a Person on behalf of, a Holder who would not be liable or subject to the withholding or deduction by making a declaration of non-residence or similar claim for exemption to the relevant tax authority.

Such Additional Amounts will also not be payable where, had the beneficial owner of this Security (or any interest therein) been the Holder of the Security, he or she would not have been entitled to payment of Additional Amounts by reason of any one or more of clauses (i) through (iv) above. If the Company shall determine that Additional Amounts will not be payable because of the immediately preceding sentence, the Company will inform such holder promptly after making such determination setting forth the reason(s) therefor.

"Relevant Date" means whichever is the later of (i) the date on which such payment first becomes due and (ii) if the full amount payable has not been received in The City of New York by the Book-Entry Depositary or the Trustee on or prior to such due date, the date on which, the full amount having been so received, notice to that effect shall have been given to the Holders in accordance with the Indenture.

References to principal, interest, discount or premium in respect of this Security shall be deemed also to refer to any Additional Amounts which may be payable as set forth in the Indenture or in this Security.

The Company shall furnish to the Trustee the official receipts (or a certified copy of the official receipts) evidencing payment of United Kingdom Taxes. Copies of such receipts shall be made available to the Holder of this Security upon request.

So long as the Securities are listed on the Luxembourg Stock Exchange and the rules of the Luxembourg Stock Exchange so require, notices to Holders of Securities will be published in a leading newspaper having general circulation in Luxembourg (which is expected to be the Luxembourg Wort).

The Book-Entry Depositary will immediately send to DTC a copy of any notices, reports, and other communications received by it relating to the Company or the Securities.

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

[Remainder of page intentionally left blank.]

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer or director of the Company duly authorized.

Dated: March 16, 2001

WPD HOLDINGS UK

By:                                                        
   Name:
   Title:

[FORM OF CERTIFICATE OF AUTHENTICATION]

This is one of the Securities of the series designated herein and referred to in the within-mentioned Indenture.

Date: March 16, 2001

BANKERS TRUST COMPANY
   as Trustee

By:                                                        
       Title:  Authorized Officer

[FORM OF REVERSE OF SECURITY]
(Rule 144A)

WPD HOLDINGS UK
6.75% Notes Due December 15, 2004

This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture, dated as of March 16, 2001 (herein called the "Original Indenture") among the Company, Bankers Trust Company, as trustee (herein called the "Trustee"), which term includes any successor trustee under the Indenture), and Deutsche Bank Luxembourg S.A., as paying and transfer agent (the "Paying and Transfer Agent"), as supplemented by the First Supplemental Indenture, dated as of March 16, 2001 (together with the Original Indenture, the "Indenture"), among the Company, the Trustee, and the Paying Agent, to which Indenture and all supplemental indentures thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties, and immunities thereunder of the Company, the Trustee, the Paying Agent, and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. Terms defined in the Indenture that are not defined herein are used with the meanings assigned to them in the Indenture. This Security is one of the series designated on the face hereof, limited in aggregate principal amount to [$__________________].

The Securities of this series will be redeemable in whole or in part, at the option of the Company at any time, at a redemption price equal to the greater of (i) 100% of the principal amount of the Securities of this series being redeemed or (ii) the sum of the present values of the remaining scheduled payments of principal of and interest on the Securities of this series being redeemed discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at a discount rate equal to the Treasury Yield plus 25 basis points in respect of the Securities of this series, plus, for (i) or (ii) above, whichever is applicable, accrued interest on the Notes to the date of redemption.

"Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker (as defined below) as having a maturity comparable to the remaining term of the Securities of this series to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Securities of this series.

"Comparable Treasury Price" means, with respect to any date on which the Securities are redeemed (each, a "Redemption Date"), (i) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third Business Day preceding such Redemption Date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S. Government Securities," or (ii) if such release (or any successor release) is not published or does not contain such prices on such Business Day, the Reference Treasury Dealer Quotation (as defined below) for such Redemption Date.

"Independent Investment Banker" means an independent investment banking institution of national standing in the U.S. appointed by the Company and reasonably acceptable to the Trustee.

"Reference Treasury Dealer Quotation" means, with respect to the Reference Treasury Dealer (as defined below) and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount and quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third Business Day preceding such Redemption Date).

"Reference Treasury Dealer" means a primary U.S. Government securities dealer in New York City appointed by the Company and reasonably acceptable to the Trustee.

"Treasury Yield" means, with respect to any date on which the Securities are redeemed (each a "Redemption Date"), the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.

Notice of redemption shall be given not less than 15 days nor more than 30 days prior to the date fixed for redemption.

If fewer than all the of the Securities are to be redeemed, selection of Securities of this series for redemption will be made by the Trustee in any manner the Trustee deems fair and appropriate and complies with applicable legal and securities exchange requirements.

Unless the Company defaults in payment of the redemption price, from and after the Redemption Date, the Securities of this series or portions thereof called for redemption will cease to bear interest, and the Holders thereof will have no right in respect to such Securities of this series, except the right to receive the redemption price thereof.

In the event of redemption of these Securities in part only, a new Security or Securities of this series and of like term or for the unredeemed portion hereof will be issued to the Holder upon the cancellation hereof.

The Indenture contains provisions for defeasance of (i) the entire indebtedness of this Security and (ii) certain restrictive covenants upon compliance by the Company with certain conditions set forth therein.

If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. At any time after such declaration of acceleration with respect to Securities of any series has been made, but before a judgment or decree for payment of money has been obtained by the Trustee as provided in the Indenture, if all Events of Default with respect to Securities of this series have been cured or waived (other than the non-payment of principal of the Securities that has become due solely by reason of such declaration of acceleration), then such declaration of acceleration and its consequences shall be automatically annulled and rescinded.

The Securities of this series are subject to redemption, in whole but not in part, upon not less than 15 nor more than 30 days' notice given as provided in the Indenture to the Holders of Securities of this series at a price equal to the outstanding principal amount thereof together with Additional Amounts, if any, and accrued interest, to the Redemption Date if:

(i)    the Company satisfies the Trustee prior to the giving of such notice that it has or will become obliged to pay Additional Amounts as a result of either (x) any change in, or amendment to, the laws or regulations of the United Kingdom or any political subdivision or any authority or agency thereof or therein having power to tax or levy duties, or any change in the application or interpretation of such laws or regulations, which change or amendment becomes effective on or after March 16, 2001, or (y) the issuance of definitive Registered Securities pursuant to any of clauses (i), (ii) or (iv) of the third following paragraph; and

(ii)    such obligation cannot be avoided by the Company taking reasonably measures available to it;

subject, as provided in the Indenture, to the delivery by the Company of an Officers' Certificate stating that the obligation referred to in clause (i) above cannot be avoided by the Company taking reasonable measures available to it.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the Indenture or any further supplemental indenture or the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Securities at the time Outstanding of all series to be affected (voting as a class). The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future H olders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest, if any, on this Security at the time, place, and rate, and in the coin or currency, herein prescribed.

This Security shall be exchangeable, in whole but not in part, for Securities registered in the names of Persons other than the Book-Entry Depositary with respect to such series or its nominee only as provided in this paragraph. This Security shall be so exchangeable if (i) DTC notifies the Company and the Book-Entry Depositary that it is unwilling or unable to continue to hold the Book-Entry Interest or at any time it ceases to be a "clearing agency" registered as such under the Exchange Act and, in either case, a successor is not appointed by the Company within 120 days, (ii) the Book-Entry Depositary for the Securities of this series notifies the Company that it is unwilling or unable to continue as Book-Entry Depositary with respect to this Security and no successor is appointed within 120 days, (iii) the Company executes and delivers to the Trustee an Officers' Certificate providing that this Security shall be so exchangeable, or (iv) there shall have occurred and be continuing an Event of Default with respect to the Securities of this series and the Holder, in such circumstance, acting upon instructions from owners of interests representing a majority of outstanding principal amount of the Book-Entry Interests relating to this Security, shall have requested in writing that this Security be exchanged for one or more definitive Registered Securities of this series. Securities so issued in exchange for this Security shall be of the same series, having the same interest rate, if any, and maturity and having the same terms as this Security, in authorized denominations and in the aggregate having the same principal amount as this Security and registered in such names as the Book-Entry Depositary for this Security shall direct.

The Securities of this series of which this Security is a part and which are not Global Securities are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. The bearer of this Security shall be treated as the owner of it for all purposes, subject to the terms of the Indenture. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

When a successor assumes all the obligations of its predecessor under the Securities of this series and the Indenture in accordance with the terms of the Indenture, the predecessor will be released from those obligations.

The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities of this series and may otherwise deal with the Company, its Subsidiaries or their respective Affiliates as if it were not the Trustee.

No stockholder, director, officer, employee, incorporator or Affiliate of the Company shall have any liability for any obligation of the Company under the Securities of this series or the Indenture for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of the Securities of this series, by accepting a Security of this series, waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Securities of this series.

This Security shall not be valid until the Trustee or Authenticating Agent signs the certificate of authentication on this Security.

Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures ("CUSIP"), the Company will cause CUSIP numbers to be printed on the Securities of this series as a convenience to the Holders of the Securities of this series. No representation is made as to the accuracy of such numbers as printed on the Securities of this series and reliance may be placed only on the other identification numbers printed hereon.

This Security shall be governed by and construed in accordance with the laws of the State of New York.

All terms used in this Security that are defined in the Indenture shall have the meanings assigned to them in the Indenture.

[FORM OF ASSIGNMENT FORM]

To assign this Security, fill in the form below:

   I or we assign and transfer this Security to:

(Print or type assignee's name, address and zip code)

(Insert assignee's soc. sec. or tax I.D. No.)

and irrevocably appoint him, her or it as agent to transfer this Security on the books of the Company. The agent may substitute another act for him, her or it.

___________________________________________________________________________

___________________________________________________________________________

    Date: _______________

    Your Signature: _______________________

     Signature Guarantee: _____________________________________
                                                   (Signature must be guaranteed)

___________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in the Securities Transfer Agents Medallion Program ("STAMP") or such other signature guarantee medallion program as may be approved by the Registrar in addition to or substitution for, STAMP), pursuant to S.E.C. Rule 17Ad-15.

In connection with any transfer or exchange of any of the Securities evidenced by this certificate occurring prior to the date that is two years after the later of the date of original issuance of such Securities and the last date, if any, on which such Securities were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Securities are being:

CHECK ONE BOX BELOW:

1 [_]   acquired for the undersigned's own account, without transfer;

2 [_]   transferred to the Company;

3 [_]   transferred pursuant to and in compliance with Rule 144A under the Securities Act of 1933;

4 [_]   transferred pursuant to an effective registration statement under the Securities Act;

5 [_]   transferred pursuant to and in connection with Regulation S under the Securities Act of 1933; or

6 [_]   transferred pursuant to another available exemption from the registration requirements of the Securities Act of 1933.

Unless one of the boxes is checked, the Trustee may refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered holder thereof; provided, however, that if box (5) or (6) is checked, the Trustee or the Company may require, prior to registering any such transfer of the Securities, in their sole discretion, such legal opinions, certifications and other information as the Trustee or the Company may reasonably request to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act.

_________________________________
Signature

Signature Guarantee:

________________________________________________________
(Signature must be guaranteed)

________________________________________________________
Signature

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions) with membership in STAMP or such other signature guarantee medallion program as may be approved by the Security Registrar in addition to or substitution for STAMP, pursuant to S.E.C. Rule 17Ad-15.

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITIES

The following increases or decreases in this Global Security have been made:

Date of Exchange Amount of decrease in Principal Amount of this Global Security Amount of increase in Principal Amount of this Global Security Principal Amount of this Global Security following such decrease or increase Signature of authorized signatory of Trustee or Security Custodian

Exhibit A-2

[FORM OF REGULATION S TEMPORARY GLOBAL NOTE]

This Security is a Global Security within the meaning of the Indenture hereinafter referred to and is held by a Book-Entry Depositary or a nominee of a Book-Entry Depositary. This Security is exchangeable for securities held by or registered in the name of a person other than the Book-Entry Depositary or its nominee only in the limited circumstances described in the Indenture, and no transfer of this Security (other than a transfer of this Security as a whole by the Book-Entry Depositary to a nominee of the Book-Entry Depositary or by a nominee of the Book-Entry Depositary to the Book-Entry Depositary or another nominee of the Book-Entry Depositary) may be made, except in limited circumstances.

Unless this Global Security is presented by an authorized representative of the Book-Entry Depositary to the issuer or its agent for exchange or payment, and any definitive security is issued in the name or names as directed in writing by the Book-Entry Depositary, ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the bearer hereof, the Book-Entry Depositary, has an interest herein.

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE ISSUANCE HEREOF (OR A PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN TO THE COMPANY, SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY THE BO X CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE LAWS OF ANY STATE OF THE UNITED STATES.

THIS GLOBAL NOTE IS A TEMPORARY GLOBAL NOTE FOR PURPOSES OF REGULATION S UNDER THE SECURITIES ACT. NEITHER THIS TEMPORARY GLOBAL NOTE NOR ANY INTEREST HEREIN MAY BE OFFERED, SOLD OR DELIVERED, EXCEPT AS PERMITTED UNDER THE INDENTURE HEREINAFTER REFERRED TO.

NO BENEFICIAL OWNERS OF THIS TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF PRINCIPAL OR INTEREST HEREON UNLESS THE REQUIRED CERTIFICATIONS HAVE BEEN DELIVERED PURSUANT TO THE TERMS OF THE INDENTURE.

WPD HOLDINGS UK
6.75% Notes Due December 15, 2004

No. [________]                                                               [$____________]
CUSIP No. [_______]
ISIN No. [________]

WPD HOLDINGS UK, a company duly organized and existing under the laws of England and Wales (herein called the "Company," which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay the bearer upon surrender hereof, the principal sum of [____________________________] on December 15, 2004, and to pay interest thereon from December 15, 2000, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on June 15 and December 15 of each year, commencing on June 15, 2001, at the rate per annum provided in the title hereof, until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the bearer on such Interest Payment Date. Any such interest not so punctually paid or duly provided for will fo rthwith cease to be payable to the bearer on such Interest Payment Date and may be paid to the bearer at the time of payment of such Defaulted Interest, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture.

Payment of the principal of (and premium, if any) and interest, if any, on this Security will be made at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, the City of New York, and/or in Luxembourg in such coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts. Payments of any amounts in respect of this Security will be made through the Paying Agents to the Book-Entry Depositary, as the holder thereof. The Book-Entry Depositary will pay an amount equal to such payment to DTC, which will distribute such payment to its Participants in amounts proportionate to their respective ownership of interests in the Book-Entry Interests as shown on the records of DTC. The Company expects that payments by Participants to owners of interests in Book-Entry Interests held through such Participants will be governed by standing customer instructions and customary practices and will be the responsibil ity of such Participants.

The Company will not have any responsibility or liability for any aspect relating to payments made or to be made by the Book-Entry Depositary to DTC in respect of this Security or the Book-Entry Interests. None of the Company, the Trustee, the Book-Entry Depositary or any agent of any of the foregoing will have any responsibility or liability for any aspect relating to payments made or to be made by DTC on account of a Participant's or Indirect Participant's ownership of an interest in the Book-Entry Interests or for maintaining, supervising or reviewing any records relating to a Participant's or Indirect Participant's interests in the Book-Entry Interests.

All payments of principal and interest (including payments of discount and premium, if any) in respect of this Security shall be made free and clear of, and without withholding or deduction for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or within the United Kingdom or by or within any political subdivision thereof or any authority therein or thereof having power to tax ("United Kingdom Taxes"), unless such withholding or deduction is required by law. In the event of any such withholding or deduction, the Company shall pay to the Holder such additional amounts (the "Additional Amounts") as will result in the payment to such Holder of the amount that would otherwise have been receivable by such Holder in the absence of such withholding or deduction, except that no such Additional Amounts shall be payable:

(i)    to, or to a Person on behalf of, a Holder who is liable for such United Kingdom Taxes in respect of this Security by reason of such Holder having some connection with the United Kingdom (including being a citizen or resident or national of, or carrying on a business or maintaining a permanent establishment in, or being physically present in, the United Kingdom) other than the mere holding of this Security or the receipt of principal and interest (including payments of discount and premium, if any) in respect thereof;

(ii)    to, or to a Person on behalf of, a Holder who presents this Security (where presentation is required) for payment more than 30 days after the Relevant Date (as defined below), except to the extent that such Holder would have been entitled to such Additional Amounts on presenting this Security for payment on the last day of such period of 30 days;

(iii)    to, or to a Person on behalf of, a Holder who presents this Security (where presentation is required) in the United Kingdom; or

(iv)    to, or to a Person on behalf of, a Holder who would not be liable or subject to the withholding or deduction by making a declaration of non-residence or similar claim for exemption to the relevant tax authority.

Such Additional Amounts will also not be payable where, had the beneficial owner of this Security (or any interest therein) been the Holder of the Security, he or she would not have been entitled to payment of Additional Amounts by reason of any one or more of clauses (i) through (iv) above. If the Company shall determine that Additional Amounts will not be payable because of the immediately preceding sentence, the Company will inform such holder promptly after making such determination setting forth the reason(s) therefor.

"Relevant Date" means whichever is the later of (i) the date on which such payment first becomes due and (ii) if the full amount payable has not been received in The City of New York by the Book-Entry Depositary or the Trustee on or prior to such due date, the date on which, the full amount having been so received, notice to that effect shall have been given to the Holders in accordance with the Indenture.

References to principal, interest, discount or premium in respect of this Security shall be deemed also to refer to any Additional Amounts which may be payable as set forth in the Indenture or in this Security.

The Company shall furnish to the Trustee the official receipts (or a certified copy of the official receipts) evidencing payment of United Kingdom Taxes. Copies of such receipts shall be made available to the Holder of this Security upon request.

So long as the Securities are listed on the Luxembourg Stock Exchange and the rules of the Luxembourg Stock Exchange so require, notices to Holders of Securities will be published in a leading newspaper having general circulation in Luxembourg (which is expected to be the Luxembourg Wort).

The Book-Entry Depositary will immediately send to DTC a copy of any notices, reports, and other communications received by it relating to the Company or the Securities.

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

[Remainder of page intentionally left blank.]

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer or director of the Company duly authorized.

Dated: March 16, 2001

WPD HOLDINGS UK

By:                                                        
   Name:
   Title:

[FORM OF CERTIFICATE OF AUTHENTICATION]

This is one of the Securities of the series designated herein and referred to in the within-mentioned Indenture.

Date: March 16, 2001

BANKERS TRUST COMPANY
   as Trustee

By:                                                        
   Title:  Authorized Officer

[FORM OF REVERSE OF SECURITY]
(Regulation S - Temporary)

WPD HOLDINGS UK
6.75% Notes Due December 15, 2004

This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture, dated as of March 16, 2001 (herein called the "Original Indenture") among the Company, Bankers Trust Company, as trustee (herein called the "Trustee"), which term includes any successor trustee under the Indenture), and Deutsche Bank Luxembourg S.A., as paying and transfer agent (the "Paying and Transfer Agent"), as supplemented by the First Supplemental Indenture, dated as of March 16, 2001 (together with the Original Indenture, the "Indenture"), among the Company, the Trustee, and the Paying Agent, to which Indenture and all supplemental indentures thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties, and immunities thereunder of the Company, the Trustee, the Paying Agent, and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. Terms defined in the Indenture that are not defined herein are used with the meanings assigned to them in the Indenture. This Security is one of the series designated on the face hereof, limited in aggregate principal amount to [____________________________].

The Securities of this series will be redeemable in whole or in part, at the option of the Company at any time, at a redemption price equal to the greater of (i) 100% of the principal amount of the Securities of this series being redeemed or (ii) the sum of the present values of the remaining scheduled payments of principal of and interest on the Securities of this series being redeemed discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at a discount rate equal to the Treasury Yield plus 25 basis points in respect of the Securities of this series, plus, for (i) or (ii) above, whichever is applicable, accrued interest on the Notes to the date of redemption.

"Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker (as defined below) as having a maturity comparable to the remaining term of the Securities of this series to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Securities of this series.

"Comparable Treasury Price" means, with respect to any date on which the Securities are redeemed (each, a "Redemption Date"), (i) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third Business Day preceding such Redemption Date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S. Government Securities," or (ii) if such release (or any successor release) is not published or does not contain such prices on such Business Day, the Reference Treasury Dealer Quotation (as defined below) for such Redemption Date.

"Independent Investment Banker" means an independent investment banking institution of national standing in the U.S. appointed by the Company and reasonably acceptable to the Trustee.

"Reference Treasury Dealer Quotation" means, with respect to the Reference Treasury Dealer (as defined below) and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount and quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third Business Day preceding such Redemption Date).

"Reference Treasury Dealer" means a primary U.S. Government securities dealer in New York City appointed by the Company and reasonably acceptable to the Trustee.

"Treasury Yield" means, with respect to any date on which the Securities are redeemed (each a "Redemption Date"), the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.

Notice of redemption shall be given not less than 15 days nor more than 30 days prior to the date fixed for redemption.

If fewer than all the of the Securities are to be redeemed, selection of Securities of this series for redemption will be made by the Trustee in any manner the Trustee deems fair and appropriate and complies with applicable legal and securities exchange requirements.

Unless the Company defaults in payment of the redemption price, from and after the Redemption Date, the Securities of this series or portions thereof called for redemption will cease to bear interest, and the Holders thereof will have no right in respect to such Securities of this series, except the right to receive the redemption price thereof.

In the event of redemption of these Securities in part only, a new Security or Securities of this series and of like term or for the unredeemed portion hereof will be issued to the Holder upon the cancellation hereof.

The Indenture contains provisions for defeasance of (i) the entire indebtedness of this Security and (ii) certain restrictive covenants upon compliance by the Company with certain conditions set forth therein.

If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. At any time after such declaration of acceleration with respect to Securities of any series has been made, but before a judgment or decree for payment of money has been obtained by the Trustee as provided in the Indenture, if all Events of Default with respect to Securities of this series have been cured or waived (other than the non-payment of principal of the Securities that has become due solely by reason of such declaration of acceleration), then such declaration of acceleration and its consequences shall be automatically annulled and rescinded.

The Securities of this series are subject to redemption, in whole but not in part, upon not less than 15 nor more than 30 days' notice given as provided in the Indenture to the Holders of Securities of this series at a price equal to the outstanding principal amount thereof together with Additional Amounts, if any, and accrued interest, to the Redemption Date if:

(i)    the Company satisfies the Trustee prior to the giving of such notice that it has or will become obliged to pay Additional Amounts as a result of either (x) any change in, or amendment to, the laws or regulations of the United Kingdom or any political subdivision or any authority or agency thereof or therein having power to tax or levy duties, or any change in the application or interpretation of such laws or regulations, which change or amendment becomes effective on or after March 16, 2001, or (y) the issuance of definitive Registered Securities pursuant to any of clauses (i), (ii) or (iv) of the third following paragraph; and

(ii)    such obligation cannot be avoided by the Company taking reasonably measures available to it;

subject, as provided in the Indenture, to the delivery by the Company of an Officers' Certificate stating that the obligation referred to in clause (i) above cannot be avoided by the Company taking reasonable measures available to it.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the Indenture or any further supplemental indenture or the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Securities at the time Outstanding of all series to be affected (voting as a class). The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future H olders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest, if any, on this Security at the time, place, and rate, and in the coin or currency, herein prescribed.

This Security shall be exchangeable, in whole but not in part, for Securities registered in the names of Persons other than the Book-Entry Depositary with respect to such series or its nominee only as provided in this paragraph. This Security shall be so exchangeable if (i) DTC notifies the Company and the Book-Entry Depositary that it is unwilling or unable to continue to hold the Book-Entry Interest or at any time it ceases to be a "clearing agency" registered as such under the Exchange Act and, in either case, a successor is not appointed by the Company within 120 days, (ii) the Book-Entry Depositary for the Securities of this series notifies the Company that it is unwilling or unable to continue as Book-Entry Depositary with respect to this Security and no successor is appointed within 120 days, (iii) the Company executes and delivers to the Trustee an Officers' Certificate providing that this Security shall be so exchangeable, or (iv) there shall have occurred and be continuing an Event of Default with respect to the Securities of this series and the Holder, in such circumstance, acting upon instructions from owners of interests representing a majority of outstanding principal amount of the Book-Entry Interests relating to this Security, shall have requested in writing that this Security be exchanged for one or more definitive Registered Securities of this series. Securities so issued in exchange for this Security shall be of the same series, having the same interest rate, if any, and maturity and having the same terms as this Security, in authorized denominations and in the aggregate having the same principal amount as this Security and registered in such names as the Book-Entry Depositary for this Security shall direct.

The Securities of this series of which this Security is a part and which are not Global Securities are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. The bearer of this Security shall be treated as the owner of it for all purposes, subject to the terms of the Indenture. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

When a successor assumes all the obligations of its predecessor under the Securities of this series and the Indenture in accordance with the terms of the Indenture, the predecessor will be released from those obligations.

The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities of this series and may otherwise deal with the Company, its Subsidiaries or their respective Affiliates as if it were not the Trustee.

No stockholder, director, officer, employee, incorporator or Affiliate of the Company shall have any liability for any obligation of the Company under the Securities of this series or the Indenture for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of the Securities of this series, by accepting a Security of this series, waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Securities of this series.

This Security shall not be valid until the Trustee or Authenticating Agent signs the certificate of authentication on this Security.

Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures ("CUSIP"), the Company will cause CUSIP numbers to be printed on the Securities of this series as a convenience to the Holders of the Securities of this series. No representation is made as to the accuracy of such numbers as printed on the Securities of this series and reliance may be placed only on the other identification numbers printed hereon.

This Security shall be governed by and construed in accordance with the laws of the State of New York.

All terms used in this Security that are defined in the Indenture shall have the meanings assigned to them in the Indenture.

[FORM OF ASSIGNMENT FORM]

To assign this Security, fill in the form below:

   I or we assign and transfer this Security to:

(Print or type assignee's name, address and zip code)

(Insert assignee's soc. sec. or tax I.D. No.)

and irrevocably appoint him, her or it as agent to transfer this Security on the books of the Company. The agent may substitute another act for him, her or it.

___________________________________________________________________________

___________________________________________________________________________

    Date: _______________

    Your Signature: _______________________

     Signature Guarantee: _____________________________________
                                                   (Signature must be guaranteed)

___________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in the Securities Transfer Agents Medallion Program ("STAMP") or such other signature guarantee medallion program as may be approved by the Registrar in addition to or substitution for, STAMP), pursuant to S.E.C. Rule 17Ad-15.

In connection with any transfer or exchange of any of the Securities evidenced by this certificate occurring prior to the date that is two years after the later of the date of original issuance of such Securities and the last date, if any, on which such Securities were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Securities are being:

CHECK ONE BOX BELOW:

1 [_]    acquired for the undersigned's own account, without transfer;

2 [_]   transferred to the Company;

3 [_]   transferred pursuant to and in compliance with Rule 144A under the Securities Act of 1933;

4 [_]   transferred pursuant to an effective registration statement under the Securities Act;

5 [_]   transferred pursuant to and in connection with Regulation S under the Securities Act of 1933; or

6 [_]   transferred pursuant to another available exemption from the registration requirements of the Securities Act of 1933.

Unless one of the boxes is checked, the Trustee may refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered holder thereof; provided, however, that if box (5) or (6) is checked, the Trustee or the Company may require, prior to registering any such transfer of the Securities, in their sole discretion, such legal opinions, certifications and other information as the Trustee or the Company may reasonably request to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act.

_________________________________
Signature

Signature Guarantee:

________________________________________________________
(Signature must be guaranteed)

________________________________________________________
Signature

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions) with membership in STAMP or such other signature guarantee medallion program as may be approved by the Security Registrar in addition to or substitution for STAMP, pursuant to S.E.C. Rule 17Ad-15.

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITIES

The following increases or decreases in this Global Security have been made:

Date of Exchange Amount of decrease in Principal Amount of this Global Security Amount of increase in Principal Amount of this Global Security Principal Amount of this Global Security following such decrease or increase Signature of authorized signatory of Trustee or Security Custodian

Exhibit A-3

[FORM OF REGULATION S PERMANENT GLOBAL NOTE]

This Security is a Global Security within the meaning of the Indenture hereinafter referred to and is held by a Book-Entry Depositary or a nominee of a Book-Entry Depositary. This Security is exchangeable for securities held by or registered in the name of a person other than the Book-Entry Depositary or its nominee only in the limited circumstances described in the Indenture, and no transfer of this Security (other than a transfer of this Security as a whole by the Book-Entry Depositary to a nominee of the Book-Entry Depositary or by a nominee of the Book-Entry Depositary to the Book-Entry Depositary or another nominee of the Book-Entry Depositary) may be made, except in limited circumstances.

Unless this Global Security is presented by an authorized representative of the Book-Entry Depositary to the issuer or its agent for exchange or payment, and any definitive security is issued in the name or names as directed in writing by the Book-Entry Depositary, ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the bearer hereof, the Book-Entry Depositary, has an interest herein.

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE ISSUANCE HEREOF (OR A PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN TO THE COMPANY, SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY THE BO X CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE LAWS OF ANY STATE OF THE UNITED STATES.

WPD HOLDINGS UK
6.75% Notes Due December 15, 2004

No. [________]                                                               [$____________]
CUSIP No. [_______]
ISIN No. [________]

WPD HOLDINGS UK, a company duly organized and existing under the laws of England and Wales (herein called the "Company," which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay the bearer upon surrender hereof, the principal sum of [_______________________] on December 15, 2004, and to pay interest thereon from December 15, 2000, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on June 15 and December 15 of each year, commencing on June 15, 2001, at the rate per annum provided in the title hereof, until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the bearer on such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwi th cease to be payable to the bearer on such Interest Payment Date and may be paid to the bearer at the time of payment of such Defaulted Interest, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture.

Payment of the principal of (and premium, if any) and interest, if any, on this Security will be made at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, the City of New York, and/or in Luxembourg in such coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts. Payments of any amounts in respect of this Security will be made through the Paying Agents to the Book-Entry Depositary, as the holder thereof. The Book-Entry Depositary will pay an amount equal to such payment to DTC, which will distribute such payment to its Participants in amounts proportionate to their respective ownership of interests in the Book-Entry Interests as shown on the records of DTC. The Company expects that payments by Participants to owners of interests in Book-Entry Interests held through such Participants will be governed by standing customer instructions and customary practices and will be the responsibil ity of such Participants.

The Company will not have any responsibility or liability for any aspect relating to payments made or to be made by the Book-Entry Depositary to DTC in respect of this Security or the Book-Entry Interests. None of the Company, the Trustee, the Book-Entry Depositary or any agent of any of the foregoing will have any responsibility or liability for any aspect relating to payments made or to be made by DTC on account of a Participant's or Indirect Participant's ownership of an interest in the Book-Entry Interests or for maintaining, supervising or reviewing any records relating to a Participant's or Indirect Participant's interests in the Book-Entry Interests.

All payments of principal and interest (including payments of discount and premium, if any) in respect of this Security shall be made free and clear of, and without withholding or deduction for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or within the United Kingdom or by or within any political subdivision thereof or any authority therein or thereof having power to tax ("United Kingdom Taxes"), unless such withholding or deduction is required by law. In the event of any such withholding or deduction, the Company shall pay to the Holder such additional amounts (the "Additional Amounts") as will result in the payment to such Holder of the amount that would otherwise have been receivable by such Holder in the absence of such withholding or deduction, except that no such Additional Amounts shall be payable:

(i)    to, or to a Person on behalf of, a Holder who is liable for such United Kingdom Taxes in respect of this Security by reason of such Holder having some connection with the United Kingdom (including being a citizen or resident or national of, or carrying on a business or maintaining a permanent establishment in, or being physically present in, the United Kingdom) other than the mere holding of this Security or the receipt of principal and interest (including payments of discount and premium, if any) in respect thereof;

(ii)    to, or to a Person on behalf of, a Holder who presents this Security (where presentation is required) for payment more than 30 days after the Relevant Date (as defined below), except to the extent that such Holder would have been entitled to such Additional Amounts on presenting this Security for payment on the last day of such period of 30 days;

(iii)    to, or to a Person on behalf of, a Holder who presents this Security (where presentation is required) in the United Kingdom; or

(iv)    to, or to a Person on behalf of, a Holder who would not be liable or subject to the withholding or deduction by making a declaration of non-residence or similar claim for exemption to the relevant tax authority.

Such Additional Amounts will also not be payable where, had the beneficial owner of this Security (or any interest therein) been the Holder of the Security, he or she would not have been entitled to payment of Additional Amounts by reason of any one or more of clauses (i) through (iv) above. If the Company shall determine that Additional Amounts will not be payable because of the immediately preceding sentence, the Company will inform such holder promptly after making such determination setting forth the reason(s) therefor.

"Relevant Date" means whichever is the later of (i) the date on which such payment first becomes due and (ii) if the full amount payable has not been received in The City of New York by the Book-Entry Depositary or the Trustee on or prior to such due date, the date on which, the full amount having been so received, notice to that effect shall have been given to the Holders in accordance with the Indenture.

References to principal, interest, discount or premium in respect of this Security shall be deemed also to refer to any Additional Amounts which may be payable as set forth in the Indenture or in this Security.

The Company shall furnish to the Trustee the official receipts (or a certified copy of the official receipts) evidencing payment of United Kingdom Taxes. Copies of such receipts shall be made available to the Holder of this Security upon request.

So long as the Securities are listed on the Luxembourg Stock Exchange and the rules of the Luxembourg Stock Exchange so require, notices to Holders of Securities will be published in a leading newspaper having general circulation in Luxembourg (which is expected to be the Luxembourg Wort).

The Book-Entry Depositary will immediately send to DTC a copy of any notices, reports, and other communications received by it relating to the Company or the Securities.

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

[Remainder of page intentionally left blank.]

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer or director of the Company duly authorized.

Dated: March 16, 2001

WPD HOLDINGS UK

By:                                                        
   Name:
   Title:

[FORM OF CERTIFICATE OF AUTHENTICATION]

This is one of the Securities of the series designated herein and referred to in the within-mentioned Indenture.

Date: March 16, 2001

BANKERS TRUST COMPANY
   as Trustee

By:                                                        
   Title:  Authorized Officer

[FORM OF REVERSE OF SECURITY]
(Regulation S - Permanent)

WPD HOLDINGS UK
6.75% Notes Due December 15, 2004

This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture, dated as of March 16, 2001 (herein called the "Original Indenture") among the Company, Bankers Trust Company, as trustee (herein called the "Trustee"), which term includes any successor trustee under the Indenture), and Deutsche Bank Luxembourg S.A., as paying and transfer agent (the "Paying and Transfer Agent"), as supplemented by the First Supplemental Indenture, dated as of March 16, 2001 (together with the Original Indenture, the "Indenture"), among the Company, the Trustee, and the Paying Agent, to which Indenture and all supplemental indentures thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties, and immunities thereunder of the Company, the Trustee, the Paying Agent, and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. Terms defined in the Indenture that are not defined herein are used with the meanings assigned to them in the Indenture. This Security is one of the series designated on the face hereof, limited in aggregate principal amount to [$________].

The Securities of this series will be redeemable in whole or in part, at the option of the Company at any time, at a redemption price equal to the greater of (i) 100% of the principal amount of the Securities of this series being redeemed or (ii) the sum of the present values of the remaining scheduled payments of principal of and interest on the Securities of this series being redeemed discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at a discount rate equal to the Treasury Yield plus 25 basis points in respect of the Securities of this series, plus, for (i) or (ii) above, whichever is applicable, accrued interest on the Notes to the date of redemption.

"Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker (as defined below) as having a maturity comparable to the remaining term of the Securities of this series to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Securities of this series.

"Comparable Treasury Price" means, with respect to any date on which the Securities are redeemed (each, a "Redemption Date"), (i) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third Business Day preceding such Redemption Date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S. Government Securities," or (ii) if such release (or any successor release) is not published or does not contain such prices on such Business Day, the Reference Treasury Dealer Quotation (as defined below) for such Redemption Date.

"Independent Investment Banker" means an independent investment banking institution of national standing in the U.S. appointed by the Company and reasonably acceptable to the Trustee.

"Reference Treasury Dealer Quotation" means, with respect to the Reference Treasury Dealer (as defined below) and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount and quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third Business Day preceding such Redemption Date).

"Reference Treasury Dealer" means a primary U.S. Government securities dealer in New York City appointed by the Company and reasonably acceptable to the Trustee.

"Treasury Yield" means, with respect to any date on which the Securities are redeemed (each a "Redemption Date"), the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.

Notice of redemption shall be given not less than 15 days nor more than 30 days prior to the date fixed for redemption.

If fewer than all the of the Securities are to be redeemed, selection of Securities of this series for redemption will be made by the Trustee in any manner the Trustee deems fair and appropriate and complies with applicable legal and securities exchange requirements.

Unless the Company defaults in payment of the redemption price, from and after the Redemption Date, the Securities of this series or portions thereof called for redemption will cease to bear interest, and the Holders thereof will have no right in respect to such Securities of this series, except the right to receive the redemption price thereof.

In the event of redemption of these Securities in part only, a new Security or Securities of this series and of like term or for the unredeemed portion hereof will be issued to the Holder upon the cancellation hereof.

The Indenture contains provisions for defeasance of (i) the entire indebtedness of this Security and (ii) certain restrictive covenants upon compliance by the Company with certain conditions set forth therein.

If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. At any time after such declaration of acceleration with respect to Securities of any series has been made, but before a judgment or decree for payment of money has been obtained by the Trustee as provided in the Indenture, if all Events of Default with respect to Securities of this series have been cured or waived (other than the non-payment of principal of the Securities that has become due solely by reason of such declaration of acceleration), then such declaration of acceleration and its consequences shall be automatically annulled and rescinded.

The Securities of this series are subject to redemption, in whole but not in part, upon not less than 15 nor more than 30 days' notice given as provided in the Indenture to the Holders of Securities of this series at a price equal to the outstanding principal amount thereof together with Additional Amounts, if any, and accrued interest, to the Redemption Date if:

(i)    the Company satisfies the Trustee prior to the giving of such notice that it has or will become obliged to pay Additional Amounts as a result of either (x) any change in, or amendment to, the laws or regulations of the United Kingdom or any political subdivision or any authority or agency thereof or therein having power to tax or levy duties, or any change in the application or interpretation of such laws or regulations, which change or amendment becomes effective on or after March 16, 2001, or (y) the issuance of definitive Registered Securities pursuant to any of clauses (i), (ii) or (iv) of the third following paragraph; and

(ii)    such obligation cannot be avoided by the Company taking reasonably measures available to it;

subject, as provided in the Indenture, to the delivery by the Company of an Officers' Certificate stating that the obligation referred to in clause (i) above cannot be avoided by the Company taking reasonable measures available to it.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the Indenture or any further supplemental indenture or the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Securities at the time Outstanding of all series to be affected (voting as a class). The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future H olders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest, if any, on this Security at the time, place, and rate, and in the coin or currency, herein prescribed.

This Security shall be exchangeable, in whole but not in part, for Securities registered in the names of Persons other than the Book-Entry Depositary with respect to such series or its nominee only as provided in this paragraph. This Security shall be so exchangeable if (i) DTC notifies the Company and the Book-Entry Depositary that it is unwilling or unable to continue to hold the Book-Entry Interest or at any time it ceases to be a "clearing agency" registered as such under the Exchange Act and, in either case, a successor is not appointed by the Company within 120 days, (ii) the Book-Entry Depositary for the Securities of this series notifies the Company that it is unwilling or unable to continue as Book-Entry Depositary with respect to this Security and no successor is appointed within 120 days, (iii) the Company executes and delivers to the Trustee an Officers' Certificate providing that this Security shall be so exchangeable, or (iv) there shall have occurred and be continuing an Event of Default with respect to the Securities of this series and the Holder, in such circumstance, acting upon instructions from owners of interests representing a majority of outstanding principal amount of the Book-Entry Interests relating to this Security, shall have requested in writing that this Security be exchanged for one or more definitive Registered Securities of this series. Securities so issued in exchange for this Security shall be of the same series, having the same interest rate, if any, and maturity and having the same terms as this Security, in authorized denominations and in the aggregate having the same principal amount as this Security and registered in such names as the Book-Entry Depositary for this Security shall direct.

The Securities of this series of which this Security is a part and which are not Global Securities are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. The bearer of this Security shall be treated as the owner of it for all purposes, subject to the terms of the Indenture. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

When a successor assumes all the obligations of its predecessor under the Securities of this series and the Indenture in accordance with the terms of the Indenture, the predecessor will be released from those obligations.

The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities of this series and may otherwise deal with the Company, its Subsidiaries or their respective Affiliates as if it were not the Trustee.

No stockholder, director, officer, employee, incorporator or Affiliate of the Company shall have any liability for any obligation of the Company under the Securities of this series or the Indenture for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of the Securities of this series, by accepting a Security of this series, waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Securities of this series.

This Security shall not be valid until the Trustee or Authenticating Agent signs the certificate of authentication on this Security.

Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures ("CUSIP"), the Company will cause CUSIP numbers to be printed on the Securities of this series as a convenience to the Holders of the Securities of this series. No representation is made as to the accuracy of such numbers as printed on the Securities of this series and reliance may be placed only on the other identification numbers printed hereon.

This Security shall be governed by and construed in accordance with the laws of the State of New York.

All terms used in this Security that are defined in the Indenture shall have the meanings assigned to them in the Indenture.

[FORM OF ASSIGNMENT FORM]

To assign this Security, fill in the form below:

   I or we assign and transfer this Security to:

(Print or type assignee's name, address and zip code)

(Insert assignee's soc. sec. or tax I.D. No.)

and irrevocably appoint him, her or it as agent to transfer this Security on the books of the Company. The agent may substitute another act for him, her or it.

___________________________________________________________________________

___________________________________________________________________________

    Date: _______________

    Your Signature: _______________________

     Signature Guarantee: _____________________________________
                                                   (Signature must be guaranteed)

___________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in the Securities Transfer Agents Medallion Program ("STAMP") or such other signature guarantee medallion program as may be approved by the Registrar in addition to or substitution for, STAMP), pursuant to S.E.C. Rule 17Ad-15.

In connection with any transfer or exchange of any of the Securities evidenced by this certificate occurring prior to the date that is two years after the later of the date of original issuance of such Securities and the last date, if any, on which such Securities were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Securities are being:

CHECK ONE BOX BELOW:

1 [_]    acquired for the undersigned's own account, without transfer;

2 [_]    transferred to the Company;

3 [_]    transferred pursuant to and in compliance with Rule 144A under the Securities Act of 1933;

4 [_]    transferred pursuant to an effective registration statement under the Securities Act;

5 [_]    transferred pursuant to and in connection with Regulation S under the Securities Act of 1933; or

6 [_]    transferred pursuant to another available exemption from the registration requirements of the Securities Act of 1933.

Unless one of the boxes is checked, the Trustee may refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered holder thereof; provided, however, that if box (5) or (6) is checked, the Trustee or the Company may require, prior to registering any such transfer of the Securities, in their sole discretion, such legal opinions, certifications and other information as the Trustee or the Company may reasonably request to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act.

_________________________________
Signature

Signature Guarantee:

________________________________________________________
(Signature must be guaranteed)

________________________________________________________
Signature

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions) with membership in STAMP or such other signature guarantee medallion program as may be approved by the Security Registrar in addition to or substitution for STAMP, pursuant to S.E.C. Rule 17Ad-15.

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITIES

The following increases or decreases in this Global Security have been made:

Date of Exchange Amount of decrease in Principal Amount of this Global Security Amount of increase in Principal Amount of this Global Security Principal Amount of this Global Security following such decrease or increase Signature of authorized signatory of Trustee or Security Custodian

Exhibit B-1

[FORM OF GLOBAL NOTE]
(Rule 144A)

This Security is a Global Security within the meaning of the Indenture hereinafter referred to and is held by a Book-Entry Depositary or a nominee of a Book-Entry Depositary. This Security is exchangeable for securities held by or registered in the name of a person other than the Book-Entry Depositary or its nominee only in the limited circumstances described in the Indenture, and no transfer of this Security (other than a transfer of this Security as a whole by the Book-Entry Depositary to a nominee of the Book-Entry Depositary or by a nominee of the Book-Entry Depositary to the Book-Entry Depositary or another nominee of the Book-Entry Depositary) may be made, except in limited circumstances.

Unless this Global Security is presented by an authorized representative of the Book-Entry Depositary to the issuer or its agent for exchange or payment, and any definitive security is issued in the name or names as directed in writing by the Book-Entry Depositary, ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the bearer hereof, the Book-Entry Depositary, has an interest herein.

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE ISSUANCE HEREOF (OR A PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN TO THE COMPANY, SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY THE BO X CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE LAWS OF ANY STATE OF THE UNITED STATES.

WPD HOLDINGS UK
6.875% Notes Due December 15, 2007

No. [________]                                                               [$____________]
CUSIP No. [_______]
ISIN No. [________]

WPD HOLDINGS UK, a company duly organized and existing under the laws of England and Wales (herein called the "Company," which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay the bearer upon surrender hereof, the principal sum of [________________] on December 15, 2007, and to pay interest thereon from December 15, 2000, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on June 15 and December 15 of each year, commencing on June 15, 2001, at the rate per annum provided in the title hereof, until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the bearer on such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the bearer on such Interest Payment Date and may be paid to the bearer at the time of payment of such Defaulted Interest, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture.

Payment of the principal of (and premium, if any) and interest, if any, on this Security will be made at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, the City of New York, and/or in Luxembourg in such coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts. Payments of any amounts in respect of this Security will be made through the Paying Agents to the Book-Entry Depositary, as the holder thereof. The Book-Entry Depositary will pay an amount equal to such payment to DTC, which will distribute such payment to its Participants in amounts proportionate to their respective ownership of interests in the Book-Entry Interests as shown on the records of DTC. The Company expects that payments by Participants to owners of interests in Book-Entry Interests held through such Participants will be governed by standing customer instructions and customary practices and will be the responsibil ity of such Participants.

The Company will not have any responsibility or liability for any aspect relating to payments made or to be made by the Book-Entry Depositary to DTC in respect of this Security or the Book-Entry Interests. None of the Company, the Trustee, the Book-Entry Depositary or any agent of any of the foregoing will have any responsibility or liability for any aspect relating to payments made or to be made by DTC on account of a Participant's or Indirect Participant's ownership of an interest in the Book-Entry Interests or for maintaining, supervising or reviewing any records relating to a Participant's or Indirect Participant's interests in the Book-Entry Interests.

All payments of principal and interest (including payments of discount and premium, if any) in respect of this Security shall be made free and clear of, and without withholding or deduction for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or within the United Kingdom or by or within any political subdivision thereof or any authority therein or thereof having power to tax ("United Kingdom Taxes"), unless such withholding or deduction is required by law. In the event of any such withholding or deduction, the Company shall pay to the Holder such additional amounts (the "Additional Amounts") as will result in the payment to such Holder of the amount that would otherwise have been receivable by such Holder in the absence of such withholding or deduction, except that no such Additional Amounts shall be payable:

(i)    to, or to a Person on behalf of, a Holder who is liable for such United Kingdom Taxes in respect of this Security by reason of such Holder having some connection with the United Kingdom (including being a citizen or resident or national of, or carrying on a business or maintaining a permanent establishment in, or being physically present in, the United Kingdom) other than the mere holding of this Security or the receipt of principal and interest (including payments of discount and premium, if any) in respect thereof;

(ii)    to, or to a Person on behalf of, a Holder who presents this Security (where presentation is required) for payment more than 30 days after the Relevant Date (as defined below), except to the extent that such Holder would have been entitled to such Additional Amounts on presenting this Security for payment on the last day of such period of 30 days;

(iii)    to, or to a Person on behalf of, a Holder who presents this Security (where presentation is required) in the United Kingdom; or

(iv)    to, or to a Person on behalf of, a Holder who would not be liable or subject to the withholding or deduction by making a declaration of non-residence or similar claim for exemption to the relevant tax authority.

Such Additional Amounts will also not be payable where, had the beneficial owner of this Security (or any interest therein) been the Holder of the Security, he or she would not have been entitled to payment of Additional Amounts by reason of any one or more of clauses (i) through (iv) above. If the Company shall determine that Additional Amounts will not be payable because of the immediately preceding sentence, the Company will inform such holder promptly after making such determination setting forth the reason(s) therefor.

"Relevant Date" means whichever is the later of (i) the date on which such payment first becomes due and (ii) if the full amount payable has not been received in The City of New York by the Book-Entry Depositary or the Trustee on or prior to such due date, the date on which, the full amount having been so received, notice to that effect shall have been given to the Holders in accordance with the Indenture.

References to principal, interest, discount or premium in respect of this Security shall be deemed also to refer to any Additional Amounts which may be payable as set forth in the Indenture or in this Security.

The Company shall furnish to the Trustee the official receipts (or a certified copy of the official receipts) evidencing payment of United Kingdom Taxes. Copies of such receipts shall be made available to the Holder of this Security upon request.

So long as the Securities are listed on the Luxembourg Stock Exchange and the rules of the Luxembourg Stock Exchange so require, notices to Holders of Securities will be published in a leading newspaper having general circulation in Luxembourg (which is expected to be the Luxembourg Wort).

The Book-Entry Depositary will immediately send to DTC a copy of any notices, reports, and other communications received by it relating to the Company or the Securities.

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

This Security has been issued with an original issue discount for the purposes of Sections 1271-1275 of the Internal Revenue Code of 1986, as amended. The issue price, amount of original issue discount, issue date and yield to maturity of the Securities may be obtained by contacting the Company's Investor Relations Department at +44 117 933 2000.

[Remainder of page intentionally left blank.]

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer or director of the Company duly authorized.

Dated: March 16, 2001

WPD HOLDINGS UK

By:                                                        
   Name:
   Title:

[FORM OF CERTIFICATE OF AUTHENTICATION]

This is one of the Securities of the series designated herein and referred to in the within-mentioned Indenture.

Date: March 16, 2001

BANKERS TRUST COMPANY
   as Trustee

By:                                                        
   Title:  Authorized Officer

[FORM OF REVERSE OF SECURITY]
(Rule 144A)

WPD HOLDINGS UK
6.875% Notes Due December 15, 2007

This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture, dated as of March 16, 2001 (herein called the "Original Indenture") among the Company, Bankers Trust Company, as trustee (herein called the "Trustee"), which term includes any successor trustee under the Indenture), and Deutsche Bank Luxembourg S.A., as paying and transfer agent (the "Paying and Transfer Agent"), as supplemented by the First Supplemental Indenture, dated as of March 16, 2001 (together with the Original Indenture, the "Indenture"), among the Company, the Trustee, and the Paying Agent, to which Indenture and all supplemental indentures thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties, and immunities thereunder of the Company, the Trustee, the Paying Agent, and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. Terms defined in the Indenture that are not defined herein are used with the meanings assigned to them in the Indenture. This Security is one of the series designated on the face hereof, limited in aggregate principal amount to [$_________________].

The Securities of this series will be redeemable in whole or in part, at the option of the Company at any time, at a redemption price equal to the greater of (i) 100% of the principal amount of the Securities of this series being redeemed or (ii) the sum of the present values of the remaining scheduled payments of principal of and interest on the Securities of this series being redeemed discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at a discount rate equal to the Treasury Yield plus 25 basis points in respect of the Securities of this series, plus, for (i) or (ii) above, whichever is applicable, accrued interest on the Notes to the date of redemption.

"Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker (as defined below) as having a maturity comparable to the remaining term of the Securities of this series to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Securities of this series.

"Comparable Treasury Price" means, with respect to any date on which the Securities are redeemed (each, a "Redemption Date"), (i) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third Business Day preceding such Redemption Date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S. Government Securities," or (ii) if such release (or any successor release) is not published or does not contain such prices on such Business Day, the Reference Treasury Dealer Quotation (as defined below) for such Redemption Date.

"Independent Investment Banker" means an independent investment banking institution of national standing in the U.S. appointed by the Company and reasonably acceptable to the Trustee.

"Reference Treasury Dealer Quotation" means, with respect to the Reference Treasury Dealer (as defined below) and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount and quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third Business Day preceding such Redemption Date).

"Reference Treasury Dealer" means a primary U.S. Government securities dealer in New York City appointed by the Company and reasonably acceptable to the Trustee.

"Treasury Yield" means, with respect to any date on which the Securities are redeemed (each a "Redemption Date"), the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.

Notice of redemption shall be given not less than 15 days nor more than 30 days prior to the date fixed for redemption.

If fewer than all the of the Securities are to be redeemed, selection of Securities of this series for redemption will be made by the Trustee in any manner the Trustee deems fair and appropriate and complies with applicable legal and securities exchange requirements.

Unless the Company defaults in payment of the redemption price, from and after the Redemption Date, the Securities of this series or portions thereof called for redemption will cease to bear interest, and the Holders thereof will have no right in respect to such Securities of this series, except the right to receive the redemption price thereof.

In the event of redemption of these Securities in part only, a new Security or Securities of this series and of like term or for the unredeemed portion hereof will be issued to the Holder upon the cancellation hereof.

The Indenture contains provisions for defeasance of (i) the entire indebtedness of this Security and (ii) certain restrictive covenants upon compliance by the Company with certain conditions set forth therein.

If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. At any time after such declaration of acceleration with respect to Securities of any series has been made, but before a judgment or decree for payment of money has been obtained by the Trustee as provided in the Indenture, if all Events of Default with respect to Securities of this series have been cured or waived (other than the non-payment of principal of the Securities that has become due solely by reason of such declaration of acceleration), then such declaration of acceleration and its consequences shall be automatically annulled and rescinded.

The Securities of this series are subject to redemption, in whole but not in part, upon not less than 15 nor more than 30 days' notice given as provided in the Indenture to the Holders of Securities of this series at a price equal to the outstanding principal amount thereof together with Additional Amounts, if any, and accrued interest, to the Redemption Date if:

(i)    the Company satisfies the Trustee prior to the giving of such notice that it has or will become obliged to pay Additional Amounts as a result of either (x) any change in, or amendment to, the laws or regulations of the United Kingdom or any political subdivision or any authority or agency thereof or therein having power to tax or levy duties, or any change in the application or interpretation of such laws or regulations, which change or amendment becomes effective on or after March 16, 2001, or (y) the issuance of definitive Registered Securities pursuant to any of clauses (i), (ii) or (iv) of the third following paragraph; and

(ii)    such obligation cannot be avoided by the Company taking reasonably measures available to it;

subject, as provided in the Indenture, to the delivery by the Company of an Officers' Certificate stating that the obligation referred to in clause (i) above cannot be avoided by the Company taking reasonable measures available to it.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the Indenture or any further supplemental indenture or the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Securities at the time Outstanding of all series to be affected (voting as a class). The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future H olders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest, if any, on this Security at the time, place, and rate, and in the coin or currency, herein prescribed.

This Security shall be exchangeable, in whole but not in part, for Securities registered in the names of Persons other than the Book-Entry Depositary with respect to such series or its nominee only as provided in this paragraph. This Security shall be so exchangeable if (i) DTC notifies the Company and the Book-Entry Depositary that it is unwilling or unable to continue to hold the Book-Entry Interest or at any time it ceases to be a "clearing agency" registered as such under the Exchange Act and, in either case, a successor is not appointed by the Company within 120 days, (ii) the Book-Entry Depositary for the Securities of this series notifies the Company that it is unwilling or unable to continue as Book-Entry Depositary with respect to this Security and no successor is appointed within 120 days, (iii) the Company executes and delivers to the Trustee an Officers' Certificate providing that this Security shall be so exchangeable, or (iv) there shall have occurred and be continuing an Event of Default with respect to the Securities of this series and the Holder, in such circumstance, acting upon instructions from owners of interests representing a majority of outstanding principal amount of the Book-Entry Interests relating to this Security, shall have requested in writing that this Security be exchanged for one or more definitive Registered Securities of this series. Securities so issued in exchange for this Security shall be of the same series, having the same interest rate, if any, and maturity and having the same terms as this Security, in authorized denominations and in the aggregate having the same principal amount as this Security and registered in such names as the Book-Entry Depositary for this Security shall direct.

The Securities of this series of which this Security is a part and which are not Global Securities are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. The bearer of this Security shall be treated as the owner of it for all purposes, subject to the terms of the Indenture. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

When a successor assumes all the obligations of its predecessor under the Securities of this series and the Indenture in accordance with the terms of the Indenture, the predecessor will be released from those obligations.

The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities of this series and may otherwise deal with the Company, its Subsidiaries or their respective Affiliates as if it were not the Trustee.

No stockholder, director, officer, employee, incorporator or Affiliate of the Company shall have any liability for any obligation of the Company under the Securities of this series or the Indenture for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of the Securities of this series, by accepting a Security of this series, waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Securities of this series.

This Security shall not be valid until the Trustee or Authenticating Agent signs the certificate of authentication on this Security.

Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures ("CUSIP"), the Company will cause CUSIP numbers to be printed on the Securities of this series as a convenience to the Holders of the Securities of this series. No representation is made as to the accuracy of such numbers as printed on the Securities of this series and reliance may be placed only on the other identification numbers printed hereon.

This Security shall be governed by and construed in accordance with the laws of the State of New York.

All terms used in this Security that are defined in the Indenture shall have the meanings assigned to them in the Indenture.

[FORM OF ASSIGNMENT FORM]

To assign this Security, fill in the form below:

   I or we assign and transfer this Security to:

(Print or type assignee's name, address and zip code)

(Insert assignee's soc. sec. or tax I.D. No.)

and irrevocably appoint him, her or it as agent to transfer this Security on the books of the Company. The agent may substitute another act for him, her or it.

___________________________________________________________________________

___________________________________________________________________________

    Date: _______________

    Your Signature: _______________________

     Signature Guarantee: _____________________________________
                                                   (Signature must be guaranteed)

___________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in the Securities Transfer Agents Medallion Program ("STAMP") or such other signature guarantee medallion program as may be approved by the Registrar in addition to or substitution for, STAMP), pursuant to S.E.C. Rule 17Ad-15.

In connection with any transfer or exchange of any of the Securities evidenced by this certificate occurring prior to the date that is two years after the later of the date of original issuance of such Securities and the last date, if any, on which such Securities were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Securities are being:

CHECK ONE BOX BELOW:

1 [_]    acquired for the undersigned's own account, without transfer;

2 [_]    transferred to the Company;

3 [_]    transferred pursuant to and in compliance with Rule 144A under the Securities Act of 1933;

4 [_]    transferred pursuant to an effective registration statement under the Securities Act;

5 [_]    transferred pursuant to and in connection with Regulation S under the Securities Act of 1933; or

6 [_]    transferred pursuant to another available exemption from the registration requirements of the Securities Act of 1933.

Unless one of the boxes is checked, the Trustee may refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered holder thereof; provided, however, that if box (5) or (6) is checked, the Trustee or the Company may require, prior to registering any such transfer of the Securities, in their sole discretion, such legal opinions, certifications and other information as the Trustee or the Company may reasonably request to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act.

_________________________________
Signature

Signature Guarantee:

________________________________________________________
(Signature must be guaranteed)

________________________________________________________
Signature

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions) with membership in STAMP or such other signature guarantee medallion program as may be approved by the Security Registrar in addition to or substitution for STAMP, pursuant to S.E.C. Rule 17Ad-15.

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITIES

The following increases or decreases in this Global Security have been made:

Date of Exchange Amount of decrease in Principal Amount of this Global Security Amount of increase in Principal Amount of this Global Security Principal Amount of this Global Security following such decrease or increase Signature of authorized signatory of Trustee or Security Custodian

Exhibit B-2

[FORM OF REGULATION S TEMPORARY GLOBAL NOTE]

This Security is a Global Security within the meaning of the Indenture hereinafter referred to and is held by a Book-Entry Depositary or a nominee of a Book-Entry Depositary. This Security is exchangeable for securities held by or registered in the name of a person other than the Book-Entry Depositary or its nominee only in the limited circumstances described in the Indenture, and no transfer of this Security (other than a transfer of this Security as a whole by the Book-Entry Depositary to a nominee of the Book-Entry Depositary or by a nominee of the Book-Entry Depositary to the Book-Entry Depositary or another nominee of the Book-Entry Depositary) may be made, except in limited circumstances.

Unless this Global Security is presented by an authorized representative of the Book-Entry Depositary to the issuer or its agent for exchange or payment, and any definitive security is issued in the name or names as directed in writing by the Book-Entry Depositary, ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the bearer hereof, the Book-Entry Depositary, has an interest herein.

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE ISSUANCE HEREOF (OR A PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN TO THE COMPANY, SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY THE BO X CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE LAWS OF ANY STATE OF THE UNITED STATES.

THIS GLOBAL NOTE IS A TEMPORARY GLOBAL NOTE FOR PURPOSES OF REGULATION S UNDER THE SECURITIES ACT. NEITHER THIS TEMPORARY GLOBAL NOTE NOR ANY INTEREST HEREIN MAY BE OFFERED, SOLD OR DELIVERED, EXCEPT AS PERMITTED UNDER THE INDENTURE HEREINAFTER REFERRED TO.

NO BENEFICIAL OWNERS OF THIS TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF PRINCIPAL OR INTEREST HEREON UNLESS THE REQUIRED CERTIFICATIONS HAVE BEEN DELIVERED PURSUANT TO THE TERMS OF THE INDENTURE.

WPD HOLDINGS UK
6.875% Notes Due December 15, 2007

No. [________]                                                                         [$____________]
CUSIP No. [_______]
ISIN No. [________]

WPD HOLDINGS UK, a company duly organized and existing under the laws of England and Wales (herein called the "Company," which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay the bearer upon surrender hereof, the principal sum of [____________________________] on December 15, 2007, and to pay interest thereon from December 15, 2000, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on June 15 and December 15 of each year, commencing on June 15, 2001, at the rate per annum provided in the title hereof, until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the bearer on such Interest Payment Date. Any such interest not so punctually paid or duly provided for wil l forthwith cease to be payable to the bearer on such Interest Payment Date and may be paid to the bearer at the time of payment of such Defaulted Interest, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture.

Payment of the principal of (and premium, if any) and interest, if any, on this Security will be made at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, the City of New York, and/or in Luxembourg in such coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts. Payments of any amounts in respect of this Security will be made through the Paying Agents to the Book-Entry Depositary, as the holder thereof. The Book-Entry Depositary will pay an amount equal to such payment to DTC, which will distribute such payment to its Participants in amounts proportionate to their respective ownership of interests in the Book-Entry Interests as shown on the records of DTC. The Company expects that payments by Participants to owners of interests in Book-Entry Interests held through such Participants will be governed by standing customer instructions and customary practices and will be the responsibil ity of such Participants.

The Company will not have any responsibility or liability for any aspect relating to payments made or to be made by the Book-Entry Depositary to DTC in respect of this Security or the Book-Entry Interests. None of the Company, the Trustee, the Book-Entry Depositary or any agent of any of the foregoing will have any responsibility or liability for any aspect relating to payments made or to be made by DTC on account of a Participant's or Indirect Participant's ownership of an interest in the Book-Entry Interests or for maintaining, supervising or reviewing any records relating to a Participant's or Indirect Participant's interests in the Book-Entry Interests.

All payments of principal and interest (including payments of discount and premium, if any) in respect of this Security shall be made free and clear of, and without withholding or deduction for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or within the United Kingdom or by or within any political subdivision thereof or any authority therein or thereof having power to tax ("United Kingdom Taxes"), unless such withholding or deduction is required by law. In the event of any such withholding or deduction, the Company shall pay to the Holder such additional amounts (the "Additional Amounts") as will result in the payment to such Holder of the amount that would otherwise have been receivable by such Holder in the absence of such withholding or deduction, except that no such Additional Amounts shall be payable:

(i)    to, or to a Person on behalf of, a Holder who is liable for such United Kingdom Taxes in respect of this Security by reason of such Holder having some connection with the United Kingdom (including being a citizen or resident or national of, or carrying on a business or maintaining a permanent establishment in, or being physically present in, the United Kingdom) other than the mere holding of this Security or the receipt of principal and interest (including payments of discount and premium, if any) in respect thereof;

(ii)    to, or to a Person on behalf of, a Holder who presents this Security (where presentation is required) for payment more than 30 days after the Relevant Date (as defined below), except to the extent that such Holder would have been entitled to such Additional Amounts on presenting this Security for payment on the last day of such period of 30 days;

(iii)    to, or to a Person on behalf of, a Holder who presents this Security (where presentation is required) in the United Kingdom; or

(iv)    to, or to a Person on behalf of, a Holder who would not be liable or subject to the withholding or deduction by making a declaration of non-residence or similar claim for exemption to the relevant tax authority.

Such Additional Amounts will also not be payable where, had the beneficial owner of this Security (or any interest therein) been the Holder of the Security, he or she would not have been entitled to payment of Additional Amounts by reason of any one or more of clauses (i) through (iv) above. If the Company shall determine that Additional Amounts will not be payable because of the immediately preceding sentence, the Company will inform such holder promptly after making such determination setting forth the reason(s) therefor.

"Relevant Date" means whichever is the later of (i) the date on which such payment first becomes due and (ii) if the full amount payable has not been received in The City of New York by the Book-Entry Depositary or the Trustee on or prior to such due date, the date on which, the full amount having been so received, notice to that effect shall have been given to the Holders in accordance with the Indenture.

References to principal, interest, discount or premium in respect of this Security shall be deemed also to refer to any Additional Amounts which may be payable as set forth in the Indenture or in this Security.

The Company shall furnish to the Trustee the official receipts (or a certified copy of the official receipts) evidencing payment of United Kingdom Taxes. Copies of such receipts shall be made available to the Holder of this Security upon request.

So long as the Securities are listed on the Luxembourg Stock Exchange and the rules of the Luxembourg Stock Exchange so require, notices to Holders of Securities will be published in a leading newspaper having general circulation in Luxembourg (which is expected to be the Luxembourg Wort).

The Book-Entry Depositary will immediately send to DTC a copy of any notices, reports, and other communications received by it relating to the Company or the Securities.

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

This Security has been issued with an original issue discount for the purposes of Sections 1271-1275 of the Internal Revenue Code of 1986, as amended. The issue price, amount of original issue discount, issue date and yield to maturity of the Securities may be obtained by contacting the Company's Investor Relations Department at +44 117 933 2000.

[Remainder of page intentionally left blank.]

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer or director of the Company duly authorized.

Dated: March 16, 2001

WPD HOLDINGS UK

By:                                                        
   Name:
   Title:

[FORM OF CERTIFICATE OF AUTHENTICATION]

This is one of the Securities of the series designated herein and referred to in the within-mentioned Indenture.

Date: March 16, 2001

BANKERS TRUST COMPANY
   as Trustee

By:                                                        
   Title:  Authorized Officer

[FORM OF REVERSE OF SECURITY]
(Regulation S - Temporary)

WPD HOLDINGS UK
6.875% Notes Due December 15, 2007

This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture, dated as of March 16, 2001 (herein called the "Original Indenture") among the Company, Bankers Trust Company, as trustee (herein called the "Trustee"), which term includes any successor trustee under the Indenture), and Deutsche Bank Luxembourg S.A., as paying and transfer agent (the "Paying and Transfer Agent"), as supplemented by the First Supplemental Indenture, dated as of March 16, 2001 (together with the Original Indenture, the "Indenture"), among the Company, the Trustee, and the Paying Agent, to which Indenture and all supplemental indentures thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties, and immunities thereunder of the Company, the Trustee, the Paying Agent, and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. Terms defined in the Indenture that are not defined herein are used with the meanings assigned to them in the Indenture. This Security is one of the series designated on the face hereof, limited in aggregate principal amount to [$_________________].

The Securities of this series will be redeemable in whole or in part, at the option of the Company at any time, at a redemption price equal to the greater of (i) 100% of the principal amount of the Securities of this series being redeemed or (ii) the sum of the present values of the remaining scheduled payments of principal of and interest on the Securities of this series being redeemed discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at a discount rate equal to the Treasury Yield plus 25 basis points in respect of the Securities of this series, plus, for (i) or (ii) above, whichever is applicable, accrued interest on the Notes to the date of redemption.

"Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker (as defined below) as having a maturity comparable to the remaining term of the Securities of this series to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Securities of this series.

"Comparable Treasury Price" means, with respect to any date on which the Securities are redeemed (each, a "Redemption Date"), (i) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third Business Day preceding such Redemption Date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S. Government Securities," or (ii) if such release (or any successor release) is not published or does not contain such prices on such Business Day, the Reference Treasury Dealer Quotation (as defined below) for such Redemption Date.

"Independent Investment Banker" means an independent investment banking institution of national standing in the U.S. appointed by the Company and reasonably acceptable to the Trustee.

"Reference Treasury Dealer Quotation" means, with respect to the Reference Treasury Dealer (as defined below) and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount and quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third Business Day preceding such Redemption Date).

"Reference Treasury Dealer" means a primary U.S. Government securities dealer in New York City appointed by the Company and reasonably acceptable to the Trustee.

"Treasury Yield" means, with respect to any date on which the Securities are redeemed (each a "Redemption Date"), the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.

Notice of redemption shall be given not less than 15 days nor more than 30 days prior to the date fixed for redemption.

If fewer than all the of the Securities are to be redeemed, selection of Securities of this series for redemption will be made by the Trustee in any manner the Trustee deems fair and appropriate and complies with applicable legal and securities exchange requirements.

Unless the Company defaults in payment of the redemption price, from and after the Redemption Date, the Securities of this series or portions thereof called for redemption will cease to bear interest, and the Holders thereof will have no right in respect to such Securities of this series, except the right to receive the redemption price thereof.

In the event of redemption of these Securities in part only, a new Security or Securities of this series and of like term or for the unredeemed portion hereof will be issued to the Holder upon the cancellation hereof.

The Indenture contains provisions for defeasance of (i) the entire indebtedness of this Security and (ii) certain restrictive covenants upon compliance by the Company with certain conditions set forth therein.

If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. At any time after such declaration of acceleration with respect to Securities of any series has been made, but before a judgment or decree for payment of money has been obtained by the Trustee as provided in the Indenture, if all Events of Default with respect to Securities of this series have been cured or waived (other than the non-payment of principal of the Securities that has become due solely by reason of such declaration of acceleration), then such declaration of acceleration and its consequences shall be automatically annulled and rescinded.

