Scottish Power PLC – ‘F-4’ on 5/6/99

As of:  Thursday, 5/6/99   ·   Accession #:  950130-99-2711   ·   File #:  333-77877

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Registration Statement of a Foreign Private Issuer for Securities Issued in a Business-Combination Transaction   —   Form F-4
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: F-4         Proxy Statement/Prospectus Dated 5/6/99              415   2.29M 
 2: EX-3.(I)(A)  Memorandum & Art. of Assoc. of New Scottish Pwr.    105    384K 
 3: EX-5        Opinion of Shepherd & Wedderburn Ws                    2     12K 
 4: EX-8.(A)    Opinion of Milbank Tweed                               3     14K 
 5: EX-8.(B)    Opinion of Milbank Tweed                               3     14K 
 6: EX-8.(C)    Opinion of Stoel Rives                                 3     16K 
 7: EX-8.(D)    Opinion of Stoel Rives                                 3     15K 
 8: EX-8.(E)    Opinion of Leboeuf, Lamb                               4     19K 
 9: EX-23.(A)   Consent of Deloitte & Touche                           1      7K 
10: EX-23.(B)   Consent of Coopers & Lybrand                           1      7K 
11: EX-23.(C)   Consent of Pricewaterhousecoopers LLP                  1      7K 
12: EX-23.(G)   Consent of Morgan Stanley & Co. Limited                1      7K 
13: EX-23.(H)   Consent of Salomon Smith Barney Inc.                   1      8K 
14: EX-99.(C)   Form of Letter From Solcitation Agents                 7     35K 
15: EX-99.(D)   Form of Letter From Broker, Dealers                    4     23K 
16: EX-99.(E)   Form of Pacificorp's Proxy Cards                       5     20K 

F-4   —   Proxy Statement/Prospectus Dated 5/6/99
Document Table of Contents

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As filed with the Securities and Exchange Commission on May 6, 1999 
                                                 Registration No. 333-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549 
--------------- 
FORM F-4
REGISTRATION STATEMENT
UNDER 
THE SECURITIES ACT OF 1933
--------------- 
Scottish Power plc
New Scottish Power plc
  (Exact Name of Registrant as Specified in its Charter)
                                                    None
   Scotland                    4911                 (I.R.S. Employer
(State or Other          (Primary Standard         Identification No.)
Jurisdiction of      Industrial Classification                        
Incorporation or            Code Number)                              
Organization)                                                       
1 Atlantic Quay   
Glasgow G2 8SP  
United Kingdom  
011-44-141-248-8200   
(Address and telephone number of Registrant's principal executive offices)
ScottishPower Inc.
c/o The Corporation Trust Center
1209 Orange street
Wilmington, DE 19801
Attention: Alan Victor Richardson 
(302) 658-7581
(Name, address and telephone number of agent for service) 
--------------- 
Copies to:
John T. O'Connor                        Dexter E. Martin
Milbank, Tweed, Hadley & McCloy LLP              John M. Schweitzer         
1 Chase Manhattan Plaza                     Stoel Rives LLP     
 New York, New York 10005               700 NE Multonah, Suite 950
  (212) 530-5000                        Portland, OR 07232
                   ---------------      (503) 294-9100

  Approximate date of commencement of proposed sale to the public: As promptly
as practicable after the effective date of this registration statement.         
If this Form is filed to register additional securities for an offering   
pursuant to Rule 462(b) under the Securities Act, check the following box and   
list the Securities Act registration statement for the same offering. [_]       
If this Form is a post-effective amendment filed pursuant to Rule 462(d)  
under the Securities Act, check the following box and list the Securities Act   
registration statement number of the earlier effective registration statement   
for the same offering. [_]                                                      
--------------- 
CALCULATION OF REGISTRATION FEE 
--------------------------------------------------------------------------------

                                                                [Download Table]
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                                            Proposed       Proposed                
                                            Maximum        Maximum                 
 Title of Each Class of                     Offering      Aggregate     Amount of  
    Securities to be      Amount to be     Price Per    Offering Price Registration
     Registered (1)       Registered (2)     Share            (3)        Fee (4)   
-----------------------------------------------------------------------------------
                                                                                   
 Scottish Power plc                                                                
 Ordinary Shares of                                                                
  nominal value 50p each                                                           
           Or                                                                      
 New Scottish Power plc                                                            
 Ordinary Shares of                                                                
  nominal value 50p                                                                
  each..................   714,560,000   Not Applicable $5,017,320,000 $128,065.16 
-----------------------------------------------------------------------------------

--------------------------------------------------------------------------------
(1) American Depositary Shares evidenced by American Depositary Receipts        
   issuable upon deposit of ordinary shares, of nominal value 50p each, of the
Registrant will be registered under a separate registration statement on
 Form F-6. Each American Depositary Share represents four ordinary shares.
(2) Based on (i) 308,000,000 shares of common stock, without par value          
 ("PacifiCorp common stock"), of PacifiCorp outstanding on the record date
   and shares of PacifiCorp common stock that may be issuable upon exercise of
outstanding employee stock options to purchase PacifiCorp common stock, 
  including those issuable prior to the expected date of consummation of the
   merger described herein and (ii) the exchange ratio of 2.32 ordinary shares
for each share of PacifiCorp common stock.                              
(3) Pursuant to Rules 457(f)(i) and 457(c) under the Securities Act and solely  
 for the purpose of calculating the registration fee, the proposed maximum
aggregate offering price is equal to the market value of the approximate
number of shares of PacifiCorp common stock to be canceled in the merger
 and is based upon a market value of $16.29 per share of PacifiCorp common
  stock, the average of the high and low sale prices per share of PacifiCorp
  common stock on the New York Stock Exchange Composite Tape on May 4, 1999.
(4) In accordance with Rule 457(b) of the Securities Act of 1933, the amount of 
   the registration fee was reduced by $1,266,749.80, which is the amount paid
  to the Securities and Exchange Commission on January 5, 1999 in connection
  with the confidential filing of the preliminary proxy statement/prospectus
included as part of this registration statement.                        
--------------- 
The Registrant hereby amends this registration statement on such date or  
dates as may be necessary to delay its effective date until the Registrant      
shall file a further amendment which specifically states that this registration 
statement shall thereafter become effective in accordance with Section 8(a) of  
the Securities Act of 1933 or until the registration statement shall become     
effective on such date as the Commission, acting pursuant to said Section 8(a), 
may determine.                                                                  

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PACIFICORP

825 NE Multnomah, Suite 2000
Portland, Oregon 97232

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 17, 1999 

To the Shareholders of PacifiCorp:                                              

Notice is hereby given that the 1999 annual meeting of shareholders of    
PacifiCorp, an Oregon corporation, will be held at 1:30 p.m. local time, on     
June 17, 1999, at the Salt Lake City Hilton Hotel, 150 West 300 South, Salt     
Lake City, Utah. The meeting is called:                                         

1. To consider and vote on a proposal to approve alternate forms of an      
agreement and plan of merger among PacifiCorp, Scottish Power plc and 
  others, pursuant to which a newly formed subsidiary in the ScottishPower
group will be merged with and into PacifiCorp, with PacifiCorp        
continuing as a subsidiary in the ScottishPower group (these          
alternatives are sometimes referred to in this document as the "merger
agreement" and "merger");                                             

2. To elect two Class III directors of PacifiCorp, each to serve for a term 
of three years, and until their successors are duly elected and       
qualified;                                                            

3. To act on the proposed ratification of the appointment of Deloitte &     
Touche LLP to serve as independent auditor of PacifiCorp for the year 
1999;                                                                 

4. To obtain the consent of a majority of the voting power of the three     
classes of PacifiCorp preferred stock, voting together as a single    
class, to an increase of $5 billion in the amount of unsecured        
indebtedness permitted under PacifiCorp's Third Restated Articles of  
Incorporation; and                                                    

5. To transact such other business as may properly come before the annual   
meeting.                                                              

The accompanying proxy statement/prospectus contains information regarding
the business to be considered at the annual meeting. A copy of the original     
merger agreement is attached as Annex A to the proxy statement/prospectus and a 
copy of the restated merger agreement is attached as Annex B.                   

  Only PacifiCorp shareholders of record at the close of business on April 30,
1999, the record date established by the Board of Directors of PacifiCorp in    
connection with the annual meeting, are entitled to notice of, and to vote at,  
the annual meeting. Under Oregon law, holders of PacifiCorp common stock are    
not entitled to dissenters' rights in connection with the merger. Holders of    
PacifiCorp preferred stock, however, do have the right to dissent from the      
merger under Oregon law and receive payment of the "fair value" of their shares 
of PacifiCorp preferred stock if they comply with certain requirements of       
Oregon law described in the accompanying proxy statement/prospectus.            

  In addition, only holders of PacifiCorp preferred stock are entitled to vote
on Item 4 above. All PacifiCorp shareholders are entitled to vote on the other  
items to be presented at the annual meeting.                                    

You are cordially invited to attend the annual meeting. Whether or not you
plan to attend the annual meeting, you are requested to complete, sign and date 
the accompanying proxy form and return it promptly in the enclosed envelope. If 
you attend the annual meeting, you may vote in person if you wish, whether or   
not you have executed and returned your proxy form. A proxy granted by the      
enclosed form may be revoked at any time prior to its use.                      

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The Board of Directors of PacifiCorp, by a unanimous vote of directors    
present, has determined that the merger agreement and the transactions          
contemplated by the merger agreement, including the merger, are in the best     
interests of PacifiCorp and its shareholders, and has adopted the merger        
agreement. The Board of Directors of PacifiCorp recommends that you vote in     
favor of the proposal to approve the merger agreement. The Board of Directors   
of PacifiCorp also believes that the long-term interests of shareholders are    
served by, and encourages holders of PacifiCorp preferred stock to vote in      
favor of, the unsecured debt consent.                                           

                                       By Order of the Board of Directors,

                    LENORE M. MARTIN
                       Corporate Secretary

Portland, Oregon                                                                
May 6, 1999                                                                     

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The Information Agent for the Merger is:

Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor, New York, New York 10022

Call toll free: 1-877-750-2689

YOUR VOTE IS IMPORTANT. 
PLEASE SIGN, DATE AND RETURN YOUR PROXY FORM. 

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  PACIFICORP                              SCOTTISH POWER PLC
              Proxy                       Prospectus for up to 714,560,000
    Statement                              ordinary shares

                                                          NEW SCOTTISH POWER PLC
                                          Prospectus for up to 714,560,000
                                           ordinary shares

MERGER PROPOSED--YOUR VOTE IS VERY IMPORTANT

The Boards of Directors of            shareholders will also be asked to  
PacifiCorp, Scottish Power plc, and      approve other proposals, including     
New Scottish Power plc, a newly-         the election of two directors, the     
formed company which ScottishPower       ratification of the appointment of     
intends will become its holding          an independent auditor for the year    
company, have unanimously agreed on      1999 and, in the case of holders of    
a merger in which PacifiCorp would       PacifiCorp preferred stock, an         
become a wholly owned subsidiary of      increase in the amount of unsecured    
New ScottishPower or ScottishPower,      debt permitted under PacifiCorp's      
depending on whether the holding         articles. The date, time and place     
company proposal is implemented.         of the PacifiCorp annual meeting is    
             as follows:
In the merger, for each share of                                          
PacifiCorp common stock, PacifiCorp               June 17, 1999 at 1:30 p.m.    
common shareholders will each                     local time                    
receive:                                          The Salt Lake City Hilton     
                          Hotel,

.  0.58 American depositary                     150 West 300 South,         
shares of New ScottishPower                  Salt Lake City, Utah     
or ScottishPower, each ADS                                            
representing four ordinary             The outstanding shares of      
shares of 50 pence each and         PacifiCorp's three classes of     
evidenced by American               preferred stock will not be       
depositary receipts                 converted in the merger.          

                                    PacifiCorp's common stock is
or                                   traded on the New York Stock       
                                Exchange and the Pacific Stock
                                  Exchange under the symbol "PPW".
                                 ScottishPower's ordinary shares
                              are, and New ScottishPower's
                                    ordinary shares will be, traded on
                                   the London Stock Exchange Limited
                            under the symbol "SPW" and
                                   ScottishPower's ADSs are, and New
                               ScottishPower's ADSs will be,
                              traded on the New York Stock
                                  Exchange under the symbol "SPI".

.  if a properly completed                                                  
election form has been                                                
submitted to the exchange                                             
agent on a timely basis, 2.32                                         
ordinary shares of New                                                
ScottishPower or                                                      
ScottishPower.                                                        

The shareholders of PacifiCorp                                            
and ScottishPower must approve the                                              
merger agreement at their meetings                                              
for the merger to occur. PacifiCorp                                             

This proxy statement/prospectus provides you with detailed information  
about the proposed merger. We urge you to read this entire document carefully 
before voting.                                                                

Neither the Securities and Exchange Commission nor any other regulatory 
body has approved or disapproved these securities or determined if this proxy 
statement/prospectus is accurate or adequate. Any representation to the       
contrary is a criminal offense.                                               

This proxy statement/prospectus is dated May 6, 1999, and is first being  
mailed to PacifiCorp shareholders on or about May 6, 1999.                      

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TABLE OF CONTENTS 

                                                                [Download Table]

                                                                          Page
                                                                          ----
                                                                              
CURRENCIES AND EXCHANGE RATES............................................  iv 
QUESTIONS AND ANSWERS ABOUT THE MERGER...................................   1 
SUMMARY..................................................................   3 
SELECTED HISTORICAL FINANCIAL INFORMATION OF SCOTTISHPOWER...............  10 
SELECTED HISTORICAL FINANCIAL INFORMATION OF PACIFICORP..................  11 
SIGNIFICANT FACTORS AFFECTING OPERATING RESULTS..........................  12 
RECENT DEVELOPMENTS......................................................  15 
SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION.....  17 
COMPARATIVE PER SHARE DATA...............................................  21 
COMPARATIVE MARKET PRICE AND DIVIDEND DATA...............................  22 
RISK FACTORS.............................................................  24 
WHERE YOU CAN FIND MORE INFORMATION......................................  24 
PACIFICORP ANNUAL MEETING, VOTING AND PROXIES............................  26 
  Introduction...........................................................  26 
  PacifiCorp Annual Meeting..............................................  26 
  Proxy Solicitation.....................................................  28 
THE MERGER...............................................................  30 
  The Companies..........................................................  30 
  Background of the Merger...............................................  30 
  Reasons for the Merger; Recommendations of PacifiCorp Board of              
   Directors and ScottishPower Board of Directors........................  35 
  Opinions of Financial Advisors.........................................  39 
  Interests of PacifiCorp's Officers and Directors.......................  54 
  Conversion of PacifiCorp Common Stock in the Merger....................  57 
  Fractional Shares......................................................  57 
  Election; Election Procedures..........................................  58 
  Exchange of Certificates in the Merger.................................  58 
  Terms of the Merger Agreement..........................................  59 
  Regulatory Matters.....................................................  68 
  Dividend Policy........................................................  72 
  Conduct of PacifiCorp's Business After the Merger......................  72 
  New York Stock Exchange and London Stock Exchange Listing..............  73 
  Material Tax Consequences..............................................  73 
  United States Tax Consequences.........................................  74 
  Accounting Treatment...................................................  78 
  Dissenters' Rights.....................................................  79 
  Federal Securities Law Consequences....................................  81 
SCHEME OF ARRANGEMENT....................................................  81 
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION.............  82 
DESCRIPTION OF ORDINARY SHARES........................................... 106 
DESCRIPTION OF AMERICAN DEPOSITARY SHARES................................ 112 
COMPARISON OF RIGHTS OF PACIFICORP SHAREHOLDERS AND SCOTTISHPOWER             
 SHAREHOLDERS............................................................ 120 

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                                                                           Page
                                                                           ----
                                                                               
PROPOSAL TO INCREASE UNSECURED DEBT LIMIT................................. 136 
PROPOSAL FOR ELECTION OF DIRECTORS........................................ 140 
PROPOSAL FOR APPOINTMENT OF INDEPENDENT AUDITOR........................... 155 
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE................... 156 
ANNUAL REPORT............................................................. 156 
OTHER MATTERS............................................................. 156 
UK LISTING PARTICULARS AND CIRCULAR....................................... 157 
LEGAL MATTERS............................................................. 157 
EXPERTS................................................................... 158 

                                                                [Download Table]
                                                         
ANNEX A Agreement and Plan of Merger                     
ANNEX B Amended and Restated Agreement and Plan of Merger
ANNEX C Opinion of PacifiCorp Financial Advisor          
ANNEX D Opinion of ScottishPower Financial Advisor       
ANNEX E Dissenters' Rights Statute                       
ANNEX F Summary Listing Particulars                      

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CURRENCIES AND EXCHANGE RATES 

ScottishPower publishes its consolidated financial statements in pounds   
sterling. References in this proxy statement/prospectus to "U.S. dollars",      
"U.S. $", "$" or "c" are to United States currency and references to "pounds    
sterling", "(Pounds)", "pounds", "pence" or "p" are to United Kingdom currency  
(there are 100 pence to each pound). Solely for your convenience, this document 
contains translations of certain pound sterling amounts into U.S. dollars at    
specified rates, or if not so specified, at the noon buying rate in New York    
City for cable transfers in pounds sterling as certified for customs purposes   
by the Federal Reserve Bank of New York on December 31, 1998 of (Pounds)1.00 =  
$1.66. On April 27, 1999, the last practicable date for which information was   
available before the printing of this proxy statement/prospectus, the noon      
buying rate was (Pounds)1.00 to $1.62. No representation is made that the pound 
sterling amounts have been, could have been or could be converted into U.S.     
dollars at the rate indicated or at any other rates.                            

 The following table sets forth, for each period indicated, the high and low
noon buying rates for one pound sterling expressed in U.S. dollars, the average 
noon buying rate during the period, and the noon buying rate at the end of the  
period, based upon information provided by the Federal Reserve Bank of New      
York:                                                                           

                                                        [Enlarge/Download Table]

                                                  Year Ended December 31,                          
                         --------------------------------------------------------------------------
                              1998           1997           1996           1995           1994     
                         -------------- -------------- -------------- -------------- --------------
                                                                                                   
High.................... $       1.7222 $       1.7035 $       1.7123 $       1.6440 $       1.6368
Low..................... $       1.6114 $       1.5775 $       1.4948 $       1.5302 $       1.4615
Average................. $       1.6573 $       1.6397 $       1.5607 $       1.5785 $       1.5319
Period End.............. $       1.6628 $       1.6427 $       1.7123 $       1.5535 $       1.5665

   The following table sets forth, for each period indicated, the high and low                     
noon buying rates for one U.S. dollar expressed in pounds sterling, the average                    
noon buying rate during the period, and the noon buying rate at the end of the                     
period, based upon information provided by the Federal Reserve Bank of New                         
York:                                                                                              


                                                  Year Ended December 31,                          
                         --------------------------------------------------------------------------
                              1998           1997           1996           1995           1994     
                         -------------- -------------- -------------- -------------- --------------
                                                                                                   
High.................... (Pounds)0.5807 (Pounds)0.5870 (Pounds)0.5840 (Pounds)0.6083 (Pounds)0.6109
Low..................... (Pounds)0.6206 (Pounds)0.6339 (Pounds)0.6690 (Pounds)0.6535 (Pounds)0.6842
Average................. (Pounds)0.6034 (Pounds)0.6106 (Pounds)0.6408 (Pounds)0.6335 (Pounds)0.6528
Period End.............. (Pounds)0.6014 (Pounds)0.6088 (Pounds)0.5840 (Pounds)0.6437 (Pounds)0.6384

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QUESTIONS AND ANSWERS ABOUT THE MERGER

Q:  Why are the companies proposing to merge? How will I benefit?               

A:  The combination of PacifiCorp and ScottishPower will create an              
international utility company with significant energy businesses in the 
U.S. and U.K., and approximately seven million customers, and pro forma 
revenues of approximately $10 billion. The boards of directors of       
 ScottishPower and PacifiCorp believe that the combined group will be more
competitive and stronger financially than either PacifiCorp or          
ScottishPower would be on its own. ScottishPower's proven utility       
management skills, developed in the competitive U.K. market, will aid   
   PacifiCorp as competition is introduced into the U.S. generation and supply
businesses. The combined group will focus on accelerating PacifiCorp's  
strategy to improve the performance of its western U.S. electricity     
   business. PacifiCorp and ScottishPower believe that the application of best
practices of the two companies will reduce costs and increase operating 
efficiencies with the goal of enhancing shareholder value.              

  At the time the merger was announced, the merger consideration represented a
premium of 26% over the market price of PacifiCorp common stock before    
  announcement. You particularly should note that the extent of any premium at
the time of the merger will depend on the market price of the PacifiCorp  
common stock and ScottishPower ordinary shares, which fluctuate on a daily
basis.                                                                    

Q:  What is New ScottishPower?                                                  

A: On December 6, 1998, we signed a merger agreement under which PacifiCorp     
would become a wholly owned subsidiary of ScottishPower. That merger      
agreement provided that if ScottishPower determined to establish a holding
 company structure, the parties would agree to amend the merger agreement to
effect the merger as if the holding company had originally been a party to
the merger agreement. In February 1999, ScottishPower determined that a   
  holding company structure would provide the most effective structure for the
 ScottishPower group. It also anticipates that the creation of a new holding
company will assist the regulatory processes associated with the merger.  
Accordingly, we signed an amended and restated merger agreement which will
mean that PacifiCorp and ScottishPower will become sister companies under 
 New ScottishPower if the holding company structure is put in place. If this
occurs, in exchange for your shares of PacifiCorp common stock, you will  
 receive American depositary shares or ordinary shares of New ScottishPower,
with the same economic and voting rights as the American depositary shares
and ordinary shares of ScottishPower. Adoption of the holding company     
structure requires the approval of ScottishPower's shareholders and the   
sanction of the Scottish courts, and is subject to other conditions which 
must be satisfied or waived by the ScottishPower Board of Directors.      

Q: What happens if the holding company structure for the ScottishPower group is 
not adopted?                                                              

A: The original merger agreement will remain in full force and effect until New 
ScottishPower is put in place as the holding company for the ScottishPower
group. If this does not occur, you will receive American depositary shares
or ordinary shares of ScottishPower rather than American depositary shares
or ordinary shares of New ScottishPower.                                  

Q:  What is an ADS?                                                             

A:  An ADS, which stands for an "American depositary share", is a security      
  created to allow you to more easily hold and trade your ownership interest
in ScottishPower in the United States. ScottishPower ADSs are quoted and
  traded on the New York Stock Exchange in U.S. dollars. Likewise, dividends
 on ScottishPower ADSs are paid in U.S. dollars. Each ADS you will receive
represents ownership of four ordinary shares of ScottishPower or New    
ScottishPower, depending on whether the holding company structure is    
adopted.                                                                

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If you desire to convert your ADSs into the underlying ordinary shares, this
can be done at any time. Conversion can occur by contacting your broker or
the financial institution which acts as depositary for the ADSs. A fee is 
charged by the depositary, currently $5.00 for every 100 ADSs you convert,
together with any transaction expenses, for any conversion.               

Q: What do I need to do now?                                                    

A: After you have carefully read this proxy statement/prospectus, just indicate 
 on your proxy card how you want to vote and mail your signed and dated form
in the enclosed postage-prepaid return envelope marked "Proxy" as soon as 
  possible, so that your shares may be represented and voted at the PacifiCorp
annual meeting.                                                           

Q: If my shares are held in "street name" by my broker, will my broker vote my  
shares for me?                                                            

A: Your broker will vote your shares only if you provide instructions on how to 
  vote. You should follow the directions provided by your broker regarding how
to instruct your broker to vote your shares. If you do not return your    
  proxy, your shares will not be voted on the merger, which will have the same
effect as voting against the merger.                                      

Q: Can I change my vote after I have mailed my signed proxy card?               

A: Yes. There are three ways in which you may revoke your proxy and change your 
vote. First, you may send a written notice to PacifiCorp stating that you 
would like to revoke your proxy. Second, you may complete and submit a new
 proxy card. Third, you may attend the PacifiCorp annual meeting and vote in
person.                                                                   

Q: Should I send in my stock certificates now?                                  

A: No. After the merger is completed, we will send you written instructions for 
exchanging your PacifiCorp common stock certificates.                     

Q: What will happen to my PacifiCorp common stock held in PacifiCorp's Dividend 
Reinvestment and Stock Purchase Plan?                                     

A: Upon completion of the merger, the PacifiCorp Dividend Reinvestment and      
  Stock Purchase Plan will terminate and each share of PacifiCorp common stock
held by the plan for you will be converted into  0.58 ADSs or, at your    
  election, 2.32 ordinary shares. The depositary will offer a similar dividend
reinvestment plan to ADS holders after the merger.                        

Who can help answer questions?

If you have more questions about the merger, you should contact our Information 
Agent:

Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor, New York, New York 10022

Call toll free: 1-877-750-2689

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SUMMARY 

This summary highlights the information most significant to shareholders, 
but does not contain all of the information that is important to you. To        
understand the merger fully and for a complete description of the legal terms   
of the merger, you should read carefully this entire document and the documents 
we have referred you to. See "Where You Can Find More Information." The         
original merger agreement is attached as Annex A to this document and the       
restated merger agreement is attached as Annex B. To assist you in reading this 
document, we have generally used the terms "ScottishPower" and "merger          
agreement" to refer to New ScottishPower and the restated merger agreement if   
the holding company structure is adopted and to ScottishPower and the original  
merger agreement if it is not. We encourage you to read the merger agreement    
and the restated merger agreement. They are the legal documents that govern the 
merger.                                                                         

The Companies (see page 30)                                                     

ScottishPower                                                             
1 Atlantic Quay                                                           
Glasgow G2 8SP                                                            
United Kingdom                                                            
011-44-141-248-8200                                                       

ScottishPower is a leading multi-utility business in the U.K. serving     
approximately 5.5 million homes across Scotland, England and Wales.             
ScottishPower's activities span the generation, transmission, distribution and  
supply of electricity, gas supply, water supply and wastewater services,        
telecommunications, retailing of electrical appliances, technology and          
contracting services.                                                           

New ScottishPower                                                         
1 Atlantic Quay                                                           
Glasgow G2 8SP                                                            
United Kingdom                                                            
011-44-141-248-8200                                                       

New ScottishPower was incorporated in Scotland on February 19, 1999.      
Following the approval and implementation of the scheme of arrangement, it will 
be the holding company for ScottishPower and, following the merger, for         
PacifiCorp.                                                                     

PacifiCorp                                                                
825 NE Multnomah                                                          
Suite 2000                                                                
Portland, Oregon 97232                                                    
503-813-7200                                                              

PacifiCorp is a publicly held electricity company in the United States and
Australia. In the United States, PacifiCorp conducts a retail electric utility  
business and engages in power production and sales on a wholesale basis.        
PacifiCorp indirectly owns 100% of Powercor Australia Ltd., the largest of the  
five electric distribution companies in Victoria, Australia, and a 19.9%        
interest in the 1,600 megawatt, brown coal-fired thermal Hazelwood power        
station and adjacent brown coal mine in Victoria.                               

The Merger                                                                      

 The merger will occur only if the ScottishPower shareholders and PacifiCorp
shareholders approve the merger and all other requirements in the merger        
agreement are satisfied or waived. If the holding company structure is adopted, 
a wholly owned subsidiary of New ScottishPower will merge into PacifiCorp and   

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PacifiCorp and ScottishPower will become sister companies. If the holding       
company structure is not adopted, a wholly owned subsidiary of ScottishPower    
will merge into PacifiCorp and PacifiCorp will become a wholly owned subsidiary 
of ScottishPower. The following diagrams illustrate the structure of the        
ScottishPower group:                                                            

.prior to the merger                                                        

.after the merger (if the holding company structure is adopted)             

.after the merger (if the holding company structure is not adopted)         

PRE-MERGER                                                                      

SCOTTISHPOWER PLC             
------------------------------------------------------------------------------  
held through subsidiary                                                         
(GENSCOT LTD)                                                                   
------------------------------------------------------------------------------  
                                           SCOTTISHPOWER     VARIOUS
MANWEB PLC                SOUTHERN WATER PLC  TELECOMMUNICATIONS  IMMATERIAL    
                                                  LTD         SUBSIDIARIES
------------------------------------------------------------------------------  

POST-MERGER (IF HOLDING COMPANY STRUCTURE ADOPTED)                              

NEW 
SCOTTISHPOWER PLC 
------------------------------------------------------------------------------  
MERGER SUBSIDIARIES      SCOTTISHPOWER PLC                                      
------------------------------------------------------------------------------  

PACIFICORP                                                    
-------------                                                   

EXISTING                                                      
PACIFICORP                                                      
GROUP                                                       

------------------------------------------------------------------------------  
held through subsidiary                                                         
(GENSCOT LTD)                                                                   
------------------------------------------------------------------------------  
                                           SCOTTISHPOWER     VARIOUS
MANWEB PLC                SOUTHERN WATER PLC  TELECOMMUNICATIONS  IMMATERIAL    
                                                  LTD         SUBSIDIARIES
----------                ------------------- ------------------ -------------  

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POST-MERGER (IF HOLDING COMPANY STRUCTURE NOT ADOPTED)                          

SCOTTISHPOWER PLC     
--------------------------------------------------------------------------------
held through subsidiary                             
(GENSCOT LTD)                                       
--------------------------------------------------------------------------------

                                                SCOTTISHPOWER    VARIOUS OTHER
MERGER                                       TELECOMMUNICATIONS IMMATERIAL
SUBSIDIARIES    MANWEB PLC  SOUTHERN WATER PLC        LTD          SUBSIDIARIES 
------------    ----------  ------------------  ------------------ -------------
PACIFICORP                                                                      
---------------                                                                 
EXISTING                                                                    
PACIFICORP                                                                    
GROUP                                                                     
---------------                                                                 

What You Will Receive in the Merger (see page 57)                               

 In the merger, each share of PacifiCorp common stock will be converted into
0.58 ADSs or, at your election, 2.32 ordinary shares, of New ScottishPower or   
ScottishPower, depending on whether the holding company structure is adopted.   

The ADSs will trade on the New York Stock Exchange and will be quoted in  
U.S. dollars while ordinary shares will trade on the London Stock Exchange and  
will be quoted in pounds sterling. The ADSs can be converted into ordinary      
shares whenever the holder chooses, provided a fee is paid by the holder to the 
bank that acts as a depositary for the ADSs. The fee is currently $5.00 per 100 
ADSs.                                                                           

ScottishPower will not issue fractional shares of ADSs or ordinary shares.
Instead, ScottishPower will pay you cash for any fractional share of            
ScottishPower owed to you based on the market value of ScottishPower ADSs or    
ordinary shares on the last trading day immediately preceding the merger.       

