SEIZING VALUE

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SEIZING VALUE
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SCOTTISHPOWER IN 2000
Leading International Utility Company
One of the largest traded public
utilities Customers 7.5m Employees 25,000 Market
Cap 10bn
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EVOLUTION OF STRATEGY FOR 2000s
US
UK
International
National
Post PUHCA?
Grow assets and customer base selectively
Electricity and
West
convergence opportunities
UK
Maximise value
Drive for world-class
from 5.5 million
performance
Reshape core
PacifiCorp
Multi-
homes
business and exploit
in all activities
Territory
Utility
existing
assets
Multi-Utility
Electricity
Multi-Utility
Electricity
Utility-Related
Creating shareholder value
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UNIQUE DRIVERS OF SCOTTISHPOWER VALUE
Quality assets Opportunities from significant
customer base electricity opportunities - RBoS
Joint Venture - Thus US growth opportunities
Underwritten by proven efficiency skills
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UK BUSINESS VALUE
m
Unique value drivers
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GENERATION

• Balanced, flexible, low-cost plant portfolio
• Optimise trading opportunities, NETA, ROSTA
• England and Wales interconnector 2200 MW
• Northern Ireland interconnector 250 MW
• 400 MW Brighton CCGT plant

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GENERATION ASSETS
Illustrative Market Values
Plant MW Fuel Price /kW Drax 3,870 Coal 1,875m
484Eggborough 2,005 Coal 640m 319Killinghome 65
0 Gas 411m 630 Value of coal assets sold
300/kW - 400/kW ScottishPowerLongannet 2,400 C
oalCockenzie 1,200 CoalBrighton 400 Gas On that
basis, value of SP plant 4,000 MW x 300 -
400/kW 1,200m - 1,600m
With FGD, hence premium price
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DRIVING VALUE FROM INFRASTRUCTURE
Strong track record of delivering infrastructure
efficiency Plans in place to deliver further
value OM and capex focus Will create upside
versus regulators targets
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INFRASTRUCTURE VALUATION
Regulatory Asset Base
Transmission 648mDistribution -
Scotland 1,344m - Manweb 640mSouthern
Water 1,829m Total 4,443m
Upside from efficiency savings
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SIGNIFICANT UK CUSTOMER BASE
1 in 5 UK Homes
Electricity Gas 3.5 million Water /
Wastewater 2.0 million UK TOTAL 5.5 million
Substantial opportunity
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ENERGY SUPPLY
Industry leader - Electricity - Gas Growing
number of accounts nationwide Developing new
products andchannels to market Strong national
brand
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INNOVATIVE APPROACHTO CUSTOMERS
JV with RBoS
Sleeptight Protecting you from all household
disasters - home insurance, maintenance products
etc
Unique service packagesto the home and small
businesses Exploit Internet and traditional
channels
Homewise Delivering all of your household
services - utilities, telecoms, internet etc
Lifestyle Helping you deal with the changes in
your life - home move, travel etc
Leveraging value from acombined 10m customer
base
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EXAMPLES OF CUSTOMER VALUATIONS
Acquisition cost of customers 160 - 205 - BE /
Hyder 160 / customer - NP / Midlands 165 /
customer - EdF / SWEB 205 / customer Analysts
valuations of customers 150 - 200 Analysts
valuation of Centrica 250 - 400 On that basis,
value of SP UKcustomer base5.5 million x 150
- 400 / customer 750m - 2,200m
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Leverage existing business for growth
Internet Interactive
Enable customers to exploit new technologies
thus
Call Centres
Data Telecoms
Implement technologically advanced platform
Clear Business StrategyPartner in leveraging
customer base
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Provision of bundled solutionsCross selling to
established customer base Enhanced service
provision through partners
Develop and offer flexible integrated Internet,
data and voice solutions, tailored to
customer-specific requirementsAggressive
roll-out of e-commerce Development of
web-enabled content and vertical portals
Phased infrastructure expansion tied to marketing
planPan-UK DWDM backbone, with IP/MPLS
transmission Flexible local loop strategy for
broadband solutions
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Analysts target value for Thus over 900pper
share ScottishPower retains a 50.1 holding Clear
prospects for growth 900p represents value per SP
share of 150p
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UK BUSINESS VALUE
m
Unique value drivers
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PACIFICORP
Quality asset base Underperforming business -
1998 normalised ROE 6.7 ScottishPower will apply
proven utility management skills PacifiCorp well
positioned for future growth
Major US platform
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INITIAL DRIVERS OF VALUE
Rate filings - Requested rate increase 193m -
Orders by April through November 2000 Efficiency
improvements - Aim to achieve top ten efficiency
by 2004 Disposal of non-core assets
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EFFICIENCY IMPROVEMENT POTENTIAL
Utility Ranking
Non Generation cost / customer
1997
1998
1996
1998
1 158 155 173 5 191 193 186 10 214 221
228 30 280 261 270 50 324 292 292
75 PacifiCorp 300 340 352
Aim to achieve top ten efficiency by 2004
Source FERC Form1 1998, 1997, 1996 (Non
generation costs exclude bad debt customer
informational expenses)
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TRANSITION MANAGEMENT
Operating Costs/Expenses 1998 (m)
Taxes 97
Experienced transition team Separate from line
management Benchmarking processesand costs
Special Charges 123
Fuel 478
Maintenance 165
Administration 234
Depreciation and Amortisation 387
Other Operations 292
Total 1,776m
Source PacifiCorp 10K Expenses for US
Domestic Electric excluding purchased power
Transition plan published May 2000
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US BUSINESS SUMMARY
Major US electric utility High quality but
underperforming assets Initiatives well underway
to focus management on business
improvement Transition plan ready for
communication in May 2000 Excellent value
improvement proposition Further growth
opportunities
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GROUP FINANCIALS
Outlook for Group Earnings

• Substantial increase in operating profit from
  PacifiCorp
• Gearing of approximately 90 - debt of 5.4bn
• 2000/01 EPS rebased due to UK regulatory reviews
• Post 2001 EPS growth from UK and US businesses

Dividend Aim
Aim to deliver real dividend growth Targeting
annual growth rate of 5 nominal fornext 3 years
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SUMMARY
Unique drivers of value Value from asset
efficiency Significant customer base Traditional
and innovative approach Controlling stake in
Thus Major US platform
Seizing Value
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