The Securities of this series are subject to redemption, in whole but not in part, upon not less than 15 nor more than 30 days' notice given as provided in the Indenture to the Holders of Securities of this series at a price equal to the outstanding principal amount thereof together with Additional Amounts, if any, and accrued interest, to the Redemption Date if:

(i)    the Company satisfies the Trustee prior to the giving of such notice that it has or will become obliged to pay Additional Amounts as a result of either (x) any change in, or amendment to, the laws or regulations of the United Kingdom or any political subdivision or any authority or agency thereof or therein having power to tax or levy duties, or any change in the application or interpretation of such laws or regulations, which change or amendment becomes effective on or after March 16, 2001, or (y) the issuance of definitive Registered Securities pursuant to any of clauses (i), (ii) or (iv) of the third following paragraph; and

(ii)    such obligation cannot be avoided by the Company taking reasonably measures available to it;

subject, as provided in the Indenture, to the delivery by the Company of an Officers' Certificate stating that the obligation referred to in clause (i) above cannot be avoided by the Company taking reasonable measures available to it.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the Indenture or any further supplemental indenture or the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Securities at the time Outstanding of all series to be affected (voting as a class). The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future H olders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest, if any, on this Security at the time, place, and rate, and in the coin or currency, herein prescribed.

This Security shall be exchangeable, in whole but not in part, for Securities registered in the names of Persons other than the Book-Entry Depositary with respect to such series or its nominee only as provided in this paragraph. This Security shall be so exchangeable if (i) DTC notifies the Company and the Book-Entry Depositary that it is unwilling or unable to continue to hold the Book-Entry Interest or at any time it ceases to be a "clearing agency" registered as such under the Exchange Act and, in either case, a successor is not appointed by the Company within 120 days, (ii) the Book-Entry Depositary for the Securities of this series notifies the Company that it is unwilling or unable to continue as Book-Entry Depositary with respect to this Security and no successor is appointed within 120 days, (iii) the Company executes and delivers to the Trustee an Officers' Certificate providing that this Security shall be so exchangeable, or (iv) there shall have occurred and be continuing an Event of Default with respect to the Securities of this series and the Holder, in such circumstance, acting upon instructions from owners of interests representing a majority of outstanding principal amount of the Book-Entry Interests relating to this Security, shall have requested in writing that this Security be exchanged for one or more definitive Registered Securities of this series. Securities so issued in exchange for this Security shall be of the same series, having the same interest rate, if any, and maturity and having the same terms as this Security, in authorized denominations and in the aggregate having the same principal amount as this Security and registered in such names as the Book-Entry Depositary for this Security shall direct.

The Securities of this series of which this Security is a part and which are not Global Securities are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. The bearer of this Security shall be treated as the owner of it for all purposes, subject to the terms of the Indenture. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

When a successor assumes all the obligations of its predecessor under the Securities of this series and the Indenture in accordance with the terms of the Indenture, the predecessor will be released from those obligations.

The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities of this series and may otherwise deal with the Company, its Subsidiaries or their respective Affiliates as if it were not the Trustee.

No stockholder, director, officer, employee, incorporator or Affiliate of the Company shall have any liability for any obligation of the Company under the Securities of this series or the Indenture for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of the Securities of this series, by accepting a Security of this series, waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Securities of this series.

This Security shall not be valid until the Trustee or Authenticating Agent signs the certificate of authentication on this Security.

Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures ("CUSIP"), the Company will cause CUSIP numbers to be printed on the Securities of this series as a convenience to the Holders of the Securities of this series. No representation is made as to the accuracy of such numbers as printed on the Securities of this series and reliance may be placed only on the other identification numbers printed hereon.

This Security shall be governed by and construed in accordance with the laws of the State of New York.

All terms used in this Security that are defined in the Indenture shall have the meanings assigned to them in the Indenture.

[FORM OF ASSIGNMENT FORM]

To assign this Security, fill in the form below:

   I or we assign and transfer this Security to:

(Print or type assignee's name, address and zip code)

(Insert assignee's soc. sec. or tax I.D. No.)

and irrevocably appoint him, her or it as agent to transfer this Security on the books of the Company. The agent may substitute another act for him, her or it.

___________________________________________________________________________

___________________________________________________________________________

    Date: _______________

    Your Signature: _______________________

     Signature Guarantee: _____________________________________
                                                   (Signature must be guaranteed)

___________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in the Securities Transfer Agents Medallion Program ("STAMP") or such other signature guarantee medallion program as may be approved by the Registrar in addition to or substitution for, STAMP), pursuant to S.E.C. Rule 17Ad-15.

In connection with any transfer or exchange of any of the Securities evidenced by this certificate occurring prior to the date that is two years after the later of the date of original issuance of such Securities and the last date, if any, on which such Securities were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Securities are being:

CHECK ONE BOX BELOW:

1 [_]    acquired for the undersigned's own account, without transfer;

2 [_]    transferred to the Company;

3 [_]    transferred pursuant to and in compliance with Rule 144A under the Securities Act of 1933;

4 [_]    transferred pursuant to an effective registration statement under the Securities Act;

5 [_]    transferred pursuant to and in connection with Regulation S under the Securities Act of 1933; or

6 [_]    transferred pursuant to another available exemption from the registration requirements of the Securities Act of 1933.

Unless one of the boxes is checked, the Trustee may refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered holder thereof; provided, however, that if box (5) or (6) is checked, the Trustee or the Company may require, prior to registering any such transfer of the Securities, in their sole discretion, such legal opinions, certifications and other information as the Trustee or the Company may reasonably request to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act.

_________________________________
Signature

Signature Guarantee:

________________________________________________________
(Signature must be guaranteed)

________________________________________________________
Signature

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions) with membership in STAMP or such other signature guarantee medallion program as may be approved by the Security Registrar in addition to or substitution for STAMP, pursuant to S.E.C. Rule 17Ad-15.

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITIES

The following increases or decreases in this Global Security have been made:

Date of Exchange Amount of decrease in Principal Amount of this Global Security Amount of increase in Principal Amount of this Global Security Principal Amount of this Global Security following such decrease or increase Signature of authorized signatory of Trustee or Security Custodian

Exhibit B-3

[FORM OF REGULATION S PERMANENT GLOBAL NOTE]

This Security is a Global Security within the meaning of the Indenture hereinafter referred to and is held by a Book-Entry Depositary or a nominee of a Book-Entry Depositary. This Security is exchangeable for securities held by or registered in the name of a person other than the Book-Entry Depositary or its nominee only in the limited circumstances described in the Indenture, and no transfer of this Security (other than a transfer of this Security as a whole by the Book-Entry Depositary to a nominee of the Book-Entry Depositary or by a nominee of the Book-Entry Depositary to the Book-Entry Depositary or another nominee of the Book-Entry Depositary) may be made, except in limited circumstances.

Unless this Global Security is presented by an authorized representative of the Book-Entry Depositary to the issuer or its agent for exchange or payment, and any definitive security is issued in the name or names as directed in writing by the Book-Entry Depositary, ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the bearer hereof, the Book-Entry Depositary, has an interest herein.

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE ISSUANCE HEREOF (OR A PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN TO THE COMPANY, SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY THE BO X CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE LAWS OF ANY STATE OF THE UNITED STATES.

WPD HOLDINGS UK
6.875% Notes Due December 15, 2007

No. [________]                                                               [$____________]
CUSIP No. [_______]
ISIN No. [________]

WPD HOLDINGS UK, a company duly organized and existing under the laws of England and Wales (herein called the "Company," which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay the bearer upon surrender hereof, the principal sum of [________________] on December 15, 2007, and to pay interest thereon from December 15, 2000, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on June 15 and December 15 of each year, commencing on June 15, 2001, at the rate per annum provided in the title hereof, until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the bearer on such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith ceas e to be payable to the bearer on such Interest Payment Date and may be paid to the bearer at the time of payment of such Defaulted Interest, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture.

Payment of the principal of (and premium, if any) and interest, if any, on this Security will be made at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, the City of New York, and/or in Luxembourg in such coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts. Payments of any amounts in respect of this Security will be made through the Paying Agents to the Book-Entry Depositary, as the holder thereof. The Book-Entry Depositary will pay an amount equal to such payment to DTC, which will distribute such payment to its Participants in amounts proportionate to their respective ownership of interests in the Book-Entry Interests as shown on the records of DTC. The Company expects that payments by Participants to owners of interests in Book-Entry Interests held through such Participants will be governed by standing customer instructions and customary practices and will be the responsibil ity of such Participants.

The Company will not have any responsibility or liability for any aspect relating to payments made or to be made by the Book-Entry Depositary to DTC in respect of this Security or the Book-Entry Interests. None of the Company, the Trustee, the Book-Entry Depositary or any agent of any of the foregoing will have any responsibility or liability for any aspect relating to payments made or to be made by DTC on account of a Participant's or Indirect Participant's ownership of an interest in the Book-Entry Interests or for maintaining, supervising or reviewing any records relating to a Participant's or Indirect Participant's interests in the Book-Entry Interests.

All payments of principal and interest (including payments of discount and premium, if any) in respect of this Security shall be made free and clear of, and without withholding or deduction for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or within the United Kingdom or by or within any political subdivision thereof or any authority therein or thereof having power to tax ("United Kingdom Taxes"), unless such withholding or deduction is required by law. In the event of any such withholding or deduction, the Company shall pay to the Holder such additional amounts (the "Additional Amounts") as will result in the payment to such Holder of the amount that would otherwise have been receivable by such Holder in the absence of such withholding or deduction, except that no such Additional Amounts shall be payable:

(i)    to, or to a Person on behalf of, a Holder who is liable for such United Kingdom Taxes in respect of this Security by reason of such Holder having some connection with the United Kingdom (including being a citizen or resident or national of, or carrying on a business or maintaining a permanent establishment in, or being physically present in, the United Kingdom) other than the mere holding of this Security or the receipt of principal and interest (including payments of discount and premium, if any) in respect thereof;

(ii)    to, or to a Person on behalf of, a Holder who presents this Security (where presentation is required) for payment more than 30 days after the Relevant Date (as defined below), except to the extent that such Holder would have been entitled to such Additional Amounts on presenting this Security for payment on the last day of such period of 30 days;

(iii)    to, or to a Person on behalf of, a Holder who presents this Security (where presentation is required) in the United Kingdom; or

(iv)    to, or to a Person on behalf of, a Holder who would not be liable or subject to the withholding or deduction by making a declaration of non-residence or similar claim for exemption to the relevant tax authority.

Such Additional Amounts will also not be payable where, had the beneficial owner of this Security (or any interest therein) been the Holder of the Security, he or she would not have been entitled to payment of Additional Amounts by reason of any one or more of clauses (i) through (iv) above. If the Company shall determine that Additional Amounts will not be payable because of the immediately preceding sentence, the Company will inform such holder promptly after making such determination setting forth the reason(s) therefor.

"Relevant Date" means whichever is the later of (i) the date on which such payment first becomes due and (ii) if the full amount payable has not been received in The City of New York by the Book-Entry Depositary or the Trustee on or prior to such due date, the date on which, the full amount having been so received, notice to that effect shall have been given to the Holders in accordance with the Indenture.

References to principal, interest, discount or premium in respect of this Security shall be deemed also to refer to any Additional Amounts which may be payable as set forth in the Indenture or in this Security.

The Company shall furnish to the Trustee the official receipts (or a certified copy of the official receipts) evidencing payment of United Kingdom Taxes. Copies of such receipts shall be made available to the Holder of this Security upon request.

So long as the Securities are listed on the Luxembourg Stock Exchange and the rules of the Luxembourg Stock Exchange so require, notices to Holders of Securities will be published in a leading newspaper having general circulation in Luxembourg (which is expected to be the Luxembourg Wort).

The Book-Entry Depositary will immediately send to DTC a copy of any notices, reports, and other communications received by it relating to the Company or the Securities.

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

This Security has been issued with an original issue discount for the purposes of Sections 1271-1275 of the Internal Revenue Code of 1986, as amended. The issue price, amount of original issue discount, issue date and yield to maturity of the Securities may be obtained by contacting the Company's Investor Relations Department at +44 117 933 2000.

[Remainder of page intentionally left blank.]

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer or director of the Company duly authorized.

Dated: March 16, 2001

WPD HOLDINGS UK

By:                                                        
   Name:
   Title:

[FORM OF CERTIFICATE OF AUTHENTICATION]

This is one of the Securities of the series designated herein and referred to in the within-mentioned Indenture.

Date: March 16, 2001

BANKERS TRUST COMPANY
   as Trustee

By:                                                        
   Title:  Authorized Officer

[FORM OF REVERSE OF SECURITY]
(Regulation S - Permanent)

WPD HOLDINGS UK
6.875% Notes Due December 15, 2007

This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture, dated as of March 16, 2001 (herein called the "Original Indenture") among the Company, Bankers Trust Company, as trustee (herein called the "Trustee"), which term includes any successor trustee under the Indenture), and Deutsche Bank Luxembourg S.A., as paying and transfer agent (the "Paying and Transfer Agent"), as supplemented by the First Supplemental Indenture, dated as of March 16, 2001 (together with the Original Indenture, the "Indenture"), among the Company, the Trustee, and the Paying Agent, to which Indenture and all supplemental indentures thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties, and immunities thereunder of the Company, the Trustee, the Paying Agent, and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. Terms defined in the Indenture that are not defined herein are used with the meanings assigned to them in the Indenture. This Security is one of the series designated on the face hereof, limited in aggregate principal amount to [$___________].

The Securities of this series will be redeemable in whole or in part, at the option of the Company at any time, at a redemption price equal to the greater of (i) 100% of the principal amount of the Securities of this series being redeemed or (ii) the sum of the present values of the remaining scheduled payments of principal of and interest on the Securities of this series being redeemed discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at a discount rate equal to the Treasury Yield plus 25 basis points in respect of the Securities of this series, plus, for (i) or (ii) above, whichever is applicable, accrued interest on the Notes to the date of redemption.

"Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker (as defined below) as having a maturity comparable to the remaining term of the Securities of this series to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Securities of this series.

"Comparable Treasury Price" means, with respect to any date on which the Securities are redeemed (each, a "Redemption Date"), (i) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third Business Day preceding such Redemption Date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S. Government Securities," or (ii) if such release (or any successor release) is not published or does not contain such prices on such Business Day, the Reference Treasury Dealer Quotation (as defined below) for such Redemption Date.

"Independent Investment Banker" means an independent investment banking institution of national standing in the U.S. appointed by the Company and reasonably acceptable to the Trustee.

"Reference Treasury Dealer Quotation" means, with respect to the Reference Treasury Dealer (as defined below) and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount and quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third Business Day preceding such Redemption Date).

"Reference Treasury Dealer" means a primary U.S. Government securities dealer in New York City appointed by the Company and reasonably acceptable to the Trustee.

"Treasury Yield" means, with respect to any date on which the Securities are redeemed (each a "Redemption Date"), the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.

Notice of redemption shall be given not less than 15 days nor more than 30 days prior to the date fixed for redemption.

If fewer than all the of the Securities are to be redeemed, selection of Securities of this series for redemption will be made by the Trustee in any manner the Trustee deems fair and appropriate and complies with applicable legal and securities exchange requirements.

Unless the Company defaults in payment of the redemption price, from and after the Redemption Date, the Securities of this series or portions thereof called for redemption will cease to bear interest, and the Holders thereof will have no right in respect to such Securities of this series, except the right to receive the redemption price thereof.

In the event of redemption of these Securities in part only, a new Security or Securities of this series and of like term or for the unredeemed portion hereof will be issued to the Holder upon the cancellation hereof.

The Indenture contains provisions for defeasance of (i) the entire indebtedness of this Security and (ii) certain restrictive covenants upon compliance by the Company with certain conditions set forth therein.

If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. At any time after such declaration of acceleration with respect to Securities of any series has been made, but before a judgment or decree for payment of money has been obtained by the Trustee as provided in the Indenture, if all Events of Default with respect to Securities of this series have been cured or waived (other than the non-payment of principal of the Securities that has become due solely by reason of such declaration of acceleration), then such declaration of acceleration and its consequences shall be automatically annulled and rescinded.

The Securities of this series are subject to redemption, in whole but not in part, upon not less than 15 nor more than 30 days' notice given as provided in the Indenture to the Holders of Securities of this series at a price equal to the outstanding principal amount thereof together with Additional Amounts, if any, and accrued interest, to the Redemption Date if:

(i)    the Company satisfies the Trustee prior to the giving of such notice that it has or will become obliged to pay Additional Amounts as a result of either (x) any change in, or amendment to, the laws or regulations of the United Kingdom or any political subdivision or any authority or agency thereof or therein having power to tax or levy duties, or any change in the application or interpretation of such laws or regulations, which change or amendment becomes effective on or after March 16, 2001, or (y) the issuance of definitive Registered Securities pursuant to any of clauses (i), (ii) or (iv) of the third following paragraph; and

(ii)    such obligation cannot be avoided by the Company taking reasonably measures available to it;

subject, as provided in the Indenture, to the delivery by the Company of an Officers' Certificate stating that the obligation referred to in clause (i) above cannot be avoided by the Company taking reasonable measures available to it.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the Indenture or any further supplemental indenture or the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Securities at the time Outstanding of all series to be affected (voting as a class). The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future H olders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest, if any, on this Security at the time, place, and rate, and in the coin or currency, herein prescribed.

This Security shall be exchangeable, in whole but not in part, for Securities registered in the names of Persons other than the Book-Entry Depositary with respect to such series or its nominee only as provided in this paragraph. This Security shall be so exchangeable if (i) DTC notifies the Company and the Book-Entry Depositary that it is unwilling or unable to continue to hold the Book-Entry Interest or at any time it ceases to be a "clearing agency" registered as such under the Exchange Act and, in either case, a successor is not appointed by the Company within 120 days, (ii) the Book-Entry Depositary for the Securities of this series notifies the Company that it is unwilling or unable to continue as Book-Entry Depositary with respect to this Security and no successor is appointed within 120 days, (iii) the Company executes and delivers to the Trustee an Officers' Certificate providing that this Security shall be so exchangeable, or (iv) there shall have occurred and be continuing an Event of Default with respect to the Securities of this series and the Holder, in such circumstance, acting upon instructions from owners of interests representing a majority of outstanding principal amount of the Book-Entry Interests relating to this Security, shall have requested in writing that this Security be exchanged for one or more definitive Registered Securities of this series. Securities so issued in exchange for this Security shall be of the same series, having the same interest rate, if any, and maturity and having the same terms as this Security, in authorized denominations and in the aggregate having the same principal amount as this Security and registered in such names as the Book-Entry Depositary for this Security shall direct.

The Securities of this series of which this Security is a part and which are not Global Securities are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. The bearer of this Security shall be treated as the owner of it for all purposes, subject to the terms of the Indenture. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

When a successor assumes all the obligations of its predecessor under the Securities of this series and the Indenture in accordance with the terms of the Indenture, the predecessor will be released from those obligations.

The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities of this series and may otherwise deal with the Company, its Subsidiaries or their respective Affiliates as if it were not the Trustee.

No stockholder, director, officer, employee, incorporator or Affiliate of the Company shall have any liability for any obligation of the Company under the Securities of this series or the Indenture for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of the Securities of this series, by accepting a Security of this series, waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Securities of this series.

This Security shall not be valid until the Trustee or Authenticating Agent signs the certificate of authentication on this Security.

Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures ("CUSIP"), the Company will cause CUSIP numbers to be printed on the Securities of this series as a convenience to the Holders of the Securities of this series. No representation is made as to the accuracy of such numbers as printed on the Securities of this series and reliance may be placed only on the other identification numbers printed hereon.

This Security shall be governed by and construed in accordance with the laws of the State of New York.

All terms used in this Security that are defined in the Indenture shall have the meanings assigned to them in the Indenture.

[FORM OF ASSIGNMENT FORM]

To assign this Security, fill in the form below:

   I or we assign and transfer this Security to:

(Print or type assignee's name, address and zip code)

(Insert assignee's soc. sec. or tax I.D. No.)

and irrevocably appoint him, her or it as agent to transfer this Security on the books of the Company. The agent may substitute another act for him, her or it.

___________________________________________________________________________

___________________________________________________________________________

    Date: _______________

    Your Signature: _______________________

     Signature Guarantee: _____________________________________
                                                   (Signature must be guaranteed)

___________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in the Securities Transfer Agents Medallion Program ("STAMP") or such other signature guarantee medallion program as may be approved by the Registrar in addition to or substitution for, STAMP), pursuant to S.E.C. Rule 17Ad-15.

In connection with any transfer or exchange of any of the Securities evidenced by this certificate occurring prior to the date that is two years after the later of the date of original issuance of such Securities and the last date, if any, on which such Securities were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Securities are being:

CHECK ONE BOX BELOW:

1 [_]    acquired for the undersigned's own account, without transfer;

2 [_]    transferred to the Company;

3 [_]    transferred pursuant to and in compliance with Rule 144A under the Securities Act of 1933;

4 [_]    transferred pursuant to an effective registration statement under the Securities Act;

5 [_]    transferred pursuant to and in connection with Regulation S under the Securities Act of 1933; or

6 [_]    transferred pursuant to another available exemption from the registration requirements of the Securities Act of 1933.

Unless one of the boxes is checked, the Trustee may refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered holder thereof; provided, however, that if box (5) or (6) is checked, the Trustee or the Company may require, prior to registering any such transfer of the Securities, in their sole discretion, such legal opinions, certifications and other information as the Trustee or the Company may reasonably request to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act.

_________________________________
Signature

Signature Guarantee:

________________________________________________________
(Signature must be guaranteed)

________________________________________________________
Signature

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions) with membership in STAMP or such other signature guarantee medallion program as may be approved by the Security Registrar in addition to or substitution for STAMP, pursuant to S.E.C. Rule 17Ad-15.

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITIES

The following increases or decreases in this Global Security have been made:

Date of Exchange Amount of decrease in Principal Amount of this Global Security Amount of increase in Principal Amount of this Global Security Principal Amount of this Global Security following such decrease or increase Signature of authorized signatory of Trustee or Security Custodian

Exhibit C-1

[FORM OF GLOBAL NOTE]
(Rule 144A)

This Security is a Global Security within the meaning of the Indenture hereinafter referred to and is held by a Book-Entry Depositary or a nominee of a Book-Entry Depositary. This Security is exchangeable for securities held by or registered in the name of a person other than the Book-Entry Depositary or its nominee only in the limited circumstances described in the Indenture, and no transfer of this Security (other than a transfer of this Security as a whole by the Book-Entry Depositary to a nominee of the Book-Entry Depositary or by a nominee of the Book-Entry Depositary to the Book-Entry Depositary or another nominee of the Book-Entry Depositary) may be made, except in limited circumstances.

Unless this Global Security is presented by an authorized representative of the Book-Entry Depositary to the issuer or its agent for exchange or payment, and any definitive security is issued in the name or names as directed in writing by the Book-Entry Depositary, ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the bearer hereof, the Book-Entry Depositary, has an interest herein.

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE ISSUANCE HEREOF (OR A PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN TO THE COMPANY, SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY THE BO X CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE LAWS OF ANY STATE OF THE UNITED STATES.

WPD HOLDINGS UK
6.50% Notes Due December 15, 2008

No. [________]                                                               [$____________]
CUSIP No. [_______]
ISIN No. [________]

WPD HOLDINGS UK, a company duly organized and existing under the laws of England and Wales (herein called the "Company," which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay the bearer upon surrender hereof, the principal sum of [________________] Dollars on December 15, 2008, and to pay interest thereon from December 15, 2000, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on June 15 and December 15 of each year, commencing on June 15, 2001, at the rate per annum provided in the title hereof, until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the bearer on such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cea se to be payable to the bearer on such Interest Payment Date and may be paid to the bearer at the time of payment of such Defaulted Interest, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture.

Payment of the principal of (and premium, if any) and interest, if any, on this Security will be made at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, the City of New York, and/or in Luxembourg in such coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts. Payments of any amounts in respect of this Security will be made through the Paying Agents to the Book-Entry Depositary, as the holder thereof. The Book-Entry Depositary will pay an amount equal to such payment to DTC, which will distribute such payment to its Participants in amounts proportionate to their respective ownership of interests in the Book-Entry Interests as shown on the records of DTC. The Company expects that payments by Participants to owners of interests in Book-Entry Interests held through such Participants will be governed by standing customer instructions and customary practices and will be the responsibil ity of such Participants.

The Company will not have any responsibility or liability for any aspect relating to payments made or to be made by the Book-Entry Depositary to DTC in respect of this Security or the Book-Entry Interests. None of the Company, the Trustee, the Book-Entry Depositary or any agent of any of the foregoing will have any responsibility or liability for any aspect relating to payments made or to be made by DTC on account of a Participant's or Indirect Participant's ownership of an interest in the Book-Entry Interests or for maintaining, supervising or reviewing any records relating to a Participant's or Indirect Participant's interests in the Book-Entry Interests.

All payments of principal and interest (including payments of discount and premium, if any) in respect of this Security shall be made free and clear of, and without withholding or deduction for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or within the United Kingdom or by or within any political subdivision thereof or any authority therein or thereof having power to tax ("United Kingdom Taxes"), unless such withholding or deduction is required by law. In the event of any such withholding or deduction, the Company shall pay to the Holder such additional amounts (the "Additional Amounts") as will result in the payment to such Holder of the amount that would otherwise have been receivable by such Holder in the absence of such withholding or deduction, except that no such Additional Amounts shall be payable:

(i)    to, or to a Person on behalf of, a Holder who is liable for such United Kingdom Taxes in respect of this Security by reason of such Holder having some connection with the United Kingdom (including being a citizen or resident or national of, or carrying on a business or maintaining a permanent establishment in, or being physically present in, the United Kingdom) other than the mere holding of this Security or the receipt of principal and interest (including payments of discount and premium, if any) in respect thereof;

(ii)    to, or to a Person on behalf of, a Holder who presents this Security (where presentation is required) for payment more than 30 days after the Relevant Date (as defined below), except to the extent that such Holder would have been entitled to such Additional Amounts on presenting this Security for payment on the last day of such period of 30 days;

(iii)    to, or to a Person on behalf of, a Holder who presents this Security (where presentation is required) in the United Kingdom; or

(iv)    to, or to a Person on behalf of, a Holder who would not be liable or subject to the withholding or deduction by making a declaration of non-residence or similar claim for exemption to the relevant tax authority.

Such Additional Amounts will also not be payable where, had the beneficial owner of this Security (or any interest therein) been the Holder of the Security, he or she would not have been entitled to payment of Additional Amounts by reason of any one or more of clauses (i) through (iv) above. If the Company shall determine that Additional Amounts will not be payable because of the immediately preceding sentence, the Company will inform such holder promptly after making such determination setting forth the reason(s) therefor.

"Relevant Date" means whichever is the later of (i) the date on which such payment first becomes due and (ii) if the full amount payable has not been received in The City of New York by the Book-Entry Depositary or the Trustee on or prior to such due date, the date on which, the full amount having been so received, notice to that effect shall have been given to the Holders in accordance with the Indenture.

References to principal, interest, discount or premium in respect of this Security shall be deemed also to refer to any Additional Amounts which may be payable as set forth in the Indenture or in this Security.

The Company shall furnish to the Trustee the official receipts (or a certified copy of the official receipts) evidencing payment of United Kingdom Taxes. Copies of such receipts shall be made available to the Holder of this Security upon request.

So long as the Securities are listed on the Luxembourg Stock Exchange and the rules of the Luxembourg Stock Exchange so require, notices to Holders of Securities will be published in a leading newspaper having general circulation in Luxembourg (which is expected to be the Luxembourg Wort).

The Book-Entry Depositary will immediately send to DTC a copy of any notices, reports, and other communications received by it relating to the Company or the Securities.

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

This Security has been issued with an original issue discount for the purposes of Sections 1271-1275 of the Internal Revenue Code of 1986, as amended. The issue price, amount of original issue discount, issue date and yield to maturity of the Securities may be obtained by contacting the Company's Investor Relations Department at +44 117 933 2000.

[Remainder of page intentionally left blank.]

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer or director of the Company duly authorized.

Dated: March 16, 2001

WPD HOLDINGS UK

By:                                                        
   Name:
   Title:

[FORM OF CERTIFICATE OF AUTHENTICATION]

This is one of the Securities of the series designated herein and referred to in the within-mentioned Indenture.

Date: March 16, 2001

BANKERS TRUST COMPANY
   as Trustee

By:                                                        
   Title:  Authorized Officer

[FORM OF REVERSE OF SECURITY]
(Rule 144A)

WPD HOLDINGS UK
6.50% Notes Due December 15, 2008

This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture, dated as of March 16, 2001 (herein called the "Original Indenture") among the Company, Bankers Trust Company, as trustee (herein called the "Trustee"), which term includes any successor trustee under the Indenture), and Deutsche Bank Luxembourg S.A., as paying and transfer agent (the "Paying and Transfer Agent"), as supplemented by the First Supplemental Indenture, dated as of March 16, 2001 (together with the Original Indenture, the "Indenture"), among the Company, the Trustee, and the Paying Agent, to which Indenture and all supplemental indentures thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties, and immunities thereunder of the Company, the Trustee, the Paying Agent, and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. Terms defined in the Indenture that are not defined herein are used with the meanings assigned to them in the Indenture. This Security is one of the series designated on the face hereof, limited in aggregate principal amount to [$______________].

The Securities of this series will be redeemable in whole or in part, at the option of the Company at any time, at a redemption price equal to the greater of (i) 100% of the principal amount of the Securities of this series being redeemed or (ii) the sum of the present values of the remaining scheduled payments of principal of and interest on the Securities of this series being redeemed discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at a discount rate equal to the Treasury Yield plus 25 basis points in respect of the Securities of this series, plus, for (i) or (ii) above, whichever is applicable, accrued interest on the Notes to the date of redemption.

"Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker (as defined below) as having a maturity comparable to the remaining term of the Securities of this series to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Securities of this series.

"Comparable Treasury Price" means, with respect to any date on which the Securities are redeemed (each, a "Redemption Date"), (i) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third Business Day preceding such Redemption Date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S. Government Securities," or (ii) if such release (or any successor release) is not published or does not contain such prices on such Business Day, the Reference Treasury Dealer Quotation (as defined below) for such Redemption Date.

"Independent Investment Banker" means an independent investment banking institution of national standing in the U.S. appointed by the Company and reasonably acceptable to the Trustee.

"Reference Treasury Dealer Quotation" means, with respect to the Reference Treasury Dealer (as defined below) and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount and quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third Business Day preceding such Redemption Date).

"Reference Treasury Dealer" means a primary U.S. Government securities dealer in New York City appointed by the Company and reasonably acceptable to the Trustee.

"Treasury Yield" means, with respect to any date on which the Securities are redeemed (each a "Redemption Date"), the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.

Notice of redemption shall be given not less than 15 days nor more than 30 days prior to the date fixed for redemption.

If fewer than all the of the Securities are to be redeemed, selection of Securities of this series for redemption will be made by the Trustee in any manner the Trustee deems fair and appropriate and complies with applicable legal and securities exchange requirements.

Unless the Company defaults in payment of the redemption price, from and after the Redemption Date, the Securities of this series or portions thereof called for redemption will cease to bear interest, and the Holders thereof will have no right in respect to such Securities of this series, except the right to receive the redemption price thereof.

In the event of redemption of these Securities in part only, a new Security or Securities of this series and of like term or for the unredeemed portion hereof will be issued to the Holder upon the cancellation hereof.

The Indenture contains provisions for defeasance of (i) the entire indebtedness of this Security and (ii) certain restrictive covenants upon compliance by the Company with certain conditions set forth therein.

If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. At any time after such declaration of acceleration with respect to Securities of any series has been made, but before a judgment or decree for payment of money has been obtained by the Trustee as provided in the Indenture, if all Events of Default with respect to Securities of this series have been cured or waived (other than the non-payment of principal of the Securities that has become due solely by reason of such declaration of acceleration), then such declaration of acceleration and its consequences shall be automatically annulled and rescinded.

The Securities of this series are subject to redemption, in whole but not in part, upon not less than 15 nor more than 30 days' notice given as provided in the Indenture to the Holders of Securities of this series at a price equal to the outstanding principal amount thereof together with Additional Amounts, if any, and accrued interest, to the Redemption Date if:

(i)    the Company satisfies the Trustee prior to the giving of such notice that it has or will become obliged to pay Additional Amounts as a result of either (x) any change in, or amendment to, the laws or regulations of the United Kingdom or any political subdivision or any authority or agency thereof or therein having power to tax or levy duties, or any change in the application or interpretation of such laws or regulations, which change or amendment becomes effective on or after March 16, 2001, or (y) the issuance of definitive Registered Securities pursuant to any of clauses (i), (ii) or (iv) of the third following paragraph; and

(ii)    such obligation cannot be avoided by the Company taking reasonably measures available to it;

subject, as provided in the Indenture, to the delivery by the Company of an Officers' Certificate stating that the obligation referred to in clause (i) above cannot be avoided by the Company taking reasonable measures available to it.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the Indenture or any further supplemental indenture or the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Securities at the time Outstanding of all series to be affected (voting as a class). The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future H olders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest, if any, on this Security at the time, place, and rate, and in the coin or currency, herein prescribed.

This Security shall be exchangeable, in whole but not in part, for Securities registered in the names of Persons other than the Book-Entry Depositary with respect to such series or its nominee only as provided in this paragraph. This Security shall be so exchangeable if (i) DTC notifies the Company and the Book-Entry Depositary that it is unwilling or unable to continue to hold the Book-Entry Interest or at any time it ceases to be a "clearing agency" registered as such under the Exchange Act and, in either case, a successor is not appointed by the Company within 120 days, (ii) the Book-Entry Depositary for the Securities of this series notifies the Company that it is unwilling or unable to continue as Book-Entry Depositary with respect to this Security and no successor is appointed within 120 days, (iii) the Company executes and delivers to the Trustee an Officers' Certificate providing that this Security shall be so exchangeable, or (iv) there shall have occurred and be continuing an Event of Default with respect to the Securities of this series and the Holder, in such circumstance, acting upon instructions from owners of interests representing a majority of outstanding principal amount of the Book-Entry Interests relating to this Security, shall have requested in writing that this Security be exchanged for one or more definitive Registered Securities of this series. Securities so issued in exchange for this Security shall be of the same series, having the same interest rate, if any, and maturity and having the same terms as this Security, in authorized denominations and in the aggregate having the same principal amount as this Security and registered in such names as the Book-Entry Depositary for this Security shall direct.

The Securities of this series of which this Security is a part and which are not Global Securities are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. The bearer of this Security shall be treated as the owner of it for all purposes, subject to the terms of the Indenture. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

When a successor assumes all the obligations of its predecessor under the Securities of this series and the Indenture in accordance with the terms of the Indenture, the predecessor will be released from those obligations.

The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities of this series and may otherwise deal with the Company, its Subsidiaries or their respective Affiliates as if it were not the Trustee.

No stockholder, director, officer, employee, incorporator or Affiliate of the Company shall have any liability for any obligation of the Company under the Securities of this series or the Indenture for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of the Securities of this series, by accepting a Security of this series, waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Securities of this series.

This Security shall not be valid until the Trustee or Authenticating Agent signs the certificate of authentication on this Security.

Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures ("CUSIP"), the Company will cause CUSIP numbers to be printed on the Securities of this series as a convenience to the Holders of the Securities of this series. No representation is made as to the accuracy of such numbers as printed on the Securities of this series and reliance may be placed only on the other identification numbers printed hereon.

This Security shall be governed by and construed in accordance with the laws of the State of New York.

All terms used in this Security that are defined in the Indenture shall have the meanings assigned to them in the Indenture.

[FORM OF ASSIGNMENT FORM]

To assign this Security, fill in the form below:

   I or we assign and transfer this Security to:

(Print or type assignee's name, address and zip code)

(Insert assignee's soc. sec. or tax I.D. No.)

and irrevocably appoint him, her or it as agent to transfer this Security on the books of the Company. The agent may substitute another act for him, her or it.

___________________________________________________________________________

___________________________________________________________________________

    Date: _______________

    Your Signature: _______________________

     Signature Guarantee: _____________________________________
                                                   (Signature must be guaranteed)

___________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in the Securities Transfer Agents Medallion Program ("STAMP") or such other signature guarantee medallion program as may be approved by the Registrar in addition to or substitution for, STAMP), pursuant to S.E.C. Rule 17Ad-15.

In connection with any transfer or exchange of any of the Securities evidenced by this certificate occurring prior to the date that is two years after the later of the date of original issuance of such Securities and the last date, if any, on which such Securities were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Securities are being:

CHECK ONE BOX BELOW:

1 [_]        acquired for the undersigned's own account, without transfer;

2 [_]        transferred to the Company;

3 [_]    transferred pursuant to and in compliance with Rule 144A under the Securities Act of 1933;

4 [_]    transferred pursuant to an effective registration statement under the Securities Act;

5 [_]    transferred pursuant to and in connection with Regulation S under the Securities Act of 1933; or

6 [_]    transferred pursuant to another available exemption from the registration requirements of the Securities Act of 1933.

Unless one of the boxes is checked, the Trustee may refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered holder thereof; provided, however, that if box (5) or (6) is checked, the Trustee or the Company may require, prior to registering any such transfer of the Securities, in their sole discretion, such legal opinions, certifications and other information as the Trustee or the Company may reasonably request to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act.

_________________________________
Signature

Signature Guarantee:

________________________________________________________
(Signature must be guaranteed)

________________________________________________________
Signature

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions) with membership in STAMP or such other signature guarantee medallion program as may be approved by the Security Registrar in addition to or substitution for STAMP, pursuant to S.E.C. Rule 17Ad-15.

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITIES

The following increases or decreases in this Global Security have been made:

Date of Exchange Amount of decrease in Principal Amount of this Global Security Amount of increase in Principal Amount of this Global Security Principal Amount of this Global Security following such decrease or increase Signature of authorized signatory of Trustee or Security Custodian

Exhibit C-2

[FORM OF REGULATION S TEMPORARY GLOBAL NOTE]

This Security is a Global Security within the meaning of the Indenture hereinafter referred to and is held by a Book-Entry Depositary or a nominee of a Book-Entry Depositary. This Security is exchangeable for securities held by or registered in the name of a person other than the Book-Entry Depositary or its nominee only in the limited circumstances described in the Indenture, and no transfer of this Security (other than a transfer of this Security as a whole by the Book-Entry Depositary to a nominee of the Book-Entry Depositary or by a nominee of the Book-Entry Depositary to the Book-Entry Depositary or another nominee of the Book-Entry Depositary) may be made, except in limited circumstances.

Unless this Global Security is presented by an authorized representative of the Book-Entry Depositary to the issuer or its agent for exchange or payment, and any definitive security is issued in the name or names as directed in writing by the Book-Entry Depositary, ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the bearer hereof, the Book-Entry Depositary, has an interest herein.

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE ISSUANCE HEREOF (OR A PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN TO THE COMPANY, SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY THE BO X CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE LAWS OF ANY STATE OF THE UNITED STATES.

THIS GLOBAL NOTE IS A TEMPORARY GLOBAL NOTE FOR PURPOSES OF REGULATION S UNDER THE SECURITIES ACT. NEITHER THIS TEMPORARY GLOBAL NOTE NOR ANY INTEREST HEREIN MAY BE OFFERED, SOLD OR DELIVERED, EXCEPT AS PERMITTED UNDER THE INDENTURE HEREINAFTER REFERRED TO.

NO BENEFICIAL OWNERS OF THIS TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF PRINCIPAL OR INTEREST HEREON UNLESS THE REQUIRED CERTIFICATIONS HAVE BEEN DELIVERED PURSUANT TO THE TERMS OF THE INDENTURE.

WPD HOLDINGS UK
6.50% Notes Due December 15, 2008

No. [________]                                                               [$____________]
CUSIP No. [_______]
ISIN No. [________]

WPD HOLDINGS UK, a company duly organized and existing under the laws of England and Wales (herein called the "Company," which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay the bearer upon surrender hereof, the principal sum of [____________________________] on December 15, 2008, and to pay interest thereon from December 15, 2000, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on June 15 and December 15 of each year, commencing on June 15, 2001, at the rate per annum provided in the title hereof, until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the bearer on such Interest Payment Date. Any such interest not so punctually paid or duly provided for will fo rthwith cease to be payable to the bearer on such Interest Payment Date and may be paid to the bearer at the time of payment of such Defaulted Interest, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture.

Payment of the principal of (and premium, if any) and interest, if any, on this Security will be made at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, the City of New York, and/or in Luxembourg in such coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts. Payments of any amounts in respect of this Security will be made through the Paying Agents to the Book-Entry Depositary, as the holder thereof. The Book-Entry Depositary will pay an amount equal to such payment to DTC, which will distribute such payment to its Participants in amounts proportionate to their respective ownership of interests in the Book-Entry Interests as shown on the records of DTC. The Company expects that payments by Participants to owners of interests in Book-Entry Interests held through such Participants will be governed by standing customer instructions and customary practices and will be the responsibil ity of such Participants.

The Company will not have any responsibility or liability for any aspect relating to payments made or to be made by the Book-Entry Depositary to DTC in respect of this Security or the Book-Entry Interests. None of the Company, the Trustee, the Book-Entry Depositary or any agent of any of the foregoing will have any responsibility or liability for any aspect relating to payments made or to be made by DTC on account of a Participant's or Indirect Participant's ownership of an interest in the Book-Entry Interests or for maintaining, supervising or reviewing any records relating to a Participant's or Indirect Participant's interests in the Book-Entry Interests.

All payments of principal and interest (including payments of discount and premium, if any) in respect of this Security shall be made free and clear of, and without withholding or deduction for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or within the United Kingdom or by or within any political subdivision thereof or any authority therein or thereof having power to tax ("United Kingdom Taxes"), unless such withholding or deduction is required by law. In the event of any such withholding or deduction, the Company shall pay to the Holder such additional amounts (the "Additional Amounts") as will result in the payment to such Holder of the amount that would otherwise have been receivable by such Holder in the absence of such withholding or deduction, except that no such Additional Amounts shall be payable:

(i)    to, or to a Person on behalf of, a Holder who is liable for such United Kingdom Taxes in respect of this Security by reason of such Holder having some connection with the United Kingdom (including being a citizen or resident or national of, or carrying on a business or maintaining a permanent establishment in, or being physically present in, the United Kingdom) other than the mere holding of this Security or the receipt of principal and interest (including payments of discount and premium, if any) in respect thereof;

(ii)    to, or to a Person on behalf of, a Holder who presents this Security (where presentation is required) for payment more than 30 days after the Relevant Date (as defined below), except to the extent that such Holder would have been entitled to such Additional Amounts on presenting this Security for payment on the last day of such period of 30 days;

(iii)    to, or to a Person on behalf of, a Holder who presents this Security (where presentation is required) in the United Kingdom; or

(iv)    to, or to a Person on behalf of, a Holder who would not be liable or subject to the withholding or deduction by making a declaration of non-residence or similar claim for exemption to the relevant tax authority.

Such Additional Amounts will also not be payable where, had the beneficial owner of this Security (or any interest therein) been the Holder of the Security, he or she would not have been entitled to payment of Additional Amounts by reason of any one or more of clauses (i) through (iv) above. If the Company shall determine that Additional Amounts will not be payable because of the immediately preceding sentence, the Company will inform such holder promptly after making such determination setting forth the reason(s) therefor.

"Relevant Date" means whichever is the later of (i) the date on which such payment first becomes due and (ii) if the full amount payable has not been received in The City of New York by the Book-Entry Depositary or the Trustee on or prior to such due date, the date on which, the full amount having been so received, notice to that effect shall have been given to the Holders in accordance with the Indenture.

References to principal, interest, discount or premium in respect of this Security shall be deemed also to refer to any Additional Amounts which may be payable as set forth in the Indenture or in this Security.

The Company shall furnish to the Trustee the official receipts (or a certified copy of the official receipts) evidencing payment of United Kingdom Taxes. Copies of such receipts shall be made available to the Holder of this Security upon request.

So long as the Securities are listed on the Luxembourg Stock Exchange and the rules of the Luxembourg Stock Exchange so require, notices to Holders of Securities will be published in a leading newspaper having general circulation in Luxembourg (which is expected to be the Luxembourg Wort).

The Book-Entry Depositary will immediately send to DTC a copy of any notices, reports, and other communications received by it relating to the Company or the Securities.

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

This Security has been issued with an original issue discount for the purposes of Sections 1271-1275 of the Internal Revenue Code of 1986, as amended. The issue price, amount of original issue discount, issue date and yield to maturity of the Securities may be obtained by contacting the Company's Investor Relations Department at +44 117 933 2000.

[Remainder of page intentionally left blank.]

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer or director of the Company duly authorized.

Dated: March 16, 2001

WPD HOLDINGS UK

By:                                                        
   Name:
   Title:

[FORM OF CERTIFICATE OF AUTHENTICATION]

This is one of the Securities of the series designated herein and referred to in the within-mentioned Indenture.

Date: March 16, 2001

BANKERS TRUST COMPANY
   as Trustee

By:                                                        
   Title:  Authorized Officer

[FORM OF REVERSE OF SECURITY]
(Regulation S - Temporary)

WPD HOLDINGS UK
6.50% Notes Due December 15, 2008

This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture, dated as of March 16, 2001 (herein called the "Original Indenture") among the Company, Bankers Trust Company, as trustee (herein called the "Trustee"), which term includes any successor trustee under the Indenture), and Deutsche Bank Luxembourg S.A., as paying and transfer agent (the "Paying and Transfer Agent"), as supplemented by the First Supplemental Indenture, dated as of March 16, 2001 (together with the Original Indenture, the "Indenture"), among the Company, the Trustee, and the Paying Agent, to which Indenture and all supplemental indentures thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties, and immunities thereunder of the Company, the Trustee, the Paying Agent, and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. Terms defined in the Indenture that are not defined herein are used with the meanings assigned to them in the Indenture. This Security is one of the series designated on the face hereof, limited in aggregate principal amount to [$_______________].

The Securities of this series will be redeemable in whole or in part, at the option of the Company at any time, at a redemption price equal to the greater of (i) 100% of the principal amount of the Securities of this series being redeemed or (ii) the sum of the present values of the remaining scheduled payments of principal of and interest on the Securities of this series being redeemed discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at a discount rate equal to the Treasury Yield plus 25 basis points in respect of the Securities of this series, plus, for (i) or (ii) above, whichever is applicable, accrued interest on the Notes to the date of redemption.

"Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker (as defined below) as having a maturity comparable to the remaining term of the Securities of this series to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Securities of this series.

"Comparable Treasury Price" means, with respect to any date on which the Securities are redeemed (each, a "Redemption Date"), (i) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third Business Day preceding such Redemption Date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S. Government Securities," or (ii) if such release (or any successor release) is not published or does not contain such prices on such Business Day, the Reference Treasury Dealer Quotation (as defined below) for such Redemption Date.

"Independent Investment Banker" means an independent investment banking institution of national standing in the U.S. appointed by the Company and reasonably acceptable to the Trustee.

"Reference Treasury Dealer Quotation" means, with respect to the Reference Treasury Dealer (as defined below) and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount and quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third Business Day preceding such Redemption Date).

"Reference Treasury Dealer" means a primary U.S. Government securities dealer in New York City appointed by the Company and reasonably acceptable to the Trustee.

"Treasury Yield" means, with respect to any date on which the Securities are redeemed (each a "Redemption Date"), the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.

Notice of redemption shall be given not less than 15 days nor more than 30 days prior to the date fixed for redemption.

If fewer than all the of the Securities are to be redeemed, selection of Securities of this series for redemption will be made by the Trustee in any manner the Trustee deems fair and appropriate and complies with applicable legal and securities exchange requirements.

Unless the Company defaults in payment of the redemption price, from and after the Redemption Date, the Securities of this series or portions thereof called for redemption will cease to bear interest, and the Holders thereof will have no right in respect to such Securities of this series, except the right to receive the redemption price thereof.

In the event of redemption of these Securities in part only, a new Security or Securities of this series and of like term or for the unredeemed portion hereof will be issued to the Holder upon the cancellation hereof.

The Indenture contains provisions for defeasance of (i) the entire indebtedness of this Security and (ii) certain restrictive covenants upon compliance by the Company with certain conditions set forth therein.

If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. At any time after such declaration of acceleration with respect to Securities of any series has been made, but before a judgment or decree for payment of money has been obtained by the Trustee as provided in the Indenture, if all Events of Default with respect to Securities of this series have been cured or waived (other than the non-payment of principal of the Securities that has become due solely by reason of such declaration of acceleration), then such declaration of acceleration and its consequences shall be automatically annulled and rescinded.

The Securities of this series are subject to redemption, in whole but not in part, upon not less than 15 nor more than 30 days' notice given as provided in the Indenture to the Holders of Securities of this series at a price equal to the outstanding principal amount thereof together with Additional Amounts, if any, and accrued interest, to the Redemption Date if:

(i)    the Company satisfies the Trustee prior to the giving of such notice that it has or will become obliged to pay Additional Amounts as a result of either (x) any change in, or amendment to, the laws or regulations of the United Kingdom or any political subdivision or any authority or agency thereof or therein having power to tax or levy duties, or any change in the application or interpretation of such laws or regulations, which change or amendment becomes effective on or after March 16, 2001, or (y) the issuance of definitive Registered Securities pursuant to any of clauses (i), (ii) or (iv) of the third following paragraph; and

(ii)    such obligation cannot be avoided by the Company taking reasonably measures available to it;

subject, as provided in the Indenture, to the delivery by the Company of an Officers' Certificate stating that the obligation referred to in clause (i) above cannot be avoided by the Company taking reasonable measures available to it.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the Indenture or any further supplemental indenture or the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Securities at the time Outstanding of all series to be affected (voting as a class). The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future H olders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest, if any, on this Security at the time, place, and rate, and in the coin or currency, herein prescribed.

This Security shall be exchangeable, in whole but not in part, for Securities registered in the names of Persons other than the Book-Entry Depositary with respect to such series or its nominee only as provided in this paragraph. This Security shall be so exchangeable if (i) DTC notifies the Company and the Book-Entry Depositary that it is unwilling or unable to continue to hold the Book-Entry Interest or at any time it ceases to be a "clearing agency" registered as such under the Exchange Act and, in either case, a successor is not appointed by the Company within 120 days, (ii) the Book-Entry Depositary for the Securities of this series notifies the Company that it is unwilling or unable to continue as Book-Entry Depositary with respect to this Security and no successor is appointed within 120 days, (iii) the Company executes and delivers to the Trustee an Officers' Certificate providing that this Security shall be so exchangeable, or (iv) there shall have occurred and be continuing an Event of Default with respect to the Securities of this series and the Holder, in such circumstance, acting upon instructions from owners of interests representing a majority of outstanding principal amount of the Book-Entry Interests relating to this Security, shall have requested in writing that this Security be exchanged for one or more definitive Registered Securities of this series. Securities so issued in exchange for this Security shall be of the same series, having the same interest rate, if any, and maturity and having the same terms as this Security, in authorized denominations and in the aggregate having the same principal amount as this Security and registered in such names as the Book-Entry Depositary for this Security shall direct.

The Securities of this series of which this Security is a part and which are not Global Securities are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. The bearer of this Security shall be treated as the owner of it for all purposes, subject to the terms of the Indenture. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

When a successor assumes all the obligations of its predecessor under the Securities of this series and the Indenture in accordance with the terms of the Indenture, the predecessor will be released from those obligations.

The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities of this series and may otherwise deal with the Company, its Subsidiaries or their respective Affiliates as if it were not the Trustee.

No stockholder, director, officer, employee, incorporator or Affiliate of the Company shall have any liability for any obligation of the Company under the Securities of this series or the Indenture for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of the Securities of this series, by accepting a Security of this series, waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Securities of this series.

This Security shall not be valid until the Trustee or Authenticating Agent signs the certificate of authentication on this Security.

Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures ("CUSIP"), the Company will cause CUSIP numbers to be printed on the Securities of this series as a convenience to the Holders of the Securities of this series. No representation is made as to the accuracy of such numbers as printed on the Securities of this series and reliance may be placed only on the other identification numbers printed hereon.

This Security shall be governed by and construed in accordance with the laws of the State of New York.

All terms used in this Security that are defined in the Indenture shall have the meanings assigned to them in the Indenture.

[FORM OF ASSIGNMENT FORM]

To assign this Security, fill in the form below:

   I or we assign and transfer this Security to:

(Print or type assignee's name, address and zip code)

(Insert assignee's soc. sec. or tax I.D. No.)

and irrevocably appoint him, her or it as agent to transfer this Security on the books of the Company. The agent may substitute another act for him, her or it.

___________________________________________________________________________

___________________________________________________________________________

    Date: _______________

    Your Signature: _______________________

     Signature Guarantee: _____________________________________
                                                   (Signature must be guaranteed)

___________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in the Securities Transfer Agents Medallion Program ("STAMP") or such other signature guarantee medallion program as may be approved by the Registrar in addition to or substitution for, STAMP), pursuant to S.E.C. Rule 17Ad-15.

In connection with any transfer or exchange of any of the Securities evidenced by this certificate occurring prior to the date that is two years after the later of the date of original issuance of such Securities and the last date, if any, on which such Securities were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Securities are being:

CHECK ONE BOX BELOW:

1 [_]    acquired for the undersigned's own account, without transfer;

2 [_]    transferred to the Company;

3 [_]    transferred pursuant to and in compliance with Rule 144A under the Securities Act of 1933;

4 [_]    transferred pursuant to an effective registration statement under the Securities Act;

5 [_]    transferred pursuant to and in connection with Regulation S under the Securities Act of 1933; or

6 [_]    transferred pursuant to another available exemption from the registration requirements of the Securities Act of 1933.

Unless one of the boxes is checked, the Trustee may refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered holder thereof; provided, however, that if box (5) or (6) is checked, the Trustee or the Company may require, prior to registering any such transfer of the Securities, in their sole discretion, such legal opinions, certifications and other information as the Trustee or the Company may reasonably request to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act.

_________________________________
Signature

Signature Guarantee:

________________________________________________________
(Signature must be guaranteed)

________________________________________________________
Signature

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions) with membership in STAMP or such other signature guarantee medallion program as may be approved by the Security Registrar in addition to or substitution for STAMP, pursuant to S.E.C. Rule 17Ad-15.

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITIES

The following increases or decreases in this Global Security have been made:

Date of Exchange Amount of decrease in Principal Amount of this Global Security Amount of increase in Principal Amount of this Global Security Principal Amount of this Global Security following such decrease or increase Signature of authorized signatory of Trustee or Security Custodian

Exhibit C-3

[FORM OF REGULATION S PERMANENT GLOBAL NOTE]

This Security is a Global Security within the meaning of the Indenture hereinafter referred to and is held by a Book-Entry Depositary or a nominee of a Book-Entry Depositary. This Security is exchangeable for securities held by or registered in the name of a person other than the Book-Entry Depositary or its nominee only in the limited circumstances described in the Indenture, and no transfer of this Security (other than a transfer of this Security as a whole by the Book-Entry Depositary to a nominee of the Book-Entry Depositary or by a nominee of the Book-Entry Depositary to the Book-Entry Depositary or another nominee of the Book-Entry Depositary) may be made, except in limited circumstances.

Unless this Global Security is presented by an authorized representative of the Book-Entry Depositary to the issuer or its agent for exchange or payment, and any definitive security is issued in the name or names as directed in writing by the Book-Entry Depositary, ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the bearer hereof, the Book-Entry Depositary, has an interest herein.

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE ISSUANCE HEREOF (OR A PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN TO THE COMPANY, SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY THE BO X CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE LAWS OF ANY STATE OF THE UNITED STATES.

WPD HOLDINGS UK
6.50% Notes Due December 15, 2008

No. [________]                                                               [$____________]
CUSIP No. [_______]
ISIN No. [________]

WPD HOLDINGS UK, a company duly organized and existing under the laws of England and Wales (herein called the "Company," which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay the bearer upon surrender hereof, the principal sum of [_______________]on December 15, 2008, and to pay interest thereon from December 15, 2000, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on June 15 and December 15 of each year, commencing on June 15, 2001, at the rate per annum provided in the title hereof, until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the bearer on such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the bearer on such Interest Payment Date and may be paid to the bearer at the time of payment of such Defaulted Interest, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture.

Payment of the principal of (and premium, if any) and interest, if any, on this Security will be made at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, the City of New York, and/or in Luxembourg in such coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts. Payments of any amounts in respect of this Security will be made through the Paying Agents to the Book-Entry Depositary, as the holder thereof. The Book-Entry Depositary will pay an amount equal to such payment to DTC, which will distribute such payment to its Participants in amounts proportionate to their respective ownership of interests in the Book-Entry Interests as shown on the records of DTC. The Company expects that payments by Participants to owners of interests in Book-Entry Interests held through such Participants will be governed by standing customer instructions and customary practices and will be the responsibil ity of such Participants.

The Company will not have any responsibility or liability for any aspect relating to payments made or to be made by the Book-Entry Depositary to DTC in respect of this Security or the Book-Entry Interests. None of the Company, the Trustee, the Book-Entry Depositary or any agent of any of the foregoing will have any responsibility or liability for any aspect relating to payments made or to be made by DTC on account of a Participant's or Indirect Participant's ownership of an interest in the Book-Entry Interests or for maintaining, supervising or reviewing any records relating to a Participant's or Indirect Participant's interests in the Book-Entry Interests.

All payments of principal and interest (including payments of discount and premium, if any) in respect of this Security shall be made free and clear of, and without withholding or deduction for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or within the United Kingdom or by or within any political subdivision thereof or any authority therein or thereof having power to tax ("United Kingdom Taxes"), unless such withholding or deduction is required by law. In the event of any such withholding or deduction, the Company shall pay to the Holder such additional amounts (the "Additional Amounts") as will result in the payment to such Holder of the amount that would otherwise have been receivable by such Holder in the absence of such withholding or deduction, except that no such Additional Amounts shall be payable:

(i)    to, or to a Person on behalf of, a Holder who is liable for such United Kingdom Taxes in respect of this Security by reason of such Holder having some connection with the United Kingdom (including being a citizen or resident or national of, or carrying on a business or maintaining a permanent establishment in, or being physically present in, the United Kingdom) other than the mere holding of this Security or the receipt of principal and interest (including payments of discount and premium, if any) in respect thereof;

(ii)    to, or to a Person on behalf of, a Holder who presents this Security (where presentation is required) for payment more than 30 days after the Relevant Date (as defined below), except to the extent that such Holder would have been entitled to such Additional Amounts on presenting this Security for payment on the last day of such period of 30 days;

(iii)    to, or to a Person on behalf of, a Holder who presents this Security (where presentation is required) in the United Kingdom; or

(iv)    to, or to a Person on behalf of, a Holder who would not be liable or subject to the withholding or deduction by making a declaration of non-residence or similar claim for exemption to the relevant tax authority.

Such Additional Amounts will also not be payable where, had the beneficial owner of this Security (or any interest therein) been the Holder of the Security, he or she would not have been entitled to payment of Additional Amounts by reason of any one or more of clauses (i) through (iv) above. If the Company shall determine that Additional Amounts will not be payable because of the immediately preceding sentence, the Company will inform such holder promptly after making such determination setting forth the reason(s) therefor.

"Relevant Date" means whichever is the later of (i) the date on which such payment first becomes due and (ii) if the full amount payable has not been received in The City of New York by the Book-Entry Depositary or the Trustee on or prior to such due date, the date on which, the full amount having been so received, notice to that effect shall have been given to the Holders in accordance with the Indenture.

References to principal, interest, discount or premium in respect of this Security shall be deemed also to refer to any Additional Amounts which may be payable as set forth in the Indenture or in this Security.

The Company shall furnish to the Trustee the official receipts (or a certified copy of the official receipts) evidencing payment of United Kingdom Taxes. Copies of such receipts shall be made available to the Holder of this Security upon request.

So long as the Securities are listed on the Luxembourg Stock Exchange and the rules of the Luxembourg Stock Exchange so require, notices to Holders of Securities will be published in a leading newspaper having general circulation in Luxembourg (which is expected to be the Luxembourg Wort).

The Book-Entry Depositary will immediately send to DTC a copy of any notices, reports, and other communications received by it relating to the Company or the Securities.

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

This Security has been issued with an original issue discount for the purposes of Sections 1271-1275 of the Internal Revenue Code of 1986, as amended. The issue price, amount of original issue discount, issue date and yield to maturity of the Securities may be obtained by contacting the Company's Investor Relations Department at +44 117 933 2000.

[Remainder of page intentionally left blank.]

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer or director of the Company duly authorized.

Dated: March 16, 2001

WPD HOLDINGS UK

By:                                                        
   Name:
   Title:

[FORM OF CERTIFICATE OF AUTHENTICATION]

This is one of the Securities of the series designated herein and referred to in the within-mentioned Indenture.

Date: March 16, 2001

BANKERS TRUST COMPANY
   as Trustee

By:                                                        
   Title:  Authorized Officer

[FORM OF REVERSE OF SECURITY]
(Regulation S - Permanent)

WPD HOLDINGS UK
6.50% Notes Due December 15, 2008

This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture, dated as of March 16, 2001 (herein called the "Original Indenture") among the Company, Bankers Trust Company, as trustee (herein called the "Trustee"), which term includes any successor trustee under the Indenture), and Deutsche Bank Luxembourg S.A., as paying and transfer agent (the "Paying and Transfer Agent"), as supplemented by the First Supplemental Indenture, dated as of March 16, 2001 (together with the Original Indenture, the "Indenture"), among the Company, the Trustee, and the Paying Agent, to which Indenture and all supplemental indentures thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties, and immunities thereunder of the Company, the Trustee, the Paying Agent, and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. Terms defined in the Indenture that are not defined herein are used with the meanings assigned to them in the Indenture. This Security is one of the series designated on the face hereof, limited in aggregate principal amount to [$___________].

The Securities of this series will be redeemable in whole or in part, at the option of the Company at any time, at a redemption price equal to the greater of (i) 100% of the principal amount of the Securities of this series being redeemed or (ii) the sum of the present values of the remaining scheduled payments of principal of and interest on the Securities of this series being redeemed discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at a discount rate equal to the Treasury Yield plus 25 basis points in respect of the Securities of this series, plus, for (i) or (ii) above, whichever is applicable, accrued interest on the Notes to the date of redemption.

"Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker (as defined below) as having a maturity comparable to the remaining term of the Securities of this series to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Securities of this series.

"Comparable Treasury Price" means, with respect to any date on which the Securities are redeemed (each, a "Redemption Date"), (i) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third Business Day preceding such Redemption Date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S. Government Securities," or (ii) if such release (or any successor release) is not published or does not contain such prices on such Business Day, the Reference Treasury Dealer Quotation (as defined below) for such Redemption Date.

"Independent Investment Banker" means an independent investment banking institution of national standing in the U.S. appointed by the Company and reasonably acceptable to the Trustee.

"Reference Treasury Dealer Quotation" means, with respect to the Reference Treasury Dealer (as defined below) and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount and quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third Business Day preceding such Redemption Date).

"Reference Treasury Dealer" means a primary U.S. Government securities dealer in New York City appointed by the Company and reasonably acceptable to the Trustee.

"Treasury Yield" means, with respect to any date on which the Securities are redeemed (each a "Redemption Date"), the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.

Notice of redemption shall be given not less than 15 days nor more than 30 days prior to the date fixed for redemption.

If fewer than all the of the Securities are to be redeemed, selection of Securities of this series for redemption will be made by the Trustee in any manner the Trustee deems fair and appropriate and complies with applicable legal and securities exchange requirements.

Unless the Company defaults in payment of the redemption price, from and after the Redemption Date, the Securities of this series or portions thereof called for redemption will cease to bear interest, and the Holders thereof will have no right in respect to such Securities of this series, except the right to receive the redemption price thereof.

In the event of redemption of these Securities in part only, a new Security or Securities of this series and of like term or for the unredeemed portion hereof will be issued to the Holder upon the cancellation hereof.

The Indenture contains provisions for defeasance of (i) the entire indebtedness of this Security and (ii) certain restrictive covenants upon compliance by the Company with certain conditions set forth therein.

If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. At any time after such declaration of acceleration with respect to Securities of any series has been made, but before a judgment or decree for payment of money has been obtained by the Trustee as provided in the Indenture, if all Events of Default with respect to Securities of this series have been cured or waived (other than the non-payment of principal of the Securities that has become due solely by reason of such declaration of acceleration), then such declaration of acceleration and its consequences shall be automatically annulled and rescinded.

The Securities of this series are subject to redemption, in whole but not in part, upon not less than 15 nor more than 30 days' notice given as provided in the Indenture to the Holders of Securities of this series at a price equal to the outstanding principal amount thereof together with Additional Amounts, if any, and accrued interest, to the Redemption Date if:

(i)    the Company satisfies the Trustee prior to the giving of such notice that it has or will become obliged to pay Additional Amounts as a result of either (x) any change in, or amendment to, the laws or regulations of the United Kingdom or any political subdivision or any authority or agency thereof or therein having power to tax or levy duties, or any change in the application or interpretation of such laws or regulations, which change or amendment becomes effective on or after March 16, 2001, or (y) the issuance of definitive Registered Securities pursuant to any of clauses (i), (ii) or (iv) of the third following paragraph; and

(ii)    such obligation cannot be avoided by the Company taking reasonably measures available to it;

subject, as provided in the Indenture, to the delivery by the Company of an Officers' Certificate stating that the obligation referred to in clause (i) above cannot be avoided by the Company taking reasonable measures available to it.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the Indenture or any further supplemental indenture or the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Securities at the time Outstanding of all series to be affected (voting as a class). The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future H olders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest, if any, on this Security at the time, place, and rate, and in the coin or currency, herein prescribed.

This Security shall be exchangeable, in whole but not in part, for Securities registered in the names of Persons other than the Book-Entry Depositary with respect to such series or its nominee only as provided in this paragraph. This Security shall be so exchangeable if (i) DTC notifies the Company and the Book-Entry Depositary that it is unwilling or unable to continue to hold the Book-Entry Interest or at any time it ceases to be a "clearing agency" registered as such under the Exchange Act and, in either case, a successor is not appointed by the Company within 120 days, (ii) the Book-Entry Depositary for the Securities of this series notifies the Company that it is unwilling or unable to continue as Book-Entry Depositary with respect to this Security and no successor is appointed within 120 days, (iii) the Company executes and delivers to the Trustee an Officers' Certificate providing that this Security shall be so exchangeable, or (iv) there shall have occurred and be continuing an Event of Default with respect to the Securities of this series and the Holder, in such circumstance, acting upon instructions from owners of interests representing a majority of outstanding principal amount of the Book-Entry Interests relating to this Security, shall have requested in writing that this Security be exchanged for one or more definitive Registered Securities of this series. Securities so issued in exchange for this Security shall be of the same series, having the same interest rate, if any, and maturity and having the same terms as this Security, in authorized denominations and in the aggregate having the same principal amount as this Security and registered in such names as the Book-Entry Depositary for this Security shall direct.

The Securities of this series of which this Security is a part and which are not Global Securities are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. The bearer of this Security shall be treated as the owner of it for all purposes, subject to the terms of the Indenture. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

When a successor assumes all the obligations of its predecessor under the Securities of this series and the Indenture in accordance with the terms of the Indenture, the predecessor will be released from those obligations.

The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities of this series and may otherwise deal with the Company, its Subsidiaries or their respective Affiliates as if it were not the Trustee.

No stockholder, director, officer, employee, incorporator or Affiliate of the Company shall have any liability for any obligation of the Company under the Securities of this series or the Indenture for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of the Securities of this series, by accepting a Security of this series, waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Securities of this series.

This Security shall not be valid until the Trustee or Authenticating Agent signs the certificate of authentication on this Security.

Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures ("CUSIP"), the Company will cause CUSIP numbers to be printed on the Securities of this series as a convenience to the Holders of the Securities of this series. No representation is made as to the accuracy of such numbers as printed on the Securities of this series and reliance may be placed only on the other identification numbers printed hereon.

This Security shall be governed by and construed in accordance with the laws of the State of New York.

All terms used in this Security that are defined in the Indenture shall have the meanings assigned to them in the Indenture.

[FORM OF ASSIGNMENT FORM]

To assign this Security, fill in the form below:

   I or we assign and transfer this Security to:

(Print or type assignee's name, address and zip code)

(Insert assignee's soc. sec. or tax I.D. No.)

and irrevocably appoint him, her or it as agent to transfer this Security on the books of the Company. The agent may substitute another act for him, her or it.

___________________________________________________________________________

___________________________________________________________________________

    Date: _______________

    Your Signature: _______________________

     Signature Guarantee: _____________________________________
                                                   (Signature must be guaranteed)

___________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in the Securities Transfer Agents Medallion Program ("STAMP") or such other signature guarantee medallion program as may be approved by the Registrar in addition to or substitution for, STAMP), pursuant to S.E.C. Rule 17Ad-15.

In connection with any transfer or exchange of any of the Securities evidenced by this certificate occurring prior to the date that is two years after the later of the date of original issuance of such Securities and the last date, if any, on which such Securities were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Securities are being:

CHECK ONE BOX BELOW:

1 [_]    acquired for the undersigned's own account, without transfer;

2 [_]    transferred to the Company;

3 [_]    transferred pursuant to and in compliance with Rule 144A under the Securities Act of 1933;

4 [_]    transferred pursuant to an effective registration statement under the Securities Act;

5 [_]    transferred pursuant to and in connection with Regulation S under the Securities Act of 1933; or

6 [_]    transferred pursuant to another available exemption from the registration requirements of the Securities Act of 1933.

Unless one of the boxes is checked, the Trustee may refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered holder thereof; provided, however, that if box (5) or (6) is checked, the Trustee or the Company may require, prior to registering any such transfer of the Securities, in their sole discretion, such legal opinions, certifications and other information as the Trustee or the Company may reasonably request to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act.

_________________________________
Signature

Signature Guarantee:

________________________________________________________
(Signature must be guaranteed)

________________________________________________________
Signature

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions) with membership in STAMP or such other signature guarantee medallion program as may be approved by the Security Registrar in addition to or substitution for STAMP, pursuant to S.E.C. Rule 17Ad-15.

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITIES

The following increases or decreases in this Global Security have been made:

Date of Exchange Amount of decrease in Principal Amount of this Global Security Amount of increase in Principal Amount of this Global Security Principal Amount of this Global Security following such decrease or increase Signature of authorized signatory of Trustee or Security Custodian

Exhibit D-1

[FORM OF RULE 144A GLOBAL NOTE]

This Security is a Global Security within the meaning of the Indenture hereinafter referred to and is held by a Book-Entry Depositary or a nominee of a Book-Entry Depositary. This Security is exchangeable for securities held by or registered in the name of a person other than the Book-Entry Depositary or its nominee only in the limited circumstances described in the Indenture, and no transfer of this Security (other than a transfer of this Security as a whole by the Book-Entry Depositary to a nominee of the Book-Entry Depositary or by a nominee of the Book-Entry Depositary to the Book-Entry Depositary or another nominee of the Book-Entry Depositary) may be made, except in limited circumstances.

Unless this Global Security is presented by an authorized representative of the Book-Entry Depositary to the issuer or its agent for exchange or payment, and any definitive security is issued in the name or names as directed in writing by the Book-Entry Depositary, ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the bearer hereof, the Book-Entry Depositary, has an interest herein.