  The outstanding shares of PacifiCorp's three classes of preferred stock will
not be converted in the merger and will continue to have the same rights and    
preferences they had before the merger. However, the merger agreement requires  
PacifiCorp to redeem the $1.16, $1.18 and $1.28 series of its preferred stock   
before the merger.                                                              

The PacifiCorp Annual Meeting (see page 26)                                     

The PacifiCorp annual meeting will be held at the Salt Lake City Hilton   
Hotel, 150 West 300 South, Salt Lake City, Utah, on Thursday, June 17, 1999,    
commencing at 1:30 p.m., local time. At the PacifiCorp annual meeting, the      
holders of record of PacifiCorp common stock and PacifiCorp preferred stock     
will be asked to consider and vote upon proposals to approve the merger         
agreement, elect two PacifiCorp directors and approve PacifiCorp's independent  
auditor for 1999. In addition, holders of PacifiCorp preferred stock will be    
asked to consent to an increase in the limit on unsecured debt under            
PacifiCorp's articles of incorporation.                                         

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The Record Date for Voting (see page 26)                                        

The close of business on April 30, 1999 is the record date for determining
if you are entitled to vote at the PacifiCorp annual meeting. At the PacifiCorp 
record date, there were 297,331,855 shares of PacifiCorp common stock, 126,463  
shares of PacifiCorp 5% preferred stock, 288,469 shares of PacifiCorp serial    
preferred stock, and 2,744,438 shares of PacifiCorp no par serial preferred     
stock entitled to vote at the PacifiCorp annual meeting.                        

Voting and Revocation of Proxies (see page 27)                                  

 Oregon law requires that the merger agreement be approved by an affirmative
vote of at least a majority of the outstanding shares of PacifiCorp common      
stock and a majority of the voting power of all PacifiCorp stock entitled to    
vote. In addition, the articles of incorporation of PacifiCorp require the      
consent to the merger of the holders of a majority of the voting power of the   
PacifiCorp preferred stock, voting together as a single class. The consent of   
the holders of a majority of the voting power of the PacifiCorp preferred stock 
is also required to approve the proposed increase in the limit on unsecured     
debt included in the PacifiCorp articles of incorporation.                      

Each share of PacifiCorp common stock and PacifiCorp preferred stock is   
entitled to one vote, except for the 994,438 shares of PacifiCorp $1.16, $1.18  
and $1.28 no par serial preferred stock, which are entitled to one-quarter vote 
per share. Shares of PacifiCorp common stock and PacifiCorp preferred stock     
represented by properly executed proxies received in time for the PacifiCorp    
annual meeting will be voted in accordance with the instructions specified in   
the proxy. If no instructions are indicated on a properly executed proxy, such  
shares will be voted FOR the proposal to approve the merger agreement, FOR the  
election of PacifiCorp directors, FOR the approval of PacifiCorp's independent  
auditor for 1999, and FOR the unsecured debt consent.                           

You may revoke your proxy at any time before the PacifiCorp annual meeting
by:                                                                             

.  delivering to the Corporate Secretary of PacifiCorp a notice of          
revocation bearing a later date,                                      

.  delivering to the Corporate Secretary of PacifiCorp a duly executed      
proxy bearing a later date, or                                        

.  attending the PacifiCorp annual meeting and voting in person.            

Attendance at the PacifiCorp annual meeting will not by itself constitute 
revocation of a proxy.                                                          

The votes relating to the merger approval are not dependent on the results
of the votes on the proposals with respect to election of directors, approval   
of PacifiCorp's independent auditor or the unsecured debt consent.              

Special Cash Payments to Holders of Preferred Stock (see page 138)              

  If, but only if, the merger is approved at the PacifiCorp annual meeting and
all regulatory approvals for the merger required under the merger agreement     
have been obtained, PacifiCorp will make a special cash payment in the          
following amounts to each holder of record of PacifiCorp preferred stock on the 
PacifiCorp record date that voted FOR the approval of the merger:               

                                                                [Download Table]

                                                                 Payment 
Preferred Stock                                                 Per Share
---------------                                                 ---------
                                                                         
$1.16, $1.18 and $1.28 no par serial preferred stock...........   $0.25  
All other preferred stock......................................   $1.00  

These special cash payments will be made promptly after receipt of the last     
regulatory approval for the merger but before the merger.                       

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  In addition, if the unsecured debt consent is approved, PacifiCorp will make
a special cash payment in the following amounts to each holder of PacifiCorp    
preferred stock on the PacifiCorp record date that voted FOR the unsecured debt 
consent:                                                                        

                                                                [Download Table]

                                                                 Payment 
Preferred Stock                                                 Per Share
---------------                                                 ---------
                                                                         
$1.16, $1.18 and $1.28 no par serial preferred stock...........   $0.25  
All other preferred stock......................................   $1.00  

These special cash payments will be made promptly after the PacifiCorp annual   
meeting. Special cash payments are estimated to be a maximum of $5 million.     
This amount will be expensed on the books of PacifiCorp when incurred.          

The ScottishPower Extraordinary General Meeting in Respect of the Merger        

A ScottishPower extraordinary general meeting has been convened for 10:00 
a.m., local time, on June 15, 1999. At the meeting, a resolution will be        
proposed to approve the merger. The resolution will require the approval of a   
majority of the votes cast in person or on a poll at the meeting.               

ScottishPower Court Meeting, Extraordinary General Meeting and Class Meeting in 
Respect of the Scheme                                                           

 A court meeting has been convened for 10:10 a.m., local time, or as soon as
the extraordinary general meeting in respect of the merger concludes or is      
adjourned, on June 15, 1999, pursuant to an order of the Court of Session in    
Edinburgh to enable ScottishPower shareholders to consider and approve the      
scheme of arrangement, which is the process under which New ScottishPower will  
be put in place as the holding company for the ScottishPower group.             

An extraordinary general meeting and a class meeting have been convened at
10:20 a.m. and 10:30 a.m., local time, respectively, or as soon as the court    
meeting concludes or is adjourned, on June 15, 1999 to enable ScottishPower     
shareholders to consider and pass special resolutions to approve and implement  
the scheme of arrangement.                                                      

It is intended that immediately upon the scheme of arrangement becoming   
effective, New ScottishPower will change its name to Scottish Power plc and the 
existing ScottishPower will be renamed Scottish Power U.K. plc.                 

How to Choose to Receive Ordinary Shares Instead of ADSs (see page 58)          

 Promptly after completion of the merger, which we currently expect to occur
during the Fall of 1999, each holder of PacifiCorp common stock will be sent an 
election form, which will permit the holder to elect to receive ordinary shares 
in exchange for all or any portion of the holder's shares of PacifiCorp common  
stock. If a holder of PacifiCorp common stock does not submit a properly        
completed election form in a timely fashion or if the holder revokes his or her 
election form before the deadline for the submission of the election form, his  
or her shares will be converted in the merger into the right to receive the     
ADSs. To make the ordinary share election, a holder of PacifiCorp common stock  
must complete properly and return the election form to The Bank of New York,    
the exchange agent, before the date announced in a news release to be issued by 
ScottishPower as the last day on which an ordinary share election may be made.  

Neither PacifiCorp nor the PacifiCorp Board of Directors makes any        
recommendation as to whether you should elect to receive the ordinary shares    
instead of ADSs in the merger. You must make your own decision with respect to  
the election.                                                                   

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Recommendation of the PacifiCorp Board of Directors Concerning the Merger (see  
page 35)                                                                        

The PacifiCorp Board of Directors has, by a unanimous vote of directors   
present, adopted and approved the merger agreement and the transactions         
contemplated by the merger agreement, including the merger, and has concluded   
that the terms of the merger are in your best interests. The PacifiCorp Board   
of Directors recommends a vote "FOR" the approval of the merger agreement.      

Opinion of PacifiCorp's Financial Advisor (see page 39)                         

Salomon Smith Barney Inc. has acted as financial advisor to PacifiCorp in 
connection with the merger and has delivered to PacifiCorp a written opinion    
dated December 6, 1998, which provides that, as of the date of the opinion and  
based upon matters stated in it, the merger consideration to be received by     
holders of PacifiCorp common stock under the original merger agreement is fair, 
from a financial point of view, to the PacifiCorp common shareholders.          

Opinion of ScottishPower's Financial Advisor (see page 46)                      

  Morgan Stanley & Co. Limited has acted as financial advisor to ScottishPower
in connection with the merger and has delivered to ScottishPower a written      
opinion dated December 6, 1998, which provides that, as of the date of the      
opinion and based upon matters stated in it, the exchange ratio of 0.58 ADSs,   
or 2.32 ordinary shares, for each outstanding share of PacifiCorp common stock  
under the original merger agreement is fair, from a financial point of view, to 
ScottishPower.                                                                  

Interests of PacifiCorp Officers and Directors (see page 54)                    

In considering the PacifiCorp Board of Directors' recommendation that you 
vote in favor of the merger, you should be aware that members of the PacifiCorp 
Board of Directors and officers of PacifiCorp have benefits that provide them   
with interests in the merger that are different from the interests of           
PacifiCorp shareholders.                                                        

Conditions to the Merger (see page 65)                                          

  ScottishPower and PacifiCorp will complete the merger only if the conditions
set forth in the merger agreement are either satisfied or, if permitted,        
waived. These conditions include, among other things:                           

.  approval of the merger agreement by PacifiCorp's shareholders;           

.  approval of the merger by ScottishPower's shareholders;                  

.  the absence of any event having a significant negative impact on         
  PacifiCorp or ScottishPower and their respective subsidiaries taken as a
whole;                                                                

.  receipt of necessary regulatory and third-party consents and approvals;  

.  the absence of any governmental agency or court order prohibiting the    
merger;                                                               

.  the agreement by the London Stock Exchange to list the ordinary shares   
and the authorization by the New York Stock Exchange to list the ADSs;

.  the material accuracy of the representations and warranties and material 
performance of the covenants contained in the merger agreement; and   

.  the delivery of written tax opinions from Milbank, Tweed, Hadley &       
McCloy LLP, Stoel Rives LLP and LeBoeuf, Lamb, Greene & MacRae, LLP.  

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If any of these conditions are waived by either party, ScottishPower and  
PacifiCorp intend to amend this proxy statement/prospectus as required by law   
and distribute the amended proxy statement/prospectus or other information      
which is suitable to comply with any such laws.                                 

Termination Fee (see page 67)                                                   

If PacifiCorp receives an alternative proposal from a third party and the 
merger agreement is terminated, PacifiCorp is required to pay to ScottishPower  
a termination fee of $250,000,000. If PacifiCorp terminates the merger          
agreement following a change in control, other than through the scheme of       
arrangement, of ScottishPower, ScottishPower is required to pay to PacifiCorp a 
termination fee of $250,000,000.                                                

In addition, the merger agreement generally requires each party to pay a  
termination fee of $10,000,000 if its shareholder approval is not obtained and  
the other party's shareholder approval is obtained.                             

Dissenters' Rights (see page 79)                                                

Under Oregon law, holders of shares of PacifiCorp common stock do not have
dissenters' rights with respect to the merger. Holders of PacifiCorp preferred  
stock, however, do have the right under Oregon law to dissent from the merger   
and receive payment of the "fair value" of their shares of PacifiCorp preferred 
stock if they comply with the requirements of Oregon law described in this      
proxy statement/prospectus.                                                     

New York Stock Exchange and London Stock Exchange Listing (see page 73)         

ScottishPower has agreed to have the ADSs issued in the merger listed for 
trading on the New York Stock Exchange. The authorization for listing is a      
condition to the obligations of PacifiCorp to consummate the merger. It is also 
a condition that the London Stock Exchange shall have agreed to admit the       
ordinary shares to be issued in the merger to the Official List of the London   
Stock Exchange.                                                                 

Dividends (see page 72)                                                         

 After completing the merger, ScottishPower intends to adopt the practice of
paying regular dividends on a quarterly basis. Dividends on ordinary shares     
underlying the ADSs will be declared in pounds sterling and converted into U.S. 
dollars and dividends on all other ordinary shares will be paid in pounds       
sterling. ScottishPower expects dividends to be paid in February, May, August   
and November of each year. PacifiCorp plans to continue its normal dividend     
policy until the merger is completed.                                           

ScottishPower is committed to its stated aim of achieving 7% to 8% real   
dividend growth annually until the U.K. regulatory reviews which take effect    
from April 1, 2000, while maintaining a prudent level of dividend cover. It is  
ScottishPower's current aim to deliver real dividend growth thereafter and this 
will be re-examined once the outcome of these regulatory reviews is known.      

Risk Factors (see page 24)                                                      

  All PacifiCorp shareholders should read carefully the discussion under "Risk
Factors" for information concerning the regulation of ScottishPower's business  
in the U.K.                                                                     

Material Income Tax Consequences (see page 73)                                  

 All PacifiCorp shareholders should read carefully the discussion under "The
Merger--Material Income Tax Consequences" beginning on page 73 and are urged to 
consult their own tax advisors as to specific consequences to them of the       
merger under federal, state, local or any other applicable tax laws.            

Comparison of Rights of PacifiCorp Shareholders and ScottishPower Shareholders  
(see page 120)                                                                  

In the merger, holders of PacifiCorp common stock will receive either ADSs
or ordinary shares. There are numerous differences between the rights of a      
shareholder in PacifiCorp, an Oregon corporation, and the rights of a           
shareholder in ScottishPower, a Scottish corporation. We urge you to review the 
discussion under "Comparison of Rights of PacifiCorp Shareholders and           
ScottishPower Shareholders" beginning on page 120 for a summary of these        
differences.                                                                    

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SELECTED HISTORICAL FINANCIAL INFORMATION OF SCOTTISHPOWER

 The selected historical financial information set out below is extracted or
derived from the consolidated financial statements of ScottishPower for the     
five years ended March 31, 1998 which have been audited by Coopers & Lybrand,   
Chartered Accountants and Registered Auditors (see "Experts") and from the      
unaudited Interim Accounts for the six months ended September 30, 1998. This    
selected historical financial information should be read in conjunction with,   
and is qualified in its entirety by reference to, such consolidated financial   
statements and their accompanying notes located on pages F-1 through F-39 of    
the Form 20-F filed by ScottishPower for the year ended March 31, 1998 and the  
unaudited Interim Accounts for the six months ended September 30, 1998 filed on 
Form 6-K, both of which are incorporated in this document by reference--see     
"Where You Can Find More Information".                                          

  ScottishPower prepares the consolidated financial statements of the group in
accordance with accounting principles generally accepted in the U.K. ("U.K.     
GAAP"), which differs in certain significant respects from accounting           
principles generally accepted in the United States ("U.S. GAAP"). A description 
of the significant differences between U.K. GAAP and U.S. GAAP applicable to    
ScottishPower and a reconciliation of profit for the financial year (or net     
income) and equity shareholders' funds (or shareholders' equity) under U.K.     
GAAP to those under U.S. GAAP are set out in Note 33 to the consolidated        
financial statements of ScottishPower included in the Form 20-F for the year    
ended March 31, 1998.                                                           

 In the table below, amounts for the six months ended September 30, 1998 and
for the year ended March 31, 1998 have been translated solely for the           
convenience of the reader, at $1.70 to (Pounds)1.00 and $1.68 to (Pounds)1.00,  
the noon buying rates in effect on September 30, 1998, and March 31, 1998       
respectively.                                                                   

The basic earnings per ScottishPower ADS have been calculated based on a  
ratio of four ScottishPower ordinary shares to one ScottishPower ADS. Dividends 
per ScottishPower ordinary share and per ScottishPower ADS exclude any          
associated U.K. tax credit available to certain holders of ScottishPower        
ordinary shares and ScottishPower ADSs.                                         

Other than turnover, U.S. GAAP information for the years ended March 31,  
1995 and March 31, 1994 has not been published by ScottishPower.                

                                                        [Enlarge/Download Table]

                            Six months ended                                                                                    
                             September 30,                                            Year ended March 31,                      
                   ---------------------------------------- --------------------------------------------------------------------
                    1998        1998           1997          1998        1998           1997           1996           1995      
                   -------- -------------- ---------------- -------- -------------- -------------- -------------- --------------
                      $       (Pounds)       (Pounds)          $       (Pounds)       (Pounds)       (Pounds)       (Pounds)    
                                           (in millions except for per ordinary share and ADS amounts)                          
                                                                                                                                
U.K. GAAP                                                                                                                       
 information                                                                                                                    
 Turnover........    2,455         1,444           1,370      5,255         3,128          2,941          2,271          1,716  
 Operating                                                                                                                      
  profit.........      551           324             317      1,319           785            664            434            380  
 Profit before                                                                                                                  
  taxation.......      420           247             245      1,075           640            558            404            375  
 Ordinary                                                                                                                       
  taxation.......      (97)          (57)            (58)      (255)         (152)          (137)          (109)          (101) 
 Windfall tax....      --            --             (317)      (533)         (317)           --             --             --   
 Profit/(loss)                                                                                                                  
  after                                                                                                                         
  taxation.......      323           190            (130)       287           171            421            295            274  
 Earnings/(loss)                                                                                                                
  per                                                                                                                           
  ScottishPower                                                                                                                 
  ordinary                                                                                                                      
  share..........  $0.2729         16.05 p        (11.04) p $0.2421         14.41 p        38.11 p        33.12 p        32.88 p
 Earnings per                                                                                                                   
  ScottishPower                                                                                                                 
  ordinary share                                                                                                                
  (as adjusted)..  $0.2729         16.05 p         15.85 p  $0.6935         41.28 p        38.11 p        33.12 p        32.88 p
 Earnings/(loss)                                                                                                                
  per                                                                                                                           
  ScottishPower                                                                                                                 
  ADS............    $1.09  (Pounds)0.64   (Pounds)(0.44)     $0.97  (Pounds)0.58   (Pounds)1.52   (Pounds)1.32   (Pounds)1.32  
 Earnings per                                                                                                                   
  ScottishPower                                                                                                                 
  ADS (as                                                                                                                       
  adjusted)......    $1.09  (Pounds)0.64    (Pounds)0.63      $2.77  (Pounds)1.65   (Pounds)1.52   (Pounds)1.32   (Pounds)1.32  
 Dividend per                                                                                                                   
  ScottishPower                                                                                                                 
  ordinary share,                                                                                                               
  net............  $0.1275          7.50 p          6.80 p  $0.3427         20.40 p        18.50 p        15.50 p        13.65 p
 Dividend per                                                                                                                   
  ScottishPower                                                                                                                 
  ADS, net.......  $  0.51  (Pounds)0.30    (Pounds)0.27    $  1.38  (Pounds)0.82   (Pounds)0.74   (Pounds)0.62   (Pounds)0.55  
 Total assets....   10,149         5,970           5,355      9,369         5,577          4,848          2,861          1,844  
 Long term                                                                                                                      
  liabilities....    3,624         2,132           1,031      2,411         1,435          1,076            785            313  
 Equity                                                                                                                         
  shareholders'                                                                                                                 
  funds..........    3,079         1,811           1,540      2,869         1,708          1,523          1,208          1,106  
U.S. GAAP                                                                                                                       
 information                                                                                                                    
 Turnover........    2,455         1,444           1,370      5,255         3,128          2,941          2,271          1,716  
 Profit/(loss)                                                                                                                  
  after                                                                                                                         
  taxation.......      284           167            (132)       218           130            353            271            --   
 Basic                                                                                                                          
  earnings/(loss)                                                                                                               
  per                                                                                                                           
  ScottishPower                                                                                                                 
  ordinary                                                                                                                      
  share..........  $0.2402         14.13 p        (11.20)p  $0.1848         11.00 p        31.94 p        30.39 p          --   
 Basic                                                                                                                          
  earnings/(loss)                                                                                                               
  per                                                                                                                           
  ScottishPower                                                                                                                 
  ADS............  $0.9608  (Pounds)0.57   (Pounds)(0.45)   $0.7392  (Pounds)0.44   (Pounds)1.28   (Pounds)1.22            --   
 Diluted                                                                                                                        
  earnings/(loss)                                                                                                               
  per                                                                                                                           
  ScottishPower                                                                                                                 
  ordinary                                                                                                                      
  share..........  $0.2377         13.98 p        (11.09)p  $0.1830         10.89 p        31.66 p        30.14 p          --   
 Diluted                                                                                                                        
  earnings/(loss)                                                                                                               
  per                                                                                                                           
  ScottishPower                                                                                                                 
  ADS............  $0.9508  (Pounds)0.56   (Pounds)(0.44)   $0.7320  (Pounds)0.44   (Pounds)1.27   (Pounds)1.21            --   
 Total assets....   11,798         6,940           6,353     11,001         6,548          6,065          3,480            --   
 Equity                                                                                                                         
  shareholders'                                                                                                                 
  funds..........    3,845         2,262           2,064      3,785         2,253          2,340          1,510            --   

-------                                                                         

--------------                              
1994                                
--------------                              
(Pounds)                                

U.K. GAAP                                                                     
information                                                                 
Turnover........       1,569                                                
Operating                                                                   
profit.........         360                                               
Profit before                                                               
taxation.......         351                                               
Ordinary                                                                    
taxation.......         (93)                                              
Windfall tax....         --                                                 
Profit/(loss)                                                               
after                                                                     
taxation.......         258                                               
Earnings/(loss)                                                             
per                                                                       
ScottishPower                                                             
ordinary                                                                  
share..........       30.95 p                                             
Earnings per                                                                
ScottishPower                                                             
ordinary share                                                            
(as adjusted)..       30.95 p                                             
Earnings/(loss)                                                             
per                                                                       
ScottishPower                                                             
ADS............(Pounds)1.24                                               
Earnings per                                                                
ScottishPower                                                             
ADS (as                                                                   
adjusted)......(Pounds)1.24                                               
Dividend per                                                                
ScottishPower                                                             
ordinary share,                                                           
net............       12.40 p                                             
Dividend per                                                                
ScottishPower                                                             
ADS, net.......(Pounds)0.50                                               
Total assets....       1,679                                                
Long term                                                                   
liabilities....         300                                               
Equity                                                                      
shareholders'                                                             
funds..........         942                                               
U.S. GAAP                                                                     
information                                                                 
Turnover........       1,569                                                
Profit/(loss)                                                               
after                                                                     
taxation.......         --                                                
Basic                                                                       
earnings/(loss)                                                           
per                                                                       
ScottishPower                                                             
ordinary                                                                  
share..........         --                                                
Basic                                                                       
earnings/(loss)                                                           
per                                                                       
ScottishPower                                                             
ADS............         --                                                
Diluted                                                                     
earnings/(loss)                                                           
per                                                                       
ScottishPower                                                             
ordinary                                                                  
share..........         --                                                
Diluted                                                                     
earnings/(loss)                                                           
per                                                                       
ScottishPower                                                             
ADS............         --                                                
Total assets....         --                                                 
Equity                                                                      
shareholders'                                                             
funds..........         --                                                
------------------------------                                                  
(1) As permitted under U.K. GAAP, ScottishPower earnings per share has been     
presented above including and excluding the impact of windfall tax to   
   provide an additional measure of underlying performance. In accordance with
 U.S. GAAP, earnings per share has been presented above based on U.S. GAAP
earnings, without adjustments for the impact of windfall tax.           
 As such additional measures of underlying performance are not permitted under
 U.S. GAAP, the inclusion of windfall tax in the determination of earnings for
the purposes of computation of earnings per share in accordance with U.S.   
GAAP decreased earnings by (Pounds)317 million or 26.86 pence per           
share/(Pounds)1.07 per ADS for the year ended March 31, 1998.               

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SELECTED HISTORICAL FINANCIAL INFORMATION OF PACIFICORP 

 The selected historical financial information set out below is extracted or
derived from the consolidated financial statements of PacifiCorp for the five   
years ended December 31, 1998 which have been audited by Deloitte & Touche LLP, 
independent auditors (see "Experts"). This selected historical financial        
information should be read in conjunction with, and is qualified in its         
entirety by reference to, such consolidated financial statements and their      
accompanying notes included in the Form 10-K of PacifiCorp for the year ended   
December 31, 1998, which is incorporated in this document by reference--see     
"Where You Can Find More Information."                                          

                                                                [Download Table]

                                           Year ended December 31,             
                                 ----------------------------------------------
                                   1998      1997      1996     1995     1994  
                                 --------  --------  -------- -------- --------
                                  ($ million, except for per share amounts)    
                                                                               
Income Statement information                                                   
Revenues.......................   5,580.4   4,548.9   3,792.0  2,806.8  2,839.9
Income from operations.........     680.8     810.7   1,086.3    890.6    857.6
Net income/(loss)..............     (36.1)    663.7     504.9    505.0    468.0
Earnings contribution/(loss) on                                                
 common share                                                                  
Continuing operations..........      91.3     210.1     400.5    363.3    357.8
Discontinued operations........    (146.7)    446.8      74.6    103.0     70.5
Extraordinary item.............       --      (16.0)      --       --       -- 
                                 --------  --------  -------- -------- --------
Total earnings/(losses)                                                        
 contribution on common share..     (55.4)    640.9     475.1    466.3    428.3
                                 --------  --------  -------- -------- --------
Earnings/(loss) per common                                                     
 share--basic and dilutive                                                     
Continuing operations..........  $   0.30  $   0.71  $   1.37 $   1.28 $   1.26
Discontinued operations........  $  (0.49) $   1.50  $   0.25 $   0.36 $   0.25
Extraordinary item.............       --   $  (0.05)      --       --       -- 
                                 --------  --------  -------- -------- --------
Total earnings/(losses) per                                                    
 common share..................  $  (0.19) $   2.16  $   1.62 $   1.64 $   1.51
                                 --------  --------  -------- -------- --------
Cash dividends declared per                                                    
 common share..................  $   1.08  $   1.08  $   1.08 $   1.08 $   1.08
Balance Sheet information                                                      
Total assets...................    12,989    13,627    13,809   13,167   11,000
Long-term debt (excluding                                                      
 current portion)..............     4,559     4,413     4,829    4,509    3,391
Common equity..................     3,957     4,321     4,032    3,633    3,460

Continuing Operations                                                       

 PacifiCorp is an electricity company in the United States and Australia. In
the United States, PacifiCorp conducts a retail electric utility business under 
the assumed business names of Pacific Power & Light Company and Utah Power &    
Light Company, and engages in power production and sales on a wholesale basis   
under the name PacifiCorp. PacifiCorp Group Holdings Company, a wholly owned    
subsidiary of PacifiCorp, holds the stock of subsidiaries conducting businesses 
not regulated as domestic electric utilities. PacifiCorp Group Holdings Company 
indirectly owns 100% of Powercor Australia Ltd., the largest of the five        
electric distribution companies in Victoria, Australia.                         

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SIGNIFICANT FACTORS AFFECTING OPERATING RESULTS 

  Financial results reported in accordance with U.K. GAAP or U.S. GAAP include
the impact of unusual or infrequent events and factors which are not expected   
to occur regularly in the future. Significant factors and trends, which may be  
helpful to review in understanding the past performance and future prospects of 
ScottishPower and PacifiCorp, are described briefly below. The following        
discussion should be read in conjunction with the "Selected Historical          
Financial Information" of ScottishPower and PacifiCorp included in the previous 
pages and with the "Management's Discussion and Analysis of Financial Condition 
and Results of Operations" of ScottishPower and PacifiCorp that are contained   
in the annual reports and other information that ScottishPower and PacifiCorp,  
respectively, have filed with the SEC. See "Where You Can Find More             
Information".                                                                   

Significant Factors Affecting ScottishPower's Operating Results                 

Year ended March 31, 1996                                                     

On 6 October 1995, ScottishPower acquired Manweb plc a U.K. regional      
electricity company, for a total consideration of (Pounds)1,115.7 million which 
included a share issue of (Pounds)271.9 million (including 119.4 million        
shares). There were no contingent payments which formed part of the acquisition 
agreement. The acquisition method of accounting was used and the goodwill       
arising on the acquisition was written off the reserves in the year to March    
31, 1996 in accordance with the accounting policy adopted at that time. Manweb  
contributed operating profit, before reorganization costs, of (Pounds)80.4      
million in the six months from the date of acquisition to March 31, 1996 and    
operating profit of (Pounds)135.0 million in the year ended March 31, 1997. Had 
the acquisition taken place on April 1, 1995, Manweb would have contributed     
turnover of (Pounds)812.1 million, operating profit of (Pounds)126.6 million    
and profit on ordinary activities after tax of (Pounds)42.9 million in the year 
to March 31, 1996. For the year to March 31, 1995 Manweb recorded turnover of   
(Pounds)878.6 million, operating profit of (Pounds)101.0 million and profit on  
ordinary activities after tax of (Pounds)62.8 million. Had the acquisition      
taken place on April 1, 1995, the contribution to earnings per share from       
Manweb's operations would have been 4.90p in the year to March 31, 1996 and     
7.70p in the year to March 31, 1995.                                            

 In the year ended March 31, 1996, costs of (Pounds)42.7 million relating to
a reorganization of Manweb were charged to the profit and loss account as an    
exceptional operating item. Of the total costs, (Pounds)28.2 million            
represented accruals for severance costs and (Pounds)14.5 million represented   
reorganization costs in areas such as contracting and retail. By March 31,      
1998, operating cost savings from the acquisition of Manweb totalled (Pounds)98 
million compared to pre-acquisition cost levels.                                

Year ended March 31, 1997                                                     

  In August 1996, ScottishPower acquired Southern Water, a U.K. water company,
for a total consideration of (Pounds)1,716.5 million which included a share     
issue of (Pounds)397.9 million (including 126.4 million shares). As part of the 
acquisition agreement, deferred contingent consideration of (Pounds)13.4        
million was included and related to the election made by participants in the    
Southern Water Sharesave Scheme to be granted options over ScottishPower shares 
in place of options previously granted over Southern Water shares. The          
acquisition method of accounting was used and the goodwill arising on the       
acquisition was written off to reserves in the year to March 31, 1997 in        
accordance with the accounting policy adopted at that time. Southern Water      
contributed operating profit, before reorganization costs, of (Pounds)135.6     
million in the eight months from the date of acquisition to March 31, 1997 and  
operating profit of (Pounds)240.7 million in the year ended March 31, 1998. Had 
the acquisition taken place on April 1, 1996 Southern Water would have          
contributed turnover of (Pounds)474.5 million, operating profit of              
(Pounds)200.0 million and profit after ordinary tax of (Pounds)139.3 million in 
the year to March 31, 1997. For the year to March 31, 1996 Southern Water       
recorded turnover of (Pounds)424.7 million, operating profit                    

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of (Pounds)170.6 million and profit on ordinary activities after tax of         
(Pounds)144.8 million. Had the acquisition taken place on April 1, 1996, the    
contribution to earnings per share from Southern Water's operations would have  
been 12.6p in the year to March 31, 1997 and 16.2p in the year to March 31,     
1996.                                                                           

 In the year ended March 31, 1997, costs of (Pounds)21.2 million relating to
a reorganization of Southern Water were charged to the profit and loss account  
as an exceptional operating item. By March 31, 1998, operating cost savings     
from the acquisition of Southern Water totalled (Pounds)31 million.             

