Restructuring Agreements

RNS Number:1242S
Scottish & Southern Energy PLC
17 November 2003

Monday 17 November 2003



                         SCOTTISH AND SOUTHERN ENERGY plc
      RESTRUCTURING AGREEMENTS AND THE INTRODUCTION OF BRITISH ELECTRICITY
                 TRANSMISSION AND TRADING ARRANGEMENTS (BETTA)



Scottish and Southern Energy plc (SSE) has agreed in principle that two '
restructuring' agreements with ScottishPower plc should be terminated in April
2005 in order to help pave the way for the development of a genuinely single
market in electricity transmission and trading in Great Britain.  The agreement
is expected to be completed by mid-December, and is subject to regulatory
approval.



The restructuring agreements were put in place when the Scottish electricity
industry was privatised in 1991, separately from the privatisation in England
and Wales.  Two agreements between SSE and ScottishPower are presently due to
continue beyond April 2005, when British Electricity Transmission and Trading
Arrangements (BETTA) are expected to be introduced:



*        The Peterhead Agreement, under which ScottishPower pays a reducing
capacity fee each year for the use of just over 750MW of the station's capacity,
which typically produces around 1.5TWh of electricity a year.  The fee is #27m
in 2003/04 and will be #25m in 2004/05.  This agreement was due to run until
2012.

*        The Hydro Agreement, under which ScottishPower pays a fixed flat fee of
around #8m per annum and #13/MWh for up to 360,000 MWh of output a year.  This
agreement was due to run until 2039.



The decision to terminate these restructuring agreements in April 2005 means
that SSE will be able to deploy 642MW of additional efficient and flexible
thermal generation capacity in BETTA, including the balancing market, thus
optimising the use of its portfolio.



In addition, SSE will gain access to 115MW of standby capacity, the importance
of which is likely to be underlined by the need to make sure that the UK is able
to meet future peak demand for electricity.



SSE believes that there will be significant value in having this capacity to
deploy in the market and that this value will be greater if wholesale
electricity prices continue their recovery.  Looking ahead, Peterhead's status
as one of the lowest carbon thermal power stations in the UK means it should
also be well-positioned for the introduction of the Emissions Trading Scheme in
2005.



In addition to plant covered by the Peterhead Agreement, the hydro output
previously made available to ScottishPower will now be available to SSE. The
value of hydro power is also likely to be reinforced by developments in
electricity markets over the next few years.



Ian Marchant, Chief Executive of SSE, said:



"The establishment of a single set of arrangements for electricity transmission
and trading in Great Britain is a welcome development.  In the overall context
of everything being done to pave the way for BETTA, the termination of these
contracts makes sense.



It resolves a potentially contentious issue which is a leftover from the
Scottish privatisation, and I am confident that this is the right time at which
to agree to end  these agreements.  In particular, we will benefit from being
able to deploy these previously committed generation assets flexibly in the new
single British market."



For further information please contact:


Scottish and Southern Energy plc
Alan Young - Director of Corporate Communications                       [phone]
Denis Kerby - Investor and Media Relations Manager                      [phone]

Financial Dynamics
Andrew Dowler                                                           [phone]
















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