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE ISSUANCE HEREOF (OR A PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN TO THE COMPANY, SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY THE BO X CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE LAWS OF ANY STATE OF THE UNITED STATES.

WPD HOLDINGS UK
7.25% Notes Due December 15, 2017

No. [________]                                                               [$____________]
CUSIP No. [_______]
ISIN No. [________]

WPD HOLDINGS UK, a company duly organized and existing under the laws of England and Wales (herein called the "Company," which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay the bearer upon surrender hereof, the principal sum of [______________] on December 15, 2017, and to pay interest thereon from December 15, 2000, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on June 15 and December 15 of each year, commencing on June 15, 2001, at the rate per annum provided in the title hereof, until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the bearer on such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be p ayable to the bearer on such Interest Payment Date and may be paid to the bearer at the time of payment of such Defaulted Interest, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture.

Payment of the principal of (and premium, if any) and interest, if any, on this Security will be made at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, the City of New York, and/or in Luxembourg in such coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts. Payments of any amounts in respect of this Security will be made through the Paying Agents to the Book-Entry Depositary, as the holder thereof. The Book-Entry Depositary will pay an amount equal to such payment to DTC, which will distribute such payment to its Participants in amounts proportionate to their respective ownership of interests in the Book-Entry Interests as shown on the records of DTC. The Company expects that payments by Participants to owners of interests in Book-Entry Interests held through such Participants will be governed by standing customer instructions and customary practices and will be the responsibil ity of such Participants.

The Company will not have any responsibility or liability for any aspect relating to payments made or to be made by the Book-Entry Depositary to DTC in respect of this Security or the Book-Entry Interests. None of the Company, the Trustee, the Book-Entry Depositary or any agent of any of the foregoing will have any responsibility or liability for any aspect relating to payments made or to be made by DTC on account of a Participant's or Indirect Participant's ownership of an interest in the Book-Entry Interests or for maintaining, supervising or reviewing any records relating to a Participant's or Indirect Participant's interests in the Book-Entry Interests.

All payments of principal and interest (including payments of discount and premium, if any) in respect of this Security shall be made free and clear of, and without withholding or deduction for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or within the United Kingdom or by or within any political subdivision thereof or any authority therein or thereof having power to tax ("United Kingdom Taxes"), unless such withholding or deduction is required by law. In the event of any such withholding or deduction, the Company shall pay to the Holder such additional amounts (the "Additional Amounts") as will result in the payment to such Holder of the amount that would otherwise have been receivable by such Holder in the absence of such withholding or deduction, except that no such Additional Amounts shall be payable:

(i)    to, or to a Person on behalf of, a Holder who is liable for such United Kingdom Taxes in respect of this Security by reason of such Holder having some connection with the United Kingdom (including being a citizen or resident or national of, or carrying on a business or maintaining a permanent establishment in, or being physically present in, the United Kingdom) other than the mere holding of this Security or the receipt of principal and interest (including payments of discount and premium, if any) in respect thereof;

(ii)    to, or to a Person on behalf of, a Holder who presents this Security (where presentation is required) for payment more than 30 days after the Relevant Date (as defined below), except to the extent that such Holder would have been entitled to such Additional Amounts on presenting this Security for payment on the last day of such period of 30 days;

(iii)    to, or to a Person on behalf of, a Holder who presents this Security (where presentation is required) in the United Kingdom; or

(iv)    to, or to a Person on behalf of, a Holder who would not be liable or subject to the withholding or deduction by making a declaration of non-residence or similar claim for exemption to the relevant tax authority.

Such Additional Amounts will also not be payable where, had the beneficial owner of this Security (or any interest therein) been the Holder of the Security, he or she would not have been entitled to payment of Additional Amounts by reason of any one or more of clauses (i) through (iv) above. If the Company shall determine that Additional Amounts will not be payable because of the immediately preceding sentence, the Company will inform such holder promptly after making such determination setting forth the reason(s) therefor.

"Relevant Date" means whichever is the later of (i) the date on which such payment first becomes due and (ii) if the full amount payable has not been received in The City of New York by the Book-Entry Depositary or the Trustee on or prior to such due date, the date on which, the full amount having been so received, notice to that effect shall have been given to the Holders in accordance with the Indenture.

References to principal, interest, discount or premium in respect of this Security shall be deemed also to refer to any Additional Amounts which may be payable as set forth in the Indenture or in this Security.

The Company shall furnish to the Trustee the official receipts (or a certified copy of the official receipts) evidencing payment of United Kingdom Taxes. Copies of such receipts shall be made available to the Holder of this Security upon request.

So long as the Securities are listed on the Luxembourg Stock Exchange and the rules of the Luxembourg Stock Exchange so require, notices to Holders of Securities will be published in a leading newspaper having general circulation in Luxembourg (which is expected to be the Luxembourg Wort).

The Book-Entry Depositary will immediately send to DTC a copy of any notices, reports, and other communications received by it relating to the Company or the Securities.

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

This Security has been issued with an original issue discount for the purposes of Sections 1271-1275 of the Internal Revenue Code of 1986, as amended. The issue price, amount of original issue discount, issue date and yield to maturity of the Securities may be obtained by contacting the Company's Investor Relations Department at +44 117 933 2000.

[Remainder of page intentionally left blank.]

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer or director of the Company duly authorized.

Dated: March 16, 2001

WPD HOLDINGS UK

By:                                                        
   Name:
   Title:

[FORM OF CERTIFICATE OF AUTHENTICATION]

This is one of the Securities of the series designated herein and referred to in the within-mentioned Indenture.

Date: March 16, 2001

BANKERS TRUST COMPANY
   as Trustee

By:                                                        
   Title:  Authorized Officer

[FORM OF REVERSE OF SECURITY]
(Rule 144A)

WPD HOLDINGS UK
7.25% Notes Due December 15, 2017

This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture, dated as of March 16, 2001 (herein called the "Original Indenture") among the Company, Bankers Trust Company, as trustee (herein called the "Trustee"), which term includes any successor trustee under the Indenture), and Deutsche Bank Luxembourg S.A., as paying and transfer agent (the "Paying and Transfer Agent"), as supplemented by the First Supplemental Indenture, dated as of March 16, 2001 (together with the Original Indenture, the "Indenture"), among the Company, the Trustee, and the Paying Agent, to which Indenture and all supplemental indentures thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties, and immunities thereunder of the Company, the Trustee, the Paying Agent, and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. Terms defined in the Indenture that are not defined herein are used with the meanings assigned to them in the Indenture. This Security is one of the series designated on the face hereof, limited in aggregate principal amount to [$_________________].

The Securities of this series will be redeemable in whole or in part, at the option of the Company at any time, at a redemption price equal to the greater of (i) 100% of the principal amount of the Securities of this series being redeemed or (ii) the sum of the present values of the remaining scheduled payments of principal of and interest on the Securities of this series being redeemed discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at a discount rate equal to the Treasury Yield plus 37.5 basis points in respect of the Securities of this series, plus, for (i) or (ii) above, whichever is applicable, accrued interest on the Notes to the date of redemption.

"Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker (as defined below) as having a maturity comparable to the remaining term of the Securities of this series to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Securities of this series.

"Comparable Treasury Price" means, with respect to any date on which the Securities are redeemed (each, a "Redemption Date"), (i) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third Business Day preceding such Redemption Date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S. Government Securities," or (ii) if such release (or any successor release) is not published or does not contain such prices on such Business Day, the Reference Treasury Dealer Quotation (as defined below) for such Redemption Date.

"Independent Investment Banker" means an independent investment banking institution of national standing in the U.S. appointed by the Company and reasonably acceptable to the Trustee.

"Reference Treasury Dealer Quotation" means, with respect to the Reference Treasury Dealer (as defined below) and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount and quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third Business Day preceding such Redemption Date).

"Reference Treasury Dealer" means a primary U.S. Government securities dealer in New York City appointed by the Company and reasonably acceptable to the Trustee.

"Treasury Yield" means, with respect to any date on which the Securities are redeemed (each a "Redemption Date"), the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.

Notice of redemption shall be given not less than 15 days nor more than 30 days prior to the date fixed for redemption.

If fewer than all the of the Securities are to be redeemed, selection of Securities of this series for redemption will be made by the Trustee in any manner the Trustee deems fair and appropriate and complies with applicable legal and securities exchange requirements.

Unless the Company defaults in payment of the redemption price, from and after the Redemption Date, the Securities of this series or portions thereof called for redemption will cease to bear interest, and the Holders thereof will have no right in respect to such Securities of this series, except the right to receive the redemption price thereof.

In the event of redemption of these Securities in part only, a new Security or Securities of this series and of like term or for the unredeemed portion hereof will be issued to the Holder upon the cancellation hereof.

The Indenture contains provisions for defeasance of (i) the entire indebtedness of this Security and (ii) certain restrictive covenants upon compliance by the Company with certain conditions set forth therein.

If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. At any time after such declaration of acceleration with respect to Securities of any series has been made, but before a judgment or decree for payment of money has been obtained by the Trustee as provided in the Indenture, if all Events of Default with respect to Securities of this series have been cured or waived (other than the non-payment of principal of the Securities that has become due solely by reason of such declaration of acceleration), then such declaration of acceleration and its consequences shall be automatically annulled and rescinded.

The Securities of this series are subject to redemption, in whole but not in part, upon not less than 15 nor more than 30 days' notice given as provided in the Indenture to the Holders of Securities of this series at a price equal to the outstanding principal amount thereof together with Additional Amounts, if any, and accrued interest, to the Redemption Date if:

(i)    the Company satisfies the Trustee prior to the giving of such notice that it has or will become obliged to pay Additional Amounts as a result of either (x) any change in, or amendment to, the laws or regulations of the United Kingdom or any political subdivision or any authority or agency thereof or therein having power to tax or levy duties, or any change in the application or interpretation of such laws or regulations, which change or amendment becomes effective on or after March 16, 2001, or (y) the issuance of definitive Registered Securities pursuant to any of clauses (i), (ii) or (iv) of the third following paragraph; and

(ii)    such obligation cannot be avoided by the Company taking reasonably measures available to it;

subject, as provided in the Indenture, to the delivery by the Company of an Officers' Certificate stating that the obligation referred to in clause (i) above cannot be avoided by the Company taking reasonable measures available to it.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the Indenture or any further supplemental indenture or the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Securities at the time Outstanding of all series to be affected (voting as a class). The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future H olders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest, if any, on this Security at the time, place, and rate, and in the coin or currency, herein prescribed.

This Security shall be exchangeable, in whole but not in part, for Securities registered in the names of Persons other than the Book-Entry Depositary with respect to such series or its nominee only as provided in this paragraph. This Security shall be so exchangeable if (i) DTC notifies the Company and the Book-Entry Depositary that it is unwilling or unable to continue to hold the Book-Entry Interest or at any time it ceases to be a "clearing agency" registered as such under the Exchange Act and, in either case, a successor is not appointed by the Company within 120 days, (ii) the Book-Entry Depositary for the Securities of this series notifies the Company that it is unwilling or unable to continue as Book-Entry Depositary with respect to this Security and no successor is appointed within 120 days, (iii) the Company executes and delivers to the Trustee an Officers' Certificate providing that this Security shall be so exchangeable, or (iv) there shall have occurred and be continuing an Event of Default with respect to the Securities of this series and the Holder, in such circumstance, acting upon instructions from owners of interests representing a majority of outstanding principal amount of the Book-Entry Interests relating to this Security, shall have requested in writing that this Security be exchanged for one or more definitive Registered Securities of this series. Securities so issued in exchange for this Security shall be of the same series, having the same interest rate, if any, and maturity and having the same terms as this Security, in authorized denominations and in the aggregate having the same principal amount as this Security and registered in such names as the Book-Entry Depositary for this Security shall direct.

The Securities of this series of which this Security is a part and which are not Global Securities are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. The bearer of this Security shall be treated as the owner of it for all purposes, subject to the terms of the Indenture. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

When a successor assumes all the obligations of its predecessor under the Securities of this series and the Indenture in accordance with the terms of the Indenture, the predecessor will be released from those obligations.

The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities of this series and may otherwise deal with the Company, its Subsidiaries or their respective Affiliates as if it were not the Trustee.

No stockholder, director, officer, employee, incorporator or Affiliate of the Company shall have any liability for any obligation of the Company under the Securities of this series or the Indenture for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of the Securities of this series, by accepting a Security of this series, waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Securities of this series.

This Security shall not be valid until the Trustee or Authenticating Agent signs the certificate of authentication on this Security.

Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures ("CUSIP"), the Company will cause CUSIP numbers to be printed on the Securities of this series as a convenience to the Holders of the Securities of this series. No representation is made as to the accuracy of such numbers as printed on the Securities of this series and reliance may be placed only on the other identification numbers printed hereon.

This Security shall be governed by and construed in accordance with the laws of the State of New York.

All terms used in this Security that are defined in the Indenture shall have the meanings assigned to them in the Indenture.

[FORM OF ASSIGNMENT FORM]

To assign this Security, fill in the form below:

   I or we assign and transfer this Security to:

(Print or type assignee's name, address and zip code)

(Insert assignee's soc. sec. or tax I.D. No.)

and irrevocably appoint him, her or it as agent to transfer this Security on the books of the Company. The agent may substitute another act for him, her or it.

___________________________________________________________________________

___________________________________________________________________________

    Date: _______________

    Your Signature: _______________________

     Signature Guarantee: _____________________________________
                                                   (Signature must be guaranteed)

___________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in the Securities Transfer Agents Medallion Program ("STAMP") or such other signature guarantee medallion program as may be approved by the Registrar in addition to or substitution for, STAMP), pursuant to S.E.C. Rule 17Ad-15.

In connection with any transfer or exchange of any of the Securities evidenced by this certificate occurring prior to the date that is two years after the later of the date of original issuance of such Securities and the last date, if any, on which such Securities were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Securities are being:

CHECK ONE BOX BELOW:

1 [_]    acquired for the undersigned's own account, without transfer;

2 [_]    transferred to the Company;

3 [_]    transferred pursuant to and in compliance with Rule 144A under the Securities Act of 1933;

4 [_]    transferred pursuant to an effective registration statement under the Securities Act;

5 [_]    transferred pursuant to and in connection with Regulation S under the Securities Act of 1933; or

6 [_]    transferred pursuant to another available exemption from the registration requirements of the Securities Act of 1933.

Unless one of the boxes is checked, the Trustee may refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered holder thereof; provided, however, that if box (5) or (6) is checked, the Trustee or the Company may require, prior to registering any such transfer of the Securities, in their sole discretion, such legal opinions, certifications and other information as the Trustee or the Company may reasonably request to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act.

_________________________________
Signature

Signature Guarantee:

________________________________________________________
(Signature must be guaranteed)

________________________________________________________
Signature

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions) with membership in STAMP or such other signature guarantee medallion program as may be approved by the Security Registrar in addition to or substitution for STAMP, pursuant to S.E.C. Rule 17Ad-15.

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITIES

The following increases or decreases in this Global Security have been made:

Date of Exchange Amount of decrease in Principal Amount of this Global Security Amount of increase in Principal Amount of this Global Security Principal Amount of this Global Security following such decrease or increase Signature of authorized signatory of Trustee or Security Custodian

Exhibit D-2

[FORM OF REGULATION S TEMPORARY GLOBAL NOTE]

This Security is a Global Security within the meaning of the Indenture hereinafter referred to and is held by a Book-Entry Depositary or a nominee of a Book-Entry Depositary. This Security is exchangeable for securities held by or registered in the name of a person other than the Book-Entry Depositary or its nominee only in the limited circumstances described in the Indenture, and no transfer of this Security (other than a transfer of this Security as a whole by the Book-Entry Depositary to a nominee of the Book-Entry Depositary or by a nominee of the Book-Entry Depositary to the Book-Entry Depositary or another nominee of the Book-Entry Depositary) may be made, except in limited circumstances.

Unless this Global Security is presented by an authorized representative of the Book-Entry Depositary to the issuer or its agent for exchange or payment, and any definitive security is issued in the name or names as directed in writing by the Book-Entry Depositary, ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the bearer hereof, the Book-Entry Depositary, has an interest herein.

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE ISSUANCE HEREOF (OR A PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN TO THE COMPANY, SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY THE BO X CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE LAWS OF ANY STATE OF THE UNITED STATES.

THIS GLOBAL NOTE IS A TEMPORARY GLOBAL NOTE FOR PURPOSES OF REGULATION S UNDER THE SECURITIES ACT. NEITHER THIS TEMPORARY GLOBAL NOTE NOR ANY INTEREST HEREIN MAY BE OFFERED, SOLD OR DELIVERED, EXCEPT AS PERMITTED UNDER THE INDENTURE HEREINAFTER REFERRED TO.

NO BENEFICIAL OWNERS OF THIS TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF PRINCIPAL OR INTEREST HEREON UNLESS THE REQUIRED CERTIFICATIONS HAVE BEEN DELIVERED PURSUANT TO THE TERMS OF THE INDENTURE.

WPD HOLDINGS UK
7.25% Notes Due December 15, 2017

No. [________]                                                               [$____________]
CUSIP No. [_______]
ISIN No. [________]

WPD HOLDINGS UK, a company duly organized and existing under the laws of England and Wales (herein called the "Company," which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay the bearer upon surrender hereof, the principal sum of [_____________________] on December 15, 2017, and to pay interest thereon from December 15, 2000, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on June 15 and December 15 of each year, commencing on June 15, 2001, at the rate per annum provided in the title hereof, until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the bearer on such Interest Payment Date. Any such interest not so punctually paid or duly provided for will fo rthwith cease to be payable to the bearer on such Interest Payment Date and may be paid to the bearer at the time of payment of such Defaulted Interest, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture.

Payment of the principal of (and premium, if any) and interest, if any, on this Security will be made at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, the City of New York, and/or in Luxembourg in such coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts. Payments of any amounts in respect of this Security will be made through the Paying Agents to the Book-Entry Depositary, as the holder thereof. The Book-Entry Depositary will pay an amount equal to such payment to DTC, which will distribute such payment to its Participants in amounts proportionate to their respective ownership of interests in the Book-Entry Interests as shown on the records of DTC. The Company expects that payments by Participants to owners of interests in Book-Entry Interests held through such Participants will be governed by standing customer instructions and customary practices and will be the responsibil ity of such Participants.

The Company will not have any responsibility or liability for any aspect relating to payments made or to be made by the Book-Entry Depositary to DTC in respect of this Security or the Book-Entry Interests. None of the Company, the Trustee, the Book-Entry Depositary or any agent of any of the foregoing will have any responsibility or liability for any aspect relating to payments made or to be made by DTC on account of a Participant's or Indirect Participant's ownership of an interest in the Book-Entry Interests or for maintaining, supervising or reviewing any records relating to a Participant's or Indirect Participant's interests in the Book-Entry Interests.

All payments of principal and interest (including payments of discount and premium, if any) in respect of this Security shall be made free and clear of, and without withholding or deduction for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or within the United Kingdom or by or within any political subdivision thereof or any authority therein or thereof having power to tax ("United Kingdom Taxes"), unless such withholding or deduction is required by law. In the event of any such withholding or deduction, the Company shall pay to the Holder such additional amounts (the "Additional Amounts") as will result in the payment to such Holder of the amount that would otherwise have been receivable by such Holder in the absence of such withholding or deduction, except that no such Additional Amounts shall be payable:

(i)    to, or to a Person on behalf of, a Holder who is liable for such United Kingdom Taxes in respect of this Security by reason of such Holder having some connection with the United Kingdom (including being a citizen or resident or national of, or carrying on a business or maintaining a permanent establishment in, or being physically present in, the United Kingdom) other than the mere holding of this Security or the receipt of principal and interest (including payments of discount and premium, if any) in respect thereof;

(ii)    to, or to a Person on behalf of, a Holder who presents this Security (where presentation is required) for payment more than 30 days after the Relevant Date (as defined below), except to the extent that such Holder would have been entitled to such Additional Amounts on presenting this Security for payment on the last day of such period of 30 days;

(iii)    to, or to a Person on behalf of, a Holder who presents this Security (where presentation is required) in the United Kingdom; or

(iv)    to, or to a Person on behalf of, a Holder who would not be liable or subject to the withholding or deduction by making a declaration of non-residence or similar claim for exemption to the relevant tax authority.

Such Additional Amounts will also not be payable where, had the beneficial owner of this Security (or any interest therein) been the Holder of the Security, he or she would not have been entitled to payment of Additional Amounts by reason of any one or more of clauses (i) through (iv) above. If the Company shall determine that Additional Amounts will not be payable because of the immediately preceding sentence, the Company will inform such holder promptly after making such determination setting forth the reason(s) therefor.

"Relevant Date" means whichever is the later of (i) the date on which such payment first becomes due and (ii) if the full amount payable has not been received in The City of New York by the Book-Entry Depositary or the Trustee on or prior to such due date, the date on which, the full amount having been so received, notice to that effect shall have been given to the Holders in accordance with the Indenture.

References to principal, interest, discount or premium in respect of this Security shall be deemed also to refer to any Additional Amounts which may be payable as set forth in the Indenture or in this Security.

The Company shall furnish to the Trustee the official receipts (or a certified copy of the official receipts) evidencing payment of United Kingdom Taxes. Copies of such receipts shall be made available to the Holder of this Security upon request.

So long as the Securities are listed on the Luxembourg Stock Exchange and the rules of the Luxembourg Stock Exchange so require, notices to Holders of Securities will be published in a leading newspaper having general circulation in Luxembourg (which is expected to be the Luxembourg Wort).

The Book-Entry Depositary will immediately send to DTC a copy of any notices, reports, and other communications received by it relating to the Company or the Securities.

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

This Security has been issued with an original issue discount for the purposes of Sections 1271-1275 of the Internal Revenue Code of 1986, as amended. The issue price, amount of original issue discount, issue date and yield to maturity of the Securities may be obtained by contacting the Company's Investor Relations Department at +44 117 933 2000.

[Remainder of page intentionally left blank.]

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer or director of the Company duly authorized.

Dated: March 16, 2001

WPD HOLDINGS UK

By:                                                        
   Name:
   Title:

[FORM OF CERTIFICATE OF AUTHENTICATION]

This is one of the Securities of the series designated herein and referred to in the within-mentioned Indenture.

Date: March 16, 2001

BANKERS TRUST COMPANY
   as Trustee

By:                                                        
   Title:  Authorized Officer

[FORM OF REVERSE OF SECURITY]
(Regulation S - Temporary)

WPD HOLDINGS UK
7.25% Notes Due December 15, 2017

This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture, dated as of March 16, 2001 (herein called the "Original Indenture") among the Company, Bankers Trust Company, as trustee (herein called the "Trustee"), which term includes any successor trustee under the Indenture), and Deutsche Bank Luxembourg S.A., as paying and transfer agent (the "Paying and Transfer Agent"), as supplemented by the First Supplemental Indenture, dated as of March 16, 2001 (together with the Original Indenture, the "Indenture"), among the Company, the Trustee, and the Paying Agent, to which Indenture and all supplemental indentures thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties, and immunities thereunder of the Company, the Trustee, the Paying Agent, and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. Terms defined in the Indenture that are not defined herein are used with the meanings assigned to them in the Indenture. This Security is one of the series designated on the face hereof, limited in aggregate principal amount to [$___________________].

The Securities of this series will be redeemable in whole or in part, at the option of the Company at any time, at a redemption price equal to the greater of (i) 100% of the principal amount of the Securities of this series being redeemed or (ii) the sum of the present values of the remaining scheduled payments of principal of and interest on the Securities of this series being redeemed discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at a discount rate equal to the Treasury Yield plus 37.5 basis points in respect of the Securities of this series, plus, for (i) or (ii) above, whichever is applicable, accrued interest on the Notes to the date of redemption.

"Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker (as defined below) as having a maturity comparable to the remaining term of the Securities of this series to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Securities of this series.

"Comparable Treasury Price" means, with respect to any date on which the Securities are redeemed (each, a "Redemption Date"), (i) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third Business Day preceding such Redemption Date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S. Government Securities," or (ii) if such release (or any successor release) is not published or does not contain such prices on such Business Day, the Reference Treasury Dealer Quotation (as defined below) for such Redemption Date.

"Independent Investment Banker" means an independent investment banking institution of national standing in the U.S. appointed by the Company and reasonably acceptable to the Trustee.

"Reference Treasury Dealer Quotation" means, with respect to the Reference Treasury Dealer (as defined below) and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount and quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third Business Day preceding such Redemption Date).

"Reference Treasury Dealer" means a primary U.S. Government securities dealer in New York City appointed by the Company and reasonably acceptable to the Trustee.

"Treasury Yield" means, with respect to any date on which the Securities are redeemed (each a "Redemption Date"), the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.

Notice of redemption shall be given not less than 15 days nor more than 30 days prior to the date fixed for redemption.

If fewer than all the of the Securities are to be redeemed, selection of Securities of this series for redemption will be made by the Trustee in any manner the Trustee deems fair and appropriate and complies with applicable legal and securities exchange requirements.

Unless the Company defaults in payment of the redemption price, from and after the Redemption Date, the Securities of this series or portions thereof called for redemption will cease to bear interest, and the Holders thereof will have no right in respect to such Securities of this series, except the right to receive the redemption price thereof.

In the event of redemption of these Securities in part only, a new Security or Securities of this series and of like term or for the unredeemed portion hereof will be issued to the Holder upon the cancellation hereof.

The Indenture contains provisions for defeasance of (i) the entire indebtedness of this Security and (ii) certain restrictive covenants upon compliance by the Company with certain conditions set forth therein.

If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. At any time after such declaration of acceleration with respect to Securities of any series has been made, but before a judgment or decree for payment of money has been obtained by the Trustee as provided in the Indenture, if all Events of Default with respect to Securities of this series have been cured or waived (other than the non-payment of principal of the Securities that has become due solely by reason of such declaration of acceleration), then such declaration of acceleration and its consequences shall be automatically annulled and rescinded.

The Securities of this series are subject to redemption, in whole but not in part, upon not less than 15 nor more than 30 days' notice given as provided in the Indenture to the Holders of Securities of this series at a price equal to the outstanding principal amount thereof together with Additional Amounts, if any, and accrued interest, to the Redemption Date if:

(i)    the Company satisfies the Trustee prior to the giving of such notice that it has or will become obliged to pay Additional Amounts as a result of either (x) any change in, or amendment to, the laws or regulations of the United Kingdom or any political subdivision or any authority or agency thereof or therein having power to tax or levy duties, or any change in the application or interpretation of such laws or regulations, which change or amendment becomes effective on or after March 16, 2001, or (y) the issuance of definitive Registered Securities pursuant to any of clauses (i), (ii) or (iv) of the third following paragraph; and

(ii)    such obligation cannot be avoided by the Company taking reasonably measures available to it;

subject, as provided in the Indenture, to the delivery by the Company of an Officers' Certificate stating that the obligation referred to in clause (i) above cannot be avoided by the Company taking reasonable measures available to it.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the Indenture or any further supplemental indenture or the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Securities at the time Outstanding of all series to be affected (voting as a class). The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future H olders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest, if any, on this Security at the time, place, and rate, and in the coin or currency, herein prescribed.

This Security shall be exchangeable, in whole but not in part, for Securities registered in the names of Persons other than the Book-Entry Depositary with respect to such series or its nominee only as provided in this paragraph. This Security shall be so exchangeable if (i) DTC notifies the Company and the Book-Entry Depositary that it is unwilling or unable to continue to hold the Book-Entry Interest or at any time it ceases to be a "clearing agency" registered as such under the Exchange Act and, in either case, a successor is not appointed by the Company within 120 days, (ii) the Book-Entry Depositary for the Securities of this series notifies the Company that it is unwilling or unable to continue as Book-Entry Depositary with respect to this Security and no successor is appointed within 120 days, (iii) the Company executes and delivers to the Trustee an Officers' Certificate providing that this Security shall be so exchangeable, or (iv) there shall have occurred and be continuing an Event of Default with respect to the Securities of this series and the Holder, in such circumstance, acting upon instructions from owners of interests representing a majority of outstanding principal amount of the Book-Entry Interests relating to this Security, shall have requested in writing that this Security be exchanged for one or more definitive Registered Securities of this series. Securities so issued in exchange for this Security shall be of the same series, having the same interest rate, if any, and maturity and having the same terms as this Security, in authorized denominations and in the aggregate having the same principal amount as this Security and registered in such names as the Book-Entry Depositary for this Security shall direct.

The Securities of this series of which this Security is a part and which are not Global Securities are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. The bearer of this Security shall be treated as the owner of it for all purposes, subject to the terms of the Indenture. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

When a successor assumes all the obligations of its predecessor under the Securities of this series and the Indenture in accordance with the terms of the Indenture, the predecessor will be released from those obligations.

The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities of this series and may otherwise deal with the Company, its Subsidiaries or their respective Affiliates as if it were not the Trustee.

No stockholder, director, officer, employee, incorporator or Affiliate of the Company shall have any liability for any obligation of the Company under the Securities of this series or the Indenture for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of the Securities of this series, by accepting a Security of this series, waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Securities of this series.

This Security shall not be valid until the Trustee or Authenticating Agent signs the certificate of authentication on this Security.

Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures ("CUSIP"), the Company will cause CUSIP numbers to be printed on the Securities of this series as a convenience to the Holders of the Securities of this series. No representation is made as to the accuracy of such numbers as printed on the Securities of this series and reliance may be placed only on the other identification numbers printed hereon.

This Security shall be governed by and construed in accordance with the laws of the State of New York.

All terms used in this Security that are defined in the Indenture shall have the meanings assigned to them in the Indenture.

[FORM OF ASSIGNMENT FORM]

To assign this Security, fill in the form below:

   I or we assign and transfer this Security to:

(Print or type assignee's name, address and zip code)

(Insert assignee's soc. sec. or tax I.D. No.)

and irrevocably appoint him, her or it as agent to transfer this Security on the books of the Company. The agent may substitute another act for him, her or it.

___________________________________________________________________________

___________________________________________________________________________

    Date: _______________

    Your Signature: _______________________

     Signature Guarantee: _____________________________________
                                                   (Signature must be guaranteed)

___________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in the Securities Transfer Agents Medallion Program ("STAMP") or such other signature guarantee medallion program as may be approved by the Registrar in addition to or substitution for, STAMP), pursuant to S.E.C. Rule 17Ad-15.

In connection with any transfer or exchange of any of the Securities evidenced by this certificate occurring prior to the date that is two years after the later of the date of original issuance of such Securities and the last date, if any, on which such Securities were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Securities are being:

CHECK ONE BOX BELOW:

1 [_]    acquired for the undersigned's own account, without transfer;

2 [_]    transferred to the Company;

3 [_]    transferred pursuant to and in compliance with Rule 144A under the Securities Act of 1933;

4 [_]    transferred pursuant to an effective registration statement under the Securities Act;

5 [_]    transferred pursuant to and in connection with Regulation S under the Securities Act of 1933; or

6 [_]    transferred pursuant to another available exemption from the registration requirements of the Securities Act of 1933.

Unless one of the boxes is checked, the Trustee may refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered holder thereof; provided, however, that if box (5) or (6) is checked, the Trustee or the Company may require, prior to registering any such transfer of the Securities, in their sole discretion, such legal opinions, certifications and other information as the Trustee or the Company may reasonably request to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act.

_________________________________
Signature

Signature Guarantee:

________________________________________________________
(Signature must be guaranteed)

________________________________________________________
Signature

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions) with membership in STAMP or such other signature guarantee medallion program as may be approved by the Security Registrar in addition to or substitution for STAMP, pursuant to S.E.C. Rule 17Ad-15.

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITIES

The following increases or decreases in this Global Security have been made:

Date of Exchange Amount of decrease in Principal Amount of this Global Security Amount of increase in Principal Amount of this Global Security Principal Amount of this Global Security following such decrease or increase Signature of authorized signatory of Trustee or Security Custodian

Exhibit D-3

[FORM OF REGULATION S PERMANENT GLOBAL NOTE]

This Security is a Global Security within the meaning of the Indenture hereinafter referred to and is held by a Book-Entry Depositary or a nominee of a Book-Entry Depositary. This Security is exchangeable for securities held by or registered in the name of a person other than the Book-Entry Depositary or its nominee only in the limited circumstances described in the Indenture, and no transfer of this Security (other than a transfer of this Security as a whole by the Book-Entry Depositary to a nominee of the Book-Entry Depositary or by a nominee of the Book-Entry Depositary to the Book-Entry Depositary or another nominee of the Book-Entry Depositary) may be made, except in limited circumstances.

Unless this Global Security is presented by an authorized representative of the Book-Entry Depositary to the issuer or its agent for exchange or payment, and any definitive security is issued in the name or names as directed in writing by the Book-Entry Depositary, ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the bearer hereof, the Book-Entry Depositary, has an interest herein.

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE ISSUANCE HEREOF (OR A PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN TO THE COMPANY, SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY THE BO X CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE LAWS OF ANY STATE OF THE UNITED STATES.

WPD HOLDINGS UK
7.25% Notes Due December 15, 2017

No. [________]                                                               [$____________]
CUSIP No. [_______]
ISIN No. [________]

WPD HOLDINGS UK, a company duly organized and existing under the laws of England and Wales (herein called the "Company," which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay the bearer upon surrender hereof, the principal sum of [______________] on December 15, 2017, and to pay interest thereon from December 15, 2000, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on June 15 and December 15 of each year, commencing on June 15, 2001, at the rate per annum provided in the title hereof, until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the bearer on such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the bearer on such Interest Payment Date and may be paid to the bearer at the time of payment of such Defaulted Interest, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture.

Payment of the principal of (and premium, if any) and interest, if any, on this Security will be made at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, the City of New York, and/or in Luxembourg in such coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts. Payments of any amounts in respect of this Security will be made through the Paying Agents to the Book-Entry Depositary, as the holder thereof. The Book-Entry Depositary will pay an amount equal to such payment to DTC, which will distribute such payment to its Participants in amounts proportionate to their respective ownership of interests in the Book-Entry Interests as shown on the records of DTC. The Company expects that payments by Participants to owners of interests in Book-Entry Interests held through such Participants will be governed by standing customer instructions and customary practices and will be the responsibil ity of such Participants.

The Company will not have any responsibility or liability for any aspect relating to payments made or to be made by the Book-Entry Depositary to DTC in respect of this Security or the Book-Entry Interests. None of the Company, the Trustee, the Book-Entry Depositary or any agent of any of the foregoing will have any responsibility or liability for any aspect relating to payments made or to be made by DTC on account of a Participant's or Indirect Participant's ownership of an interest in the Book-Entry Interests or for maintaining, supervising or reviewing any records relating to a Participant's or Indirect Participant's interests in the Book-Entry Interests.

All payments of principal and interest (including payments of discount and premium, if any) in respect of this Security shall be made free and clear of, and without withholding or deduction for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or within the United Kingdom or by or within any political subdivision thereof or any authority therein or thereof having power to tax ("United Kingdom Taxes"), unless such withholding or deduction is required by law. In the event of any such withholding or deduction, the Company shall pay to the Holder such additional amounts (the "Additional Amounts") as will result in the payment to such Holder of the amount that would otherwise have been receivable by such Holder in the absence of such withholding or deduction, except that no such Additional Amounts shall be payable:

(i)    to, or to a Person on behalf of, a Holder who is liable for such United Kingdom Taxes in respect of this Security by reason of such Holder having some connection with the United Kingdom (including being a citizen or resident or national of, or carrying on a business or maintaining a permanent establishment in, or being physically present in, the United Kingdom) other than the mere holding of this Security or the receipt of principal and interest (including payments of discount and premium, if any) in respect thereof;

(ii)    to, or to a Person on behalf of, a Holder who presents this Security (where presentation is required) for payment more than 30 days after the Relevant Date (as defined below), except to the extent that such Holder would have been entitled to such Additional Amounts on presenting this Security for payment on the last day of such period of 30 days;

(iii)    to, or to a Person on behalf of, a Holder who presents this Security (where presentation is required) in the United Kingdom; or

(iv)    to, or to a Person on behalf of, a Holder who would not be liable or subject to the withholding or deduction by making a declaration of non-residence or similar claim for exemption to the relevant tax authority.

Such Additional Amounts will also not be payable where, had the beneficial owner of this Security (or any interest therein) been the Holder of the Security, he or she would not have been entitled to payment of Additional Amounts by reason of any one or more of clauses (i) through (iv) above. If the Company shall determine that Additional Amounts will not be payable because of the immediately preceding sentence, the Company will inform such holder promptly after making such determination setting forth the reason(s) therefor.

"Relevant Date" means whichever is the later of (i) the date on which such payment first becomes due and (ii) if the full amount payable has not been received in The City of New York by the Book-Entry Depositary or the Trustee on or prior to such due date, the date on which, the full amount having been so received, notice to that effect shall have been given to the Holders in accordance with the Indenture.

References to principal, interest, discount or premium in respect of this Security shall be deemed also to refer to any Additional Amounts which may be payable as set forth in the Indenture or in this Security.

The Company shall furnish to the Trustee the official receipts (or a certified copy of the official receipts) evidencing payment of United Kingdom Taxes. Copies of such receipts shall be made available to the Holder of this Security upon request.

So long as the Securities are listed on the Luxembourg Stock Exchange and the rules of the Luxembourg Stock Exchange so require, notices to Holders of Securities will be published in a leading newspaper having general circulation in Luxembourg (which is expected to be the Luxembourg Wort).

The Book-Entry Depositary will immediately send to DTC a copy of any notices, reports, and other communications received by it relating to the Company or the Securities.

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

This Security has been issued with an original issue discount for the purposes of Sections 1271-1275 of the Internal Revenue Code of 1986, as amended. The issue price, amount of original issue discount, issue date and yield to maturity of the Securities may be obtained by contacting the Company's Investor Relations Department at +44 117 933 2000.

[Remainder of page intentionally left blank.]

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer or director of the Company duly authorized.

Dated: March 16, 2001

WPD HOLDINGS UK

By:                                                        
   Name:
   Title:

[FORM OF CERTIFICATE OF AUTHENTICATION]

This is one of the Securities of the series designated herein and referred to in the within-mentioned Indenture.

Date: March 16, 2001

BANKERS TRUST COMPANY
   as Trustee

By:                                                        
   Title:  Authorized Officer

[FORM OF REVERSE OF SECURITY]
(Regulation S - Permanent)

WPD HOLDINGS UK
7.25% Notes Due December 15, 2017

This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture, dated as of March 16, 2001 (herein called the "Original Indenture") among the Company, Bankers Trust Company, as trustee (herein called the "Trustee"), which term includes any successor trustee under the Indenture), and Deutsche Bank Luxembourg S.A., as paying and transfer agent (the "Paying and Transfer Agent"), as supplemented by the First Supplemental Indenture, dated as of March 16, 2001 (together with the Original Indenture, the "Indenture"), among the Company, the Trustee, and the Paying Agent, to which Indenture and all supplemental indentures thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties, and immunities thereunder of the Company, the Trustee, the Paying Agent, and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. Terms defined in the Indenture that are not defined herein are used with the meanings assigned to them in the Indenture. This Security is one of the series designated on the face hereof, limited in aggregate principal amount to [$___________].

The Securities of this series will be redeemable in whole or in part, at the option of the Company at any time, at a redemption price equal to the greater of (i) 100% of the principal amount of the Securities of this series being redeemed or (ii) the sum of the present values of the remaining scheduled payments of principal of and interest on the Securities of this series being redeemed discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at a discount rate equal to the Treasury Yield plus 37.5 basis points in respect of the Securities of this series, plus, for (i) or (ii) above, whichever is applicable, accrued interest on the Notes to the date of redemption.

"Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker (as defined below) as having a maturity comparable to the remaining term of the Securities of this series to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Securities of this series.

"Comparable Treasury Price" means, with respect to any date on which the Securities are redeemed (each, a "Redemption Date"), (i) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third Business Day preceding such Redemption Date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S. Government Securities," or (ii) if such release (or any successor release) is not published or does not contain such prices on such Business Day, the Reference Treasury Dealer Quotation (as defined below) for such Redemption Date.

"Independent Investment Banker" means an independent investment banking institution of national standing in the U.S. appointed by the Company and reasonably acceptable to the Trustee.

"Reference Treasury Dealer Quotation" means, with respect to the Reference Treasury Dealer (as defined below) and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount and quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third Business Day preceding such Redemption Date).

"Reference Treasury Dealer" means a primary U.S. Government securities dealer in New York City appointed by the Company and reasonably acceptable to the Trustee.

"Treasury Yield" means, with respect to any date on which the Securities are redeemed (each a "Redemption Date"), the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.

Notice of redemption shall be given not less than 15 days nor more than 30 days prior to the date fixed for redemption.

If fewer than all the of the Securities are to be redeemed, selection of Securities of this series for redemption will be made by the Trustee in any manner the Trustee deems fair and appropriate and complies with applicable legal and securities exchange requirements.

Unless the Company defaults in payment of the redemption price, from and after the Redemption Date, the Securities of this series or portions thereof called for redemption will cease to bear interest, and the Holders thereof will have no right in respect to such Securities of this series, except the right to receive the redemption price thereof.

In the event of redemption of these Securities in part only, a new Security or Securities of this series and of like term or for the unredeemed portion hereof will be issued to the Holder upon the cancellation hereof.

The Indenture contains provisions for defeasance of (i) the entire indebtedness of this Security and (ii) certain restrictive covenants upon compliance by the Company with certain conditions set forth therein.

If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. At any time after such declaration of acceleration with respect to Securities of any series has been made, but before a judgment or decree for payment of money has been obtained by the Trustee as provided in the Indenture, if all Events of Default with respect to Securities of this series have been cured or waived (other than the non-payment of principal of the Securities that has become due solely by reason of such declaration of acceleration), then such declaration of acceleration and its consequences shall be automatically annulled and rescinded.

The Securities of this series are subject to redemption, in whole but not in part, upon not less than 15 nor more than 30 days' notice given as provided in the Indenture to the Holders of Securities of this series at a price equal to the outstanding principal amount thereof together with Additional Amounts, if any, and accrued interest, to the Redemption Date if:

(i)    the Company satisfies the Trustee prior to the giving of such notice that it has or will become obliged to pay Additional Amounts as a result of either (x) any change in, or amendment to, the laws or regulations of the United Kingdom or any political subdivision or any authority or agency thereof or therein having power to tax or levy duties, or any change in the application or interpretation of such laws or regulations, which change or amendment becomes effective on or after March 16, 2001, or (y) the issuance of definitive Registered Securities pursuant to any of clauses (i), (ii) or (iv) of the third following paragraph; and

(ii)    such obligation cannot be avoided by the Company taking reasonably measures available to it;

subject, as provided in the Indenture, to the delivery by the Company of an Officers' Certificate stating that the obligation referred to in clause (i) above cannot be avoided by the Company taking reasonable measures available to it.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the Indenture or any further supplemental indenture or the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Securities at the time Outstanding of all series to be affected (voting as a class). The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future H olders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest, if any, on this Security at the time, place, and rate, and in the coin or currency, herein prescribed.

This Security shall be exchangeable, in whole but not in part, for Securities registered in the names of Persons other than the Book-Entry Depositary with respect to such series or its nominee only as provided in this paragraph. This Security shall be so exchangeable if (i) DTC notifies the Company and the Book-Entry Depositary that it is unwilling or unable to continue to hold the Book-Entry Interest or at any time it ceases to be a "clearing agency" registered as such under the Exchange Act and, in either case, a successor is not appointed by the Company within 120 days, (ii) the Book-Entry Depositary for the Securities of this series notifies the Company that it is unwilling or unable to continue as Book-Entry Depositary with respect to this Security and no successor is appointed within 120 days, (iii) the Company executes and delivers to the Trustee an Officers' Certificate providing that this Security shall be so exchangeable, or (iv) there shall have occurred and be continuing an Event of Default with respect to the Securities of this series and the Holder, in such circumstance, acting upon instructions from owners of interests representing a majority of outstanding principal amount of the Book-Entry Interests relating to this Security, shall have requested in writing that this Security be exchanged for one or more definitive Registered Securities of this series. Securities so issued in exchange for this Security shall be of the same series, having the same interest rate, if any, and maturity and having the same terms as this Security, in authorized denominations and in the aggregate having the same principal amount as this Security and registered in such names as the Book-Entry Depositary for this Security shall direct.

The Securities of this series of which this Security is a part and which are not Global Securities are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. The bearer of this Security shall be treated as the owner of it for all purposes, subject to the terms of the Indenture. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

When a successor assumes all the obligations of its predecessor under the Securities of this series and the Indenture in accordance with the terms of the Indenture, the predecessor will be released from those obligations.

The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities of this series and may otherwise deal with the Company, its Subsidiaries or their respective Affiliates as if it were not the Trustee.

No stockholder, director, officer, employee, incorporator or Affiliate of the Company shall have any liability for any obligation of the Company under the Securities of this series or the Indenture for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of the Securities of this series, by accepting a Security of this series, waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Securities of this series.

This Security shall not be valid until the Trustee or Authenticating Agent signs the certificate of authentication on this Security.

Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures ("CUSIP"), the Company will cause CUSIP numbers to be printed on the Securities of this series as a convenience to the Holders of the Securities of this series. No representation is made as to the accuracy of such numbers as printed on the Securities of this series and reliance may be placed only on the other identification numbers printed hereon.

This Security shall be governed by and construed in accordance with the laws of the State of New York.

All terms used in this Security that are defined in the Indenture shall have the meanings assigned to them in the Indenture.

[FORM OF ASSIGNMENT FORM]

To assign this Security, fill in the form below:

   I or we assign and transfer this Security to:

(Print or type assignee's name, address and zip code)

(Insert assignee's soc. sec. or tax I.D. No.)

and irrevocably appoint him, her or it as agent to transfer this Security on the books of the Company. The agent may substitute another act for him, her or it.

___________________________________________________________________________

___________________________________________________________________________

    Date: _______________

    Your Signature: _______________________

     Signature Guarantee: _____________________________________
                                                   (Signature must be guaranteed)

___________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in the Securities Transfer Agents Medallion Program ("STAMP") or such other signature guarantee medallion program as may be approved by the Registrar in addition to or substitution for, STAMP), pursuant to S.E.C. Rule 17Ad-15.

In connection with any transfer or exchange of any of the Securities evidenced by this certificate occurring prior to the date that is two years after the later of the date of original issuance of such Securities and the last date, if any, on which such Securities were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Securities are being:

CHECK ONE BOX BELOW:

1 [_]    acquired for the undersigned's own account, without transfer;

2 [_]    transferred to the Company;

3 [_]    transferred pursuant to and in compliance with Rule 144A under the Securities Act of 1933;

4 [_]    transferred pursuant to an effective registration statement under the Securities Act;

5 [_]    transferred pursuant to and in connection with Regulation S under the Securities Act of 1933; or

6 [_]    transferred pursuant to another available exemption from the registration requirements of the Securities Act of 1933.

Unless one of the boxes is checked, the Trustee may refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered holder thereof; provided, however, that if box (5) or (6) is checked, the Trustee or the Company may require, prior to registering any such transfer of the Securities, in their sole discretion, such legal opinions, certifications and other information as the Trustee or the Company may reasonably request to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act.

_________________________________
Signature

Signature Guarantee:

________________________________________________________
(Signature must be guaranteed)

________________________________________________________
Signature

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions) with membership in STAMP or such other signature guarantee medallion program as may be approved by the Security Registrar in addition to or substitution for STAMP, pursuant to S.E.C. Rule 17Ad-15.

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITIES

The following increases or decreases in this Global Security have been made:

Date of Exchange Amount of decrease in Principal Amount of this Global Security Amount of increase in Principal Amount of this Global Security Principal Amount of this Global Security following such decrease or increase Signature of authorized signatory of Trustee or Security Custodian

Exhibit E-1

[FORM OF RULE 144A GLOBAL NOTE]

This Security is a Global Security within the meaning of the Indenture hereinafter referred to and is held by a Book-Entry Depositary or a nominee of a Book-Entry Depositary. This Security is exchangeable for securities held by or registered in the name of a person other than the Book-Entry Depositary or its nominee only in the limited circumstances described in the Indenture, and no transfer of this Security (other than a transfer of this Security as a whole by the Book-Entry Depositary to a nominee of the Book-Entry Depositary or by a nominee of the Book-Entry Depositary to the Book-Entry Depositary or another nominee of the Book-Entry Depositary) may be made, except in limited circumstances.

Unless this Global Security is presented by an authorized representative of the Book-Entry Depositary to the issuer or its agent for exchange or payment, and any definitive security is issued in the name or names as directed in writing by the Book-Entry Depositary, ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the bearer hereof, the Book-Entry Depositary, has an interest herein.

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE ISSUANCE HEREOF (OR A PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN TO THE COMPANY, SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY THE BO X CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE LAWS OF ANY STATE OF THE UNITED STATES.

WPD HOLDINGS UK
7.375% Notes Due December 15, 2028

No. [________]                                                               [$____________]
CUSIP No. [_______]
ISIN No. [________]

WPD HOLDINGS UK, a company duly organized and existing under the laws of England and Wales (herein called the "Company," which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay the bearer upon surrender hereof, the principal sum of [__________________] on December 15, 2028, and to pay interest thereon from December 15, 2000, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on June 15 and December 15 of each year, commencing on June 15, 2001, at the rate per annum provided in the title hereof, until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the bearer on such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the bearer on such Interest Payment Date and may be paid to the bearer at the time of payment of such Defaulted Interest, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture.

Payment of the principal of (and premium, if any) and interest, if any, on this Security will be made at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, the City of New York, and/or in Luxembourg in such coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts. Payments of any amounts in respect of this Security will be made through the Paying Agents to the Book-Entry Depositary, as the holder thereof. The Book-Entry Depositary will pay an amount equal to such payment to DTC, which will distribute such payment to its Participants in amounts proportionate to their respective ownership of interests in the Book-Entry Interests as shown on the records of DTC. The Company expects that payments by Participants to owners of interests in Book-Entry Interests held through such Participants will be governed by standing customer instructions and customary practices and will be the responsibil ity of such Participants.

The Company will not have any responsibility or liability for any aspect relating to payments made or to be made by the Book-Entry Depositary to DTC in respect of this Security or the Book-Entry Interests. None of the Company, the Trustee, the Book-Entry Depositary or any agent of any of the foregoing will have any responsibility or liability for any aspect relating to payments made or to be made by DTC on account of a Participant's or Indirect Participant's ownership of an interest in the Book-Entry Interests or for maintaining, supervising or reviewing any records relating to a Participant's or Indirect Participant's interests in the Book-Entry Interests.

All payments of principal and interest (including payments of discount and premium, if any) in respect of this Security shall be made free and clear of, and without withholding or deduction for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or within the United Kingdom or by or within any political subdivision thereof or any authority therein or thereof having power to tax ("United Kingdom Taxes"), unless such withholding or deduction is required by law. In the event of any such withholding or deduction, the Company shall pay to the Holder such additional amounts (the "Additional Amounts") as will result in the payment to such Holder of the amount that would otherwise have been receivable by such Holder in the absence of such withholding or deduction, except that no such Additional Amounts shall be payable:

(i)    to, or to a Person on behalf of, a Holder who is liable for such United Kingdom Taxes in respect of this Security by reason of such Holder having some connection with the United Kingdom (including being a citizen or resident or national of, or carrying on a business or maintaining a permanent establishment in, or being physically present in, the United Kingdom) other than the mere holding of this Security or the receipt of principal and interest (including payments of discount and premium, if any) in respect thereof;

(ii)    to, or to a Person on behalf of, a Holder who presents this Security (where presentation is required) for payment more than 30 days after the Relevant Date (as defined below), except to the extent that such Holder would have been entitled to such Additional Amounts on presenting this Security for payment on the last day of such period of 30 days;

(iii)    to, or to a Person on behalf of, a Holder who presents this Security (where presentation is required) in the United Kingdom; or

(iv)    to, or to a Person on behalf of, a Holder who would not be liable or subject to the withholding or deduction by making a declaration of non-residence or similar claim for exemption to the relevant tax authority.

Such Additional Amounts will also not be payable where, had the beneficial owner of this Security (or any interest therein) been the Holder of the Security, he or she would not have been entitled to payment of Additional Amounts by reason of any one or more of clauses (i) through (iv) above. If the Company shall determine that Additional Amounts will not be payable because of the immediately preceding sentence, the Company will inform such holder promptly after making such determination setting forth the reason(s) therefor.

"Relevant Date" means whichever is the later of (i) the date on which such payment first becomes due and (ii) if the full amount payable has not been received in The City of New York by the Book-Entry Depositary or the Trustee on or prior to such due date, the date on which, the full amount having been so received, notice to that effect shall have been given to the Holders in accordance with the Indenture.

References to principal, interest, discount or premium in respect of this Security shall be deemed also to refer to any Additional Amounts which may be payable as set forth in the Indenture or in this Security.

The Company shall furnish to the Trustee the official receipts (or a certified copy of the official receipts) evidencing payment of United Kingdom Taxes. Copies of such receipts shall be made available to the Holder of this Security upon request.

So long as the Securities are listed on the Luxembourg Stock Exchange and the rules of the Luxembourg Stock Exchange so require, notices to Holders of Securities will be published in a leading newspaper having general circulation in Luxembourg (which is expected to be the Luxembourg Wort).

The Book-Entry Depositary will immediately send to DTC a copy of any notices, reports, and other communications received by it relating to the Company or the Securities.

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

This Security has been issued with an original issue discount for the purposes of Sections 1271-1275 of the Internal Revenue Code of 1986, as amended. The issue price, amount of original issue discount, issue date and yield to maturity of the Securities may be obtained by contacting the Company's Investor Relations Department at +44 117 933 2000.

[Remainder of page intentionally left blank.]

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer or director of the Company duly authorized.

Dated: March 16, 2001

WPD HOLDINGS UK

By:                                                        
   Name:
   Title:

[FORM OF CERTIFICATE OF AUTHENTICATION]

This is one of the Securities of the series designated herein and referred to in the within-mentioned Indenture.

Date: March 16, 2001

BANKERS TRUST COMPANY
   as Trustee

By:                                                        
   Title:  Authorized Officer

[FORM OF REVERSE OF SECURITY]
(Rule 144A)

WPD HOLDINGS UK
7.375% Notes Due December 15, 2028

This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture, dated as of March 16, 2001 (herein called the "Original Indenture") among the Company, Bankers Trust Company, as trustee (herein called the "Trustee"), which term includes any successor trustee under the Indenture), and Deutsche Bank Luxembourg S.A., as paying and transfer agent (the "Paying and Transfer Agent"), as supplemented by the First Supplemental Indenture, dated as of March 16, 2001 (together with the Original Indenture, the "Indenture"), among the Company, the Trustee, and the Paying Agent, to which Indenture and all supplemental indentures thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties, and immunities thereunder of the Company, the Trustee, the Paying Agent, and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. Terms defined in the Indenture that are not defined herein are used with the meanings assigned to them in the Indenture. This Security is one of the series designated on the face hereof, limited in aggregate principal amount to [$_________________].

The Securities of this series will be redeemable in whole or in part, at the option of the Company at any time, at a redemption price equal to the greater of (i) 100% of the principal amount of the Securities of this series being redeemed or (ii) the sum of the present values of the remaining scheduled payments of principal of and interest on the Securities of this series being redeemed discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at a discount rate equal to the Treasury Yield plus 37.5 basis points in respect of the Securities of this series, plus, for (i) or (ii) above, whichever is applicable, accrued interest on the Notes to the date of redemption.

"Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker (as defined below) as having a maturity comparable to the remaining term of the Securities of this series to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Securities of this series.

"Comparable Treasury Price" means, with respect to any date on which the Securities are redeemed (each, a "Redemption Date"), (i) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third Business Day preceding such Redemption Date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S. Government Securities," or (ii) if such release (or any successor release) is not published or does not contain such prices on such Business Day, the Reference Treasury Dealer Quotation (as defined below) for such Redemption Date.

"Independent Investment Banker" means an independent investment banking institution of national standing in the U.S. appointed by the Company and reasonably acceptable to the Trustee.

"Reference Treasury Dealer Quotation" means, with respect to the Reference Treasury Dealer (as defined below) and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount and quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third Business Day preceding such Redemption Date).

"Reference Treasury Dealer" means a primary U.S. Government securities dealer in New York City appointed by the Company and reasonably acceptable to the Trustee.

"Treasury Yield" means, with respect to any date on which the Securities are redeemed (each a "Redemption Date"), the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.

Notice of redemption shall be given not less than 15 days nor more than 30 days prior to the date fixed for redemption.

If fewer than all the of the Securities are to be redeemed, selection of Securities of this series for redemption will be made by the Trustee in any manner the Trustee deems fair and appropriate and complies with applicable legal and securities exchange requirements.

Unless the Company defaults in payment of the redemption price, from and after the Redemption Date, the Securities of this series or portions thereof called for redemption will cease to bear interest, and the Holders thereof will have no right in respect to such Securities of this series, except the right to receive the redemption price thereof.

In the event of redemption of these Securities in part only, a new Security or Securities of this series and of like term or for the unredeemed portion hereof will be issued to the Holder upon the cancellation hereof.

The Indenture contains provisions for defeasance of (i) the entire indebtedness of this Security and (ii) certain restrictive covenants upon compliance by the Company with certain conditions set forth therein.

If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. At any time after such declaration of acceleration with respect to Securities of any series has been made, but before a judgment or decree for payment of money has been obtained by the Trustee as provided in the Indenture, if all Events of Default with respect to Securities of this series have been cured or waived (other than the non-payment of principal of the Securities that has become due solely by reason of such declaration of acceleration), then such declaration of acceleration and its consequences shall be automatically annulled and rescinded.

The Securities of this series are subject to redemption, in whole but not in part, upon not less than 15 nor more than 30 days' notice given as provided in the Indenture to the Holders of Securities of this series at a price equal to the outstanding principal amount thereof together with Additional Amounts, if any, and accrued interest, to the Redemption Date if:

(i)    the Company satisfies the Trustee prior to the giving of such notice that it has or will become obliged to pay Additional Amounts as a result of either (x) any change in, or amendment to, the laws or regulations of the United Kingdom or any political subdivision or any authority or agency thereof or therein having power to tax or levy duties, or any change in the application or interpretation of such laws or regulations, which change or amendment becomes effective on or after March 16, 2001, or (y) the issuance of definitive Registered Securities pursuant to any of clauses (i), (ii) or (iv) of the third following paragraph; and

(ii)    such obligation cannot be avoided by the Company taking reasonably measures available to it;

subject, as provided in the Indenture, to the delivery by the Company of an Officers' Certificate stating that the obligation referred to in clause (i) above cannot be avoided by the Company taking reasonable measures available to it.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the Indenture or any further supplemental indenture or the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Securities at the time Outstanding of all series to be affected (voting as a class). The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future H olders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest, if any, on this Security at the time, place, and rate, and in the coin or currency, herein prescribed.

This Security shall be exchangeable, in whole but not in part, for Securities registered in the names of Persons other than the Book-Entry Depositary with respect to such series or its nominee only as provided in this paragraph. This Security shall be so exchangeable if (i) DTC notifies the Company and the Book-Entry Depositary that it is unwilling or unable to continue to hold the Book-Entry Interest or at any time it ceases to be a "clearing agency" registered as such under the Exchange Act and, in either case, a successor is not appointed by the Company within 120 days, (ii) the Book-Entry Depositary for the Securities of this series notifies the Company that it is unwilling or unable to continue as Book-Entry Depositary with respect to this Security and no successor is appointed within 120 days, (iii) the Company executes and delivers to the Trustee an Officers' Certificate providing that this Security shall be so exchangeable, or (iv) there shall have occurred and be continuing an Event of Default with respect to the Securities of this series and the Holder, in such circumstance, acting upon instructions from owners of interests representing a majority of outstanding principal amount of the Book-Entry Interests relating to this Security, shall have requested in writing that this Security be exchanged for one or more definitive Registered Securities of this series. Securities so issued in exchange for this Security shall be of the same series, having the same interest rate, if any, and maturity and having the same terms as this Security, in authorized denominations and in the aggregate having the same principal amount as this Security and registered in such names as the Book-Entry Depositary for this Security shall direct.

The Securities of this series of which this Security is a part and which are not Global Securities are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. The bearer of this Security shall be treated as the owner of it for all purposes, subject to the terms of the Indenture. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

When a successor assumes all the obligations of its predecessor under the Securities of this series and the Indenture in accordance with the terms of the Indenture, the predecessor will be released from those obligations.

The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities of this series and may otherwise deal with the Company, its Subsidiaries or their respective Affiliates as if it were not the Trustee.

No stockholder, director, officer, employee, incorporator or Affiliate of the Company shall have any liability for any obligation of the Company under the Securities of this series or the Indenture for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of the Securities of this series, by accepting a Security of this series, waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Securities of this series.

This Security shall not be valid until the Trustee or Authenticating Agent signs the certificate of authentication on this Security.

Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures ("CUSIP"), the Company will cause CUSIP numbers to be printed on the Securities of this series as a convenience to the Holders of the Securities of this series. No representation is made as to the accuracy of such numbers as printed on the Securities of this series and reliance may be placed only on the other identification numbers printed hereon.

This Security shall be governed by and construed in accordance with the laws of the State of New York.

All terms used in this Security that are defined in the Indenture shall have the meanings assigned to them in the Indenture.

[FORM OF ASSIGNMENT FORM]

To assign this Security, fill in the form below:

   I or we assign and transfer this Security to:

(Print or type assignee's name, address and zip code)

(Insert assignee's soc. sec. or tax I.D. No.)

and irrevocably appoint him, her or it as agent to transfer this Security on the books of the Company. The agent may substitute another act for him, her or it.

___________________________________________________________________________

___________________________________________________________________________

    Date: _______________

    Your Signature: _______________________

     Signature Guarantee: _____________________________________
                                                   (Signature must be guaranteed)

___________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in the Securities Transfer Agents Medallion Program ("STAMP") or such other signature guarantee medallion program as may be approved by the Registrar in addition to or substitution for, STAMP), pursuant to S.E.C. Rule 17Ad-15.

In connection with any transfer or exchange of any of the Securities evidenced by this certificate occurring prior to the date that is two years after the later of the date of original issuance of such Securities and the last date, if any, on which such Securities were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Securities are being:

CHECK ONE BOX BELOW:

1 [_]    acquired for the undersigned's own account, without transfer;

2 [_]    transferred to the Company;

3 [_]    transferred pursuant to and in compliance with Rule 144A under the Securities Act of 1933;

4 [_]    transferred pursuant to an effective registration statement under the Securities Act;

5 [_]    transferred pursuant to and in connection with Regulation S under the Securities Act of 1933; or

6 [_]    transferred pursuant to another available exemption from the registration requirements of the Securities Act of 1933.

Unless one of the boxes is checked, the Trustee may refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered holder thereof; provided, however, that if box (5) or (6) is checked, the Trustee or the Company may require, prior to registering any such transfer of the Securities, in their sole discretion, such legal opinions, certifications and other information as the Trustee or the Company may reasonably request to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act.

_________________________________
Signature

Signature Guarantee:

________________________________________________________
(Signature must be guaranteed)

________________________________________________________
Signature

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions) with membership in STAMP or such other signature guarantee medallion program as may be approved by the Security Registrar in addition to or substitution for STAMP, pursuant to S.E.C. Rule 17Ad-15.

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITIES

The following increases or decreases in this Global Security have been made:

Date of Exchange Amount of decrease in Principal Amount of this Global Security Amount of increase in Principal Amount of this Global Security Principal Amount of this Global Security following such decrease or increase Signature of authorized signatory of Trustee or Security Custodian

Exhibit E-2

[FORM OF REGULATION S TEMPORARY GLOBAL NOTE]

This Security is a Global Security within the meaning of the Indenture hereinafter referred to and is held by a Book-Entry Depositary or a nominee of a Book-Entry Depositary. This Security is exchangeable for securities held by or registered in the name of a person other than the Book-Entry Depositary or its nominee only in the limited circumstances described in the Indenture, and no transfer of this Security (other than a transfer of this Security as a whole by the Book-Entry Depositary to a nominee of the Book-Entry Depositary or by a nominee of the Book-Entry Depositary to the Book-Entry Depositary or another nominee of the Book-Entry Depositary) may be made, except in limited circumstances.

Unless this Global Security is presented by an authorized representative of the Book-Entry Depositary to the issuer or its agent for exchange or payment, and any definitive security is issued in the name or names as directed in writing by the Book-Entry Depositary, ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the bearer hereof, the Book-Entry Depositary, has an interest herein.

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE ISSUANCE HEREOF (OR A PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN TO THE COMPANY, SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY THE BO X CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE LAWS OF ANY STATE OF THE UNITED STATES.

THIS GLOBAL NOTE IS A TEMPORARY GLOBAL NOTE FOR PURPOSES OF REGULATION S UNDER THE SECURITIES ACT. NEITHER THIS TEMPORARY GLOBAL NOTE NOR ANY INTEREST HEREIN MAY BE OFFERED, SOLD OR DELIVERED, EXCEPT AS PERMITTED UNDER THE INDENTURE HEREINAFTER REFERRED TO.

NO BENEFICIAL OWNERS OF THIS TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF PRINCIPAL OR INTEREST HEREON UNLESS THE REQUIRED CERTIFICATIONS HAVE BEEN DELIVERED PURSUANT TO THE TERMS OF THE INDENTURE.

WPD HOLDINGS UK
7.375% Notes Due December 15, 2028

No. [________]                                                               [$____________]
CUSIP No. [_______]
ISIN No. [________]

WPD HOLDINGS UK, a company duly organized and existing under the laws of England and Wales (herein called the "Company," which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay the bearer upon surrender hereof, the principal sum of [____________________________] on December 15, 2028, and to pay interest thereon from December 15, 2000, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on June 15 and December 15 of each year, commencing on June 15, 2001, at the rate per annum provided in the title hereof, until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the bearer on such Interest Payment Date. Any such interest not so punctually paid or duly provided for will fo rthwith cease to be payable to the bearer on such Interest Payment Date and may be paid to the bearer at the time of payment of such Defaulted Interest, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture.

Payment of the principal of (and premium, if any) and interest, if any, on this Security will be made at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, the City of New York, and/or in Luxembourg in such coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts. Payments of any amounts in respect of this Security will be made through the Paying Agents to the Book-Entry Depositary, as the holder thereof. The Book-Entry Depositary will pay an amount equal to such payment to DTC, which will distribute such payment to its Participants in amounts proportionate to their respective ownership of interests in the Book-Entry Interests as shown on the records of DTC. The Company expects that payments by Participants to owners of interests in Book-Entry Interests held through such Participants will be governed by standing customer instructions and customary practices and will be the responsibil ity of such Participants.

The Company will not have any responsibility or liability for any aspect relating to payments made or to be made by the Book-Entry Depositary to DTC in respect of this Security or the Book-Entry Interests. None of the Company, the Trustee, the Book-Entry Depositary or any agent of any of the foregoing will have any responsibility or liability for any aspect relating to payments made or to be made by DTC on account of a Participant's or Indirect Participant's ownership of an interest in the Book-Entry Interests or for maintaining, supervising or reviewing any records relating to a Participant's or Indirect Participant's interests in the Book-Entry Interests.

All payments of principal and interest (including payments of discount and premium, if any) in respect of this Security shall be made free and clear of, and without withholding or deduction for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or within the United Kingdom or by or within any political subdivision thereof or any authority therein or thereof having power to tax ("United Kingdom Taxes"), unless such withholding or deduction is required by law. In the event of any such withholding or deduction, the Company shall pay to the Holder such additional amounts (the "Additional Amounts") as will result in the payment to such Holder of the amount that would otherwise have been receivable by such Holder in the absence of such withholding or deduction, except that no such Additional Amounts shall be payable:

(i)    to, or to a Person on behalf of, a Holder who is liable for such United Kingdom Taxes in respect of this Security by reason of such Holder having some connection with the United Kingdom (including being a citizen or resident or national of, or carrying on a business or maintaining a permanent establishment in, or being physically present in, the United Kingdom) other than the mere holding of this Security or the receipt of principal and interest (including payments of discount and premium, if any) in respect thereof;

(ii)    to, or to a Person on behalf of, a Holder who presents this Security (where presentation is required) for payment more than 30 days after the Relevant Date (as defined below), except to the extent that such Holder would have been entitled to such Additional Amounts on presenting this Security for payment on the last day of such period of 30 days;

(iii)    to, or to a Person on behalf of, a Holder who presents this Security (where presentation is required) in the United Kingdom; or

(iv)    to, or to a Person on behalf of, a Holder who would not be liable or subject to the withholding or deduction by making a declaration of non-residence or similar claim for exemption to the relevant tax authority.

Such Additional Amounts will also not be payable where, had the beneficial owner of this Security (or any interest therein) been the Holder of the Security, he or she would not have been entitled to payment of Additional Amounts by reason of any one or more of clauses (i) through (iv) above. If the Company shall determine that Additional Amounts will not be payable because of the immediately preceding sentence, the Company will inform such holder promptly after making such determination setting forth the reason(s) therefor.

"Relevant Date" means whichever is the later of (i) the date on which such payment first becomes due and (ii) if the full amount payable has not been received in The City of New York by the Book-Entry Depositary or the Trustee on or prior to such due date, the date on which, the full amount having been so received, notice to that effect shall have been given to the Holders in accordance with the Indenture.

References to principal, interest, discount or premium in respect of this Security shall be deemed also to refer to any Additional Amounts which may be payable as set forth in the Indenture or in this Security.

The Company shall furnish to the Trustee the official receipts (or a certified copy of the official receipts) evidencing payment of United Kingdom Taxes. Copies of such receipts shall be made available to the Holder of this Security upon request.

So long as the Securities are listed on the Luxembourg Stock Exchange and the rules of the Luxembourg Stock Exchange so require, notices to Holders of Securities will be published in a leading newspaper having general circulation in Luxembourg (which is expected to be the Luxembourg Wort).

The Book-Entry Depositary will immediately send to DTC a copy of any notices, reports, and other communications received by it relating to the Company or the Securities.

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

This Security has been issued with an original issue discount for the purposes of Sections 1271-1275 of the Internal Revenue Code of 1986, as amended. The issue price, amount of original issue discount, issue date and yield to maturity of the Securities may be obtained by contacting the Company's Investor Relations Department at +44 117 933 2000.

[Remainder of page intentionally left blank.]

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer or director of the Company duly authorized.

Dated: March 16, 2001

WPD HOLDINGS UK

By:                                                        
   Name:
   Title:

[FORM OF CERTIFICATE OF AUTHENTICATION]

This is one of the Securities of the series designated herein and referred to in the within-mentioned Indenture.