Year ended March 31, 1998                                                     

In the year ended March 31, 1998, exceptional taxation of (Pounds)317     
million was charged to the profit and loss account. This was paid in two equal  
installments on December 1, 1997 and December 1, 1998. The tax related to the   
group's estimated share of the windfall tax which was levied on certain utility 
companies in the U.K. according to the formula contained within the Finance     
(No. 2) Act 1997. The 1997 budget speech, which introduced this tax, referred   
to the charge as being of a "one-off" nature.                                   

Significant Factors Affecting PacifiCorp's Operating Results                    

Year ended December 31, 1995                                                  

In August 1995, Pacific Telecom, Inc. closed the sale of the stock of     
Alascom, Inc. which resulted in a pre-tax gain of $66.5 million. Alascom, Inc.  
contributed income before income taxes of $36.9 million in the seven months     
from January 1, 1995 to date of disposition and income before income taxes of   
$80.7 million in the year ended December 31, 1994.                              

In December 1995, PacifiCorp purchased Powercor Australia Ltd. Powercor   
contributed income before income taxes of $1.2 million in the one month from    
the date of acquisition to December 31, 1995 and income before income taxes of  
$51.8 million in the year ended December 31, 1996.                              

Year ended December 31, 1996                                                  

In September 1996, a consortium, known as the Hazelwood Power Partnership,
purchased a 1,600 megawatt, coal-fired generating station and associated coal   
mine in Victoria, Australia. PacifiCorp has a 19.9% interest in the partnership 
through an indirect subsidiary. Hazelwood Power Partnership incurred losses     
before income taxes of $1.2 million in the four months from the date of         
acquisition to December 31, 1996 and losses before income taxes of $2.3 million 
in the year ended December 31, 1997.                                            

Year ended December 31, 1997                                                  

In April 1997, PacifiCorp, through a subsidiary, acquired all of the      
outstanding shares of common stock of TPC Corporation. TPC Corporation incurred 
losses before income taxes of $7.2 million in the nine months from the date of  
acquisition to December 31, 1997 and a loss from operations before income taxes 
of $15.1 million in the year ended December 31, 1998. A decision to sell TPC    
Corporation was made in October 1998. PacifiCorp sold TPC Corporation in        
February 1999.                                                                  

In August 1997, PacifiCorp incurred a pre-tax loss of $105.6 million      
associated with closing foreign currency exchange positions and option premium  
costs relating to the initial tender offer for The Energy Group plc in June     
1997.                                                                           

 On November 5, 1997, PacifiCorp completed the sale of its independent power
subsidiary, Pacific Generation Company, which resulted in a pre-tax gain of     
$56.5 million. Pacific Generation Company                                       

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contributed income before income taxes of $16.7 million in the ten months from  
January 1, 1997 to the date of disposition and income before income taxes of    
$12.4 million in the year ended December 31, 1996.                              

  On December 1, 1997, PacifiCorp completed the sale of Pacific Telecom, Inc.,
realizing a pre-tax gain of $671 million. Pacific Telecom, Inc. contributed     
income before income taxes of $146.8 million in the eleven months from January  
1, 1997 to the date of disposition and income before income taxes of $122.2     
million in the year ended December 31, 1996.                                    

In December 1997, PacifiCorp recorded $170.4 million of pre-tax special   
charges. The charges included a write off of $86.9 million of deferred          
regulatory pension assets, $19.1 million of certain information system assets   
associated with PacifiCorp's decision to proceed with installation of SAP       
enterprise wide software and $64.5 million associated with the write down of    
assets and acceleration of reclamation costs due to the early closure of the    
Glenrock mine. PacifiCorp also recorded an extraordinary charge of $25.6        
million pre-tax relating to the write off of allocable generation regulatory    
assets in California and Montana.                                               

Year ended December 31, 1998                                                  

In January 1998, PacifiCorp recorded a $113.1 million pre-tax charge      
associated with a workforce reduction plan in the United States.                

 In March 1998, PacifiCorp recorded an $86.2 million pre-tax charge to write
off deferred costs related to the failed attempt to acquire The Energy Group    
plc.                                                                            

In October 1998, PacifiCorp decided to discontinue its eastern U.S. energy
trading business, exit its energy development business and dispose of the       
Hazelwood power plant. As a result, PacifiCorp recorded a $234.5 million pre-   
tax loss at December 31, 1998.                                                  

On March 4, 1999, the Utah Public Service Commission issued an order in a 
general rate case under which PacifiCorp was required to refund $40 million     
through a credit on customer bills. As a result of the order, PacifiCorp        
recorded a $38 million reduction in revenues in 1998 and will record a $2       
million reduction in 1999. The order also requires PacifiCorp to reduce         
revenues by $85 million, or 12%, per year.                                      

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RECENT DEVELOPMENTS 

On May 6, 1999, ScottishPower filed with the SEC on Form 6-K an audited   
Preliminary Statement for the year ended March 31, 1999. The selected           
historical financial information set out below is extracted or derived from the 
audited Preliminary Statement.                                                  

  In the table below, amounts for the years ended March 31, 1999 and March 31,
1998 have been translated solely for the convenience of the reader, at $1.61 to 
(Pounds)1.00 and at $1.68 to (Pounds)1.00, respectively, being the noon buying  
rates in effect on March 31, 1999 and March 31, 1998, respectively.             

Please refer to page 10 of this document which details the methods of     
calculating earnings per ADS and dividends per ordinary share and per ADS. Page 
10 also highlights that ScottishPower prepares its financial statements under   
U.K. GAAP, which differs in certain significant respects from U.S GAAP.         

                                                                [Download Table]

                                            Year ended March 31,               
                                  -------------------------------------------- 
                                   1999        1999       1998        1998     
                            Notes -------  ------------  -------  ------------ 
                                     $       (Pounds)       $       (Pounds)   
                                    (in millions except for per ordinary       
                                           share and ADS amounts)              
                                                                               
U.K. GAAP Information                                                          
 Turnover.................          5,220         3,242    5,255         3,128 
 Operating profit.........          1,293           803    1,319           785 
 Profit before taxation...          1,037           644    1,075           640 
 Ordinary taxation........           (229)         (142)    (255)         (152)
 Windfall tax.............            --            --      (533)         (317)
 Profit after taxation....            808           502      287           171 
 Earnings per                                                                  
  ScottishPower ordinary                                                       
  share...................   (1)  $0.6830         42.42p $0.2421         14.41p
 Earnings per                                                                  
  ScottishPower ordinary                                                       
  share (as adjusted).....   (1)  $0.6846         42.52p $0.6935         41.28p
 Diluted earnings per                                                          
  ScottishPower ordinary                                                       
  share...................   (1)  $0.6762         42.00p $0.2397         14.27p
 Diluted earnings per                                                          
  ScottishPower ordinary                                                       
  share (as adjusted).....   (1)  $0.6778         42.10p $0.6866         40.87p
 Earnings per                                                                  
  ScottishPower ADS.......   (1)  $  2.74  (Pounds)1.70  $  0.97  (Pounds)0.58 
 Earnings per                                                                  
  ScottishPower ADS (as                                                        
  adjusted)...............   (1)  $  2.74  (Pounds)1.70  $  2.77  (Pounds)1.65 
 Diluted earnings per                                                          
  ScottishPower ADS.......   (1)  $  2.70  (Pounds)1.68  $  0.96  (Pounds)0.57 
 Diluted earnings per                                                          
  ScottishPower ADS (as                                                        
  adjusted)...............   (1)  $  2.70  (Pounds)1.68  $  2.74  (Pounds)1.63 
 Dividend per                                                                  
  ScottishPower ordinary                                                       
  share, net                      $0.3623         22.50p $0.3427         20.40p
 Dividend per                                                                  
  ScottishPower ADS, net..        $  1.45  (Pounds)0.90  $  1.38  (Pounds)0.82 
 Total assets.............         10.034         6,232    9,369         5,577 
 Long term liabilities....          3,394         2,108    2,411         1,435 
 Equity shareholders'                                                          
  funds...................          3,133         1,946    2,869         1,708 
U.S. GAAP Information                                                          
 Turnover.................          5,220         3,242    5,255         3,128 
 Profit after taxation....            733           455      218           130 
 Basic earnings per                                                            
  ScottishPower ordinary                                                       
  share                      (1)  $ 61.81         38.39p $0.1848         11.00p
 Basic earnings per                                                            
  ScottishPower ADS.......   (1)  $2.4724  (Pounds)1.54  $0.7392  (Pounds)0.44 
 Diluted earnings per                                                          
  ScottishPower ordinary                                                       
  share                      (1)  $0.6120         38.01p $0.1830         10.89p
 Diluted earnings per                                                          
  ScottishPower ADS.......   (1)  $2.4480  (Pounds)1.52  $0.7320  (Pounds)0.44 
 Total assets.............         11.582         7.194   11,001         6,548 
 Equity shareholders'                                                          
  funds...................          3,986         2,476    3,785         2,253 

--------                                                                        
(1) As permitted under U.K. GAAP, ScottishPower earnings per share has been     
presented above including and excluding the impact of windfall tax      
((Pounds)317 million for fiscal 1998) and goodwill amortization         
  ((Pounds)1.2 million for fiscal 1999), to provide an additional measure of
underlying performance. In accordance with U.S. GAAP, earnings per share
 has been presented above based on U.S. GAAP earnings, without adjustments
for the impact of windfall tax and goodwill amortization.               
 As such additional measures of underlying performance are not permitted under
 U.S. GAAP, the inclusion of windfall tax in the determination of earnings for
the purposes of computation of earnings per share in accordance with U.S.   
GAAP decreased earnings by (Pounds)317 million or 26.86 pence per           
 share / (Pounds)1.07 per ADS for the year ended March 31, 1998. The inclusion
of goodwill decreased earnings by (Pounds)31.2 million or 2.63 pence per    
share / 10.52 pence per ADS for the year ended March 31, 1999 and by        
(Pounds)29.8 million or 2.53 pence per share / 10.12 pence per ADS for the  
year ended March 31, 1998.                                                  

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Summary of financial performance on a U.K. GAAP basis for the year ended March  
31, 1999                                                                        

  Group turnover for the year of (Pounds)3,242 million was (Pounds)114 million
higher than 1997/98, an increase of 3.6% due principally to growth in the       
developing domestic gas business (gas and other energy sales were up by         
(Pounds)77 million to (Pounds)240 million) and in the telecommunications        
business (ScottishTelecom total turnover increased by (Pounds)107 million to    
(Pounds)220 million).                                                           

 Group operating profit amounted to (Pounds)803 million, an increase of 2.3%
or (Pounds)18 million compared with 1997/98, principally due to increased       
profit in Power Systems and Southern Water. This increase in group operating    
profit is after absorbing an additional (Pounds)28 million of costs compared to 
the previous year, for capturing new energy and telecoms customers, marketing   
the ScottishPower brand and depreciation of new systems required to operate in  
the competitive electricity and gas markets. Earnings before interest, tax and  
depreciation increased by (Pounds)66 million to (Pounds)1,017 million.          

  The net interest charge of (Pounds)161 million was (Pounds)14 million higher
than in 1997/98 due mainly to the full year effect of increased debt on payment 
of the first installment of the windfall tax in December 1997 and the partial   
year impact from the second installment paid in December 1998. Interest cover   
remained prudent at 5.0 times against 5.3 times in the prior year. The          
effective tax rate was reduced to 22.0% from 23.7% in the previous year largely 
due to higher capital allowances on the current mix and level of capital        
expenditure.                                                                    

 The profit after ordinary tax for the year amounted to (Pounds)502 million,
an increase of (Pounds)14 million or 2.9%. Earnings per share were 42.42p, an   
increase of 2.8% (42.52p before goodwill amortization, an increase of 3.0%).    

The proposed final dividend of 15.00p net per share brings the total      
dividend per share for the year to 22.50p net, an increase of 10.3%. The full   
year dividend was covered 1.9 times by earnings, versus 2.0 times in 1997/98.   

Free cash flow for the year was (Pounds)702 million, a reduction of       
(Pounds)32 million versus 1997/98, reflecting working capital increases in our  
developing gas and telecommunications businesses. The group invested            
(Pounds)754 million in capital projects during the year, (Pounds)97 million     
more than in the previous years. This investment was primarily to improve the   
quality of the infrastructure assets in our electricity and water and           
wastewater services businesses and in the growth of our telecommunications      
business. In addition, expenditure on improving information systems throughout  
the group continued.                                                            

Net debt at March 31, 1999 was (Pounds)2,421 million, an increase of      
(Pounds)468 million compared with a year ago, principally due to payments of    
windfall tax and the increased program of capital expenditure. Gearing at March 
31, 1999 was 124%, up from 114% at March 31, 1998.                              

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SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

ScottishPower and PacifiCorp (the "Combined Group") are providing the     
following Summary Unaudited Pro Forma Condensed Combined Financial Information  
to provide an indication of what the results of operations and financial        
position of the Combined Group might have looked like had the merger occurred   
on an earlier date. This information is provided for illustrative purposes only 
and does not show what the results of operations or financial position of the   
Combined Group would have been if the merger had actually occurred on the dates 
indicated. This information also does not indicate what the Combined Group's    
future operating results or consolidated financial position will be.            

See "Unaudited Pro Forma Condensed Combined Financial Information" for a  
more detailed explanation of this analysis.                                     

Basis of Presentation                                                           

PacifiCorp's financial statements will continue to be kept in accordance  
with U.S. GAAP. The Summary Unaudited Pro Forma Condensed Combined Financial    
Information has been prepared in accordance with U.K. GAAP which differs in     
some significant respects from U.S. GAAP. In the pro forma financial            
information, PacifiCorp's financial position and results of operations have     
been adjusted to U.K. GAAP and translated into pounds sterling, as described in 
the Notes to the Unaudited Pro Forma Condensed Combined Financial Information   
contained under "Unaudited Pro Forma Condensed Combined Financial Information". 

The Combined Group intends to account for the merger using the acquisition
method of accounting under U.K. GAAP and the merger qualifies for the purchase  
method of accounting under U.S. GAAP. The pro forma financial information has   
been prepared on this basis.                                                    

Summary Unaudited Pro Forma Income Statement Information                        

The Summary Unaudited Pro Forma Income Statement Information assumes that 
the merger took place on April 1, 1997 and reflects continuing operations only. 
This is the first day of the earliest financial period of ScottishPower         
presented in the pro forma financial information.                               

The Summary Unaudited Pro Forma Income Statement Information for the year 
ended March 31, 1998 combines the audited historical consolidated income        
statement of ScottishPower for the year then ended and the audited historical   
consolidated income statement of PacifiCorp, as adjusted to U.K. GAAP, for the  
year ended December 31, 1997.                                                   

The Summary Unaudited Pro Forma Income Statement Information for the six  
months ended September 30, 1998 and September 30, 1997 combine the unaudited    
historical condensed consolidated income statements of ScottishPower for those  
periods then ended, and the unaudited historical condensed consolidated income  
statements of PacifiCorp, as adjusted to U.K. GAAP, for the six months ended    
June 30, 1998 and June 30, 1997, respectively.                                  

The Summary Unaudited Pro Forma Income Statement Information also gives   
effect to the pro forma adjustments described in the Notes to the Unaudited Pro 
Forma Condensed Combined Financial Information under "Unaudited Pro Forma       
Condensed Combined Financial Information".                                      

Summary Unaudited Pro Forma Balance Sheet Information                           

The Summary Unaudited Pro Forma Balance Sheet Information assumes that the
merger took place on September 30, 1998.                                        

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The Summary Unaudited Pro Forma Balance Sheet Information as at September 
30, 1998 combines the unaudited historical consolidated balance sheet of        
ScottishPower and the unaudited historical consolidated balance sheet of        
PacifiCorp, as adjusted to U.K. GAAP, both as at September 30, 1998.            

 The Summary Unaudited Pro Forma Balance Sheet Information also gives effect
to the pro forma adjustments described in the Notes to the Unaudited Pro Forma  
Condensed Combined Financial Information under "Unaudited Pro Forma Condensed   
Combined Financial Information".                                                

Summary Unaudited Pro Forma Income Statement Information                        

                                                        [Enlarge/Download Table]

                                        Six months ended                                  
                                         September 30,               Year ended March 31, 
                               -----------------------------------   -------------------- 
                         Notes  1998       1998          1997         1998       1998     
                         ----- ------- ------------  -------------   ------- ------------ 
                                  $      (Pounds)      (Pounds)         $      (Pounds)   
                                 (in millions except for per share and  ADS amounts)      
                                                                                          
U.K. GAAP                                                                                 
Turnover................       4,886.3      2,961.4        2,621.6   9,746.2      5,942.8 
Operating profit from                                                                     
 continuing operations..         796.9        483.0          623.3   2,001.5      1,220.4 
Profit/(loss) for the                                                                     
 period.................         320.6        194.4          (41.9)    418.0        254.8 
Earnings/(loss) per                                                                       
 ScottishPower ordinary                                                                   
 share..................  (1)    $0.17        10.37p         (2.25)p   $0.22        13.65p
Earnings per                                                                              
 ScottishPower ordinary                                                                   
 share                                                                                    
 (as adjusted)..........  (1)    $0.20        11.97p         16.36p    $0.55        33.84p
U.S. GAAP                                                                                 
Profit/(loss) for the                                                                     
 period.................         240.7        145.9          (83.1)    243.5        148.5 
Earnings/(loss) per                                                                       
 ScottishPower ordinary                                                                   
 share..................  (1)    $0.13         7.79p         (4.46)p   $0.13         7.95p
Earnings/(loss) per                                                                       
 ScottishPower ADS......  (1)    $0.52 (Pounds)0.31  (Pounds)(0.18)    $0.52 (Pounds)0.32 

Summary Unaudited Pro Forma Balance Sheet Information                           

                                                                [Download Table]

                                                                    As at      
                                                                September 30,  
                                                                    1998       
                                                              -----------------
                                                                 $     (Pounds)
                                                                 (millions)    
                                                                               
U.K. GAAP                                                                      
Total assets................................................. 25,336.4 14,903.7
Loans and other borrowings due after more than one year......  8,029.3  4,723.1
Shareholders' interest.......................................  9,242.0  5,436.5
U.S. GAAP                                                                      
Shareholders' interest....................................... 11,444.9  6,732.3

--------                                                                        
Notes:                                                                          

(1) As permitted under U.K. GAAP, the Combined Group pro forma earnings per     
share has been presented above including and excluding the impact of    
windfall tax and goodwill amortization ((Pounds)30.0 million for the six
  months ended September 30, 1997 and 1998, and (Pounds)60.0 million for the
  year ended March 31, 1998), to provide an additional measure of underlying
   performance. In accordance with U.S. GAAP, pro forma earnings per share has
been presented above based on U.S. GAAP earnings, without adjustment for
the impact of windfall tax or goodwill amortization. As such additional 
 measures of underlying performance are not permitted under U.S. GAAP, the
   inclusion of windfall tax in the determination of earnings for the purposes
 of computation of earnings per share in accordance with US GAAP decreased
earnings by (Pounds)317 million or 17.00 pence per share/68.00 pence per
  ADS for the six months ended September 30, 1997 and by (Pounds)317 million
 or 16.98 pence per share/67.92 pence per ADS for the year ended March 31,
1998. The inclusion of goodwill amortization decreased earnings by      
(Pounds)69.6 million or 3.71 pence per share/14.84 pence per ADS for the
  six months ended September 30, 1998, by (Pounds)69.3 million or 3.72 pence
 per share/14.88 pence per ADS for the six months ended September 30, 1997
and by (Pounds)139.0 million or 7.44 pence per share/29.76 pence per ADS
for the year ended March 31, 1998.                                      

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COMPARATIVE PER SHARE DATA

The following table sets forth certain per share data of ScottishPower and
PacifiCorp on both historical and pro forma combined bases and on an equivalent 
pro forma basis for PacifiCorp. The historical data as of September 30, 1998    
and 1997 and for the six month periods then ended, the PacifiCorp pro forma     
equivalent per share data and the pro forma combined amounts for all periods    
presented below are unaudited. The pro forma equivalent per share data for      
PacifiCorp has been determined based on the merger consideration of 0.58        
ScottishPower ADSs, representing 2.32 ScottishPower ordinary shares, for each   
share of PacifiCorp common stock. This table should be read in conjunction with 
the historical financial statements and pro forma financial information, and    
the related notes thereto, incorporated by reference or appearing elsewhere     
herein. See "Where You Can Find More Information," and "Unaudited Pro Forma     
Condensed Combined Financial Information".                                      

Unaudited pro forma condensed combined data and PacifiCorp equivalent pro 
forma per share data reflect the combined results, in respect of continuing     
operations only, for both ScottishPower and PacifiCorp, after giving effect to  
the merger (including the issuance of the merger consideration), as if it had   
occurred on September 30, 1998, in the case of book value data, and on April 1, 
1997, in the case of earnings and dividend data. The pro forma data does not    
reflect potential cost savings or potential synergistic benefits and            
enhancements anticipated by ScottishPower's management as a result of the       
merger. See "The Merger--Reasons for the Merger; Recommendations of PacifiCorp  
Board of Directors and ScottishPower Board of Directors" and "--Opinions of     
Financial Advisors". The unaudited pro forma financial data are presented for   
informational purposes only, and are not necessarily indicative of the          
operating results or financial position that would have occurred had the merger 
and other transactions presented in the Unaudited Pro Forma Condensed Combined  
Financial Information been completed on the dates indicated nor are they        
indicative of future operating results or financial position. Pro forma         
dividend per share amounts represent the aggregate of the actual historical     
dividends paid by ScottishPower and PacifiCorp divided by the estimated pro     
forma number of outstanding ordinary shares following the merger. The pro forma 
dividend per share amounts are not necessarily indicative of the actual         
dividends that will be paid following the merger.                               

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  In the following table, as permitted under U.K. GAAP, pro forma earnings per
share has been presented including and excluding the impact of windfall tax     
((Pounds)317 million for fiscal 1998) and goodwill amortization ((Pounds)30.0   
million for the six months ended September 30, 1997 and 1998, and (Pounds)60.0  
million for the year ended March 31, 1998), to provide an additional measure of 
underlying performance. In accordance with U.S. GAAP, earnings per share has    
been presented based on U.S. GAAP earnings of the Combined Group, without       
adjustment for the impact of windfall tax ((Pounds)317 million for fiscal 1998) 
or goodwill amortization (September 30, 1998: (Pounds)69.6 million; September   
30, 1997; (Pounds)69.3 million; March 31, 1998; (Pounds)139.0 million). The     
inclusion of these amounts in the determination of earnings for the purposes of 
computation of earnings per share in accordance with U.S. GAAP decreased        
earnings per share as follows:                                                  

                                                                [Download Table]

                                                        PacifiCorp              
                                                        Pro Forma  ScottishPower
                                         Combined Group Equivalent  Historical  
                                         ------------------------- -------------
                                            P      $        $            P      
                                         ------- ----------------- -------------
                                                                                
March 31, 1998                                                                  
  Per ordinary/common share                                                     
    Windfall tax........................   16.98   0.28    0.65        26.87    
    Goodwill amortisation...............    7.44   0.12    0.28         2.53    
  Per ADS                                                                       
    Windfall tax........................   67.92   1.12    2.60       107.48    
    Goodwill amortisation...............   29.76   0.48    1.12        10.12    
September 30, 1998                                                              
  Per ordinary/common share                                                     
    Windfall tax........................     --     --      --           --     
    Goodwill amortisation...............    3.71   0.06    0.14         1.27    
  Per ADS                                                                       
    Windfall tax........................     --     --      --           --     
    Goodwill amortisation...............   14.84   0.24    0.56         5.08    
September 30, 1997                                                              
  Per ordinary/common share                                                     
    Windfall tax........................   17.00   0.28    0.65        26.89    
    Goodwill amortisation...............    3.72   0.06    0.14         1.25    
  Per ADS                                                                       
    Windfall tax........................   68.00   1.12    2.60       107.56    
    Goodwill amortisation...............   14.88   0.24    0.56         5.00    

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COMPARATIVE PER SHARE DATA

                                                                [Download Table]

                                Combined     PacifiCorp                         
                                 Group       Pro Forma  PacifiCorp ScottishPower
                               Pro Forma     Equivalent Historical  Historical  
                              -------------  ---------- ---------- -------------
                                p       $        $          $            p      
                                                         Note (a)               
                                                                                
Year ended March 31, 1998                                                       
Amounts under U.K. GAAP                                                         
 Earnings per                                                                   
  ordinary/common share                                                         
 Basic......................   13.65   0.22     0.51       0.80        14.41    
 Diluted....................   13.56   0.22     0.51       0.80        14.27    
 Earnings per                                                                   
  ordinary/common share (as                                                     
  adjusted)                                                                     
 Basic......................   33.84   0.55     1.28       0.80        41.28    
 Diluted....................   33.63   0.55     1.28       0.80        40.87    
 Dividends per                                                                  
  ordinary/common share.....   23.49   0.39     0.90       1.08        20.40    
 Book value per                                                                 
  ordinary/common share.....     N/A    N/A      N/A        N/A       141.30    
Amounts under U.S. GAAP                                                         
 Earnings per                                                                   
  ordinary/common share                                                         
 Basic......................    7.95   0.13     0.30       0.71        11.00    
 Diluted....................    7.90   0.13     0.30       0.71        10.89    
 Dividends per                                                                  
  ordinary/common share.....   23.49   0.39     0.90       1.08        20.40    
 Book value per                                                                 
  ordinary/common share.....     N/A    N/A      N/A      14.55       190.40    
Six months ended September                                                      
 30, 1998                                                                       
Amounts under U.K. GAAP                                                         
 Earnings per                                                                   
  ordinary/common share                                                         
 Basic......................   10.37   0.17     0.39       0.19        16.05    
 Diluted....................   10.30   0.17     0.39       0.19        15.87    
 Earnings per                                                                   
  ordinary/common share (as                                                     
  adjusted)                                                                     
 Basic......................   11.97   0.20     0.46       0.19        16.05    
 Diluted....................   11.89   0.20     0.46       0.19        15.87    
 Dividends per                                                                  
  ordinary/common share.....   10.00   0.16     0.37       0.54         7.50    
 Book value per                                                                 
  ordinary/common share.....  286.43   4.87    11.30      14.27       149.90    
Amounts under U.S. GAAP                                                         
 Earnings per                                                                   
  ordinary/common share                                                         
 Basic......................    7.79   0.13     0.30       0.18        14.13    
 Diluted....................    7.73   0.13     0.30       0.18        13.98    
 Dividends per                                                                  
  ordinary/common share.....   10.00   0.16     0.37       0.54         7.50    
 Book value per                                                                 
  ordinary/common share.....  356.94   6.07    14.08      14.04       190.80    
Six months ended September                                                      
 30, 1997                                                                       
Amounts under U.K. GAAP                                                         
 Earnings per                                                                   
  ordinary/common share                                                         
 Basic......................   (2.25) (0.04)   (0.09)      0.65       (11.04)   
 Diluted....................   (2.23) (0.04)   (0.09)      0.65       (10.93)   
 Earnings per                                                                   
  ordinary/common share (as                                                     
  adjusted)                                                                     
 Basic......................   16.36   0.27     0.63       0.65        15.85    
 Diluted....................   16.27   0.27     0.63       0.65        15.71    
 Dividends per                                                                  
  ordinary/common share.....    9.57   0.16     0.37       0.54         6.80    
 Book value per                                                                 
  ordinary/common share.....     N/A    N/A      N/A        N/A       130.60    
Amounts under U.S. GAAP                                                         
 Earnings/(loss) per                                                            
  ordinary/common share                                                         
 Basic......................   (4.46) (0.07)   (0.16)      0.57       (11.20)   
 Diluted....................   (4.43) (0.07)   (0.16)      0.57       (11.09)   
 Dividends per                                                                  
  ordinary/common share.....    9.57   0.16     0.37       0.54         6.80    
 Book value per                                                                 
  ordinary/common share.....     N/A    N/A      N/A      13.74       175.10    

--------                                                                        
Notes:                                                                          
(a) PacifiCorp historical comparative per share data is given for the year      
   ended December 31, 1997 and for the six months ended June 30, 1998 and 1997
 except for the book value per common share under U.K. GAAP which is given
as at September 30, 1998.                                               

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COMPARATIVE MARKET PRICE AND DIVIDEND DATA

Market Price Data                                                               

ScottishPower ADSs are listed for trading on the New York Stock Exchange  
under the symbol "SPI". ScottishPower ordinary shares are listed on the         
Official List of the London Stock Exchange under the symbol "SPW". PacifiCorp   
common stock is listed for trading on the New York Stock Exchange and Pacific   
Stock Exchange under the symbol "PPW".                                          

The table below sets forth for the calendar quarters indicated, (1) the   
range of high and low closing sale prices for the ScottishPower ADSs, as        
reported over-the-counter prior to September 8, 1997 and as reported on the New 
York Stock Exchange Composite Tape following that date, (2) the highest and     
lowest middle market quotations for the ScottishPower ordinary shares, as       
derived from the Daily Official List of the London Stock Exchange, and (3) the  
range of high and low closing sale prices for the PacifiCorp common stock, as   
reported on the New York Stock Exchange Composite Tape.                         