Date: March 16, 2001

BANKERS TRUST COMPANY
   as Trustee

By:                                                        
   Title:  Authorized Officer

[FORM OF REVERSE OF SECURITY]
(Regulation S - Temporary)

WPD HOLDINGS UK
7.375% Notes Due December 15, 2028

This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture, dated as of March 16, 2001 (herein called the "Original Indenture") among the Company, Bankers Trust Company, as trustee (herein called the "Trustee"), which term includes any successor trustee under the Indenture), and Deutsche Bank Luxembourg S.A., as paying and transfer agent (the "Paying and Transfer Agent"), as supplemented by the First Supplemental Indenture, dated as of March 16, 2001 (together with the Original Indenture, the "Indenture"), among the Company, the Trustee, and the Paying Agent, to which Indenture and all supplemental indentures thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties, and immunities thereunder of the Company, the Trustee, the Paying Agent, and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. Terms defined in the Indenture that are not defined herein are used with the meanings assigned to them in the Indenture. This Security is one of the series designated on the face hereof, limited in aggregate principal amount to [$ ].

The Securities of this series will be redeemable in whole or in part, at the option of the Company at any time, at a redemption price equal to the greater of (i) 100% of the principal amount of the Securities of this series being redeemed or (ii) the sum of the present values of the remaining scheduled payments of principal of and interest on the Securities of this series being redeemed discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at a discount rate equal to the Treasury Yield plus 37.5 basis points in respect of the Securities of this series, plus, for (i) or (ii) above, whichever is applicable, accrued interest on the Notes to the date of redemption.

"Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker (as defined below) as having a maturity comparable to the remaining term of the Securities of this series to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Securities of this series.

"Comparable Treasury Price" means, with respect to any date on which the Securities are redeemed (each, a "Redemption Date"), (i) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third Business Day preceding such Redemption Date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S. Government Securities," or (ii) if such release (or any successor release) is not published or does not contain such prices on such Business Day, the Reference Treasury Dealer Quotation (as defined below) for such Redemption Date.

"Independent Investment Banker" means an independent investment banking institution of national standing in the U.S. appointed by the Company and reasonably acceptable to the Trustee.

"Reference Treasury Dealer Quotation" means, with respect to the Reference Treasury Dealer (as defined below) and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount and quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third Business Day preceding such Redemption Date).

"Reference Treasury Dealer" means a primary U.S. Government securities dealer in New York City appointed by the Company and reasonably acceptable to the Trustee.

"Treasury Yield" means, with respect to any date on which the Securities are redeemed (each a "Redemption Date"), the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.

Notice of redemption shall be given not less than 15 days nor more than 30 days prior to the date fixed for redemption.

If fewer than all the of the Securities are to be redeemed, selection of Securities of this series for redemption will be made by the Trustee in any manner the Trustee deems fair and appropriate and complies with applicable legal and securities exchange requirements.

Unless the Company defaults in payment of the redemption price, from and after the Redemption Date, the Securities of this series or portions thereof called for redemption will cease to bear interest, and the Holders thereof will have no right in respect to such Securities of this series, except the right to receive the redemption price thereof.

In the event of redemption of these Securities in part only, a new Security or Securities of this series and of like term or for the unredeemed portion hereof will be issued to the Holder upon the cancellation hereof.

The Indenture contains provisions for defeasance of (i) the entire indebtedness of this Security and (ii) certain restrictive covenants upon compliance by the Company with certain conditions set forth therein.

If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. At any time after such declaration of acceleration with respect to Securities of any series has been made, but before a judgment or decree for payment of money has been obtained by the Trustee as provided in the Indenture, if all Events of Default with respect to Securities of this series have been cured or waived (other than the non-payment of principal of the Securities that has become due solely by reason of such declaration of acceleration), then such declaration of acceleration and its consequences shall be automatically annulled and rescinded.

The Securities of this series are subject to redemption, in whole but not in part, upon not less than 15 nor more than 30 days' notice given as provided in the Indenture to the Holders of Securities of this series at a price equal to the outstanding principal amount thereof together with Additional Amounts, if any, and accrued interest, to the Redemption Date if:

(i)    the Company satisfies the Trustee prior to the giving of such notice that it has or will become obliged to pay Additional Amounts as a result of either (x) any change in, or amendment to, the laws or regulations of the United Kingdom or any political subdivision or any authority or agency thereof or therein having power to tax or levy duties, or any change in the application or interpretation of such laws or regulations, which change or amendment becomes effective on or after March 16, 2001, or (y) the issuance of definitive Registered Securities pursuant to any of clauses (i), (ii) or (iv) of the third following paragraph; and

(ii)    such obligation cannot be avoided by the Company taking reasonably measures available to it;

subject, as provided in the Indenture, to the delivery by the Company of an Officers' Certificate stating that the obligation referred to in clause (i) above cannot be avoided by the Company taking reasonable measures available to it.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the Indenture or any further supplemental indenture or the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Securities at the time Outstanding of all series to be affected (voting as a class). The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future H olders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest, if any, on this Security at the time, place, and rate, and in the coin or currency, herein prescribed.

This Security shall be exchangeable, in whole but not in part, for Securities registered in the names of Persons other than the Book-Entry Depositary with respect to such series or its nominee only as provided in this paragraph. This Security shall be so exchangeable if (i) DTC notifies the Company and the Book-Entry Depositary that it is unwilling or unable to continue to hold the Book-Entry Interest or at any time it ceases to be a "clearing agency" registered as such under the Exchange Act and, in either case, a successor is not appointed by the Company within 120 days, (ii) the Book-Entry Depositary for the Securities of this series notifies the Company that it is unwilling or unable to continue as Book-Entry Depositary with respect to this Security and no successor is appointed within 120 days, (iii) the Company executes and delivers to the Trustee an Officers' Certificate providing that this Security shall be so exchangeable, or (iv) there shall have occurred and be continuing an Event of Default with respect to the Securities of this series and the Holder, in such circumstance, acting upon instructions from owners of interests representing a majority of outstanding principal amount of the Book-Entry Interests relating to this Security, shall have requested in writing that this Security be exchanged for one or more definitive Registered Securities of this series. Securities so issued in exchange for this Security shall be of the same series, having the same interest rate, if any, and maturity and having the same terms as this Security, in authorized denominations and in the aggregate having the same principal amount as this Security and registered in such names as the Book-Entry Depositary for this Security shall direct.

The Securities of this series of which this Security is a part and which are not Global Securities are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. The bearer of this Security shall be treated as the owner of it for all purposes, subject to the terms of the Indenture. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

When a successor assumes all the obligations of its predecessor under the Securities of this series and the Indenture in accordance with the terms of the Indenture, the predecessor will be released from those obligations.

The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities of this series and may otherwise deal with the Company, its Subsidiaries or their respective Affiliates as if it were not the Trustee.

No stockholder, director, officer, employee, incorporator or Affiliate of the Company shall have any liability for any obligation of the Company under the Securities of this series or the Indenture for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of the Securities of this series, by accepting a Security of this series, waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Securities of this series.

This Security shall not be valid until the Trustee or Authenticating Agent signs the certificate of authentication on this Security.

Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures ("CUSIP"), the Company will cause CUSIP numbers to be printed on the Securities of this series as a convenience to the Holders of the Securities of this series. No representation is made as to the accuracy of such numbers as printed on the Securities of this series and reliance may be placed only on the other identification numbers printed hereon.

This Security shall be governed by and construed in accordance with the laws of the State of New York.

All terms used in this Security that are defined in the Indenture shall have the meanings assigned to them in the Indenture.

[FORM OF ASSIGNMENT FORM]

To assign this Security, fill in the form below:

   I or we assign and transfer this Security to:

(Print or type assignee's name, address and zip code)

(Insert assignee's soc. sec. or tax I.D. No.)

and irrevocably appoint him, her or it as agent to transfer this Security on the books of the Company. The agent may substitute another act for him, her or it.

___________________________________________________________________________

___________________________________________________________________________

    Date: _______________

    Your Signature: _______________________

     Signature Guarantee: _____________________________________
                                                   (Signature must be guaranteed)

___________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in the Securities Transfer Agents Medallion Program ("STAMP") or such other signature guarantee medallion program as may be approved by the Registrar in addition to or substitution for, STAMP), pursuant to S.E.C. Rule 17Ad-15.

In connection with any transfer or exchange of any of the Securities evidenced by this certificate occurring prior to the date that is two years after the later of the date of original issuance of such Securities and the last date, if any, on which such Securities were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Securities are being:

CHECK ONE BOX BELOW:

1 [_]    acquired for the undersigned's own account, without transfer;

2 [_]    transferred to the Company;

3 [_]    transferred pursuant to and in compliance with Rule 144A under the Securities Act of 1933;

4 [_]    transferred pursuant to an effective registration statement under the Securities Act;

5 [_]    transferred pursuant to and in connection with Regulation S under the Securities Act of 1933; or

6 [_]    transferred pursuant to another available exemption from the registration requirements of the Securities Act of 1933.

Unless one of the boxes is checked, the Trustee may refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered holder thereof; provided, however, that if box (5) or (6) is checked, the Trustee or the Company may require, prior to registering any such transfer of the Securities, in their sole discretion, such legal opinions, certifications and other information as the Trustee or the Company may reasonably request to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act.

_________________________________
Signature

Signature Guarantee:

________________________________________________________
(Signature must be guaranteed)

________________________________________________________
Signature

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions) with membership in STAMP or such other signature guarantee medallion program as may be approved by the Security Registrar in addition to or substitution for STAMP, pursuant to S.E.C. Rule 17Ad-15.

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITIES

The following increases or decreases in this Global Security have been made:

Date of Exchange Amount of decrease in Principal Amount of this Global Security Amount of increase in Principal Amount of this Global Security Principal Amount of this Global Security following such decrease or increase Signature of authorized signatory of Trustee or Security Custodian

Exhibit E-3

[FORM OF REGULATION S PERMANENT GLOBAL NOTE]

This Security is a Global Security within the meaning of the Indenture hereinafter referred to and is held by a Book-Entry Depositary or a nominee of a Book-Entry Depositary. This Security is exchangeable for securities held by or registered in the name of a person other than the Book-Entry Depositary or its nominee only in the limited circumstances described in the Indenture, and no transfer of this Security (other than a transfer of this Security as a whole by the Book-Entry Depositary to a nominee of the Book-Entry Depositary or by a nominee of the Book-Entry Depositary to the Book-Entry Depositary or another nominee of the Book-Entry Depositary) may be made, except in limited circumstances.

Unless this Global Security is presented by an authorized representative of the Book-Entry Depositary to the issuer or its agent for exchange or payment, and any definitive security is issued in the name or names as directed in writing by the Book-Entry Depositary, ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the bearer hereof, the Book-Entry Depositary, has an interest herein.

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE ISSUANCE HEREOF (OR A PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN TO THE COMPANY, SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY THE BO X CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE LAWS OF ANY STATE OF THE UNITED STATES.

WPD HOLDINGS UK
7.375% Notes Due December 15, 2028

No. [________]                                                               [$____________]
CUSIP No. [_______]
ISIN No. [________]

WPD HOLDINGS UK, a company duly organized and existing under the laws of England and Wales (herein called the "Company," which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay the bearer upon surrender hereof, the principal sum of [______________] on December 15, 2028, and to pay interest thereon from December 15, 2000, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on June 15 and December 15 of each year, commencing on June 15, 2001, at the rate per annum provided in the title hereof, until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the bearer on such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the bearer on such Interest Payment Date and may be paid to the bearer at the time of payment of such Defaulted Interest, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture.

Payment of the principal of (and premium, if any) and interest, if any, on this Security will be made at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, the City of New York, and/or in Luxembourg in such coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts. Payments of any amounts in respect of this Security will be made through the Paying Agents to the Book-Entry Depositary, as the holder thereof. The Book-Entry Depositary will pay an amount equal to such payment to DTC, which will distribute such payment to its Participants in amounts proportionate to their respective ownership of interests in the Book-Entry Interests as shown on the records of DTC. The Company expects that payments by Participants to owners of interests in Book-Entry Interests held through such Participants will be governed by standing customer instructions and customary practices and will be the responsibil ity of such Participants.

The Company will not have any responsibility or liability for any aspect relating to payments made or to be made by the Book-Entry Depositary to DTC in respect of this Security or the Book-Entry Interests. None of the Company, the Trustee, the Book-Entry Depositary or any agent of any of the foregoing will have any responsibility or liability for any aspect relating to payments made or to be made by DTC on account of a Participant's or Indirect Participant's ownership of an interest in the Book-Entry Interests or for maintaining, supervising or reviewing any records relating to a Participant's or Indirect Participant's interests in the Book-Entry Interests.

All payments of principal and interest (including payments of discount and premium, if any) in respect of this Security shall be made free and clear of, and without withholding or deduction for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or within the United Kingdom or by or within any political subdivision thereof or any authority therein or thereof having power to tax ("United Kingdom Taxes"), unless such withholding or deduction is required by law. In the event of any such withholding or deduction, the Company shall pay to the Holder such additional amounts (the "Additional Amounts") as will result in the payment to such Holder of the amount that would otherwise have been receivable by such Holder in the absence of such withholding or deduction, except that no such Additional Amounts shall be payable:

(i)    to, or to a Person on behalf of, a Holder who is liable for such United Kingdom Taxes in respect of this Security by reason of such Holder having some connection with the United Kingdom (including being a citizen or resident or national of, or carrying on a business or maintaining a permanent establishment in, or being physically present in, the United Kingdom) other than the mere holding of this Security or the receipt of principal and interest (including payments of discount and premium, if any) in respect thereof;

(ii)    to, or to a Person on behalf of, a Holder who presents this Security (where presentation is required) for payment more than 30 days after the Relevant Date (as defined below), except to the extent that such Holder would have been entitled to such Additional Amounts on presenting this Security for payment on the last day of such period of 30 days;

(iii)    to, or to a Person on behalf of, a Holder who presents this Security (where presentation is required) in the United Kingdom; or

(iv)    to, or to a Person on behalf of, a Holder who would not be liable or subject to the withholding or deduction by making a declaration of non-residence or similar claim for exemption to the relevant tax authority.

Such Additional Amounts will also not be payable where, had the beneficial owner of this Security (or any interest therein) been the Holder of the Security, he or she would not have been entitled to payment of Additional Amounts by reason of any one or more of clauses (i) through (iv) above. If the Company shall determine that Additional Amounts will not be payable because of the immediately preceding sentence, the Company will inform such holder promptly after making such determination setting forth the reason(s) therefor.

"Relevant Date" means whichever is the later of (i) the date on which such payment first becomes due and (ii) if the full amount payable has not been received in The City of New York by the Book-Entry Depositary or the Trustee on or prior to such due date, the date on which, the full amount having been so received, notice to that effect shall have been given to the Holders in accordance with the Indenture.

References to principal, interest, discount or premium in respect of this Security shall be deemed also to refer to any Additional Amounts which may be payable as set forth in the Indenture or in this Security.

The Company shall furnish to the Trustee the official receipts (or a certified copy of the official receipts) evidencing payment of United Kingdom Taxes. Copies of such receipts shall be made available to the Holder of this Security upon request.

So long as the Securities are listed on the Luxembourg Stock Exchange and the rules of the Luxembourg Stock Exchange so require, notices to Holders of Securities will be published in a leading newspaper having general circulation in Luxembourg (which is expected to be the Luxembourg Wort).

The Book-Entry Depositary will immediately send to DTC a copy of any notices, reports, and other communications received by it relating to the Company or the Securities.

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

This Security has been issued with an original issue discount for the purposes of Sections 1271-1275 of the Internal Revenue Code of 1986, as amended. The issue price, amount of original issue discount, issue date and yield to maturity of the Securities may be obtained by contacting the Company's Investor Relations Department at +44 117 933 2000.

[Remainder of page intentionally left blank.]

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer or director of the Company duly authorized.

Dated: March 16, 2001

WPD HOLDINGS UK

By:                                                        
   Name:
   Title:

[FORM OF CERTIFICATE OF AUTHENTICATION]

This is one of the Securities of the series designated herein and referred to in the within-mentioned Indenture.

Date: March 16, 2001

BANKERS TRUST COMPANY
   as Trustee

By:                                                        
   Title:  Authorized Officer

[FORM OF REVERSE OF SECURITY]
(Regulation S - Permanent)

WPD HOLDINGS UK
7.375% Notes Due December 15, 2028

This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture, dated as of March 16, 2001 (herein called the "Original Indenture") among the Company, Bankers Trust Company, as trustee (herein called the "Trustee"), which term includes any successor trustee under the Indenture), and Deutsche Bank Luxembourg S.A., as paying and transfer agent (the "Paying and Transfer Agent"), as supplemented by the First Supplemental Indenture, dated as of March 16, 2001 (together with the Original Indenture, the "Indenture"), among the Company, the Trustee, and the Paying Agent, to which Indenture and all supplemental indentures thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties, and immunities thereunder of the Company, the Trustee, the Paying Agent, and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. Terms defined in the Indenture that are not defined herein are used with the meanings assigned to them in the Indenture. This Security is one of the series designated on the face hereof, limited in aggregate principal amount to [$___________].

The Securities of this series will be redeemable in whole or in part, at the option of the Company at any time, at a redemption price equal to the greater of (i) 100% of the principal amount of the Securities of this series being redeemed or (ii) the sum of the present values of the remaining scheduled payments of principal of and interest on the Securities of this series being redeemed discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at a discount rate equal to the Treasury Yield plus 37.5 basis points in respect of the Securities of this series, plus, for (i) or (ii) above, whichever is applicable, accrued interest on the Notes to the date of redemption.

"Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker (as defined below) as having a maturity comparable to the remaining term of the Securities of this series to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Securities of this series.

"Comparable Treasury Price" means, with respect to any date on which the Securities are redeemed (each, a "Redemption Date"), (i) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third Business Day preceding such Redemption Date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S. Government Securities," or (ii) if such release (or any successor release) is not published or does not contain such prices on such Business Day, the Reference Treasury Dealer Quotation (as defined below) for such Redemption Date.

"Independent Investment Banker" means an independent investment banking institution of national standing in the U.S. appointed by the Company and reasonably acceptable to the Trustee.

"Reference Treasury Dealer Quotation" means, with respect to the Reference Treasury Dealer (as defined below) and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount and quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third Business Day preceding such Redemption Date).

"Reference Treasury Dealer" means a primary U.S. Government securities dealer in New York City appointed by the Company and reasonably acceptable to the Trustee.

"Treasury Yield" means, with respect to any date on which the Securities are redeemed (each a "Redemption Date"), the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.

Notice of redemption shall be given not less than 15 days nor more than 30 days prior to the date fixed for redemption.

If fewer than all the of the Securities are to be redeemed, selection of Securities of this series for redemption will be made by the Trustee in any manner the Trustee deems fair and appropriate and complies with applicable legal and securities exchange requirements.

Unless the Company defaults in payment of the redemption price, from and after the Redemption Date, the Securities of this series or portions thereof called for redemption will cease to bear interest, and the Holders thereof will have no right in respect to such Securities of this series, except the right to receive the redemption price thereof.

In the event of redemption of these Securities in part only, a new Security or Securities of this series and of like term or for the unredeemed portion hereof will be issued to the Holder upon the cancellation hereof.

The Indenture contains provisions for defeasance of (i) the entire indebtedness of this Security and (ii) certain restrictive covenants upon compliance by the Company with certain conditions set forth therein.

If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. At any time after such declaration of acceleration with respect to Securities of any series has been made, but before a judgment or decree for payment of money has been obtained by the Trustee as provided in the Indenture, if all Events of Default with respect to Securities of this series have been cured or waived (other than the non-payment of principal of the Securities that has become due solely by reason of such declaration of acceleration), then such declaration of acceleration and its consequences shall be automatically annulled and rescinded.

The Securities of this series are subject to redemption, in whole but not in part, upon not less than 15 nor more than 30 days' notice given as provided in the Indenture to the Holders of Securities of this series at a price equal to the outstanding principal amount thereof together with Additional Amounts, if any, and accrued interest, to the Redemption Date if:

(i)    the Company satisfies the Trustee prior to the giving of such notice that it has or will become obliged to pay Additional Amounts as a result of either (x) any change in, or amendment to, the laws or regulations of the United Kingdom or any political subdivision or any authority or agency thereof or therein having power to tax or levy duties, or any change in the application or interpretation of such laws or regulations, which change or amendment becomes effective on or after March 16, 2001, or (y) the issuance of definitive Registered Securities pursuant to any of clauses (i), (ii) or (iv) of the third following paragraph; and

(ii)    such obligation cannot be avoided by the Company taking reasonably measures available to it;

subject, as provided in the Indenture, to the delivery by the Company of an Officers' Certificate stating that the obligation referred to in clause (i) above cannot be avoided by the Company taking reasonable measures available to it.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the Indenture or any further supplemental indenture or the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Securities at the time Outstanding of all series to be affected (voting as a class). The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future H olders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest, if any, on this Security at the time, place, and rate, and in the coin or currency, herein prescribed.

This Security shall be exchangeable, in whole but not in part, for Securities registered in the names of Persons other than the Book-Entry Depositary with respect to such series or its nominee only as provided in this paragraph. This Security shall be so exchangeable if (i) DTC notifies the Company and the Book-Entry Depositary that it is unwilling or unable to continue to hold the Book-Entry Interest or at any time it ceases to be a "clearing agency" registered as such under the Exchange Act and, in either case, a successor is not appointed by the Company within 120 days, (ii) the Book-Entry Depositary for the Securities of this series notifies the Company that it is unwilling or unable to continue as Book-Entry Depositary with respect to this Security and no successor is appointed within 120 days, (iii) the Company executes and delivers to the Trustee an Officers' Certificate providing that this Security shall be so exchangeable, or (iv) there shall have occurred and be continuing an Event of Default with respect to the Securities of this series and the Holder, in such circumstance, acting upon instructions from owners of interests representing a majority of outstanding principal amount of the Book-Entry Interests relating to this Security, shall have requested in writing that this Security be exchanged for one or more definitive Registered Securities of this series. Securities so issued in exchange for this Security shall be of the same series, having the same interest rate, if any, and maturity and having the same terms as this Security, in authorized denominations and in the aggregate having the same principal amount as this Security and registered in such names as the Book-Entry Depositary for this Security shall direct.

The Securities of this series of which this Security is a part and which are not Global Securities are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. The bearer of this Security shall be treated as the owner of it for all purposes, subject to the terms of the Indenture. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

When a successor assumes all the obligations of its predecessor under the Securities of this series and the Indenture in accordance with the terms of the Indenture, the predecessor will be released from those obligations.

The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities of this series and may otherwise deal with the Company, its Subsidiaries or their respective Affiliates as if it were not the Trustee.

No stockholder, director, officer, employee, incorporator or Affiliate of the Company shall have any liability for any obligation of the Company under the Securities of this series or the Indenture for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of the Securities of this series, by accepting a Security of this series, waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Securities of this series.

This Security shall not be valid until the Trustee or Authenticating Agent signs the certificate of authentication on this Security.

Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures ("CUSIP"), the Company will cause CUSIP numbers to be printed on the Securities of this series as a convenience to the Holders of the Securities of this series. No representation is made as to the accuracy of such numbers as printed on the Securities of this series and reliance may be placed only on the other identification numbers printed hereon.

This Security shall be governed by and construed in accordance with the laws of the State of New York.

All terms used in this Security that are defined in the Indenture shall have the meanings assigned to them in the Indenture.

[FORM OF ASSIGNMENT FORM]

To assign this Security, fill in the form below:

   I or we assign and transfer this Security to:

(Print or type assignee's name, address and zip code)

(Insert assignee's soc. sec. or tax I.D. No.)

and irrevocably appoint him, her or it as agent to transfer this Security on the books of the Company. The agent may substitute another act for him, her or it.

___________________________________________________________________________

___________________________________________________________________________

    Date: _______________

    Your Signature: _______________________

     Signature Guarantee: _____________________________________
                                                   (Signature must be guaranteed)

___________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in the Securities Transfer Agents Medallion Program ("STAMP") or such other signature guarantee medallion program as may be approved by the Registrar in addition to or substitution for, STAMP), pursuant to S.E.C. Rule 17Ad-15.

In connection with any transfer or exchange of any of the Securities evidenced by this certificate occurring prior to the date that is two years after the later of the date of original issuance of such Securities and the last date, if any, on which such Securities were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Securities are being:

CHECK ONE BOX BELOW:

1 [_]    acquired for the undersigned's own account, without transfer;

2 [_]    transferred to the Company;

3 [_]    transferred pursuant to and in compliance with Rule 144A under the Securities Act of 1933;

4 [_]    transferred pursuant to an effective registration statement under the Securities Act;

5 [_]    transferred pursuant to and in connection with Regulation S under the Securities Act of 1933; or

6 [_]    transferred pursuant to another available exemption from the registration requirements of the Securities Act of 1933.

Unless one of the boxes is checked, the Trustee may refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered holder thereof; provided, however, that if box (5) or (6) is checked, the Trustee or the Company may require, prior to registering any such transfer of the Securities, in their sole discretion, such legal opinions, certifications and other information as the Trustee or the Company may reasonably request to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act.

_________________________________
Signature

Signature Guarantee:

________________________________________________________
(Signature must be guaranteed)

________________________________________________________
Signature

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions) with membership in STAMP or such other signature guarantee medallion program as may be approved by the Security Registrar in addition to or substitution for STAMP, pursuant to S.E.C. Rule 17Ad-15.

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITIES

The following increases or decreases in this Global Security have been made:

Date of Exchange Amount of decrease in Principal Amount of this Global Security Amount of increase in Principal Amount of this Global Security Principal Amount of this Global Security following such decrease or increase Signature of authorized signatory of Trustee or Security Custodian

Exhibit F

[FORM OF FACE OF DEFINITIVE REGISTERED SENIOR NOTE]

WPD HOLDINGS UK
[___]% Notes Due [___]

No. [________]                                                               [$____________]
CUSIP No. [_______]
ISIN No. [________]

WPD HOLDINGS UK, a company duly organized and existing under the laws of England and Wales (herein called the "Company," which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay [name of registered owner or its registered assigns], the principal sum of [_______] Dollars on December 15, [___], and to pay interest thereon from [_______], or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on June 15 and December 15 of each year, commencing on [_______], at the rate per annum provided in the title hereof, until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or mo re Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the [_______] or [_______] (whether or not a Business Day), as the case may be, immediately preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Person in whose name this Security (or one or more Predecessor Securities) is registered on such Regular Records Date and may be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture.

Payment of the principal of (and premium, if any) and interest, if any, on this Security will be made at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, the City of New York, and/or in Luxembourg in such coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts; provided, however, that at the option of the Company payment of interest may be made by check mailed to the address of the person entitled thereto as such address shall appear in the Security Register.

All payments of principal and interest (including payments of discount and premium, if any) in respect of this Security shall be made free and clear of, and without withholding or deduction for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or within the United Kingdom or by or within any political subdivision thereof or any authority therein or thereof having power to tax ("United Kingdom Taxes"), unless such withholding or deduction is required by law. In the event of any such withholding or deduction, the Company shall pay to the Holder such additional amounts (the "Additional Amounts") as will result in the payment to such Holder of the amount that would otherwise have been receivable by such Holder in the absence of such withholding or deduction, except that no such Additional Amounts shall be payable:

(i)    to, or to a Person on behalf of, a Holder who is liable for such United Kingdom Taxes in respect of this Security by reason of such Holder having some connection with the United Kingdom (including being a citizen or resident or national of, or carrying on a business or maintaining a permanent establishment in, or being physically present in, the U.K.) other than the mere holding of this Security or the receipt of principal and interest (including payments of discount and premium, if any) in respect thereof;

(ii)    to, or to a Person on behalf of, a Holder who presents this Security (where presentation is required) for payment more than 30 days after the Relevant Date (as defined below), except to the extent that such Holder would have been entitled to such Additional Amounts on presenting this Security for payment on the last day of such period of 30 days;

(iii)    to, or to a Person on behalf of, a Holder who presents this Security (where presentation is required) in the United Kingdom; or

(iv)    to, or to a Person on behalf of, a Holder who would not be liable or subject to the withholding or deduction by making a declaration of non-residence or similar claim for exemption to the relevant tax authority.

Such Additional Amounts will also not be payable where, had the beneficial owner of this Security (or any interest therein) been the Holder of the Security, he or she would not have been entitled to payment of Additional Amounts by reason of any one or more of clauses (i) through (iv) above. If the Company shall determine that Additional Amounts will not be payable because of the immediately preceding sentence, the Company will inform such holder promptly after making such determination setting forth the reason(s) therefor.

"Relevant Date" means whichever is the later of (i) the date on which such payment first becomes due and (ii) if the full amount payable has not been received in The City of New York by the Book-Entry Depositary or the Trustee on or prior to such due date, the date on which, the full amount having been so received, notice to that effect shall have been given to the Holders in accordance with the Indenture.

References to principal, interest, discount or premium in respect of this Security shall be deemed also to refer to any Additional Amounts which may be payable as set forth in the Indenture or in this Security.

The Company shall furnish to the Trustee the official receipts (or a certified copy of the official receipts) evidencing payment of United Kingdom Taxes. Copies of such receipts shall be made available to the Holder of this Security upon request.

So long as the Securities are listed on the Luxembourg Stock Exchange and the rules of the Luxembourg Stock Exchange so require, notices to Holders of Securities will be published in a leading newspaper having general circulation in Luxembourg (which is expected to be the Luxembourg Wort).

The Book-Entry Depositary will immediately send to DTC a copy of any notices, reports, and other communications received by it relating to the Company or the Securities

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

This Security has been issued with an original issue discount for the purposes of Sections 1271-1275 of the Internal Revenue Code of 1986, as amended. The issue price, amount of original issue discount, issue date and yield to maturity of the Securities may be obtained by contacting the Company's Investor Relations Department at +44 117 933 2000.

[Remainder of page intentionally left blank.]

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer or director of the Company duly authorized.

Dated: [______ __, ___]

WPD HOLDINGS UK

By:                                                        
   Name:
   Title:

[FORM OF CERTIFICATE OF AUTHENTICATION]

CERTIFICATE OF AUTHENTICATION

This is one of the Securities of the series designated herein and referred to in the within-mentioned Indenture.

Dated: [______ __, ___]

BANKERS TRUST COMPANY
   as Trustee

By:                                                        
   Title:  Authorized Officer

[Form of Reverse of Security]

WPD HOLDINGS UK
[____]% Senior Notes Due [____]

This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture, dated as of March 9, 2001 (herein called the "Original Indenture"), among the Company, Bankers Trust Company, as trustee (herein called the "Trustee," which term includes any successor trustee under the Indenture), and Deutsche Bank Luxembourg S.A., as paying and transfer agent (herein called the "Paying Agent," which term includes any successor paying and transfer agent under the Indenture), as supplemented by the First Supplemental Indenture, dated as of March 9, 2001 (together with the Original Indenture, the "Indenture") among the Company, the Trustee, and the Paying Agent, to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties, and immunities thereunder of the Company, the Trustee, the Paying Agent, and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. Terms defined in the Indenture that are not defined herein are used with the meanings assigned to them in the Indenture. This Security is one of the series designated on the face hereof limited in aggregate principal amount to $[___________].

The Securities of this series will be redeemable in whole or in part, at the option of the Company at any time, at a redemption price equal to the greater of (i) 100% of the principal amount of the Securities of this series being redeemed or (ii) the sum of the present values of the remaining scheduled payments of principal of and interest on the Securities of this series being redeemed discounted to the date of redemption on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at a discount rate equal to the Treasury Yield plus [__] basis points, plus, for (i) or (ii) above, whichever is applicable, accrued interest on the Securities of this series to the date of redemption.

"Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker (as defined below) as having a maturity comparable to the remaining term of Securities of this series to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Securities of this series.

"Comparable Treasury Price" means, with respect to any redemption date, (i) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third Business Day preceding such Redemption Date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S. Government Securities," or (ii) if such release (or any successor release) is not published or does not contain such prices on such Business Day, the Reference Treasury Dealer Quotation (as defined below) for such Redemption Date.

"Independent Investment Banker" means an independent investment banking institution of national standing in the U.S. appointed by the Company and reasonably acceptable to the Trustee.

"Reference Treasury Dealer Quotation" means, with respect to the Reference Treasury Dealer (as defined below) and any redemption date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount and quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third Business Day preceding such Redemption Date).

"Reference Treasury Dealer" means a primary U.S. Government securities dealer in New York City appointed by the Company and reasonably acceptable to the Trustee.

"Treasury Yield" means, with respect to any date on which the Securities are redeemed (each, a "Redemption Date"), the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.

Notice of redemption shall be given in accordance neither less than 15 days nor more than 30 days prior to the date fixed for redemption.

If fewer than all the Securities of this series are to be redeemed, selection of Securities of this series for redemption will be made by the Trustee in any manner the Trustee deems fair and appropriate and that complies with applicable legal and securities exchange requirements.

Unless the Company defaults in payment of the redemption price, from and after the redemption date, the Securities of this series or portions thereof called for redemption will cease to bear interest, and the Holders thereof will have no right in respect to such Securities of this series except the right to receive the redemption price thereof.

In the event of redemption of this Security in part only, a new Security or Securities of this series and of like tenor for the unredeemed portion hereof will be issued to the Holder hereof upon the cancellation hereof.

The Indenture contains provisions for defeasance of (i) the entire indebtedness of this security and (ii) certain restrictive covenants upon compliance by the Company with certain conditions set forth therein.

If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. At any time after such declaration of acceleration with respect to Securities of this series has been made, but before a judgment or decree for payment of money has been obtained by the Trustee as provided in the Indenture, if all Events of Default with respect to Securities of this series have been cured or waived (other than the non-payment of principal of the Securities of this series which has become due solely by reason of such declaration of acceleration) then such declaration of acceleration and its consequences shall be automatically annulled and rescinded.

The Securities of this series are subject to redemption in whole but not in part upon not less than 15 nor more than 30 days' notice given as provided in the Indenture to the Holders of Securities of this series at a price equal to the outstanding principal amount thereof together with Additional Amounts, if any, and accrued interest, to the Redemption Date if:

(i)    the Company satisfies the Trustee prior to the giving of such notice that it has or will become obliged to pay Additional Amounts as a result of either any change in, or amendment to, the laws or regulations of the United Kingdom or any political subdivision or any authority or agency thereof or therein having power to tax or levy duties, or any change in the application or interpretation of such laws or regulations, which change or amendment becomes effective on or after the March 16, 2001; and

(ii)    such obligation cannot be avoided by the Company taking reasonable measures available to it;

subject, as provided in the Indenture, to the delivery by the Company of an Officers' Certificate stating that the obligation referred to in (i) above cannot be avoided by the Company taking reasonable measures available to it.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the Indenture or any supplemental indenture or the rights and obligations of the Company and rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Securities at the time Outstanding of all series to be affected (voting as a class). The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of th is Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest, if any, on this Security at the times, place and rate, and in the coin or currency, herein prescribed.

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of (and premium, if any) and interest, if any, on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.

The Securities of the series of which this Security is a party and which are not Global Securities are issuable only in registered form without coupons in denominations of $[__________] and any integral multiple thereof.

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

When a successor assumes all the obligations of its predecessor under the Securities of this series and the Indenture in accordance with the terms of the Indenture, the predecessor will be released from those obligations.

The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities of this series and may otherwise deal with the Company, its Subsidiaries or their respective Affiliates as if it were not the Trustee.

No stockholder, director, officer, employee, incorporator or Affiliate of the Company shall have any liability for any obligation of the Company under the Securities of this series or the Indenture or for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of the Securities of this series by accepting a Security of this series waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Securities of this series.

This Security shall not be valid until the Trustee or Authenticating Agent signs the certificate of authentication on this Security.

Customary abbreviations may be used in the name of a Holder of a Registered Security of this series or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures ("CUSIP"), the Company will cause CUSIP numbers to be printed on the Securities of this series as a convenience to the Holders of the Securities of this series. No representation is made as to the accuracy of such numbers as printed on the Securities of this series and reliance may be placed only on the other identification numbers printed hereon.

This Security shall be governed by and construed in accordance with the laws of the State of New York.

All terms used in this Security that are defined in the Indenture shall have the meanings assigned to them in the Indenture.

[FORM OF ASSIGNMENT FORM]

To assign this Security, fill in the form below:

I or we assign and transfer this Security to

(Print or type assignee's name, address and zip code)

(Insert assignee's soc. sec. or tax I.D. No.)

and irrevocably appoint him, her or it as agent to transfer this Security on the books of the Company. The agent may substitute another act for him, her or it.

___________________________________________________________________________

___________________________________________________________________________

    Date: _______________

    Your Signature: _______________________

     Signature Guarantee: _____________________________________
                                                   (Signature must be guaranteed)

___________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in the Securities Transfer Agents Medallion Program ("STAMP") or such other signature guarantee medallion program as may be approved by the Registrar in addition to or substitution for, STAMP), pursuant to S.E.C. Rule 17Ad-15.

EX-4

Exhibit 4(n)-3

WPD HOLDINGS UK

(formerly known as "SWEB HOLDINGS UK")

and

WESTERN POWER DISTRIBUTION HOLDINGS LIMITED

and

DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Trustee, Principal Paying Agent, Security Registrar and Transfer Agent

and

DEUTSCHE BANK LUXEMBOURG S.A.,
as Paying and Transfer Agent

SECOND SUPPLEMENTAL INDENTURE

Dated as of January 30, 2003

Debt Securities

THIS SECOND SUPPLEMENTAL INDENTURE is made as of the 30^th day of January, 2003, by and among WPD HOLDINGS UK (formerly known as "SWEB Holdings UK"), an unlimited liability company registered under the laws of England and Wales, with UK Company Registration Number 3585938 (the "Company"), WESTERN POWER DISTRIBUTION HOLDINGS LIMITED, a private company limited by shares and registered under the laws of England and Wales, with UK Company Registration Number [•] ("WPDHL"), DEUTSCHE BANK TRUST COMPANY AMERICAS (formerly known as "Bankers Trust Company"), a New York banking corporation, as trustee, principal paying agent, security registrar and transfer agent (the "Trustee") and DEUTSCHE BANK LUXEMBOURG S.A. (formerly known as "Bankers Trust Luxembourg S.A."), as Paying and Transfer Agent (the "Agent").

W I T N E S S E T H:

WHEREAS, the Company, the Trustee and the Agent have heretofore entered into an Indenture, dated as of March 16, 2001 (the "Original Indenture"), to provide for the issuance of unsecured securities;

WHEREAS, the Company, the Trustee and the Agent have heretofore entered into a First Supplemental Indenture, dated as of March 16, 2001 (the "First Supplemental Indenture"), to provide, among other things, for the issuance of 6.75% Notes due 2004, 6.875% Notes due 2007, 6.50% Notes due 2008, 7.25% Notes due 2017 and 7.375% Notes due 2028 (collectively, the "Notes");

WHEREAS, the Original Indenture and the First Supplemental Indenture are incorporated herein by reference and the Original Indenture and the First Supplemental Indenture, as supplemented by this Second Supplemental Indenture, are herein called the "Indenture";

WHEREAS, Section 801 of the Indenture permits the conveyance or transfer of the Company's properties and assets substantially as an entirety under the Indenture, the Notes and all other documents, agreements and instruments related thereto to WPDHL, as the successor entity, which hereby expressly assumes by this Second Supplemental Indenture the Company's applicable obligations on the Notes;

WHEREAS, upon the assumption of such obligations by WPDHL in accordance with Section 802 of the Indenture, the Company shall be released from such obligations;

WHEREAS, this Second Supplemental Indenture is being executed in connection with the transfer to and assumption by WPDHL of the assets and liabilities of the Company as an entirety or substantially as an entirety (the "Sale");

WHEREAS, Section 901(i) of the Indenture provides that the Company and the Trustee may at any time without the consent of the holders of the Notes (the "Holders") supplement the Indenture to evidence the assumption by a successor entity of the covenants of the Company therein and in the Notes; and

WHEREAS, all conditions necessary to authorize the execution and delivery of this Second Supplemental Indenture and to make it a valid and binding obligation of the parties have been done or performed;

NOW, THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE ONE

Transfer, Assumption and Release

SECTION 101.  Transfer by the Company to WPDHL. As of the date hereof, in connection with the Sale, the Company hereby transfers all of the Company's obligations under the Indenture, the Notes and all other documents, agreements and instruments related thereto to WPDHL.

SECTION 102.  Assumption by WPDHL; Release of the Company. As of the date hereof, WPDHL hereby expressly assumes all obligations of the Company under the Indenture, the Notes and all other documents, agreements and instruments related thereto and shall succeed to, and be substituted for, and may exercise every right and power of, the Company under the Indenture, the Notes and all other documents, agreements and instruments related thereto with the same effect as if WPDHL had been named as the Company therein, and thereafter the Company shall be relieved of all rights and obligations under the Indenture and the Notes.

ARTICLE TWO

Miscellaneous

SECTION 201.  Execution as Supplemental Indenture. This Second Supplemental Indenture is executed and shall be construed as an indenture supplemental to the Original Indenture and the First Supplemental Indenture, as provided in the Original Indenture, and this Second Supplemental Indenture forms a part thereof. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect.

SECTION 202.  Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with another provision hereof which is required to be included in this Second Supplemental Indenture by any of the provisions of the Trust Indenture Act, such required provision shall control.

SECTION 203.   Effect of Headings. The Article and Section headings herein are for convenience only and shall not affect the construction hereof.

SECTION 204.  Successors and Assigns. All covenants and agreements in this Second Supplemental Indenture by WPDHL shall bind its successors and assigns, whether so expressed or not.

SECTION 205.  Separability Clause. In case any provision in this Second Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

SECTION 206.  Benefits of Second Supplemental Indenture. Nothing in this Second Supplemental Indenture, express or implied, shall give to any person, other than the parties hereto and their successors hereunder and the Holders, any benefit or any legal or equitable right, remedy or claim under this Second Supplemental Indenture.

SECTION 207.  Execution and Counterparts. This Second Supplemental Indenture may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

SECTION 208.  Governing Law. This Second Supplemental Indenture shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York.

[Remainder of page intentionally left blank]

IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed by their respective officers or directors duly authorized thereto, all as of the day and year first above written.

WPD HOLDINGS UK

By:_________________________

Name:

Title:

WESTERN POWER DISTRIBUTION

HOLDINGS LIMITED

By:__________________________

Name:

Title:

DEUTSCHE BANK TRUST COMPANY

AMERICAS,

as Trustee, Principal Paying Agent, Security

Registrar and Transfer Agent

By:__________________________

Name:

Title:

DEUTSCHE BANK LUXEMBOURG S.A.,

as Paying and Transfer Agent

By:__________________________

Name:

Title:

EX-4

Exhibit 4(o)-1

CONFORMED COPY

Dated 25 March 2003

WESTERN POWER

DISTRIBUTION (SOUTH WEST) PLC

and

J.P. MORGAN CORPORATE TRUSTEE SERVICES LIMITED

TRUST DEED

constituting

£200,000,000 5.875 per cent. Bonds due 2027

Linklaters

Ref: AMS/DAXL

This Trust Deed is made on 25 March 2003 between:

1. WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC ("WPD South West" or the "Issuer") a company incorporated in England and Wales whose registered office is at Avonbank, Feeder Road, Bristol BS2 0TB and

2. J.P. MORGAN CORPORATE TRUSTEE SERVICES LIMITED (the "Trustee", which expression, where the context so admits, includes any other trustee for the time being of this Trust Deed) a company incorporated in England and Wales whose registered office is at 125 London Wall, London EC2Y 5AJ.

Whereas:

1. The Issuer has authorised the issue of £200,000,000 5.875 per cent. Bonds due 2027 to be constituted by this Trust Deed.

2. The Trustee has agreed to act as trustee of this Trust Deed on the following terms and conditions.

This Deed witnesses and it is declared as follows:

1   Interpretation

1.1   Definitions: Capitalised terms used, but not defined, herein shall bear the same respective meanings given to such terms in the Conditions and, in addition, the following expressions have the following meanings:

"Auditors" means the auditors for the time being of the Issuer or, if they are unable or unwilling to carry out any action requested of them under this Trust Deed, such other firm of accountants as may be nominated or approved in writing by the Trustee for the purpose

"Authorised Signatory" means any Director of the Issuer or any other person who is for the time being authorised by the relevant Issuer to sign documents for the purposes of these presents and who has been notified in writing to the Trustee as being so authorised

"Bondholder" means the bearer of a Bond

"Bonds" means bearer bonds substantially in the form set out in Schedule 1 comprising the £200,000,000 5.875 per cent Bonds due 2027 constituted by this Trust Deed and for the time being outstanding or, as the context may require, a specific number of them and includes any replacement Bonds issued pursuant to the Conditions and (except for the purposes of Clause 3.1) the Temporary Global Bond and the Global Bond

"Clearing System" means Clearstream, Luxembourg or Euroclear or both of them as applicable

"Clearstream, Luxembourg" means Clearstream Banking, société anonyme

"Conditions" means the terms and conditions set out in Schedule 1 as from time to time modified in accordance with this Trust Deed and, with respect to any Bonds represented by the Global Bond, as modified by the provisions of the Global Bond. Any reference to a particularly numbered Condition shall be construed accordingly

"Couponholder" means the bearer of a Coupon "Coupons" means the bearer coupons relating to the Bonds or, as the context may require, a specific number of them and includes any replacement Coupons issued pursuant to the Conditions

"Euroclear" means Euroclear Bank S.A./N.V. as operator of the Euroclear System

"Event of Default" means an event described in Condition 8 which, if so required by that Condition, has been certified by the Trustee to be, in its opinion, materially prejudicial to the interests of the Bondholders

"Excluded Subsidiary" has the meaning set out in Condition 8

"Extraordinary Resolution" has the meaning set out in Schedule 3

"Global Bond" means the permanent global bond which will represent the Bonds, or some of them, after exchange of the Temporary Global Bond, or a portion of it, substantially in the form set out in Part 2 of Schedule 2

"Group" has the meaning set out in Condition 3

"outstanding" means, in relation to the Bonds, all the Bonds issued except (a) those which have been redeemed in accordance with the Conditions, (b) those in respect of which the date for redemption has occurred and the redemption moneys (including all interest accrued on such Bonds to the date for such redemption and any interest payable under the Conditions after such date) have been duly paid to the Trustee or to the Principal Paying Agent as provided in Clause 2 and remain available for payment against presentation and surrender of Bonds and/or Coupons, as the case may be, (c) those which have become void, (d) those which have been purchased and cancelled as provided in the Conditions, (e) those mutilated or defaced Bonds which have been surrendered in exchange for replacement Bonds, (f) (for the purpose only of determining how many Bonds are outstanding and without prejudice to their status for any other purpose) those Bonds alleged to have been lost, stolen or destroyed and in respect of which replacement Bonds have been issued, and (g) the Temporary Global Bond to the extent that it shall have been exchanged for the Global Bond pursuant to its provisions and the Global Bond to the extent that it shall have been exchanged for definitive Bonds pursuant to its provisions provided that for the purposes of (1) ascertaining the right to attend and vote at any meeting of the Bondholders, (2) the determination of how many Bonds are outstanding for the purposes of Conditions 8, 11 and 12 and Schedule 3, (3) the exercise of any discretion, power or authority which the Trustee is required, expressly or impliedly, to exercise in or by reference to the interests of the Bondholders and (4) the certification (where relevant) by the Trustee as to whether a Potential Event of Default is in its opinion materially prejudicial to the interests of the Bondholders, those Bonds which are beneficially held by or on behalf of the Issuer or any of its Subsidiaries and not cancelled shall (unless no longer so held) be deemed not to remain outstanding

"Paying Agency Agreement" means the agreement referred to as such in the Conditions, as altered from time to time, and includes any other agreements approved in writing by the Trustee appointing Successor Paying Agents or altering any such agreements

"Paying Agents" means the banks (including the Principal Paying Agent) referred to as such in the Conditions or any Successor Paying Agents in each case at their respective specified offices

"Potential Event of Default" means an event or circumstance which could with the giving of notice, lapse of time, issue of a certificate and/or fulfilment of any other requirement provided for in Condition 8 become an Event of Default

"Principal Paying Agent" means the bank named as such in the Conditions or any Successor Principal Paying Agent

"Principal Subsidiary" has the meaning set out in Condition 8

"specified office" means, in relation to a Paying Agent, the office identified with its name at the end of the Conditions or any other office approved by the Trustee and notified to Bondholders pursuant to Clause 6.11

"Subsidiary" has the meaning ascribed to it in the Conditions

"Successor" means, in relation to the Paying Agents, such other or further person as may from time to time be appointed by the Issuer as a Paying Agent with the written approval of, and on terms approved in writing by, the Trustee and notice of whose appointment is given to Bondholders pursuant to Clause 6.11

"Temporary Global Bond" means the temporary global bond which will represent the Bonds on issue substantially in the form set out in Part 1 of Schedule 2

"this Trust Deed" means this Trust Deed (as from time to time altered in accordance with this Trust Deed) and any other document executed in accordance with this Trust Deed (as from time to time so altered) and expressed to be supplemental to this Trust Deed

"trust corporation" means a trust corporation (as defined in the Law of Property Act 1925) or a corporation entitled to act as a trustee pursuant to applicable foreign legislation relating to trustees

1.2   Construction of Certain References: References to:

1.2.1   costs, charges, remuneration or expenses include any value added, turnover or similar tax charged in respect thereof;

1.2.2   "pounds" "sterling" or "pounds sterling" or the signs "£" or "GBP" shall be construed as references to the lawful currency for the time being of the United Kingdom; and

1.2.3   any provision of any statute shall be deemed also to refer to any statutory modification or re-enactment thereof or any statutory instrument, order or regulation made thereunder or under such re-enactment;

1.2.4   Schedules, Clauses and paragraphs shall be construed as references to, respectively, the Schedules to and the Clauses and paragraphs of this Trust Deed;

1.2.5   any action, remedy or method of judicial proceedings for the enforcement of rights of creditors shall be deemed to include, in respect of any jurisdiction other than England, references to such action, remedy or method of judicial proceedings for the enforcement of rights of creditors available or appropriate in such jurisdiction as shall most nearly approximate thereto;

1.2.6   principal and/or premium and/or interest in respect of the Bonds or to any moneys payable by the Issuer under this Trust Deed shall be deemed to include, in the case of principal and/or premium, a reference to any specific redemption price (as specified in the Conditions) and, in any case, a reference to any additional amounts which may be payable under the Conditions.

1.3   Headings: Headings shall be ignored in construing this Trust Deed.

1.4   Contracts: References in this Trust Deed to any document are to such document as amended, supplemented or replaced from time to time and include any document that amends, supplements or replaces them.

1.5   Schedules: The Schedules are part of this Trust Deed and have effect accordingly.

1.6   Contracts (Rights of Third Parties) Act 1999: A person who is not a party to this Trust Deed has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Trust Deed except and to the extent that Clause 7.4 expressly provides for such Act to apply.

2   Amount of the Bonds and Covenant to Pay

2.1   Amount of the Bonds: The aggregate principal amount of the Bonds is limited to £200,000,000.

2.2   Covenant to pay: The Issuer will on any date when any Bonds become due to be redeemed unconditionally pay to or to the order of the Trustee in the United Kingdom in pounds sterling in same day funds the principal amount of the Bonds becoming due for redemption on that date together with any applicable premium and will (subject to the Conditions) until such payment (both before and after judgment) unconditionally so pay to or to the order of the Trustee interest on the principal amount of the Bonds outstanding as set out in the Conditions provided that (1) payment of any sum due in respect of the Bonds made to the Principal Paying Agent as provided in the Paying Agency Agreement shall, to that extent, satisfy such obligation except to the extent that there is failure in its subsequent payment to the relevant Bondholders or Couponholders under the Conditions and (2) a payment made after the due date or pursuant to Condition 8 will be deemed to have been made when the full amount due has been received by the Principal Paying Agent or the Trustee and notice to that effect has been given to the Bondholders (if required under Clause 6.9), except to the extent that there is failure in its subsequent payment to the relevant Bondholders or Couponholders under the Conditions. The Trustee will hold the benefit of this covenant on trust for the Bondholders and Couponholders.

2.3   Discharge: Subject to Clause 2.4, any payment to be made in respect of the Bonds or the Coupons by the Issuer or the Trustee may be made as provided in the Conditions and any payment so made will (subject to Clause 2.4) to that extent be a good discharge to the Issuer or the Trustee, as the case may be.

2.4   Payment after a Default: At any time after an Event of Default or a Potential Event of Default has occurred the Trustee may:

2.4.1   by notice in writing to the Issuer and the Paying Agents, require the Paying Agents, until notified by the Trustee to the contrary, so far as permitted by applicable law:

1. to act as Paying Agents of the Trustee under this Trust Deed and the Bonds on the terms of the Paying Agency Agreement (with consequential amendments as necessary and except that the Trustee's liability for the indemnification, remuneration and expenses of the Paying Agents will be limited to the amounts for the time being held by the Trustee in respect of the Bonds on the terms of this Trust Deed) and thereafter to hold all Bonds and Coupons and all moneys, documents and records held by them in respect of Bonds and Coupons to the order of the Trustee or

2. to deliver all Bonds and Coupons and all moneys, documents and records held by them in respect of the Bonds and Coupons to the Trustee or as the Trustee directs in such notice and

2.4.2   by notice in writing to the Issuer and until such notice is withdrawn require it to make all subsequent payments in respect of the Bonds and Coupons to or to the order of the Trustee and not to the Principal Paying Agent.

3   Form of the Bonds

3.1   The Global Bonds: The Bonds will initially be represented by the Temporary Global Bond in the principal amount of £200,000,000. Interests in the Temporary Global Bond will be exchangeable for the Global Bond as set out in the Temporary Global Bond. The Global Bond will be exchangeable for definitive Bonds as set out in the Global Bond.

3.2   The Definitive Bonds: The definitive Bonds and the Coupons will be security printed in accordance with applicable legal and stock exchange requirements substantially in the forms set out in Schedule 1. The Bonds will be endorsed with the Conditions.

3.3   Signature: The Bonds and the Coupons will be signed manually or in facsimile by an Authorised Signatory of the Issuer and the Bonds will be authenticated by or on behalf of the Principal Paying Agent. The Issuer may use the facsimile signature of a person who at the date of this Trust Deed is such an Authorised Signatory even if at the time of issue of any Bonds or Coupons he no longer holds that office. Bonds and Coupons so executed and authenticated will be binding and valid obligations of the Issuer.

4   Stamp Duties and Taxes

4.1   Stamp Duties: The Issuer will pay any stamp, issue, documentary or other taxes and duties, including interest and penalties, payable in Belgium, Luxembourg and the United Kingdom in respect of the creation, issue and offering of the Bonds and the Coupons and the execution or delivery of this Trust Deed. The Issuer will also indemnify the Trustee, the Bondholders and the Couponholders from and against all stamp, issue, documentary or other taxes paid by any of them in any jurisdiction in connection with any action taken by or on behalf of the Trustee or, as the case may be, (and where permitted under these presents so to do) the Bondholders or the Couponholders to enforce the Issuer's obligations under this Trust Deed, the Bonds or the Coupons.

4.2   Change of Taxing Jurisdiction: If the Issuer becomes subject generally to the taxing jurisdiction of a territory or a taxing authority of or in that territory with power to tax other than or in addition to the United Kingdom or any such authority of or in such territory then the Issuer will (unless the Trustee otherwise agrees) give the Trustee an undertaking satisfactory to the Trustee in terms corresponding to the terms of Condition 7 with the substitution for, or (as the case may require) the addition to, the references in that Condition to the United Kingdom of references to that other or additional territory or authority to whose taxing jurisdiction the Issuer has become so subject. In such event this Trust Deed, the Bonds and the Coupons will be read accordingly.

5   Application of Moneys Received by the Trustee

5.1   Declaration of Trust: All moneys received by the Trustee in respect of the Bonds or amounts payable under this Trust Deed will, despite any appropriation of all or part of them by the Issuer, be held by the Trustee on trust to apply them (subject to Clause 5.2):

5.1.1   first, in payment of all costs, charges, expenses and liabilities properly incurred by the Trustee (including remuneration payable to it) in carrying out its functions under this Trust Deed

5.1.2   secondly, in payment of any amounts owing in respect of the Bonds or Coupons pari passu and rateably and

5.1.3   thirdly, in payment of any balance to the Issuer for itself.

If the Trustee holds any moneys in respect of Bonds or Coupons which have become void, the Trustee will hold them on these trusts.

5.2   Accumulation: If the amount of the moneys at any time available for payment in respect of the Bonds under Clause 5.1 is less than 10 per cent of the principal amount of the Bonds then outstanding, the Trustee may, at its discretion, invest such moneys. The Trustee may retain such investments and accumulate the resulting income until the investments and the accumulations, together with any other funds for the time being under its control and available for such payment, amount to at least 10 per cent of the principal amount of the Bonds then outstanding and then such investments, accumulations and funds (after deduction of, or provision for, any applicable taxes) will be applied as specified in Clause 5.1.

5.3   Investment: Moneys held by the Trustee may be invested in its name or under its control in any investments or other assets anywhere whether or not they produce income or deposited in its name or under its control at such bank or other financial institution in such currency as the Trustee may, in its absolute discretion, think fit. If that bank or institution is the Trustee or a subsidiary, holding or associated company of the Trustee, it need only account for an amount of interest equal to the standard amount of interest payable by it on such a deposit to an independent customer. The Trustee may at any time vary or transpose any such investments or assets or convert any moneys so deposited into any other currency, and will not be responsible for any resulting loss, whether by depreciation in value, change in exchange rates or otherwise.

6   Covenants

So long as any Bond is outstanding, the Issuer will:

6.1   Books of Account: keep, and procure that each of its Subsidiaries keeps, proper books of account and, at any time after an Event of Default or Potential Event of Default has occurred or if the Trustee reasonably believes that such an event has occurred, so far as permitted by applicable law, allow, and procure that each such Subsidiary will allow, the Trustee and anyone appointed by it to whom the Issuer and/or the relevant Subsidiary has no reasonable objection, access to its books of account at all reasonable times during normal business hours

6.2   Notice of Events of Default: notify the Trustee in writing immediately on becoming aware of the occurrence of any Event of Default or Potential Event of Default

6.3   Information: so far as permitted by applicable law, give the Trustee such information as it reasonably requires to perform its functions

6.4   Financial Statements etc.: send to the Trustee at the time of their issue and in the case of annual financial statements in any event within 180 days of the end of each financial year three copies in English of every balance sheet, profit and loss account, report or other notice, statement or circular issued, or which legally or contractually should be issued, to the members or creditors (or any class of them) of the Issuer or any holding company thereof generally in their capacity as such

6.5   Certificate of Authorised Signatories: send to the Trustee, within 14 days of its annual audited financial statements being made available to its members, and also within 14 days of any request by the Trustee a certificate of the Issuer signed by any two of its Authorised Signatories that, having made all reasonable enquiries, to the best of the knowledge, information and belief of the Issuer as at a date (the "Certification Date") not more than five days before the date of the certificate no Event of Default, Potential Event of Default, Restructuring Event or Potential Restructuring Event (as defined below) or other breach of this Trust Deed had occurred since the Certification Date of the last such certificate or (if none) the date of this Trust Deed or, if such an event had occurred, giving details of it

6.6   Certificate of two Directors of the Issuer: send to the Trustee, within 28 days of a request by the Trustee, a certificate signed by two Directors of the Issuer as to the amount of the Capital and Reserves of the Issuer as at the date specified in such request

6.7   Notices to Bondholders: send to the Trustee the form of each notice to be given to Bondholders and, once given, two copies of each such notice, such notice to be in a form approved by the Trustee (such approval not to be unreasonably withheld or delayed and such approval, unless so expressed, not to constitute approval for the purposes of Section 21 of the FSMA of any such notice which is a communication within the meaning of Section 21 of the FSMA)

6.8   Further Acts: so far as permitted by applicable law, do such further things as may be necessary in the opinion of the Trustee to give effect to this Trust Deed

6.9   Notice of late payment: forthwith upon request by the Trustee give notice to the Bondholders of any unconditional payment to the Principal Paying Agent or the Trustee of any sum due in respect of the Bonds or Coupons made after the due date for such payment

6.10   Listing: use all reasonable endeavours to maintain the listing of the Bonds on the Luxembourg Stock Exchange but, if it is unable to do so, having used such endeavours, or if the maintenance of such listing is agreed by the Trustee to be unduly onerous and the Trustee is satisfied that the interests of the Bondholders would not be thereby materially prejudiced (such agreement not to be unreasonably withheld or delayed), instead use all reasonable endeavours to obtain and maintain a listing of the Bonds on another stock exchange approved in writing by the Trustee

6.11   Change in Agents: give at least 14 days' prior notice to the Bondholders of any future appointment, resignation or removal of a Paying Agent or of any change by a Paying Agent of its specified office and not make any such appointment or removal without the Trustee's written approval

6.12   Bonds held by Issuer etc.: send to the Trustee as soon as practicable after being so requested by the Trustee a certificate of the Issuer signed by any two of its Authorised Signatories stating the number of Bonds held at the date of such certificate by or on behalf of the Issuer or its Subsidiaries

6.13   Principal Subsidiaries: give to the Trustee at the same time as sending the certificate referred to in Clause 6.5 or within 28 days of a request by the Trustee, a certificate signed by two Directors of the Issuer listing those Subsidiaries of the Issuer which as at the last day of the last financial year of the Issuer or as at the date specified in such request were Principal Subsidiaries and confirming that there are no Subsidiaries of the type referred to in Clauses 6.14.1 or 6.14.2

6.14   Restriction on Principal Subsidiaries: not permit to exist and will not create any Subsidiary (not being an Excluded Subsidiary or any other Subsidiary whose only indebtedness for borrowed money is Non-recourse Indebtedness):

6.14.1   whose (a) profits on ordinary activities before tax or (b) gross assets, in each case attributable to the Issuer, represent 20 per cent. or more of the consolidated profits on ordinary activities before tax of the Group or, as the case may be, consolidated gross assets of the Group, in each case as calculated by reference to the then latest audited financial statements of such Subsidiary (consolidated in the case of a company which itself has Subsidiaries) and the then latest audited consolidated financial statements of the Group; or

6.14.2   to which is transferred all or substantially all of the business, undertaking and assets of a Subsidiary of the Issuer which immediately prior to such transfer is a Subsidiary, with such profits and/or gross assets as are described in 6.14.1 above,

unless such Subsidiary carries on a "distribution business" as defined in Condition 1 of the Standard Conditions of the Utilities Act 2000 Determination of Standard Licence Conditions for Electricity Distribution Licences (as amended from time to time); and

6.15   forthwith give notice in writing to the Trustee of:

6.15.1   the occurrence of any Restructuring Event or of any event (a "Potential Restructuring Event") which, depending on any certification as provided in the definition of "Restructuring Event", may be a Restructuring Event;

6.15.2   (if at the time any Restructuring Event occurs there are Rated Securities) the occurrence of any Rating Downgrade in respect of that Restructuring Event within the Restructuring Period; and

6.15.3   (if at the time any Restructuring Event occurs there are no Rated Securities) the obtaining of a rating in accordance with the definition of "Negative Rating Event" or the occurrence of a Negative Rating Event

7   Remuneration and Indemnification of the Trustee

7.1   Normal Remuneration: So long as any Bond is outstanding the Issuer will pay the Trustee as remuneration for its services as Trustee such sum on such dates in each case as they may from time to time agree. Such remuneration will accrue from day to day from the date of this Trust Deed. However, if any payment to a Bondholder or Couponholder of moneys due in respect of any Bond or Coupon is improperly withheld or refused, such remuneration will again accrue as from the date of such withholding or refusal until payment to such Bondholder or Couponholder is duly made.

7.2   Extra Remuneration: If an Event of Default or Potential Event of Default shall have occurred or if the Trustee finds it expedient or necessary or is requested by the Issuer to undertake duties which they both agree to be of an exceptional nature or otherwise outside the scope of the Trustee's normal duties under this Trust Deed, the Issuer will pay such additional remuneration as they may agree or, failing agreement as to any of the matters in this sub-Clause (or as to such sums referred to in Clause 7.1), as determined by an investment bank (acting as an expert) selected by the Trustee and approved by the Issuer or, failing such approval, nominated by the President for the time being of The Law Society of England and Wales. The expenses involved in such nomination and such investment bank's fee will be borne by the Issuer. The determination of such investment bank will be conclusive and binding on the Issuer, the Trustee, the Bondholders and the Couponholders save in the case of a manifest error.

7.3   Expenses: The Issuer will also on demand by the Trustee pay or discharge all costs, charges, liabilities and expenses properly incurred by the Trustee in the preparation and execution of this Trust Deed and the performance of its functions under this Trust Deed including, but not limited to, legal and travelling expenses and any stamp, documentary or other taxes or duties paid by the Trustee in connection with any legal proceedings reasonably brought or contemplated by the Trustee against the Issuer to enforce any provision of this Trust Deed, the Bonds or the Coupons. Such costs, charges, liabilities and expenses will:

7.3.1   in the case of payments made by the Trustee before such demand carry interest from the date of the demand at the rate of 2 per cent per annum over the base rate of JPMorgan Chase Bank on the date on which the Trustee made such payments and

7.3.2   in other cases carry interest at such rate from 30 days after the date of the demand or (where the demand specifies that payment is to be made on an earlier date) from such earlier date.

7.4    Indemnity: The Issuer will on demand by the Trustee indemnify it in respect of Amounts or Claims paid or incurred by it in acting as trustee under this Trust Deed (including (1) any Agent/Delegate Liabilities and (2) in respect of disputing or defending any Amounts or Claims made against the Trustee or any Agent/Delegate Liabilities). The Issuer will on demand by such agent or delegate indemnify it against such Agent/Delegate Liabilities. "Amounts or Claims" are losses, liabilities, costs, claims, actions, demands or expenses and "Agent/Delegate Liabilities" are Amounts or Claims which the Trustee is or would be obliged to pay or reimburse to any of its agents or delegates appointed pursuant to this Trust Deed. The Contracts (Rights of Third Parties) Act 1999 applies to this Clause 7.4.

7.5   Continuing Effect: Clauses 7.3 and 7.4 will continue in full force and effect as regards the Trustee even if it no longer is Trustee.

8   Provisions Supplemental to the Trustee Act 1925 and the Trustee Act 2000

By way of supplement to the Trustee Act 1925 it is expressly declared as follows:

8.1   Advice: The Trustee may act on the opinion or advice of, or information obtained from, any expert and will not be responsible to anyone for any loss occasioned by so acting. Any such opinion, advice or information may be sent or obtained by letter, telex or fax and the Trustee will not be liable to anyone for acting in good faith on any opinion, advice or information purporting to be conveyed by such means even if it contains some error or is not authentic.

8.2   Trustee to Assume Performance: The Trustee need not notify anyone of the execution of this Trust Deed nor shall it be bound to take any steps to ascertain whether any Event of Default, Potential Event of Default, Restructuring Event, Potential Restructuring Event or Negative Rating Event has happened and, until it shall have actual knowledge or express notice to the contrary, the Trustee shall be entitled to assume that no Event of Default, Potential Event of Default, Restructuring Event, Potential Restructuring Event or Negative Rating Event has happened and that the Issuer is observing and performing all its obligations under this Trust Deed, the Bonds and the Coupons.

8.3   Resolutions of Bondholders: The Trustee will not be responsible for having acted in good faith on a resolution purporting to have been passed at a meeting of Bondholders in respect of which minutes have been made and signed even if it is later found that there was a defect in the constitution of the meeting or the passing of the resolution or that the resolution was not valid or binding on the Bondholders or Couponholders.

8.4   Certificate signed by Authorised Signatories: If the Trustee, in the exercise of its functions, requires to be satisfied or to have information as to any fact or the expediency of any act, it may call for and accept as sufficient evidence of that fact or the expediency of that act a certificate signed by any two Authorised Signatories of the Issuer as to that fact or to the effect that, in their opinion, that act is expedient and the Trustee need not call for further evidence and will not be responsible for any loss occasioned by acting on such a certificate. The Trustee shall be entitled to rely on any certificate of two Authorised Signatories of the Issuer where the Issuer procures the delivery of the same pursuant to its obligations to do so under the Conditions or this Trust Deed and such certificate shall be binding on the Issuer, the Trustee and the Bondholders.

8.5   Report of the Auditors: The Trustee shall be entitled to rely on any certificate or report of the Auditors whether or not such report is addressed to the Trustee and notwithstanding that such report and/or any engagement letter or other document entered into by the Trustee contains a monetary or other limit on the liability of the Auditors. Such report shall, in the absence of manifest error, be conclusive and binding on all parties, and the Trustee shall not be responsible for any loss occasioned by acting on any such report.

8.6   Deposit of Documents: The Trustee may appoint as custodian, on any terms, any bank or entity whose business includes the safe custody of documents or any lawyer or firm of lawyers believed by it to be of good repute and may deposit this Trust Deed and any other documents with such custodian and pay all sums due in respect thereof. The Trustee is not obliged to appoint a custodian of securities payable to bearer.

8.7   Discretion: The Trustee will have absolute and uncontrolled discretion as to the exercise of its powers, trusts and discretions and will not be responsible for any loss, liability, cost, claim, action, demand, expense or inconvenience which may result from their exercise or non-exercise.

8.8   Agents: Whenever it considers it expedient in the interests of the Bondholders, the Trustee may, in the conduct of its trust business, instead of acting personally, employ and pay an agent selected by it, whether or not a lawyer or other professional person, to transact or conduct, or concur in transacting or conducting, any business and to do or concur in doing all acts required to be done by the Trustee (including the receipt and payment of money).

8.9   Delegation: Whenever it considers it expedient in the interests of the Bondholders, the Trustee may delegate to any person on any terms (including power to sub-delegate) all or any of its functions.

8.10   Nominees: In relation to any asset held by it under this Trust Deed, the Trustee may appoint any person to act as its nominee on any terms.

8.11   Forged Bonds: The Trustee will not be liable to the Issuer or any Bondholder or Couponholder by reason of having accepted as valid or not having rejected any Bond or Coupon purporting to be such and later found to be forged or not authentic.

8.12   Confidentiality: Unless ordered to do so by a court of competent jurisdiction the Trustee shall not be required to disclose to any Bondholder or Couponholder any confidential financial or other information made available to the Trustee by the Issuer and no Bondholder or Couponholder shall be entitled to take any action to obtain such information from the Trustee.

8.13   Determinations Conclusive: As between itself and the Bondholders and Couponholders the Trustee may in its absolute discretion determine all questions and doubts arising in relation to any of the provisions of this Trust Deed including (without limitation) determination of whether or not a default in performance by the Issuer of any obligation under the Bonds or Trust Deed is materially prejudicial to the interests of Bondholders and Couponholders. Such determinations, whether made upon such a question actually raised or implied in the acts or proceedings of the Trustee, will be conclusive and shall bind the Trustee, the Bondholders and the Couponholders.

8.14   Currency Conversion: Where it is necessary or desirable to convert any sum from one currency to another, it will (unless otherwise provided hereby or required by law) be converted at such rate or rates, in accordance with such method and as at such date as may reasonably be specified by the Trustee but having regard to current rates of exchange, if available. Any rate, method and date so specified will be binding on the Issuer, the Bondholders and the Couponholders.

8.15   Events of Default: The Trustee may determine whether or not an Event of Default or Potential Event of Default is in its opinion capable of remedy and/or materially prejudicial to the interests of the Bondholders. Any such determination will be conclusive and binding on the Issuer, the Bondholders and the Couponholders.

8.16   Payment for and Delivery of Bonds: The Trustee will not be responsible for the receipt or application by the Issuer of the proceeds of the issue of the Bonds, any exchange of Bonds or the delivery of Bonds to the persons entitled to them.

8.17   Bonds held by the Issuer etc.: In the absence of knowledge or express notice to the contrary, the Trustee may assume without enquiry (other than requesting a certificate under Clause 6.12) that no Bonds are for the time being held by or on behalf of the Issuer or its Subsidiaries.

8.18   Responsibility for agents etc.: If the Trustee exercises reasonable care in selecting any custodian, agent, delegate or nominee appointed under this clause (an "Appointee"), it will not have any obligation to supervise the Appointee or be responsible for any loss, liability, cost, claim, action, demand or expense incurred by reason of the Appointee's misconduct or default or the misconduct or default of any substitute appointed by the Appointee.

8.19   Responsibility for Rating: The Trustee shall (a) have no responsibility for the maintenance of any rating of the Bonds by any Rating Agency and (b) shall not be liable to Bondholders if any exercise by it of its trusts, powers and discretions results in a change to the rating assigned by any Rating Agency to any class of Bonds.

9   Trustee Liable for Negligence

Section 1 of the Trustee Act 2000 shall not apply to any function of the Trustee, provided that if the Trustee fails to show the degree of care and diligence required of it as trustee, nothing in this Trust Deed shall relieve or indemnify it from or against any liability which would otherwise attach to it in respect of any negligence, default, breach of duty or breach of trust of which it may be guilty.

10   Waiver and Proof of Default

10.1   Waiver: The Trustee may, without the consent of the Bondholders or Couponholders and without prejudice to its rights in respect of any subsequent breach, from time to time and at any time, if in its opinion the interests of the Bondholders will not be materially prejudiced thereby, waive or authorise, on such terms as seem expedient to it, any breach or proposed breach by the Issuer of this Trust Deed or the Conditions or determine that an Event of Default, Potential Event of Default, Restructuring Event or Potential Restructuring Event will not be treated as such provided that the Trustee will not do so in contravention of an express direction given by an Extraordinary Resolution or a request made pursuant to Condition 8. No such direction or request will affect a previous waiver, authorisation or determination. Any such waiver, authorisation or determination will be binding on the Bondholders and the Couponholders and, if the Trustee so requires, will be notified to the Bondholders as soon as practicable.

10.2   Proof of Default: Proof that the Issuer has failed to pay a sum due to the holder of any one Bond or Coupon will (unless the contrary be proved) be sufficient evidence that it has made the same default as regards all other Bonds or Coupons which are then payable.

11   Trustee not Precluded from Entering into Contracts

The Trustee and any other person, whether or not acting for itself, may acquire, hold or dispose of any Bond, Coupon or other security (or any interest therein) of the Issuer or any other person, may enter into or be interested in any contract or transaction with any such person and may act on, or as depositary or agent for, any committee or body of holders of any securities of any such person in each case with the same rights as it would have had if the Trustee were not acting as Trustee and need not account for any profit.

12   Modification and Substitution

12.1   Modification: The Trustee may agree without the consent of the Bondholders or Couponholders to any modification to this Trust Deed which is, in its opinion, of a formal, minor or technical nature or to correct a manifest error. The Trustee may also so agree to any modification to this Trust Deed which is in its opinion not materially prejudicial to the interests of the Bondholders, but such power does not extend to any such modification as is mentioned in the proviso to paragraph 2 of Schedule 3.

12.2   Substitution:

12.2.1   The Trustee may, without the consent of the Bondholders or Couponholders, agree to the substitution of the Issuer's successor in business or any Subsidiary of the Issuer (other than an Excluded Subsidiary) (the "Substituted Obligor") in place of the Issuer (or of any previous substitute under this sub-Clause) as the principal debtor under this Trust Deed, the Bonds and the Coupons provided that:

1. a deed is executed or undertaking given by the Substituted Obligor to the Trustee, in form and manner satisfactory to the Trustee, agreeing to be bound by this Trust Deed, the Bonds and the Coupons (with consequential amendments as the Trustee may deem appropriate) as if the Substituted Obligor had been named in this Trust Deed, the Bonds and the Coupons as the principal debtor in place of the Issuer

2. if the Substituted Obligor is subject generally to the taxing jurisdiction of a territory or any authority of or in that territory with power to tax (the "Substituted Territory") other than the territory to the taxing jurisdiction of which (or to any such authority of or in which) the Issuer is subject generally (the "Issuer's Territory"), the Substituted Obligor will (unless the Trustee otherwise agrees) give to the Trustee an undertaking satisfactory to the Trustee in terms corresponding to Condition 7 with the substitution for the references in that Condition to the Issuer's Territory of references to the Substituted Territory whereupon the Trust Deed, the Bonds and the Coupons will be read accordingly
3. if any two Authorised Signatories of the Substituted Obligor certify that it will be solvent immediately after such substitution, the Trustee need not have regard to the Substituted Obligor's financial condition, profits or prospects or compare them with those of the Issuer
4. the Issuer and the Substituted Obligor comply with such other requirements as the Trustee may direct in the interests of the Bondholders and
5. (unless the Issuer's successor in business is the Substituted Obligor as the principal debtor under this Trust Deed, the Bonds and the Coupons) the obligations of the Substituted Obligor as the principal debtor under this Trust Deed, the Bonds and the Coupons are guaranteed by the Issuer (with consequential amendments as necessary) to the Trustee's satisfaction.

12.2.2   Release of Substituted Issuer: An agreement by the Trustee pursuant to Clause 12.2 will, if so expressed, release the Issuer (or a previous substitute) from any or all of its obligations under this Trust Deed, the Bonds and the Coupons. Notice of the substitution will be given to the Bondholders within 14 days of the execution of such documents and compliance with such requirements.

12.2.3   Completion of Substitution: On completion of the formalities set out in Clause 12.2, the Substituted Obligor will be deemed to be named in this Trust Deed, the Bonds and the Coupons as the principal debtor in place of the Issuer (or of any previous substitute) and this Trust Deed, the Bonds and the Coupons will be deemed to be amended as necessary to give effect to the substitution.

13   Appointment, Retirement and Removal of the Trustee

13.1   Appointment: The Issuer has the power of appointing new trustees but no-one may be so appointed unless previously approved by an Extraordinary Resolution. A trust corporation will at all times be a Trustee and may be the sole Trustee. Any appointment of a new Trustee will be notified by the Issuer to the Bondholders as soon as practicable.

13.2   Retirement and Removal: Any Trustee may retire at any time on giving at least three months' written notice to the Issuer without giving any reason or being responsible for any costs occasioned by such retirement and the Bondholders may by Extraordinary Resolution remove any Trustee provided that the retirement or removal of a sole trust corporation will not be effective until a trust corporation is appointed as successor Trustee. If a sole trust corporation gives notice of retirement or an Extraordinary Resolution is passed for its removal, the Issuer will use all reasonable endeavours to procure that another trust corporation be appointed as Trustee and if it does not procure the appointment of a new trustee within 30 days of the expiry of the Trustee's notice referred to in this Clause, the Trustee shall be entitled to procure forthwith a new trustee.

13.3   Co-Trustees: The Trustee may, despite Clause 13.1, by written notice to the Issuer appoint anyone to act as an additional Trustee jointly with the Trustee:

13.3.1   if the Trustee considers the appointment to be in the interests of the Bondholders and/or the Couponholders

13.3.2   to conform with a legal requirement, restriction or condition in a jurisdiction in which a particular act is to be performed or

13.3.3   to obtain a judgment or to enforce a judgment or any provision of this Trust Deed in any jurisdiction.

Subject to the provisions of this Trust Deed the Trustee may confer on any person so appointed such functions as it thinks fit. The Trustee may by written notice to the Issuer and that person remove that person. At the Trustee's request, the Issuer will forthwith do all things as may be required to perfect such appointment or removal and it irrevocably appoints the Trustee as its attorney in its name and on its behalf to do so.

13.4   Competence of a Majority of Trustees: If there are more than two Trustees the majority of them will be competent to perform the Trustee's functions provided the majority includes a trust corporation.

14   Couponholders

No notices need be given to Couponholders. They will be deemed to have notice of the contents of any notice given to Bondholders. Even if it has express notice to the contrary, in exercising any of its functions by reference to the interests of the Bondholders, the Trustee will assume that the holder of each Bond is the holder of all Coupons relating to it.

15   Currency Indemnity

15.1   Currency of Account and Payment: Pounds sterling or, in relation to Clause 7, Dollars (the "Contractual Currency") is the sole currency of account and payment for all sums payable by the Issuer under or in connection with this Trust Deed, the Bonds and the Coupons, including damages.

15.2   Extent of discharge: An amount received or recovered in a currency other than the Contractual Currency (whether as a result of, or of the enforcement of, a judgment or order of a court of any jurisdiction, in the winding-up or dissolution of the Issuer or otherwise), by the Trustee or any Bondholder or Couponholder in respect of any sum expressed to be due to it from the Issuer will only discharge the Issuer to the extent of the Contractual Currency amount which the recipient is able to purchase with the amount so received or recovered in that other currency on the date of that receipt or recovery (or, if it is not practicable to make that purchase on that date, on the first date on which it is practicable to do so).

15.3   Indemnity: If that Contractual Currency amount is less than the Contractual Currency amount expressed to be due to the recipient under this Trust Deed, the Bonds or the Coupons, the Issuer will indemnify it against any loss sustained by it as a result. In any event, the Issuer will indemnify the recipient against the cost of making any such purchase.

15.4   Indemnity separate: The indemnities in this Clause 15 and in Clause 7.4 constitute separate and independent obligations from the other obligations in this Trust Deed, will give rise to a separate and independent cause of action, will apply irrespective of any indulgence granted by the Trustee and/or any Bondholder or Couponholder and will continue in full force and effect despite any judgment, order, claim or proof for a liquidated amount in respect of any sum due under this Trust Deed, the Bonds and/or the Coupons or any other judgment or order.

16   Communications

Any communication shall be by letter or fax:

in the case of the Issuer, to it at:

Avonbank
Feeder Road
Bristol BS2 0TB

Telephone no.:       +44(0) 117 933 2020
Fax no.:                 +44(0) 117 933 2108
Attention:               The Treasurer

and in the case of the Trustee, to it at:

Trinity Tower
9 Thomas More Street
London E1W 1YT

Telephone no.:       +44 207 777 5422
Fax no.:                 +44 207 777 5410
Attention:               Manager, Trust Administration

Communications will take effect, in the case of delivery, when delivered or, in the case of fax, when despatched. Communications not by letter shall be confirmed by letter but failure to send or receive that letter shall not invalidate the original communication.

17   Further Issues

17.1   Supplemental Trust Deed: If the Issuer issues further securities as provided in the Conditions, the Issuer shall, before their issue, execute and deliver to the Trustee a deed supplemental to this Trust Deed containing such provisions (corresponding to any of the provisions of this Trust Deed) as the Trustee may require.

17.2   Meetings of Bondholders: If the Trustee so directs, Schedule 3 shall apply equally to Bondholders and to holders of any securities issued pursuant to the Conditions as if references in it to "Bonds" and "Bondholders" were also to such securities and their holders respectively.

18   Governing Law

This Trust Deed shall be governed by and construed in accordance with English law.

19   Counterparts

This Trust Deed may be executed and delivered in any number of counterparts each of which will be deemed an original.

Schedule 1
Form of Definitive Bond

On the front:

Denomination	ISIN	Series	Certif. No.
£[1,000]/£[10,000]/£[100,000]	XS0165510313

WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC
(Incorporated with limited liability in England and Wales)
£200,000,000
5.875 per cent Bonds due 2027

This Bond forms part of a series designated as specified in the title (the "Bonds") of Western Power Distribution (South West) plc (the "Issuer") constituted by the Trust Deed referred to on the reverse hereof. The Bonds are subject to, and have the benefit of, that Trust Deed and the terms and conditions (the "Conditions") set out on the reverse hereof.

This is to certify that the bearer of this Bond is entitled on 25 March 2027, or on such earlier date as the principal sum mentioned below may become repayable in accordance with the Conditions, to the principal sum of:

£[1,000]/[10,000]/[100,000] ([one/ten/one hundred] thousand pounds sterling)

together with interest on such principal sum from 25 March 2003 at the rate of 5.875 per cent per annum payable in arrear on 25 March in each year, subject to and in accordance with the Conditions.

This Bond shall not be valid or become obligatory for any purpose until authenticated by or on behalf of the Principal Paying Agent.

In witness whereof the Issuer has caused this Bond to be signed in facsimile on its behalf.

Dated as of 25 March 2003

WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC

By:

[Director]

This Bond is authenticated by or on behalf of the Principal Paying Agent.

By:

Authorised Signatory

ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.

On the back:

Terms and Conditions

PRINCIPAL PAYING AGENT
JPMorgan Chase Bank
Trinity Tower
9 Thomas More Street
London E1W 1YT

PAYING AGENT
J.P. Morgan Bank Luxembourg S.A.
5 rue Plaetis
L-2338 Luxembourg

Form of Coupon

On the front:

WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC
£200,000,000 5.875 per cent Bonds due 2027

Coupon for £[58.75/587.50/5,875.00] due on 25 March 20[04/05/06/07/08/09/10/11/12/13/14/15/16/17/18/19/20/21/22/23/24/25/26/27].

This Coupon is payable to bearer (subject to the Conditions endorsed on the Bond to which this Coupon relates, which shall be binding upon the holder of this Coupon whether or not it is for the time being attached to such Bond) at the specified offices of the Paying Agents set out on the reverse hereof (or any further or other Paying Agents or specified offices duly appointed or nominated and notified to the Bondholders).

If the Bond to which this Coupon relates shall have become due and payable before the maturity date of this Coupon, this Coupon shall become void and no payment shall be made in respect of it.

ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.

WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC

By:

[Director]

Cp No.	Denomination	ISIN	Series	Certif. No.
	£[1,000]/[10,000]/[100,000]	XS0165510313

On the back:

PRINCIPAL PAYING AGENT
JPMorgan Chase Bank
Trinity Tower
9 Thomas More Street
London E1W 1YT

PAYING AGENT
J.P. Morgan Bank Luxembourg S.A.
5 rue Plaetis
L-2338 Luxembourg

Schedule 2
Part 1
Form of Temporary Global Bond

ISIN: XS0165510313

WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC
(Incorporated with limited liability in England and Wales)
£200,000,000
5.875 per cent Bonds due 2027

Temporary Global Bond

This is to certify that the bearer is entitled to the sum of

TWO HUNDRED MILLION POUNDS STERLING (£200,000,000)

on 25 March 2027 (or such earlier date as such principal sum may become payable in accordance with the Trust Deed (as defined below) and with the terms and conditions (the "Conditions") of the Bonds designated above (the "Bonds") set out in Schedule 1 to the trust deed dated £25 March 2003 (the "Trust Deed") between Western Power Distribution (South West) plc (the "Issuer") and J.P. Morgan Corporate Trustee Services Limited as trustee (the "Trustee")) upon presentation and surrender of this Temporary Global Bond and to interest at the rate of 5.875 per cent per annum on such principal sum in arrear on 25 March in each year in accordance with the Conditions.

On or after 6 May 2003 (the "Exchange Date") this Temporary Global Bond may be exchanged in whole or part (free of charge to the holder) by its presentation and, on exchange in full, surrender to or to the order of the Principal Paying Agent for interests in a Global Bond (the "Global Bond") in bearer form in an aggregate principal amount equal to the principal amount of this Temporary Global Bond submitted for exchange with respect to which there shall be presented to the Principal Paying Agent a certificate dated no earlier than the Exchange Date from Euroclear Bank S.A./N.V. as operator of the Euroclear System ("Euroclear") or Clearstream Banking, société anonyme ("Clearstream, Luxembourg") substantially to the following effect:

"CERTIFICATE
WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC
£200,000,000
5.875 per cent Bonds due 2027
Common Code 016551031 ISIN XS0165510313 (the "Bonds")

This is to certify that, based solely on certificates we have received in writing, by tested telex or by electronic transmission from member organisations appearing in our records as persons being entitled to a portion of the principal amount set out below (our "Member Organisations") substantially to the effect set out in the temporary global Bond in respect of the Bonds, as of the date hereof, £[o] principal amount of the Bonds (1) is owned by persons that are not citizens or residents of the United States, domestic partnerships, domestic corporations or any estate or trust the income of which is subject to United States federal income taxation regardless of its source ("United States persons"), (2) is owned by United States persons that (a) are foreign branches of United States financial institutions (as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(iv) ("financial institutions")) purchasing for their own account or for resale, or (b) acquired the Bonds through foreign branches of United States financial institutions and who hold the Bonds through such United States financial institutions on the date hereof (and in either case (a) or (b), each such United States financial institution has agreed, on its own behalf or through its agent, that we may advise the Issuer or the Issuer's agent that it will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder), or (3) is owned by United States or foreign financial institutions for purposes of resale during the restricted period (as defined in U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7), and to the further effect that United States or foreign financial institutions described in clause (3) above (whether or not also described in clause (1) or (2)) have certified that they have not acquired the Bonds for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions.

We further certify (1) that we are not making available herewith for exchange (or, if relevant, exercise of any rights or collection of any interest) any portion of such temporary global Bond excepted in such certificates and (2) that as of the date hereof we have not received any notification from any of our Member Organisations to the effect that the statements made by such Member Organisation with respect to any portion of the part submitted herewith for exchange (or, if relevant, exercise of any rights or collection of any interest) are no longer true and cannot be relied upon as of the date hereof.

We understand that this certificate is required in connection with certain tax laws of the United States. In connection therewith, if administrative or legal proceedings are commenced or threatened in connection with which this certificate is or would be relevant, we irrevocably authorise you to produce this certificate to any interested party in such proceedings.

Yours faithfully

[EUROCLEAR BANK S.A./N.V. as operator of the Euroclear System] or [CLEARSTREAM BANKING, SOCIÉTÉ ANONYME]

By: Dated:

Any person appearing in the records of Euroclear or Clearstream, Luxembourg as entitled to an interest in this Temporary Global Bond may require the exchange of an appropriate part of this Temporary Global Bond for an equivalent interest in the Global Bond by delivering or causing to be delivered to Euroclear or Clearstream, Luxembourg a certificate dated not more than 15 days before the Exchange Date in substantially the following form (copies of which will be available at the office of Euroclear in Brussels and Clearstream, Luxembourg in Luxembourg):

"CERTIFICATE
WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC
£200,000,000
5.875 per cent Bonds due 2027
Common Code 016551031 ISIN XS0165510313 (the "Bonds")

To: Euroclear Bank S.A./N.V. as operator of the Euroclear System or Clearstream Banking, société anonyme

This is to certify that as of the date hereof, and except as set out below, the Bonds held by you for our account (1) are owned by person(s) that are not citizens or residents of the United States, domestic partnerships, domestic corporations or any estate or trust the income of which is subject to United States federal income taxation regardless of its source ("United States person(s)"), (2) are owned by United States person(s) that (a) are foreign branches of United States financial institutions (as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(iv) ("financial institutions")) purchasing for their own account or for resale, or (b) acquired the Bonds through foreign branches of United States financial institutions and who hold the Bonds through such United States financial institutions on the date hereof (and in either case (a) or (b), each such United States financial institution hereby agrees, on its own behalf or through its agent, that you may advise the Issuer or the Issuer's agent that it will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder), or (3) are owned by United States or foreign financial institution(s) for purposes of resale during the restricted period (as defined in U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)), and in addition if the owner of the Bonds is a United States or foreign financial institution described in clause (3) above (whether or not also described in clause (1) or (2)) this is to further certify that such financial institution has not acquired the Bonds for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions.

As used herein, "United States" means the United States of America (including the States and the District of Columbia) and its "possessions" include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands.

We undertake to advise you promptly by tested telex on or prior to that date on which you intend to submit your certificate relating to the Bonds held by you for our account in accordance with your documented procedures if any applicable statement herein is not correct on such date, and in the absence of any such notification it may be assumed that this certificate applies as of such date.

This certificate excepts and does not relate to £[o] principal amount of such interest in the Bonds in respect of which we are not able to certify and as to which we understand exchange for an equivalent interest in the Global Bond (or, if relevant, exercise of any rights or collection of any interest) cannot be made until we do so certify.

We understand that this certificate is required in connection with certain tax laws of the United States. In connection therewith, if administrative or legal proceedings are commenced or threatened in connection with which this certificate is or would be relevant, we irrevocably authorise you to produce this certificate to any interested party in such proceeding.

Dated:

By:

[Name of person giving certificate]
As, or as agent for the beneficial owner(s) of the above Bonds to which this certificate relates."

Upon any exchange of a part of this Temporary Global Bond for an equivalent interest in the Global Bond, the portion of the principal amount hereof so exchanged shall be endorsed by or on behalf of the Principal Paying Agent in the Schedule hereto, whereupon the principal amount hereof shall be reduced for all purposes by the amount so exchanged and endorsed.

The Global Bond will be exchangeable in accordance with its terms for definitive Bonds (the "Definitive Bonds") in bearer form with Coupons attached.

This Temporary Global Bond is subject to the Conditions and the Trust Deed and until the whole of this Temporary Global Bond shall have been exchanged for equivalent interests in the Global Bond its holder shall be entitled to the same benefits as if he were the holder of the Global Bond for interests in which it may be exchanged (or the relevant part of it as the case may be) except that (unless exchange of this Temporary Global Bond for the relevant interest in the Global Bond shall be improperly withheld or refused by or on behalf of the Issuer) no person shall be entitled to receive any payment on this Temporary Global Bond.

This Temporary Global Bond shall not be valid or become obligatory for any purpose until authenticated by or on behalf of the Principal Paying Agent.

This Temporary Global Bond shall be governed by and construed in accordance with English law.

In witness whereof the Issuer has caused this Temporary Global Bond to be signed on its behalf.

Dated 25 March 2003

WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC
By:

This Temporary Global Bond is authenticated by or on behalf of the Principal Paying Agent.

By:

Authorised Signatory

ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.

Schedule of Exchanges for Interests in the Global Bond

The following exchanges of an interest in this Temporary Global Bond for an interest in the Global Bond have been made:

Date of Exchange Amount of decrease in principal amount of this Temporary Global Bond Principal amount of this Temporary Global Bond following such decrease Notation made by or on behalf of the Principal Paying Agent

Schedule 2
Part 2
Form of Global Bond

ISIN: XS0165510313

WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC
(Incorporated with limited liability in England and Wales)
£200,000,000
5.875 per cent Bonds due 2027

Global Bond

This is to certify that the bearer is entitled to a principal sum not exceeding:

TWO HUNDRED MILLION POUNDS STERLING (£200,000,000)

on 25 March 2027 (or such earlier date as such principal sum may become payable in accordance with the terms and conditions (the "Conditions") of the Bonds designated above (the "Bonds") set out in Schedule 1 to the Trust Deed dated 25 March 2003 (the "Trust Deed") between Western Power Distribution (South West) plc (the "Issuer") and J.P. Morgan Corporate Trustee Services Limited as trustee (the "Trustee")) upon presentation and surrender of this Global Bond and to interest at the rate of 5.875 per cent per annum on such principal sum in arrear on 25 March in each year in accordance with the Conditions.

The aggregate principal amount from time to time of this Global Bond shall be that amount not exceeding £200,000,000 as shall be shown by the latest entry in the fourth column of Schedule A hereto, which shall be completed by or on behalf of the Principal Paying Agent upon exchange of the whole or a part of the Temporary Global Bond initially representing the Bonds for a corresponding interest herein or upon the redemption or purchase and cancellation of Bonds represented hereby or exchanged for Definitive Bonds as described below.

This Global Bond is exchangeable in whole but not in part (free of charge to the holder) for the Definitive Bonds described below (1) upon the happening of an Event of Default (as defined in Condition 8) by such holder giving notice to the Trustee or the Principal Paying Agent, (2) if this Global Bond is held on behalf of Euroclear or Clearstream, Luxembourg or the Alternative Clearing System (each as defined under "Notices" below) and any such clearing system is closed for business for a continuous period of 14 days (other than by reason of holidays, statutory or otherwise) or announces an intention permanently to cease business or does in fact do so by such holder giving notice to the Trustee or the Principal Paying Agent, or (3) if the Issuer would suffer a material disadvantage in respect of the Bonds as a result of a change in the laws or regulations (taxation or otherwise) of any jurisdiction referred to in Condition 7 which would not be suffered were the Bonds in definitive form and a certificate to such effect signed by two directors of the Issuer is delivered to the Trustee, by the Issuer giving notice to the Trustee, Principal Paying Agent and the Bondholders, of its intention to exchange this Global Bond for Definitive Bonds on or after the Exchange Date specified in the notice.

On or after the Exchange Date the holder of this Global Bond may surrender this Global Bond to or to the order of the Principal Paying Agent. In exchange for this Global Bond, the Issuer shall deliver, or procure the delivery of, an equal aggregate principal amount of duly executed and authenticated Definitive Bonds having attached to them all Coupons in respect of interest which has not already been paid on this Global Bond.

"Exchange Date" means a day falling not less than 60 days or, in the case of exchange pursuant to (1) above 30 days after that on which the notice requiring exchange is given and on which banks are open for business in the city in which the specified office of the Principal Paying Agent is located and except in the case of exchange pursuant to (2) above in the cities in which Euroclear and Clearstream, Luxembourg or, if relevant, the Alternative Clearing System (each as defined under "Notices" below) are located.

Except as otherwise described herein, this Global Bond is subject to the Conditions and the Trust Deed and, until it is exchanged for Definitive Bonds, its holder shall be entitled to the same benefits as if it were the holder of the Definitive Bonds for which it may be exchanged and as if such Definitive Bonds had been issued on the date of this Global Bond.

The Conditions shall be modified with respect to Bonds represented by this Global Bond by the following provisions:

Payments

Principal and interest in respect of this Global Bond shall be paid to its holder against presentation and (if no further payment falls to be made on it) surrender of it to or to the order of the Principal Paying Agent in respect of the Bonds (or to or to the order of such other Paying Agent as shall have been notified to the Bondholders for this purpose) which shall endorse such payment or cause such payment to be endorsed in the appropriate Schedule hereto (such endorsement being prima facie evidence that the payment in question has been made). References in the Conditions to Coupons and Couponholders shall be construed accordingly. No person shall however be entitled to receive any payment on this Global Bond falling due after the Exchange Date, unless exchange of this Global Bond for Definitive Bonds is improperly withheld or refused by or on behalf of the Issuer. Condition 6(e)(iii) and Condition 7(e) will apply to the Definitive Bonds only.

Notices

So long as this Global Bond is held on behalf of Euroclear Bank S.A./N.V. as operator of the Euroclear System ("Euroclear") or Clearstream Banking, société anonyme ("Clearstream, Luxembourg") or such other clearing system as shall have been approved by the Trustee (the "Alternative Clearing System"), notices required to be given to Bondholders may be given by their being delivered to Euroclear and Clearstream, Luxembourg or, as the case may be, the Alternative Clearing System, rather than by publication as required by the Conditions and any such notice shall be deemed to have been given to the Bondholders on the day after the day on which such notice is delivered to Euroclear and Clearstream, Luxembourg, or, as the case may be, the Alternative Clearing System, except that, so long as the Bonds are listed on the Luxembourg Stock Exchange and the rules of that Exchange so require, notices shall also be published in a leading newspaper having general circulation in Luxembourg (which is expected to be the Luxemburger Wort).

Prescription

Claims in respect of principal and interest in respect of this Global Bond will become void unless it is presented for payment within a period of 10 years (in the case of principal) and five years (in the case of interest) from the appropriate Relevant Date (as defined in Condition 7).

Meetings

The holder hereof shall (unless this Global Bond represents only one Bond) be treated as two persons for the purposes of any quorum requirements of a meeting of Bondholders and, at any such meeting, as having one vote in respect of each £1,000 principal amount of Bonds for which this Global Bond may be exchanged.

Purchase and Cancellation

Cancellation of any Bond represented by this Global Bond which is required by the Conditions to be cancelled will be effected by reduction in the principal amount of this Global Bond on its presentation to or to the order of the Principal Paying Agent for notation in Schedule A. Bonds may only be purchased by the Issuer or any of its respective Subsidiaries if (where they should be cancelled in accordance with the Conditions) they are purchased together with the right to receive interest therein.

Trustee's Powers

In considering the interests of Bondholders in circumstances where this Global Bond is held on behalf of any one or more of Euroclear, Clearstream, Luxembourg and an Alternative Clearing System, the Trustee may, to the extent it considers it appropriate to do so in the circumstances, (a) have regard to such information as may have been made available to it by or on behalf of the relevant clearing system or its operator as to the identity of its accountholders (either individually or by way of category) with entitlements in respect of this Global Bond and (b) consider such interests on the basis that such accountholders were the holder of this Global Bond.

Redemption at the option of Bondholders on a Restructuring Event

The option of the Bondholders provided for in Condition 5(c) may be exercised by the holder of this Global Bond giving notice to the Principal Paying Agent within the time limits relating to the deposit of Bonds with a Paying Agent set out in that Condition substantially in the form of the redemption notice available from any Paying Agent and stating the principal amount of Bonds in respect of which the option is exercised and at the same time presenting this Global Bond to the Principal Paying Agent for notation accordingly in Schedule C hereto.

This Global Bond shall not be valid or become obligatory for any purpose until authenticated by or on behalf of the Principal Paying Agent.

This Global Bond is governed by and shall be construed in accordance with English law.

In witness whereof the Issuer has caused this Global Bond to be signed on its behalf.

Dated 25 March 2003

WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC
By:

This Global Bond is authenticated by or on behalf of the Principal Paying Agent.

By:

Authorised Signatory

ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.

Schedule A
Principal Amount of this Global Bond

The aggregate principal amount of this Global Bond is as shown by the latest entry made by or on behalf of the Principal Paying Agent in the fourth column below. Increases in the principal amount of this Global Bond following exchanges of a part of the Temporary Global Bond for interests in this Global Bond and reductions in the principal amount of this Global Bond following redemption or the purchase and cancellation of Bonds are entered in the second and third columns below.

Date	Reason for change in the principal amount of this Global Bond	Amount of such change	Initial principal amount and principal amount of this Global Bond following such change	Notation made by or on behalf of the Principal Paying Agent (other than in respect of the initial principal amount)
25 March 2003	Not applicable	Not applicable	£ zero	Not applicable

Schedule B
Interest Payments in respect of this Global Bond

The following payments of interest in respect of this Global Bond and the Bonds represented by this Global Bond have been made:

Date made Amount of interest due and payable Amount of interest paid Notation made by or on behalf of the Principal Paying Agent

Schedule C
Exercise of Bondholders' Option on Restructuring Event

The following exercises of the option of the Bondholders provided for in Condition 5(c) have been made in respect of the stated principal amount of this Global Bond:

Date of Exercise Principal amount of this Global Bond in respect of which exercise is made Date on which redemption of such principal amount is due Notation made by or on behalf of the Principal Paying Agent

Schedule 3
Provisions for Meetings of Bondholders

Interpretation

1   In this Schedule:

1.1   references to a meeting are to a meeting of Bondholders and include, unless the context otherwise requires, any adjournment

1.2   "agent" means a holder of a voting certificate or a proxy for a Bondholder

1.3   "block voting instruction" means an instruction issued in accordance with paragraphs 8 to 14

1.4   "Extraordinary Resolution" means a resolution passed at a meeting duly convened and held in accordance with this Trust Deed by a majority of at least 75 per cent of the votes cast

1.5   "voting certificate" means a certificate issued in accordance with paragraphs 5, 6, 7 and 14 and

1.6   references to persons representing a proportion of the Bonds are to Bondholders or agents holding or representing in the aggregate at least that proportion in principal amount of the Bonds for the time being outstanding.

Powers of meetings

2   A meeting shall, subject to the Conditions and without prejudice to any powers conferred on other persons by this Trust Deed, have power by Extraordinary Resolution:

2.1   to sanction any proposal by the Issuer or the Trustee for any modification, abrogation, variation or compromise of, or arrangement in respect of, the rights of the Bondholders and/or the Couponholders against the Issuer, whether or not those rights arise under this Trust Deed

2.2   to sanction the exchange or substitution for the Bonds of, or the conversion of the Bonds into, shares, bonds or other obligations or securities of the Issuer or any other entity

2.3   to assent to any modification of this Trust Deed, the Bonds or the Coupons proposed by the Issuer or the Trustee

2.4   to authorise anyone to concur in and do anything necessary to carry out and give effect to an Extraordinary Resolution

2.5   to give any authority, direction or sanction required to be given by Extraordinary Resolution

2.6   to appoint any persons (whether Bondholders or not) as a committee or committees to represent the Bondholders' interests and to confer on them any powers or discretions which the Bondholders could themselves exercise by Extraordinary Resolution

2.7   to approve a proposed new Trustee and to remove a Trustee

2.8   to approve the substitution of any entity for the Issuer (or any previous substitute) as principal debtor under this Trust Deed and

2.9   to discharge or exonerate the Trustee from any liability in respect of any act or omission for which it may become responsible under this Trust Deed, the Bonds or the Coupons

provided that the special quorum provisions in paragraph 19 shall apply to any Extraordinary Resolution (a "special quorum resolution") for the purpose of sub-paragraph 2.2 or 2.8 or for the purpose of making a modification to this Trust Deed, the Bonds or the Coupons which would have the effect of:

1. modifying the maturity of the Bonds or the dates on which interest is payable on them or

2. reducing or cancelling the principal amount of, or interest on, the Bonds or

3. changing the currency of payment of the Bonds or the Coupons or

4. modifying the provisions in this Schedule concerning the quorum required at a meeting or the majority required to pass an Extraordinary Resolution or

5. amending this proviso.

Convening a meeting

3   The Issuer or the Trustee may at any time convene a meeting. If it receives a written request by Bondholders holding at least 10 per cent in principal amount of the Bonds for the time being outstanding and is indemnified to its satisfaction against all costs and expenses, the Trustee shall convene a meeting. Every meeting shall be held at a time and place approved by the Trustee.

4   At least 21 days' notice (exclusive of the day on which the notice is given and of the day of the meeting) shall be given to the Bondholders. A copy of the notice shall be given by the party convening the meeting to the other parties. The notice shall specify the day, time and place of meeting and, unless the Trustee otherwise agrees, the nature of the resolutions to be proposed and shall explain how Bondholders may appoint proxies or representatives, obtain voting certificates and use block voting instructions and the details of the time limits applicable.

Arrangements for voting

5   If a holder of a Bond wishes to obtain a voting certificate in respect of it for a meeting, he must deposit it for that purpose at least 48 hours before the time fixed for the meeting with a Paying Agent or to the order of a Paying Agent with a bank or other depositary nominated by the Paying Agent for the purpose. The Paying Agent shall then issue a voting certificate in respect of it.

6   A voting certificate shall:

6.1   be a document in the English language

6.2   be dated

6.3   specify the meeting concerned and the serial numbers of the Bonds deposited and

6.4   entitle, and state that it entitles, its bearer to attend and vote at that meeting in respect of those Bonds.

7   Once a Paying Agent has issued a voting certificate for a meeting in respect of a Bond, it shall not release the Bond until either:

7.1   the meeting has been concluded or

7.2   the voting certificate has been surrendered to the Paying Agent.

8   If a holder of a Bond wishes the votes attributable to it to be included in a block voting instruction for a meeting, then, at least 48 hours before the time fixed for the meeting, (i) he must deposit the Bond for that purpose with a Paying Agent or to the order of a Paying Agent with a bank or other depositary nominated by the Paying Agent for the purpose and (ii) he or a duly authorised person on his behalf must direct the Paying Agent how those votes are to be cast. The Paying Agent shall issue a block voting instruction in respect of the votes attributable to all Bonds so deposited.

9   A block voting instruction shall:

9.1   be a document in the English language

9.2   be dated

9.3   specify the meeting concerned

9.4   list the total number and serial numbers of the Bonds deposited, distinguishing with regard to each resolution between those voting for and those voting against it

9.5   certify that such list is in accordance with Bonds deposited and directions received as provided in paragraphs 8, 11 and 14 and

9.6   appoint a named person (a "proxy") to vote at that meeting in respect of those Bonds and in accordance with that list.

A proxy need not be a Bondholder.

10   Once a Paying Agent has issued a block voting instruction for a meeting in respect of the votes attributable to any Bonds:

10.1   it shall not release the Bonds, except as provided in paragraph 11, until the meeting has been concluded and

10.2   the directions to which it gives effect may not be revoked or altered during the 48 hours before the time fixed for the meeting.

11   If the receipt for a Bond deposited with a Paying Agent in accordance with paragraph 8 is surrendered to the Paying Agent at least 48 hours before the time fixed for the meeting, the Paying Agent shall release the Bond and exclude the votes attributable to it from the block voting instruction.

12   Each block voting instruction shall be deposited at least 24 hours before the time fixed for the meeting at such place as the Trustee shall designate or approve, and in default it shall not be valid unless the chairman of the meeting decides otherwise before the meeting proceeds to business. If the Trustee requires, a notarially certified copy of each block voting instruction shall be produced by the proxy at the meeting but the Trustee need not investigate or be concerned with the validity of the proxy's appointment.

13   A vote cast in accordance with a block voting instruction shall be valid even if it or any of the Bondholders' instructions pursuant to which it was executed has previously been revoked or amended, unless written intimation of such revocation or amendment is received from the relevant Paying Agent by the Issuer or the Trustee at its registered office or by the chairman of the meeting in each case at least 24 hours before the time fixed for the meeting.

14   No Bond may be deposited with or to the order of a Paying Agent at the same time for the purposes of both paragraph 5 and paragraph 8 for the same meeting.

Chairman

15   The chairman of a meeting shall be such person as the Trustee may nominate in writing, but if no such nomination is made or if the person nominated is not present within 15 minutes after the time fixed for the meeting the Bondholders or agents present shall choose one of their number to be chairman, failing which the Issuer may appoint a chairman.

16   The chairman may, but need not, be a Bondholder or agent. The chairman of an adjourned meeting need not be the same person as the chairman of the original meeting.

Attendance

17   The following may attend and speak at a meeting:

17.1   Bondholders and agents

17.2   the chairman

17.3   the Issuer and the Trustee (through their respective representatives) and their respective financial and legal advisers.

No-one else may attend or speak.

Quorum and Adjournment

18   No business (except choosing a chairman) shall be transacted at a meeting unless a quorum is present at the commencement of business. If a quorum is not present within 15 minutes from the time initially fixed for the meeting, it shall, if convened on the requisition of Bondholders or if the Issuer and the Trustee agree, be dissolved. In any other case it shall be adjourned until such date, not less than 14 nor more than 42 days later, and time and place as the chairman may decide. If a quorum is not present within 15 minutes from the time fixed for a meeting so adjourned, the meeting shall be dissolved.

19   Two or more Bondholders or agents present in person shall be a quorum:

19.1   in the cases marked "No minimum proportion" in the table below, whatever the proportion of the Bonds which they represent

19.2   in any other case, only if they represent the proportion of the Bonds shown by the table below.

Column 1	Column 2	Column 3
Purpose of meeting	Any meeting except one referred to in column 3	Meeting previously adjourned through want of a quorum
	Required proportion	Required proportion
To pass a special quorum resolution	75 per cent	25 per cent
To pass any other Extraordinary Resolution	A clear majority	No minimum proportion
Any other purpose	10 per cent	No minimum proportion

20   The chairman may with the consent of (and shall if directed by) a meeting adjourn the meeting from time to time and from place to place. Only business which could have been transacted at the original meeting may be transacted at a meeting adjourned in accordance with this paragraph or paragraph 18.

21   At least 10 days' notice of a meeting adjourned through want of a quorum shall be given in the same manner as for an original meeting and that notice shall state the quorum required at the adjourned meeting. No notice need, however, otherwise be given of an adjourned meeting.

Voting

22   Each question submitted to a meeting shall be decided by a show of hands unless a poll is (before, or on the declaration of the result of, the show of hands) demanded by the chairman, the Issuer, the Trustee or one or more persons representing 2 per cent of the Bonds.

23   Unless a poll is demanded a declaration by the chairman that a resolution has or has not been passed shall be conclusive evidence of the fact without proof of the number or proportion of the votes cast in favour of or against it.

24   If a poll is demanded, it shall be taken in such manner and (subject as provided below) either at once or after such adjournment as the chairman directs. The result of the poll shall be deemed to be the resolution of the meeting at which it was demanded as at the date it was taken. A demand for a poll shall not prevent the meeting continuing for the transaction of business other than the question on which it has been demanded.

25   A poll demanded on the election of a chairman or on a question of adjournment shall be taken at once.

26   On a show of hands every person who is present in person and who produces a Bond or a voting certificate or is a proxy has one vote. On a poll every such person has one vote for each £1,000 principal amount of Bonds so produced or represented by the voting certificate so produced or for which he is a proxy or representative. Without prejudice to the obligations of proxies, a person entitled to more than one vote need not use them all or cast them all in the same way.

27   In case of equality of votes the chairman shall both on a show of hands and on a poll have a casting vote in addition to any other votes which he may have.

Effect and Publication of an Extraordinary Resolution

28   An Extraordinary Resolution shall be binding on all the Bondholders, whether or not present at the meeting, and on all the Couponholders and each of them shall be bound to give effect to it accordingly. The passing of such a resolution shall be conclusive evidence that the circumstances justify its being passed. The Issuer shall give notice of the passing of an Extraordinary Resolution to Bondholders within 14 days but failure to do so shall not invalidate the resolution.

Minutes

29   Minutes shall be made of all resolutions and proceedings at every meeting and, if purporting to be signed by the chairman of that meeting or of the next succeeding meeting, shall be conclusive evidence of the matters in them. Until the contrary is proved every meeting for which minutes have been so made and signed shall be deemed to have been duly convened and held and all resolutions passed or proceedings transacted at it to have been duly passed and transacted.

Trustee's Power to Prescribe Regulations

30   Subject to all other provisions in this Trust Deed the Trustee may without the consent of the Bondholders prescribe such further regulations regarding the holding of meetings and attendance and voting at them as it in its sole discretion determines including (without limitation) such requirements as the Trustee thinks reasonable to satisfy itself that the persons who purport to make any requisition in accordance with this Trust Deed are entitled to do so and as to the form of voting certificates or block voting instructions so as to satisfy itself that persons who purport to attend or vote at a meeting are entitled to do so.

In witness whereof this Trust Deed has been executed as a deed on the date stated at the beginning.

WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC

By:    C. OOSTHUIZEN            By:   SALLY A. JONES
Title:   Finance Director            Title:   Company Secretary

J.P. MORGAN CORPORATE TRUSTEE SERVICES LIMITED

By:    JENNY PENNELL            By:   CARL BALDRY
   Authorised Signatory                Assistant Trust Manager

EX-4

Exhibit 4(o)-2

CONFORMED COPY

Dated 27 May 2003

WESTERN POWER
DISTRIBUTION (SOUTH WEST) PLC

and

J.P. MORGAN CORPORATE TRUSTEE SERVICES LIMITED

SUPPLEMENTAL TRUST DEED

constituting
£50,000,000 5.875 per cent. Bonds due 2027
to be consolidated and form a single series
with the £200,000,000 5.875 per cent. Bonds due 2027
issued by the Issuer on 25 March 2003

Linklaters

Ref: AMS/DAXL

This Supplemental Trust Deed is made on 27 May 2003 between:

1. WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC ("WPD South West" or the "Issuer") a company incorporated in England and Wales whose registered office is at Avonbank, Feeder Road, Bristol BS2 0TB and

2. J.P. MORGAN CORPORATE TRUSTEE SERVICES LIMITED (the "Trustee", which expression, where the context so admits, includes any other trustee for the time being of this Trust Deed) a company incorporated in England and Wales whose registered office is at 125 London Wall, London EC2Y 5AJ.

Whereas:

(A)   The Issuer has pursuant to Condition 14 of the Original Bonds (as defined below) authorised the issue of £50,000,000 5.875 per cent. Bonds due 2027 to be constituted by this Supplemental Trust Deed which is supplemental to a trust deed dated 25 March 2003 made between the Issuer and the Trustee (the "Original Trust Deed" and, together with this Supplemental Trust Deed, the "Trust Deed").

(B)   The New Bonds (as defined below) are to be consolidated and form a single series with the £200,000,000 5.875 per cent. Bonds due 2027 issued by the Issuer on 25 March 2003 constituted by the Original Trust Deed (the "Original Bonds").

(C)   The Trustee has agreed to act as trustee of this Supplemental Trust Deed on the following terms and conditions.

This Supplemental Trust Deed witnesses and it is declared as follows:

1   Interpretation

1.1   Definitions: Save as expressly provided in this Supplemental Trust Deed, all expressions defined in the Original Trust Deed and the New Conditions (as defined below) shall, unless there is anything in the subject or context inconsistent therewith, have the same meanings in this Supplemental Trust Deed. In this Supplemental Trust Deed the following expressions have the following meanings:

"New Bondholders" means the bearer of a New Bond

"New Bonds" means bearer bonds substantially in the form set out in Schedule 1 to this Supplemental Trust Deed comprising the £50,000,000 5.875 per cent. Bonds due 2027 constituted by this Supplemental Trust Deed and for the time being outstanding or, as the context may require, a specific number of them and includes any replacement Bonds issued pursuant to the Conditions and (except for the purposes of Clause 5.1) the New Temporary Global Bond and the New Global Bond

"New Conditions" means the terms and conditions set out in Schedule 1 to this Supplemental Trust Deed as from time to time modified in accordance with the Trust Deed and, with respect to any New Bonds represented by the New Global Bond, as modified by the provisions of the New Global Bond. Any reference to a particularly numbered New Condition shall be construed accordingly

"New Couponholders" means the bearer of a New Coupon

"New Coupons" means the bearer coupons relating to the New Bonds or, as the context may require, a specific number of them and includes any replacement New Coupons issued pursuant to the New Conditions

"New Global Bond" means the permanent global bond which will represent the New Bonds, or some of them, after exchange of the New Temporary Global Bond, or a portion of it, substantially in the form set out in Part 2 of Schedule 2 hereto

"New Temporary Global Bond" means the temporary global bond which will represent the New Bonds on issue substantially in the form set out in Part 1 of Schedule 2 hereto

"Supplemental Paying Agency Agreement" means the supplemental paying agency agreement referred to as such in the New Conditions, as altered from time to time, and includes any other agreements approved in writing by the Trustee appointing Successor Paying Agents or altering any such agreements, and

"this Supplemental Trust Deed" means this Supplemental Trust Deed (as from time to time altered in accordance with the Trust Deed) and any other document executed in accordance with the Trust Deed (as from time to time so altered) and expressed to be supplemental to this Supplemental Trust Deed.

1.2   Headings: Headings shall be ignored in construing this Supplemental Trust Deed.

1.3   Schedules: The Schedules are part of this Supplemental Trust Deed and have effect accordingly.

1.4   Contracts (Rights of Third Parties) Act 1999: A person who is not a party to this Supplemental Trust Deed has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Supplemental Trust Deed except and to the extent that Clause 7.4 of the Original Trust Deed expressly provides for such Act to apply.

2   Incorporation of Original Trust Deed

This Supplemental Trust Deed shall be read as one with the Original Trust Deed so that all references therein to "this Trust Deed" or "the Trust Deed" shall be deemed to refer to the Original Trust Deed as amended and supplemented by this Supplemental Trust Deed (as either may from time to time be amended in accordance with the Original Trust Deed) and any other document executed in accordance with the Original Trust Deed (as from time to time so amended) and expressed to be supplemented to the Original Trust Deed and this Supplemental Trust Deed (as from time to time so amended).

3   Consequential Modification of the Original Trust Deed

The Trustee, in exercise of the powers conferred upon it by Clause 12.1 of the Original Trust Deed, hereby agrees with the Issuer to modify the Original Trust Deed with effect from the date hereof so that the following definitions shall be deemed inserted in Clause 1.1 of the Original Trust Deed replacing, where relevant, the corresponding existing definitions therein:

"Bonds" means the Original Bonds and/or the New Bonds

"Conditions" means, in relation to the Original Bonds, the terms and conditions set out in Schedule 1 to the Original Trust Deed and, in relation to the New Bonds, the New Conditions, all as from time to time modified in accordance with this Trust Deed and, with respect to any Bonds represented by a Global Bond, as modified by the provisions of such Global Bond. Any reference to a particularly numbered Condition shall be construed accordingly

"Coupons" means, in relation to the Original Bonds, the bearer coupons relating thereto and, in relation to the New Bonds, the New Coupons or, as the context may require, a specific number of them and includes any replacement Coupons issued pursuant to the Conditions

"Global Bond" means, in relation to the Original Bonds, the permanent global bond which will represent the Original Bonds, or some of them, after exchange of the Temporary Global Bond, or a portion of it, substantially in the form set out in Part 2 of Schedule 2 of the Original Trust Deed and, in relation to the New Bonds, the New Global Bond

"Original Bonds" means the bonds substantially in the form set out in Schedule 1 to the Original Trust Deed comprising the £200,000,000 5.875 per cent. Bonds due 2027 and for the time being outstanding or, as the context may require, a specific number of them and includes any replacement Original Bonds issued pursuant to the Conditions and (except for the purposes of Clause 3.1 of the Original Trust Deed) the Temporary Global Bond and the Global Bond

"Original Paying Agency Agreement" means the agency agreement dated 25 March 2003, between the Issuer, the Trustee, the Principal Paying Agent and the paying agent named therein, as amended from time to time, and includes any other agreements approved in writing by the Trustee appointing Successor Paying Agents or amending any such agreements

"Paying Agency Agreement" means the Original Paying Agency Agreement as amended and supplemented by the Supplemental Paying Agency Agreement

"Temporary Global Bond" means, in relation to the Original Bonds, the temporary global bond which represents the Original Bonds on issue substantially in the form set out in Part 1 of Schedule 2 of the Original Trust Deed and, in relation to the New Bonds, the New Temporary Global Bond.

4   Amount of the New Bonds and Covenant to Pay

4.1   Amount of the New Bonds: The aggregate principal amount of the New Bonds is limited to £50,000,000.

4.2   Covenant to pay: The Issuer will on any date when any New Bonds become due to be redeemed unconditionally pay to or to the order of the Trustee in the United Kingdom in pounds sterling in same day funds the principal amount of the New Bonds becoming due for redemption on that date together with any applicable premium and will (subject to the New Conditions) until such payment (both before and after judgment) unconditionally so pay to or to the order of the Trustee interest on the principal amount of the New Bonds outstanding as set out in the New Conditions provided that (1) payment of any sum due in respect of the New Bonds made to the Principal Paying Agent as provided in the Paying Agency Agreement shall, to that extent, satisfy such obligation except to the extent that there is failure in its subsequent payment to the relevant New Bondholders or New Couponholders under the New Conditions and (2) a payment made after the due date or pursuant to Condition 8 will be deemed to have been made when the full amount due has been received by the Principal Paying Agent or the Trustee and notice to that effect has been given to the New Bondholders (if required under Clause 6.9 of the Original Trust Deed), except to the extent that there is failure in its subsequent payment to the relevant New Bondholders or New Couponholders under the New Conditions. The Trustee will hold the benefit of this covenant on trust for the New Bondholders and New Couponholders.

4.3   Discharge: Subject to Clause 4.4, any payment to be made in respect of the New Bonds or the New Coupons by the Issuer or the Trustee may be made as provided in the New Conditions and any payment so made will (subject to Clause 4.4) to that extent be a good discharge to the Issuer or the Trustee, as the case may be.

4.4   Payment after a Default: At any time after an Event of Default or a Potential Event of Default has occurred the Trustee may:

4.4.1   by notice in writing to the Issuer and the Paying Agents, require the Paying Agents, until notified by the Trustee to the contrary, so far as permitted by applicable law:

1. to act as Paying Agents of the Trustee under the Trust Deed and the New Bonds on the terms of the Paying Agency Agreement (with consequential amendments as necessary and except that the Trustee's liability for the indemnification, remuneration and expenses of the Paying Agents will be limited to the amounts for the time being held by the Trustee in respect of the New Bonds on the terms of the Trust Deed) and thereafter to hold all New Bonds and New Coupons and all moneys, documents and records held by them in respect of New Bonds and New Coupons to the order of the Trustee or

2. to deliver all New Bonds and New Coupons and all moneys, documents and records held by them in respect of the New Bonds and New Coupons to the Trustee or as the Trustee directs in such notice and

4.4.2   by notice in writing to the Issuer and until such notice is withdrawn require it to make all subsequent payments in respect of the New Bonds and New Coupons to or to the order of the Trustee and not to the Principal Paying Agent.

5   Form of the Bonds

5.1   The Global Bonds: The New Bonds to be issued on the date hereof will initially be represented by the New Temporary Global Bond in the principal amount of £50,000,000. Interests in the New Temporary Global Bond will be exchangeable for the New Global Bond as set out in the New Temporary Global Bond. The New Global Bond will be exchangeable for definitive New Bonds as set out in the New Global Bond.

5.2   The Definitive Bonds: The definitive New Bonds and the New Coupons will be security printed in accordance with applicable legal and stock exchange requirements substantially in the forms set out in Schedule 1 hereto. The New Bonds will be endorsed with the New Conditions.

5.3    Signature: The New Bonds and the New Coupons will be signed manually or in facsimile by an Authorised Signatory of the Issuer and the New Bonds will be authenticated by or on behalf of the Principal Paying Agent. The Issuer may use the facsimile signature of a person who at the date of this Supplemental Trust Deed is such an Authorised Signatory even if at the time of issue of any New Bonds or New Coupons he no longer holds that office. New Bonds and New Coupons so executed and authenticated will be binding and valid obligations of the Issuer.

6   Communications

Any communication shall be by letter or fax:

in the case of the Issuer, to it at:

Avonbank
Feeder Road
Bristol BS2 0TB

Telephone no.+44(0) 117 933 2020
Fax no. +44(0) 117 933 2108
Attention The Treasurer

and in the case of the Trustee, to it at:

Trinity Tower
9 Thomas More Street
London E1W 1YT

Telephone no.+44 207 777 5422
Fax no.+44 207 777 5410
Attention Manager, Trust Administration

Communications will take effect, in the case of delivery, when delivered or, in the case of fax, when despatched. Communications not by letter shall be confirmed by letter but failure to send or receive that letter shall not invalidate the original communication.

7   Governing Law

This Supplemental Trust Deed shall be governed by and construed in accordance with English law.

8   Counterparts

This Supplemental Trust Deed may be executed and delivered in any number of counterparts each of which will be deemed an original.

Schedule 1
Form of Definitive Bond

On the front:

Denomination	ISIN	Series	Certif. No.
£[1,000/10,000/100,000]	XS0165510313

WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC
(Incorporated with limited liability in England and Wales)
£50,000,000 5.875 per cent. Bonds due 2027
(consolidated and forming a single series with the £200,000,000
5.875 per cent. Bonds due 2027 issued by the Issuer on 25 March 2003)

This Bond forms part of a series designated as specified in the title (the "Bonds") of Western Power Distribution (South West) plc (the "Issuer") constituted by the Supplemental Trust Deed referred to on the reverse hereof. The Bonds are subject to, and have the benefit of, that Trust Deed and the terms and conditions (the "Conditions") set out on the reverse hereof.

This is to certify that the bearer of this Bond is entitled on 25 March 2027, or on such earlier date as the principal sum mentioned below may become repayable in accordance with the Conditions, to the principal sum of:

£[1/10/100],000 ([one/ten/one hundred] thousand pounds sterling)

together with interest on such principal sum from 25 March 2003 at the rate of 5.875 per cent. per annum payable in arrear on 25 March in each year, subject to and in accordance with the Conditions.

This Bond shall not be valid or become obligatory for any purpose until authenticated by or on behalf of the Principal Paying Agent.

In witness whereof the Issuer has caused this Bond to be signed in facsimile on its behalf.

Dated 27 May 2003

WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC

By:

Director

This Bond is authenticated by or on behalf of the Principal Paying Agent.

By:

Authorised Signatory

ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.

Terms and Conditions

PRINCIPAL PAYING AGENT
JPMorgan Chase Bank
Trinity Tower
9 Thomas More Street
London E1W 1YT

PAYING AGENT
J.P. Morgan Bank Luxembourg S.A.
5 rue Plaetis
L-2338 Luxembourg

Form of Coupon

On the front:

WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC
£50,000,000 5.875 per cent. Bonds due 2027 (consolidated and forming a single series with the £200,000,000 5.875 per cent Bonds due 2027 issued by the Issuer on 25 March 2003)

Coupon for £[58.75/587.50/5,875.00] due on 25 March 20[04/05/06/07/08/09/10/11/12/13/14/15/16/17/18/19/20/21/22/23/24/25/26/27].

This Coupon is payable to bearer (subject to the Conditions endorsed on the Bond to which this Coupon relates, which shall be binding upon the holder of this Coupon whether or not it is for the time being attached to such Bond) at the specified offices of the Paying Agents set out on the reverse hereof (or any further or other Paying Agents or specified offices duly appointed or nominated and notified to the Bondholders).

If the Bond to which this Coupon relates shall have become due and payable before the maturity date of this Coupon, this Coupon shall become void and no payment shall be made in respect of it.

ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.

WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC

By:

[Director]

Cp No.	Denomination	ISIN	Series	Certif. No.
	£[1,000]/[10,000]/[100,000]	XS0165510313

On the back:

PRINCIPAL PAYING AGENT
JPMorgan Chase Bank
Trinity Tower
9 Thomas More Street
London E1W 1YT

PAYING AGENT
J.P. Morgan Bank Luxembourg S.A.
5 rue Plaetis
L-2338 Luxembourg

Schedule 2
Part 1
Form of New Temporary Global Bond

ISIN: XS0168678703

WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC
(Incorporated with limited liability in England and Wales)
£50,000,000 5.875 per cent. Bonds due 2027
(to be consolidated and form a single series with the £200,000,000 5.875 per cent. Bonds due 2027 issued by the Issuer on 25 March 2003)

Temporary Global Bond

This is to certify that the bearer is entitled to the sum of

FIFTY MILLION POUNDS STERLING (£50,000,000)

on 25 March 2027 (or such earlier date as such principal sum may become payable in accordance with the Trust Deed (as defined below) and with the terms and conditions (the "Conditions") of the Bonds designated above (the "Bonds") set out in Schedule 1 to the Supplemental Trust Deed dated 27 May 2003 (the "Supplemental Trust Deed") supplemental to the Original Trust Deed dated 25 March 2003 (the "Original Trust Deed" and, together with the Supplemental Trust Deed, the "Trust Deed") both made between Western Power Distribution (South West) plc (the "Issuer") and J.P. Morgan Corporate Trustee Services Limited as trustee (the "Trustee")) upon presentation and surrender of this Temporary Global Bond and to interest at the rate of 5.875 per cent per annum on such principal sum in arrear on 25 March in each year in accordance with the Conditions.

On or after 7 July 2003 (the "Exchange Date") this Temporary Global Bond may be exchanged in whole or part (free of charge to the holder) by its presentation and, on exchange in full, surrender to or to the order of the Principal Paying Agent for interests in a Global Bond (the "Global Bond") in bearer form in an aggregate principal amount equal to the principal amount of this Temporary Global Bond submitted for exchange with respect to which there shall be presented to the Principal Paying Agent a certificate dated no earlier than the Exchange Date from Euroclear Bank S.A./N.V. as operator of the Euroclear System ("Euroclear") or Clearstream Banking, société anonyme ("Clearstream, Luxembourg") substantially to the following effect:

"CERTIFICATE
WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC
£50,000,000 5.875 per cent. Bonds due 2027
(to be consolidated and form a single series with the £200,000,000
5.875 per cent. Bonds due 2027 issued by the Issuer on 25 March 2003)
Common Code 016867870 ISIN XS0168678703 (the "Bonds")

This is to certify that, based solely on certificates we have received in writing, by tested telex or by electronic transmission from member organisations appearing in our records as persons being entitled to a portion of the principal amount set out below (our "Member Organisations") substantially to the effect set out in the temporary global Bond in respect of the Bonds, as of the date hereof, £[•] principal amount of the Bonds (1) is owned by persons that are not citizens or residents of the United States, domestic partnerships, domestic corporations or any estate or trust the income of which is subject to United States federal income taxation regardless of its source ("United States persons"), (2) is owned by United States persons that (a) are foreign branches of United States financial institutions (as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(iv) ("financial institutions")) purchasing for their own account or for resale, or (b) acquired the Bonds through foreign branches of United States financial institutions and who hold the Bonds through such United States financial institutions on the date hereof (and in either case (a) or (b), each such United States financial institution has agreed, on its own behalf or through its agent, that we may advise the Issuer or the Issuer's agent that it will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder), or (3) is owned by United States or foreign financial institutions for purposes of resale during the restricted period (as defined in U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7), and to the further effect that United States or foreign financial institutions described in clause (3) above (whether or not also described in clause (1) or (2)) have certified that they have not acquired the Bonds for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions.

We further certify (1) that we are not making available herewith for exchange (or, if relevant, exercise of any rights or collection of any interest) any portion of such temporary global Bond excepted in such certificates and (2) that as of the date hereof we have not received any notification from any of our Member Organisations to the effect that the statements made by such Member Organisation with respect to any portion of the part submitted herewith for exchange (or, if relevant, exercise of any rights or collection of any interest) are no longer true and cannot be relied upon as of the date hereof.

We understand that this certificate is required in connection with certain tax laws of the United States. In connection therewith, if administrative or legal proceedings are commenced or threatened in connection with which this certificate is or would be relevant, we irrevocably authorise you to produce this certificate to any interested party in such proceedings.

Yours faithfully

[EUROCLEAR BANK S.A./N.V. as operator of the Euroclear System] or [CLEARSTREAM BANKING, SOCIÉTÉ ANONYME]

By: Dated:

Any person appearing in the records of Euroclear or Clearstream, Luxembourg as entitled to an interest in this Temporary Global Bond may require the exchange of an appropriate part of this Temporary Global Bond for an equivalent interest in the Global Bond by delivering or causing to be delivered to Euroclear or Clearstream, Luxembourg a certificate dated not more than 15 days before the Exchange Date in substantially the following form (copies of which will be available at the office of Euroclear in Brussels and Clearstream, Luxembourg in Luxembourg):

"CERTIFICATE
WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC
£50,000,000 5.875 per cent. Bonds due 2027
(to be consolidated and form a single series with the £200,000,000
5.875 per cent. Bonds due 2027 issued by the Issuer on 25 March 2003)
Common Code 016867870 ISIN XS0168678703 (the "Bonds")

To: Euroclear Bank S.A./N.V. as operator of the Euroclear System or Clearstream Banking, société anonyme

This is to certify that as of the date hereof, and except as set out below, the Bonds held by you for our account (1) are owned by person(s) that are not citizens or residents of the United States, domestic partnerships, domestic corporations or any estate or trust the income of which is subject to United States federal income taxation regardless of its source ("United States person(s)"), (2) are owned by United States person(s) that (a) are foreign branches of United States financial institutions (as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(iv) ("financial institutions")) purchasing for their own account or for resale, or (b) acquired the Bonds through foreign branches of United States financial institutions and who hold the Bonds through such United States financial institutions on the date hereof (and in either case (a) or (b), each such United States financial institution hereby agrees, on its own behalf or through its agent, that you may advise the Issuer or the Issuer's agent that it will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder), or (3) are owned by United States or foreign financial institution(s) for purposes of resale during the restricted period (as defined in U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)), and in addition if the owner of the Bonds is a United States or foreign financial institution described in clause (3) above (whether or not also described in clause (1) or (2)) this is to further certify that such financial institution has not acquired the Bonds for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions.

As used herein, "United States" means the United States of America (including the States and the District of Columbia) and its "possessions" include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands.

We undertake to advise you promptly by tested telex on or prior to that date on which you intend to submit your certificate relating to the Bonds held by you for our account in accordance with your documented procedures if any applicable statement herein is not correct on such date, and in the absence of any such notification it may be assumed that this certificate applies as of such date.

This certificate excepts and does not relate to £[•] principal amount of such interest in the Bonds in respect of which we are not able to certify and as to which we understand exchange for an equivalent interest in the Global Bond (or, if relevant, exercise of any rights or collection of any interest) cannot be made until we do so certify.

We understand that this certificate is required in connection with certain tax laws of the United States. In connection therewith, if administrative or legal proceedings are commenced or threatened in connection with which this certificate is or would be relevant, we irrevocably authorise you to produce this certificate to any interested party in such proceeding.

Dated:

By:

[Name of person giving certificate]
As, or as agent for the beneficial owner(s) of the above Bonds to which this certificate relates."

Upon any exchange of a part of this Temporary Global Bond for an equivalent interest in the Global Bond, the portion of the principal amount hereof so exchanged shall be endorsed by or on behalf of the Principal Paying Agent in the Schedule hereto, whereupon the principal amount hereof shall be reduced for all purposes by the amount so exchanged and endorsed.

The Global Bond will be exchangeable in accordance with its terms for definitive Bonds (the "Definitive Bonds") in bearer form with Coupons attached.

This Temporary Global Bond is subject to the Conditions and the Trust Deed and until the whole of this Temporary Global Bond shall have been exchanged for equivalent interests in the Global Bond its holder shall be entitled to the same benefits as if he were the holder of the Global Bond for interests in which it may be exchanged (or the relevant part of it as the case may be) except that (unless exchange of this Temporary Global Bond for the relevant interest in the Global Bond shall be improperly withheld or refused by or on behalf of the Issuer) no person shall be entitled to receive any payment on this Temporary Global Bond.

This Temporary Global Bond shall not be valid or become obligatory for any purpose until authenticated by or on behalf of the Principal Paying Agent.

This Temporary Global Bond shall be governed by and construed in accordance with English law.

In witness whereof the Issuer has caused this Temporary Global Bond to be signed on its behalf.

Dated 27 May 2003

WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC
By:

This Temporary Global Bond is authenticated by or on behalf of the Principal Paying Agent.

By:

Authorised Signatory

ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.

Schedule of Exchanges for Interests in the Global Bond

The following exchanges of an interest in this Temporary Global Bond for an interest in the Global Bond have been made:

Date of Exchange Amount of decrease in principal amount of this Temporary Global Bond Principal amount of this Temporary Global Bond following such decrease Notation made by or on behalf of the Principal Paying Agent

Schedule 2
Part 2
Form of New Global Bond

ISIN: XS0165510313

WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC
(Incorporated with limited liability in England and Wales)
£50,000,000 5.875 per cent. Bonds due 2027
(consolidated and forming a single series with the £200,000,000
5.875 per cent. Bonds due 2027 issued by the Issuer on 25 March 2003)

Global Bond

This is to certify that the bearer is entitled to a principal sum not exceeding:

FIFTY MILLION POUNDS STERLING (£50,000,000)

on 25 March 2003 (or such earlier date as such principal sum may become payable in accordance with the terms and conditions (the "Conditions") of the Bonds designated above (the "Bonds") set out in Schedule 1 to the Supplemental Trust Deed dated 27 May 2003 (the "Supplemental Trust Deed") supplemental to the Original Trust Deed dated 25 March 2003 (the "Original Trust Deed") and, together with the Supplemental Trust Deed, the "Trust Deed") both made between Western Power Distribution (South West) plc (the "Issuer") and J.P. Morgan Corporate Trustee Services Limited as trustee (the "Trustee") upon presentation and surrender of this Global Bond and to interest at the rate of 5.875 per cent. per annum on such principal sum in arrear on 25 March in each year in accordance with the Conditions.

The aggregate principal amount from time to time of this Global Bond shall be that amount not exceeding £50,000,000 as shall be shown by the latest entry in the fourth column of Schedule A hereto, which shall be completed by or on behalf of the Principal Paying Agent upon exchange of the whole or a part of the Temporary Global Bond initially representing the Bonds for a corresponding interest herein or upon the redemption or purchase and cancellation of Bonds represented hereby or exchanged for Definitive Bonds as described below.

This Global Bond is exchangeable in whole but not in part (free of charge to the holder) for the Definitive Bonds described below (1) upon the happening of an Event of Default (as defined in Condition 8) by such holder giving notice to the Trustee or the Principal Paying Agent, (2) if this Global Bond is held on behalf of Euroclear or Clearstream, Luxembourg or the Alternative Clearing System (each as defined under "Notices" below) and any such clearing system is closed for business for a continuous period of 14 days (other than by reason of holidays, statutory or otherwise) or announces an intention permanently to cease business or does in fact do so by such holder giving notice to the Trustee or the Principal Paying Agent, or (3) if the Issuer would suffer a material disadvantage in respect of the Bonds as a result of a change in the laws or regulations (taxation or otherwise) of any jurisdiction referred to in Condition 7 which would not be suffered were the Bonds in definitive form and a certificate to such effect signed by two directors of the Issuer is delivered to the Trustee, by the Issuer giving notice to the Trustee, Principal Paying Agent and the Bondholders, of its intention to exchange this Global Bond for Definitive Bonds on or after the Exchange Date specified in the notice.

On or after the Exchange Date the holder of this Global Bond may surrender this Global Bond to or to the order of the Principal Paying Agent. In exchange for this Global Bond, the Issuer shall deliver, or procure the delivery of, an equal aggregate principal amount of duly executed and authenticated Definitive Bonds having attached to them all Coupons in respect of interest which has not already been paid on this Global Bond.

"Exchange Date" means a day falling not less than 60 days or, in the case of exchange pursuant to (1) above 30 days after that on which the notice requiring exchange is given and on which banks are open for business in the city in which the specified office of the Principal Paying Agent is located and except in the case of exchange pursuant to (2) above in the cities in which Euroclear and Clearstream, Luxembourg or, if relevant, the Alternative Clearing System (each as defined under "Notices" below) are located.

Except as otherwise described herein, this Global Bond is subject to the Conditions and the Trust Deed and, until it is exchanged for Definitive Bonds, its holder shall be entitled to the same benefits as if it were the holder of the Definitive Bonds for which it may be exchanged and as if such Definitive Bonds had been issued on the date of this Global Bond.

The Conditions shall be modified with respect to Bonds represented by this Global Bond by the following provisions:

Payments

Principal and interest in respect of this Global Bond shall be paid to its holder against presentation and (if no further payment falls to be made on it) surrender of it to or to the order of the Principal Paying Agent in respect of the Bonds (or to or to the order of such other Paying Agent as shall have been notified to the Bondholders for this purpose) which shall endorse such payment or cause such payment to be endorsed in the appropriate Schedule hereto (such endorsement being prima facie evidence that the payment in question has been made). References in the Conditions to Coupons and Couponholders shall be construed accordingly. No person shall however be entitled to receive any payment on this Global Bond falling due after the Exchange Date, unless exchange of this Global Bond for Definitive Bonds is improperly withheld or refused by or on behalf of the Issuer. Condition 6(e)(iii) and Condition 7(e) will apply to the Definitive Bonds only.