                                                                [Download Table]

                                                                    PacifiCorp 
                                    ScottishPower   ScottishPower     Common   
                                         ADS       Ordinary Shares     Stock   
                                    ------------- ----------------- -----------
                                     High   Low     High     Low    High   Low 
                                    ------------- -------- -------- ----- -----
                                      $      $    (Pounds) (Pounds)   $     $  
                                                                               
1997                                                                           
  First Quarter....................  24.48  21.54   3.76     3.34   21.75 20.13
  Second Quarter...................  26.03  23.18   3.97     3.52   22.38 19.25
  Third Quarter....................  31.31  26.21   4.80     3.97   23.38 20.56
  Fourth Quarter...................  35.63  28.13   5.40     4.20   27.31 21.44
1998                                                                           
  First Quarter....................  38.50  33.00   5.82     4.85   26.75 22.81
  Second Quarter...................  37.50  35.25   5.76     5.25   24.44 21.81
  Third Quarter....................  41.28  35.25   6.20     5.28   23.13 18.88
  Fourth Quarter...................  44.63  37.00   6.75     5.32   22.31 18.75
1999                                                                           
  First Quarter....................  44.02  34.13   6.64     5.29   21.56 17.25
  Second Quarter (through April 27,                                            
   1999)...........................  35.00  33.50   5.33     5.09   17.13 15.94

On December 4, 1998, the last full trading day prior to the public        
announcement of the execution and delivery of the merger agreement, the closing 
price per (1) ScottishPower ADS was $44.63, (2) ScottishPower ordinary share    
was (Pounds)6.75, and (3) share of PacifiCorp common stock was $20.75 (or       
$26.02 on an equivalent per share basis).                                       

On April 27, 1999, the most recent date for which it was practicable to   
obtain market price data before the printing of this proxy                      
statement/prospectus, the closing price per (1) ScottishPower ADS was $34.50,   
(2) ScottishPower ordinary share was (Pounds)5.18, and (3) share of PacifiCorp  
common stock was $15.94 (or $19.42 on an equivalent per share basis).           
PacifiCorp shareholders are urged to obtain current market quotations for the   
ScottishPower ADSs, ScottishPower ordinary shares and PacifiCorp common stock.  
No assurance can be given as to the market price of ScottishPower ADSs,         
ScottishPower ordinary shares or PacifiCorp common stock at the time of the     
merger.                                                                         

On the PacifiCorp record date, there were approximately 103,000 holders of
record of PacifiCorp common stock.                                              

Dividend Data                                                                   

  ScottishPower. The following table sets forth dividends declared and paid in
respect of ScottishPower ordinary shares for the periods indicated, including   
the associated U.K. tax credit available to certain beneficial                  

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owners of ScottishPower ordinary shares or ScottishPower ADSs who are residents 
of the U.S. for tax purposes and after deduction of U.K. withholding taxes. The 
dividends set forth below have been grossed up by the tax credit rates          
applicable on the dates of payment. The tax credit rates were as follows: April 
6, 1988 to April 5, 1993 = 25%; April 6, 1993 to April 5, 1994 = 22.5%; and     
April 6, 1994 to April 5, 1999 = 20%. It should be noted that the percentage of 
any dividend represented by the associated U.K. tax credit has varied over the  
periods indicated. The amounts shown are not those that were actually paid to   
holders of ScottishPower ordinary shares and ScottishPower ADSs. Dividends have 
been translated from pounds sterling into U.S. dollars using exchange rates     
prevailing on the date the dividends were paid to holders of ScottishPower      
ordinary shares and, with respect to ScottishPower ADSs, multiplied by four.    

Dividends Per ScottishPower 

                                                                [Download Table]

                                         Ordinary Share             ADS         
                                       ------------------- ---------------------
                                       Interim Final Total Interim Final  Total 
                                       ------- ----- ----- ------- ------ ------
                                          p      p     p      c      c      c   
                                                                                
Year ended March 31,                                                            
  1993................................  4.96    9.59 14.55  28.46   57.75  86.21
  1994................................  5.33   10.34 15.67  32.02   65.27  97.29
  1995................................  5.69   11.38 17.07  36.03   72.39 108.42
  1996................................  6.46   12.91 19.37  39.33   80.84 120.17
  1997................................  7.71   15.41 23.12  49.49   99.55 149.04
  1998................................  8.50   17.00 25.50  55.58  115.96 171.54
  1999................................  9.38                60.29               

PacifiCorp. PacifiCorp has historically declared and paid dividends       
quarterly. The following table sets forth the quarterly dividends in respect of 
the shares of PacifiCorp common stock declared and paid in each of the past     
five years.                                                                     

Dividends Per PacifiCorp Common Share 

                                                                [Download Table]

                                            First  Second   Third  Fourth       
                                           Quarter Quarter Quarter Quarter Total
                                           ------- ------- ------- ------- -----
                                             ($)     ($)     ($)     ($)    ($) 
                                                                                
Year ended December 31,                                                         
  1994....................................  0.27    0.27    0.27    0.27   1.08 
  1995....................................  0.27    0.27    0.27    0.27   1.08 
  1996....................................  0.27    0.27    0.27    0.27   1.08 
  1997....................................  0.27    0.27    0.27    0.27   1.08 
  1998....................................  0.27    0.27    0.27    0.27   1.08 

Although dividends have historically been declared and paid semi-annually,
following the merger, ScottishPower intends to pay dividends on a quarterly     
basis. As dividends paid by ScottishPower will be in pounds sterling, exchange  
rate fluctuations will affect the U.S. dollar amounts received by holders of    
ScottishPower ADSs on conversion by The Bank of New York, the depositary, of    
such cash dividends. See "Currencies and Exchange Rates" and "The Merger--      
Material Tax Consequences," "Description of Ordinary Shares--Dividends and      
Other Distributions" and "Description of American Depositary Shares--Dividends, 
Other Distributions, Rights and Changes Affecting Deposited Securities."        

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RISK FACTORS

U.K. Regulatory Environment. ScottishPower's business is subject to       
regulation in the U.K., a general description of which is set forth in          
ScottishPower's Annual Report on Form 20-F which is incorporated in this        
document by reference. It is expected that regulation will continue to have a   
material bearing on the profitability and investment capability of              
ScottishPower. ScottishPower's regulated monopoly businesses comprise           
electricity transmission and distribution in ScottishPower and electricity      
distribution in Manweb (together representing 44% of the 1999 operating profit) 
and the water supply and waste water business in Southern Water (representing   
33% of ScottishPower's 1999 operating profit). The regulatory price controls    
relating to these areas of ScottishPower's business for the five year period    
commencing April 1, 2000 are currently being reviewed by regulatory authorities 
in the U.K., as well as those relating to supply and generation. ScottishPower  
believes that it has high standards of operation and customer service.          
Nevertheless, ScottishPower is unable to judge accurately the outcome of these  
reviews and there can be no assurance that they will not materially affect      
profits. It is expected that all the results of these reviews will be known by  
November 1999.                                                                  

WHERE YOU CAN FIND MORE INFORMATION 

PacifiCorp and ScottishPower are and, upon completion of the scheme of    
arrangement, New ScottishPower will be, subject to the informational            
requirements of the Securities Exchange Act of 1934.                            

  PacifiCorp files annual, quarterly and special reports, proxy statements and
other information with the SEC. ScottishPower files annual reports and other    
information with the SEC. You may read and copy any reports, statements or      
other information filed by PacifiCorp or ScottishPower at the SEC's public      
reference rooms in Washington, D.C., New York, New York and Chicago, Illinois.  
Please call the SEC at 1-800-SEC-0330 for further information on the public     
reference rooms. PacifiCorp's SEC filings are also available to the public at   
the web site maintained by the SEC at http://www.sec.gov. The ADSs and          
PacifiCorp common stock are listed on the New York Stock Exchange, and          
consequently, the periodic reports, proxy statements and other information      
filed by ScottishPower and PacifiCorp with the SEC can be inspected at the      
offices of the New York Stock Exchange, 20 Broad Street, New York, New York     
10005. The PacifiCorp common stock is also listed on the Pacific Stock          
Exchange, 301 Pine Street, San Francisco, California 94104, where such filings  
by PacifiCorp may also be inspected. The primary market for ScottishPower       
ordinary shares is the London Stock Exchange.                                   

New ScottishPower and ScottishPower have filed with the SEC a registration
statement on Form F-4 to register the ordinary shares underlying the ADSs to be 
issued by one of them to holders of PacifiCorp common stock in the merger. This 
proxy statement/prospectus is a part of the registration statement and          
constitutes a prospectus of New ScottishPower and ScottishPower, as well as     
being a proxy statement of PacifiCorp.                                          

As allowed by SEC rules, this proxy statement/prospectus does not contain 
all the information you can find in the registration statement or the exhibits  
to the registration statement. Statements contained or incorporated by          
reference in this proxy statement/prospectus as to the contents of any contract 
or other document filed as an exhibit to the registration statement or          
otherwise filed with the SEC are not necessarily complete, and in each instance 
reference is made to the copy of such contract or other document so filed, each 
such statement being qualified in all respects by the reference.                

 The SEC allows us to "incorporate by reference" information into this proxy
statement/prospectus, which means that we can disclose important information to 
you by referring you to another document filed separately with the SEC. The     
information incorporated by reference is deemed to be part of this proxy        
statement/prospectus, except for any information superseded by information      
contained in this proxy statement/prospectus. This proxy statement/prospectus   
incorporates by reference the documents set forth below that we have previously 
filed with the SEC. These documents contain important information about our     
companies and their financial condition.                                        

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                                                        [Enlarge/Download Table]

PacifiCorp SEC Filings (File No. 1-5152)      Period                                       
----------------------------------------      ------                                       
                                                                                           
Annual Report on Form 10-K                    Year ended December 31, 1998 (as amended on  
                                              April 30, 1999)                              
Current Report on Form 8-K                    Filed on February 17, 1999                   

ScottishPower SEC Filings (File No. 1-14676)  Period                                       
--------------------------------------------  ------                                       
                                                                                           
Annual Report on Form 20-F                    Fiscal year ended March 31, 1998 (as amended 
                                              on October 14, 1998)                         
Reports of Foreign Private Issuer on Form 6-K Filed on April 6, 1998, April 20, 1998, May  
                                              4, 1998, June 1, 1998, July 6, 1998, July 31,
                                              1998, September 16, 1998, November 2, 1998,  
                                              November 24, 1998, December 21, 1998,        
                                              February 9, 1999, February 23, 1999, March 1,
                                              1999, March 8, 1999, March 23, 1999, April 6,
                                              1999, April 12, 1999, April 19, 1999, April  
                                              20, 1999 and April 26, 1999; and dated April 
                                              26, 1999 and May 6, 1999                     

PacifiCorp, ScottishPower and New ScottishPower also incorporate by       
reference into this proxy statement/prospectus additional documents that may be 
filed with the SEC from the date of this proxy statement/prospectus to the date 
of the meeting. These include periodic reports, such as Annual Reports on Form  
10-K and 20-F, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and  
Reports of Foreign Private Issuers on Form 6-K, as well as proxy statements.    

Any statement contained in an incorporated document shall be deemed to be 
modified or superseded for purposes of this proxy statement/prospectus to the   
extent that a statement contained in this proxy statement/prospectus or in any  
other subsequently filed incorporated document modifies or supersedes such      
statement. Any statement that is modified or superseded shall not be deemed,    
except as modified or superseded, to constitute a part of this proxy            
statement/prospectus.                                                           

Each of PacifiCorp and ScottishPower hereby undertakes to provide without 
charge to each person, including any beneficial owner, to whom a copy of this   
proxy statement/prospectus is delivered, on the written or oral request of any  
such person, a copy of any or all of the incorporated documents, other than     
exhibits to such documents, unless such exhibits are specifically incorporated  
by reference therein. Requests should be directed to (1) PacifiCorp, 825 NE     
Multnomah, Suite 2000, Portland, Oregon 97232, Attention: Lenore M. Martin,     
Corporate Secretary, telephone number (503) 813-7200, or (2) ScottishPower, 1   
Atlantic Quay, Glasgow G2 8SP, United Kingdom, Attention: Andrew Mitchell,      
Secretary, telephone number 011-44-141-248-8200. In order to ensure timely      
delivery of any such documents in advance of the PacifiCorp annual meeting, any 
request should be made by June 3, 1999.                                         

----------------  

You should rely only on the information contained or incorporated by      
reference in this proxy statement/prospectus to vote on the transactions. We    
have not authorized anyone to provide you with information that is different    
from what is contained in this proxy statement/prospectus. This proxy           
statement/prospectus is dated May 6, 1999. You should not assume that the       
information contained in the proxy statement/prospectus is accurate as of any   
date other than that date, and neither the mailing of this proxy                
statement/prospectus to shareholders nor the issuance of ADSs or ordinary       
shares in the merger shall create any implication to the contrary.              

----------------  

Forward-Looking Statements                                                      

There are forward-looking statements in this document that are subject to 
risks and uncertainties. Forward-looking statements include, but are not        
limited to, information concerning possible or assumed future results of        
operations of ScottishPower and PacifiCorp, as well as statements preceded by,  
followed by or that include the words "believes", "expects", "estimates",       
"intends", "anticipates" or similar expressions. You should understand that     
certain important factors, in addition to those discussed elsewhere in this     
document and in the documents we incorporate by reference, could affect the     
future results of ScottishPower and PacifiCorp and could cause those results to 
differ materially from those expressed in our forward-looking statements.       

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PACIFICORP ANNUAL MEETING, VOTING AND PROXIES 

Introduction                                                                    

This proxy statement/prospectus is being furnished to the holders of      
PacifiCorp common stock and PacifiCorp preferred stock in connection with the   
solicitation of proxies by the PacifiCorp Board of Directors from the holders   
of such securities for use at the PacifiCorp annual meeting, which is being     
held to approve the merger agreement. As a result of the merger, PacifiCorp     
will become an indirect, wholly owned subsidiary of ScottishPower, as set forth 
in the Notice of Annual Meeting.                                                

PacifiCorp Annual Meeting                                                       

Date, Place and Time; Record Date. The PacifiCorp 1999 annual meeting will
be held at the Salt Lake City Hilton Hotel, 150 West 300 South, Salt Lake City, 
Utah, on Thursday, June 17, 1999, commencing at 1:30 p.m. local time for the    
purposes set forth below. Only holders of record of PacifiCorp common stock and 
PacifiCorp preferred stock at the close of business on the PacifiCorp record    
date, April 30, 1999, will be entitled to notice of and to vote at the          
PacifiCorp annual meeting and any adjournment thereof. The meeting may be       
adjourned from time to time as the shareholders present in person or by proxy   
may determine. All shareholders who find it convenient to do so are invited to  
attend the meeting in person.                                                   

  Purposes of PacifiCorp Annual Meeting. The purposes of the PacifiCorp annual
meeting are to:                                                                 

.  consider and vote upon a proposal to approve the merger agreement,       

.  elect two Class III directors of PacifiCorp,                             

.  ratify the appointment of Deloitte & Touche LLP to serve as independent  
auditor of PacifiCorp for the year 1999, and                          

.  transact such other business as may properly come before the meeting.    

In addition, holders of PacifiCorp preferred stock will be asked to consent to  
an increase in the limit on unsecured debt under PacifiCorp's articles of       
incorporation. If any other business should properly come before the annual     
meeting, the shares represented by the proxies solicited hereby may be          
discretionarily voted on such business in accordance with the judgment of the   
persons named on the proxy form to the extent allowed by the rules of the SEC,  
unless otherwise indicated in the proxy form.                                   

Recommendation of PacifiCorp Board of Directors. The PacifiCorp Board of  
Directors, by unanimous vote of directors present, has adopted and approved the 
merger agreement and has concluded that the terms of the merger are in the best 
interests of the PacifiCorp shareholders.                                       

The PacifiCorp Board of Directors recommends that PacifiCorp shareholders 
vote FOR approval of the merger agreement, FOR the election of PacifiCorp       
directors and FOR the approval of PacifiCorp's independent auditor for 1999.    
The PacifiCorp board also recommends that holders of PacifiCorp preferred stock 
vote FOR the unsecured debt consent.                                            

In considering the recommendation of the PacifiCorp Board of Directors    
regarding the merger agreement and the associated transactions, the PacifiCorp  
shareholders should be aware that some members of the PacifiCorp Board of       
Directors and management have interests with respect to the merger that are in  
addition to and/or potentially different from the interests of the other        
PacifiCorp shareholders. See "The Merger--Interests of PacifiCorp's Officers    
and Directors."                                                                 

Required Vote; Quorum. Each holder of record of PacifiCorp common stock,  
PacifiCorp 5% preferred stock, PacifiCorp serial preferred stock, PacifiCorp    
$7.48 no par serial preferred stock and PacifiCorp $7.70 no par serial          
preferred stock on the PacifiCorp record date is entitled to cast one vote per  
share on each matter                                                            

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submitted to a vote at the PacifiCorp annual meeting. Each holder of record of  
PacifiCorp $1.16, $1.18 and $1.28 no par serial preferred stock on the          
PacifiCorp record date is entitled to cast one-quarter vote per share on the    
approval of the merger and the unsecured debt consent at the PacifiCorp annual  
meeting. The holders of at least a majority of the total number of votes        
entitled to be cast by the holders of all outstanding shares of PacifiCorp      
common stock and PacifiCorp preferred stock, respectively, must be present in   
person or represented by proxy at the PacifiCorp annual meeting in order for    
the required quorums to be present.                                             

 The merger agreement must be approved by an affirmative vote of the holders
of at least a majority of the shares of the PacifiCorp common stock and at      
least a majority of the voting power of all PacifiCorp stock entitled to vote   
at the meeting. In addition, the holders of at least a majority of the voting   
power of the PacifiCorp preferred stock, voting together as a single class,     
must approve the merger. As of the close of business on the PacifiCorp record   
date, PacifiCorp's capital stock consisted of 297,331,855 shares of PacifiCorp  
common stock, 126,463 shares of PacifiCorp 5% preferred stock, 288,469 shares   
of PacifiCorp serial preferred stock, 750,000 shares of PacifiCorp $7.48 no par 
serial preferred stock, 1,000,000 shares of PacifiCorp $7.70 no par serial      
preferred stock, and an aggregate of 994,438 shares of PacifiCorp $1.16, $1.18  
and $1.28 no par serial preferred stock.                                        

Other Voting Information. Abstentions and broker non-votes are counted for
purposes of determining whether a quorum exists at the PacifiCorp annual        
meeting, but will have the effect of a vote against the approval of the merger  
agreement and, with respect to holders of PacifiCorp preferred stock, against   
the unsecured debt consent. The directors and executive officers of PacifiCorp, 
who collectively own less than 0.3% of the outstanding shares of PacifiCorp     
common stock, have indicated their intention to vote their shares in favor of   
approval of the merger agreement at the PacifiCorp annual meeting.              

Voting and Revocation of Proxies. The shares represented by each properly 
executed proxy received before or at the PacifiCorp annual meeting will be      
voted in accordance with the instructions specified in the proxy, if given. If  
no instructions are indicated on a properly executed proxy, the shares will be  
voted FOR the proposal to approve the merger agreement, FOR the election of     
PacifiCorp directors, FOR the approval of PacifiCorp's auditor for 1999, and    
FOR the unsecured debt consent. You may revoke a proxy at any time before the   
PacifiCorp annual meeting by delivering to the Corporate Secretary of           
PacifiCorp at Suite 2000, 825 NE Multnomah, Portland, Oregon 97232, a notice of 
revocation bearing a later date, by delivering a duly executed proxy bearing a  
later date or by attending the meeting and voting in person. Attendance at the  
PacifiCorp annual meeting will not by itself constitute revocation of a proxy.  

Any beneficial owner of shares who is not the registered holder of such   
shares as of the PacifiCorp record date (as would be the case for any           
beneficial owner whose shares are registered in the name of a broker, dealer,   
commercial bank, trust company or other nominee) must arrange with the record   
holder to execute and deliver a PacifiCorp proxy form on such beneficial        
owner's behalf. These record holders will not have the authority to vote with   
respect to the merger approval and the unsecured debt consent unless they       
receive specific instructions from beneficial owners. Accordingly, these types  
of "broker non-votes" will have the same effect as voting "AGAINST" the merger  
agreement and the unsecured debt consent. Beneficial owners are urged to ensure 
that the record holder of their shares marks, signs, dates and returns the      
accompanying proxy form as soon as possible.                                    

Only shareholders of record on the PacifiCorp record date are eligible to 
vote at the PacifiCorp annual meeting. Therefore, each shareholder is urged,    
even if such shareholder has sold its shares subsequent to the PacifiCorp       
record date, to vote "FOR" the approval of all the proposals on the             
accompanying PacifiCorp proxy form. If special cash payments are made to        
holders of PacifiCorp preferred stock, they will be made to the holders of      
record on the PacifiCorp record date.                                           

 The PacifiCorp annual meeting may be adjourned to another date and/or place
for any proper purpose, including for the purpose of soliciting additional      
proxies.                                                                        

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Proxy Solicitation                                                              

General. In addition to soliciting proxies by mail, proxies may also be   
solicited by the directors, officers and employees of PacifiCorp, who will      
receive no additional compensation therefor in addition to their regular        
salaries and fees, by telephone, telegram, printed advertising materials,       
facsimile transmission or other electronic communication methods or in person.  
All expenses of soliciting proxies from PacifiCorp shareholders will be borne   
by PacifiCorp. Banks, brokerage firms and other custodians who hold shares of   
PacifiCorp common stock and PacifiCorp preferred stock in their name or custody 
or in the name of nominees for others will be reimbursed by PacifiCorp for      
their reasonable expenses incurred in forwarding proxy solicitation materials   
to those persons for whom they hold the shares. In addition, PacifiCorp has     
retained Innisfree M&A Incorporated to aid in the solicitation of proxies in    
connection with the PacifiCorp annual meeting. The fee of Innisfree M&A         
Incorporated is not to exceed $50,000, plus reimbursement for reasonable out-   
of-pocket expenses.                                                             

In connection with the merger approval and the unsecured debt consent from
holders of PacifiCorp preferred stock, solicitation fees may be payable as      
described below to Soliciting Dealers that are designated as the Soliciting     
Dealer soliciting a proxy from holders of PacifiCorp preferred stock as set     
forth on the Notice of Solicited Proxies. A "Soliciting Dealer" is (1) any      
broker or dealer in securities, including each of the Co-Solicitation Agents    
named below in its capacity as a dealer or broker, that is a member of any      
national securities exchange or of the NASD, (2) any foreign broker or dealer   
not eligible for membership in the NASD that agrees to conform to the NASD's    
Conduct Rules in making solicitations or (3) any bank or trust company. See     
"Proposal to Increase Unsecured Debt Limit--Special Cash Payments" for          
information concerning cash payments that may be made to holders of PacifiCorp  
preferred stock who vote in favor of the merger or the unsecured debt consent.  

Soliciting Dealer Fees for Merger Approval. If, but only if, the merger is
approved at the PacifiCorp annual meeting and all regulatory approvals for the  
merger required under the merger agreement have been obtained, for each share   
of PacifiCorp preferred stock that is voted "FOR" the merger by a beneficial    
owner holding 2,500 or fewer shares of PacifiCorp preferred stock (10,000 or    
fewer shares for the PacifiCorp $1.16, $1.18 or $1.28 series), PacifiCorp will  
pay to the designated Soliciting Dealer, including any Co-Solicitation Agent, a 
solicitation fee of $1.00 per share ($0.25 for the PacifiCorp $1.16, $1.18 or   
$1.28 series). These solicitation fees will be paid promptly after the merger   
is completed.                                                                   

If, but only if, the merger is approved at the PacifiCorp annual meeting, 
for each share of PacifiCorp preferred stock that is voted "FOR" the merger by  
a beneficial owner holding more than 2,500 shares of PacifiCorp preferred stock 
(10,000 shares for the PacifiCorp $1.16, $1.18 or $1.28 series), PacifiCorp     
will pay to the Co-Solicitation Agents an aggregate fee of $0.25 per share      
($0.0625 per share for the PacifiCorp $1.16, $1.18 or $1.28 series). These      
solicitation fees will be paid promptly after the merger is completed.          

Soliciting Dealer Fees for Unsecured Debt Consents. In addition, if, but  
only if, the unsecured debt consent is obtained at the PacifiCorp annual        
meeting, for each share of PacifiCorp preferred stock that is voted "FOR" the   
unsecured debt consent by a beneficial owner holding 2,500 or fewer shares of   
PacifiCorp preferred stock (10,000 or a fewer shares for the PacifiCorp $1.16,  
$1.18 or $1.28 series), PacifiCorp will pay to the designated Soliciting        
Dealer, including any Co-Solicitation Agent, a solicitation fee of $1.00 per    
share ($0.25 per share for the PacifiCorp $1.16, $1.18 or $1.28 series). The    
solicitation fee for these unsecured debt consents will be paid promptly after  
the PacifiCorp annual meeting.                                                  

If, but only if, the unsecured debt consent is obtained at the PacifiCorp 
annual meeting, for each share of PacifiCorp preferred stock that is voted      
"FOR" the unsecured debt consent by a beneficial owner holding more than 2,500  
shares of PacifiCorp preferred stock (10,000 shares for the PacifiCorp $1.16,   
$1.18 or $1.28 series), PacifiCorp will pay to the Co-Solicitation Agents an    
aggregate fee of $0.25 per share ($0.0625 per share for the PacifiCorp $1.16,   
$1.18 or $1.28 series). The solicitation fee for these unsecured debt consents  
will be paid promptly after the PacifiCorp annual meeting.                      

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Co-Solicitation Agents. If the merger is approved, for each share of      
PacifiCorp preferred stock that is voted "FOR" the merger, PacifiCorp has also  
agreed to pay to Salomon Smith Barney Inc., Donaldson, Lufkin & Jenrette        
Securities Corporation and PaineWebber Incorporated, who have been engaged by   
PacifiCorp as co-solicitation agents for the solicitation of proxies from       
holders of PacifiCorp preferred stock for the merger and the unsecured debt     
consent (collectively, the "Co-Solicitation Agents"), in consideration for such 
engagement, an additional aggregate fee of $0.25 per share ($0.0625 per share   
for the PacifiCorp $1.16, $1.18 or $1.28 series). In addition, if this          
unsecured debt consent is obtained, for each share of PacifiCorp preferred      
stock that is voted "FOR" the unsecured debt consent, PacifiCorp has also       
agreed to pay to the Co-Solicitation Agents an additional aggregate fee of      
$0.25 per share ($0.0625 per share for the PacifiCorp $1.16, $1.18 or $1.28     
series). The additional fees to be paid to the Co-Solicitation Agents relating  
to the merger will be paid promptly after the merger is completed. The          
additional fees to be paid to the Co-Solicitation Agents relating to the        
unsecured debt consent will be paid promptly after the PacifiCorp annual        
meeting.                                                                        

  PacifiCorp has also agreed to reimburse the Co-Solicitation Agents for their
reasonable out-of-pocket expenses, including the fees and expenses of their     
legal counsel, and has agreed to indemnify them and related persons and         
entities against certain liabilities and expenses in connection with their      
engagement, including liabilities under the federal securities laws.            

Soliciting Dealers. A designated Soliciting Dealer will include any       
Soliciting Dealer even when the activities of the Soliciting Dealer in          
connection with the PacifiCorp annual meeting consist solely of forwarding to   
clients materials relating to the PacifiCorp annual meeting, and voting "FOR"   
either the merger or the unsecured debt consent as directed by beneficial       
owners. No Soliciting Dealer is required to make any recommendation to holders  
of shares as to whether or not to vote "FOR" either proposal. No assumption is  
made, in making payment to any Soliciting Dealer, that its activities in        
connection with the PacifiCorp annual meeting included any activities other     
than those described above, and for all purposes noted in the materials         
relating to the PacifiCorp annual meeting, the term "solicit" means no more     
than processing proxies or forwarding to customers materials regarding the      
solicitation.                                                                   

No solicitation fee, other than solicitation fees payable to the Co-      
Solicitation Agents as described above, is payable to a Soliciting Dealer with  
respect to a vote "FOR" the merger or the unsecured debt consent except as set  
forth on a Notice of Solicited Proxies. No solicitation fee is payable to a     
Soliciting Dealer in respect of shares registered in the name of the Soliciting 
Dealer unless the shares are held by the Soliciting Dealer as nominee and a     
vote is being made, or a proxy in respect thereof is being granted, with        
respect to the shares by one or more beneficial owners identified on the Notice 
of Solicited Proxies. No solicitation fee is payable to a Soliciting Dealer if  
the Soliciting Dealer is required for any reason to transfer any portion of the 
fee to a beneficial holder. No solicitation fee will be paid to a Soliciting    
Dealer with respect to shares held for its own account or shares beneficially   
owned by the Soliciting Dealer. No broker, dealer, commercial bank, trust       
company or other nominee is an agent of PacifiCorp or the Co-Solicitation       
Agents for purposes of this solicitation.                                       

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THE MERGER

This section describes the proposed merger and the material provisions of 
the merger agreement and the restated merger agreement, which are attached as   
Annex A and Annex B. We urge you to read the merger agreements in their         
entirety.                                                                       

The Companies                                                                   

ScottishPower. ScottishPower was incorporated in Scotland in 1989 and was 
privatized in 1991. It had previously been the South of Scotland Electricity    
Board which was formed in the 1950's from an amalgamation of smaller regional   
electricity supply boards. ScottishPower is a leading multi-utility business in 
the U.K. with approximately five million customers across Scotland, England and 
Wales. ScottishPower's activities span the generation, transmission,            
distribution and supply of electricity, gas supply, water supply and wastewater 
services, telecommunications, retailing of electrical appliances, technology    
and contracting services. ScottishPower is one of the largest industrial groups 
in the U.K., positioned around the middle of the FTSE 100 Index, with a market  
capitalization at December 31, 1998 of (Pounds)7.4 billion.                     

  The mailing address of the principal executive offices of ScottishPower is 1
Atlantic Quay, Glasgow G2 8SP, United Kingdom, and its telephone number at that 
address is 011-44-141-248-8200.                                                 

New ScottishPower. New ScottishPower was incorporated in Scotland on      
February 19, 1999. Following the approval and implementation of the scheme of   
arrangement, it will be the holding company for ScottishPower and, following    
the merger, it will also be the holding company for PacifiCorp.                 

 The mailing address of the principal executive offices of New ScottishPower
is 1 Atlantic Quay, Glasgow G2 8SP, United Kingdom, and its telephone number at 
that address is 011-44-141-248-8200.                                            

PacifiCorp. PacifiCorp is an electricity company in the United States and 
Australia. In the United States, PacifiCorp conducts a retail electric utility  
business under the assumed business names of Pacific Power & Light Company and  
Utah Power & Light Company, and engages in power production and sales on a      
wholesale basis under the name PacifiCorp. PacifiCorp Group Holdings Company, a 
wholly owned subsidiary of PacifiCorp, holds the stock of subsidiaries          
conducting businesses not regulated as domestic electric utilities. PacifiCorp  
Group Holdings Company indirectly owns 100% of Powercor Australia Ltd., the     
largest of the five electric distribution companies in Victoria, Australia, and 
a 19.9% interest in the 1,600 megawatt, brown coal-fired thermal Hazelwood      
power station and adjacent brown coal mine in Victoria.                         

 The mailing address of the principal executive offices of PacifiCorp is 825
NE Multnomah, Suite 2000, Portland, Oregon 97232, and its telephone number at   
that address is (503) 813-7200.                                                 

Background of the Merger                                                        

From time to time over the past twenty-four months, ScottishPower has     
considered strategic alternatives relating to the United States electric        
utility marketplace, including potential acquisitions and other business        
combination transactions with U.S. based utilities. From mid-1997, Morgan       
Stanley assisted ScottishPower in exploring various strategic alternatives,     
including the acquisition of a U.S. electric and/or gas utility. Beginning in   
January 1998, Morgan Stanley contacted several U.S. electric and gas utilities  
on behalf of ScottishPower to explore strategic options. Although varying       
degrees of interest were expressed by some of the contacted utilities, and      
although preliminary discussions were undertaken with two of these utilities    
regarding a possible business combination transaction, in each instance, the    
ScottishPower Board of Directors determined that it would not be in the best    
interests of ScottishPower to pursue a transaction with either utility.         

In early July 1998, Ian Robinson, the Chief Executive of ScottishPower,   
contacted by telephone Frederick Buckman, the then Chief Executive Officer of   
PacifiCorp. Mr. Robinson and Mr. Buckman agreed during that conversation that   
they and other representatives of their respective companies should meet to     
discuss whether the parties would be interested in considering a business       
combination transaction.                                                        

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On July 16, 1998, Mr. Robinson and Ian Russell, ScottishPower's Finance   
Director, met in New York City with Mr. Buckman and discussed the potential for 
a strategic combination between the two companies. Although substantive terms   
of a proposed transaction were not discussed, the parties agreed to continue    
their discussions at a later date. On August 19, 1998, Mr. Robinson, Mr.        
Russell, Mr. Buckman, Verl Topham, PacifiCorp's General Counsel, Craig          
Longfield, President of PacifiCorp Financial Services, Inc., and Henry Hewitt   
of Stoel Rives LLP, PacifiCorp's legal advisors, met in New York City to        
continue their discussions regarding a possible business combination            
transaction. At the end of the August 19 meeting, Mr. Buckman stated that he    
would consult with the PacifiCorp Board of Directors and advise them of the     
meeting and would contact Mr. Robinson regarding PacifiCorp's interest in       
further discussions.                                                            

On August 26, 1998, PacifiCorp announced Mr. Buckman's departure from     
PacifiCorp, and the appointment of Keith McKennon, the then Chairman of         
PacifiCorp, to the additional position of Chief Executive Officer, effective    
September 1, 1998. In early September 1998, Mr. McKennon telephoned Mr.         
Robinson to acknowledge that he was aware of the discussions that had taken     
place between the companies, and to inform him that PacifiCorp was reviewing    
its strategic plan and alternatives, which review would be completed by mid-    
October. Mr. McKennon suggested that any further discussions should await the   
outcome of that review.                                                         

On September 24, 1998, Mr. Robinson called Mr. McKennon to suggest that it
would be desirable to accelerate renewal of discussions regarding a possible    
business combination transaction. On October 2, 1998, the ScottishPower Board   
of Directors, following a report by Mr. Robinson and Mr. Russell on the         
September conversations with Mr. McKennon, instructed the management of         
ScottishPower to advance further discussions with PacifiCorp and its advisors.  
A meeting was held in Chicago on October 5, 1998, and was attended by Messrs.   
Robinson, Russell, McKennon and Hewitt and Richard O'Brien, PacifiCorp's        
Executive Vice President and Chief Operating Officer.                           

 At the October 5 meeting, the ScottishPower executives proposed a two-stage
approach to exploring a potential transaction in more detail. The initial phase 
would focus on identifying and discussing the key "threshold" issues of         
strategy, management and whether a range of values could be identified which    
was potentially attractive to both companies. If the senior management of the   
companies concluded that there was a mutual interest in a transaction, the      
companies would pursue a second phase involving detailed due diligence and      
negotiation of the specific terms of the proposed transaction. It was agreed    
that representatives from both companies would do some preliminary valuation    
work before PacifiCorp's next scheduled board meeting on October 16, 1998.      

  As a result of the discussions held at the October 5 meeting, on October 12,
1998, ScottishPower and PacifiCorp entered into a confidentiality and           
standstill agreement. On the same date, ScottishPower formally engaged Morgan   
Stanley as financial advisor to assist in the discussions with PacifiCorp.      
Initial discussions regarding utility regulatory matters, including regulatory  
approvals that might be required in connection with a potential transaction,    
took place on October 14. On October 16, 1998, at a meeting of the PacifiCorp   
Board of Directors, Mr. McKennon reported to the PacifiCorp board on the status 
of management's strategic review and the discussions with ScottishPower, and    
the PacifiCorp board authorized the management of PacifiCorp to continue        
discussions with ScottishPower regarding a possible strategic transaction.      
Later, a staff working session, headed by Mr. Russell and Mr. O'Brien, was      
conducted on October 17 and 18, at which the participants reviewed threshold    
regulatory, strategic and financial due diligence issues, and ScottishPower's   
representatives were advised regarding PacifiCorp's intentions to refocus on    
its core electricity business in the western United States.                     

On October 23, 1998, PacifiCorp announced that it had completed its       
strategic review and that it was refocusing on its electricity business in the  
western United States, selling or terminating some of its non-core businesses   
and instituting a share repurchase program. The existence of the discussions    
with ScottishPower did not delay or affect PacifiCorp's strategic review.       

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At a meeting of the ScottishPower Board of Directors held on October 23,  
1998, Mr. Robinson, Mr. Russell and other members of ScottishPower's management 
reported to the ScottishPower Board of Directors on the status of the ongoing   
discussions with PacifiCorp. Based on this report, the ScottishPower Board of   
Directors authorized management to continue discussing a proposed business      
combination transaction with PacifiCorp's management and its advisors.          

On October 29, 1998, a further meeting was held in New York City, with    
Messrs. Robinson, Russell, McKennon, O'Brien and Hewitt in attendance. At this  
meeting the participants discussed potential transaction structures and         
corporate governance issues.                                                    

On November 1, 1998, Mr. Russell was appointed Deputy Chief Executive of  
ScottishPower in addition to retaining his position as Finance Director.        

On November 5, 1998, Mr. McKennon and Mr. Robinson met in London, and     
continued their discussion of potential transaction structures and other        
specific terms upon which the companies might be willing to engage in a         
combination transaction. At this meeting, it was determined that a sufficient   
basis existed for the parties to commence a mutual due diligence process and    
negotiation of a merger agreement.                                              

Following the November 5 meeting, both parties began preparations for     
commencing detailed due diligence investigations and negotiations regarding the 
specific terms of a merger of ScottishPower and PacifiCorp. In this regard, on  
November 9, 1998, ScottishPower engaged Milbank, Tweed, Hadley & McCloy to      
assist in connection with the potential combination.                            

  On November 15, 1998, ScottishPower delivered to PacifiCorp an initial draft
of a proposed merger agreement. Both companies opened data rooms in New York    
City on November 16, 1998 and commenced detailed due diligence reviews. At a    
meeting of the ScottishPower Board of Directors held on November 20, 1998, Mr.  
Robinson, Mr. Russell and other members of ScottishPower's management reported  
to the ScottishPower board on their preliminary review of the business and      
financial condition of PacifiCorp, and the discussions with PacifiCorp and its  
legal advisors, Stoel Rives LLP and LeBoeuf, Lamb, Greene & MacRae, regarding   
the draft merger agreement. On November 21 and 22, 1998, the management of      
ScottishPower and PacifiCorp each made presentations to the other and their     
respective financial advisors, Morgan Stanley and Salomon Smith Barney,         
regarding their businesses, financial performance, management, strategic plans  
and other related matters.                                                      

On November 23, 1998, teams from both companies, including representatives
of Milbank Tweed, Stoel Rives, LeBoeuf, Lamb, Morgan Stanley and Salomon Smith  
Barney, led by Mr. Russell and Mr. O'Brien, met to discuss the draft merger     
agreement and specific terms upon which the parties might be willing to enter   
into a definitive merger agreement. This meeting included discussions on all    
aspects of the proposed merger agreement, including appropriate                 
representations, warranties, covenants, closing conditions and termination      
provisions.                                                                     

  During the period from November 23, 1998 to December 6, 1998, ScottishPower,
PacifiCorp, Milbank Tweed, Stoel Rives, LeBoeuf Lamb, Morgan Stanley, Salomon   
Smith Barney, and PricewaterhouseCoopers and Ernst & Young, each of whom were   
advisors to ScottishPower on tax and accounting matters, continued detailed     
legal and financial due diligence and, along with Freshfields, ScottishPower's  
U.K. legal advisors, and Linklaters & Paines, PacifiCorp's U.K. legal advisors, 
held numerous meetings and/or telephone conferences regarding the specific      
terms of the proposed merger agreement. During these meetings and/or telephone  
conferences some of the issues discussed included valuation ranges for the      
PacifiCorp common stock, the form of consideration that might be offered to     
holders of PacifiCorp common stock, corporate governance and management issues  
relating to the combined enterprise and other transaction considerations.       

At a meeting on December 2, 1998, the teams led by Mr. Russell and Mr.    
O'Brien, together with representatives of Milbank Tweed, Stoel Rives, LeBoeuf   
Lamb, Morgan Stanley and Salomon Smith Barney, again met to attempt to finalize 
the terms on which the managements of ScottishPower and PacifiCorp would        

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be willing to recommend a merger agreement. At this meeting, there were         
discussions relating to the exchange ratio at which shares of PacifiCorp common 
stock would be exchanged for ADSs or ordinary shares, as well as other          
outstanding issues. At the conclusion of this meeting, while continuing to      
attempt to make progress on the resolution of significant issues that remained  
open regarding the proposed merger agreement, the representatives of the        
parties present at the meeting agreed to discuss with their respective boards   
of directors an exchange ratio of 0.58 ADSs or 2.32 ordinary shares for each    
share of PacifiCorp common stock. This proposed exchange ratio was arrived at   
as a result of direct negotiation between Messrs. Russell and O'Brien and,      
together with other significant terms of the proposed merger agreement          
discussed but not resolved at this meeting, was expressly subject to further    
discussion with, and ultimate approval by, the board of directors of each of    
ScottishPower and PacifiCorp.                                                   

 A meeting of the PacifiCorp Board of Directors was held in Portland, Oregon
on the afternoon of December 4, 1998 to consider the proposed merger            
transaction. At that meeting, the PacifiCorp Board of Directors reviewed        
various materials relevant to the transaction and received presentations from   
PacifiCorp's management, its legal counsel, Stoel Rives LLP, and its financial  
advisor, Salomon Smith Barney. Included in the presentations were a review of   
the economic and other principal terms of the transaction, including the        
related tax and accounting treatment, the regulatory approvals required to      
consummate the proposed merger and the fiduciary responsibilities of the        
PacifiCorp Board of Directors in considering the proposed transaction. Salomon  
Smith Barney advised the PacifiCorp Board of Directors that it expected to be   
able to provide its opinion that the consideration in the merger agreement was  
fair, from a financial point of view, to the holders of PacifiCorp common       
stock.                                                                          

The PacifiCorp Board of Directors considered and discussed a number of    
factors relating to the merger, including:                                      

.  the proposed terms of the merger agreement;                              

.  the proposed exchange ratio and benefit to PacifiCorp shareholders from  
the transaction;                                                      

.  PacifiCorp's due diligence activities with respect to ScottishPower;     

.  the tax risks associated with the proposed transaction structure;        

.  the financial strength of the combined companies;                        

.  the likely shareholder return associated with PacifiCorp's business      
plan; and                                                             

.  the effect of the transaction on PacifiCorp's employees and customers    
including;                                                            

.  ScottishPower's record of providing excellent customer service;      

.  ScottishPower's commitment to employee development, training and     
benefits; and                                                     

.  ScottishPower's good relationship with labor unions.                 

Following that meeting, representatives of Milbank Tweed, Stoel Rives,    
LeBoeuf Lamb, Morgan Stanley and Salomon Smith Barney continued, over the       
course of December 5, 1998, to discuss and attempt to resolve specific open     
issues in the proposed merger agreement, the most significant of which were the 
precise terms under which a termination fee might be payable by either party    
and the number of ordinary shares and ADSs that might be required to be issued  
in the merger.                                                                  

On the afternoon of December 6, 1998, the ScottishPower Board of Directors
met to consider the proposed merger transaction and its proposed terms. At this 
meeting, management of ScottishPower made presentations to the ScottishPower    
Board of Directors regarding PacifiCorp, its business and financial condition,  
its assets and liabilities and other matters relating to PacifiCorp relevant to 
the ScottishPower Board of Directors' consideration of the proposed             
transaction. Management of ScottishPower also discussed in detail with the      
ScottishPower Board of Directors the proposed financial terms of the merger,    
including the proposed exchange ratio. As a part of this meeting, the           
ScottishPower Board of Directors received advice from its legal counsel,        
Milbank, Tweed and Freshfields, regarding the terms of the proposed merger      
agreement, the U.S. federal and                                                 

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state regulatory approvals required to consummate the proposed merger and other 
matters relevant to their consideration of the proposed transaction. In         
addition, Morgan Stanley delivered to the ScottishPower Board of Directors its  
oral opinion that the proposed exchange ratio under the original merger         
agreement was fair, from a financial point of view, to ScottishPower.  During   
the course of this meeting, the ScottishPower Board of Directors considered and 
discussed numerous factors relating to the proposed merger, including:          

.  the proposed terms of the merger agreement;                              

.  the financial and other effects of the proposed merger on ScottishPower; 

.  the proposed exchange ratio;                                             

.  the challenge that would be presented to the management of ScottishPower 
of operating an international business;                               

.  the opportunity presented by the proposed merger for ScottishPower to    
establish a significant position in the U.S. energy marketplace; and  

.  the effects of regulation as a registered holding company under the      
Public Utility Holding Company Act of 1935.                           

 Following these presentations and deliberations, the ScottishPower Board of
Directors unanimously approved the proposed merger and the proposed terms of    
the merger agreement and established a committee, consisting of any two or more 
directors, normally to include Murray Stuart, the Chairman of ScottishPower,    
and at least one of Mr. Robinson or Mr. Russell (the "ScottishPower Special     
Committee"), to finalize the outstanding terms of the merger agreement and to   
authorize the execution and delivery of the merger agreement.                   

On the evening of December 6, 1998 (London time), the merger agreement was
finalized and approved by the ScottishPower Special Committee.                  

Also, during the afternoon of December 6, 1998 (Portland time), following 
its finalization, the merger agreement was considered by the PacifiCorp Board   
of Directors. The PacifiCorp Board of Directors reviewed the presentations and  
discussion from its meeting on December 4. The PacifiCorp Board of Directors    
also considered correspondence received by Mr. McKennon on the afternoon of     
December 4 following the meeting of the PacifiCorp Board of Directors from a    
U.S. electric utility with a market capitalization smaller than that of         
PacifiCorp in which the utility stated that its studies indicated it could      
offer up to $25 per share in value to PacifiCorp shareholders in a combination  
of cash and shares in a merger with PacifiCorp. Salomon Smith Barney presented  
an analysis of the financial implications of an offer if made on the terms      
suggested in the correspondence. Counsel for PacifiCorp reviewed the regulatory 
approvals that would be required to be obtained to effect a merger with a       
domestic utility and compared those approvals and related issues with the       
approvals that would be required to consummate a merger with ScottishPower. The 
PacifiCorp Board of Directors discussed, among other things, the complex        
regulatory issues raised in a merger between domestic utilities, the nonbinding 
and conditional nature of the correspondence, the probability of completion of  
a transaction if an offer were made, and the fact that the price suggested was  
lower than that reflected in the proposed exchange ratio in the merger          
agreement.                                                                      

The PacifiCorp Board of Directors concluded that it should not defer its  
consideration of the proposed transaction with ScottishPower. Salomon Smith     
Barney then delivered to the PacifiCorp Board of Directors its oral opinion     
that the proposed consideration in the original merger agreement was fair, from 
a financial point of view, to the holders of PacifiCorp common stock. Following 
presentations by management and counsel, the merger agreement was unanimously   
approved and adopted by members of the PacifiCorp Board of Directors present.   

Following these approvals, the merger agreement was executed and delivered
on behalf of each of ScottishPower and PacifiCorp.                              

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On Monday morning, December 7, 1998, ScottishPower and PacifiCorp publicly
announced the execution and delivery of the merger agreement.                   

  The merger agreement provided that if ScottishPower determined to reorganize
and place a newly established holding company above ScottishPower, the parties  
would agree to amend the merger agreement to effect the merger as if the        
holding company had originally been a party to the merger agreement in place of 
ScottishPower. However, the amendment was allowed only to the extent that it    
would not adversely affect the relative rights, obligations and burdens of      
ScottishPower and PacifiCorp or the benefits of the merger for PacifiCorp       
shareholders.                                                                   

 During the period between February 1 and February 23, 1999, representatives
of Milbank Tweed, Freshfields, Stoel Rives, LeBoeuf Lamb and Linklaters held    
numerous telephone conferences to discuss the revisions to the merger agreement 
that were required to implement the holding company structure. On February 19,  
1999, the ScottishPower Board of Directors determined to reorganize as a        
holding company and notified PacifiCorp of its decision. On the same day, the   
ScottishPower board approved the draft amended and restated merger agreement    
and appointed Messrs. Robinson and Russell to finalize the restated merger      
agreement on behalf of the board. On February 24, 1999, the ScottishPower board 
approved the restated merger agreement.                                         

 On February 10, 1999, the PacifiCorp Board of Directors met to consider the
proposed merger pursuant to the amended merger agreement. As a part of this     
meeting, the PacifiCorp Board of Directors received advice from its legal       
counsel, Stoel Rives, regarding the terms of the restated merger agreement.     
During the course of the meeting, the PacifiCorp Board of Directors discussed:  

.  the reasons for and advantages to the proposed holding company           
structure;                                                            

.  the terms of the restated merger agreement;                              

.  the fact that the PacifiCorp Board of Directors had no reason to believe 
  that the amendments to the merger agreement as reflected in the restated
agreement would adversely affect the rights, obligations, benefits and
burdens of PacifiCorp or the benefits of the merger for PacifiCorp    
shareholders; and                                                     

.  the fact that the amended merger agreement would not take effect until   
 the scheme of arrangement had been effected and until then the original
merger agreement would continue in effect, and that, if ScottishPower 
notifies PacifiCorp that the scheme of arrangement will not become    
effective, the merger will proceed as provided in the original merger 
agreement.                                                            

The restated merger agreement was unanimously approved and adopted by     
members of the PacifiCorp Board of Directors present at the February 10, 1999   
meeting.                                                                        

Following these approvals, the restated merger agreement was executed and 
delivered as of February 23, 1999, on behalf of each of ScottishPower and       
PacifiCorp.                                                                     

Reasons for the Merger; Recommendations of PacifiCorp Board of Directors and    
ScottishPower Board of Directors                                                

PacifiCorp. In 1995, PacifiCorp initiated a strategy to become a leading  
international energy company. In late 1995, PacifiCorp completed the            
acquisition of Powercor, an electric distribution and marketing company in the  
State of Victoria, Australia. In late 1996, PacifiCorp acquired a 19.9 percent  
interest in the Hazelwood power station and adjacent coal mine, also in         
Victoria, Australia. In late 1996, PacifiCorp also began an internal review of  
a possible acquisition of The Energy Group plc, a large U.K. based utility with 
interests in electricity distribution and generation and natural resources. In  
addition to efforts to acquire The Energy Group plc, throughout 1997 and early  
1998, PacifiCorp pursued development projects in Turkey, the Philippines, South 
America and Asia. Following the unsuccessful attempt to acquire The Energy      
Group plc, PacifiCorp management undertook an in-depth review of the company's  
corporate strategy and business plan. Possible                                  

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strategies were discussed with the PacifiCorp Board of Directors at four        
meetings during June and August, 1998. These included:                          

.  PacifiCorp's then current strategy of becoming a leading international   
energy company;                                                       

.  the possible sale of PacifiCorp's generation assets;                     

.  becoming a wholesale energy service company through acquisition of a gas 
marketing and trading company;                                        

.  merging PacifiCorp with another domestic utility; and                    

.  selling PacifiCorp.                                                      

On July 21, 1998, PacifiCorp disclosed losses from energy trading of      
approximately $32 million and a decline in earnings. On July 31, 1998,          
PacifiCorp disclosed that the Utah Division of Public Utilities proposed        
adjustments as part of PacifiCorp's general rate case that, if ultimately       
accepted by the Utah Public Service Commission, could result in a $57.4 million 
annual reduction in customer prices. On August 26, 1998, Frederick Buckman      
resigned as President and Chief Executive Officer of PacifiCorp, and Keith      
McKennon, the then Chairman of PacifiCorp, was elected to the additional        
position of Chief Executive Officer.                                            

  At meetings held on October 16 and October 22, 1998, the PacifiCorp Board of
Directors considered and approved a revised strategic plan recommended by       
management. Management concluded that PacifiCorp's core electricity business in 
the western United States required increased management attention and that      
PacifiCorp should no longer pursue its goal of becoming a leading international 
energy company. The revised plan included significant overhead cost reductions, 
improved earnings on its regulated assets and disposition of under-earning      
assets. The revised plan was believed to be preferable to other strategies      
considered principally because it was considered to be more achievable, to have 
lower risk and to have greater potential value to shareholders than other       
alternatives. On October 23, 1998, PacifiCorp announced its intent to refocus   
on its core electricity business in the western United States, divest all       
businesses other than its western electric business and Powercor Australia      
Ltd., and implement a $750 million share repurchase program.                    

 On December 6, 1998, the PacifiCorp Board of Directors, by a unanimous vote
of directors present, concluded that the merger, the terms of the merger        
agreement and the transactions contemplated by the merger agreement were in the 
best interests of PacifiCorp and its shareholders. Accordingly, the PacifiCorp  
Board of Directors adopted the merger agreement and recommended that the        
shareholders of PacifiCorp approve the merger agreement. In determining to      
recommend approval of the merger agreement and the transactions contemplated by 
the merger agreement and in adopting the merger agreement, the PacifiCorp Board 
of Directors considered each of the following material factors:                 

.  The value of the ADS consideration and the ordinary share consideration  
  provided for in the merger agreement relative to the then-current market
  price of PacifiCorp common stock. Based on the market prices of ordinary
  shares and PacifiCorp common stock on December 4, 1998, the last trading
day prior to the date the execution of the merger agreement was       
announced, PacifiCorp shareholders would receive a premium of         
  approximately 26% over the closing sale price of PacifiCorp common stock
  of $20.75. That premium is approximately 31% over the closing sale price
of PacifiCorp common stock on November 30, 1998, one week before the  
merger announcement.                                                  

.  The opinion of Salomon Smith Barney that, as of the date of the opinion, 
the merger consideration under the original merger agreement was fair,
from a financial point of view, to holders of PacifiCorp common stock.

.  That holders of PacifiCorp common stock will receive approximately 36%   
  of the total issued share capital of ScottishPower following the merger,
 and that ScottishPower intends to become a leading international energy
company consistent with PacifiCorp's prior strategy.                  

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.  The federal income tax consequences of the transaction, including the    
ability of holders of PacifiCorp common stock to have a tax-free      
 exchange of their shares of PacifiCorp common stock, with the exception
  of fractional shares, and the risk that the merger might fail to qualify
 as a tax-free reorganization as a result of actions outside the control
of PacifiCorp.                                                        

.  The proven management expertise of ScottishPower in operating a          
vertically integrated electric utility like PacifiCorp as demonstrated
by its success in reducing costs, increasing efficiency and improving 
 customer service at ScottishPower and at Manweb and Southern Water, two
significant utility acquisitions.                                     

.  The uncertainty and risk to PacifiCorp as the electric utility industry  
in the United States moves to increased competition and deregulation, 
and the value to PacifiCorp of access to ScottishPower's experience in
operating in a competitive U.K. electricity supply environment.       

.  That the combination of ScottishPower and PacifiCorp produces a          
  consolidated balance sheet at least as strong as PacifiCorp's before the
merger. The credit ratings for PacifiCorp's debt and preferred stock  
securities are expected to remain at least at the levels that existed 
before the merger, with both Standard & Poor's and Moody's Investors  
Service initially indicating an improved outlook for PacifiCorp as a  
result of the merger.                                                 

.  Other strategic alternatives for PacifiCorp, including the possibility   
  of entering into other business combinations or remaining an independent
company.                                                              

.  That the regulatory approvals required to consummate the merger are      
 expected to be less onerous to obtain than those that would be required
in connection with a merger between PacifiCorp and a domestic utility.

.  The fact that ScottishPower will be required to register under and be    
regulated by the Public Utility Holding Company Act of 1935 and       
  PacifiCorp will be subject to regulation as a subsidiary of a registered
holding company.                                                      

.  The impact of the merger on PacifiCorp's employees and customers.        

.  The effect on holders of PacifiCorp common stock of receiving shares in  
a Scottish company and having their holdings represented by ADSs and  
ordinary shares and having a currency exchange risk as a result of    
  having future dividends required to be converted from pounds to dollars,
and potential for adverse movement in share prices.                   

.  ScottishPower's existing business, including competitive and regulatory  
risks, the upcoming price reviews in the electricity service sectors, 
the environmental risks inherent in the business, and the risks       
associated with its telecommunications business.                      

.  The possible effect of the terms of the merger agreement with respect to 
any third party proposals to acquire PacifiCorp after the execution of
the merger agreement. In particular, if any third party proposal were 
  made that the PacifiCorp Board of Directors determined to be a bona fide
Alternative Proposal (as defined in the merger agreement), the        
 PacifiCorp Board of Directors could determine to provide information to
  and engage in negotiations with the third party. The PacifiCorp Board of
Directors considered that the termination payment provisions of the   
merger agreement could have the effect of discouraging alternative    
proposals for a business combination with PacifiCorp.                 

  In light of the PacifiCorp Board of Directors' knowledge of the business and
operations of PacifiCorp and its business judgment, the PacifiCorp Board of     
Directors considered and evaluated each of the factors listed above during the  
course of its deliberations before approving the merger agreement. In view of   
the wide variety of factors considered in connection with its evaluation of the 
merger, the PacifiCorp Board of Directors found it impracticable to, and did    
not, quantify or otherwise attempt to assign relative weights to the specific   
factors considered in making its determinations.                                

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After considering all of the foregoing factors, the PacifiCorp Board of   
Directors concluded that a combination with ScottishPower, under the terms in   
the merger agreement and the related documentation, is in the best interests of 
PacifiCorp and its shareholders. The PacifiCorp Board of Directors believes the 
factors listed above, when considered together, support the fairness of the     
merger to PacifiCorp and its shareholders and the PacifiCorp Board of Directors 
believes that these factors, when considered together, support its              
recommendation that PacifiCorp shareholders vote for approval of the merger     
agreement.                                                                      

ScottishPower. The ScottishPower Board of Directors has unanimously       
determined that the terms of the merger agreement and the transactions          
contemplated by the merger agreement are fair to, and in the best interests of, 
ScottishPower and its shareholders. In reaching its decision to recommend and   
approve the merger agreement, the ScottishPower Board of Directors consulted    
with management of ScottishPower, as well as financial, accounting and legal    
advisors, and considered, among other things, the following material factors    
that the ScottishPower Board of Directors considered in reaching its conclusion 
to unanimously approve the merger agreement and the transactions contemplated   
by the merger agreement:                                                        

.  The merger consideration to be received by PacifiCorp shareholders, its  
 relationship to market price and earnings, and the fact that it will be
tax-free to PacifiCorp shareholders.                                  

.  The opinion of Morgan Stanley that, as of the date of the opinion, the   
exchange ratio under the original merger agreement was fair from a    
financial point of view to ScottishPower.                             

.  The fact that the merger will further a key strategic objective of       
ScottishPower, namely expansion of its core electricity business into 
the rapidly evolving U.S. market.                                     

.  The strategic fit between ScottishPower and PacifiCorp, including:       

.  The fact that both are vertically integrated electric utilities;     

.  The relevance of ScottishPower's U.K. experience in the emerging     
competitive market in the U.S.;                                   

.  The similarity of the companies' generation activities; and          

.  The potential for subsequent expansion for the combined group.       

.  Management's belief that the application of best practice across the     
combined group has the potential to create substantial cost savings   
following consummation of the merger.                                 

.  The expectation that the transaction would result in earnings accretion, 
  before amortization of goodwill, for ScottishPower shareholders from the
first full year after consummation of the merger compared to the      
directors' present expectation for the existing ScottishPower group.  

.  Management's review of the business, operations and financial condition  
of PacifiCorp as supported by the findings of due diligence.          

.  The terms of the merger agreement, including:                            

.  The fixed exchange ratio and the absence of any mechanism for        
adjusting the exchange ratio;                                     

.  The termination provisions and termination fees; and                 

.  The covenants governing conduct of the businesses between            
announcement and consummation of the merger.                      

.  The following potential risks related to the merger:                     

.  The fact that ScottishPower would have to register under and be      
regulated by the Public Utility Holding Company Act of 1935;      

.  The potential for adverse movement in share prices, exchange rates   
or interest rates;                                                

.  The size and international nature of the merger, and attendant       
potential burdens on ScottishPower management;                    

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.  The requirements to gain regulatory approvals from state and federal 
regulators and the length of time this could take;                

.  Potential legal and environmental exposures beyond those identified  
in due diligence;                                                 

.  Possible impediments to achieving potential cost savings; and        

.  Potential for adverse regulatory rulings to impair the economic      
rationale for the merger.                                         

 In light of the ScottishPower Board of Directors' knowledge of the business
and operations of ScottishPower and its business judgment, the ScottishPower    
Board of Directors considered and evaluated each of the factors listed above    
during the course of its deliberations before approving the merger agreement.   
In view of the wide variety of factors considered in connection with its        
evaluation of the merger, the ScottishPower Board of Directors found it         
impracticable to, and did not, quantify or otherwise attempt to assign relative 
weights to the specific factors considered in making its determinations.        