Notices

So long as this Global Bond is held on behalf of Euroclear Bank S.A./N.V. as operator of the Euroclear System ("Euroclear") or Clearstream Banking, société anonyme ("Clearstream, Luxembourg") or such other clearing system as shall have been approved by the Trustee (the "Alternative Clearing System"), notices required to be given to Bondholders may be given by their being delivered to Euroclear and Clearstream, Luxembourg or, as the case may be, the Alternative Clearing System, rather than by publication as required by the Conditions and any such notice shall be deemed to have been given to the Bondholders on the day after the day on which such notice is delivered to Euroclear and Clearstream, Luxembourg, or, as the case may be, the Alternative Clearing System, except that, so long as the Bonds are listed on the Luxembourg Stock Exchange and the rules of that Exchange so require, notices shall also be published in a leading newspaper having general circulation in Luxembourg (which is expected to be the Luxemburger Wort).

Prescription

Claims in respect of principal and interest in respect of this Global Bond will become void unless it is presented for payment within a period of 10 years (in the case of principal) and five years (in the case of interest) from the appropriate Relevant Date (as defined in Condition 7).

Meetings

The holder hereof shall (unless this Global Bond represents only one Bond) be treated as two persons for the purposes of any quorum requirements of a meeting of Bondholders and, at any such meeting, as having one vote in respect of each £1,000 principal amount of Bonds for which this Global Bond may be exchanged.

Purchase and Cancellation

Cancellation of any Bond represented by this Global Bond which is required by the Conditions to be cancelled will be effected by reduction in the principal amount of this Global Bond on its presentation to or to the order of the Principal Paying Agent for notation in Schedule A. Bonds may only be purchased by the Issuer or any of its respective Subsidiaries if (where they should be cancelled in accordance with the Conditions) they are purchased together with the right to receive interest therein.

Trustee's Powers

In considering the interests of Bondholders in circumstances where this Global Bond is held on behalf of any one or more of Euroclear, Clearstream, Luxembourg and an Alternative Clearing System, the Trustee may, to the extent it considers it appropriate to do so in the circumstances, (a) have regard to such information as may have been made available to it by or on behalf of the relevant clearing system or its operator as to the identity of its accountholders (either individually or by way of category) with entitlements in respect of this Global Bond and (b) consider such interests on the basis that such accountholders were the holder of this Global Bond.

Redemption at the option of Bondholders on a Restructuring Event

The option of the Bondholders provided for in Condition 5(c) may be exercised by the holder of this Global Bond giving notice to the Principal Paying Agent within the time limits relating to the deposit of Bonds with a Paying Agent set out in that Condition substantially in the form of the redemption notice available from any Paying Agent and stating the principal amount of Bonds in respect of which the option is exercised and at the same time presenting this Global Bond to the Principal Paying Agent for notation accordingly in Schedule C hereto.

This Global Bond shall not be valid or become obligatory for any purpose until authenticated by or on behalf of the Principal Paying Agent.

This Global Bond is governed by and shall be construed in accordance with English law.

In witness whereof the Issuer has caused this Global Bond to be signed on its behalf.

Dated 27 May 2003

WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC
By:

This Global Bond is authenticated by or on behalf of the Principal Paying Agent.

By:

Authorised Signatory

ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.

Schedule A
Principal Amount of this Global Bond

The aggregate principal amount of this Global Bond is as shown by the latest entry made by or on behalf of the Principal Paying Agent in the fourth column below. Increases in the principal amount of this Global Bond following exchanges of a part of the Temporary Global Bond for interests in this Global Bond and reductions in the principal amount of this Global Bond following redemption or the purchase and cancellation of Bonds are entered in the second and third columns below.

Date	Reason for change in the principal amount of this Global Bond	Amount of such change	Initial principal amount and principal amount of this Global Bond following such change	Notation made by or on behalf of the Principal Paying Agent (other than in respect of the initial principal amount)
27 May 2003	Not applicable	Not applicable	£ zero	Not applicable

Schedule B
Interest Payments in respect of this Global Bond

The following payments of interest in respect of this Global Bond and the Bonds represented by this Global Bond have been made:

Date made Amount of interest due and payable Amount of interest paid Notation made by or on behalf of the Principal Paying Agent

Schedule C
Exercise of Bondholders' Option on Restructuring Event

The following exercises of the option of the Bondholders provided for in Condition 5(c) have been made in respect of the stated principal amount of this Global Bond:

Date of Exercise Principal amount of this Global Bond in respect of which exercise is made Date on which redemption of such principal amount is due Notation made by or on behalf of the Principal Paying Agent

In witness whereof this Supplemental Trust Deed has been executed as a deed on the date stated at the beginning.

WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC

By: CHARL OOSTHUIZENBy:SALLY.A.JONES

J.P. MORGAN CORPORATE TRUSTEE SERVICES LIMITED

By: JENNY PENNELLBy:IAIN CARDEW

EX-10

Exhibit 10(dd)

DEMAND LOAN AGREEMENT (this "Agreement")
dated as of August 20, 2004 among CEP Lending, Inc. (the
"Lender") and PPL Energy Funding Corporation (the "Borrower").

The Borrower has requested the Lender, and the Lender has agreed, to provide a credit facility to the Borrower in an aggregate principal amount of up to $300,000,000 on the terms and conditions set out in this Agreement.

ARTICLE I

DEFINITIONS

Section 1.01   Definitions. Capitalized terms used in this Agreement shall have the respective meanings set forth below.

"Agreement" means this Loan Agreement, as amended, restated, supplemented or modified from time to time.

"Availability Period" means the period from and including the Closing Date to but excluding the Termination Date.

"Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as amended, or any successor statute.

"Borrower" is defined in the introductory paragraph of this Agreement.

"Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in Allentown, Pennsylvania and New York, New York are authorized by law to close.

"Closing Date" means the date hereof.

"Commitment" means the commitment of the Lender to make Loans under Section 2.01 of this Agreement.

"Credit Rating" means (i) with respect to any entity other than a financial institution, the current (A) rating issued or maintained by S&P or Moody's with respect to such entity's senior, unsecured debt securities or (B) corporate credit rating or long-term issuer rating issued or maintained with respect to such entity by S&P or Moody's, or (ii) if such entity is a financial institution, the ratings issued or maintained by S&P or Moody's with respect to such entity's long-term, unsecured, unsubordinated deposits.

"Default" means any condition or event which constitutes an Event of Default or which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default.

"Dollars" and the sign "$" means lawful money of the United States of America.

"Event of Default" has the meaning set forth in Section 5.01.

"Interest Period" means, unless otherwise agreed to by the Borrower and the Lender, a period commencing on the first day of each calendar quarter and ending on the last day of such calendar quarter; provided, that no Interest Period shall end after the Termination Date.

"Investment Grade Entity" means an entity having a Credit Rating of BBB- or above from S&P or Baa3 or above from Moody's.

"Lender" is defined in the introductory paragraph of this Agreement.

"Loan" means a demand loan made by the Lender to the Borrower pursuant to the terms of this Agreement.

"Loan Documents" means this Agreement and the Notes, collectively.

"London Interbank Offered Rate" means, for any Interest Period, the interest rate for deposits in Dollars for a three-month period which appears on Telerate Page 3750 (or any successor page) as the London interbank offered rate for deposits in Dollars at approximately 11:00 a.m. (London time) one Business Day before the first day of such Interest Period; provided, however, if more than one rate is specified on Telerate page 3750, the applicable rate shall be the arithmetic means of all such rates. If for any reason such rate is not available, the term "London Interbank Offered Rate" means for any Interest Period, the rate per annum appearing on Reuters Screen LIBO Page as the London interbank offered rate for deposits in Dollars at approximately 11:00 a.m. (London time) one Business Day before the first day of such Interest Period for a period of time comparable to such Interest Period; provided, however, that if more than one such rate is specified on Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of all such rates (rounded upwards, if necessary, to the nearest 1/100 of 1%). If for any reason the London interbank offered rate is not available on either Telerate page 3750 or Reuters Screen LIBO Page, the term "London Interbank Offered Rate" means for any Interest Period, the rate per annum at which deposits in Dollars are offered to Wachovia Bank, National Association in the London interbank market at approximately 11:00 a.m. (London time) one Business Day before the first day of such Interest Period in an amount approximately equal to the principal amount of the Loan to which such Interest Period is to apply and for a period of time comparable to such Interest Period.

"Maximum Commitment" has the meaning set forth in Section 2.01.

"Moody's" means Moody's Investors Service, Inc., or any successor thereto.

"Note" means any promissory note issued pursuant to this Agreement to evidence the obligation of the Borrower to repay outstanding Loans.

"Notice of Borrowing" has the meaning set forth in Section 2.02.

"PPL Energy Supply" means PPL Energy Supply, LLC, or any successor thereto.

"S&P" means the Standard & Poor's Rating Group, a division of The McGraw-Hill Companies, Inc., or any successor thereto.

"Termination Date" means December 31, 2009 or such earlier date upon which the Commitment shall have been terminated in its entirety in accordance with this Agreement or the Agreement shall have been otherwise terminated.

ARTICLE II

THE LOANS

Section 2.01   Commitment to Lend. Subject to Sections 2.07 and 6.01(c), the Lender agrees, on the terms and conditions set forth in this Agreement, to make Loans to the Borrower pursuant to this Section 2.01 from time to time during the Availability Period in amounts such that the aggregate of all outstanding Loans shall not exceed $300,000,000 (the "Maximum Commitment"). Within the foregoing limits, the Borrower may borrow under this Section 2.01, repay or prepay Loans and reborrow under this Section 2.01.

Section 2.02   Notice of Borrowings. The Borrower shall give the Lender notice, either in writing or electronically (a "Notice of Borrowing"), specifying (i) the date of such Loan, which shall be a Business Day; and (ii) the aggregate amount of such Loan.

Section 2.03   Irrevocability of Notice; Funding of Loans.

(a)   Irrevocability of Notice. Upon the Lender's receipt of a Notice of Borrowing, such Notice of Borrowing shall not thereafter be revocable by the Borrower.

(b)   Funding of Loans. The Lender shall make available each Loan, in United States Federal or other funds immediately available in Allentown, Pennsylvania, to the Borrower for credit to any bank account designated by the Borrower from time to time not later than 6:00 p.m. (Allentown, Pennsylvania time) on the date of each Loan.

Section 2.04   Noteless Agreement; Evidence of Indebtedness.

(a)   The Lender shall maintain an account or accounts evidencing the indebtedness of the Borrower to the Lender resulting from each Loan made by the Lender from time to time, including (i) the amount of each Loan made hereunder and the Interest Period with respect thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to the Lender hereunder and (iii) the amount of any sum received for the benefit of the Lender hereunder from the Borrower.

(b)   The entries maintained in the accounts maintained pursuant to paragraph (a) above shall be prima facie evidence of the existence and amounts of the principal and interest payment obligations therein recorded; provided, however, that the failure of the Lender to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the principal and interest payment obligations in accordance with their terms.

(c)   The Lender may request that its Loans be evidenced by a Note. In such event, the Borrower shall prepare, execute and deliver to the Lender a Note payable to the order of the Lender. Thereafter, the Loans evidenced by such Note and interest thereon shall at all times be represented by one or more Notes payable to the order of the payee named therein (or any assignee), except to the extent that the Lender or an assignee subsequently returns any such Note for cancellation and requests that such Loans once again be evidenced as described in paragraph (a) above.

Section 2.05   Interest Rates.

(a)   Interest Rates. Each Loan shall bear interest on the outstanding principal amount thereof, for each day during the Interest Period applicable thereto, at a rate per annum equal to the sum of the London Interbank Offered Rate for such Interest Period plus 1.25%. Such interest shall be payable for each Interest Period on the twentieth (20^th) calendar day (or, if such calendar day is not a Business Day, the next following Business Day) following the last day of such Interest Period. Any overdue principal of or interest on any Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of 2% plus the London Interbank Offered Rate applicable to such Loan at the date such payment was due.

(b)   Determination and Notice of Interest Rates. The same interest rate shall apply to all outstanding Loans during an Interest Period. The Lender shall determine the interest rate applicable to all Loans during each Interest Period one Business Day before the first day of such Interest Period. The Lender shall give prompt notice to the Borrower of each rate of interest so determined, and its determination thereof shall be conclusive in the absence of manifest error.

Section 2.06   Optional Prepayments and Repayments. The Borrower may prepay any Loan, in each case in whole or in part at any time, or from time to time.

Section 2.07   General Provisions as to Payments. The Borrower shall make each payment of principal of and interest on the Loans not later than 6:00 p.m. (Allentown, Pennsylvania time) on the third business day following receipt of demand notice from the Lender and otherwise on the date when due, without set-off, counterclaim or other deduction, in United States Federal or other funds immediately available, to the Lender at any bank account designated by the Lender from time to time. If the date for any payment of principal is extended by operation of law or otherwise, interest thereon shall be payable for such extended time.

Section 2.08   Computation of Interest and Fees. All interest and fees shall be computed on the basis of a year of 360 days and paid for the actual number of days elapsed (including the first day but excluding the last day).

ARTICLE III

CONDITIONS TO LOANS

Section 3.01   Conditions to All Loans. The obligation of the Lender to make any Loan is subject to the satisfaction of the following conditions:

(a)   receipt by the Lender of a Notice of Borrowing as required by Section 2.02;

(b)   the fact that, immediately before and after giving effect to such Loan, no Default or Event of Default shall have occurred and be continuing;

(c)   the fact that the representations and warranties of the Borrower contained in the Loan Documents shall be true and correct on and as of the date of such Loan;

(d)   receipt by the Lender of such other assurances, certificates, documents, consents or opinions as the Lender may reasonably request, in each case in form and substance satisfactory to them.

Each Loan shall be deemed to be a representation and warranty by the Borrower on the date of such Loan as to the facts specified in clauses (b) and (c) of this Section.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

The Borrower represents and warrants that:

Section 4.01   Status. The Borrower is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania and has the corporate authority to make and perform each Loan Document.

Section 4.02   Authority; No Conflict. The execution, delivery and performance by the Borrower of each Loan Document have been duly authorized by all necessary corporate action and do not violate (i) any provision of law or regulation, or any decree, order, writ or judgment, (ii) any provision of its articles of incorporation or bylaws, or (iii) result in the breach of or constitute a default under any indenture or other agreement or instrument to which the Borrower is a party.

Section 4.03   Legality; Etc. Each Loan Document constitutes the legal, valid and binding obligation of the Borrower, and the Notes, when executed and delivered in accordance with this Agreement, will constitute legal, valid and binding obligations of the Borrower, in each case enforceable against the Borrower in accordance with their terms except to the extent limited by (a) bankruptcy, insolvency, fraudulent conveyance or reorganization laws or by other laws relating to or affecting the enforceability of creditors' rights generally and by general equitable principles which may limit the right to obtain equitable remedies regardless of whether enforcement is considered in a proceeding of law or equity or (b) any applicable public policy on enforceability of provisions relating to contribution and indemnification.

Section 4.04   Compliance with Laws. To the knowledge of the Borrower, the Borrower is in compliance with all applicable laws, regulations and orders of any governmental authority, domestic or foreign, in respect of the conduct of its business and the ownership of its property, except to the extent (a) such compliance is being contested in good faith by appropriate proceedings or (b) non-compliance would not reasonably be expected to materially and adversely affect its ability to perform any of its obligations under the Loan Documents.

Section 4.05   No Default. No Default or Event of Default has occurred and is continuing.

ARTICLE V

DEFAULTS

Section 5.01   Events of Default. If one or more of the following events (each an "Event of Default") shall have occurred and be continuing:

(a)   the Borrower shall fail to pay when due any principal of the Loans; or

(b)   the Borrower shall fail to pay when due any interest on the Loans for five (5) Business Days following the date such payment becomes due hereunder; or

(c)   any representation, warranty or certification made by the Borrower in any Loan Document shall prove to have been incorrect in any material respect when made or deemed made; or

(d)   the Borrower shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay, or shall admit in writing its inability to pay, its debts as they become due, or shall take any corporate action to authorize any of the foregoing; or

(e)   an involuntary case or other proceeding shall be commenced against the Borrower seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 days; or an order for relief shall be entered against the Borrower under the Bankruptcy Code;

then, and in every such event, while such event is continuing, the Lender may (A) by notice to the Borrower terminate the Commitment, and the Commitment shall thereupon terminate, and (B) by notice to the Borrower declare the Loans (together with accrued interest and accrued and unpaid fees thereon) to be, and the Loans shall thereupon become, immediately due and payable without presentment, demand, protest or other notice of any kind (except as set forth in clause (A) above), all of which are hereby waived by the Borrower; provided, that, in the case of any Default or any Event of Default specified in clause 5.01(d) or 5.01(e) above with respect to the Borrower, without any notice to the Borrower or any other act by the Lender, the Commitment shall thereupon terminate and the Loans (together with accrued interest and accrued and unpaid fees thereon) shall become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower. Nothing in this Article V or elsewhere in this Agreement shall alter the nature of this Agreement as a demand loan agreement or alter or otherwise diminish the Lender's rights at any time to declare the Loans (together with accrued interest and accrued and unpaid fees thereon, if applicable) due and payable with three business days' notice, irrespective of whether a Default or an Event of Default then exists.

ARTICLE VI

COLLATERAL REQUIREMENT

Section 6.01   Collateral Requirement. The Borrower hereby represents, warrants and undertakes to the Lender as follows:

(a)   As of the date hereof, PPL Energy Supply is a wholly owned subsidiary of the Borrower and its Credit Ratings are BBB by S&P or Baa2 by Moody's.

(b)   The Borrower will notify the Lender promptly of any downgrade in PPL Energy Supply's Credit Ratings.

(c)   If PPL Energy Supply's Credit Ratings are downgraded below BBB by S&P and Baa2 by Moody's, the Borrower will (i) promptly (and, in any event with ten (10) days) thereafter notify the Lender thereof and (ii) cause PPL Energy Supply to provide to the Lender, within thirty (30) days thereafter, (x) a letter of credit, in form and substance reasonably acceptable to the Lender, from any of PPL Energy Supply's then-existing credit facilities (or, if no such credit facility exists or PPL Energy Supply is unable to cause a letter of credit to be issued thereunder, from an Investment Grade Entity reasonably acceptable to the Lender), or (y) other comparable form of credit support acceptable to the Lender in its sole discretion, in each case in a face or principal amount equal to the aggregate principal amount of all Loans then outstanding plus any accrued and unpaid interest thereon; provided, that the Lender shall not thereafter be required to make any additional Loans to the Borrower unless and until the face or principal amount of such letter of credit or other comparable form of credit support is increased by the amount of any such additional Loans. The Lender shall be entitled to draw upon any such letter of credit or other comparable form of credit support only in the amount and to the extent that the Borrower fails to make a payment in accordance with the terms of this Agreement. In the event that, at any time after the issuance of any such letter of credit or other comparable form of credit support in favor of the Lender, this Agreement is terminated in accordance with its terms (other as a result of the termination of the Commitment pursuant to Section 5.01 while any amounts are outstanding hereunder) or PPL Energy Supply's Credit Ratings are upgraded to BBB or above by S&P or Baa2 or above by Moody's, then the Lender shall return to PPL Energy Supply such letter of credit or other comparable form of credit support for cancellation (or otherwise cause such letter of credit or other comparable form of credit support to be cancelled).

ARTICLE VII

MISCELLANEOUS

Section 7.01   Notices. Except as otherwise expressly provided herein, all notices and other communications shall have been duly given and shall be effective (i) when delivered, (ii) when transmitted via telecopy (or other facsimile device) to the number set out below, (iii) the Business Day following the day on which the same has been delivered prepaid (or on an invoice basis) to a reputable national overnight air courier service or (iv) the third Business Day following the day on which the same is sent by certified or registered mail, postage prepaid, in each case to the respective parties at the address or telecopy numbers set forth below, or at such other address as such party may specify by written notice to the other party hereto:

if to the Lender:

CEP Lending, Inc.
3993 Howard Hughes Parkway, Suite 250
Las Vegas, Nevada 89109
Attention: Mindy Riddle
Telephone: 702-866-2203
Facsimile: 702-866-2244

if to the Borrower:

PPL Energy Funding Corporation
Two North Ninth Street
Allentown, PA 18101-1179
Attention: Treasury Department, GENTW14
Telephone: 610-774-5771
Facsimile: 610-774-5235

Section 7.02   Termination. The Lender may terminate this Agreement at any time with three business days' notice to the Borrower. The Borrower may terminate this Agreement at any time with three business days' notice to the Lender; provided, that no such termination shall be effective unless and until all amounts outstanding hereunder (including any accrued and unpaid interest) have been paid in full to the Lender.

Section 7.03   No Waivers; Non-Exclusive Remedies. No failure by the Lender to exercise, no course of dealing with respect to, and no delay in exercising any right, power or privilege hereunder or under any Loan Document shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies provided in the Loan Documents shall be cumulative and not exclusive of any rights or remedies provided by law.

Section 7.04   Amendments and Waivers. Any provision of this Agreement or the Notes may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by the Borrower and the Lender.

Section 7.05   Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. The Borrower may not assign this Agreement or its obligations hereunder or under the Notes without the prior written consent of the Lender.

Section 7.06   Governing Law. This Agreement and each Note shall be governed by and construed in accordance with the internal laws of the State of New York.

Section 7.07   Counterparts; Integration; Effectiveness. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement and the Notes constitute the entire agreement and understanding among the parties hereto and supersede any and all prior agreements and understandings, oral or written, relating to the subject matter hereof and thereof.

[signature page follows]                                                            

      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

CEP LENDING, INC., as the Lender

By:                                           
Name:
Title:

PPL ENERGY FUNDING CORPORATION, as the Borrower

By:                                         
Name:
Title:

EX-10

Exhibit 10(ee)

CONFORMED COPY

AMENDMENT AND RESTATEMENT AGREEMENT

DATED 12th October, 2004

BETWEEN

WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC

AND

THE LENDERS NAMED HEREIN

AND

LLOYDS TSB BANK PLC

as Facility Agent

relating to a £250,000,000 Credit Agreement

dated 18^th October, 2002 (as amended)

ALLEN & OVERY

Allen & Overy LLP

London

CONTENTS

Clause		Page
1	Interpretation	1
2	Amendments	1
3	Representations	2
4	Fees	2
5	Miscellaneous	2
6	Governing law	2
Schedules
1	Lenders	3
2	Conditions precedent documents	4
3	Restated Credit Agreement	5
SIGNATORIES		69

THIS AGREEMENT is dated 12th October, 2004

BETWEEN:

(1)      WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC (Registered No. 02366894) (the Company); and

(2)      THE FINANCIAL INSTITUTIONS listed in Schedule 1 (Lenders) as lenders (the Lenders); and

(3)      LLOYDS TSB BANK plc as agent (in this capacity the Facility Agent).

BACKGROUND

           This Agreement is supplemental to and amends a credit agreement dated 18th October, 2002 (as amended on 29^th October, 2002, 20^th June, 2003 and 17^th October, 2003) between, among others, the Company and the Facility Agent (the Credit Agreement).

IT IS AGREED as follows:

1.     Interpretation

1.1     Definitions

(a)     In this Agreement:

Effective Date means 15^th October, 2004 or such other date as the Company and the Facility Agent may agree.

(b)      Capitalised terms defined in the Credit Agreement have, unless expressly defined in this Agreement, the same meaning in this Agreement.

1.2     Construction

The principles of construction set out in the Credit Agreement will have effect as if set out in this Agreement.

2.     Amendments

(a)      Subject as set out below, the Credit Agreement will be amended from the Effective Date so that it reads as if it were restated in the form set out in Schedule 3 (Restated Credit Agreement).

(b)      The Credit Agreement will not be amended by this Agreement unless the Facility Agent notifies the Company and the Lenders that it has received all of the documents set out in Schedule 2 (Conditions precedent documents) in form and substance satisfactory to the Facility Agent (acting reasonably) on or prior to the Effective Date. The Facility Agent must give this notification as soon as practicable.

(c)       If the Facility Agent fails to give the notification under paragraph (b) above by the Effective Date, the Credit Agreement will not be amended in the manner contemplated by this Agreement.

3.     Representations

The Company confirms to each Finance Party that on the date of this Agreement and on the Effective Date, the representations given in Clause 16.2 (Status) to 16.12 (Non-Violation of other Agreements) (inclusive) of the Credit Agreement:

(a)      are true; and

(b)      would also be true if references to the Credit Agreement are construed as references to the Credit Agreement as amended and restated by this Agreement.

provided that, for the purpose of this Clause 3 (Representations), the reference to "Original Financial Statements" in Clause 16.9 (No material adverse change) shall be deemed to be a reference to the audited consolidated financial statements of the Company for the year ended 31st March, 2004.

In each case, each such representation is applied to the circumstances then existing and in the case of the confirmation made on the date of this Agreement, as if the Effective Date had occurred.

4.     Fees

The Company must pay to the Facility Agent for the account of the Lenders an extension fee and an up-front fee as set out in a letter between the Company and the Facility Agent of even date herewith.

5.     Miscellaneous

(a)      Each of this Agreement and the Credit Agreement, as amended and restated by this Agreement is a Finance Document.

(b)      Subject to the terms of this Agreement, the Credit Agreement will remain in full force and effect and, from the Effective Date, the Credit Agreement and this Agreement will be read and construed as one document.

6.     Governing law

This Agreement is governed by English law.

This Agreement has been entered into on the date stated at the beginning of this Agreement.

Schedule 1

Lenders

Bayerische Landesbank, acting through its London Branch

Danske Bank A/S, London Branch

Lloyds TSB Bank plc

WestLB AG, London Branch

Schedule 2

CONDITIONS PRECEDENT DOCUMENTS

1.        Either (a) a certified copy of the constitutional documents of the Company or (b) a certificate of the Company (signed by a director) confirming that there has been no change in the certificate of incorporation and memorandum and articles of association or other constitutional documents of the Company delivered to the Facility Agent on or about the 18th October, 2002 and that such documents continue to be in full force and effect.

2.        A certified copy of a resolution of the board of directors or a committee of the board of directors of the Company approving the terms of, and the transactions contemplated by, this Agreement.

3.        Either (a) a specimen of the signature of each person authorised on behalf of the Company to execute or witness the execution of this Agreement or to sign or send any document or notice in connection with this Agreement or (b) confirmation that the specimen signature list provided by the Company to the Facility Agent on or about the 18th October, 2002 remains accurate and complete.

4.        A certificate of the Company confirming that utilising the Total Commitments in full would not breach any borrowing limit contained in the Company's memorandum and articles of association.

5.        A legal opinion of Allen & Overy LLP, legal advisers to the Company, addressed to the Finance Parties as of the Effective Date.

6.        Evidence that all fees and expenses incurred in connection with this Agreement have been or will be paid by the Company.

Schedule 3

RESTATED CREDIT AGREEMENT

AGREEMENT

DATED 18th October, 2002

£400,000,000

CREDIT FACILITY

FOR

WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC

ARRANGED BY

BAYERISCHE LANDESBANK acting through its London Branch

DANSKE BANK A/S, LONDON BRANCH

LLOYDS TSB BANK plc

WESTLB AG, LONDON BRANCH

as Mandated Lead Arrangers

WITH

LLOYDS TSB BANK plc

as Facility Agent

INDEX

Clause		Page
1	Interpretation	1
2	Facilities	11
3	Purpose	12
4	Conditions Precedent	13
5	Utilisation	13
6	Optional Currencies	14
7	Repayment	17
8	Prepayment and Cancellation	18
9	Interest	20
10	Terms	22
11	Market Disruption	23
12	Taxes	24
13	Increased Costs	26
14	Mitigation	27
15	Payments	28
16	Representations	30
17	Information Covenants	32
18	Financial Covenants	34
19	General Covenants	35
20	Default	38
21	The Administrative Parties	40
22	Evidence and Calculations	45
23	Fees	46
24	Indemnities and Break Costs	47
25	Expenses	48
26	Amendments and Waivers	48
27	Changes to the Parties	49
28	Disclosure of Information	52
29	Set-off	52
30	Pro rata sharing	53
31	Severability	54
32	Counterparts	54
33	Notices	54
34	Language	55
35	Governing law	56
36	Enforcement	56

Schedules
1.	Original Parties	57
2.	Conditions precedent documents	59
3.	Form of Request	60
4.	Calculation of the Mandatory Cost	61
5.	Form of Transfer Certificate	63
6.	Intentionally left blank	65
7.	Form of Compliance Certificate	66
4.	Signatories	67

THIS AGREEMENT is dated 18th October, 2002 (as amended on 29th October, 2002, 20th June, 2003, 17th October, 2003 and October, 2004)

BETWEEN:

(1)       WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC (registered number 02366894) (the Company);

(2)       BAYERISCHE LANDESBANK acting through its London Branch, DANSKE BANK A/S, LONDON BRANCH, LLOYDS TSB BANK plc and WESTLB AG,LONDON BRANCH each in this capacity as a Mandated Lead Arranger and together in this capacity, the Mandated Lead Arrangers;

(3)       THE FINANCIAL INSTITUTIONS listed in Schedule 1 (Original Parties) as original lenders (the Original Lenders);

(4)       LLOYDS TSB BANK plc as facility agent (in this capacity the Facility Agent);

(5)       WESTLB AG, LONDON BRANCH as co-ordinating bank (in this capacity, the Co-ordinating Bank)

IT IS AGREED as follows:

INTERPRETATION

Definitions

In this Agreement:

Act means the Electricity Act 1989 and, unless the context otherwise requires, all subordinate legislation made pursuant thereto.

Administrative Party means a Mandated Lead Arranger, the Co-ordinating Bank or the Facility Agent.

Affiliate means a Subsidiary or a Holding Company of a person or any other Subsidiary of that Holding Company.

Applicable Accounting Principles means those accounting principles, standards and practices generally accepted in the United Kingdom and the accounting and reporting requirements of the Companies Act 1985, in each case as used in the Original Financial Statements.

Authority means The Gas and Electricity Markets Authority established under Section 1 of the Utilities Act 2000.

Availability Period means the period from and including the date of this Agreement to and including:

(a)       for a Tranche A Loan, the date that is the Final Maturity Date in relation to the Tranche A Facility;

(b)       for a Tranche B Loan, the Final Maturity Date in relation to the Tranche B Facility; and

(c)       for a Tranche C Loan, the Final Maturity Date in relation to the Tranche C Facility.

Balancing and Settlement Code means the document, as modified from time to time, setting out the electricity balancing and settlement arrangements designated by the Secretary of State and adopted by The National Grid Company plc (Registered No. 2366977) or its successor pursuant to its transmission licence.

Balancing and Settlement Code Framework means the agreement of that title, in the form approved by the Secretary of State, as amended from time to time, to which the Company is a party and by which the Balancing and Settlement Code is made binding upon the Company.

Break Costs means the amount (if any) which a Lender is entitled to receive under this Agreement as compensation if any part of a Loan or overdue amount is prepaid.

Business Day means a day (other than a Saturday or a Sunday) on which commercial banks are open in London and:

(a)        if on that day a payment in or a purchase of a currency (other than euro) is to be made, the principal financial centre of the country of that currency; or

(b)       if on that day a payment in or purchase of euro is to be made, which is also a TARGET Day.

Commitment means a Tranche A Commitment or a Tranche B Commitment or a Tranche C Commitment (as the case may be).

Compliance Certificate means a certificate substantially in the form of Schedule 7 (Form of Compliance Certificate) setting out, among other things, calculations of the financial covenants.

Default means:

(a)       an Event of Default; or

(b)       an event which would be (with the lapse of time, the expiry of a grace period, the giving of notice or the making of any determination under the Finance Documents or any combination of them) an Event of Default.

Environmental Law means all regulations and other laws concerning the protection of human health or the environment;

euro or euros or € means the single currency of the Participating Member States.

Event of Default means an event specified as such in this Agreement.

Existing Credit Agreement means the U.S.$500,000,000 Revolving Credit Agreement dated 30th October, 2001 between, inter alia, the Company, J.P. Morgan plc as Arranger and Chase Manhattan International Limited as Facility Agent and as Swingline Agent.

Extended Final Maturity Date means the date specified as such in the notice exercising the Term-Out Option provided by the Company under Clause 2.5 (Term-Out Option), being a date falling no later than the day falling 364 days after the Final Maturity Date relating to the Tranche A Facility.

Facility means the Tranche A Facility or Tranche B Facility or Tranche C Facility (as the case may be) made available under this Agreement and Facilities shall mean each of them.

Facility Office means the office(s) notified by a Lender to the Facility Agent:

(a)       on or before the date it becomes a Lender; or

(b)       by not less than five Business Days' notice,

as the office(s) through which it will perform its obligations under this Agreement.

Fee Letter means any letter entered into by reference to this Agreement between one or more Administrative Parties and the Company setting out the amount of certain fees referred to in the Agreement.

Final Maturity Date means

(a)       in relation to the Tranche A Facility, the date which falls 364 days after (and including) 15th October, 2004 (unless extended in accordance with Clause 2.5 (Term-out Option));

(b)       in relation to the Tranche B Facility, the seventh anniversary of the date of this Agreement; and

(c)       in relation to the Tranche C Facility, the third anniversary of the Restatement Date.

Finance Document means:

(a)       this Agreement;

(b)       a Fee Letter;

(c)       a Transfer Certificate; or

(d)       any other document designated as such by the Facility Agent and the Company.

Finance Party means a Lender or an Administrative Party.

Financial Indebtedness means any indebtedness for or in respect of:

(a)       moneys borrowed;

(b)       any acceptance credit;

(c)       any bond, note, debenture, loan stock or other similar instrument;

(d)       any redeemable preference share;

(e)       any finance or capital lease;

(f)       receivables sold or discounted (otherwise than on a non-recourse basis);

(g)       the acquisition cost of any asset to the extent payable after its acquisition or possession by the party liable where the deferred payment is arranged primarily as a method of raising finance or financing the acquisition of that asset;

(h)       any derivative transaction protecting against or benefiting from fluctuations in any rate or price (and, except for non-payment of an amount, the then mark to market value of the derivative transaction will be used to calculate its amount);

(i)       any other transaction (including any forward sale or purchase agreement) which has the commercial effect of a borrowing;

(j)       any counter-indemnity obligation in respect of any guarantee, indemnity, bond, letter of credit or any other instrument issued by a bank or financial institution; or

any guarantee, indemnity or similar assurance against financial loss of any person in respect of any item referred to in paragraphs (a) to (j) above.

Group means the Company and its Subsidiaries.

Holding Company means a holding company within the meaning of section 736 of the Companies Act 1985.

Increased Cost means:

(a)       an additional or increased cost;

(b)       a reduction in the rate of return under a Finance Document or on its overall capital; or

(c)       a reduction of an amount due and payable under any Finance Document,

which is incurred or suffered by a Finance Party or any of its Affiliates but only to the extent attributable to that Finance Party having entered into any Finance Document or funding or performing its obligations under any Finance Document.

Lender means:

(a)       an Original Lender; or

(b)       any person which becomes a Lender after the date of this Agreement.

LIBOR means for a Term of any Loan or overdue amount:

(a)       the applicable Screen Rate; or

(b)       if no Screen Rate is available for the relevant currency or Term of that Loan or overdue amount, the arithmetic mean (rounded upward to four decimal places) of the rates, as supplied to the Facility Agent at its request, quoted by the Reference Banks to leading banks in the London interbank market,

as of 11.00 a.m. on the Rate Fixing Day for the offering of deposits in the currency of that Loan or overdue amount for a period comparable to that Term.

Licence means:

(a)       the electricity distribution licence made and treated as granted to the Company under Section 6(1)(c) of the Act pursuant to a licensing scheme made by the Secretary of State under Part II of Schedule 7 to the Utilities Act 2000 on 28^th September, 2001; or

(b)       by any statutory amendment or replacement licence or licences granted pursuant to the Utilities Act 2000 which permit the Company to distribute electricity in the Authorised Area;

Loan means, unless otherwise stated in this Agreement, the principal amount of each borrowing under this Agreement or the principal amount outstanding of that borrowing.

Majority Lenders means, at any time, Lenders:

(a)       whose share in the outstanding Loans and whose undrawn Commitments then aggregate 66²/₃ per cent. or more of the aggregate of all the outstanding Loans and the undrawn Commitments of all the Lenders;

(b)       if there is no Loan then outstanding, whose undrawn Commitments then aggregate 66²/₃ per cent. or more of the Total Commitments; or

(c)       if there is no Loan then outstanding and the Total Commitments have been reduced to zero, whose Commitments aggregated 66²/₃ per cent. or more of the Total Commitments immediately before the reduction.

Mandatory Cost means the cost of complying with certain regulatory requirements, expressed as a percentage rate per annum and calculated by the Facility Agent under Schedule 4 (Calculation of the Mandatory Cost).

Margin means the percentage rate per annum determined to be the Margin in accordance with Clause 9.5(a)(Margin), as adjusted from time to time in accordance with Clauses 9.5(b) to 9.5(d) (Margin).

Material Adverse Effect means something having a material adverse effect on the Company's ability to perform its payment obligations under this Agreement.

Material Subsidiary means, at any time, a Subsidiary of the Company whose gross assets or gross revenues (excluding intra-Group items) then equal or exceed 15 per cent. of the gross assets or gross revenues of the Group.

For this purpose:

(a)       the gross assets or gross revenues of a Subsidiary of the Company will be determined from its financial statements (unconsolidated if it has Subsidiaries) upon which the latest audited financial statements of the Group have been based;

(b)       if a Subsidiary of the Company becomes a member of the Group after the date on which the latest audited financial statements of the Group have been prepared, the gross assets or gross revenues of that Subsidiary will be determined from its latest financial statements;

(c)       the gross assets or gross revenues of the Group will be determined from its latest audited financial statements, adjusted (where appropriate) to reflect the gross assets or gross revenues of any company or business subsequently acquired or disposed of; and

(d)       if a Material Subsidiary disposes of all or substantially all of its assets to another Subsidiary of the Company, it will immediately cease to be a Material Subsidiary and the other Subsidiary (if it is not already) will immediately become a Material Subsidiary; the subsequent financial statements of those Subsidiaries and the Group will be used to determine whether those Subsidiaries are Material Subsidiaries or not.

If there is a dispute as to whether or not a company is a Material Subsidiary, a certificate of the auditors of the Company will be, in the absence of manifest error, conclusive.

Maturity Date means the last day of the Term of a Loan (other than a Term-Out Loan) and in the case of a Term-Out Loan the date specified as such in the Request for that Term-Out Loan.

Moody's means Moody's Investors' Services, Inc. (or any successor to its ratings business).

OFGEM means the Office of Gas and Electricity Markets.

Original Financial Statements means the audited consolidated financial statements of the Company for the year ended 31st March, 2002.

Participating Member States means a member state of the European Community that adopts the euro as its lawful currency under the legislation of the European Union for European Monetary Union.

Party means a party to this Agreement.

Pro Rata Share means:

(a)       for the purpose of determining a Lender's share in a utilisation of a Facility, the proportion which its Commitment under that Facility bears to all the Commitments under that Facility; and

(b)       for any other purpose on a particular date:

   (i)       the proportion which a Lender's share of the Loans (if any) bears to all the Loans;

   (ii)       if there is no Loan outstanding on that date, the proportion which its Commitment bears to the Total Commitments on that date;

   (iii)       if the Total Commitments have been cancelled, the proportion which its Commitments bore to the Total Commitments immediately before being cancelled; or

   (iv)       when the term is used in relation to a particular Facility, the above proportions but applied only to the Loans and Commitments for that Facility.

For the purpose of sub-paragraph (iv) above, the Facility Agent will determine, in the case of a dispute whether the term in any case relates to a particular Facility.

PUCHA means the Public Utility Holding Company Act of 1935, as amended, of the United States of America.

Rate Fixing Day means:

(a)       the first day of a Term for a Loan denominated in Sterling; or

(b)       the second Business Day before the first day of a Term for a Loan denominated in any other currency; or

or such other day as the Facility Agent determines is generally treated as the rate fixing day by market practice in the relevant interbank market.

Reference Banks means the Facility Agent, Bayerische Landesbank acting through its London branch, Danske Bank A/S London Branch and WestLB AG, London Branch and any other bank or financial institution appointed as such by the Facility Agent under this Agreement.

Repeating Representations means the representations which are deemed to be repeated under this Agreement.

Request means a request for a Loan, substantially in the form of Schedule 3 (Form of Request).

Restatement Date means 15th October, 2004.

Rollover Loan means one or more Loans (other than a Term-Out Loan):

(a)       to be made on the same day that a maturing Loan is due to be repaid;

(b)       the aggregate amount of which is equal to or less than the maturing Loan;

(c)       in the same currency as the maturing Loan; and

(d)       to be made for the purpose of refinancing a maturing Loan.

S&P means Standard & Poor's Corporation (a division of the McGraw-Hill Companies, Inc) (or any successor to its ratings business).

Screen Rate means the British Bankers Association Interest Settlement Rate (if any) for the relevant currency and Term displayed on the appropriate page of the Telerate screen selected by the Facility Agent. If the relevant page is replaced or the service ceases to be available, the Facility Agent (after consultation with the Company and the Lenders) may specify another page or service displaying the appropriate rate.

Secretary of State means the Secretary of State for Trade and Industry.

Security Interest means any mortgage, pledge, lien, charge, assignment, hypothecation or security interest or any other agreement or arrangement having a similar effect.

Sterling and £ mean the lawful currency of the United Kingdom.

Subsidiary means:

(a)       a subsidiary within the meaning of section 736 of the Companies Act 1985; and

(b)       unless the context otherwise requires, a subsidiary undertaking within the meaning of section 258 of the Companies Act 1985.

TARGET Day means a day on which the Trans-European Automated Real-time Gross Settlement Express Transfer payment system is open for the settlement of payments in euro.

Tax means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any related penalty or interest).

Tax Deduction means a deduction or withholding for or on account of Tax from a payment under a Finance Document.

Tax Payment means a payment made by the Company to a Finance Party in any way relating to a Tax Deduction or under any indemnity given by the Company in respect of Tax under any Finance Document.

Term means each period determined under this Agreement by reference to which interest on a Loan or an overdue amount is calculated.

Term-Out Loans means the Loans (if any) drawn under Clause 2.5 (Term-Out Option).

Term-Out Option means the option of the Company in Clause 2.5 (Term-Out Option) to draw Tranche A Loans as Term-Out Loans.

Total Commitments means the Total Tranche A Commitments, Total Tranche B Commitments and Total Tranche C Commitments of all the Lenders.

Total Tranche A Commitments means the aggregate of the Tranche A Commitments of all the Lenders, being the total amount specified as such in Schedule 1 (Original Parties) at the date of this Agreement.

Total Tranche B Commitments means the aggregate of the Tranche B Commitments of all the Lenders, being the total amount specified as such in Schedule 1 (Original Parties) at the date of this Agreement.

Total Tranche C Commitments means the aggregate of the Tranche C Commitments of all the Lenders, being the total amount specified as such in Schedule 1 (Original Parties) at the Restatement Date.

Tranche A Commitment means:

(a)       for an Original Lender, the amount set opposite its name in Schedule 1 (Original Parties) under the heading "Tranche A Commitments" and the amount of any other Tranche A Commitment it acquires; and

(b)       for any other Lender, the amount of any Tranche A Commitment it acquires, to the extent not cancelled, transferred or reduced under this Agreement.

Tranche A Facility means the revolving credit facility (incorporating a term-out option) made available under this Agreement and described in Clause 2.1 (Tranche A Facility).

Tranche A Loan means a Loan under the Tranche A Facility and identified as such in its Request.

Tranche B Commitment means:

(a)       for an Original Lender, the amount set opposite its name in Schedule 1 (Original Parties) under the heading "Tranche B Commitments" and the amount of any other Tranche B Commitment it acquires; and

(b)       for any other Lender, the amount of any other Tranche B Commitment it acquires,

to the extent not cancelled, transferred or reduced under this Agreement.

Tranche B Facility means the revolving credit facility made available under this Agreement and described in Clause 2.2 (Tranche B Facility).

Tranche B Loan means a Loan under the Tranche B Facility and identified as such in its Request.

Tranche C Commitment means:

(a)       for an Original Lender, the amount set opposite its name in Schedule 1 (Original Parties) under the heading "Tranche C Commitments" and the amount of any other Tranche C Commitment it acquires; and

(b)       for any other Lender, the amount of any other Tranche C Commitment it acquires,

to the extent not cancelled, transferred or reduced under this Agreement.

Tranche C Facility means the revolving credit facility made available under this Agreement and described in Clause 2.3 (Tranche C Facility).

Tranche C Loan means a Loan under the Tranche C Facility and identified as such in its Request.

Transfer Certificate means a certificate, substantially in the form of Schedule 5 (Form of Transfer Certificate), with such amendments as the Facility Agent may approve or reasonably require or any other form agreed between the Facility Agent and the Company.

U.K. means the United Kingdom.

U.S. Dollars and U.S.$ means the lawful currency for the time being of the United States of America.

Utilisation Date means each date on which a Facility is utilised.

Construction

(a)       The following definitions have the meanings given to them in Clause 18.1 (Financial covenants):

   (i)         Consolidated EBITDA;

   (ii)        Interest Payable;

   (iii)       Measurement Period;

   (iv)       Regulatory Asset Base; and

   (v)        Total Gross Debt.

(b)       In this Agreement, unless the contrary intention appears, a reference to:

   (i)        an amendment includes a supplement, novation, restatement or re-enactment and amended will be construed accordingly;

assets includes present and future properties, revenues and rights of every description;

an authorisation includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration or notarisation;

disposal means a sale, transfer, grant, lease or other disposal, whether voluntary or involuntary, and dispose will be construed accordingly;

indebtedness includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money;

know your customer requirements are the identification checks that a Finance Party requests in order to meet its obligations under any applicable law or regulation to identify a person who is (or is to become) its customer;

a person includes any individual, company, corporation, unincorporated association or body (including a partnership, trust, joint venture or consortium), government, state, agency, organisation or other entity whether or not having separate legal personality;

a regulation includes any regulation, rule, official directive, request or guideline (whether or not having the force of law but, if not having the force of law, being of a type with which any person to which it applies is accustomed to comply) of any governmental, inter-governmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation;

the Winding-up of a person also includes the administration, dissolution or liquidation or other like process of that person, any composition or arrangement with the creditors, amalgamation, reconstruction, reorganisation or consolidation pursuant to Part XIII of the Companies Act 1985 proposed or carried out in respect of that person or a company voluntary arrangement pursuant to the Insolvency Act 1986 carried out or proposed in respect of that person;

   (ii)       a currency is a reference to the lawful currency for the time being of the relevant country;

   (iii)      a Default being outstanding means that it has not been remedied or waived;

   (iv)      a provision of law is a reference to that provision as extended, applied, amended or re-enacted and includes any subordinate legislation;

   (v)       a Clause, a Subclause or a Schedule is a reference to a clause or subclause of, or a schedule to, this Agreement;

   (vi)      a person includes its successors in title, permitted assigns and permitted transferees;

   (vii)     a Finance Document or another document is a reference to that Finance Document or other document as amended; and

   (viii)    a time of day is a reference to London time.

(c)       Unless the contrary intention appears, a reference to a month or months is a reference to a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month or the calendar month in which it is to end, except that:

   (i)        if the numerically corresponding day is not a Business Day, the period will end on the next Business Day in that month (if there is one) or the preceding Business Day (if there is not);

   (ii)       if there is no numerically corresponding day in that month, that period will end on the last Business Day in that month; and

   (iii)      notwithstanding sub-paragraph (i) above, a period which commences on the last Business Day of a month will end on the last Business Day in the next month or the calendar month in which it is to end, as appropriate.

(d)       Unless expressly provided to the contrary in a Finance Document, a person who is not a party to a Finance Document may not enforce any of its terms under the Contracts (Rights of Third Parties) Act 1999 and notwithstanding any term of any Finance Document, the consent of any third party is not required for any variation (including any release or compromise of any liability) or termination of that Finance Document.

(e)       Unless the contrary intention appears:

   (i)        a reference to a Party will not include that Party if it has ceased to be a Party under this Agreement;

   (ii)       a word or expression used in any other Finance Document or in any notice given in connection with any Finance Document has the same meaning in that Finance Document or notice as in this Agreement; and

   (iii)      any obligation of the Company under the Finance Documents which is not a payment obligation remains in force for so long as any payment obligation of the Company is or may be outstanding under the Finance Documents.

(f)       The headings in this Agreement do not affect its interpretation.

Facilities

Tranche A Facility

Subject to the terms of this Agreement, the Lenders make available to the Company a revolving loan facility with a term-out option denominated in Sterling in an aggregate amount equal to the Total Tranche A Commitments.

Tranche B Facility

Subject to the terms of this Agreement, the Lenders make available to the Company a revolving credit facility denominated in Sterling in an aggregate amount equal to the Total Tranche B Commitments.

Tranche C Facility

Subject to the terms of this Agreement, the Lenders make available to the Company a revolving credit facility denominated in Sterling in an aggregate amount equal to the Total Tranche C Commitments.

Nature of a Finance Party's rights and obligations

Unless otherwise agreed by all the Finance Parties:

the obligations of a Finance Party under the Finance Documents are several;

failure by a Finance Party to perform its obligations does not affect the obligations of any other Party under the Finance Documents;

no Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents;

the rights of a Finance Party under the Finance Documents are separate and independent rights;

a debt arising under the Finance Documents to a Finance Party is a separate and independent debt; and

a Finance Party may, except as otherwise stated in the Finance Documents, separately enforce those rights.

Term-out Option

(g)       The Company may on one occasion only, by delivery of a notice to the Facility Agent (who shall send a copy of the same to the Lenders) not earlier than 45 days prior to the Final Maturity Date in relation to the Tranche A Facility, elect to draw one or more Tranche A Loans (each a Term-Out Loan) each with the same Utilisation Date falling prior to the Final Maturity Date and each with the same Maturity Date being a date after the initial Final Maturity Date, but no later than the date falling four years after the date of this Agreement (such selected date being the Extended Final Maturity Date). The delivery of this notice constitutes the exercise of the Term-Out Option by the Company.

(h)       Any Tranche A Loan outstanding after the date of the exercise of the Term-Out Option must be repaid on its Maturity Date.

PURPOSE

Tranche A Loans

Each Tranche A Loan may be used for the core working capital requirements of the Company (including the repayment of the Existing Credit Agreement and certain other bilateral facilities) and in compliance with the Licence.

Tranche B Loans

Each Tranche B Loan may only be used for general corporate purposes and in compliance with the Licence.

Tranche C Loans

Each Tranche C Loan may only be used for general corporate purposes and in compliance with the Licence.

No obligation to monitor

No Finance Party is bound to monitor or verify the utilisation of a Facility.

CONDITIONS PRECEDENT

Conditions precedent documents

A Request may not be given until the Facility Agent has notified the Company and the Lenders that it has received all of the documents and evidence set out in Schedule 2 (Conditions precedent documents) in form and substance satisfactory to the Facility Agent. The Facility Agent must give this notification to the Company and the Lenders promptly upon being so satisfied.

Further conditions precedent

The obligations of each Lender to participate in any Loan are subject to the further conditions precedent that on both the date of the Request and the Utilisation Date for that Loan:

the Repeating Representations are correct in all material respects; and

no Default or, in the case of a Rollover Loan, no Event of Default is outstanding or would result from the Loan.

Maximum number

Unless the Facility Agent agrees, a Request may not be given if, as a result, there would be more than 15 Loans outstanding.

UTILISATION

Giving of Requests

(i)       The Company may borrow a Loan by giving to the Facility Agent a duly completed Request.

(j)       Unless the Facility Agent otherwise agrees, the latest time for receipt by the Facility Agent of a duly completed Request is 11.00 a.m. one Business Day before the Rate Fixing Day for the proposed borrowing.

(k)       Each Request is irrevocable.

Completion of Requests

A Request for a Loan will not be regarded as having been duly completed unless:

it identifies the Facility the Loan applies to;

the Utilisation Date is a Business Day falling within the Availability Period;

The amount of the Loan requested is:

a minimum of £5,000,000 or its equivalent in accordance with Clause 6.5 (Optional Currency Equivalents), and an integral multiple of 1,000,000 units of that currency;

the maximum undrawn amount available under this Agreement for Loans under the relevant Facility on the proposed Utilisation Date; or

such other amount as the Facility Agent may agree; and

the proposed Term complies with this Agreement.

Only one Loan may be requested in a Request.

Advance of Loan

(l)       The Facility Agent must promptly notify each Lender of the details of the requested Loan and the amount of its share in that Loan.

(m)     The amount of each Lender's share of the Loan will be its Pro Rata Share on the proposed Utilisation Date.

(n)       No Lender is obliged to participate in a Loan if as a result:

   (i)       its share in the Loans under a Facility would exceed its Commitment for that Facility; or

   (ii)      the Loans would exceed the Total Commitments.

(o)       If the conditions set out in this Agreement have been met, each Lender must make its share in the Loan available to the Facility Agent for the Company on the Utilisation Date.

OPTIONAL CURRENCIES

General

In this Clause:

Agent's Spot Rate of Exchange means the Facility Agent's spot rate of exchange for the purchase of the relevant currency in the London foreign exchange market with Sterling at or about 11.00 a.m. on a particular day.

Optional Currency means any currency (other than Sterling) in which a Loan may be denominated under this Agreement.

Pre-approved Currency means U.S.$ and euro.

Sterling Amount of a Loan or part of a Loan means:

(a)       if the Loan is denominated in Sterling, its amount; or

(b)       in the case of any Loan denominated in an Optional Currency, its equivalent in Sterling calculated on the basis of the Agent's Spot Rate of Exchange one Business Day before the Rate Fixing Day for that Term.

Selection

(p)     The Company must select the currency of a Loan in its Request. The Company may select Sterling or an Optional Currency for a Loan.

(q)     Unless the Facility Agent otherwise agrees, the Loans may not be denominated at any one time in more than three currencies.

Selection of Optional Currencies

(r)       A Loan may be denominated in an Optional Currency for a Term if:

   (i)       that Optional Currency is readily available in the amount required and freely convertible into Sterling in the relevant interbank market on the Rate Fixing Day and the first day of that Term; and

   (ii)      that Optional Currency is a Pre-approved Currency or has been previously approved by the Facility Agent (acting on the instruction of all the Lenders).

(s)       If the Facility Agent has received a request from the Company for a currency to be approved as an Optional Currency (other than a Pre-approved Currency), the Facility Agent must, within five Business Days, confirm to the Company:

   (i)       whether or not the Lenders have given their approval; and

   (ii)      if approval has been given, the minimum amount (and, if required, integral multiples) for any Loan in that currency.

Revocation of currency

(t)       Notwithstanding any other term of this Agreement, if before 9.30 a.m. on any Rate Fixing Day the Facility Agent receives notice from a Lender that:

   (i)       the Optional Currency requested is not readily available to it in the relevant interbank market in the amount and for the period required; or

   (ii)       participating in a Loan in the proposed Optional Currency might contravene any law or regulation applicable to it,

the Facility Agent must give notice to the Company to that effect promptly and in any event before 11.00 a.m. on that day.

(u)     In this event:

   (i)       that Lender must participate in the Loan in Sterling; and

   (ii)       the share of that Lender in the Loan and any other similarly affected Lender(s) will be treated as a separate Loan denominated in Sterling during that Term.

(v)      Any part of a Loan treated as a separate Loan under this Subclause will not be taken into account for the purposes of any limit on the number of Loans or currencies outstanding at any one time.

(w)     A Loan will still be treated as a Rollover Loan if it is not denominated in the same currency as the maturing Loan by reason only of the operation of this Subclause.

Optional Currency equivalents

(x)      Except as expressly provided in this Agreement, the equivalent in Sterling of a Loan or part of a Loan in an Optional Currency for the purposes of calculating:

   (i)       whether any limit under this Agreement has been exceeded;

   (ii)       the amount of a Loan;

   (iii)      the share of a Lender in a Loan;

   (iv)      the amount of any repayment of a Loan; or

   (v)       the undrawn amount of a Lender's Commitment,

is its Sterling Amount.

(y)      The rate of exchange to be used for calculating the amount in Sterling of any repayment or prepayment of a Term-Out Loan in an Optional Currency is that last used for determining the amount of the Term-Out Loan in that Optional Currency.

Term-Out Loans - change of currency

(z)       A Term-Out Loan will remain denominated in the same currency through successive Terms, unless the currency is changed under paragraph (c) below.

(aa)     The Company may change the currency of a Term-Out Loan with effect from the start of a Term by giving notice to the Facility Agent by 9.00 a.m. three Business Days before the first day of that Term. The Term-Out Loan will remain denominated in that currency until it is changed again under this Subclause.

(bb)     If a Term-Out Loan is to be denominated in different currencies during successive Terms:

   (i)       the Company must repay that Term-Out Loan on the last day of its current Term in the currency in which it is then denominated (the old currency); and

   (ii)       the Lenders must, subject to the terms of this Agreement, re-advance the Term-Out Loan in the currency in which the Company requires the Term-Out Loan to be denominated for the next Term (the new currency).

The amount of the Loan in the new currency will be calculated by reference to its Sterling Amount.

(cc)     Alternatively, if the Facility Agent and the Company agree:

   (i)       the Facility Agent may apply the amount (or so much of that amount as is necessary) of the Term-Out Loan in the new currency to purchase an amount of the old currency sufficient to discharge the obligation of the Company to repay the Term-Out Loan in the old currency;

   (ii)       the Facility Agent must apply any amount of the old currency purchased under sub-paragraph (i) above towards repaying the Term-Out Loan in the old currency;

   (iii)     the Facility Agent will promptly notify the Company if there is a shortfall or an excess;

   (iv)     if there is a shortfall, the Company must pay to the Facility Agent on the date the Term-Out Loan is due to be repaid in the old currency an amount in the old currency equal to the shortfall; and

   (v)      if there is an excess, the Facility Agent must pay to the Company on the date the Term-Out Loan is due to be repaid in the old currency an amount in the new currency equal to the excess.

If the day on which the old currency is due to be repaid is not also a Business Day for the new currency:

   (vi)     the Facility Agent must notify the Company and the Lenders promptly;

   (vii)     the Term-Out Loan will remain in the old currency until the next day which is a Business Day for both the old and the new currencies; and

   (viii)    during this period, the Term-Out Loan will have Terms running from one Business Day to the next Business Day.

The Company must indemnify the Facility Agent against any loss or liability incurred by the Facility Agent as a result of any foreign exchange contract entered into for the purpose of this Clause.

Term-Out Loans - continuing in same Optional Currency

(dd)     If a Term-Out Loan is to be denominated in the same Optional Currency during two successive Terms, the Facility Agent must calculate the amount of the Term-Out Loan in the Optional Currency for the second of those Terms.

(ee)     The amount of the Term-Out Loan in the Optional Currency for the second Term will be the amount determined by notionally converting into that Optional Currency the Sterling Amount of the Term-Out Loan on the basis of the Agent's Spot Rate of Exchange one Business Day before the Rate Fixing Day for that Term.

(ff)      If the amount calculated is less than the existing amount of that Term-Out Loan in the Optional Currency during the first Term, the Company must pay, subject to paragraph (e) below, on the last day of the first Term an amount equal to the difference.

(gg)     If the amount calculated is more than the existing amount of that Term-Out Loan in the Optional Currency during the first Term, each Lender must pay, subject to paragraph (e) below, on the last day of the first Term its Pro Rata Share of the difference.

(hh)     If the calculation made by the Facility Agent under paragraph (a) above shows that the amount of the Term-Out Loan in the Optional Currency has increased or decreased by less than five per cent. since it was borrowed or (if later) the most recent adjustment under paragraph (c) or (d) above, no payment is required under paragraph (c) or (d) above.

Notification

The Facility Agent must notify the Lenders and the Company of the relevant Sterling Amount (and the applicable Agent's Spot Rate of Exchange) promptly after they are ascertained.

REPAYMENT

Repayment of Loans

(ii)      The Company must repay each Loan (other than a Term-Out Loan) in full on its Maturity Date. No Loan may be outstanding after the applicable Final Maturity Date.

(jj)      Subject to the other terms of this Agreement, any amounts repaid under paragraph (a) above may be re-borrowed.

Repayment of Term-Out Loans

The Company must repay all Term-Out Loans in full on the Extended Final Maturity Date.

PREPAYMENT AND CANCELLATION

Mandatory prepayment - illegality

(kk)     A Lender must notify the Company promptly if it becomes aware that it is unlawful in any jurisdiction for that Lender to perform any of its obligations under a Finance Document or to fund or maintain its share in any Loan.

(ll)     After notification under paragraph (a) above:

   (i)       the Company must repay or prepay the share of that Lender in each Loan made to it on the date specified in paragraph (c) below; and

   (ii)      the Commitments of that Lender will be immediately cancelled.

(mm)     The date for repayment or prepayment of a Lender's share in a Loan will be:

   (i)       the Business Day following receipt by the Company of notice from the Lender under paragraph (a) above; or

   (ii)       if later, the latest date allowed by the relevant law.

Mandatory prepayment - change of control

If, except in the context of a group reorganisation where the Company continues to be controlled directly or indirectly, by PPL Corporation, the Company becomes aware of any person (whether alone or together with any associated person or persons) gaining control of the Company (for these purposes "associated person" means, in relation to any person, a person who is (i) "acting in concert" (as defined in the City Code on Takeovers and Mergers) with that person or (ii) a "connected person" (as defined in section 839 of the Income and Corporation Taxes Act 1988) of that person and "control" has the meaning given to it in Section 416 of the Income and Corporation Taxes Act 1988):

   (iii)     within 5 days of such date, the Company shall give notice of such change of control to the Facility Agent;

   (iv)     the Lenders and the Company shall immediately enter into negotiations for a period of not more than 45 days from the date of the change of control with a view to agreeing whether the Facility shall continue to be made available and on what terms; and

   (v)      if no such agreement is reached within the said period of 45 days then:

(A)     any Lender may on 10 days' notice to the Facility Agent and to the Company require the repayment of its share in each Loan and cancel its Commitment; and

(B)     the Majority Lenders may on 10 days' notice to the Company require repayment in full of all outstanding Loans and cancel the Total Commitments.

Voluntary prepayment

(nn)    The Company may, by giving not less than three Business Days' prior notice to the Facility Agent, prepay any Loan at any time in whole or in part.

(oo)     A prepayment of part of a Loan drawn in US Dollars must be in a minimum amount of $5,000,000 and an integral multiple of U.S. $1,000,000.

(pp)     A prepayment of part of a Loan drawn in Sterling must be in a minimum amount of £5,000,000 and an integral multiple of £1,000,000.

Automatic cancellation

The Commitments of each Lender in relation to the Tranche A Facility, the Tranche B Facility and the Tranche C Facility will be automatically cancelled at the close of business on the last day of the relevant Availability Period.

Voluntary cancellation

(qq)    The Company may, by giving not less than three Business Days' prior notice to the Facility Agent, cancel the unutilised amount of the Total Commitments in whole or in part.

(rr)     Partial cancellation of the Total Commitments must be in a minimum amount of £5,000,000 and an integral multiple of £1,000,000.

(ss)     Any cancellation in part will be applied against the relevant Commitment of each Lender pro rata.

Involuntary prepayment and cancellation

(tt)      If the Company is, or will be, required to pay to a Lender a Tax Payment or an Increased Cost, the Company may, while the requirement continues, give notice to the Facility Agent requesting prepayment and cancellation in respect of that Lender.

(uu)     After notification under paragraph (a) above:

   (i)       the Company must repay or prepay that Lender's share in each Loan made to it on the date specified in paragraph (c) below; and

   (ii)      the Commitments of that Lender will be immediately cancelled.

(vv)    The date for repayment or prepayment of a Lender's share in a Loan will be the last day of the current Term for that Loan or, if earlier, the date specified by the Company in its notification.

Partial prepayment of Term-Out Loans

No amount of a Term-Out Loan repaid or prepaid under this Agreement may subsequently be re-borrowed.

Re-borrowing of Loans (other than Term-Out Loans)

Any voluntary prepayment of a Loan (other than a Term-Out Loan) may be re-borrowed on the terms of this Agreement. Any mandatory or involuntary prepayment of a Loan may not be re-borrowed.

Miscellaneous provisions

(ww)   Any notice of prepayment and/or cancellation under this Agreement is irrevocable and must specify the relevant date(s) and the affected Loans and Commitments. The Facility Agent must notify the Lenders promptly of receipt of any such notice.

(xx)     All prepayments under this Agreement must be made with accrued interest on the amount prepaid. No premium or penalty is payable in respect of any prepayment except for Break Costs.

(yy)     The Majority Lenders may agree a shorter notice period for a voluntary prepayment or a voluntary cancellation.

(zz)     No prepayment or cancellation is allowed except in accordance with the express terms of this Agreement.

(aaa)    No amount of the Total Commitments cancelled under this Agreement may subsequently be reinstated.

INTEREST

Calculation of interest

The rate of interest on each Loan for each Term is the percentage rate per annum equal to the aggregate of the applicable:

Margin;

LIBOR; and

Mandatory Cost.

Payment of interest

Except where it is provided to the contrary in this Agreement, the Company must pay accrued interest on each Loan made to it on the last day of each Term and also, if the Term is longer than six months, on the dates falling at six-monthly intervals after the first day of that Term.

Interest on overdue amounts

(bbb)   If the Company fails to pay any amount payable by it under the Finance Documents, it must immediately on demand by the Facility Agent pay interest on the overdue amount from its due date up to the date of actual payment, both before, on and after judgment.

(ccc)    Interest on an overdue amount is payable at a rate determined by the Facility Agent to be one per cent. per annum above the rate which would have been payable if the overdue amount had, during the period of non-payment, constituted a Tranche B Loan in the currency of the overdue amount. For this purpose, the Facility Agent may (acting reasonably):

   (i)     select successive Terms of any duration of up to three months; and

   (ii)     determine the appropriate Rate Fixing Day for that Term.

(ddd)   Notwithstanding paragraph (b) above, if the overdue amount is a principal amount of a Loan and becomes due and payable prior to the last day of its current Term, then:

   (i)       the first Term for that overdue amount will be the unexpired portion of that Term; and

   (ii)      the rate of interest on the overdue amount for that first Term will be one per cent. per annum above the rate then payable on that Loan.

After the expiry of the first Term for that overdue amount, the rate on the overdue amount will be calculated in accordance with paragraph (b) above.

(eee)    Interest (if unpaid) on an overdue amount will be compounded with that overdue amount at the end of each of its Terms but will remain immediately due and payable.

Notification of rates of interest

The Facility Agent must promptly notify each relevant Party of the determination of a rate of interest under this Agreement.

Margin

(fff)    The applicable Margin for all Loans will be determined in accordance with the table below, with:

the applicable Margin for Tranche A Loans being determined by reference to the percentage rate per annum specified in Column 2 as set out below opposite the long term credit rating assigned to the Company and published by Moody's and/or S&P as specified in Column 1;

the applicable Margin for Tranche B Loans being determined by reference to the percentage rate per annum specified in Column 3 as set out below opposite the long term credit rating assigned to the Company and published by Moody's and/or S&P as specified in Column 1; and

the applicable Margin for Tranche C Loans being determined by reference to the percentage rate per annum specified in Column 4 as set out below opposite the long term credit rating assigned to the Company and published by Moody's and/or S&P as specified in Column 1,

Column 1 Credit Rating (S&P/Moody's)	Column 2 Tranche A Margin %	Column 3 Tranche B Margin %	Column 4 Tranche C Margin %
A-/A3 (or higher)	0.40	0.45	0.425
BBB+/Baa1	0.50	0.55	0.525
BBB/Baa2	0.70	0.70	0.70
BBB-/Baa3 (or lower)	0.95	0.95	0.95

(ggg)   During any period in which (i) an Event of Default is outstanding; and/or (ii) there is no long term credit rating assigned to the Company by either S&P or Moody's, the applicable Margin for Tranche A and Tranche B and Tranche C shall, in each case, be 1.00 per cent. per annum.

(hhh)   In the event that the long term credit ratings assigned to the Company by S&P and Moody's would indicate a different Margin under (a) above then the lower of the two credit ratings shall apply to determine the applicable Margin, save that, in the event that there is more than one notch difference between the two credit ratings, then the middle level shall apply to determine the applicable Margin and, in the event that there are an even number of levels between the two credit ratings (and therefore no middle level) the higher of the two middle levels shall be used to determine the applicable Margin.

(iii)     Any adjustment to the Margin pursuant to paragraphs (a) to (c) above shall be made on the date of publication by S&P and/or Moody's of a long term credit rating of the Company (or an amendment of a previously published rating) or on the date in which no long term credit rating is assigned to the Company, if such publication (or amendment) would result in a change in the Margin as provided above and, for the avoidance of doubt, such adjustment shall apply to Loans currently outstanding at such date of publication and with effect from such date.

(jjj)     Promptly after becoming aware of the same, the Company shall inform the Facility Agent in writing if any of the circumstances contemplated by sub-clauses 9.5(b) through (c) apply.

TERMS

Selection - Term-Out Loans

(kkk)   Each Term-Out Loan has successive Terms.

(lll)     The Company must select the first Term-Out for a Term-Out Loan in the relevant notice under Clause 2.5 (Term-Out Option) and each subsequent Term in an irrevocable notice received by the Facility Agent not later than 11.00 a.m. one Business Day before the Rate Fixing Day for that Term. Each Term for a Term-Out Loan will start on its Utilisation Date or on the expiry of its preceding Term.

(mmm) If the Company fails to select a Term for an outstanding Term-Out Loan under paragraph (b) above, that Term will, subject to the other provisions of this Clause, be one month.

(nnn)   Subject to the following provisions of this Clause, each Term for a Term-Out Loan will be one, two, three or six months or any other period agreed by the Company and the Lenders.

Selection - Loans

(ooo)   Each Loan (other than a Term-Out Loan) has one Term only.

(ppp)   The Company must select the Term for a Loan in the relevant Request.

(qqq)   Subject to the following provisions of this Clause, each Term for a Loan will be one, two, three or six months or for a period of one to thirty days duration as selected by the Company or any other period agreed by the Company and the Lenders.

Consolidation - Term-Out Loans

(rrr)    Unless the Company otherwise requests, a Term for a Term-Out Loan will end on the same day as the current Term for any other Term-Out Loan denominated in the same currency as that Term-Out Loan. On the last day of those Terms, those Term-Out Loans will be consolidated and treated as one Term-Out Loan.

(sss)    The Company may select different Terms for any portion of a Term-Out Loan on the last day of the Term of that Term-Out Loan provided such portion is a minimum of £5,000,000 and an integral multiple of £1,000,000. Any such portion shall be treated as a separate Loan.