Opinions of Financial Advisors                                                  

PacifiCorp. At the meeting of the PacifiCorp Board of Directors held on   
December 6, 1998, Salomon Smith Barney delivered its oral opinion, subsequently 
confirmed in writing, that, as of December 6, 1998, the merger consideration    
under the original merger agreement was fair, from a financial point of view,   
to holders of PacifiCorp common stock. No limitations were imposed by the       
PacifiCorp board upon Salomon Smith Barney regarding the investigation made or  
the procedures followed by Salomon Smith Barney in rendering its opinion. The   
opinion of Salomon Smith Barney was for the use and benefit of the PacifiCorp   
board in connection with its consideration of the merger.                       

 The full text of the written opinion of Salomon Smith Barney is attached as
Annex C to this proxy statement/prospectus and explains the assumptions made,   
procedures followed, matters considered and limitations on the review           
undertaken by Salomon Smith Barney. Holders of PacifiCorp common stock are      
urged to read Salomon Smith Barney's opinion in its entirety. The summary of    
the opinion in this proxy statement/prospectus is qualified in its entirety by  
reference to the full text of the opinion, which is incorporated into this      
proxy statement/prospectus by reference.                                        

In connection with the rendering of its opinion, Salomon Smith Barney     
reviewed publicly available information concerning PacifiCorp and ScottishPower 
and other financial information concerning PacifiCorp and ScottishPower,        
including financial forecasts, that were provided to Salomon Smith Barney by    
PacifiCorp or ScottishPower. Salomon Smith Barney discussed the past and        
current business operations, financial condition and prospects of PacifiCorp    
and ScottishPower with officers and employees of PacifiCorp or ScottishPower.   
Salomon Smith Barney also considered other information, financial studies,      
analyses, investigations and financial, economic and market criteria that it    
deemed relevant.                                                                

In its review and analyses and in arriving at its opinion, Salomon Smith  
Barney assumed and relied upon the accuracy and completeness of the information 
reviewed by it for the purpose of the opinion and Salomon Smith Barney did not  
assume any responsibility for independent verification of such information.     
With respect to the financial forecasts, Salomon Smith Barney was advised by    
the managements of PacifiCorp and ScottishPower that such forecasts had been    
reasonably prepared on bases reflecting their best currently available          
estimates and judgments, and Salomon Smith Barney expressed no opinion with     
respect to such forecasts or the assumptions on which they were based. Salomon  
Smith Barney did not assume any responsibility for any independent evaluation   
or appraisal of any of the assets, including properties and facilities, or      
liabilities of PacifiCorp or ScottishPower.                                     

 Salomon Smith Barney's opinion is necessarily based upon conditions as they
existed and could be evaluated on the date of the opinion and Salomon Smith     
Barney did not assume any responsibility to update or revise its opinion based  
upon circumstances or events occurring after the date of the opinion. Salomon   
Smith                                                                           

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Barney's opinion does not imply any conclusion as to the likely trading range   
for ADRs or ordinary shares following the consummation of the merger, which may 
vary depending upon, among other factors, changes in interest rates, dividend   
rates, market conditions, general economic conditions and other factors that    
generally influence the price of securities. Salomon Smith Barney's opinion did 
not address PacifiCorp's underlying business decision to effect the merger, and 
Salomon Smith Barney expressed no view on the effect on PacifiCorp of the       
merger and related transactions. Salomon Smith Barney's opinion is directed     
only to the fairness, from a financial point of view, of the merger             
consideration to be received by the holders of PacifiCorp common stock under    
the original merger agreement and does not constitute a recommendation          
concerning how holders of PacifiCorp common stock should vote with respect to   
the merger agreement or the merger.                                             

In connection with the rendering of its opinion, Salomon Smith Barney     
performed certain financial analyses, which it discussed with the PacifiCorp    
board on December 4 and December 6, 1998. The material portions of the analyses 
performed by Salomon Smith Barney in connection with the rendering of its       
opinion dated December 6, 1998 are summarized below.                            

Discounted Cash Flow Analysis. Salomon Smith Barney performed a discounted
cash flow analysis of PacifiCorp to estimate a range of values for the          
PacifiCorp common stock. The discounted cash flow analysis for PacifiCorp was   
based upon financial forecasts (the "Plan Case forecasts") for the years ended  
December 31, 1999 to December 31, 2003, prepared by the management of           
PacifiCorp. The Plan Case forecasts were subsequently adjusted by the           
management of PacifiCorp (the "Improvement Case forecasts"), and separate       
analyses were prepared by Salomon Smith Barney based upon each of the two sets  
of financial forecasts. As a substitute for the cash flows generated beyond     
2003, Salomon Smith Barney calculated a terminal year value for PacifiCorp by   
applying a range of common stock price to earnings per share ("EPS") multiples  
("P/E multiples") of 13.5x to 17.0x (which implies firm value to earnings       
before interest, taxes, depreciation and amortization ("EBITDA") multiples of   
7.5x to 8.5x) to 2003 net income, and then added to those values the            
outstanding debt and preferred stock balances (net of cash) as of December 31,  
2003. For the purposes of this analysis, "firm value" is the value attributed   
to the common shares plus the sum of the preferred stock valued at par value,   
the outstanding short-term and long-term debt at book value and other financial 
long-term liabilities at book value less cash. The unlevered free cash flow     
amounts for the years ended December 31, 1999 to December 31, 2003, plus the    
terminal values were then discounted back to the present using a range of       
discount rates of 6.0%-7.5% based upon an analysis of the weighted average cost 
of capital for PacifiCorp. For purposes of this analysis, "unlevered free cash  
flow" was calculated as the cash available to the PacifiCorp's capital          
providers (equity, debt and preferred equity) after operating expenses, taxes,  
capital expenditures and changes in working capital. Analysis of the Plan Case  
forecasts and the Improvement Case forecasts for PacifiCorp, without            
considering any benefits derived from the merger, indicated an implied equity   
value range per share of PacifiCorp common stock of approximately $15.50 to     
$21.25 and $18.00 to $24.25, respectively. The following table summarizes       
PacifiCorp's discounted cash flow analysis:                                     

                                                                [Download Table]

                             Equity Valuation                             
                                   Range                                  
                              Per PacifiCorp                              
                               Common Stock                               
                             -----------------                            
Case                           Low     High            Methodology        
----                         ------- --------- ---------------------------
                                                                          
                                               6.0%-7.5% Weighted Average 
                                               Cost of Capital            
PacifiCorp Plan Case                           13.5x-17.0x Terminal (2003)
Discounted Cash Flow........ $ 15.50 $21.25... Net Income                 
                                               6.0%-7.5% Weighted Average 
PacifiCorp                                     Cost of Capital            
Improvement Case                               13.5x-17.0x Terminal (2003)
Discounted Cash Flow........ $ 18.00 $24.25... Net Income                 

Salomon Smith Barney performed a similar analysis of ScottishPower to     
estimate a range of values for the ordinary shares. The discounted cash flow    
analysis for ScottishPower was based upon certain financial forecasts           

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provided by ScottishPower (the "Management Case forecasts"). The Management     
Case forecasts were subsequently adjusted by the management of PacifiCorp (the  
"Sensitivity Case forecasts"), and separate analyses were prepared based upon   
each of the two sets of financial forecasts. As a substitute for cash flows     
beyond 2003, Salomon Smith Barney calculated a terminal year value for          
ScottishPower by applying a range of firm value to EBITDA multiples of 9.0x to  
10.0x to terminal year EBITDA. The unlevered free cash flow amounts for years   
ended March 31, 1999 to March 31, 2003, plus the terminal values were then      
discounted back to the present using a range of discount rates of 7.25% to      
7.75%. Analysis of the Management Case forecasts and the Sensitivity Case       
forecasts for ScottishPower, without considering any benefits derived from the  
merger, indicated an implied equity value range per share of ScottishPower      
ordinary share of (Pounds)5.97 to (Pounds)7.07 and (Pounds)5.32 to              
(Pounds)6.33, respectively. The following table summarizes ScottishPower's      
discounted cash flow analysis:                                                  

                                                                [Download Table]

                            Equity Valuation Range                        
                          Per ScottishPower Ordinary                      
                                     Share                                
                          ---------------------------                     
Case                          Low           High          Methodology     
----                      ------------ -------------- --------------------
                                                                          
                                                      7.25%-7.75% Weighted
                                                      Average Cost of     
ScottishPower Management                              Capital             
Case Discounted Cash                                  9.0x-10.0x Terminal 
Flow....................  (Pounds)5.97 (Pounds)7.07.. (2003) EBITDA       
                                                      7.25%-7.75% Weighted
ScottishPower                                         Average Cost of     
Sensitivity                                           Capital             
Case Discounted Cash                                  9.0x-10.0x Terminal 
Flow....................  (Pounds)5.32 (Pounds)6.33.. (2003) EBITDA       

 Public Market Valuation Analysis. Salomon Smith Barney estimated a range of
values for PacifiCorp common stock and ScottishPower ordinary shares by         
reviewing and analyzing certain financial information of other publicly traded  
companies that Salomon Smith Barney determined to be comparable to PacifiCorp,  
ScottishPower's utilities segment and ScottishPower's telecommunications        
segment.                                                                        

 Using publicly available information, including the EPS estimates from IBES
for the projected 1999 periods and EBITDA for the latest 12-month period as of  
September 30, 1998 (the "LTM"), Salomon Smith Barney reviewed, among other      
things, the range of P/E multiples and firm value to EBITDA multiples for the   
companies determined to be comparable to PacifiCorp. The following table        
summarizes the results of this analysis:                                        

Companies Determined to be                                          
Comparable to PacifiCorp                                            
--------------------------                                          

Allegheny Energy Inc.                                               
Ameren Corp.                                                        
Cinergy Corp.                                                       
Dominion Resources, Inc.                                            
DPL Inc.                                                            
Idaho Power                                                         
Montana Power Co.                                                   
New Century Energies, Inc.                                          
OGE Energy Corp.                                                    
Potomac Electric Power Company                                      
Puget Sound Energy Inc.                                             
Sempra Energy                                                       
Washington Water Power Company                                      

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                                                                [Download Table]

Estimates for the Companies Determined to be Comparable                 
to PacifiCorp                                                 Range     
-------------------------------------------------------   --------------
                                                                        
P/E Mutliples (for the projected 12-month period                        
 ended December 31, 1999 ("Calendar 1999")..............  13.5x to 16.5x
Firm Value to EBITDA Multiples (for the LTM)............    7.5x to 8.5x

Salomon Smith Barney applied these multiples which were derived from the  
companies determined to be comparable to PacifiCorp to PacifiCorp's             
corresponding financial and market statistics. Ranges of equity values were     
derived by:                                                                     

--mutliplying price to earnings per share multiples for Calendar 1999 by    
PacifiCorp's projected earnings per share for Calendar 1999, based upon   
the Plan Case forecasts and Improvement Case forecasts;                   

--multiplying firm value to EBITDA multiples for the LTM by PacifiCorp's    
EBITDA for the LTM to derive a range of firm values.                      

  The following table summarizes the equity valuation range derived using this
analysis.                                                                       

                                                                [Download Table]

                                                Equity Valuation Range Per
Case                                             PacifiCorp Common Stock  
----                                            --------------------------
                                                                          
PacifiCorp Plan Case...........................  $15.75 to $20.75         
PacifiCorp Improvement Case....................  $16.50 to $21.50         

Salmon Smith Barney also reviewed public information, including earnings  
before interest and taxes ("EBIT") for the LTM and projected Calendar 1999      
period, EBITDA for the LTM and projected Calendar 1999 period, and EPS for the  
projected Calendar 1999 and 2000 periods, and calculated the firm value to EBIT 
multiples, the firm value to EBITDA multiples and P/E multiples for the         
companies determined to be comparable to ScottishPower's utilities segment.     
Salomon Smith Barney valued ScottishPower's telecommunications segment          
separately based upon the range of multiples for the companies determined to be 
comparable to ScottishPower's telecommunications segment. Salomon Smith Barney  
reviewed public information, including net property, plant and equipment ("Net  
PP&E"), and calculated the firm value to Net PP&E multiples for the companies   
determined to be comparable to ScottishPower's telecommunications segment. The  
following table summarizes the results of this analysis:                        

Companies Determined                                                            
to be Comparable to                                                             
ScottishPower's                                                             
Utilities Segment                                                             
-----------------                                                             
British Energy plc                                                            
BG plc                                                                        
Centrica plc                                                                  
Hyder plc                                                                     
National Grid Group plc (excluding                                            
the telecommunications company,                                             
Energis plc)                                                                
National Power plc                                                            
PowerGen plc                                                                  
Scottish and Southern Energy plc                                              
United Utilities plc                                                          

Companies Determined                                                            
to be Comparable to                                                           
ScottishPower's                                                           
Telecommunications                                                            
Segment                                                           
--------------------                                                            
COLT Telecom Group plc                                                          
Energis plc                                                                     
Equant N.V.                                                                     
NTL Incorporated                                                                

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                                                                [Download Table]


 Estimates for the                               
Companies Determined                             
to be Comparable to                              
  ScottishPower's                                
 Utilities Segment                     Range     
 -----------------                     -----     
                                                 
P/E Multiples (for Calendar                      
 1999)...........................  13.0x to 14.0x
P/E Mutliples (for Calendar                      
 2000)...........................  13.0x to 14.0x
Firm Value to EBIT Multiples (for                
 the LTM)........................  11.0x to 12.0x
Firm Value to EBIT Multiples (for                
 Calendar 1999)..................  10.5x to 11.5x
Firm Value to EBITDA Multiples                   
 (for the LTM)...................   9.0x to 10.0x
Firm Value to EBITDA Multiples                   
 (for                                            
 Calendar 1999)..................   8.5x to  9.5x
                                                                [Download Table]

  Estimates for the                      
Companies Determined                     
 to be Comparable to                     
   ScottishPower's                       
Telecommunications                       
     Segment                Range        
------------------          -----        
                                         
 Firm Value to Net PP&E                  
 Multiples.............  7.0x to 7.5x    

Salomon Smith Barney applied these multiples which were derived from the  
companies determined to be comparable to ScottishPower's utilities segment and  
telecommunications segment to ScottishPower's corresponding financial and       
market statistics. Ranges of equity values for the companies determined to be   
comparable to ScottishPower's utilities segment were derived by:                
--multiplying price to earnings per share multiples for Calendar 1999 by    
the net income for ScottishPower's utilities segment for Calendar 1999, 
based upon the Management Case forecasts;                               
--multiplying price to earnings per share multiples for Calendar 2000 by    
the net income for ScottishPower's utilities segment for Calendar 2000, 
based upon the Management Case forecasts;                               
--multiplying firm value to EBIT multiples for the LTM by the EBIT of       
ScottishPower's utilities segment for the LTM to derive a range of firm 
values;                                                                 
--multiplying firm value to EBIT multiples for Calendar 1999 by the         
projected EBIT for ScottishPower's utilities segment for Calendar 1999, 
  based upon the Management Case forecasts to derive a range of firm values;
--multiplying firm value to EBITDA multiples for the LTM by the EBITDA of   
ScottishPower's utilities segment for the LTM to derive a range of firm 
values;                                                                 
--multiplying firm value to EBITDA multiples for Calendar 1999 by the       
 projected EBITDA for ScottishPower's utilities segment for Calendar 1999,
  based upon the Management Case forecasts to derive a range of firm values.
Ranges of equity values for the companies determined to be comparable to    
ScottishPower's telecommunications segment were determined by:                  
--multiplying firm value to Net PP&E multiples to derive a range of firm    
  values by the Net PP&E of ScottishPower's telecommunications segment as of
September 30, 1998.                                                     

This analysis, together with the analysis of ScottishPower's utilities    
segment resulted in the following equity valuation range:                       

                                                                [Download Table]

         Equity Valuation Per        
     ScottishPower Ordinary Share    
     ---------------------------- ---
                                     
     (Pounds)6.06 to (Pounds)6.71    

  Private Market Valuation Analysis. To further estimate a range of values for
PacifiCorp's equity value per share, Salomon Smith Barney reviewed and analyzed 
financial, operating and stock market information relating to selected merger   
transactions involving utilities companies announced since 1997.                

Salomon Smith Barney reviewed, among other things, P/E multiples for the  
projected periods following the announcement of such precedent transactions and 
firm value to EBITDA multiples for the latest 12-month period prior to the      
announcement of such precedent transactions.The following table summarizes the  
results of this analysis:                                                       

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Acquiror Company/Target Company                                     
-------------------------------                                     

AES Corporation/Cilcorp Inc.                                        
CalEnergy Company, Inc./ MidAmerican Energy Holdings Company        
  American Electric Power Company, Inc./Central & South West Corporation
LG&E Energy Corp./ KU Energy Corporation                            
Enron Corp./Portland General Electric Company                       

                                                                [Download Table]

   Estimates for the Selected Precedent Transactions         Range     
   -------------------------------------------------     --------------
                                                                       
P/E Multiples (for the projected periods following the                 
 announcement of such precedent transactions)........... 14.5x to 20.0x
Firm Value to EBITDA Multiples (for the latest 12-month                
 period prior to the announcement of such precedent                    
 transactions)..........................................  7.5.x to 9.0x

Salomon Smith Barney applied these multiples from the selected precedent  
transactions to the corresponding PacifiCorp financial and market statistics.   
Ranges of equity values for PacifiCorp were derived by:                         

--multiplying price to earnings per share multiples for the projected       
periods following the announcement of such precedent transactions by      
PacifiCorp's projected earnings per share for Calendar 1999, based upon   
the Plan Case forecasts and Improvement Case forecasts;                   

--multiplying firm value to EBITDA multiples for the latest 12-month period 
prior to the announcement of such precedent transactions by PacifiCorp's  
projected EBITDA for Calendar 1999, based upon the Plan Case forecasts and
Improvement Case forecasts to derive a range of firm values.              

The following table summarizes the equity valuation range per PacifiCorp  
Common Stock derived using this analysis:                                       

                                                                [Download Table]

                             Equity Valuation
                                Range Per    
                                PacifiCorp   
Case                           Common Stock  
----                         ----------------
                                             
PacifiCorp Plan Case........ $16.75 to $22.75
PacifiCorp Improvement                       
 Case....................... $17.75 to $24.00

Sum-of-the-Parts Valuation Analysis. Salomon Smith Barney performed a sum-
of-the-parts valuation analysis of ScottishPower to estimate a range of values  
for the ScottishPower ordinary shares. The following table summarizes the       
results of this analysis:                                                       

                                                                [Download Table]

                                                                      Multiple 
                                                                     ----------
               Business Unit                  Valuation Methodology  Low  High 
               -------------                  ---------------------  ---- -----
                                                                               
ScottishPower's Generation Wholesale Unit.. Firm Value/1999 EBITDA.. 8.0x  9.0x
ScottishPower's Power Systems Unit......... Firm Value/1999 EBITDA.. 9.0x 10.0x
Scottish Power's Energy Supply Unit........ Discounted Cash Flow....  --    -- 
ScottishPower's Water Unit................. Firm Value/1999 EBITDA.. 7.0x  7.5x
ScottishPower's Telecom Unit............... Discounted Cash Flow....  --    -- 
ScottishPower's Retail Unit................ Firm Value/1999 EBITDA.. 7.5x  8.5x

 The following table summarizes the equity valuation range per ScottishPower
ordinary share derived using this analysis:                                     

Equity Valuation Per Share                                                    
of ScottishPower Ordinary                                                     
Share                                                     
--------------------------                                                    

(Pounds)6.23 to (Pounds)7.17                                                    

Valuation Comparison. Salomon Smith Barney compared the valuations for    
ScottishPower and PacifiCorp derived under the preceding analyses based on the  
PacifiCorp Plan Case forecasts and the ScottishPower Management Case forecasts  
and calculated the range of exchange ratios implied by these comparisons.       

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The following table summarizes the results of this analysis:              

                                                                [Download Table]

                                                              Exchange  
  Valuation Comparisons                                        Ratio    
  ---------------------                                       --------  
                                                                        
PacifiCorp Discounted Cash Flow/                                        
ScottishPower Discounted Cash Flow......................... 1.52 to 1.86
PacifiCorp Public Market                                                
Valuation/ScottishPower Public Market                                   
Valuation.................................................. 1.54 to 1.89
PacifiCorp Public Market                                                
Valuation/ScottishPower Sum-of-the-Parts                                
Valuation.................................................. 1.47 to 1.80
PacifiCorp Public Market Valuation plus a                               
30% premium/ScottishPower Public Market                                 
Valuation.................................................. 2.01 to 2.45
PacifiCorp Private Market                                               
Valuation/ScottishPower Public Market                                   
Valuation.................................................. 1.67 to 2.04
PacifiCorp Private Market Valuation/                                    
ScottishPower Sum-of-the-Parts Valuation................... 1.59 to 1.95

  Contribution Analysis. Salomon Smith Barney analyzed the pro forma financial
contributions from each of PacifiCorp and ScottishPower to the combined company 
assuming the merger is consummated in accordance with the merger agreement.     
Salomon Smith Barney analyzed, among other things, the relative contribution to 
the combined company's net income and EBITDA from each of PacifiCorp's and      
ScottishPower's net income and EBITDA for the projected fiscal years ended      
March 31, 2000 and March 31, 2001 before giving effect to any merger accounting 
adjustments or synergies. The following table summarizes the results of this    
analysis:                                                                       

                                                                [Download Table]

                     PacifiCorp  Scottish Power    Implied    
                    Contribution  Contribution  Exchange Ratio
                    ------------ -------------- --------------
                                                              
EBITDA                                                        
  Fiscal Year 2000     42.4%         57.6%          2.41x     
  Fiscal Year 2001     43.5%         56.5%          2.59x     
Net Income                                                    
  Fiscal Year 2000     29.9%         70.1%          1.72x     
  Fiscal Year 2001     34.2%         65.8%          2.09x     

Pro Forma Analysis of the Merger. Salomon Smith Barney analyzed the pro   
forma impact of the merger on an EPS basis to PacifiCorp's and ScottishPower's  
shareholders for the fiscal years ended March 31, 2001 through 2003. The        
analysis was performed utilizing stand-alone earnings estimates for the years   
2001 through 2003 from the PacifiCorp Plan Case forecasts and the ScottishPower 
Management Case forecasts and taking into account estimated synergies assumed   
to be derived from the merger. Based on this analysis on an EPS basis, the      
merger would be accretive pre-goodwill by at least 2%, and would be dilutive    
post-goodwill by not more than 4%, to ScottishPower's earnings for the fiscal   
years 2001 through 2003.                                                        

The preparation of a fairness opinion is a complex process not susceptible
to partial analysis or summary descriptions. The summary above is not and does  
not purport to be a complete description of the analyses underlying Salomon     
Smith Barney's opinion or its presentation to the PacifiCorp board. Salomon     
Smith Barney believes that its analyses and the summary above must be           
considered as a whole and that selecting portions of                            

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its analyses and the factors considered by it, without considering all such     
analyses and factors, could create an incomplete view of the processes          
underlying the analyses in its opinion. In addition, no company used in the     
public market valuation analysis summarized above is identical to PacifiCorp or 
ScottishPower or any of their business segments and no transaction used in the  
private market valuation analysis summarized above is identical to the merger.  
Accordingly, an analysis of the data described above necessarily involves       
complex considerations and judgments concerning differences in financial and    
operating characteristics of PacifiCorp or any of its business segments and     
other facts that could affect the public trading value or the acquisition value 
of the companies to which it is being compared.                                 

In performing its analyses, Salomon Smith Barney made numerous assumptions
with respect to industry performance, general business, financial, market and   
economic conditions and other matters, many of which are beyond the control of  
PacifiCorp. The analyses which Salomon Smith Barney performed are not           
necessarily indicative of actual values or actual future results, which may be  
significantly more or less favorable than suggested by the analyses. The        
analyses were prepared solely as part of Salomon Smith Barney's analysis of the 
fairness, from a financial point of view, of the merger consideration under the 
original merger agreement to holders of PacifiCorp common stock. The analyses   
do not purport to be appraisals or to reflect the prices at which a company     
might actually be sold or the prices at which any securities may trade at the   
present time or at any time in the future. In addition, the opinion of Salomon  
Smith Barney and Salomon Smith Barney's presentation to the PacifiCorp Board of 
Directors, were among the many factors taken into consideration by the          
PacifiCorp Board of Directors, in making its determination to approve the       
merger.                                                                         

  Under a letter agreement dated October 15, 1998, PacifiCorp agreed to pay to
Salomon Smith Barney a fee of $25 million, payable as follows: (a) $6.25        
million upon execution of the merger agreement; (b) $6.25 million following     
shareholder approval of the merger; and (c) the balance upon the consummation   
of the merger and payable at the closing. PacifiCorp also agreed, subject to    
certain limitations, to reimburse Salomon Smith Barney for all reasonable fees  
and disbursements of Salomon Smith Barney's counsel and all of Salomon Smith    
Barney's reasonable travel and other out-of-pocket expenses incurred in         
connection with its engagement, and agreed to indemnify Salomon Smith Barney    
and specific related persons against various liabilities, relating to or        
arising out of its engagement.                                                  

Salomon Smith Barney is an internationally recognized investment banking  
firm that provides financial services in connection with a wide range of        
business transactions. As part of its business, Salomon Smith Barney regularly  
engages in the valuation of companies and their securities in connection with   
mergers and acquisitions, negotiated underwritings, competitive biddings,       
secondary distributions of listed and unlisted securities, private placements   
and other purposes. In the ordinary course of its business, Salomon Smith       
Barney may actively trade the securities of PacifiCorp and ScottishPower for    
its own account and the accounts of its customers and, accordingly, may at any  
time hold a long or short position in such securities. In addition, Salomon     
Smith Barney and its affiliates have rendered investment banking and financial  
advisory services to PacifiCorp and ScottishPower for which Salomon Smith       
Barney received customary compensation. Salomon Smith Barney and its affiliates 
(including Citigroup Inc.) may have other business relationships with           
PacifiCorp or ScottishPower. The PacifiCorp Board of Directors, retained        
Salomon Smith Barney based on Salomon Smith Barney's expertise in the valuation 
of companies as well as its substantial experience in transactions such as the  
merger.                                                                         

ScottishPower. ScottishPower retained Morgan Stanley to act as financial  
advisor to the ScottishPower Board of Directors in connection with the merger   
and related matters based upon Morgan Stanley's qualifications, expertise and   
reputation. On December 6, 1998, Morgan Stanley rendered an oral opinion, which 
was subsequently confirmed in writing, to the ScottishPower Board of Directors, 
to the effect that, as of such date, and based upon and subject to the          
considerations set forth in the written opinion, the exchange ratio of 0.58     
ADSs, or 2.32 ordinary shares, to be paid for each outstanding share of         
PacifiCorp common stock under the original merger agreement was fair from a     
financial point of view to ScottishPower.                                       

The full text of the Morgan Stanley opinion, dated as of December 6, 1998,
explains, among other things, the assumptions made, procedures followed,        
matters considered and limitations on the review undertaken, is attached as     
Annex D to this proxy statement/prospectus and is incorporated by reference.    

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The Morgan Stanley opinion is directed to the ScottishPower Board of Directors, 
and addresses the fairness of the exchange ratio pursuant to the original       
merger agreement from a financial point of view to ScottishPower as of the date 
of such opinion and does not address any other aspect of the merger, nor does   
it constitute a recommendation to any ScottishPower shareholder as to how such  
shareholder should vote at the ScottishPower Extraordinary General Meeting held 
in connection with the merger. The summary of the Morgan Stanley opinion in     
this proxy statement/prospectus should not be viewed as a substitute for the    
full text of the Morgan Stanley opinion attached as Annex D to this proxy       
statement prospectus.                                                           

In arriving at its opinion, Morgan Stanley, among other things:           

.  reviewed certain publicly available financial statements and other       
information of ScottishPower and PacifiCorp, respectively;            

.  reviewed certain internal financial statements and other financial and   
operating information concerning ScottishPower and PacifiCorp prepared
by the managements of the respective companies;                       

.  reviewed certain financial projections for ScottishPower and PacifiCorp  
prepared by the managements of the respective companies;              

.  reviewed and discussed with the senior management of ScottishPower the   
strategic rationale for the merger and the perceived benefits of the  
merger to the shareholders of ScottishPower;                          

.  reviewed the estimates by senior management of ScottishPower of the      
potential cost savings if the merger is consummated;                  

.  discussed with senior executives of ScottishPower and PacifiCorp the     
past and current operations and the financial conditions and prospects
for each of their respective companies;                               

.  discussed with the management of ScottishPower the results of the due    
  diligence exercise in relation to PacifiCorp conducted by ScottishPower;

.  reviewed certain adjustments to the financial statements and projections 
of PacifiCorp proposed by the management of ScottishPower, in relation
to the reconciliation from U.S. to U.K. GAAP;                         

.  compared the financial performance of ScottishPower and recent reported  
prices for ScottishPower ordinary shares and PacifiCorp common stock  
with that of certain other comparable publicly traded companies and   
their securities;                                                     

.  reviewed the financial terms, to the extent publicly available, of       
certain comparable transactions;                                      

.  reviewed the likely impact of the merger on the future earnings per      
share for ScottishPower shareholders based on the summary financial   
projections for ScottishPower and PacifiCorp;                         

.  participated in certain discussions and negotiations among               
representatives of ScottishPower and PacifiCorp and their advisors;   

.  reviewed the draft merger agreement and certain related documents; and   

.  performed such other analyses and considered such other factors as       
Morgan Stanley deemed appropriate.                                    