No overrunning the Final Maturity Date

If a Term would otherwise overrun the Final Maturity Date, it will be shortened so that it ends on the Final Maturity Date.

Other adjustments

The Facility Agent and the Company may enter into such other arrangements as they may agree for the adjustment of Terms and the consolidation and/or splitting of Loans.

Notification

The Facility Agent must notify the Company and the Lenders of the duration of each Term promptly after ascertaining its duration.

MARKET DISRUPTION

Failure of a Reference Bank to supply a rate

If LIBOR is to be calculated by reference to the Reference Banks but a Reference Bank does not supply a rate by 12.00 noon on a Rate Fixing Day, the applicable LIBOR will, subject as provided below, be calculated on the basis of the rates of the remaining Reference Banks.

Market disruption

(ttt)     In this Clause, each of the following events is a market disruption event:

   (i)       LIBOR is to be calculated by reference to the Reference Banks but no, or only one, Reference Bank supplies a rate by 12.00 noon on the Rate Fixing Day; or

   (ii)      the Facility Agent receives by close of business on the Rate Fixing Day notification from Lenders whose shares in the relevant Loan exceed 50 per cent. of that Loan that such Lenders are unable to obtain matching deposits in the relevant interbank market or the rate at which they can do so is in excess of LIBOR for the relevant Term.

(uuu)   The Facility Agent must promptly notify the Company and the Lenders of a market disruption event.

(vvv)   After notification under paragraph (b) above, the rate of interest on each Lender's share in the affected Loan for the relevant Term will be the aggregate of the applicable:

   (i)     Margin;

   (ii)     rate notified to the Facility Agent by that Lender as soon as practicable, and in any event before interest is due to be paid in respect of that Term, to be that which expresses as a percentage rate per annum the cost to that Lender of funding its share in that Loan from whatever source it may reasonably select; and

   (iii)     Mandatory Cost.

Alternative basis of interest or funding

(www) If a market disruption event occurs and the Facility Agent or the Company so requires, the Company and the Facility Agent must enter into negotiations for a period of not more than 30 days with a view to agreeing an alternative basis for determining the rate of interest and/or funding for the affected Loan and any future Loan.

(xxx)   Any alternative basis agreed will be, with the prior consent of all the Lenders, binding on all the Parties.

TAXES

General

In this Clause:

Tax Credit means a credit against any Tax or any relief or remission for Tax (or its repayment).

U.K. Lender means a Lender which is within the charge to U.K. corporation tax in respect of, and beneficially entitled to, a payment of interest on a Loan made by a person that was a bank for the purposes of section 349 of the Income and Corporation Taxes Act 1988 (as currently defined in section 840A of the Income and Corporation Taxes Act 1988) at the time the Loan was made;

Tax gross-up

(yyy)   The Company must make all payments to be made by it under the Finance Documents without any Tax Deduction, unless a Tax Deduction is required by law.

(zzz)    If:

   (i)      a Lender is not, or ceases to be, a U.K. Lender; or

   (ii)      the Company or a Lender is aware that the Company must make a Tax Deduction (or that there is a change in the rate or the basis of a Tax Deduction),

it must promptly notify the Facility Agent. The Facility Agent must then promptly notify the affected Parties.

(aaaa)  Except as provided below, if a Tax Deduction is required by law to be made by the Company or the Facility Agent, the amount of the payment due from the Company will be increased to an amount which (after making the Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required.

(bbbb)  Except as provided below, the Company is not required to make an increased payment under paragraph (c) above to a Lender that is not, or has ceased to be, a U.K. Lender in excess of the amount that the Company would have had to pay had the Lender been, or not ceased to be, a U.K. Lender.

(cccc)   Paragraph (d) above will not apply if the Lender has ceased to be a U.K. Lender by reason of any change after the date it became a Lender under this Agreement in (or in the interpretation, administration, or application of) any law or double taxation agreement or any published practice or concession of any relevant taxing authority.

(dddd)  Where a Lender fails to give notice under paragraph (b) above within 60 days after it obtains knowledge (or, after reasonable due enquiry, ought to have obtained knowledge) of such event, then such Lender shall, with respect to any claim made by it under this Clause 12.2 (Tax gross-up), only be entitled to claim an increased payment for the period from and after the date that is 60 days prior to the date on which the Lender does give notice.

(eeee)   If the Company is required to make a Tax Deduction, it must make the minimum Tax Deduction and must make any payment required in connection with that Tax Deduction within the time allowed by law.

(ffff)    Within 30 days of making either a Tax Deduction or a payment required in connection with a Tax Deduction, the Company must deliver to the Facility Agent for the relevant Finance Party evidence satisfactory to that Finance Party (acting reasonably) that the Tax Deduction has been made or (as applicable) the appropriate payment has been paid to the relevant taxing authority.

Tax indemnity

(gggg)  Except as provided below, the Company must indemnify a Finance Party against any loss or liability which that Finance Party (in its absolute discretion) determines will be or has been suffered (directly or indirectly) by that Finance Party for or on account of Tax in relation to a payment received or receivable (or any payment deemed to be received or receivable) under a Finance Document.

(hhhh)  Paragraph (a) above does not apply to any Tax assessed on a Finance Party under the laws of the jurisdiction in which:

   (i)       that Finance Party is incorporated or, if different, the jurisdiction (or jurisdictions) in which that Finance Party is treated as resident for tax purposes; or

   (ii)      that Finance Party's Facility Office is located in respect of amounts received or receivable in that jurisdiction,

if that Tax is imposed on or calculated by reference to the net income received or receivable by that Finance Party. However, any payment deemed to be received or receivable, including any amount treated as income but not actually received by the Finance Party, such as a Tax Deduction, will not be treated as net income received or receivable for this purpose.

(iiii)    A Finance Party making, or intending to make, a claim under paragraph (a) above must promptly notify the Company of the event which will give, or has given, rise to the claim.

Tax Credit

If the Company makes a Tax Payment and the relevant Finance Party has obtained and used any Tax Credit that is attributable to that Tax Payment, then, if in its discretion (acting reasonably) it can do so without any further adverse consequences for it, that Finance Party must pay an amount to the Company which that Finance Party determines (in its discretion, acting reasonably) will leave it (after that payment) in the same after-tax position as it would have been in if the Tax Payment had not been required to be made by the Company. The relevant Finance Party shall take those steps it considers reasonable to seek and claim any tax credit.

Tax Warranty of Lenders

Each Lender severally warrants to the Company on the date it becomes a Lender that it is a U.K. Lender. A Lender must promptly notify the Company if it ceases to be a U.K. Lender after this Agreement is entered into.

Stamp taxes

The Company must pay and indemnify each Finance Party against any stamp duty, registration or other similar Tax payable in connection with the entry into, performance or enforcement of any Finance Document, except for any such Tax payable in connection with the entry into of a Transfer Certificate.

Value added taxes

(jjjj)     All costs and expenses payable under a Finance Document by the Company is exclusive of any value added tax or any other Tax of a similar nature which might be chargeable in connection with that amount. If any such Tax is chargeable, the Company must pay to the Finance Party (in addition to and at the same time as paying that amount) an amount equal to the amount of that Tax.

(kkkk)  The obligation of the Company under paragraph (a) above will be reduced to the extent that the Finance Party determines (acting reasonably) that it is entitled to repayment or a credit in respect of the relevant Tax.

INCREASED COSTS

Increased Costs

Except as provided below in this Clause, the Company must pay to a Finance Party the amount of any Increased Cost incurred by that Finance Party or any of its Affiliates as a result of:

the introduction of, or any change in, or any change in the interpretation or application of, any law or regulation; or

compliance with any law or regulation,

made after the date of this Agreement.

Exceptions

The Company need not make any payment for an Increased Cost to the extent that the Increased Cost is:

compensated for under another Clause or would have been but for an exception to that Clause;

a Tax on the overall net income of a Finance Party or any of its Affiliates;

attributable to a Finance Party or its Affiliate wilfully failing to comply with any law or regulation; or

incurred in any period or periods ending prior to the date falling 60 days before the date any demand in relation to that Increased Cost is made (save where the relevant Finance Party (after due enquiry) was unaware of the existence of such Increased Cost or where such Increased Cost is caused by reason of a change in (or in the interpretation, administration or application of) law with retrospective effect).

Claims

A Finance Party intending to make a claim for an Increased Cost must notify the Company promptly of the circumstances giving rise to, and the amount of, the claim.

MITIGATION

Mitigation

(llll)     Each Finance Party must, in consultation with the Company, take all reasonable steps to mitigate any circumstances which arise and which result or would result in:

   (i)      any Tax Payment or Increased Cost being payable to that Finance Party;

   (ii)      that Finance Party being able to exercise any right of prepayment and/or cancellation under this Agreement by reason of any illegality;

   (iii)     that Finance Party incurring any cost of complying with the minimum reserve requirements of the European Central Bank; or

   (iv)     the occurrence of any market disruption event,

including transferring its rights and obligations under the Finance Documents to an Affiliate or changing its Facility Office.

(mmmm)  A Finance Party is not obliged to take any step under this Subclause if, in the opinion of that Finance Party (acting reasonably), to do so might be prejudicial to it.

(nnnn)  Each Finance Party must promptly notify the Company of any circumstances as described in 14.1(a)(i) to (iv).

(oooo)  The Company must indemnify each Finance Party for all costs and expenses reasonably incurred by it as a result of any step taken under this Clause 14.1 (Mitigation).

Substitution

Notwithstanding Clauses 14.1, if any circumstances arise which result in:

   (i)       any Tax Payment or Increased Cost being payable to that Finance Party;

   (ii)       that Finance Party being able to exercise any right of prepayment and/or cancellation under this Agreement by reason of any illegality;

   (iii)     that Finance Party incurring any cost of complying with the minimum reserve requirements of the European Central Bank; or

   (iv)     the occurrence of any market disruption event,

then the Company, at its expense, at any time within 180 days after the occurrence of the relevant event or circumstance, so long as no Default is outstanding, may by notice to such Finance Party require it (and, if applicable, its Affiliate) to novate its rights and obligations hereunder (including its Commitments and its share of any Loans) in accordance with Clause 27 to a bank or financial institution specified by the Company and acceptable to the Facility Agent which is willing to take such a novation as aforesaid provided that:

   (v)       such novation shall not conflict with or violate any law applicable to or binding on such Finance Party (or, if applicable, its Affiliate); and

   (vi)      the Company shall have paid to the Finance Party (or, if applicable, its Affiliate) all amounts accrued and owing hereunder.

Notwithstanding the above, the Company shall not be entitled to require a novation under this Clause 14.2 with respect to any Finance Party if:

   (vii)     the relevant Finance Party shall have mitigated the effect of the relevant event or circumstance as provided in Clause 14.1(a), and the novation would have no greater or further mitigating effect; or

   (viii)     the relevant event or circumstances are applicable to all Finance Parties.

Conduct of business by a Finance Party

No term of this Agreement will:

interfere with the right of any Finance Party to arrange its affairs (Tax or otherwise) in whatever manner it thinks fit or oblige any Finance Party to investigate or claim any Tax Credit; or

oblige any Finance Party to disclose any information relating to its affairs (Tax or otherwise) or any computation in respect of Tax.

PAYMENTS

Place

Unless a Finance Document specifies that payments under it are to be made in another manner, all payments by a Party (other than the Facility Agent) under the Finance Documents must be made to the Facility Agent to its account at such office or bank:

in the principal financial centre of the country of the relevant currency; or

in the case of euro, in the principal financial centre of a Participating Member State or London,

as it may notify to that Party for this purpose by not less than five Business Days' prior notice.

Funds

Payments under the Finance Documents to the Facility Agent must be made for value on the due date at such times and in such funds as the Facility Agent may specify to the Party concerned as being customary at the time for the settlement of transactions in the relevant currency in the place for payment.

Distribution

(pppp)  Each payment received by the Facility Agent under the Finance Documents for another Party must, except as provided below, be made available by the Facility Agent to that Party by payment (as soon as practicable after receipt) to its account with such office or bank:

   (i)      in the principal financial centre of the country of the relevant currency; or

   (ii)      in the case of euro, in the principal financial centre of a Participating Member State or London,

as it may notify to the Facility Agent for this purpose by not less than five Business Days' prior notice.

(qqqq)  The Facility Agent may apply any amount received by it for the Company in or towards payment (as soon as practicable after receipt) of any amount due from the Company under the Finance Documents or in or towards the purchase of any amount of any currency to be so applied.

(rrrr)    Where a sum is paid to the Facility Agent under this Agreement for another Party, the Facility Agent is not obliged to pay that sum to that Party until it has established that it has actually received it. However, the Facility Agent may assume that the sum has been paid to it, and, in reliance on that assumption, make available to that Party a corresponding amount. If it transpires that the sum has not been received by the Facility Agent, that Party must immediately on demand by the Facility Agent refund any corresponding amount made available to it together with interest on that amount from the date of payment to the date of receipt by the Facility Agent at a rate calculated by the Facility Agent to reflect its cost of funds.

Currency

(ssss)   Unless a Finance Document specifies that payments under it are to be made in a different manner, the currency of each amount payable under the Finance Documents is determined under this Clause.

(tttt)     Interest is payable in the currency in which the relevant amount in respect of which it is payable is denominated.

(uuuu)  A repayment or prepayment of any principal amount is payable in the currency in which that principal amount is denominated on its due date.

(vvvv)  Amounts payable in respect of costs and expenses are payable in the currency in which they are incurred.

(wwww)  Each other amount payable under the Finance Documents is payable in Sterling.

No set-off or counterclaim

All payments made by the Company under the Finance Documents must be made without set-off or counterclaim.

Business Days

(xxxx)  If a payment under the Finance Documents is due on a day which is not a Business Day, the due date for that payment will instead be the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not) or whatever day the Facility Agent determines is market practice.

(yyyy)  During any extension of the due date for payment of any principal under this Agreement interest is payable on that principal at the rate payable on the original due date.

Partial payments

(zzzz)   If any Administrative Party receives a payment insufficient to discharge all the amounts then due and payable by the Company under the Finance Documents, the Administrative Party must apply that payment towards the obligations of the Company under the Finance Documents in the following order:

   (i)       first, in or towards payment pro rata of any unpaid fees, costs and expenses of the Administrative Parties under the Finance Documents;

   (ii)      secondly, in or towards payment pro rata of any accrued interest or fee due but unpaid under this Agreement;

   (iii)     thirdly, in or towards payment pro rata of any principal amount due but unpaid under this Agreement; and

   (iv)     fourthly, in or towards payment pro rata of any other sum due but unpaid under the Finance Documents.

(aaaaa)  The Facility Agent must, if so directed by all the Lenders, vary the order set out in sub-paragraphs (a)(ii) to (iv) above.

(bbbbb) This Subclause will override any appropriation made by the Company.

Timing of payments

If a Finance Document does not provide for when a particular payment is due, that payment will be due within three Business Days of demand by the relevant Finance Party.

REPRESENTATIONS

Representations

The representations set out in this Clause are made by the Company to each Finance Party.

Status

It is a limited liability company, duly incorporated and validly existing under the Companies Act 1985 in England and Wales.

Powers and authority

It has the power to enter into and perform, and has taken all necessary action to authorise the entry into and performance of, the Finance Documents to which it is or will be a party and the transactions contemplated by those Finance Documents.

Legal validity

Subject to any general principles of law limiting its obligations and referred to in any legal opinion required under this Agreement, each Finance Document to which it is a party is its legally binding, valid and enforceable obligation.

Non-conflict

The entry into and performance by it of, and the transactions contemplated by, the Finance Documents do not conflict with any borrowing or other power or restricted granted or imposed by:

any law or regulation applicable to it and violation of which has or is likely to have a Material Adverse Effect; or

its constitutional documents.

No Event of Default

No Event of Default is outstanding or will result from the execution of, or the performance of any transaction contemplated by, any Finance Document.

Authorisations

All authorisations required by it (including any authorisations required under PUCHA or the Act, if any) in connection with the entry into, performance, validity and enforceability of, and the transactions contemplated by, the Finance Documents have been obtained or effected (as appropriate) and are in full force and effect.

Financial statements

Its audited consolidated financial statements most recently delivered to the Facility Agent (which, at the date of this Agreement, are the Original Financial Statements):

have been prepared in accordance with accounting principles and practices generally accepted in its jurisdiction of incorporation, consistently applied; and

fairly represent its consolidated financial condition as at the date to which they were drawn up,

except, in each case, as disclosed to the contrary in those financial statements..

No material adverse change

Other than as disclosed in writing to the Mandated Lead Arrangers prior to the date of this Agreement there has been no material adverse change in its consolidated financial condition since the date to which the Original Financial Statements were drawn up.

Litigation

No litigation, arbitration or administrative proceedings are current or, to its knowledge, pending or threatened, which, if adversely determined, are reasonably likely to have a Material Adverse Effect.

Winding Up

No meeting has been convened for its Winding-up and, so far as it is aware, no petition, application or the like is outstanding for its Winding up.

Non-Violation of other Agreements:

Its entry into, exercise of its rights and/or performance of or compliance with its obligations under this Agreement do not and will not violate, to an extent or in a manner which has or is likely to have a Material Adverse Effect on it, any agreement to which it is a party or which is binding on it.

Times for making representations

(ccccc)  The representations set out in this Clause are made by the Company on the date of this Agreement.

(ddddd)  The representations in Clauses 16.2 to 16.7 (inclusive) are deemed to be repeated by the Company on the date of each Request and the first day of each Term.

(eeeee)  When a representation is repeated, it is applied to the circumstances existing at the time of repetition.

INFORMATION COVENANTS

Financial statements

(fffff)  The Company must supply to the Facility Agent in sufficient copies for all the Lenders:

   (i)       its audited consolidated financial statements for each of its financial years; and

   (ii)       its interim financial statements for the first half-year of each of its financial years.

(ggggg) All financial statements must be supplied as soon as they are available and:

   (i)       in the case of the Company's audited consolidated financial statements, within 180 days; and

   (ii)      in the case of the Company's interim financial statements, within 90 days,

(hhhhh)  of the end of the relevant financial period.

Form of Financial Statement

If any financial statement delivered or to be delivered to the Facility Agent under Clause 17.1 is not to be or, as the case may be, has not been prepared in accordance with Applicable Accounting Principles:

The Company and the Facility Agent (on behalf of and after consultation with all the Lenders) shall, on the request of the Facility Agent or the Company, negotiate in good faith with a view to agreeing such amendments to the above financial ratio and/or the definitions of the terms used in it as are necessary to give the Lenders comparable protection to that contemplated at the date of this Agreement;

If amendments are agreed by the Company and the Majority Lenders within 25 days, those amendments shall take effect in accordance with the terms of that agreement;

If such amendments are not so agreed within 25 days, the Company shall:

within 30 days after the end of that 25 day period; and

with all subsequent financial statements to be delivered to the Facility Agent under Clause 17.1,

deliver to the Facility Agent details of all such adjustments as need to be made to the relevant financial statements to bring them into line with the Companies Act 1985 (as in effect on the date of this Agreement) and Applicable Accounting Principles.

Compliance Certificate

(iiiii)    The Company must supply to the Facility Agent a Compliance Certificate with each set of its financial statements, sent to the Facility Agent under this Agreement.

(jjjjj)     A Compliance Certificate must be signed by two directors of the Company.

Information - miscellaneous

The Company must supply to the Facility Agent, in sufficient copies for all the Lenders if the Facility Agent so requests:

copies of all documents despatched by the Company to its creditors generally or any class of them at the same time as they are despatched;

promptly upon becoming aware of them, details of any litigation, arbitration or administrative proceedings which are current, threatened or pending and which might, if adversely determined, have a Material Adverse Effect;

promptly on request, a list of the then current Material Subsidiaries; and

promptly on request, such further information regarding the financial condition and operations of the Group as any Finance Party through the Facility Agent may reasonably request.

Notification of Default

(kkkkk) The Company must notify the Facility Agent of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence.

(lllll)    Promptly on request by the Facility Agent, the Company must supply to the Facility Agent a certificate signed by two of its directors on its behalf, certifying that no Default is outstanding or, if a Default is outstanding, specifying the Default and the steps, if any, being taken to remedy it.

Use of websites

(mmmmm)  Except as provided below, the Company may deliver any information under this Agreement to a Lender by posting it on to an electronic website if:

   (i)       the Facility Agent and the Lender agree;

   (ii)       the Company and the Facility Agent designate an electronic website for this purpose;

   (iii)     the Company notifies the Facility Agent of the address of and password for the website; and

   (iv)     the information posted is in a format agreed between the Company and the Facility Agent.

The Facility Agent must supply each relevant Lender with the address of and password for the website.

(nnnnn)  Notwithstanding the above, the Company must supply to the Facility Agent in paper form a copy of any information posted on the website together with sufficient copies for:

   (i)       any Lender not agreeing to receive information via the website; and

   (ii)       within ten Business Days of request any other Lender, if that Lender so requests.

(ooooo)  The Company must promptly upon becoming aware of its occurrence, notify the Facility Agent if:

   (i)       the website cannot be accessed;

   (ii)       the website or any information on the website is infected by any electronic virus or similar software;

   (iii)     the password for the website is changed; or

   (iv)     any information to be supplied under this Agreement is posted on the website or amended after being posted.

If the circumstances in paragraphs (i) or (ii) above occur, the Company must supply any information required under this Agreement in paper form.

Know your customer requirements

(ppppp)  The Company must promptly on the request of any Finance Party supply to that Finance Party any documentation or other evidence which is reasonably requested by that Finance Party (whether for itself, on behalf of any Finance Party or any prospective new Lender) to enable a Finance Party or prospective new Lender to carry out and be satisfied with the results of all applicable know your customer requirements.

(qqqqq)  Each Lender must promptly on the request of the Facility Agent supply to the Facility Agent any documentation or other evidence which is reasonably required by the Facility Agent to carry out and be satisfied with the results of all know your customer requirements.

FINANCIAL COVENANTS

Definitions

In this Clause:

Consolidated EBITDA means the consolidated net pre-taxation profits of the Group for a Measurement Period as adjusted by:

   (i)       adding back Interest Payable;

   (ii)      taking no account of any exceptional or extraordinary item;

   (iii)     excluding any amount attributable to minority interests;

   (iv)     adding back depreciation and amortisation; and

   (v)      taking no account of any revaluation of an asset or any loss or gain over book value arising on the disposal of an asset (otherwise than in the ordinary course of trading) by a member of the Group during that Measurement Period.

Interest Payable means, in relation to any Measurement Period, all interest payable and similar charges of the Group expressed in Sterling and determined on a consolidated basis in accordance with Applicable Accounting Principles.

Measurement Period means a half-year of the Company.

Regulatory Asset Base means the regulatory asset base of the Company most recently published by OFGEM.

Total Gross Debt means, in respect of the Company, at any time the consolidated Financial Indebtedness of the Company which is required to be accounted for as debt in the annual financial statements of the Company.

Interpretation

(rrrrr)   Except as provided to the contrary in this Agreement, an accounting term used in this Clause is to be construed in accordance with the principles applied in connection with the Original Financial Statements.

(sssss)  Any amount in a currency other than Sterling is to be taken into account at its Sterling equivalent calculated on the basis of:

   (i)       the Facility Agent's spot rate of exchange for the purchase of the relevant currency in the London foreign exchange market with Sterling at or about 11.00 a.m. on the day the relevant amount falls to be calculated; or

   (ii)       if the amount is to be calculated on the last day of a financial period of the Company, the relevant rates of exchange used by the Company in, or in connection with, its financial statements for that period.

(ttttt)    No item must be credited or deducted more than once in any calculation under this Clause.

Interest cover

The Company must ensure that the ratio of Consolidated EBITDA to Interest Payable is not, at the end of each Measurement Period, less than 3 to 1.

Asset Cover

The Company must ensure that the Regulatory Asset Base will exceed Total Gross Debt by at least £150,000,000 at all times.

GENERAL COVENANTS

General

The Company agrees to be bound by the covenants set out in this Clause relating to it and, where the covenant is expressed to apply to each member of the Group, the Company must ensure that each of its Subsidiaries performs that covenant.

Authorisations

The Company must promptly obtain, maintain and comply with the terms of any authorisation required under any law or regulation to enable it to perform its obligations under, or for the validity or enforceability of, any Finance Document.

Compliance with laws

Each member of the Group must comply in all respects with all laws to which it is subject where failure to do so is reasonably likely to have a Material Adverse Effect.

Pari passu ranking

The Company must ensure that its payment obligations under the Finance Documents rank at least pari passu with all its other present and future unsecured payment obligations, except for obligations mandatorily preferred by law applying to companies generally.

Negative pledge

(uuuuu)  Except as provided below, neither the Company nor any Material Subsidiary may create or allow to exist any Security Interest on any of its assets.

(vvvvv)     Paragraph (a) does not apply to:

   (i)       any Security Interest created under or in connection with or arising out of the Balancing and Settlement Code or any transactions or arrangements entered into in connection with the management of risks relating thereto;

   (ii)       in respect of overdue amounts which have not been overdue for more than 30 days and/or are being contested in good faith, liens arising solely by operation of law or by order of a court or tribunal (or by an agreement of similar effect) and/or in the ordinary course of business or operations;

   (iii)     any Security Interest created after the date of this Agreement for the sole purpose of re-financing all or any part of either Facility (at the option of the Company) provided that the monies borrowed or raised on such Security Interest shall, to that extent, be applied reasonably promptly in accordance with this Agreement in or towards repayment of the relevant Facility;

   (iv)     any Security Interest arising out of title retention provisions in a supplier's standard conditions of supply of goods acquired in the ordinary course of business or operations;

   (v)      any Security Interest created on any asset acquired after the date of this Agreement for the sole purpose of financing or re-financing that acquisition and securing a principal, capital or nominal amount not exceeding the cost of that acquisition, provided that the Security Interest is removed or discharged within 6 months of the date of acquisition of such asset;

   (vi)     any Security Interest outstanding on or over any asset acquired after the date of this Agreement and in existence at the date of such acquisition, provided that the Security Interest is removed or discharged within 6 months of the date of acquisition of such asset;

   (vii)     any Security Interest created or outstanding on or over any asset of any company which becomes a Material Subsidiary of the Company after the date of this Agreement where such Security Interest is created prior to the date on which such company becomes a Material Subsidiary of the Company and is not created or increased in contemplation of such Company being acquired and/or becoming a Material Subsidiary of the Company and the Security Interest is removed or discharged within 6 months of the date of such company becoming a Material Subsidiary of the Company;

   (viii)    any Security Interest created on any asset to secure any Financial Indebtedness incurred in connection with the financing of any asset or project in respect of which the repayment of that Financial Indebtedness is to be made from the revenues arising out of, or other proceeds of realisation from, that asset or project, with recourse to those revenues and proceeds and other assets used in connection with, or forming the subject matter of, that asset or project but without recourse (or with such limited recourse as the Majority Banks may from time to time agree) to any other assets of the Group;

   (ix)     any netting arrangements under any swap or other hedging transaction which is on standard market terms;

   (x)      any Security Interest created or outstanding with the prior approval of the Majority Banks; and

   (xi)     any Security Interest created or outstanding on or over assets of the Company or any of its Material Subsidiaries provided that the aggregate outstanding principal or nominal amount secured by all Security Interests created or outstanding under this exception on or over such assets shall not at any time exceed £25,000,000 or its equivalent.

Disposals

(wwwww)  Except as provided below, no member of the Group may, either in a single transaction or in a series of transactions and whether related or not, dispose of all or any part of its assets (other than cash) which is substantial in the context of the consolidated total assets of the Group.

(xxxxx)     Paragraph (a) does not apply to:

   (i)       any disposal made in the ordinary course of business or operations of the disposing entity (including, without limitation, disposals of subsidiaries or lines of business, provided that this shall not include a disposal of the core electricity distribution business);

   (ii)      disposals on normal commercial terms of obsolete assets or assets no longer required for the purpose of the relevant Person's business or operations;

   (iii)     any realisation of investments acquired, purchased or made by the temporary application of funds not immediately required in the relevant Person's business or operations;

   (iv)     the exchange of assets for other assets of a similar or superior nature and value, or the sale of assets on normal commercial terms for cash which is payable in full on the completion of the sale and is to be, and is, applied in or towards the purchase of similar assets within 6 months;

   (v)      the disposal of assets by one wholly-owned Subsidiary of the Company to another or (if the consideration for the disposal does not exceed a normal commercial consideration) to the Company by one of its Subsidiaries;

   (vi)     disposals of any National Grid shares on normal commercial terms;

   (vii)    disposals in connection with sale-and-leaseback or sale and repurchase transactions or any other form of "off balance sheet" financing, provided that the aggregate book value (in the books of the disposing party) of all assets the subject of all such disposals made during the period commencing on the date of this Agreement and ending on the date when no amount remains to be lent or remains payable under this Agreement shall not exceed £50,000,000; and

   (viii)    any disposal which the Majority Banks shall have agreed shall not be taken into account.

Environmental matters

The Company will and will ensure that its Material Subsidiaries will comply with all applicable Environmental Law and other regulations, orders or other law applicable to the conduct of the business of the supply or distribution of electricity, in each case, where failure to do so would have a Material Adverse Effect.

Insurance

Each member of the Group must insure its business and assets with insurance companies to such an extent and against such risks as that member of the Group reasonably considers to be appropriate, having regard to the insurance arrangements of companies engaged in similar business.

DEFAULT

Events of Default

Each of the events set out in this Clause is an Event of Default.

Non-payment

The Company fails to pay any sum payable under any Finance Document when due unless:

its failure to pay is caused by administrative or technical error; and

payment is made within 5 Business Days of its due date.

Breach of other obligations

(yyyyy)   The Company does not perform or comply with its obligations under Clause 18 (Financial covenants), Clause 19.5 (Negative Pledge) or Clause 19.6 (Disposals).

(zzzzz)    The Company does not perform or comply with any of its other obligations under any Finance Document in any material respect or any representation or warranty by the Company in this Agreement or in any document delivered under it is or proves to have been incorrect when made or deemed repeated, unless the non-compliance or circumstances giving rise to the misrepresentation, as the case may be, is capable of remedy and is not remedied within 45 days of the earlier of the Facility Agent giving notice requiring the same to be remedied and the Company becoming aware of such non-compliance or misrepresentation, as the case may be.

Cross-acceleration

Any other Financial Indebtedness or commitment for Financial Indebtedness of the Company is cancelled or terminated or becomes due and payable before its normal maturity (whether by declaration or automatically), in each case, by reason of default on the part of the Company or is not paid when due nor within any applicable grace period, other than in circumstances where such default or liability to pay is being contested in good faith and by appropriate proceedings. However, no Event of Default will occur under this Clause 20.4 unless and until the aggregate amount of such Financial Indebtedness in respect of which one or more of the events mentioned above in this Clause 20.4 has occurred exceeds £20,000,000 or its equivalent.

Insolvency

(aaaaaa)     Any of the following occurs in respect of the Company:

   (i)       it is unable to pay its debts generally as they fall due or it is deemed by a court of competent jurisdiction to be insolvent;

   (ii)      it suspends making payments on all or any class of its debts or publicly announces an intention to do so;

   (iii)     by reason of actual or anticipated financial difficulties, it begins negotiations with all or any class of its creditors for the general rescheduling of its indebtedness; or

   (iv)     a moratorium is declared in respect of any of its indebtedness.

(bbbbbb)    If a moratorium occurs in respect of the Company, the ending of the moratorium will not remedy any Event of Default caused by the moratorium.

Insolvency proceedings

(cccccc)     Except as provided below, any of the following occurs in respect of the Company:

   (i)       any person presents a petition for its winding-up, administration or dissolution;

   (ii)      an order for its winding-up, administration or dissolution is made;

   (iii)     any liquidator, trustee in bankruptcy, judicial custodian, compulsory manager, receiver, administrative receiver, administrator or similar officer is appointed in respect of it or any of its assets;

   (iv)     its directors or other officers request the appointment of a liquidator, trustee in bankruptcy, judicial custodian, compulsory manager, receiver, administrative receiver, administrator or similar officer; or

   (v)     any other analogous step or procedure is taken in any jurisdiction.

(dddddd)     Paragraph (a) does not apply to (i) a petition for winding-up presented by a creditor which is being actively contested in good faith and with due diligence and with a reasonable prospect of success or (ii) a voluntary solvent winding-up, amalgamation, reconstruction or reorganisation or otherwise part of a solvent scheme of arrangement, in each case on terms approved by the Majority Lenders.

Creditors' process

A distress, attachment, execution or other legal process material in relation to the Company's ability to perform its payment obligations under this Agreement is levied, enforced or sued out on or against the assets of the Company and is not discharged or stayed within 90 days.

Licence

Either (1) the Authority gives notice in writing of the revocation of the Licence in accordance with its terms and that notice is not withdrawn or contested in good faith by appropriate proceedings or (2) the Licence is revoked, in either case, other than in circumstances which permit the Company or its Affiliates to carry on the distribution business of the Company either without a licence as a result of any change in the Act or regulatory regime or with a new licence, permitting the distribution of electricity in the authorised areas covered by the Licence, issued under the Act or pursuant to the Utilities Act, 2000.

Balancing and Settlement Code

(eeeeee)   The Company ceases to be a party to the Balancing and Settlement Code Framework Agreement other than in circumstances where the Company is able to carry its distribution business; or

(ffffff)     the Company breaches the Balancing and Settlement Code and such breach has or is reasonably likely to have a Material Adverse Effect other than in circumstances where the Company is able to carry on its distribution business.

Unlawfulness

It is or becomes unlawful for the Company to perform any of its obligations under this Agreement in any material respect.

Acceleration

If an Event of Default is outstanding, the Facility Agent may, and must if so instructed by the Majority Lenders, by notice to the Company:

cancel the Total Commitments; and/or

declare that all or part of any amounts outstanding under the Finance Documents are:

immediately due and payable; and/or

payable on demand by the Facility Agent acting on the instructions of the Majority Lenders.

Any notice given under this subclause will take effect in accordance with its terms.

THE ADMINISTRATIVE PARTIES

Appointment and duties of the Facility Agent

(gggggg)   Each Finance Party (other than the Facility Agent) irrevocably appoints the Facility Agent to act as its agent under the Finance Documents.

(hhhhhh)   Each Finance Party irrevocably authorises the Facility Agent to:

   (i)       perform the duties and to exercise the rights, powers and discretions that are specifically given to it under the Finance Documents, together with any other incidental rights, powers and discretions; and

   (ii)      execute each Finance Document expressed to be executed by the Facility Agent.

(iiiiii)     The Facility Agent has only those duties which are expressly specified in the Finance Documents. Those duties are solely of a mechanical and administrative nature.

Role of the Mandated Lead Arranger

Except as specifically provided in the Finance Documents, no Mandated Lead Arranger has any obligations of any kind to any other Party in connection with any Finance Document.

No fiduciary duties

Except as specifically provided in a Finance Document, nothing in the Finance Documents makes an Administrative Party a trustee or fiduciary for any other Party or any other person. No Administrative Party need hold in trust any moneys paid to it for a Party or be liable to account for interest on those moneys.

Individual position of an Administrative Party

(jjjjjj)   If it is also a Lender, each Administrative Party has the same rights and powers under the Finance Documents as any other Lender and may exercise those rights and powers as though it were not an Administrative Party.

(kkkkkk)     Each Administrative Party may:

   (i)       carry on any business with the Company or its related entities (including acting as an agent or a trustee for any other financing); and

   (ii)      retain any profits or remuneration it receives under the Finance Documents or in relation to any other business it carries on with the Company or its related entities.

Reliance

The Facility Agent may:

rely on any notice or document believed by it to be genuine and correct and to have been signed by, or with the authority of, the proper person;

rely on any statement made by any person regarding any matters which may reasonably be assumed to be within his knowledge or within his power to verify;

engage, pay for and rely on professional advisers selected by it (including those representing a Party other than the Facility Agent); and

act under the Finance Documents through its personnel and agents.

Majority Lenders' instructions

(llllll)  The Facility Agent is fully protected if it acts on the instructions of the Majority Lenders in the exercise of any right, power or discretion or any matter not expressly provided for in the Finance Documents. Any such instructions given by the Majority Lenders will be binding on all the Lenders. In the absence of instructions, the Facility Agent may act as it considers to be in the best interests of all the Lenders.

(mmmmmm)    The Facility Agent is not authorised to act on behalf of a Lender (without first obtaining that Lender's consent) in any legal or arbitration proceedings in connection with any Finance Document.

(nnnnnn)   The Facility Agent may require the receipt of security satisfactory to it, whether by way of payment in advance or otherwise, against any liability or loss which it may incur in complying with the instructions of the Majority Lenders.

Responsibility

(oooooo)   No Administrative Party is responsible to any other Finance Party for the adequacy, accuracy or completeness of:

   (i)       any Finance Document or any other document; or

   (ii)      any statement or information (whether written or oral) made in or supplied in connection with any Finance Document.

(pppppp)     Without affecting the responsibility of the Company for information supplied by it or on its behalf in connection with any Finance Document, each Lender confirms that it:

   (i)       has made, and will continue to make, its own independent appraisal of all risks arising under or in connection with the Finance Documents (including the financial condition and affairs of the Company and its related entities and the nature and extent of any recourse against any Party or its assets); and

   (ii)       has not relied exclusively on any information provided to it by any Administrative Party in connection with any Finance Document.

(qqqqqq)        Nothing in this Agreement will oblige the Facility Agent to satisfy any know your customer requirement in relation to the identity of any person on behalf of any Finance Party.

   (i)       Each Finance Party confirms to the Facility Agent that it is solely responsible for any know your customer requirements it is required to carry out and that it may not rely on any statement in relation to those requirements made by any other person.

Exclusion of liability

(rrrrrr)     The Facility Agent is not liable or responsible to any other Finance Party for any action taken or not taken by it in connection with any Finance Document, unless directly caused by its gross negligence or wilful misconduct.

(ssssss)     No Party may take any proceedings against any officer, employee or agent of the Facility Agent in respect of any claim it might have against the Facility Agent or in respect of any act or omission of any kind by that officer, employee or agent in connection with any Finance Document. Any officer, employee or agent of the Facility Agent may rely on this Subclause and enforce its terms under the Contracts (Rights of Third Parties) Act 1999.

Default

(tttttt)     The Facility Agent is not obliged to monitor or enquire whether a Default has occurred. The Facility Agent is not deemed to have knowledge of the occurrence of a Default.

(uuuuuu)     If the Facility Agent:

   (i)       receives notice from a Party referring to this Agreement, describing a Default and stating that the event is a Default; or

   (ii)       is aware of the non-payment of any principal or interest or any fee payable to a Lender under this Agreement,

it must promptly notify the Lenders.

Information

(vvvvvv)     The Facility Agent must promptly forward to the person concerned the original or a copy of any document which is delivered to the Facility Agent by a Party for that person.

(wwwwww)     Except where a Finance Document specifically provides otherwise, the Facility Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party.

(xxxxxx)     Except as provided above, the Facility Agent has no duty:

   (i)       either initially or on a continuing basis to provide any Lender with any credit or other information concerning the risks arising under or in connection with the Finance Documents (including any information relating to the financial condition or affairs of the Company or its related entities or the nature or extent of recourse against any Party or its assets) whether coming into its possession before, on or after the date of this Agreement; or

   (ii)      unless specifically requested to do so by a Lender in accordance with a Finance Document, to request any certificate or other document from the Company.

(yyyyyy)     In acting as the Facility Agent, the agency division of the Facility Agent is treated as a separate entity from its other divisions and departments. Any information acquired by the Facility Agent which, in its opinion, is acquired by it otherwise than in its capacity as the Facility Agent may be treated as confidential by the Facility Agent and will not be treated as information possessed by the Facility Agent in its capacity as such.

(zzzzzz)     The Facility Agent is not obliged to disclose to any person any confidential information supplied to it by a member of the Group solely for the purpose of evaluating whether any waiver or amendment is required to any term of the Finance Documents.

(aaaaaaa)     The Company irrevocably authorises the Facility Agent to disclose to the other Finance Parties any information which, in its opinion, is received by it in its capacity as the Facility Agent.

Indemnities

(bbbbbbb)     Without limiting the liability of the Company under the Finance Documents, each Lender must indemnify the Facility Agent for that Lender's Pro Rata Share of any loss or liability incurred by the Facility Agent in acting as the Facility Agent, except to the extent that the loss or liability is caused by the Facility Agent's gross negligence or wilful misconduct.

(ccccccc)     The Facility Agent may deduct from any amount received by it for a Lender any amount due to the Facility Agent from that Lender under a Finance Document but unpaid.

(ddddddd)     The Company must indemnify the Facility Agent against any loss or liability properly incurred by the Facility Agent as a result of:

   (i)       investigating any event which the Facility Agent reasonably believes to be a Default; or

   (ii)      acting or relying on any notice which the Facility Agent reasonably believes to be genuine, correct and appropriately authorised.

Compliance

The Facility Agent may refrain from doing anything (including disclosing any information) which might, in its opinion, constitute a breach of any law or regulation or be otherwise actionable at the suit of any person, and may do anything which, in its opinion, is necessary or desirable to comply with any law or regulation.

Resignation of the Facility Agent

(eeeeeee)     The Facility Agent may resign and appoint any of its Affiliates as successor Facility Agent by giving notice to the Lenders and the Company.

(fffffff)     Alternatively, the Facility Agent may resign by giving notice to the Lenders and the Company, in which case the Majority Lenders may appoint a successor Facility Agent.

(ggggggg)     If no successor Facility Agent has been appointed under paragraph (b) above within 30 days after notice of resignation was given, the Facility Agent may appoint a successor Facility Agent.

(hhhhhhh)     The person(s) appointing a successor Facility Agent must, if practicable, consult with the Company prior to the appointment. Any successor Facility Agent must have an office in the U.K.

(iiiiiii)     The resignation of the Facility Agent and the appointment of any successor Facility Agent will both become effective only when the successor Facility Agent notifies all the Parties that it accepts its appointment. On giving the notification, the successor Facility Agent will succeed to the position of the Facility Agent and the term "Facility Agent" will mean the successor Facility Agent.

(jjjjjjj)     The retiring Facility Agent must, at its own cost, make available to the successor Facility Agent such documents and records and provide such assistance as the successor Facility Agent may reasonably request for the purposes of performing its functions as the Facility Agent under the Finance Documents.

(kkkkkkk)     Upon its resignation becoming effective, this Clause will continue to benefit the retiring Facility Agent in respect of any action taken or not taken by it in connection with the Finance Documents while it was the Facility Agent, and, subject to paragraph (f) above, it will have no further obligations under any Finance Document.

(lllllll)     The Majority Lenders may, by notice to the Facility Agent, require it to resign under paragraph (b) above.

Relationship with Lenders

(mmmmmmm)     The Facility Agent may treat each Lender as a Lender, entitled to payments under this Agreement and as acting through its Facility Office(s) until it has received not less than five Business Days' prior notice from that Lender to the contrary.

(nnnnnnn)     The Facility Agent may at any time, and must if requested to do so by the Majority Lenders, convene a meeting of the Lenders.

(ooooooo)     The Facility Agent must keep a register of all the Parties and supply any other Party with a copy of the register on request. The register will include each Lender's Facility Office(s) and contact details for the purposes of this Agreement.

Facility Agent's management time

If the Facility Agent requires, any amount payable to the Facility Agent by any Party under any indemnity or in respect of any costs or expenses incurred by the Facility Agent under the Finance Documents after the date of this Agreement may include the cost of using its management time or other resources and will be calculated on the basis of such reasonable daily or hourly rates as the Facility Agent may notify to the relevant Party. This is in addition to any amount in respect of fees or expenses paid or payable to the Facility Agent under any other term of the Finance Documents.

Notice period

Where this Agreement specifies a minimum period of notice to be given to the Facility Agent, the Facility Agent may, at its discretion, accept a shorter notice period.

EVIDENCE AND CALCULATIONS

Accounts

Accounts maintained by a Finance Party in connection with this Agreement are prima facie evidence of the matters to which they relate for the purpose of any litigation or arbitration proceedings.

Certificates and determinations

Any certification or determination by a Finance Party of a rate or amount under the Finance Documents will be, in the absence of manifest error, conclusive evidence of the matters to which it relates.

Calculations

Any interest or fee accruing under this Agreement accrues from day to day and is calculated on the basis of the actual number of days elapsed and a year of 360 or 365 days or otherwise, depending on what the Facility Agent determines is market practice.

FEES

Facility Agent's fee

The Company must pay to the Facility Agent for its own account an agency fee in the manner agreed between the Facility Agent and the Company.

Arrangement fee

The Company must pay an arrangement and participation fee in the manner agreed between the Mandated Lead Arrangers and the Company.

Tranche A commitment fee

(ppppppp)     The Company must pay a commitment fee computed at the rate of 45 per cent. of the Margin from time to time on the undrawn, uncancelled amount of each Lender's Tranche A Commitment calculated from the later of:

   (i)       the date of this Agreement; and

   (ii)      the date on which the Existing Credit Agreement is irrevocably repaid in full.

(qqqqqqq)     Accrued commitment fee is payable quarterly in arrear. Accrued commitment fee is also payable to the Facility Agent for a Lender on the date its Tranche A Commitment is cancelled in full.

Tranche B commitment fee

(rrrrrrr)     The Company must pay a commitment fee computed at the rate of 45 per cent. of the Margin from time to time on the undrawn, uncancelled amount of each Lender's Tranche B Commitment calculated from the later of:

   (i)       the date of this Agreement; and

   (ii)      the date on which the Existing Credit Agreement is irrevocably repaid in full.

(sssssss)     Accrued commitment fee is payable quarterly in arrear. Accrued commitment fee is also payable to the Facility Agent for a Lender on the date its Tranche B Commitment is cancelled in full.

Tranche C commitment fee

(ttttttt)     The Company must pay a commitment fee computed at the rate of 45 per cent. of the Margin from time to time on the undrawn, uncancelled amount of each Lender's Tranche C Commitment calculated from Restatement Date.

(uuuuuuu)     Accrued commitment fee is payable quarterly in arrear. Accrued commitment fee is also payable to the Facility Agent for a Lender on the date its Tranche C Commitment is cancelled in full.

Term-Out Fee

The Company shall pay to the Facility Agent for the Lenders a term-out fee in an amount equal to 0.1 per cent. flat of the amount of the Term-Out Loans termed-out under Clause 2.5 (Term-Out Option) as calculated on the Final Maturity Date in relation to the Tranche A Facility (not taking into account any extension under Clause 2.4). The term-out fee shall be payable within 5 Business days after the initial Final Maturity Date in relation to Tranche A.

INDEMNITIES AND BREAK COSTS

Currency indemnity

(vvvvvvv)     The Company must, as an independent obligation, indemnify each Finance Party against any loss or liability which that Finance Party incurs as a consequence of:

   (i)       that Finance Party receiving an amount in respect of the Company's liability under the Finance Documents; or

   (ii)      that liability being converted into a claim, proof, judgment or order,

in a currency other than the currency in which the amount is expressed to be payable under the relevant Finance Document.

(wwwwwww)     Unless otherwise required by law, the Company waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency other than that in which it is expressed to be payable.

Other indemnities

The Company shall within 15 days of demand indemnify the Facility Agent and each Lender against any funding or other cost, loss, expense or liability in an amount certified by it in reasonable detail (together with documentation in support) sustained or incurred by it as a direct result of:

   (i)       the occurrence of any Event of Default;

   (ii)      (other than by reason of negligence or default by a Finance Party) a Loan not being made after a Request has been delivered for that Loan; or

   (iii)     the receipt or recovery by any party (or the Facility Agent on its behalf) of all or any part of a Loan or overdue sum due from the Company otherwise than on the Final Maturity Date or Maturity Date (as relevant) of that Loan or, in the case of an overdue sum, the last day of an interest period relating to that overdue sum, as the case may be or a Loan or any part thereof not being prepaid in accordance with a notice of prepayment.

Break Costs

(xxxxxxx)     The Company must pay to each Lender its Break Costs.

(yyyyyyy)     Break Costs are the amount (if any) determined by the relevant Lender by which:

   (i)       the interest which that Lender would have received for the period from the date of receipt of any part of its share in a Loan or an overdue amount to the last day of the applicable Term for that Loan or overdue amount if the principal or overdue amount received had been paid on the last day of that Term;

exceeds

   (ii)      the amount which that Lender would be able to obtain by placing an amount equal to the amount received by it on deposit with a leading bank in the appropriate interbank market for a period starting on the Business Day following receipt and ending on the last day of the applicable Term.

(zzzzzzz)     Each Lender must supply to the Facility Agent for the Company details of the amount of any Break Costs claimed by it under this Subclause.

EXPENSES

Initial costs

The Company must pay to each Administrative Party the amount of all costs and expenses (including legal fees) reasonably incurred by it in connection with the negotiation, preparation, printing, execution and syndication of the Finance Documents.

Subsequent costs

The Company must pay to the Facility Agent the amount of all costs and expenses (including legal fees) reasonably incurred by it in connection with:

the negotiation, preparation, printing and execution of any Finance Document (other than a Transfer Certificate) executed after the date of this Agreement; and

any amendment, waiver or consent requested by or on behalf of the Company or specifically allowed by this Agreement.

Enforcement costs

The Company must pay to each Finance Party the amount of all costs and expenses (including legal fees) incurred by it in connection with the enforcement of, or the preservation of any rights under, any Finance Document.

AMENDMENTS AND WAIVERS

Procedure

(aaaaaaaa)     Except as provided in this Clause, any term of the Finance Documents may be amended or waived with the agreement of the Company and the Majority Lenders. The Facility Agent may effect, on behalf of any Finance Party, an amendment or waiver allowed under this Clause.

(bbbbbbbb)     The Facility Agent must promptly notify the other Parties of any amendment or waiver effected by it under paragraph (a) above. Any such amendment or waiver is binding on all the Parties.

Exceptions

(cccccccc)     An amendment or waiver which relates to:

   (i)       the definition of Majority Lenders in Clause 1.1 (Definitions);

   (ii)      an extension of the date of payment of any amount to a Lender under the Finance Documents;

   (iii)     a reduction in the Margin or a reduction in the amount of any payment of principal, interest, fee or other amount payable to a Lender under the Finance Documents;

   (iv)     an increase in, or an extension of, a Commitment or the Total Commitments;

   (v)      a term of a Finance Document which expressly requires the consent of each Lender;

   (vi)     the right of a Lender to assign or transfer its rights or obligations under the Finance Documents; or

   (vii)     this Clause,

may only be made with the consent of all the Lenders.

(dddddddd)     An amendment or waiver which relates to the rights or obligations of an Administrative Party may only be made with the consent of that Administrative Party.

Change of currency

If a change in any currency of a country occurs (including where there is more than one currency or currency unit recognised at the same time as the lawful currency of a country), the Finance Documents will be amended to the extent the Facility Agent (acting reasonably and after consultation with the Company) determines is necessary to reflect the change.

Waivers and remedies cumulative

The rights of each Finance Party under the Finance Documents:

may be exercised as often as necessary;

are cumulative and not exclusive of its rights under the general law; and

may be waived only in writing and specifically.

Delay in exercising or non-exercise of any right is not a waiver of that right.

CHANGES TO THE PARTIES

Assignments and transfers by the Company

The Company may not assign or transfer any of its rights and obligations under the Finance Documents without the prior consent of all the Lenders.

Assignments and transfers by Lenders

(eeeeeeee)     A Lender (the Existing Lender) may, subject to the following provisions of this Subclause, at any time assign or transfer (including by way of novation) any of its rights and obligations under this Agreement to any other person (the New Lender).

(ffffffff)     Unless the Company and the Facility Agent otherwise agree, a transfer of part of a Commitment or rights and obligations under this Agreement by the Existing Lender must be in a minimum amount of £5,000,000.

(gggggggg)     The consent of the Company is required for any assignment or transfer unless the New Lender is another Lender or an Affiliate of a Lender. The consent of the Company must not be unreasonably withheld or delayed. The Company will be deemed to have given its consent five Business Days after the Lender has requested it unless consent is expressly refused by the Company within that time.

(hhhhhhhh)     The Facility Agent is not obliged to execute a Transfer Certificate until it has completed all know your customer requirements to its satisfaction. The Facility Agent must promptly notify the Existing Lender and the New Lender if there are any such requirements.

(iiiiiiii)     The Company may not withhold its consent solely because the assignment or transfer might increase the Mandatory Cost

(jjjjjjjj)     A transfer of obligations will be effective only if either:

   (i)       the obligations are novated in accordance with the following provisions of this Clause; or

   (ii)      the New Lender confirms to the Facility Agent and the Company in form and substance satisfactory to the Facility Agent that it is bound by the terms of this Agreement as a Lender. On the transfer becoming effective in this manner the Existing Lender will be released from its obligations under this Agreement to the extent that they are transferred to the New Lender.

(kkkkkkkk)     Unless the Facility Agent otherwise agrees, the New Lender must pay to the Facility Agent for its own account, on or before the date any assignment or transfer occurs, a fee of £750.

(llllllll)     Any reference in this Agreement to a Lender includes a New Lender but excludes a Lender if no amount is or may be owed to or by it under this Agreement.

Procedure for transfer by way of novations

(mmmmmmmm)     In this Subclause:

Transfer Date means, for a Transfer Certificate, the later of:

   (i)       the proposed Transfer Date specified in that Transfer Certificate; and

   (ii)      the date on which the Facility Agent executes that Transfer Certificate.

(nnnnnnnn)     A novation is effected if:

   (i)       the Existing Lender and the New Lender deliver to the Facility Agent a duly completed Transfer Certificate; and

   (ii)      the Facility Agent executes it.

The Facility Agent must execute as soon as reasonably practicable a Transfer Certificate delivered to it and which appears on its face to be in order.

(oooooooo)     Each Party (other than the Existing Lender and the New Lender) irrevocably authorises the Facility Agent to execute any duly completed Transfer Certificate on its behalf.

(pppppppp)     On the Transfer Date:

   (i)       the New Lender will assume the rights and obligations of the Existing Lender expressed to be the subject of the novation in the Transfer Certificate in substitution for the Existing Lender; and

   (ii)      the Existing Lender will be released from those obligations and cease to have those rights.

Limitation of responsibility of Existing Lender

(qqqqqqqq)     Unless expressly agreed to the contrary, an Existing Lender is not responsible to a New Lender for the legality, validity, adequacy, accuracy, completeness or performance of:

   (i)     any Finance Document or any other document; or

   (ii)      any statement or information (whether written or oral) made in or supplied in connection with any Finance Document,

and any representations or warranties implied by law are excluded.

(rrrrrrrr)     Each New Lender confirms to the Existing Lender and the other Finance Parties that it:

   (i)       has made, and will continue to make, its own independent appraisal of all risks arising under or in connection with the Finance Documents (including the financial condition and affairs of the Company and its related entities and the nature and extent of any recourse against any Party or its assets) in connection with its participation in this Agreement; and

   (ii)      has not relied exclusively on any information supplied to it by the Existing Lender in connection with any Finance Document.

(ssssssss)     Nothing in any Finance Document requires an Existing Lender to:

   (i)      accept a re-transfer from a New Lender of any of the rights and obligations assigned or transferred under this Clause; or

   (ii)      support any losses incurred by the New Lender by reason of the non-performance by the Company of its obligations under any Finance Document or otherwise.

Costs resulting from change of Lender or Facility Office

If:

a Lender assigns or transfers any of its rights and obligations under the Finance Documents or changes its Facility Office; and

as a result of circumstances existing at the date the assignment, transfer or change occurs, the Company would be obliged to pay a Tax Payment or an Increased Cost,

the Company need only pay that Tax Payment or Increased Cost to the same extent that it would have been obliged to if no assignment, transfer or change had occurred.

Changes to the Reference Banks

(tttttttt)     If a Reference Bank (or, if a Reference Bank is not a Lender, the Lender of which it is an Affiliate) ceases to be a Lender, the Facility Agent must (in consultation with the Company) appoint another Lender or an Affiliate of a Lender to replace that Reference Bank.

(uuuuuuuu)     If a Reference Bank ceases to have a London office or novates or assigns all its rights and obligations under this Agreement or if any Commitments of any Reference Bank are cancelled or if Loans it has advanced are prepaid it shall be replaced as a Reference Bank by such other Bank with an office in London as the Facility Agent (after consultation with the Company) shall designate by notice to the Company and the Banks.

DISCLOSURE OF INFORMATION

(vvvvvvvv)     Each Finance Party must keep confidential any information supplied to it by or on behalf of the Company in connection with the Finance Documents. However, a Finance Party is entitled to disclose information:

   (i)       which is publicly available, other than as a result of a breach by that Finance Party of this Clause;

   (ii)      in connection with any legal or arbitration proceedings;

   (iii)     if required to do so under any law or regulation;

   (iv)     to a governmental, banking, taxation or other regulatory authority;

   (v)      to its professional advisers;

   (vi)     to the extent allowed under paragraph (b) below; or

   (vii)    with the agreement of the Company.

(wwwwwwww)     A Finance Party may disclose to an Affiliate or any person with whom it may enter, or has entered into, any kind of transfer, participation or other agreement in relation to this Agreement (a participant):

   (i)       a copy of any Finance Document; and

   (ii)      any information which that Finance Party has acquired under or in connection with any Finance Document.

However, before a participant may receive any confidential information, it must agree with the relevant Finance Party to keep that information confidential on the terms of paragraph (a) above.

This Clause supersedes any previous confidentiality undertaking given by a Finance Party in connection with this Agreement prior to it becoming a Party.

SET-OFF

A Finance Party may set off any matured obligation owed to it by the Company under the Finance Documents (to the extent beneficially owned by that Finance Party) against any obligation (whether or not matured) owed by that Finance Party to the Company, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Finance Party may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.

PRO RATA SHARIING

Redistribution

If any amount owing by the Company under this Agreement to a Lender (the recovering Lender) is discharged by payment, set-off or any other manner other than through the Facility Agent under this Agreement (a recovery), then:

the recovering Lender must, within three Business Days, supply details of the recovery to the Facility Agent;

the Facility Agent must calculate whether the recovery is in excess of the amount which the recovering Lender would have received if the recovery had been received by the Facility Agent under this Agreement; and

the recovering Lender must pay to the Facility Agent an amount equal to the excess (the redistribution).

Effect of redistribution

(xxxxxxxx)     The Facility Agent must treat a redistribution as if it were a payment by the Company under this Agreement and distribute it among the Lenders, other than the recovering Lender, accordingly.

(yyyyyyyy)     When the Facility Agent makes a distribution under paragraph (a) above, the recovering Lender will be subrogated to the rights of the Finance Parties which have shared in that redistribution.

(zzzzzzzz)     If and to the extent that the recovering Lender is not able to rely on any rights of subrogation under paragraph (b) above, the Company will owe the recovering Lender a debt which is equal to the redistribution, immediately payable and of the type originally discharged.

(aaaaaaaaa)     If:

   (i)       a recovering Lender must subsequently return a recovery, or an amount measured by reference to a recovery, to the Company; and

   (ii)      the recovering Lender has paid a redistribution in relation to that recovery,

each Finance Party must reimburse the recovering Lender all or the appropriate portion of the redistribution paid to that Finance Party, together with interest for the period while it held the re-distribution. In this event, the subrogation in paragraph (b) above will operate in reverse to the extent of the reimbursement.

Exceptions

Notwithstanding any other term of this Clause, a recovering Lender need not pay a redistribution to the extent that:

it would not, after the payment, have a valid claim against the Company in the amount of the redistribution; or

it would be sharing with another Finance Party any amount which the recovering Lender has received or recovered as a result of legal or arbitration proceedings, where:

the recovering Lender notified the Facility Agent of those proceedings; and

the other Finance Party had an opportunity to participate in those proceedings but did not do so or did not take separate legal or arbitration proceedings as soon as reasonably practicable after receiving notice of them.

SEVERABILITY

If a term of a Finance Document is or becomes illegal, invalid or unenforceable in any jurisdiction, that shall not affect:

the legality, validity or enforceability in that jurisdiction of any other term of the Finance Documents; or

the legality, validity or enforceability in other jurisdictions of that or any other term of the Finance Documents.

COUNTERPARTS

Each Finance Document may be executed in any number of counterparts. This has the same effect as if the signatures on the counterparts were on a single copy of the Finance Document.

NOTICES

In writing

(bbbbbbbbb)     Any communication in connection with a Finance Document must be in writing and, unless otherwise stated, may be given:

   (i)       in person, by post, or fax or any other electronic communication approved by the Facility Agent; or

   (ii)      if between the Facility Agent and a Lender and the Facility Agent and the Lender agree, by e-mail or other electronic communication.

(ccccccccc)     For the purpose of the Finance Documents, an electronic communication will be treated as being in writing.

(ddddddddd)     Unless it is agreed to the contrary, any consent or agreement required under a Finance Document must be given in writing.

Contact details

(eeeeeeeee)     Except as provided below, the contact details of each Party for all communications in connection with the Finance Documents are those notified by that Party for this purpose to the Facility Agent on or before the date it becomes a Party.

(fffffffff)     The contact details of the Company for this purpose are:

Address:	Avonbank,
	Feeder Road,
	Bristol,
	BS2 0TB
Fax number:	01179 332108
E-mail:	icutter@westernpower.co.uk
Attention:	Ian Cutter.

(ggggggggg)     The contact details of the Facility Agent for this purpose are:

Address:	Loans Administration
	Lloyds TSB Bank plc
	Bank House
	Wine Street
	Bristol
	BS1 2AN
Fax number:	0117 923 3367
Attention:	Martin Clancy.

(hhhhhhhhh)     Any Party may change its contact details by giving five Business Days' notice to the Facility Agent or (in the case of the Facility Agent) to the other Parties.

(iiiiiiiii)     Where a Party nominates a particular department or officer to receive a communication, a communication will not be effective if it fails to specify that department or officer.

Effectiveness

(jjjjjjjjj)     Except as provided below, any communication in connection with a Finance Document will be deemed to be given as follows:

   (i)       if delivered in person, at the time of delivery;

   (ii)      if posted, five days after being deposited in the post, postage prepaid, in a correctly addressed envelope; and

   (iii)     if by fax, when received in legible form.

(kkkkkkkkk)     A communication given under paragraph (a) above but received on a non-working day or after business hours in the place of receipt will only be deemed to be given on the next working day in that place.

(lllllllll)     A communication to the Facility Agent will only be effective on actual receipt by it.

The Company

All formal communication under the Finance Documents to or from the Company must be sent through the Facility Agent.

LANGUAGE

(mmmmmmmmm)     Any notice given in connection with a Finance Document must be in English.

(nnnnnnnnn)     Any other document provided in connection with a Finance Document must be:

   (i)       in English; or

   (ii)      (unless the Facility Agent otherwise agrees) accompanied by a certified English translation. In this case, the English translation prevails unless the document is a statutory or other official document.

GOVERNING LAW

This Agreement is governed by English law.

ENFORCEMENT

Jurisdiction

(ooooooooo)     The English courts have exclusive jurisdiction to settle any dispute in connection with any Finance Document.

(ppppppppp)     The English courts are the most appropriate and convenient courts to settle any such dispute and the Company waives objection to those courts on the grounds of inconvenient forum or otherwise in relation to proceedings in connection with any Finance Document.

(qqqqqqqqq)     This Clause is for the benefit of the Finance Parties only. To the extent allowed by law, a Finance Party may take:

   (i)       proceedings in any other court; and

   (ii)      concurrent proceedings in any number of jurisdictions.

This Agreement has been entered into on the date stated at the beginning of this Agreement.

SCHEDULE 1

ORIGINAL PARTIES

Name of Original Lender	Tranche A Commitments
Bayerische Landesbank acting through its London branch	£33,333,333
Lloyds TSB Bank plc	£33,333,333
WestLB AG, London Branch	£33,333,334
	___________
Total Tranche A Commitments	£100,000,000
	___________

Name of Original Lender	Tranche B Commitments
Danske Bank A/S, London Branch	£70,000,000
Bayersiche Landesbank acting through its London branch	£26,666,667
Lloyds TSB Bank plc	£26,666,667
WestLB AG, London Branch	£26,666,666
	___________
Total Tranche B Commitments	£150,000,000
	___________

Name of Original Lender	Tranche C Commitments
Danske Bank A/S, London Branch	£37,500,000
Bayersiche Landesbank acting through its London branch	£37,500,000
Lloyds TSB Bank plc	£37,500,000
WestLB AG, London Branch	£37,500,000
	___________
Total Tranche C Commitments	£150,000,000
	___________

SCHEDULE 2

CONDITIONS PRECEDENT DOCUMENTS

Company

1.       A certified copy of the constitutional documents of the Company.

2.       A certified copy of a resolution of the board of directors or a committee of the board of directors of the Company approving the terms of, and the transactions contemplated by, the Finance Documents.

3.       A specimen of the signature of each person authorised on behalf of the Company to execute or witness the execution of any Finance Document or to sign or send any document or notice in connection with any Finance Document.

4.       A certificate of the Company (signed by a director) confirming that borrowing the Total Commitments would not cause any borrowing limit binding on the Company to be exceeded.

Legal opinions

A legal opinion of Allen & Overy, legal advisers to the Mandated Lead Arranger and the Facility Agent addressed to the Finance Parties.

Other documents and evidence

1.       Evidence that all fees and expenses then due and payable from the Company under this Agreement have been or will be paid no later than the first Utilisation Date.

2.       The Original Financial Statements.

3.       Evidence that the following credit facilities have expired or will be prepaid and cancelled in full on or by the first Utilisation Date:

          (i)      the Existing Credit Facility;

         (ii)      the £23,500,000 bilateral credit agreement between the Company and WestLB AG dated 27th February, 2002;

         (iii)     the £50,000,000 bilateral credit agreement between the Company and Danske Bank A/S dated 26th February, 2002; and

         (iv)     the £20,000,000 bilateral credit agreement between the Company and Bayerische Landesbank dated 31st May, 2002.

SCHEDULE 3

FORM OF REQUEST

To:     LLOYDS TSB BANK PLC as Facility Agent

From:     [ ]

Date:     [ ]

WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC - £400,000,000 Credit Agreement
dated 18th October, 2002 (as amended and restated from time to time) (the "Agreement")

1.     We refer to the Agreement. This is a Request.

2.     We wish to borrow a [Tranche A/B/C Loan] on the following terms:

(a)     Utilisation Date: [ ]

(b)     Amount/currency: [ ]

(c)     Term: [ ].

3.     Our payment instructions are: [ ].

4.     We confirm that each condition precedent under the Agreement which must be satisfied on the date of this Request is so satisfied.

5      We confirm that as at [relevant testing date] Consolidated EBITDA was [ ] and Interest Payable was [ ]; therefore, the ratio of Consolidated EBITDA to Interest Payable was [ ] to 1.

6.     We confirm that as at [relevant testing date] Regulatory Asset Base was [          ] and Total Gross Debt was [     ]; therefore, Regulatory Asset Base exceeded Total Gross Debt by [ ].

7.     This Request is irrevocable.

By:

[ ]

SCHEDULE 4

CALCULATION OF THE MANDATORY COST

1.     General

The Mandatory Cost is the weighted average of the rates calculated below by the Facility Agent on the first day of a Term. The Facility Agent must distribute each amount of Mandatory Cost among the Lenders on the basis of the rate for each Lender.

2.     For a Lender lending from a Facility Office in the U.K.

(a)      The relevant rate for a Lender lending from a Facility Office in the U.K. is the arithmetic mean of the rates notified by that Lender to the Facility Agent and calculated in accordance with the following formulae:

for a Loan in Sterling:

AB + C(B - D) + E x 0.01
100 - (A + C) per cent.per annum

for any other Loan:

E x 0.01
300 per cent.per annum

where on the day of application of the formula:

A        is the percentage of the Lender's eligible liabilities (in excess of any stated minimum) which the Bank of England requires it to hold on a non-interest-bearing deposit account in accordance with its cash ratio requirements;

B        is LIBOR for that Term;

C        is the percentage of the Lender's eligible liabilities which the Bank of England requires it to place as a special deposit;

D        is the interest rate per annum allowed by the Bank of England on a special deposit; and

E        is the charge payable by the Lender to the Financial Services Authority under the fees rules (but, for this purpose, calculated by the Facility Agent on a notional basis as being the average of the fee tariffs within fee-block Category A1 (Deposit acceptors) of the fees rules, applying any applicable discount and ignoring any minimum fee required under the fees rules) and expressed in pounds per £1 million of the tariff base of that Lender.

(b)     For the purposes of this paragraph 2:

   (i)       eligible liabilities and special deposit have the meanings given to them at the time of application of the formula by the Bank of England;

   (ii)      fees rules means the then current rules on periodic fees in the Supervision Manual of the FSA Handbook; and

   (iii)     tariff base has the meaning given to it in the fees rules.

(c)      (i)       In the application of the formulae, A, B, C and D are included as figures and not as percentages, e.g. if A = 0.5% and B = 15%, AB is calculated as 0.5 x 15. A negative result obtained by subtracting D from B is taken as zero.

   (ii)      Each rate calculated in accordance with a formula is, if necessary, rounded upward to four decimal places.

(d)      (i)       Each Lender must supply to the Facility Agent the information required by it to make a calculation of the rate for that Lender. The Facility Agent may assume that this information is correct in all respects.

   (ii)      If a Lender fails to do so, the Facility Agent may assume that the Lender's obligations in respect of cash ratio deposits, special deposits and the fees rules are the same as those of a typical bank from its jurisdiction of incorporation with a Facility Office in the same jurisdiction as its Facility Office.

   (iii)     The Facility Agent has no liability to any Party if its calculation over or under compensates any Lender.

3.     For a Lender lending from a Facility Office in a Participating Member State

(a)      The relevant rate for a Lender lending from a Facility Office in a Participating Member State is the percentage rate per annum notified by that Lender to the Facility Agent as its cost of complying with the minimum reserve requirements of the European Central Bank.

(b)      If a Lender fails to specify a rate under paragraph (a) above, the Facility Agent will assume that the Lender has not incurred any such cost.

4.     Changes

The Facility Agent may, after consultation with the Company and the Lenders, notify all the Parties of any amendment to this Schedule which is required to reflect:

(a)      any change in law or regulation; or

(b)      any requirement imposed by the Bank of England, the Financial Services Authority or the European Central Bank (or, in any case, any successor authority).

Any notification will be, in the absence of manifest error, conclusive and binding on all the Parties.

SCHEDULE 5

FORM OF TRANSFER CERTIFICATE

To:     LLOYDS TSB BANK PLC as Facility Agent

From:     [THE EXISTING LENDER] (the Existing Lender) and [THE NEW LENDER] (the New Lender)

Date:     [ ]

WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC - £400,000,000 Credit Agreement
dated 18th October, 2002 (as amended and restated from time to time) (the Agreement)

We refer to the Agreement. This is a Transfer Certificate.

1.       The Existing Lender transfers by novation to the New Lender the Existing Lender's rights and obligations referred to in the Schedule below in accordance with the terms of the Agreement.