In arriving at its opinion, Morgan Stanley assumed and relied upon without
independent verification the accuracy and completeness of the information       
reviewed by Morgan Stanley for the purposes of its opinion. With respect to the 
financial projections and other estimates supplied to Morgan Stanley, Morgan    
Stanley assumed that they were reasonably prepared on bases reflecting the best 
currently available estimates and judgments of the future financial performance 
of ScottishPower and PacifiCorp. In reaching its opinion, Morgan Stanley relied 
upon, without independent verification, the assessment by the management of     
ScottishPower of the future competitive and regulatory environment, the         
opportunities for cost synergies management have                                

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estimated to be achievable and the ScottishPower Board of Directors' commercial 
assessment of the merger. Morgan Stanley did not make any independent valuation 
or appraisal of assets or liabilities, nor was Morgan Stanley furnished with    
any such appraisals. With respect to tax matters and tax structures associated  
with the transaction, Morgan Stanley relied upon the evaluation of              
ScottishPower and its legal and tax advisors. Morgan Stanley also assumed (1)   
that the merger will be completed on the bases contemplated by the original     
merger agreement, and (2) that the merger will be accounted for under the       
acquisition accounting rules under U.K. GAAP. The Morgan Stanley opinion is     
based on economic, market and other conditions as in effect on, and the         
information made available to Morgan Stanley as of, the date of the Morgan      
Stanley opinion.                                                                

The following is a summary of certain analyses performed by Morgan Stanley
in connection with its rendering its opinion to the ScottishPower board on      
December 6, 1998. Some of these summaries of financial analysis include         
information presented in tabular format. In order fully to understand the       
financial analyses used by Morgan Stanley, the tables must be read together     
with the text of each summary. The tables alone do not constitute a complete    
description of the financial analyses.                                          

  Historical Common Stock Performance. Morgan Stanley's analysis of PacifiCorp
common stock performance consisted of an historical analysis of closing prices  
and trading volumes over the period from November 30, 1995 to December 3, 1998. 
During that period, based on closing prices on the New York Stock Exchange,     
PacifiCorp common stock achieved a high closing price of $27.31 on December 31, 
1997, a low closing price of $18.75 on November 30, 1998 and a 3-year average   
closing price of $21.51.                                                        

Morgan Stanley's analysis of ScottishPower ordinary share performance     
consisted of an historical analysis of closing prices and trading volumes over  
the period from November 30, 1995 to November 23, 1998. During that period,     
based on closing prices on the London Stock Exchange, ScottishPower ordinary    
shares achieved a high closing price of (Pounds)6.62 on November 23, 1998, a    
low closing price of (Pounds)2.73 on July 3, 1996 and a 3-year average closing  
price of (Pounds)4.25.                                                          

 Comparative Stock Price Performance. Morgan Stanley performed an historical
analysis of closing prices from January 1, 1996 to December 3, 1998 of          
ScottishPower ordinary shares, the S&P Utilities Index, the FTSE 100 Index and  
the FTSE Utilities Index.                                                       

  The following table presents the change in performance from the beginning to
the end of the period for these groups.                                         

                                                                [Download Table]

                                                     Percentage Change from
                                                       January 1, 1996 to  
                                                        December 3, 1998   
                                                     ----------------------
                                                                           
ScottishPower ordinary shares.......................         +100.1%       
Standard & Poor's Electric Utilities Index..........          +22.9%       
FTSE 100 Index......................................          +49.3%       
FTSE Utilities Index................................          +75.7%       

In addition, Morgan Stanley performed a historical analysis of closing    
prices from November 30, 1995 to December 3, 1998 of ScottishPower ordinary     
shares, the PacifiCorp common stock and the S&P Utilities Index. The following  
table presents the change in performance from the beginning to the end of the   
period for these groups.                                                        

                                                                [Download Table]

                                                     Percentage Change from
                                                      November 30, 1995 to 
                                                        December 3, 1998   
                                                     ----------------------
                                                                           
ScottishPower ordinary shares.......................         +103.4%       
PacifiCorp common stock.............................           -4.5%       
Standard & Poor's Electric Utilities Index..........          +33.2%       

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Morgan Stanley noted that on December 3, 1998, PacifiCorp common stock    
closed at $19.4375 per share and ScottishPower ordinary shares closed at        
(Pounds)6.72 per share.                                                         

Trading Ratio Analysis. Morgan Stanley also reviewed the ratio of the     
trading prices of PacifiCorp common stock to ScottishPower ordinary shares over 
the intervals of three months, six months, one year, two years and three years  
prior to the announcement of the merger. Such ratios were in the range of 2.00  
to 3.34. Morgan Stanley noted that the exchange ratio of ScottishPower ordinary 
shares to PacifiCorp common stock under the original merger agreement was 2.32. 

 Comparable Public Company Analysis. As part of its analysis, Morgan Stanley
compared certain financial information of PacifiCorp with that of a group of    
publicly-traded electric utilities. Morgan Stanley reviewed financial           
information including the market equity value to forecasted fiscal 1999 and     
forecasted fiscal 2000 earnings multiples, the market equity value to book      
equity value multiple, and the aggregate value to EBITDA multiple for the       
PacifiCorp comparable companies and PacifiCorp. The financial information was   
based on a compilation of earnings projections by securities research analysts, 
the book equity value as of the period ended September 30, 1998 and the LTM     
EBITDA for the period ending September 30, 1998. The tables below summarize     
these analyses and the relevant statistics for PacifiCorp as of December 3,     
1998 and the PacifiCorp comparable companies.                                   

PacifiCorp                                            
Comparable Companies                                            

Ameren Corporation                                                        
American Electric Power Company,                                          
Inc.                                                                            
Cinergy Corp.                                                             
New Century Energies, Inc.                                                
Northern States Power Company                                             
UtiliCorp United Inc.                                                     

                                                                [Download Table]

                                                  Multiples for         
                                         -------------------------------
                                              PacifiCorp                
                                         Comparable Companies PacifiCorp
                                         -------------------- ----------
                                                                        
Market Equity Value to Forecasted 1999                                  
 Earnings...............................    13.5x - 14.5x       15.6x   
Market Equity Value to Forecasted 2000                                  
 Earnings...............................    13.0x - 14.0x       15.1x   
Market Equity Value to Book Equity                                      
 Value..................................     1.8x -  2.1x        1.4x   
Aggregate Value to LTM EBITDA...........     7.5x -  9.0x       11.9x   

Morgan Stanley applied these multiples from the PacifiCorp comparable     
companies to PacifiCorp's corresponding financial and market statistics. Ranges 
of equity values for PacifiCorp were derived by:                                

--multiplying market equity value to forecasted 1999 earnings multiples by  
security research analysts' projections of PacifiCorp's earnings;         

--multiplying market equity value to forecasted 2000 earnings multiples by  
security research analysts' projections of PacifiCorp's earnings;         

--multiplying market equity value to book multiples by PacifiCorp's book    
equity value as of September 30, 1998; and                                

--multiplying aggregate value to LTM EBITDA multiples by PacifiCorp's LTM   
EBITDA for the period ending September 30, 1998 to determine a range of   
aggregate values. PacifiCorp's debt and preferred stock, net of cash and  
cash equivalents, as of September 30, 1998 was then subtracted from the   
resulting range of aggregate values.                                      

Ranges of equity values per share were then calculated based on the number
of shares outstanding as of October 31, 1998. The medians of the ranges of      
these equity values per share were calculated. This range was                   

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then multiplied by an indicative 30% control premium based on precedent         
transactions to determine a valuation range for the analysis as a whole. Based  
on this analysis, Morgan Stanley calculated per share equity values for         
PacifiCorp ranging from $22.00 - $27.00.                                        

 Morgan Stanley also compared certain financial information of ScottishPower
with that of a group of publicly traded utility companies. Morgan Stanley       
reviewed financial information including the market equity value to forecasted  
fiscal 1999 and forecasted fiscal 2000 earnings multiples, the market equity    
value to forecasted fiscal 1999 and forecasted fiscal 2000 cash earnings        
multiples (with cash earnings defined as earnings plus depreciation and         
amortization), the market equity value to book equity value multiple, the       
aggregate value to forecasted fiscal 1999 and forecasted fiscal 2000 EBITDA     
multiples and the aggregate value to forecasted fiscal 1999 and forecasted      
fiscal 2000 EBIT multiples for the ScottishPower comparable companies and       
ScottishPower. The financial information was based on a compilation of          
earnings, cash earnings, EBITDA and EBIT projections by securities research     
analysts, and the book equity value as of the period ended March 31, 1998. The  
tables below summarize these analyses and the relevant statistics for           
ScottishPower as of December 3, 1998 and the ScottishPower comparable           
companies.                                                                      

Scottish Power
Comparable Companies
-------------------------------------------     

Electric Utilities           Water Companies      
National Grid Group plc      Anglian Water plc    
Scottish and Southern Energy plc                  
                        Severn Trent plc
Viridian Group plc           Pennon Group plc     
Generators                   Thames Water plc     
British Energy PLC           Yorkshire Water PLC  
National Power plc           Multi-Utilities      
PowerGen plc                 Hyder plc            
                            United Utilities plc

                                                                [Download Table]

                                                  Multiples for           
                                        ----------------------------------
                                           ScottishPower                  
                                        Comparable Companies ScottishPower
                                        -------------------- -------------
                                                                          
Market Equity Value to Forecasted 1999                                    
 Earnings.............................     13.5x - 14.0x         16.4x    
Market Equity Value to Forecasted 2000                                    
 Earnings.............................     13.0x - 13.5x         15.7x    

Market Equity Value to Forecasted 1999                                    
 Cash Earnings........................      9.0x  - 9.5x         12.1x    
Market Equity Value to Forecasted 2000                                    
 Cash Earnings........................      8.5x  - 9.0x         11.5x    

Market Equity Value to Book Equity                                        
 Value................................      3.0x  - 3.5x          4.7x    

Aggregate Value to Forecasted 1999                                        
 EBITDA...............................      8.0x  - 8.5x         10.1x    
Aggregate Value to Forecasted 2000                                        
 EBITDA...............................      7.5x  - 8.0x          9.4x    

Aggregate Value to Forecasted 1999                                        
 EBIT.................................     10.5x - 11.0x         12.2x    
Aggregate Value to Forecasted 2000                                        
 EBIT.................................     10.0x - 10.5x         11.4x    

Morgan Stanley applied these multiples from the ScottishPower comparable  
companies to ScottishPower's corresponding financial and market statistics.     
Ranges of equity values for ScottishPower were derived by:                      

--multiplying market equity value to forecasted 1999 earnings multiples by  
security research analysts' projections of ScottishPower's earnings;      

--multiplying market equity value to forecasted 2000 earnings multiples by  
security research analysts' projections of ScottishPower's earnings;      

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--multiplying market equity value to forecasted 1999 cash earnings          
multiples by security research analysts' projections of ScottishPower's   
cash earnings;                                                            

--multiplying market equity value to forecasted 2000 cash earnings          
multiples by security research analysts' projections of ScottishPower's   
cash earnings; and                                                        

--multiplying market equity value to book equity value multiples by the     
ScottishPower's book equity value as of March 31, 1998;                   

Ranges of equity values for ScottishPower were derived from ranges of     
aggregate values by:                                                            

--multiplying the aggregate value to forecasted 1999 EBITDA multiples by    
security research analysts' projections of ScottishPower's EBITDA to      
determine a range of aggregate values;                                    

--multiplying the aggregate value to forecasted 2000 EBITDA multiples by    
security research analysts' projections of ScottishPower's EBITDA to      
determine a range of aggregate values;                                    

--multiplying the aggregate value to forecasted 1999 EBIT multiples by      
security research analysts' projections of ScottishPower's EBIT to        
determine a range of aggregate values; and                                

--multiplying the aggregate value to forecasted 2000 EBIT multiples by      
security research analysts' projections of ScottishPower's EBIT to        
determine a range of aggregate values.                                    

For the ranges of aggregate values, ScottishPower's debt, net of cash and 
cash equivalents, as of March 31, 1998, was then subtracted to determine equity 
value ranges.                                                                   

Ranges of equity values per share were then calculated based on the number
of ScottishPower shares outstanding as of March 31, 1998. The medians of the    
ranges of equity values per share were calculated to serve as the valuation     
range for the analysis as a whole. Based on this analysis, Morgan Stanley       
calculated per share equity values for ScottishPower ranging from               
(Pounds)5.50 - (Pounds)5.75.                                                    

Discounted Cash Flow Analysis. Morgan Stanley performed a discounted cash 
flow analysis of PacifiCorp and ScottishPower based on certain financial        
projections provided by the respective managements for each company for the     
period 1999 through 2007 for PacifiCorp and 1999 through 2005 for               
ScottishPower. The discounted cash flow analysis for PacifiCorp was based on    
the projections provided by the management of PacifiCorp that were revised by   
the management of ScottishPower (the "conservative case"). The conservative     
case forecasts were subsequently revised by the management of ScottishPower     
(the "optimistic case") and separate analyses were prepared by Morgan Stanley   
upon each of the two sets of financial forecasts.                               

Morgan Stanley calculated terminal values by applying a range of perpetual
growth rates to the unlevered free cash flow in fiscal 2007 for PacifiCorp and  
2005 for ScottishPower. Morgan Stanley also calculated a terminal year value    
for ScottishPower by applying a range of EBIT multiples to terminal year EBIT.  
The cash-flow streams and terminal values were then discounted to the present   
using an estimated range of the weighted average cost for PacifiCorp's U.S.     
operations of 6.5% to 7.5% and Australian operations of 7.5% to 8.5% and for    
ScottishPower of 7.8% to 8.8%. The results of this analysis are summarized in   
the table below.                                                                

                                                                [Download Table]

Case                                         Equity Value Range Per Share 
----                                         -----------------------------
                                                                          
PacifiCorp--Conservative Case...............               $20.00 - $27.00
PacifiCorp--Optimistic Case.................               $28.00 - $37.50
ScottishPower............................... (Pounds) 5.73 - (Pounds) 6.90

Analysis of Selected Precedent Transactions. Using publicly available     
information, Morgan Stanley considered seven announced or completed             
transactions in the electric utility industry, which were deemed to be          
comparable to the merger.                                                       

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These electric utility transactions are listed below.                     

.  CalEnergy Company, Inc.'s acquisition of MidAmerican Energy Company      

.  Consolidated Edison, Inc.'s acquisition of Orange and Rockland           
Utilities, Inc.                                                       

.  Western Resources, Inc.' acquisition of Kansas City Power & Light        
Company                                                               

.  American Electric Power Company, Inc.'s acquisition of Central and South 
West Corporation                                                      

.  LG&E Energy Corp.'s acquisition of KU Energy Corporation                 

.  Enron Corp.'s acquisition of Portland General Electric Company           

.  Union Electric Company's acquisition of CIPSCO Incorporated              

Morgan Stanley compared certain financial and market statistics of the      
electric utility transactions to the merger. The ranges of these results are    
summarized below.                                                               

                                                                [Download Table]

                                                       Premium to               
                                                     Market Equity              
                         Market Equity Market Equity   Value One     Aggregate  
                           Value to    Value to Book Month Prior to Value to LTM
                         LTM Earnings  Equity Value   Announcement     EBITDA   
                         ------------- ------------- -------------- ------------
                                                                                
Precedent Transactions.. 22.0x - 26.0x  2.0x - 2.2x    30% - 40%    7.5x - 9.5x 

Morgan Stanley applied these multiples and percentages from the selected  
precedent transactions to the corresponding PacifiCorp financial and market     
statistics. Ranges of equity values for PacifiCorp were derived by:             

--multiplying market equity value to LTM earnings multiples by              
PacificCorp's LTM earnings for the period ending September 30, 1998;      

--multiplying market equity value to LTM earnings multiples by              
PacificCorp's normalized LTM earnings for the period ending September 30, 
1998;                                                                     

--multiplying market equity value to book multiples by PacifiCorp's book    
equity value as of September 30, 1998;                                    

--multiplying premium to market equity value one month prior to             
announcement by PacifiCorp's market equity value as of December 3, 1998;  
and                                                                       

--multiplying aggregate value to LTM EBITDA multiples by PacifiCorp's LTM   
EBITDA for the period ending September 30, 1998 to determine a range of   
aggregate values.                                                         

 Based on this analysis, Morgan Stanley calculated per share equity values for
PacifiCorp ranging from $25.25 to $27.25.                                       

Contribution Analysis. Morgan Stanley reviewed the pro forma effect of the
merger and computed the contribution attributable to PacifiCorp and             
ScottishPower to the combined company's historical market performance and pro   
forma projected financial results for 2000 and 2001 based on the conservative   
case. Such financial results included EBITDA, EBIT, and net income and are      
shown in the table below as of December 3, 1998.                                

                                                                [Download Table]

                                                PacifiCorp     PacifiCorp  
                                              2000 Projected 2001 Projected
                                               Contribution   Contribution 
                                              -------------- --------------
                                                                           
EBIT.........................................      40%            41%      
EBITDA.......................................      44%            44%      
Net Income...................................      30%            32%      

Morgan Stanley calculated that the exchange ratio would result in pro forma 
ownership of the combined company for holders of PacifiCorp common stock equal  
to approximately 36%.                                                           

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Pro Forma Analysis of the Merger. Morgan Stanley reviewed the pro forma   
impact of the merger on ScottishPower's earnings per ordinary share for the     
fiscal years ended 2001 through 2003. The analysis was performed assuming       
completion of the merger at the beginning of this period, utilizing stand-alone 
earnings estimated for the fiscal years ended 2001 through 2003 for PacifiCorp  
and ScottishPower based on certain financial projections prepared by the        
respective managements of each company. Based on this analysis on an EPS basis, 
the merger would be accretive pre-goodwill by at least 5.6%, and would be       
dilutive post-goodwill by not more than 9.1%, to ScottishPower's earnings for   
the fiscal years 2001 through 2003.                                             

Business Line Analysis. As part of its analysis, Morgan Stanley compared  
certain financial and operational information of PacifiCorp by business line to 
publicly available information relating to certain precedent transactions.      
These business lines included (1) transmission, distribution and supply, (2)    
generation, (3) coal mining, (4) Australian operations, (5) energy trading and  
marketing and (6) other non-regulated businesses. The table below summarizes    
these analyses.                                                                 

                                                        [Enlarge/Download Table]

        Business                           Statistic                            Range        
        --------                           ---------                            -----        
                                                                                             
Transmission                                                                                 
 Distribution and                                                                            
 Supply................. Market Equity Value to Book Equity Value            1.8x - 2.0x     
                         Market Equity Value to 1998 Estimated Earnings     16.0x - 18.0x    
Generation.............. Aggregate Value to Asset Value                      1.4x - 1.8x     
                         Aggregate Value to Capacity                      $400/kW - $600/kW  
                         Aggregate Value to Output                      $0.08/kWh - $0.10/kWh
Coal Mining............. Aggregate Value to Output                        $20/ton - $30/ton  
Australian Operations... Aggregate Value to EBIT                            10.0x - 11.0x    

For the energy trading and marketing and other non-regulated businesses,  
book asset values were used for the valuation. Based on such analysis, Morgan   
Stanley calculated per share values for PacifiCorp ranging from $28.00 to       
$35.00.                                                                         

No company used in the comparable company analysis, and no transaction    
utilized as a comparison in the analysis of selected precedent transactions or  
comparison by business line is identical to ScottishPower, PacifiCorp or the    
merger. Accordingly, an analysis of the results of the foregoing necessarily    
involves complex considerations and judgments concerning differences in         
financial and operating characteristics of PacifiCorp and ScottishPower and     
other factors that would affect the acquisition value of the companies to which 
it is being compared. In performing its analyses, Morgan Stanley made judgments 
and assumptions with regard to industry performance, general business,          
economic, market and financial conditions and other matters, many of which are  
beyond the control of PacifiCorp and ScottishPower, such as the impact of       
competition on PacifiCorp and ScottishPower and the industry generally,         
industry growth and the absence of any adverse material change in the financial 
conditions and prospects of PacifiCorp and ScottishPower or the industry or in  
the financial markets in general. Mathematical analysis (such as determining    
the mean or median) is not, in itself, a meaningful method of using precedent   
transactions data.                                                              

The preparation of a fairness opinion is a complex process and is not     
necessarily susceptible to a partial analysis or summary description. In        
arriving at its opinion, Morgan Stanley considered the results of all of its    
analyses as a whole and did not attribute any particular weight to any          
particular analysis or factor considered by it. Furthermore, selecting any      
portion of Morgan Stanley's analyses, without considering all analyses, would   
create an incomplete view of the process underlying the Morgan Stanley opinion. 
In addition, Morgan Stanley may have deemed various assumptions more or less    
probable than other assumptions, so that the ranges of valuations resulting     
from any particular analysis described above should not be taken to be Morgan   
Stanley's view of the actual value of PacifiCorp or ScottishPower.              

The analyses performed by Morgan Stanley are not necessarily indicative of
actual values, which may be significantly more or less favorable than suggested 
by such analyses. Such analyses were prepared solely as a part of Morgan        
Stanley's analysis of the fairness of the exchange ratio under the original     
merger agreement from a financial point of view to ScottishPower and were       
provided to the ScottishPower Board of Directors in                             

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connection with the delivery of the Morgan Stanley opinion. The analyses do not 
purport to be appraisals or to reflect the prices at which PacifiCorp or        
ScottishPower might actually be sold. In addition, as described above, the      
Morgan Stanley opinion was one of many factors taken into consideration by the  
ScottishPower Board of Directors in making its determination to approve the     
merger. The exchange ratio was determined through negotiations between the      
Boards of Directors of ScottishPower and PacifiCorp.                            

Morgan Stanley is an internationally recognized investment banking and    
advisory firm. Morgan Stanley, as part of its investment banking business, is   
regularly engaged in the valuation of businesses and their securities in        
connection with mergers and acquisitions, negotiated underwritings, competitive 
biddings, secondary distributions of listed and unlisted securities, private    
placements and valuations for corporate, estate and other purposes. In the      
ordinary course of its trading, brokerage and financing activities, Morgan      
Stanley and its affiliates may, at any time, have a long or short position in,  
and buy and sell the debt or equity securities and senior loans of PacifiCorp   
or ScottishPower for its account or the account of its customers. Morgan        
Stanley and its affiliates have, in the past, provided financial advisory and   
financing services to ScottishPower and to PacifiCorp and/or their respective   
affiliates and have received fees for the rendering of such services.           

  Pursuant to a letter dated October 12, 1998, ScottishPower has agreed to pay
Morgan Stanley (1) a customary advisory fee, which is payable if the merger is  
not consummated, (2) an announcement fee of $6.5 million, which is payable upon 
the announcement of the merger, (3) a shareholder approval fee of $6.5 million, 
which is payable upon the approval of the merger by shareholders, and (4) a     
transaction fee of $26.3 million (against which any aforementioned fees paid    
will be credited), which is payable upon consummation of the merger. In         
addition, ScottishPower has agreed to reimburse Morgan Stanley for its expenses 
related to the engagement and to indemnify Morgan Stanley and its affiliates,   
their respective directors, officers, agents and employees and each person, if  
any, controlling Morgan Stanley or any of its affiliates against certain        
liabilities, including liabilities under federal securities laws, and expenses, 
related to or arising out of Morgan Stanley's engagement and the transactions   
in connection therewith.                                                        

Interests of PacifiCorp's Officers and Directors                                

General. Some members of PacifiCorp's senior management and the PacifiCorp
Board of Directors may be deemed to have interests in the merger that are in    
addition to and/or potentially different from the interests of shareholders of  
PacifiCorp generally. The PacifiCorp Board of Directors was aware of these      
interests and considered them, among other matters, in approving the merger     
agreement and the transaction contemplated by the merger agreement. In          
considering the recommendation of the PacifiCorp Board of Directors in respect  
of the merger agreement and the transactions contemplated by the merger         
agreement, the PacifiCorp shareholders should be aware that these interests may 
present actual or potential conflicts of interest with respect to the merger.   

ScottishPower Board Appointments. ScottishPower has agreed, except as     
limited by the exercise of fiduciary duties and to the extent permitted by      
applicable law, to cause Keith McKennon, Chairman, Chief Executive Officer and  
President of PacifiCorp, to be appointed as Deputy Chairman and a director of   
ScottishPower at the time of the merger. In addition to Mr. McKennon, Nolan E.  
Karras and Robert G. Miller, two non-executive members of the PacifiCorp Board  
of Directors, will become members of the ScottishPower Board of Directors at    
the time of the merger. The decision as to which members of the PacifiCorp      
board, other than Mr. McKennon, would join the ScottishPower Board of Directors 
was made after the original merger agreement was signed.                        

PacifiCorp Advisory Board Appointments; Appointments of Richard           
O'Brien. ScottishPower has agreed that, promptly following the merger, specific 
non-executive members of the PacifiCorp Board of Directors, together with Mr.   
O'Brien, will be elected and appointed to a PacifiCorp Advisory Board, the      
function of which shall be to advise the PacifiCorp Board of Directors          
regarding general business strategy, opportunities and activities in            
PacifiCorp's market area and customer relationships. The PacifiCorp Advisory    
Board will meet at least semi-annually and the members of the PacifiCorp        
Advisory Board shall be appointed for two year                                  

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terms. The decision as to the membership of the PacifiCorp Advisory Board,      
other than Mr. Robinson, Mr. O'Brien and Alan Richardson, ScottishPower's       
Executive Director with responsibility for managing all U.S.-west coast aspects 
of the merger process, will not be made until after the completion of the       
merger and Mr. Robinson and Mr. McKennon will jointly designate the other       
members of the advisory board. In addition, Mr. O'Brien will be appointed a     
member of the PacifiCorp Board of Directors and President of PacifiCorp, in     
addition to his current position as Chief Operating Officer of PacifiCorp.      

  Director and Officer Indemnification and Insurance. ScottishPower has agreed
that, except to the extent changes may be required by law, until the sixth      
anniversary of the merger, it will not take any action to amend, modify or      
repeal the existing provisions for indemnification of officers and directors of 
PacifiCorp contained in the articles of incorporation and bylaws, or other      
comparable charter documents, of PacifiCorp and its subsidiaries in a manner as 
would adversely affect the rights of any individual who served as an officer or 
director of PacifiCorp or its subsidiaries before the merger. Furthermore,      
except for some specific circumstances provided for under the merger agreement, 
ScottishPower has agreed that, until the sixth anniversary of the merger, it    
will cause to be maintained in effect the policies of directors' and officers'  
liability insurance maintained by PacifiCorp and its subsidiaries as of the     
date of the merger agreement with respect to claims arising from facts or       
events that occurred on or before the merger. See "--Terms of the Merger        
Agreement--Indemnification; Insurance."                                         

Employment Agreement with Keith McKennon.  Upon completion of the merger, 
Mr. McKennon will resign his positions as Chairman, Chief Executive Officer and 
President of PacifiCorp and, as discussed above, is expected to be appointed as 
Deputy Chairman and a director of ScottishPower. It is anticipated that Mr.     
McKennon's employment with PacifiCorp will terminate at the later of the date   
the merger is completed or September 2, 1999. Currently, Mr. McKennon is a      
party to an employment agreement with PacifiCorp that provides for an annual    
base salary of not less than $780,000 and a target annual bonus opportunity     
equal to a percentage (20% in 1998, 40% in 1999, 50% in 2000 and 60% in 2001)   
of the annual base salary. Mr. McKennon has waived participation in             
PacifiCorp's Executive Severance Plan and Supplemental Executive Retirement     
Plan described below; consequently, he is not eligible for severance pay; nor   
will he qualify for any PacifiCorp retirement benefits upon termination of his  
employment.                                                                     

The Executive Severance Plan. The PacifiCorp Executive Severance Plan     
("Executive Plan") provides severance benefits to terminated executives,        
including enhanced change-in-control benefits in the event of certain           
terminations during the 24-month period following a qualifying transaction,     
including the consummation of the merger. Twenty-six PacifiCorp executives are  
entitled to severance pay under the Executive Plan. Executives designated by    
the PacifiCorp Board of Directors' personnel committee are eligible for change- 
in-control benefits resulting from either of the following within the 24-month  
period after a change in control:                                               

.  a PacifiCorp-initiated termination without "cause"; or                   

.  a resignation within two months after a "material alteration of          
position".                                                            

For this purpose, "cause" means the executive's gross misconduct or gross       
negligence or conduct which indicates a reckless disregard for the consequences 
and has a material adverse effect on PacifiCorp or its affiliates and "material 
alteration in position" means the occurrence of any of the following:           

.  a change in reporting relationship to a lower level;                 

.  a material reduction in the scope of duties and responsibilities;    

.  a material reduction in authority;                                   

.  a "material reduction in compensation"; or                           

.  relocation of executive's work location to an office more than 100   
miles from the executive's office or more than 60 miles from the  
executive's home.                                                 

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  A "material reduction in compensation" occurs when an executive's annualized
base salary is reduced by any amount or the annualized base salary and target   
bonus opportunity combined is reduced by at least 15 percent of the combined    
total opportunity before the change in compensation. In addition, Mr. O'Brien   
also has a "walkaway" right under which he would be eligible for benefits if he 
resigns for any reason effective no earlier than 12 months and no later than 14 
months after the merger. If qualified, an executive would receive severance pay 
in an amount equal to either two, two and one-half or three times the "annual   
cash compensation" of the executive, depending on the level set by the          
PacifiCorp Board of Directors' personnel committee. "Annual cash compensation"  
is defined as annualized base salary, target annual incentive opportunity and   
annualized auto allowance in effect on a material alteration or termination,    
whichever is greater. If the payment would result in imposition of an excise    
tax under Section 4999 of the Internal Revenue Code, PacifiCorp is required to  
make an additional payment to compensate the executive for the effect of this   
excise tax. The executive would also receive continuation of subsidized health  
insurance from six to 24 months depending on length of service, and a minimum   
of 12 months' executive-level outplacement services.                            

Effect of Change in Control on Compensation and Benefits. The merger will 
constitute a "change-in-control" of PacifiCorp for the following PacifiCorp     
compensation and benefit plans in which the executive officers of PacifiCorp    
participate:                                                                    

.  after a change-in-control of PacifiCorp, the PacifiCorp Compensation     
Reduction Plan, under which participating executives of PacifiCorp may
 defer certain compensation, may not be terminated by PacifiCorp without
  approval by participants with a majority of the aggregate balance of the
accounts thereunder;                                                  

.  under the terms of the PacifiCorp Long-Term Incentive Plan and           
PacifiCorp Stock Incentive Plan, and the agreements related to the    
plans, any unvested restricted PacifiCorp common stock and unvested   
  options to purchase PacifiCorp common stock will vest at the time of the
merger, except for certain stock options and restricted stock awards  
 granted in February 1999, which do not automatically vest upon a change
in control, but could vest within the 24 months following a change in 
control if the recipient's employment is terminated under certain     
conditions;                                                           

.  PacifiCorp's annual incentive plans provide for payment of no less than  
target bonus awards for the year in which a transaction such as the   
merger is consummated; and                                            

.  the PacifiCorp Supplemental Executive Retirement Plan ("SERP") provides  
  executives "involuntarily terminated" during the 24 months following the
  merger, or who resign for any reason effective no earlier than 12 months
  and no later than 14 months after the merger, with enhanced supplemental
retirement benefits.                                                  

For purposes of the SERP, a termination of employment is "involuntary" if 
the participant is discharged or resigns under specific circumstances following 
a change-in-control. A discharge or resignation is treated as an involuntary    
termination when any of the following occur:                                    

.  the executive's annualized base salary or target bonus opportunity is    
decreased;                                                            

.  the executive is reassigned to a position in an office located more than 
100 miles from the participant's then-current office or 60 miles from 
the executive's residence, whichever is greater;                      

.  the executive's reporting level in PacifiCorp is changed and is lower    
after the change than it was before;                                  

.  there is a material reduction in the scope of the participant's duties   
or responsibilities; or                                               

.  there is a material reduction in the participant's authority.            