2.       The proposed Transfer Date is [ ].

3.       The administrative details of the New Lender for the purposes of the Agreement are set out in the Schedule.

4.       This Transfer Certificate is governed by English law.

THE SCHEDULE

Rights and obligations to be transferred by novation
[insert relevant details, including applicable Commitment (or part)]

Administrative details of the New Lender
[insert details of Facility Office, address for notices and payment details etc.]

EX-10

Exhibit 10(ff)

POLLUTION CONTROL FACILITIES LOAN AGREEMENT

Dated as of February 1, 2005

Between

LEHIGH COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY

and

PPL ELECTRIC UTILITIES CORPORATION

TABLE OF CONTENTS

				Page
ARTICLE 1.		Background, Representations and Findings		1
	SECTION 1.1		Background	1
	SECTION 1.2		Company Representations.	1
	SECTION 1.3		Issuer Findings and Representations	3
ARTICLE 2.		Refunding the Prior Bonds		4
	SECTION 2.1		Issuance of Bonds	4
	SECTION 2.2		Investment of Fund Moneys	4
ARTICLE 3.		Loan and Repayment		4
	SECTION 3.1		Amount and Source of Loan.	4
	SECTION 3.2		Repayment of Loan	5
	SECTION 3.3		The Note	5
	SECTION 3.4		Acceleration of Payment to Redeem Bonds	5
	SECTION 3.5		No Defense or Set-Off.	6
	SECTION 3.6		Assignment of Issuer's Rights.	6
ARTICLE 4.		Covenants of the Company; Certain Limitations		6
	SECTION 4.1		Corporate Existence	6
	SECTION 4.2		Payment of Trustee's Compensation and Expenses	7
	SECTION 4.3		Payment of Issuer's Expenses	7
	SECTION 4.4		Indemnity Against Claims	7
	SECTION 4.5		Limitation of Liability of the Issuer	8
	SECTION 4.6		Nondiscrimination/Sexual Harassment Clause	8
	SECTION 4.7		Default, etc	8
	SECTION 4.8		Deficiencies in Revenues	8
	SECTION 4.9		Tax-Exempt Status	9
ARTICLE 5.		Miscellaneous		9
	SECTION 5.1		Notices	9
	SECTION 5.2		Assignment	10
	SECTION 5.3		Illegal, Etc. Provisions Disregarded	10
	SECTION 5.4		Applicable Law	10
	SECTION 5.5		Amendments	10
	SECTION 5.6		Continuing Disclosure.	10
	SECTION 5.7		Term of Agreement	10
	SECTION 5.8		Financing Statements, etc	10
	SECTION 5.9		Counterparts	11
EXHIBIT A - FORM OF COMPANY NOTE				A-1
EXHIBIT B - NONDISCRIMINATION/SEXUAL HARASSMENT CLAUSE				B-1

POLLUTION CONTROL FACILITIES LOAN AGREEMENT, dated as of February 1, 2005 (the "Agreement"), between the LEHIGH COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY (the "Issuer") and PPL ELECTRIC UTILITIES CORPORATION (the "Company"):

ARTICLE 1.
Background, Representations and Findings

SECTION 1.1    Background.

(a)    The Issuer is a public instrumentality of the Commonwealth of Pennsylvania (the "Commonwealth") and a body corporate and politic organized and existing pursuant to the Economic Development Financing Law (the "Act"). Under the Act, the Issuer is authorized, among other things, to make loans to any "project applicant" or "project user" (each as defined in the Act) in order to pay or provide for the financing or refinancing of costs of pollution control facilities. The Company (formerly known as Pennsylvania Power & Light Company) has heretofore requested the Issuer to undertake the financing of certain air or water pollution control facilities or certain sewage or solid waste disposal facilities at the Susquehanna Steam Electric Generating Station in Salem Township, Luzerne County in the Commonwealth of Pennsylvania (collectively, the "Project Facilities"), and, for such purpose, the Issuer has previously issued $115,500,000 aggregate principal amount of its Lehigh County Industrial Development Authority Pollution Control Revenue Refunding Bonds, 1994 Series B (Pennsylvania Power & Light Company Project) (the "Prior Bonds").

(b)    The Company has transferred its interest in the Project Facilities to PPL Susquehanna, LLC, a Delaware limited liability company and an affiliate of the Company ("PPL Susquehanna").

(c)    The Company has requested that the Issuer refund the Prior Bonds. In order to pay a portion of the costs of refunding the Prior Bonds, the Issuer has agreed to issue $115,500,000 aggregate principal amount of its Pollution Control Revenue Refunding Bonds, 2005 Series A (PPL Electric Utilities Corporation Project) (the "Bonds") on the terms and conditions set forth in the subsequent sections of this Agreement.

SECTION 1.2    Company Representations.

The Company represents that:

(a)    It is a corporation duly organized and existing under the laws of the Commonwealth of Pennsylvania, with full power and legal right to enter into this Agreement and the Note and perform its obligations hereunder and thereunder. The making and performance of this Agreement and the Note on the part of the Company have been duly authorized by all necessary action. This Agreement and the Note have been duly executed and delivered by the Company and constitute the valid and binding obligations of the Company enforceable in accordance with their respective terms except as the enforcement thereof may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws relating to or affecting the enforcement of creditors' rights generally, to general equitable principles (whether considered in a proceeding in equity or at law) and to an implied covenant of good faith and fair dealing.

(b)    The Project Facilities constitute pollution control facilities as defined in the Act and are consistent with the purposes of the Act.

(c)    None of the proceeds of the Bonds will be used directly or indirectly to acquire land or any interest therein or for the acquisition of any property or interest therein unless the first use of such property was pursuant to such acquisition.

(d)    All of the proceeds of the Prior Bonds were used to refund $115,500,000 aggregate principal amount of the Lehigh Industrial Development Authority's Pollution Control Revenue Bonds, 1984 Series B (Pennsylvania Power & Light Company Project) (the "Project Bonds") and at least 90% of the proceeds of the Project Bonds were issued to provide "pollution control facilities" and "solid waste disposal facilities" within the meaning of Sections 103(b)(4)(E) and (F) of the Internal Revenue Code of 1954, as amended, and in effect prior to the passage of the Tax Reform Act of 1986 (the "1954 Code").

(e)    None of the proceeds of the Bonds will be used to provide working capital.

(f)    None of the proceeds of the Project and Prior Bonds were used, and none of the proceeds of the Bonds will be used, to provide any airplane, skybox or other private luxury box, or health club facility; any facility primarily used for gambling; or any store the principal business of which is the sale of alcoholic beverages for consumption off premises.

(g)    The Prior Bonds were issued on September 15, 1994.

(h)    Acquisition, construction and installation of the Project Facilities has been accomplished.

(i)    The Company and PPL Susquehanna have used or operated the Project Facilities in a manner consistent with the purposes of the Project Facilities and the Act and the Company knows of no reason why the Project Facilities will not be so operated.

(j)    Neither the Prior Bonds nor the Bonds are or will be "federally guaranteed," as defined in Section 149(b) of the Internal Revenue Code of 1986, as amended (the "Code"); references to the Code and Sections of the Code (or, as applicable, to the 1954 Code and Sections thereof) include Sections 1312 and 1313 of the Tax Reform Act of 1986, relevant applicable regulations and proposed regulations thereunder and under the 1954 Code and any successor provisions to those Sections, regulations or proposed regulations and, in addition, all applicable official rulings and judicial determinations under the foregoing applicable to the Prior Bonds or the Bonds, as applicable.

(k)    At no time will any funds constituting gross proceeds of the Bonds be used in a manner as would constitute failure of compliance with Section 148 of the Code.

(l)    None of the proceeds (within the meaning of Section 147(g) of the Code) of the Bonds will be used to pay for any costs of issuance of the Bonds.

(m)    The proceeds derived from the sale of the Bonds (other than any accrued interest thereon) will be used exclusively to refund the outstanding principal amount of the Prior Bonds. The principal amount of the Bonds does not exceed the outstanding principal amount of the Prior Bonds. The redemption of the outstanding principal amount of the Prior Bonds with such proceeds of the Bonds will occur not later than 90 days after the date of issuance of the Bonds. All earnings derived from the investment of such proceeds of the Bonds will be fully needed and used on such redemption date to pay a portion of the redemption premium and interest accrued and payable on the Prior Bonds on such date.

(n)    On the date of issuance and delivery of the Prior Bonds, the Company reasonably expected that all of the proceeds of such Prior Bonds would be used to carry out the governmental purposes of such issue within the three-year period beginning on the date such issue was issued and none of the proceeds of such issue, if any, were invested in nonpurpose investments having a substantially guaranteed yield for three years or more.

(o)    Neither the average maturity of the Prior Bonds nor the average maturity of the Bonds exceeds 120% of the average reasonably expected economic lives of the facilities financed or refinanced by the proceeds of the Bonds (determined under Section 147(b) of the Code).

(p)    It is not anticipated, as of the date hereof, that there will be created any "replacement proceeds," within the meaning of Section 1.148-1(c) of the Treasury Regulations, with respect to the Bonds; however, in the event that any such replacement proceeds are deemed to have been created, such amounts will be invested in compliance with Section 148 of the Code.

(q)    The information furnished by the Company and used by the Issuer in preparing the certification pursuant to Section 148 and in preparing the Form 8038 information statement pursuant to Section 149(e) of the Code was accurate and complete as of the date of issuance of the Prior Bonds, and the information furnished by the Company and used by the Issuer in preparing the certification pursuant to Section 148 of the Code and in preparing the Form 8038 information statement pursuant to Section 149(e) of the Code will be accurate and complete as of the date of issuance of the Bonds.

(r)    The Company does not own or operate any of the Project Facilities. PPL Susquehanna has agreed with the Company that, for so long as it owns any of the Project Facilities, it will operate such Project Facilities in a manner consistent with the Company's tax covenants in this Agreement and the other transaction documents relating to the issuance of the Bonds. Notwithstanding the foregoing, nothing in any such agreement with PPL Susquehanna requires, and nothing in this Agreement shall require, the Company or PPL Susquehanna to operate any portion of the Project Facilities, or prevents PPL Susquehanna from selling all or any portion of the Project Facilities, or from merging or consolidating with another entity. Nothing in this Agreement shall bind PPL Susquehanna or any other affiliate of the Company that owns the Project Facilities or any portion thereof, or any purchasers of any portions of the Project Facilities or portions thereof sold.

SECTION 1.3    Issuer Findings and Representations.

The Issuer hereby confirms its findings and represents that:

(a)    The Project Facilities qualify as "pollution control facilities" for purposes of the Act and promote the public purposes of the Act by maintaining employment and alleviating unemployment in the Commonwealth.

(b)    The Project Facilities promote the health, safety and general welfare of the people of the Commonwealth by reducing air, water and other pollution and contamination and permitting additional generation of electric energy.

(c)    The Issuer has the necessary power under the Act, and has duly taken all action on its part required, to execute and deliver this Agreement and to undertake the refunding of the Prior Bonds through the issuance of the Bonds. The execution and performance of this Agreement by the Issuer will not violate or conflict with any instrument by which the Issuer or its properties are bound.

ARTICLE 2.
Refunding the Prior Bonds

SECTION 2.1    Issuance of Bonds.

In order to assist the Company in the refunding of the Prior Bonds, the Issuer, concurrently with the execution hereof, will issue, sell and deliver the Bonds. The proceeds of the Bonds shall be loaned to the Company in accordance with Section 3.1. The Bonds will be issued under and pursuant to the Trust Indenture (the "Indenture") dated as of February 1, 2005 between the Issuer and JPMorgan Chase Bank, N.A., as trustee (the "Trustee"), and will be issued in the aggregate principal amount, will bear interest, will mature and will be subject to redemption as set forth therein. The Company hereby approves the Indenture and the Bonds and the terms and conditions under which the Bonds have been issued, sold and delivered. Each capitalized term not otherwise defined herein shall have the meaning given to such term in the Indenture.

The proceeds from the sale of the Bonds shall be loaned to the Company to assist the Company in refunding the Prior Bonds. Those proceeds shall be delivered to the Escrow Agent to be held, together with any interest earnings thereon, in trust, as provided in the Escrow Agreement for the purpose of paying, together with moneys provided by the Company, all of the remaining principal, redemption premium and interest due on the Prior Bonds to their redemption date.

SECTION 2.2    Investment of Fund Moneys.

Any moneys held as part of the Bond Fund shall be invested or reinvested by the Trustee as provided in the Indenture. The Issuer (to the extent it retained or retains direction or control) and the Company each hereby represent that the investment and reinvestment and the use of the proceeds of the Prior Bonds were restricted in such manner and to such extent as was necessary so that the Prior Bonds would not constitute arbitrage bonds under Section 148 of the Code and each hereby covenants that it will restrict that investment and reinvestment and the use of the proceeds of the Bonds in such manner and to such extent, if any, as may be necessary so that the Bonds will not constitute arbitrage bonds under Section 148 of the Code.

The Company shall provide the Issuer with, and the Issuer may base its certificate and statement on, a certificate of an appropriate officer, employee or agent of or consultant to the Company for inclusion in the transcript of proceedings for the Bonds, setting forth the reasonable expectations of the Company on the date of delivery of and payment for the Bonds regarding the amount and use of the proceeds of the Bonds and the facts, estimates and circumstances on which those expectations are based.

ARTICLE 3.
Loan and Repayment

SECTION 3.1    Amount and Source of Loan.

Concurrently with the delivery of the Bonds, the Issuer will, upon the terms and conditions of this Agreement, lend the proceeds of the Bonds to the Company, by deposit thereof in accordance with the provisions of the Indenture. The Bonds may be sold by the Issuer at a discount from their principal amount, and in such event, the amount of such discount shall be deemed to have been loaned to the Company. To the extent that accrued interest on the Bonds is received by the Issuer upon the sale of the Bonds and is deposited into the Bond Fund under the Indenture, such accrued interest shall be applied to the first interest payment due on the Bonds with a corresponding credit on the amounts otherwise due under the Note (as hereinafter defined).

SECTION 3.2    Repayment of Loan.

The Company agrees to repay the loan made by the Issuer under Section 3.1 in installments which, as to amount, shall correspond to the payments of principal on the Bonds and, if applicable, any redemption price and shall bear interest at the interest rate set forth in the Bonds, such principal, redemption price and interest to be payable when such principal, redemption price, if applicable, or interest is due in accordance with the terms of the Indenture, provided that such amount shall be reduced to the extent that other moneys on deposit with the Trustee are available for such purpose, and a credit in respect thereof has been granted pursuant to the Indenture. All such repayments made by the Company pursuant to this Agreement shall be made in funds that will be available to the Trustee no later than (a) the corresponding principal or interest payment date on the Bonds or (b) if a Bond Insurance Policy is in effect and Section 14.01 of the Indenture requires the Trustee to notify the Bond Insurer of deficiencies prior to payment dates, one Business Day prior to the date the Trustee is required to make such payments. To evidence its obligation to pay such amounts, the Company will deliver the Note, as described under Section 3.3.

SECTION 3.3    The Note.

Concurrently with the issuance by the Issuer of the Bonds, the Company will execute and deliver to the Trustee a debt instrument of the Company, which debt instrument shall be in the form of a non-negotiable promissory note substantially in the form attached hereto as Exhibit A (the "Note"). The Note shall:

(i)    be payable to the Trustee as assignee of the Issuer's rights hereunder;

(ii)    be in a principal amount equal to the aggregate principal amount of the Bonds;

(iii)    provide for payments of interest at least equal to the payments of interest on the Bonds;

(iv)    require payments of principal equal to the corresponding payments on the Bonds;

(v)    contain provisions in respect of the prepayment of principal corresponding to the redemption provisions of the Bonds; and

(vi)    require all payments on the Note to be made on or prior to the due date for the corresponding payment to be made on the Bonds.

SECTION 3.4    Acceleration of Payment to Redeem Bonds.

The Issuer will redeem any of the Bonds or portions thereof upon the occurrence of an event which gives rise to any special mandatory redemption specified in the Indenture and in accordance with the provisions thereof. Upon any such special mandatory redemption, the Company shall prepay the Note in full (or in part, if in the opinion of Bond Counsel such partial redemption will preserve the exclusion from gross income for federal income tax purposes of interest on the Bonds remaining outstanding after such redemption). Whenever the Bonds are subject to optional redemption or extraordinary optional redemption, the Issuer will, but only upon direction or request of the Company, redeem the same in accordance with such direction or request and the Indenture. In either event, the Company will pay an amount equal to the applicable redemption price as a prepayment of the Note, together with interest accrued to the date of redemption, as provided in the Note.

In the event that the Company receives notice from the Trustee pursuant to the Indenture that a proceeding has been instituted against a Bondholder which could lead to a final determination that interest on the Bonds is taxable, the Company shall promptly notify the Trustee and the Issuer whether or not it intends to contest such proceeding. In the event that the Company chooses to so contest, it will use its best efforts to obtain a prompt final determination or decision in such proceeding or litigation and will keep the Trustee and the Issuer informed of the progress of any such proceeding or litigation.

SECTION 3.5    No Defense or Set-Off.

The obligations of the Company to make payments on the Note shall be absolute and unconditional without defense or setoff by reason of any default by the Issuer under this Agreement or under any other agreement between the Company and the Issuer or for any other reason, including without limitation, loss or impairment of investments in the Bond Fund, any acts or circumstances that may constitute failure of consideration, destruction of or damage to the Project Facilities, commercial frustration of purpose, or failure of the Issuer to perform and observe any agreement, whether express or implied, or any duty, liability or obligation arising out of or connected with this Agreement, it being the intention of the parties that the payments required hereunder will be paid in full when due without any delay or diminution whatsoever.

SECTION 3.6    Assignment of Issuer's Rights.

As the source of payment for the Bonds, the Issuer will assign to the Trustee all the Issuer's rights under this Agreement with respect to the Bonds (except rights to receive payments under Sections 4.3 and 4.4) including all of its right, title and interest in the Note and the moneys payable thereunder. The Company consents to such assignment and agrees to make payments on the Note and interest thereon directly to the Trustee without defense or setoff by reason of any dispute between the Company and the Issuer or the Trustee.

ARTICLE 4.
Covenants of the Company; Certain Limitations

SECTION 4.1    Corporate Existence.

So long as the Bonds are outstanding, the Company agrees to maintain its corporate existence and, to the extent required by Pennsylvania law, its qualification to do business in Pennsylvania, except that it may dispose of all or substantially all of its assets and may consolidate with or merge into another corporation or entity or permit one or more corporations or entities to consolidate with or merge into it, if the surviving, resulting or transferee corporation or entity, if other than the Company, is solvent, and assumes in writing all of the obligations of the Company hereunder and under the Note and is a corporation or other entity duly organized under the laws of one of the states of the United States of America and, to the extent required by Pennsylvania law, is duly qualified to do business in the Commonwealth of Pennsylvania provided that the Company shall have delivered to the Trustee a certificate from an officer of the Company to the effect that such disposition, consolidation, merger and assumption complies with the provisions of this Agreement.

SECTION 4.2    Payment of Trustee's Compensation and Expenses.

The Company will pay the Trustee's compensation and expenses under the Indenture, including out-of-pocket, incidental and reasonable attorney's fees and expenses and costs of redeeming Bonds thereunder and the compensation and expenses of any authenticating agent, the Bond Registrar and the Paying Agent appointed in respect of the Bonds.

SECTION 4.3    Payment of Issuer's Expenses.

The Company will pay the Issuer's administrative fees and expenses, including legal and accounting fees, incurred by the Issuer in connection with the issuance of the Bonds and the performance by the Issuer of any and all of its functions and duties under this Agreement or the Indenture, including, but not limited to, all duties which may be required of the Issuer by the Trustee and the Bondholders. The Issuer's fee is $231,000.

SECTION 4.4    Indemnity Against Claims.

The Company releases the Issuer from, agrees that the Issuer shall not be liable for, and indemnifies the Issuer against, all liabilities, claims (including claims for any injury, bodily harm or death of any person), costs and expenses imposed upon or asserted against the Issuer on account of: (a) the maintenance, operation and use of the Project Facilities; (b) any breach or default on the part of the Company in the performance of any covenant or agreement of the Company under this Agreement, the Note or the Continuing Disclosure Undertaking (as defined in the Indenture) or arising from any act or failure to act by the Company under such documents; (c) the refunding of the Prior Bonds, and the provision of any information furnished by the Company in connection therewith concerning the Project Facilities or the Company (including, without limitation, any information furnished by the Company for inclusion in any certifications made by the Issuer under Section 2.2 or for inclusion in, or as a basis for preparation of, the information statements filed by the Issuer pursuant to the Code); (d) any audit of the tax status of the interest on the Bonds; and (e) any claim, action or proceeding with respect to the matters set forth in (a), (b) and (c) above brought thereon, except to the extent that any liability, claim, cost or loss was due to the Issuer's willful misconduct.

The Company agrees to indemnify the Trustee and any predecessor Trustee and to hold the Trustee and any predecessor Trustee harmless against, any and all loss, claim, damage, fine, penalty, liability or expense incurred by them, including out-of-pocket and incidental expenses and reasonable legal fees and expenses ("Losses") arising out of or in connection with the acceptance or administration of the Indenture or the trusts thereunder or the performance of their duties thereunder or under this Agreement, including the costs and expenses of defending themselves against or investigating any claim (whether asserted by the Issuer, the Company, a Bondholder or any other person) of liability in the premises, except to the extent that any such loss, liability or expense was due to the Trustee's or such predecessor Trustee's, as the case may be, own negligence or bad faith. In addition to and not in limitation of the preceding sentence, the Company agrees to indemnify the Trustee and any predecessor Trustee and their agents, officers, directors and employees for any Losses that may be imposed on, incurred by or asserted against them for following any instructions or directions upon which the Trustee or such predecessor Trustee is authorized to rely pursuant to the Indenture.

In case any action or proceeding is brought against the Issuer, the Trustee or any predecessor Trustee, in respect of which indemnity may be sought hereunder, the party seeking indemnity shall promptly give notice of that action or proceeding to the Company, and the Company upon receipt of that notice shall have the obligation and the right to assume the defense of the action or proceeding. At its own expense, an indemnified party may employ separate counsel and participate in the defense; provided however, where it is ethically inappropriate for one firm to represent the interests of the Issuer and any other indemnified party or parties, the Company shall pay the Issuer's, the Trustee's or the predecessor Trustee's legal expenses, respectively, in connection with the Issuer's, the Trustee's or the predecessor Trustee's retention of separate counsel. The Company shall not be liable for any settlement made without its consent.

The indemnification set forth above is intended to and shall include the indemnification of all affected officials, directors, officers, agents and employees, past, present and future, of the Issuer, the Trustee and any predecessor Trustee; and, to the extent relating to the Trustee or any predecessor Trustee, shall be for the benefit of the Trustee or such predecessor Trustee in each of its respective capacities under the Indenture. That indemnification is intended to and shall be enforceable by the Issuer, the Trustee and any predecessor Trustee, respectively, to the full extent permitted by law.

SECTION 4.5    Limitation of Liability of the Issuer.

All covenants, stipulations, obligations and agreements of the Issuer contained in this Agreement or the Indenture shall be effective to the extent authorized and permitted by applicable law. No such covenant, stipulation, obligation or agreement shall be deemed to be a covenant, stipulation, obligation or agreement of any past, present or future member, officer, agent or employee of the Issuer in other than his official capacity, and neither the members, officers, agents or employees, past, present or future, of the Issuer nor any official executing the Bonds shall be liable personally on the Bonds or be subject to any personal liability or accountability by reason of the issuance thereof or by reason of the covenants, stipulations, obligations or agreements of the Issuer contained in this Agreement or in the Indenture. Furthermore, no obligation of the Issuer hereunder or under the Bonds shall be deemed to constitute a pledge of the faith and credit of the Issuer, or the faith and credit or taxing power of the Commonwealth of Pennsylvania, the County of Lehigh, or of any other political subdivision thereof, but shall be payable solely out of revenues pledged therefor.

SECTION 4.6    Nondiscrimination/Sexual Harassment Clause.

The Company shall use all reasonable efforts consistent with its existing procedures to comply with the provisions of the Nondiscrimination/Sexual Harassment Clause set forth in Exhibit B hereto. For purposes of such Nondiscrimination/Sexual Harassment Clause, the parties hereto understand that (i) this Agreement is the "contract" and (ii) there is no subcontractor for the performance of the Company's obligations under this Agreement.

SECTION 4.7    Default, etc.

(a)    In addition to all other rights of the Issuer granted herein, in the Note, or otherwise by law, the Issuer shall have the right to specifically enforce the performance and observation by the Company of any of its obligations, agreements or covenants under this Agreement or under the Note and may take any actions at law or in equity to collect any payments due or to obtain other remedies. If the Company shall default under any provisions of this Agreement or in any payment under this Agreement or the Note, and the Issuer shall employ attorneys or incur other expenses for the collection of payments due or for the enforcement of the performance or observation of any obligation or agreement on the part of the Company contained herein or therein, the Company will on demand therefor reimburse the reasonable fees of such attorneys and such reasonable expenses so incurred.

(b)    The Company and the Issuer acknowledge that the rights of the Issuer under this Agreement (except the Issuer's rights under Sections 4.3, 4.4, and 4.5 hereof), including the rights of the Issuer to the enforcement of this Agreement and the exercise of remedies upon the occurrence of any Event of Default, have been assigned by the Issuer to the Trustee in accordance with the Indenture. The rights of the Trustee are further subject to any rights of the Bond Insurer as provided in the Indenture.

SECTION 4.8    Deficiencies in Revenues.

If for any reason, including the Company's being required to withhold or pay any tax imposed by reason of its obligations evidenced by the Note, amounts paid to the Trustee on the Note, together with other moneys held by the Trustee then available, would not be sufficient to make the corresponding payments of the principal of, premium, if any, and interest on, the Bonds when such payments become due, the Company will pay or cause to be paid the amounts required from time to time, when due, to make up any such deficiency.

SECTION 4.9    Tax-Exempt Status.

(a)    The Company covenants and represents that it has taken and caused to be taken and shall take and cause to be taken all actions that may be required of it for the interest on the Bonds to be and to remain excluded from gross income for federal income tax purposes, and that it has not taken or permitted to be taken on its behalf, and covenants that it will not take, or permit to be taken on its behalf, any action which, if taken, would adversely affect that exclusion under the provisions of the Code.

(b)    To the extent an exemption is not available from the requirements of Section 148(f) of the Code, the Company will retain a qualified consultant to calculate, and shall pay to or for the account of the Issuer, all amounts needed to comply with the requirements of Section 148 of the Code, with respect to the Bonds, including Section 148(f) which requires generally a rebate payment to the United States of arbitrage profit from investment of the proceeds of the Bonds in obligations other than tax-exempt obligations. The obligation of the Company to make such payments is unconditional and is not limited to funds representing the proceeds of the Bonds or income from the investment thereof or any other particular source.

ARTICLE 5.
Miscellaneous

SECTION 5.1    Notices.

Notice hereunder shall be given in writing, either by registered mail, to be deemed effective two days after mailing, by telegram, by telecopy or other similar facsimile transmission, or by telephone, confirmed in writing, addressed as follows:

The Issuer:	Lehigh County Industrial Development Authority 2158 Avenue C, Suite 200 Bethlehem, PA 18107 Attention: Janet R. Smith Phone: (610) 266-0887 Fax: (610) 266-7623
The Company	PPL Electric Utilities Corporation Two North Ninth Street Allentown, Pennsylvania 18101 Attention: Treasury Department Phone: 610-774-2636 Fax: 610-774-5235
The Trustee	JPMorgan Chase Bank, N.A. 4 New York Plaza - 15th Floor New York, New York 10004 Attention: Institutional Trust Services Phone: (212) 623-6768 Fax: (212) 623-6167

or to such other address as may be filed in writing with the parties to this Agreement and with the Trustee.

SECTION 5.2    Assignment.

This Agreement may not be assigned by either party without the prior written consent of the other party hereto, which consent shall not be unreasonably withheld, except that the Issuer may assign rights with respect to the Bonds to the Trustee pursuant to Section 3.6 hereof, and the Company may assign its rights and obligations under this Agreement at any time in connection with a disposition of all or substantially all of its assets permitted under Section 4.1. Notwithstanding the foregoing, no merger or consolidation permitted under Section 4.1 shall be deemed to be an assignment for purposes of this Section 5.2.

SECTION 5.3    Illegal, etc. Provisions Disregarded.

In case any provision of this Agreement shall for any reason be held invalid, illegal or unenforceable in any respect, this Agreement shall be construed as if such provision had never been contained herein.

SECTION 5.4    Applicable Law.

This Agreement has been delivered in the Commonwealth of Pennsylvania and shall be deemed to be governed by, and interpreted under, the laws of that Commonwealth.

SECTION 5.5    Amendments.

This Agreement may not be amended except by an instrument in writing signed by the parties hereto and, if such amendment occurs after the issuance of the Bonds, in accordance with the terms of the Indenture.

SECTION 5.6    Continuing Disclosure.

The Issuer hereby acknowledges the entry by the Company into the Continuing Disclosure Undertaking under which the Company has assumed certain obligations for the benefit of the holders and beneficial owners of the Bonds. The Company agrees to perform its obligations under the Continuing Disclosure Undertaking. Notwithstanding any other provision of this Agreement, any failure by the Company to comply with any provision of the Continuing Disclosure Undertaking shall not be a failure or a default, or an Event of Default, under this Agreement or the Indenture.

SECTION 5.7    Term of Agreement.

This Agreement shall become effective upon its delivery and shall continue in effect until all Bonds have been paid or provision for such payment has been made in accordance with the Indenture, except that the provisions hereof contained in Sections 4.2, 4.3, 4.4, 4.5, 4.9 and this Section 5.7 shall continue in effect thereafter.

SECTION 5.8    Financing Statements, etc.

The Company agrees to file or record or to re-file or re-record all financing statements and continuation statements and all other documents, notices and instruments required under applicable law to perfect or maintain the perfection of or to otherwise preserve the validity of the liens and security interests granted to the Trustee under the Indenture.

SECTION 5.9    Counterparts.

This Agreement may be executed in several counterparts, all or any of which shall be regarded for all purposes as one original and shall constitute and be but one and the same instrument.

IN WITNESS WHEREOF, the parties hereto, in consideration of the mutual covenants set forth herein and intending to be legally bound, have caused this Agreement to be executed and delivered as of the date first written above.

(SEAL) Attest: By:  _____________________________________           Joanne D. Kuchera, Assistant Secretary	LEHIGH COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY By:  _____________________________________         W. Cordes Snyder, III, Chairman
	PPL ELECTRIC UTILITIES CORPORATION By:  _____________________________________         James E. Abel, Treasurer

EXHIBIT A - FORM OF COMPANY NOTE

POLLUTION CONTROL FACILITIES NOTE
(LEHIGH COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY)
2005 SERIES A

PPL ELECTRIC UTILITIES CORPORATION (the "Company"), a Pennsylvania corporation, for value received, promises to pay to JPMorgan Chase Bank, N.A. (the "Trustee"), as Trustee under the Trust Indenture dated as of February 1, 2005 (the "Indenture") of the Lehigh County Industrial Development Authority (the "Issuer"), the principal sum of $115,500,000 on September 1, 2029 and to pay (i) interest thereon from the date hereof until the payment of said principal sum has been made or provided for at the rate equal to the interest rate borne by the Issuer's Pollution Control Revenue Refunding Bonds, 2005 Series A (PPL Electric Utilities Corporation Project) (the "Bonds") and payable on each date that interest is payable on the Bonds, and (ii) interest on overdue principal, and to the extent permitted by law, on overdue interest, at the rate borne by the Bonds.

This Note is issued pursuant to a certain Pollution Control Facilities Loan Agreement (the "Agreement") dated as of February 1, 2005 between the Issuer and the Company relating to the refunding of certain obligations of the Issuer previously issued to provide funds for the refunding of bonds issued to assist the Company (formerly known as Pennsylvania Power & Light Company) in the financing of a portion of the cost of acquiring, constructing and installing certain pollution control facilities and sewage or solid waste disposal facilities at the Susquehanna Steam Electric Generating Station in Salem Township, Luzerne County in the Commonwealth of Pennsylvania (the "Project Facilities"). The obligation of the Company to make the payments required hereunder shall be absolute and unconditional without defense or set-off by reason of any default by the Issuer under the Agreement or under any other agreement between the Company and the Issuer or for any other reason, including without limitation, loss or impairment of investments in the Bond Fund, any acts or circumstances that may constitute failure of consideration, destruction of or damage to the Project Facilities, commercial frustration of purpose, or failure of the Issuer to perform and observe any agreement, whether express or implied, or any duty, liability or obligation arising out of or connected with the Agreement, it being the intention of the Company and the Issuer that the payments hereunder will be paid in full when due without any delay or diminution whatsoever.

This Note is subject to prepayment, at the option of the Company, upon written notice to the Trustee given not less than 15 days prior to the day on which the Bond Registrar is required to give notice of optional redemption or extraordinary optional redemption to the Bondholders pursuant to Section 7.04 of Indenture, to the extent that the Bonds are subject to optional redemption or extraordinary optional redemption pursuant to Section 7.01(a) or (b) of the Indenture at a prepayment price equal to the corresponding redemption price of the Bonds. Notice of any optional prepayment of this Note shall be conditional if the corresponding notice of optional redemption or extraordinary optional redemption of the Bonds under Section 7.04 of the Indenture is conditional and if the optional redemption or extraordinary optional redemption of the Bonds does not occur as a result of a failure of such condition, the notice of optional prepayment of this Note shall be of no effect.

If the Bonds are being called for special mandatory redemption as provided in Section 7.01(c) of the Indenture, the Company shall, on or before the proposed redemption date for the Bonds, pay to the Trustee the whole or portion of the unpaid principal amount of this Note equal to the principal amount of the Bonds being called for special mandatory redemption.

In the event that the Company receives notice from the Trustee pursuant to Section 7.01(c) of the Indenture that a proceeding has been instituted as described therein which could lead to a final determination that interest on the Bonds is taxable, the Company shall promptly notify the Trustee and the Issuer whether or not it intends to contest such proceeding. In the event that the Company chooses to so contest, it will use its best efforts to obtain a prompt final determination or decision in such proceeding or litigation and will keep the Trustee and the Issuer informed of the progress of any such proceeding or litigation.

Upon receipt by the Trustee of notice of prepayment hereof in connection with the optional or extraordinary optional redemption of the Bonds, the Trustee shall take all action necessary under and in accordance with the Indenture to redeem Bonds in an amount corresponding to that specified in the particular notice.

The Company is entitled to a credit against its obligations under this Note and this Note shall not be subject to required payment or prepayment to the extent that amounts which would otherwise be payable by the Company hereunder are paid from funds held by the Trustee under the Indenture and available for such payment.

Whenever payment or provision therefor has been made in respect of the principal or redemption price of all or any portion of the Bonds and interest on all or any portion of the Bonds, together with all other sums payable by the Issuer under the Indenture, in accordance with Article 13 of the Indenture, this Note shall be deemed paid to the extent such payment or provision therefor has been made, and if thereby deemed paid in full, this Note shall be canceled and returned to the Company. Notwithstanding the foregoing, if, for any reason, the amounts specified above are not sufficient to make corresponding payments of principal or redemption price of the Bonds and interest on the Bonds, when such payments are due, the Company shall pay as additional amounts due hereunder, the amounts required from time to time to make up any such deficiency.

All payments of principal and interest shall be made to the Trustee at its corporate trust office in New York, New York or as otherwise directed by the Trustee in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts. All payments shall be in the full amount required hereunder unless the Trustee notifies the Company that it is entitled to a credit under the Agreement, this Note or the Indenture.

The occurrence and continuance of each of the following events is hereby defined as and shall constitute an "Event of Default":

(a)    Failure by the Company to pay the principal or prepayment price of this Note at maturity or upon unconditional proceedings for prepayment within one Business Day of when such principal or prepayment price becomes due and payable; or

(b)    Failure by the Company to pay interest on this Note in amounts and at the times necessary to enable the Trustee to pay interest on the Bonds within ten Business Days of when such interest becomes due and payable; or

(c)    The entry by a court having jurisdiction in the premises of (1) a decree of order for relief in respect of the Company in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency or other similar law or (2) a decree or order adjudging the Company bankrupt or insolvent, or approving as properly filed a petition of one or more Persons other than the Company seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under any applicable Federal or State bankruptcy, insolvency or other similar law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official for the Company or for any substantial part of its property, or ordering the winding up or liquidation of its affairs, and any such decree or order for relief or any other decree or order shall have remained unstayed and in effect for a period of 90 consecutive days; or

(d)    The commencement by the Company of a voluntary case or proceeding under any applicable Federal or State bankruptcy, insolvency or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by the Company to the entry of a decree or order for relief in respect of the Company in a case or proceeding under any applicable Federal or State bankruptcy, insolvency or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against the Company, or the filing by the Company of a petition or answer or consent seeking reorganization or relief under any applicable Federal or State bankruptcy, insolvency or similar law, or the consent by the Company to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any substantial part of its property, or the making by the Company of an assignment for the benefit of creditors, or the admission by the Company in writing of its inability to pay its debts generally as they become due, or the authorization of such action by the Board of Directors of the Company.

In each and every such case and during the continuance thereof, the Trustee, by notice in writing to the Company may declare the unpaid balance of this Note to be due and payable immediately if, concurrently with or prior to such notice, the unpaid principal amount of the Bonds has been declared due and payable, and upon any such declaration the same shall become and shall be immediately due and payable, anything in this Note to the contrary notwithstanding. Notwithstanding the foregoing, if after any declaration of acceleration hereunder there is an annulment of any declaration of acceleration with respect to the Bonds, such annulment shall also automatically constitute an annulment of any corresponding declaration under this Note and a waiver and rescission of the consequences of such declaration.

In case the Trustee shall have proceeded to enforce any right under this Note and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Trustee, then and in every such case the Company and the Trustee shall be restored to their respective positions and rights hereunder, and all rights, remedies and powers of the Company and the Trustee shall continue as though no such proceeding had been taken, but subject to the limitations of any such adverse determination.

The Company covenants that, in case default shall be made in the payment of any installment of principal, prepayment price or interest in respect of this Note, whether at maturity or by declaration or otherwise, then, upon demand of the Issuer or the Trustee, the Company will pay to the Trustee the whole amount that then shall have become due and payable on this Note for principal, prepayment price and interest with interest on the overdue principal and prepayment price and (to the extent enforceable under applicable law) on the overdue installments of interest at the rate borne by this Note; and, in addition thereto, such further amount as shall be sufficient to cover the reasonable costs and expenses of collection, including a reasonable compensation to the Trustee, its agents, attorneys and counsel, and any expenses or liabilities incurred by the Trustee other than through its negligence or bad faith.

In case the Company shall fail forthwith to pay such amounts upon such demand, the Trustee shall be entitled and empowered to take any actions permitted under applicable law and to institute any actions or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceedings to judgment or final decree, and may enforce any such judgment or final decree against the Company and collect in the manner provided by law out of the property of the Company any moneys adjudged or decreed to be payable.

In case there shall be pending proceedings for the bankruptcy or for the reorganization of the Company under the Bankruptcy Code or any other applicable law, or in case a receiver or trustee shall have been appointed for the property of the Company or in the case of any other similar judicial proceeding relative to the Company, or to the creditors or property of the Company, the Trustee shall be entitled and empowered, by intervention in such proceedings or otherwise, to file and prove a claim or claims for the whole amount of this Note and interest owing and unpaid in respect thereof and, in case of any judicial proceedings, to file such proofs of claims and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee allowed in such judicial proceedings relative to the Company, its creditors, or its property, and to collect and receive any moneys or other property payable or deliverable on any such claims, and to distribute the same after the deduction of its fees, charges and expenses; and any receiver, assignee or trustee in bankruptcy or reorganization is hereby authorized to make such payments to the Trustee, and to pay to the Trustee any amount due it for compensation and expenses, including reasonable counsel fees incurred by it up to the date of such distribution.

No provision of this Note or of the Agreement or the Indenture shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Bondholder any plan of reorganization, arrangement, adjustment or composition affecting this Note or the rights of any Bondholder in respect thereof or to authorize the Trustee to vote in respect of the claim of any Bondholder in any such proceeding; provided, however, that the Trustee may, on behalf of the Bondholders, vote for the election of a trustee in bankruptcy or similar official and be a member of a creditors' or other similar committee.

No remedy herein conferred is intended to be exclusive of any other remedy or remedies.

No recourse shall be had for the payment of the principal or prepayment price of or interest on this Note, or for any claim based hereon or on the Agreement, against any officer, director or stockholder, past, present or future, of the Company as such, either directly or through the Company, under any constitutional provision, statute or rule of law, or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise.

This Note shall at all times be and remain part of the trust estate under the Indenture, and no assignment or transfer by the Trustee of its rights hereunder shall be effective, other than (i) a transfer made after an Event of Default under the Indenture in the course of the Trustee's exercise of its rights and remedies consequent upon such Event of Default, (ii) a transfer required in the performance of the Trustee's duties under the Indenture, or (iii) a transfer to a successor trustee under the Indenture.

This Note has been delivered in the Commonwealth of Pennsylvania and shall be deemed to be governed by, and interpreted under, the laws of that Commonwealth.

Capitalized terms used in this Note not defined herein shall have the meanings ascribed to them in the Indenture.

IN WITNESS WHEREOF, the Company has caused this Note to be duly executed and delivered.

Date: PPL ELECTRIC UTILITIES CORPORATION By:  _____________________________________
         James E. Abel, Treasurer

EXHIBIT B - NONDISCRIMINATION/SEXUAL HARASSMENT CLAUSE

During the term of this contract, the Company agrees as to itself and each tenant of the Project controlling, controlled by or under common control with the Company (each of the Company and each such tenant, a "Contractor") as follows:

1.    In the hiring of any employee(s) for the manufacture of supplies, performance of work, or any other activity required under the contract or any subcontract, the Contractor, subcontractor, or any person acting on behalf of the Contractor or subcontractor shall not, by reason of gender, race, creed, or color, discriminate against any citizen of this Commonwealth who is qualified and available to perform the work to which the employment relates.

2.    Neither the Contractor nor any subcontractor nor any person on their behalf shall in any manner discriminate against or intimidate any employee involved in the manufacture of supplies, the performance of work, or any other activity required under the contract on account of gender, race, creed or color.

3.    Contractors and subcontractors shall establish and maintain a written sexual harassment policy and shall inform their employees of the policy. The policy must contain a notice that sexual harassment will not be tolerated and employees who practice it will be disciplined.

4.    Contractors shall not discriminate by reason of gender, race, creed, or color against any subcontractor or supplier who is qualified to perform the work to which the contracts relates.

5.    The Contractor and each subcontractor shall furnish all necessary employment documents and records to and permit access to their books, records, and accounts by the contracting agency and the Bureau of Contract Administration and Business Development, for purposes of investigation, to ascertain compliance with provisions of this Nondiscrimination/Sexual Harassment Clause. If the Contractor or any subcontractor does not possess documents or records reflecting the necessary information requested, the Contractor or subcontractor shall furnish such information on reporting forms supplied by the contracting agency or the Bureau of Contract Administration and Business Development.

6.    The Contractor shall include the provisions of this Nondiscrimination/Sexual Harassment Clause in every subcontract so that such provisions will be binding upon each subcontractor.

7.    The Commonwealth may cancel or terminate the contract, and all money due or to become due under the contract may be forfeited for a violation of the terms and conditions of this Nondiscrimination/Sexual Harassment Clause. In addition, the agency may proceed with debarment or suspension and may place the Contractor in the Contractor Responsibility File.

EX-10

Exhibit 10(gg)

PPL Corporation
Director and Named Executive Officer Compensation Matters

   Directors' Fee Revisions

   On October 22, 2004, the Board of Directors of PPL Corporation (the "Company") revised the fees paid to non-employee directors. Effective January 1, 2005, the annual retainer of the non-employee directors was increased from $79,000 to $85,000 (of which a minimum of $55,000 is allocated to a deferred stock account under the Company's Directors Deferred Compensation Plan), the compensation for Committee Chairs was changed from $1,000 per Committee meeting to an annual cash retainer of $5,000 for the Committees that they chair, and a new annual cash retainer of $30,000 was established for the Presiding Director.

   Named Executive Officer Base Salaries

   On January 27, 2005, the Compensation and Corporate Governance Committee ("C&CGC") of the Board of Directors of the Company approved the annual base salaries (effective as of January 1, 2005) of the Company's "named executive officers" (as defined in Item 402(a)(3) of Regulation S-K) after a review of performance and competitive market data. The following table sets forth the annual base salary levels of the Company's named executive officers for 2005 and 2004:

Name and Position	Year	Salary ($)
William F. Hecht    Chairman, President and Chief    Executive Officer	2005 2004	1,125,000 1,040,000
James H. Miller    Executive Vice President and    Chief Operating Officer	2005 2004	630,000 550,000
John R. Biggar    Executive Vice President and    Chief Financial Officer	2005 2004	495,000 470,000
Paul T. Champagne    President-PPL EnergyPlus, LLC	2005 2004	400,000 400,000
Roger L. Petersen    President-PPL Development    Company, LLC	2005 2004	365,000 355,000

   Named Executive Officer Short-term Incentive Cash Awards for 2004 Performance

   On January 27, 2005, the C&CGC authorized annual incentive cash (i.e., bonus) awards to each of the Company's named executive officers for 2004 performance. The annual incentive cash awards were made pursuant to the Company's Short-term Incentive Plan. The incentive cash awards were made to these executive officers for the achievement of specific, independent goals established and measured by the C&CGC. For 2004, the following award targets as a percentage of base salary were established for each executive officer: Chief Executive Officer-100%; Executive Vice Presidents-65%; and Senior Vice President and Presidents of principal operating subsidiaries-50%. The annual incentive cash awards were made by applying these target percentages to the percentage of goal attainment as determined by the C&CGC. The goal categories for 2004 included specific financial and operational measures for the Company and its subsidiaries designed to enhance the Company's position for success in the competitive market. The weightings for each of these categories are generally allocated 60% to the Company's earnings per share and enhanced shareowner value, and 40% to the financial and operational performance of the Company's principal operating subsidiaries. Included in the operating goals were specific requirements tied to compliance with the Sarbanes-Oxley Act of 2002. In the case of Messrs. Champagne and Petersen, more weight was given to the performance of the particular operating subsidiary for which each is a President.

   The following table sets forth the annual incentive cash awards for the named executive officers based on 2004 performance:

Name and Position	Bonus ($)
William F. Hecht    Chairman, President and Chief     Executive Officer	1,252,200
James H. Miller    Executive Vice President and     Chief Operating Officer	430,400
John R. Biggar    Executive Vice President and     Chief Financial Officer	367,800 (1)
Paul T. Champagne    President-PPL EnergyPlus, LLC	238,800
Roger L. Petersen    President-PPL Development     Company, LLC	213,700

(1) Includes $183,900 that Mr. Biggar exchanged for restricted stock units under the terms of the Company's Cash Incentive Premium Exchange Program.

   Also, on January 27, 2005, the C&CGC awarded cash bonus payments to Messrs. Champagne and Petersen of $15,000 and $10,000, respectively.

   Named Executive Officer Long-term Incentive Equity Awards

   On January 27, 2005, the C&CGC authorized grants to the Company's named executive officers of long-term incentive equity awards pursuant to the Company's Incentive Compensation Plan. These grants consisted of restricted stock units and stock option awards. The grants of restricted stock units with a three-year restriction period were based on the achievement of two components established by the C&CGC in 2004 and measured by the Committee in January 2005: (i) sustained financial and operational results and (ii) specific strategic objectives designed to enable the Company to continue to provide value to its shareholders. Sustained financial and operational achievement was determined by averaging the most recent three years of annual performance measures used for the annual cash awards. Strategic objectives were related to increasing shareowner value through implementation of certain long-term corporate initiatives, including actions to influence the evolution of government policies toward more competitive markets, develop an internal corporate structure to optimize PPL's wholesale hedging strategy, develop and retain management skills and establish the financial profile necessary to optimize growth opportunities when the wholesale electricity markets strengthen.

   For 2004, the following long-term incentive equity award targets as a percentage of base salary were established for each executive officer:

Long-term Incentive Program	Restricted Stock Units			Stock Options
	(Targets as % of Salary)
Name and Position	Sustained Financial and Operational Results	Strategic Objective Results	Stock Price Performance
Chief Executive Officer	75%	75%	150%
Executive Vice Presidents	60%	60%	120%
Senior Vice President and Presidents of principal    operating subsidiaries	40%	40%	80%

   The following table sets forth the long-term incentive equity awards made in January 2005 to the named executive officers:

Name and Position	Restricted Stock Units (1)	Stock Options(2)
William F. Hecht- Chairman, President and Chief Executive Officer	30,400	184,120
James H. Miller- Executive Vice President and Chief Operating Officer	12,860	77,900
John R. Biggar- Executive Vice President and Chief Financial Officer	15,820 (3)	66,570
Paul T. Champagne- President-PPL EnergyPlus, LLC	6,230	37,770
Roger L. Petersen- President-PPL Development Company, LLC	5,530	33,520

(1)	The number of restricted stock units awarded are equivalent to the dollar value (based upon the closing price per share of PPL Corporation's common stock on the date of grant) of the percentage applied to base pay in effect at the end of 2004.
(2)	The exercise price of the stock option awards is $53.32. The stock options vest over a three-year period from the date of grant in equal installments and expire no later than January 27, 2015.
(3)	Includes 4,830 restricted stock units granted to Mr. Biggar pursuant to the terms of the Company's Cash Incentive Premium Exchange Program.

   Additional information for this item will be set forth in the sections entitled "Compensation of Directors," "Summary Compensation Table" and "Report of the Compensation and Corporate Governance Committee Regarding Executive Compensation" in the Company's 2005 Notice of Annual Meeting and Proxy Statement, which will be filed with the Securities and Exchange Commission not later than 120 days after December 31, 2004, and which information is incorporated herein by reference.

EX-10

Exhibit 10(hh)

PPL Electric Utilities Corporation
Named Executive Officer Compensation Matters

   Named Executive Officer Base Salaries

   On January 27, 2005, the Compensation and Corporate Governance Committee ("C&CGC") of the Board of Directors of PPL Corporation approved the annual base salary (effective as of January 1, 2005) of PPL Electric Utilities Corporation's ("PPL Electric") President, after a review of performance and competitive market data. The base salaries for each of the Vice President and Controller and the Treasurer were approved by PPL Corporation's Corporate Leadership Council ("CLC") on February 22, 2005, after a review of performance and competitive market data. All three officers are considered "named executive officers" (as defined in Item 402(a)(3) of Regulation S-K). The following table sets forth the annual base salary levels of PPL Electric's named executive officers for 2005 and 2004:

Name and Position	Year	Salary ($)
John F. Sipics    President	2005 2004	325,000 290,000
Paul A. Farr    Vice President and Controller	2005 2004	286,202 270,000
James E. Abel    Treasurer	2005 2004	250,773 243,469

   Named Executive Officer Short-term Incentive Cash Awards for 2004 Performance

   On January 27, 2005, the C&CGC authorized an annual incentive cash (i.e., bonus) award to the President for 2004 performance, and CLC authorized annual incentive cash awards to the Vice President and Controller and the Treasurer for 2004 performance on February 22, 2005. The incentive cash awards were made to these executive officers for the achievement of specific, independent goals established and measured by the C&CGC and the CLC. For 2004, the following award targets as a percentage of base salary were established for each named executive officer: President-50% and Vice President and Controller and Treasurer-40%. The annual incentive cash awards were made by applying these target percentages to the percentage of goal attainment as determined by the C&CGC and the CLC. The goal categories for 2004 for Mr. Sipics included specific financial and operational measures for PPL Corporation and key subsidiaries, including specific operational goals for PPL Electric. The weightings for each of these categories are allocated 40% to PPL Corporation's earnings per share and enhanced shareowner value, 40% to the financial and operational performance of PPL Electric and 20% to certain operating subsidiaries of PPL Corporation. In the case of Messrs. Farr and Abel, the goal categories for 2004 included specific financial and operational measures for PPL Corporation and key subsidiaries, and also consideration of individual performance. The weightings for each of these categories are allocated 40% to PPL Corporation's earnings per share and enhanced shareowner value, 40% to the financial and operational performance of certain operating subsidiaries and 20% to individual performance. Included in the operating goals for all named executive officers were specific requirements tied to compliance with the Sarbanes-Oxley Act of 2002.

   The following table sets forth the annual incentive cash awards for the named executive officers based on 2004 performance.

Name and Position	Bonus ($)
John F. Sipics    President	169,100 (1)
Paul A. Farr    Vice President and Controller	163,500 (1)
James E. Abel    Treasurer	112,100

(1) Includes $118,370 and $81,750 that Messrs. Sipics and Farr, respectively, exchanged for restricted stock units under the terms of PPL Corporation's Cash Incentive Premium Exchange Program.

   Named Executive Officer Long-term Incentive Equity Awards

   On January 27, 2005, the C&CGC authorized grants to PPL Electric's named executive officers of long-term incentive equity awards pursuant to PPL Corporation's Incentive Compensation Plan. These grants consisted of restricted stock units and stock option awards. The grants of restricted stock units with a three-year restriction period were based on the achievement of two components established by the C&CGC in 2004 and measured by the committee in January 2005: (i) sustained financial and operational results and (ii) specific strategic objectives designed to enable PPL Corporation to continue to provide value to its shareholders. Sustained financial and operational achievement was determined by averaging the most recent three years of annual performance measures used for the annual cash awards. Strategic objectives were related to increasing shareowner value through implementation of certain long-term corporate initiatives, including actions to influence the evolution of government policies toward more competitive markets, develop an internal corporate structure to optimize PPL Corporation's wholesale hedging strategy, develop and retain management skills, and establish the financial profile necessary to optimize growth opportunities when the wholesale electricity markets strengthen.

   For 2004, the following long-term incentive equity award targets as a percentage of base salary were established for each named executive officer:

Long-term Incentive Program	Restricted Stock Units			Stock Options
	(Targets as % of Salary)
Name and Position	Sustained Financial and Operational Results	Strategic Objective Results	Stock Price Performance
President	40%	40%	80%
Vice President and Controller	40%	40%	80%
Treasurer	26.25%	26.25%	52.5%

   The following table sets forth these long-term incentive equity awards made in January 2005 to the named executive officers:

Name and Position	Restricted Stock Units (1)	Stock Options (2)
John F. Sipics- President	7,640 (3)	27,380
Paul A. Farr- Vice President and Controller	6,350 (4)	25,490
James E. Abel- Treasurer	2,490	15,090

(1)	The number of restricted stock units awarded are equivalent to the dollar value (based upon the closing price per share of PPL Corporation's common stock on the date of grant) of the percentage applied to base pay in effect at the end of 2004.
(2)	The exercise price of the stock option awards is $53.32. The stock options vest over a three-year period from the date of grant in equal installments and expire no later than January 27, 2015.
(3)	Includes 3,110 restricted stock units granted to Mr. Sipics pursuant to the terms of PPL Corporation's Cash Incentive Premium Exchange Program.
(4)	Includes 2,140 restricted stock units granted to Mr. Farr pursuant to the terms of PPL Corporation's Cash Incentive Premium Exchange Program.

   Additional information for this item will be set forth in the sections entitled "Compensation of Directors" and "Summary Compensation Table," "Compensation Report of the Board of Directors" in PPL Electric's 2005 Notice of Annual Meeting and Information Statement, which will be filed with the Securities and Exchange Commission not later than 120 days after December 31, 2004, and which information is incorporated herein by reference.

EX-12

Exhibit 12(a)
PPL CORPORATION AND SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS (Millions of Dollars)
				2004			2003			2002			2001		2000
Fixed charges, as defined:
	Interest on long-term debt			$	500		$	417		$	486		$	351	$	323
	Interest on short-term debt and   other interest				20			25			71			44		64
	Amortization of debt discount,   expense and premium - net				8			41			25			17		5
	Interest on capital lease obligations   charged to expense															4
	Estimated interest component of   operating rentals				34			52			39			36		25
	Preferred security distributions of   subsidiaries on a pre-tax basis				5			45			79			64		31
			Total fixed charges	$	567		$	580		$	700		$	512	$	452
Earnings, as defined:
	Net income (a)			$	708		$	726		$	438		$	167	$	491
	Preferred security dividend requirements				2			29			67			52		26
	Less undistributed income (loss) of   equity method investments				(13	)		(18	)		(23	)		20		74
					723			773			528			199		443
Add:
	Income taxes				195			170			210			261		294
	Amortization of capitalized interest on   capital leases															2
	Total fixed charges as above   (excluding capitalized interest,   capitalized interest on capital lease   obligations and preferred security   distributions of subsidiaries on a   pre-tax basis)				558			528			600			419		405
			Total earnings	$	1,476		$	1,471		$	1,338		$	879	$	1,144
Ratio of earnings to fixed charges					2.6			2.5			1.9			1.7		2.5
Ratio of earnings to combined fixed   charges and preferred stock   dividends (b)					2.6			2.5			1.9			1.7		2.5
(a)		Net income excludes extraordinary item, minority interest, loss from discontinued operations and the cumulative effects of changes in accounting principles.
(b)		PPL, the parent holding company, does not have any preferred stock outstanding; therefore, the ratio of earnings to combined fixed charges and preferred stock dividends is the same as the ratio of earnings to fixed charges.

EX-12

Exhibit 12(b)
PPL ENERGY SUPPLY, LLC AND SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (Millions of Dollars)
				2004			2003			2002			2001		2000
Fixed charges, as defined:
	Interest on long-term debt			$	264		$	149		$	169		$	36	$	54
	Interest on short-term debt and   other interest				23			25			52			33		75
	Amortization of debt discount,   expense and premium - net				(5	)		31			9			2		11
	Estimated interest component of   operating rentals				17			38			23			19		9
	Preferred security distributions of   subsidiaries on a pre-tax basis							8			12
			Total fixed charges	$	299		$	251		$	265		$	90	$	149
Earnings, as defined:
	Net income (a)			$	661		$	719		$	509		$	168	$	246
	Preferred security dividend requirement							5			9
	Less undistributed income (loss) of   equity method investments				(12	)		(15	)		(22	)		20		74
					673			739			540			148		172
Add:
	Income taxes				199			185			266			274		125
	Total fixed charges as above   (excluding capitalized interest   and preferred security distributions of   subsidiaries on a pre-tax basis)				294			237			234			66		135
			Total earnings	$	1,166		$	1,161		$	1,040		$	488	$	432
Ratio of earnings to fixed charges					3.9			4.6			3.9			5.4		2.9
(a)		Net income excludes minority interest, loss from discontinued operations and the cumulative effects of changes in accounting principles.

EX-12

Exhibit 12(c)
PPL ELECTRIC UTILITIES CORPORATION AND SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (Millions of Dollars)
				2004		2003		2002		2001		2000
Fixed charges, as defined:
	Interest on long-term debt			$	176	$	201	$	209	$	220	$	223
	Interest on short-term debt and   other interest				7		3		3		4		16
	Amortization of debt discount,   expense and premium - net				7		8		7		6		4
	Interest on capital lease obligations   charged to expense												4
	Estimated interest component of   operating rentals				8		7		7		8		14
	Preferred security distributions of   subsidiaries on a pre-tax basis								13		23		23
			Total fixed charges	$	198	$	219	$	239	$	261	$	284
Earnings, as defined:
	Net income (a)			$	74	$	25	$	39	$	114	$	250
	Preferred security dividend   requirements				2		3		16		26		26
					76		28		55		140		276
Add:
	Income taxes				8		18		18		65		171
	Amortization of capitalized interest   on capital leases												2
	Total fixed charges as above   (excluding capitalized interest,   capitalized interest on capital lease   obligations and preferred security   distributions of subsidiaries on a   pre-tax basis)				197		219		225		238		257
			Total earnings	$	281	$	265	$	298	$	443	$	706
Ratio of earnings to fixed charges					1.4		1.2		1.2		1.7		2.5
(a)		Net income excludes extraordinary item and the cumulative effect of a change in accounting principle.

EX-21

Exhibit 21(a)
PPL Corporation
Subsidiaries of the Registrant
As of December 31, 2004
Company Name	State or Jurisdiction of
Business Conducted under Same Name	Incorporation/Formation
PPL Electric Utilities Corporation	Pennsylvania
PPL Energy Funding Corporation	Pennsylvania
PPL Energy Supply, LLC	Delaware
PPL Investment Corporation	Delaware
PPL Global, LLC	Delaware
PMDC International Holdings, Inc.	Delaware
PPL EnergyPlus, LLC	Pennsylvania
PPL Generation, LLC	Delaware
PPL Montana Holdings, LLC	Delaware
PPL Montour, LLC	Delaware
PPL Susquehanna, LLC	Delaware
WPD Investment Holdings Ltd.	United Kingdom

EX-21

Exhibit 21(b)
PPL Electric Utilities Corporation
Subsidiaries of the Registrant
As of December 31, 2004
Company Name	State or Jurisdiction of
Business Conducted under Same Name	Incorporation/Formation
PPL Transition Bond Company, LLC	Delaware
PPL Receivables Corporation	Delaware

EX-23

Exhibit 23(a)

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 333-116478, 333-116478-01, 333-116478-02, 333-85716, 333-85716-01, 333-85716-02, 333-106200 and 106200-01), the Registration Statements on Form S-3D (Nos. 333-102845 and 333-48781), and the Registration Statements on Form S-8 (Nos. 333-02003, 333-112453, 333-110372, and 333-95967) of PPL Corporation of our report dated February 25, 2005 relating to the consolidated financial statements, financial statement schedule, management's assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
March 1, 2005

EX-23

Exhibit 23(b)

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 333-116477, 333-106200 and 106200-01) of PPL Energy Supply, LLC of our report dated February 25, 2005 relating to the consolidated financial statements and financial statement schedule, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
March 1, 2005

EX-24

Exhibit 24

PPL CORPORATION

2004 ANNUAL REPORT
TO THE SECURITIES AND EXCHANGE COMMISSION
ON FORM 10-K

POWER OF ATTORNEY

     The undersigned directors of PPL Corporation, a Pennsylvania corporation, that is to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, its 2004 Annual Report on Form 10-K, do hereby appoint each of William F. Hecht, John R. Biggar and Robert J. Grey their true and lawful attorney, with power to act without the other and with full power of substitution and resubstitution, to execute for them and in their names said Form 10-K Report and any and all amendments thereto, whether said amendments add to, delete from or otherwise alter said Form 10-K Report, or add or withdraw any exhibits or schedules to be filed therewith and any and all instruments in connection therewith. The undersigned hereby grant to each said attorney full power and authority to do and perform in the name of and on behalf of the undersigned, and in any and all capacities, any act and thing whatsoever required or necessary to be done in and about the premises, as fully and to all intents and purposes as the undersigned might do, hereby ratifying and approving the acts of each of the said attorneys.

     IN WITNESS WHEREOF, the undersigned have hereunto set their hands this 25th day of February, 2005.

/s/ Frederick M. Bernthal                        Frederick M. Bernthal	/s/ Stuart Heydt                                   Stuart Heydt
/s/ John W. Conway                               John W. Conway	/s/ W. Keith Smith                               W. Keith Smith
/s/ E. Allen Deaver                                  E. Allen Deaver	/s/ Susan M. Stalnecker                       Susan M. Stalnecker
/s/ Louise K. Goeser                               Louise K. Goeser

EX-31

Exhibit 31(a)

CERTIFICATION
I, WILLIAM F. HECHT, the principal executive officer of PPL Corporation (the "registrant"), certify that:
1.	I have reviewed this annual report on Form 10-K of the registrant for the year ended December 31, 2004;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d.	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: March 1, 2005			/s/  William F. Hecht
			William F. Hecht Chairman, President and Chief Executive Officer PPL Corporation

EX-31

Exhibit 31(b)

CERTIFICATION
I, JOHN R. BIGGAR, the principal financial officer of PPL Corporation (the "registrant"), certify that:
1.	I have reviewed this annual report on Form 10-K of the registrant for the year ended December 31, 2004;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d.	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: March 1, 2005			/s/  John R. Biggar
			John R. Biggar Executive Vice President and Chief Financial Officer PPL Corporation

EX-31

Exhibit 31(c)

CERTIFICATION
I, WILLIAM F. HECHT, the principal executive officer of PPL Energy Supply, LLC (the "registrant"), certify that:
1.	I have reviewed this annual report on Form 10-K of the registrant for the year ended December 31, 2004;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	c.	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: March 1, 2005			/s/  William F. Hecht
			William F. Hecht President PPL Energy Supply, LLC

EX-31

Exhibit 31(d)

CERTIFICATION
I, JAMES E. ABEL, the principal financial officer of PPL Energy Supply, LLC (the "registrant"), certify that:
1.	I have reviewed this annual report on Form 10-K of the registrant for the year ended December 31, 2004;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	c.	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: March 1, 2005			/s/  James E. Abel
			James E. Abel Vice President and Treasurer PPL Energy Supply, LLC

EX-31

Exhibit 31(e)

CERTIFICATION
I, JOHN F. SIPICS, the principal executive officer of PPL Electric Utilities Corporation (the "registrant"), certify that:
1.	I have reviewed this annual report on Form 10-K of the registrant for the year ended December 31, 2004;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	c.	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: March 1, 2005			/s/  John F. Sipics
			John F. Sipics President PPL Electric Utilities Corporation

EX-31

Exhibit 31(f)

CERTIFICATION
I, JAMES E. ABEL, the principal financial officer of PPL Electric Utilities Corporation (the "registrant"), certify that:
1.	I have reviewed this annual report on Form 10-K of the registrant for the year ended December 31, 2004;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	c.	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: March 1, 2005			/s/  James E. Abel
			James E. Abel Treasurer PPL Electric Utilities Corporation

EX-32

Exhibit 32(a)

CERTIFICATE PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
FOR PPL CORPORATION'S 10-K FOR THE YEAR ENDED DECEMBER 31, 2004

In connection with the annual report on Form 10-K of PPL Corporation (the "Company") for the year ended December 31, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Covered Report"), I, the principal executive officer of the Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, hereby certify that:

• The Covered Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

• The information contained in the Covered Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 1, 2005 /s/ William F. Hecht                                   
William F. Hecht
Chairman, President and
Chief Executive Officer
PPL Corporation

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32

Exhibit 32(b)

CERTIFICATE PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
FOR PPL CORPORATION'S 10-K FOR THE YEAR ENDED DECEMBER 31, 2004

In connection with the annual report on Form 10-K of PPL Corporation (the "Company") for the year ended December 31, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Covered Report"), I, the principal financial officer of the Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, hereby certify that:

• The Covered Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

• The information contained in the Covered Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 1, 2005 /s/ John R. Biggar                                   
John R. Biggar
Executive Vice President and
Chief Financial Officer
PPL Corporation

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32

Exhibit 32(c)

CERTIFICATE PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
FOR PPL ENERGY SUPPLY, LLC'S 10-K FOR THE YEAR ENDED DECEMBER 31, 2004

In connection with the annual report on Form 10-K of PPL Energy Supply, LLC (the "Company") for the year ended December 31, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Covered Report"), I, the principal executive officer of the Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, hereby certify that:

• The Covered Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

• The information contained in the Covered Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 1, 2005 /s/ William F. Hecht                                   
William F. Hecht
President
PPL Energy Supply, LLC

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32

Exhibit 32(d)

CERTIFICATE PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
FOR PPL ENERGY SUPPLY, LLC'S 10-K FOR THE YEAR ENDED DECEMBER 31, 2004

In connection with the annual report on Form 10-K of PPL Energy Supply, LLC (the "Company") for the year ended December 31, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Covered Report"), I, the principal financial officer of the Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, hereby certify that:

• The Covered Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

• The information contained in the Covered Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 1, 2005 /s/ James E. Abel                                   
James E. Abel
Vice President and Treasurer
PPL Energy Supply, LLC

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32

Exhibit 32(e)

CERTIFICATE PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
FOR PPL ELECTRIC UTILITIES CORPORATION'S 10-K FOR THE YEAR ENDED DECEMBER 31, 2004

In connection with the annual report on Form 10-K of PPL Electric Utilities Corporation (the "Company") for the year ended December 31, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Covered Report"), I, the principal executive officer of the Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, hereby certify that:

• The Covered Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

• The information contained in the Covered Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 1, 2005 /s/ John F. Sipics                                   
John F. Sipics
President
PPL Electric Utilities Corporation

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32

Exhibit 32(f)

CERTIFICATE PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
FOR PPL ELECTRIC UTILITIES CORPORATION'S 10-K FOR THE YEAR ENDED DECEMBER 31, 2004

In connection with the annual report on Form 10-K of PPL Electric Utilities Corporation (the "Company") for the year ended December 31, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Covered Report"), I, the principal financial officer of the Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, hereby certify that:

• The Covered Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

• The information contained in the Covered Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 1, 2005 /s/ James E. Abel                                   
James E. Abel
Treasurer
PPL Electric Utilities Corporation

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-99

Exhibit 99
PPL Corporation - Corporate Organization (Selected Subsidiaries)
PPL Corporation
	PPL Electric Utilities Corporation
		PPL Transition Bond Company, LLC
		PPL Receivables Corporation
		CEP Commerce, LLC
			CEP Lending, Inc.
	PPL Gas Utilities Corporation
	PPL Services Corporation
		PPL Development Company, LLC
	PPL Capital Funding, Inc.
	PPL Properties, Inc.
	PPL Power Insurance Ltd.
	PPL Energy Funding Corporation
		CEP Reserves, Inc.
		PPL Ventures, LLC
			PPL Land Holdings, LLC
			PPLSolutions, LLC
			PPL Telcom, LLC
		PPL Energy Supply, LLC
			PPL Investment Corporation
			PPL Global, LLC
				PMDC Chile, Inc. (includes Emel)
				PPLG US Latin America, Inc. (includes Elfec and Integra)
				PPLG El Salvador (includes EC)
				PMDC International Holdings, Inc. (includes WPD)
			PPL EnergyPlus, LLC
				PPL Synfuel Investments, LLC
					PPL Somerset, LLC
					Avon Lake Synfuels, LLC (limited partner interest in Tyrone Synfuels, LP)
				PPL Energy Services Holdings, LLC
			PPL Generation, LLC
				Lower Mount Bethel Energy, LLC
				PPL Brunner Island, LLC
				PPL Coal Holdings Corporation
				PPL Edgewood Energy, LLC
				PPL Holtwood, LLC
				PPL Maine, LLC
				PPL Martins Creek, LLC
				PPL Midwest Holdings, LLC (includes PPL University Park, LLC)
				PPL Montana Holdings, LLC (includes PPL Montana)
				PPL Montour, LLC
					PPL Rights, Inc. (jointly owned by PPL Montour, PPL Martins Creek and PPL Brunner Island)
				PPL Shoreham Energy, LLC
				PPL Southwest Generation Holdings, LLC (50% owner of Griffith)
				PPL Sundance Energy, LLC
				PPL Susquehanna, LLC
				PPL Wallingford Energy LLC