Mr. Verl R. Topham, formerly Senior Vice President and General Counsel,   
retired as an employee of PacifiCorp (but not as a director) on May 1, 1999.    
PacifiCorp has agreed to provide him with the equivalent of change of control   
benefits as set forth above upon the date of the merger. The change of control  
enhancements                                                                    

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to the retirement benefits would apply to future retirement benefits beginning  
the month following the date of the merger. The other change of control         
benefits would be offset against any severance benefits he has received before  
the date of the merger. It is currently anticipated that three other PacifiCorp 
executives will be offered similar arrangements, although PacifiCorp may        
determine that additional arrangements for a limited number of other executives 
will be appropriate. The decision to make such payments was not made until      
after the merger agreement was executed.                                        

Payments to Directors. Non-employee directors of PacifiCorp have been     
granted restricted stock under a non-employee directors' stock compensation     
plan. Stock granted under this plan vests over the five-year plan following the 
grant or shorter period to retirement, and unvested shares are forfeited if the 
recipient ceases to be a director. PacifiCorp has agreed to pay each non-       
employee director $50,000 promptly following the date the director's unvested   
shares are forfeited following completion of the merger. See "Proposal For      
Election of Directors--Director Compensation and Certain Transactions."         

  Retention and Bonus Incentives. PacifiCorp has provided retention incentives
to retain employees in key positions through completion of the merger. In       
addition, the PacifiCorp Board of Directors has established a bonus pool to     
provide incentives and rewards for employees expected to make and making        
extraordinary efforts to accomplish the goals and objectives of PacifiCorp,     
which may or may not be related to or conditioned upon the successful           
consummation of the merger. Therefore, some executive officers of PacifiCorp    
may receive bonuses or retention incentive awards. These bonuses or retention   
awards shall be made at the discretion of Mr. McKennon, as Chief Executive      
Officer of PacifiCorp; provided, however, that any bonus to the Chief Executive 
Officer shall be in the discretion of the PacifiCorp Board of Directors.        

Ongoing Employee Compensation and Benefits. The merger agreement provides 
that ScottishPower will use its reasonable best efforts to cause the            
compensation, incentive and employee benefit plans and arrangements in effect   
on the date of the merger agreement to remain in effect for two years after the 
merger or to maintain until this date plans or arrangements no less favorable   
in the aggregate to the employees covered by the plans and arrangements.        
Therefore, current executive officers of PacifiCorp will continue to receive    
compensation, incentives and employee benefits that are at least as favorable   
as those currently provided.                                                    

Conversion of PacifiCorp Common Stock in the Merger                             

  If the shareholders of ScottishPower approve the merger at the ScottishPower
Extraordinary General Meeting, the merger agreement is approved by the          
requisite vote of PacifiCorp shareholders at the PacifiCorp annual meeting and  
the other conditions to the merger are satisfied or, where permissible, waived, 
the merger will be consummated and become effective at the time at which        
Articles of Merger meeting the requirements of Oregon law are delivered to the  
Secretary of State for the State of Oregon for filing. At the time of the       
merger, an indirect, wholly owned subsidiary of ScottishPower will be merged    
with and into PacifiCorp, which will survive the merger as an indirect, wholly  
owned subsidiary of ScottishPower.                                              

  At the time of the merger, all outstanding shares of PacifiCorp common stock
will cease to be outstanding, and subject to the terms, conditions and          
procedures in the merger agreement, each share of PacifiCorp common stock,      
other than shares owned directly or indirectly by ScottishPower or PacifiCorp,  
will be converted into the right to receive, at the election of the holder of   
PacifiCorp common stock, either:                                                

.  0.58 fully paid and nonassessable ADSs or                                

.  if a properly completed election form was submitted to the exchange      
agent on a timely basis, 2.32 fully paid and nonassessable ordinary   
 shares, all in accordance with the election procedures described below.

Fractional Shares                                                               

 No fractional ADSs or ordinary shares will be issued in the merger, and any
fractional ADS or ordinary share interests will not entitle the owner thereof   
to vote or to any rights of a holder of ADSs or ordinary shares.                

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Instead of any fractional ADS or ordinary share, each PacifiCorp shareholder    
who would otherwise have been entitled to a fraction of an ADS or ordinary      
share will receive from the exchange agent, as applicable:                      

.  a cash payment instead of any fractional ADS determined by multiplying   
(1) the sales price of an ADS on the last trading day immediately     
preceding the merger by (2) the fractional ADS interest to which the  
holder would otherwise be entitled; and/or                            

.  a cash payment instead of such fractional ordinary share determined by   
  multiplying (1) the sales price of an ordinary share on the last trading
day immediately preceding the merger by (2) the fractional ordinary   
share interest to which such holder would otherwise be entitled.      

  The term "sales price" shall mean, on any trading day, with respect to ADSs,
the closing sales price of ADSs reported on the New York Stock Exchange         
Composite Tape on this day and, with respect to ordinary shares, the middle     
market quotation of a ordinary share reported on the Daily Official List of the 
London Stock Exchange on this date. The term "trading day" shall mean any day   
on which securities are traded, with respect to ADSs, on the New York Stock     
Exchange, and with respect to ordinary shares, on the London Stock Exchange.    

Election; Election Procedures                                                   

Promptly after consummation of the merger, each record holder of shares of
PacifiCorp common stock will be sent an election form which will permit the     
shareholder to elect to receive the ordinary shares in exchange for all or any  
portion of the holder's shares of PacifiCorp common stock. A single ordinary    
share election may be made for all shares of PacifiCorp common stock held by    
any holder of PacifiCorp common stock or, alternatively, an ordinary share      
election may be made for a portion of a holder's shares. If a shareholder       
either (1) does not submit a properly completed election form in a timely       
fashion or (2) revokes his or her election form before the deadline for the     
submission of the election form, the shares of PacifiCorp common stock held by  
the shareholder will be converted in the merger into the right to receive the   
ADS consideration.                                                              

All ordinary share elections will be required to be made on an election   
form. To make an effective election with respect to shares of PacifiCorp common 
stock, the holder must, in accordance with the election form, complete properly 
and return the election form to the exchange agent before the election          
deadline. The "election deadline" will be the date announced in a news release  
to be issued by ScottishPower as the last date on which an ordinary share       
election may be made. The election deadline will be a business day no earlier   
than five days before the merger and will be at least five and not more than    
twenty business days following the date of the news release. ScottishPower has  
the right, under some specific circumstances described in the merger agreement, 
to change the election deadline to a later date.                                

ScottishPower has the right to make additional rules not inconsistent with
the merger agreement governing the validity of the election forms and the       
issuance and delivery of certificates for ADSs or ordinary shares into which    
shares of PacifiCorp common stock are converted in the merger. All rules and    
determinations will be final and binding on all holders of PacifiCorp common    
stock.                                                                          

Exchange of Certificates in the Merger                                          

Promptly after the merger, the exchange agent will mail, together with the
election form, to each holder of record of PacifiCorp common stock whose shares 
are converted into the right to receive ADSs and/or ordinary shares,            
appropriate transmittal materials and instructions advising the holder of the   
terms of the exchange effected by the merger and the procedure to be used for   
the surrender of the certificates representing PacifiCorp common stock in       
exchange for the ADRs and/or ordinary shares that the holder has the right to   
receive under the merger agreement. Holders of PacifiCorp common stock are      
requested not to surrender their certificates for exchange until after the      
merger when the transmittal form and instructions are received. Certificates    
representing ADRs and/or ordinary shares shall be delivered to the holder as    
promptly as practicable after proper delivery of the applicable PacifiCorp      
certificates and appropriate transmittal materials to the exchange agent.       

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At the time of the merger and after the merger and until surrendered as   
provided above, PacifiCorp certificates will be deemed, except as required by   
applicable law, to represent, for all corporate purposes of ScottishPower,      
ownership of the whole number of ADSs and/or ordinary shares into which the     
number of shares of PacifiCorp common stock shown thereon have been converted   
in the merger. No dividends or other distributions declared, made or paid after 
the merger with respect to ordinary shares with a record date on or after the   
merger shall be paid to the holder of any unsurrendered PacifiCorp certificate  
with respect to the ADSs and/or ordinary shares represented thereby and no cash 
payment instead of fractional ADSs and/or ordinary shares shall be paid to any  
holder until the holder of record of the PacifiCorp certificate shall surrender 
such PacifiCorp certificate as provided above. Except as applicable law may     
require otherwise, following surrender of any PacifiCorp certificate, there     
will be paid to the record holder of the certificates representing ADRs and/or  
ordinary shares issued in exchange for the PacifiCorp certificate, without      
interest:                                                                       

.  at the time of the surrender, the amount of dividends or other           
distributions, if any, with a record date at the time of the merger or
  after the merger which became payable, but which were not paid by reason
of the immediately preceding sentence, with respect to the ADRs and/or
ordinary shares; and                                                  

.  at the appropriate payment date, the amount of dividends or other        
distributions with a record date at the time of the merger or after   
merger but before surrender and a payment date after surrender payable
with respect to the ADRs and/or ordinary shares.                      

Terms of the Merger Agreement                                                   

Representations and Warranties. In the merger agreement, each of          
ScottishPower and PacifiCorp have made representations and warranties, subject  
to exceptions which were disclosed by the appropriate party, concerning their   
businesses and assets. The representations and warranties must be true and      
correct in all material respects, taken as a whole, at the time of the merger   
or else the other party will not be required to complete the merger. Such       
representations and warranties include, among other things:                     

.  that the party is duly organized and validly existing, that it has       
corporate power and authority to conduct its business and that its    
issued and outstanding shares are fully paid and nonassessable;       

.  that the party has the power and authority to enter into the merger      
 agreement and, subject to obtaining any necessary approvals, to perform
the transactions contemplated under the merger agreement and, if      
applicable, the scheme of arrangement;                                

.  that, except as otherwise disclosed, there are no suits, or actions      
 filed or threatened against the party, the party is not in violation of
 laws, including environmental laws and laws regulating employee benefit
plans and tax laws, and there are no undisclosed liabilities; and     

.  that the party has disclosed all necessary consents from governmental    
and regulatory authorities and third parties required to perform the  
  transactions contemplated under the merger agreement and, if applicable,
the scheme of arrangement.                                            

 In addition, PacifiCorp makes representations relating to its regulation as
a utility. PacifiCorp also represents and warrants that the provisions of       
Oregon laws regulating acquisitions of control shares are not applicable to the 
merger agreement or any other transactions contemplated by the merger           
agreement.                                                                      

Conduct of Business Prior to the Merger                                       

  ScottishPower and PacifiCorp have each agreed that before the merger, unless
consented to by the other party or except as expressly contemplated or          
permitted by the merger agreement or, if applicable, the scheme of arrangement, 
it will:                                                                        

(1) conduct its business only in the ordinary course consistent with its
past business practice;                                                     

(2) use all commercially reasonable efforts to:                         

.  preserve intact in all material respects its present business        
organization and reputation;                                      

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.  maintain in effect all existing material permits;                    

.  keep its key personnel;                                              

.  maintain its assets and properties in good working order;            

.  maintain insurance;                                                  

.  preserve its relationship with customers and suppliers; and          

.  comply in all material respects with all applicable laws and orders; 

(3) confer with the other party on a regular and frequent basis with    
respect to its business and other matters relevant to the merger and will   
advise the other party of any material change or event;                     

(4) notify the other party of, and use all commercially reasonable      
efforts to cure, any circumstances that will cause any of its covenants or  
agreements under the merger agreement to be breached or will render untrue  
in any material respect any of its representations or warranties contained  
in the merger agreement;                                                    

(5) notify the other party in writing of, and use all commercially      
reasonable efforts to cure, before the consummation of the merger, any      
violation or breach of any representation, warranty, covenant or agreement; 
and                                                                         

 (6) take or cause to be taken all commercially reasonable steps necessary
or desirable and proceed diligently and in good faith to satisfy each       
condition to its obligations contained in the merger agreement and to       
consummate and make effective the transactions contemplated by the merger   
agreement and not take or fail to take any action that would reasonably be  
expected to result in the nonfulfillment of any such condition.             

In addition, PacifiCorp has agreed that, unless otherwise consented to by 
ScottishPower or except as expressly contemplated or permitted by the merger    
agreement, it will not and will not permit any of its subsidiaries to:          

. amend its charter documents;                                              

. pay dividends or make distributions, except for the payment of regular    
cash dividends;                                                           

. split, combine or reclassify any of its capital stock;                    

.adopt a plan of reorganization;                                            

.repurchase any capital stock, other than certain series of PacifiCorp      
preferred stock;                                                          

.  issue, deliver or sell any share of its capital stock or any option to   
purchase its capital stock, other than:                               

.  PacifiCorp common stock pursuant to outstanding options;             

.PacifiCorp common stock and options pursuant to PacifiCorp's stock     
incentive plan; and                                                   

.PacifiCorp preferred stock with a stated value of up to $250 million;  

.make acquisitions in excess of $25 million in any one transaction;         

.  dispose of or encumber any asset other than in the ordinary course of    
business consistent with past practice or having an aggregate net book
value in excess of $25 million in any one transaction;                

.permit any changes in their accounting methods;                            

.  incur or guarantee any indebtedness, other than short-term indebtedness  
incurred in the ordinary course of business consistent with past      
practice in an aggregate amount not exceeding $500 million, long-term 
indebtedness not aggregating more than $200 million and indebtedness  
incurred in refinancing outstanding indebtedness or indebtedness      
incurred in compliance with the merger agreement;                     

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.  enter into, adopt, amend or terminate any employee benefit plan;         

.  increase the compensation of any director or employee, except for normal 
increases in the ordinary course of business and consistent with past 
practice that do not result in a material increase in benefit or      
compensation expense, or grant to any employee any additional rights; 

.  enter into any contract or amend or modify any existing contract or      
engage in any new transaction with any affiliate or any of its        
subsidiaries outside the ordinary course of business consistent with  
past practice or not on an arm's-length basis;                        

.  make any capital expenditures, other than capital expenditures incurred  
as required by applicable law, in connection with the repair or       
replacement of facilities destroyed or damaged due to casualty or     
accident and in an amount within 110% of the aggregate amount provided
for such purposes in PacifiCorp's budget;                             

.  engage in any activities which would change its status, or that of any   
of its subsidiaries, under the Public Utility Holding Company Act of  
1935;                                                                 

.  agree or consent to any material agreements or modifications to existing 
material agreements with any governmental or regulatory authority;    

.  except as required pursuant to the tariffs on file with the FERC,        
commence construction of any additional generating, transmission or   
delivery capacity in excess of 500 megawatts;                         

.  except as required pursuant to the tariffs on file with FERC and as set  
  forth in PacifiCorp's budget, obligate itself to purchase any additional
 generating, transmission or delivery plants or facilities, in an amount
in excess of $25 million in one transaction;                          

.  take any action that would cause the merger to fail to qualify as a      
  reorganization described in Section 368(a) of the Internal Revenue Code;

.  willfully take any action that is reasonably likely to result in a       
material breach of any provision of the merger agreement or in any of 
the representations and warranties being untrue as of the date the    
merger is consummated;                                                

.  initiate any material actions, suits, arbitrations or proceedings;       

.  take any action that would be reasonably likely to jeopardize the        
 qualification of any material amount of outstanding revenue bonds which
qualify at the time of the merger agreement as "exempt facility bonds"
under Section 142(a) of the Internal Revenue Code or as tax-exempt    
industrial development bonds under Section 103(b)(4) of the Internal  
Revenue Code of 1954, prior to the enactment of the Tax Reform Act of 
1986;                                                                 

.  except as previously disclosed, make or rescind any material express or  
deemed election relating to taxes or change any of its methods of     
reporting income or deductions for tax purposes from those employed in
  the preparation of its tax returns for the prior taxable year, except as
required by applicable law;                                           

.  satisfy any material claims, liabilities or obligations other than in    
the ordinary course of business consistent with past practice or as   
reflected, or contemplated by its most recent consolidated financial  
statements;                                                           

.  modify, amend, terminate, renew or fail to use reasonable efforts to     
renew any material contract or waive, release or assign any material  
rights or claims;                                                     

.  permit its subsidiaries or, within exercise of its reasonable business   
efforts, its joint ventures, except in the ordinary course of business
consistent with past practice, to modify, amend, terminate, renew or  
 fail to use reasonable efforts to renew any material contract or waive,
release or assign any material rights or claims;                      

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.  terminate, amend, modify or waive any provision of any confidentiality   
or standstill agreement to which it is a party; and                   

.  control or direct, directly or indirectly, ScottishPower's operations    
before the consummation of the merger.                                

ScottishPower has agreed that, unless otherwise consented to by PacifiCorp
or except as permitted by the merger agreement, it will not and will not permit 
any of its subsidiaries to:                                                     

.  amend its charter documents;                                             

.  pay dividends or make distributions;                                     

.  reclassify any of its capital stock;                                     

.  adopt a plan or reorganization;                                          

.  repurchase any capital stock;                                            

.  issue, deliver or sell any share of its capital stock or any option to   
purchase its capital stock;                                           

.  other than as provided for in ScottishPower's pre-disclosed operating    
 budget, make acquisitions that are in excess of (Pounds)750 million, or
that would or have a material adverse effect on ScottishPower and its 
subsidiaries taken as a whole;                                        

.  other than as provided for in ScottishPower's pre-disclosed operating    
  budget, dispose of or encumber any asset, other than dispositions in the
 ordinary course of business consistent with past practice and having an
aggregate value less than (Pounds)750 million;                        

.  permit changes in their accounting methods;                              

.  incur or guarantee any indebtedness;                                     

.  enter into any contract or amend or modify any existing contract or      
engage in any new transaction with any affiliate or any of its        
subsidiaries outside the ordinary course of business consistent with  
past practice or not on an arm's-length basis;                        

.  make any capital expenditures, other than capital expenditures incurred  
as required by applicable law, in connection with the repair or       
replacement of facilities destroyed or damaged due to casualty or     
accident and in an amount within 110% of the aggregate amount provided
for such purposes in ScottishPower's budget;                          

.  engage in any transaction which would change it status, or that of any   
of its subsidiaries, under the 1935 Act;                              

.  except as previously disclosed, commence construction of any additional  
generating, transmission or delivery capacity in excess of 500        
megawatts;                                                            

.  except as previously disclosed, obligate itself to purchase any          
  additional generating, transmission or delivery plants or facilities, in
an amount in excess of $200 million;                                  

.  take any action that would cause the merger to fail to qualify as a      
  reorganization described in Section 368(a) of the Internal Revenue Code;

.  willfully take or fail to take any action which is reasonably likely to  
 result in a material breach of any provision of the merger agreement or
  in any of the representations and warranties being untrue as of the date
the merger is consummated;                                            

.  except as previously disclosed, make or rescind any material express or  
deemed election relating to taxes or change any of its methods of     
reporting income or deductions for tax purposes from those employed in
  the preparation of its tax returns for the prior taxable year, except as
required by applicable law;                                           

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.  satisfy any material claims or liabilities other than in the ordinary    
course of business consistent with past practice or as reflected, or  
contemplated by its most recent consolidated financial statements;    

.  modify, amend, terminate, renew or fail to use reasonable efforts to     
renew any material contract or waive, release or assign any material  
rights or claims;                                                     

.  permit it subsidiaries or, within exercise of its reasonable business    
efforts, its joint ventures, except in the ordinary course of business
consistent with past practice, to modify, amend, terminate, renew or  
 fail to use reasonable efforts to renew any material contract or waive,
release or assign any material rights or claims;                      

.  terminate, amend, modify or waive any provision of any confidentiality   
or standstill agreement to which it is a party;                       

.  control or direct, directly or indirectly, PacifiCorp's operations       
before the consummation of the merger; and                            

.  engage, nor permit any of its subsidiaries to engage, in any activities  
  or omit to do anything that would entitle any governmental or regulatory
authority to revoke in whole or in any material part any material     
license, authorization or appointment or which would otherwise        
materially change the status of ScottishPower or any of its           
subsidiaries.                                                         

Indemnification; Insurance. ScottishPower has agreed that it will not,    
except to the extent required by law, until the sixth anniversary of the        
merger:                                                                         

.  amend, modify or repeal the provisions for indemnification of directors  
or officers contained in the charter documents of PacifiCorp and its  
 subsidiaries in a manner which would adversely affect the rights of any
individual who was a director or officer of PacifiCorp or any of its  
subsidiaries before the merger to be indemnified by those corporations
 in respect of their serving as officers or directors before the merger;
and                                                                   

.  until the sixth anniversary of the merger, it will cause to be           
maintained in effect, to the extent available, the policies of        
directors' and officers' liability insurance maintained by PacifiCorp 
  and its subsidiaries as of the date of the merger agreement with respect
to claims arising from facts or events that occurred on or before the 
merger.                                                               

Neither ScottishPower nor PacifiCorp shall be obligated to expend any amount
per year in excess of 200% of the aggregate premiums paid by PacifiCorp and its 
subsidiaries in 1998, on an annualized basis,to maintain or procure insurance   
coverage.                                                                       

Benefit Arrangements. ScottishPower has agreed to use its reasonable best 
efforts to cause:                                                               

.  PacifiCorp's employee benefit plans in effect at the date of the signing 
  of the merger agreement that have been disclosed to ScottishPower before
  that date, including plans for health and retirement benefits, incentive
 compensation, stock compensation and severance pay, to remain in effect
until the second anniversary of the merger; or                        

.  to maintain until that date benefit plans which are no less favorable,   
in the aggregate, to the employees covered by PacifiCorp's employee   
benefit plans referred to above at the date of signing of the merger  
agreement.                                                            

ScottishPower will not be required to continue any specific plan nor will   
it be prevented from:                                                 

.  establishing any other benefit plans in respect of all or any of the     
  employees covered by such employee benefit plans or any other employees;
or                                                                    

.  amending employee benefit plans where required by applicable law or      
where the amendment is with the consent of the affected employees.    

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ScottishPower further has agreed to honor, and to cause its subsidiaries to 
honor, each existing employment, change of control, severance and termination   
agreement between PacifiCorp or any of its subsidiaries, and any officer,       
director or employee of those companies.                                        

 PacifiCorp Stock Option Plans. Under the merger agreement, the parties have
agreed that each outstanding option to purchase shares of PacifiCorp common     
stock under the PacifiCorp Stock Incentive Plan will be converted into an       
option to acquire, on the same terms and conditions as were applicable under    
such PacifiCorp stock option, a number of ADSs equal to the product of:         

(1)  the number of shares of PacifiCorp common stock subject to the option  
immediately before the merger and                                 

(2)  0.58.                                                            

The option exercise price per ADS at which such option is exercisable will
be the amount obtained by dividing:                                             

(1)  the option exercise price per share of PacifiCorp common stock at      
which the option is exercisable immediately before the merger by  

(2)  0.58.                                                            

In the case of any PacifiCorp stock option to which Section 421 of the Internal 
Revenue Code applies by reason of its qualification under any of Sections 422-  
424 of the Internal Revenue Code, however, the option exercise price, the       
number of shares which may be acquired under the option and the terms and       
conditions of exercise of the option will be determined to comply with Section  
424(a) of the Internal Revenue Code. Under no circumstances will the option     
exercise price per ADS be less than the aggregate par value of the ordinary     
shares represented by an ADS.                                                   

ScottishPower has agreed to:                                              

.  as soon as practicable after the merger, deliver to the participants in  
the PacifiCorp Stock Incentive Plan appropriate notices setting forth 
the participants' rights under the plan with respect to converted     
  options which shall continue in effect on the same terms and conditions;

.  take all corporate action necessary to have a sufficient number of ADSs  
available for delivery under the PacifiCorp Stock Incentive Plan;     

.  as soon as practicable after the merger, file a registration statement   
  on Form S-8 promulgated by the SEC under the Securities Act with respect
  to the ADSs subject to those options and use its reasonable best efforts
 to maintain the effectiveness of the registration statement for so long
as those options remain outstanding.                                  

 PacifiCorp has agreed to take all corporate action necessary and obtain all
relevant consents to ensure that the consideration received upon the conversion 
under the merger of each outstanding share of restricted PacifiCorp common      
stock issued under PacifiCorp's Non-Employee Director's Stock Compensation      
Plan, Stock Incentive Plan and Long Term Incentive Plan will continue to be     
subject to the same restrictions that the shares were subject to under          
PacifiCorp's Non-Employee Director's Stock Compensation Plan, Stock Incentive   
Plan and Long Term Incentive Plan and the applicable award agreements,          
including any forfeiture restrictions. These restrictions are subject to        
amendment or modification of those plans or award agreements to reflect action  
of the PacifiCorp Board of Directors taken before the date of the merger        
agreement and disclosed to ScottishPower. See "--Interests of PacifiCorp's      
Officers and Directors in the Merger--Effect of Change of Control on            
Compensation and Benefits".                                                     

No Solicitation. Under the merger agreement, PacifiCorp has agreed that,  
before the merger, neither it nor any of its subsidiaries or other affiliates   
will, and it will use its best efforts to cause their representatives not to    
initiate, solicit or encourage, directly or indirectly, any inquiries or the    
making or implementation of any alternative proposal, as defined below, or      
engage in any negotiations concerning,                                          

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or provide any information or data to, or have any discussions with, any        
person or group relating to an alternative proposal, or otherwise facilitate    
any effort or attempt to make or implement an alternative proposal.             

The term "alternative proposal" means for these purposes any proposal or  
offer, including, without limitation, any proposal or offer to PacifiCorp's     
shareholders, with respect to a merger, consolidation or other business         
combination including PacifiCorp or any of its subsidiaries or any acquisition  
or similar transaction involving the purchase of                                

.  all or any significant portion of the assets of PacifiCorp and its       
subsidiaries taken as a whole;                                        

.  5% or more of the outstanding shares of PacifiCorp common stock; or      

.  5% or more of the outstanding shares of the capital stock of any         
subsidiary of PacifiCorp.                                             

PacifiCorp further agreed to immediately cease and cause to be terminated 
any existing activities, discussions or negotiations with any third parties     
with respect to any of the foregoing. In addition, PacifiCorp agreed to notify  
ScottishPower promptly if any inquiries, proposals or offers are received by,   
any information is requested from, or any negotiations or discussions are       
sought to be initiated or continued with, PacifiCorp or its subsidiaries or     
representatives relating to an alternative proposal.                            

The merger agreement, however, does provide that the PacifiCorp Board of  
Directors may furnish information to or enter into discussions or negotiations  
with any person or group that makes an unsolicited alternative proposal if,     
and to the extent that, before receipt of the PacifiCorp shareholders'          
approval of the merger agreement:                                               

.  the PacifiCorp Board of Directors, based upon the advice of outside      
counsel, determines in good faith that a failure to perform the action
could reasonably be expected to result in a breach of its fiduciary   
duties to shareholders imposed by law;                                

.  the PacifiCorp Board of Directors has reasonably concluded in good faith 
that the person or group making the alternative proposal will have    
adequate sources of financing to consummate the alternative proposal; 
and                                                                   

.  the PacifiCorp Board of Directors has reasonably concluded in good faith 
that the alternative proposal is more favorable to PacifiCorp's       
shareholders than the merger.                                         

However, before furnishing such information to, or entering into          
discussions or negotiations with, any person or group, PacifiCorp must provide  
written notice to ScottishPower to the effect that it is furnishing             
information to, or entering into discussions or negotiations with, the party    
or parties making the alternative proposal, and identify the party or parties   
in reasonable detail. PacifiCorp also agreed to keep ScottishPower informed of  
the status of any discussions or negotiations to the extent the disclosure      
would not constitute a violation of any applicable law. In addition, the        
merger agreement provides that the PacifiCorp Board of Directors will comply    
with Rule 14e-2 promulgated under the Securities Exchange Act with respect to   
an alternative proposal.                                                        

Conditions Precedent to the Merger. Before the merger can occur, various  
conditions stated in the merger agreement must be fulfilled or, alternatively,  
waived by the appropriate party or parties. In addition to the approval of the  
with the merger by the shareholders of ScottishPower and the approval of the    
merger agreement and the terms of the merger by the PacifiCorp shareholders,    
the obligations of ScottishPower and PacifiCorp to effect the merger are        
subject to the fulfillment or waiver of specified conditions, including,        

.  the representations and warranties made by the respective parties in the 
merger agreement must be true, in all material respects, taken as a   
  whole, as of the date of the merger except for those representations and
warranties made as of an earlier date;                                

.  the other party must have performed and complied with, in all material   
respects, each obligation required by the merger agreement;           

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.  there must not have been any development having a significant negative   
impact on the other party or any circumstances which could, when taken
 together with any breaches or violations of the merger agreement by the
other party, have a significant negative impact on the other party and
its subsidiaries taken as a whole;                                    

.  except as provided in the merger agreement, all consents, approvals and  
actions, filings with and notices to any governmental or regulatory   
authority must have been obtained and become final orders, and these  
final orders in the aggregate shall not have a significant negative   
impact on PacifiCorp and its subsidiaries, taken as a whole;          

.  the consent or approval of each person, other than a governmental or     
regulatory authority, whose consent or approval is required by        
  ScottishPower, PacifiCorp and any of their respective subsidiaries under
any material contract to consummate the merger and the other          
 transactions contemplated by the merger agreement having been obtained,
except for those consents and approvals which, if not obtained, would 
not have a significant negative impact on PacifiCorp and its          
subsidiaries taken as a whole or on the ability of ScottishPower or   
PacifiCorp to consummate the transactions contemplated by the merger  
agreement and, if applicable, the scheme of arrangement;              

.  there must not be any injunction or other order by any governmental or   
regulatory authority preventing or restricting consummation of the    
merger;                                                               

.  the applicable period under the HSR Act must have expired or been        
terminated; and                                                       

.  written tax opinions from Milbank, Tweed, Stoel Rives LLP, and LeBoeuf,  
Lamb must have been delivered to ScottishPower and PacifiCorp.        

Termination. The merger agreement may be terminated by mutual written     
agreement of the parties. The merger agreement may also be terminated by either 
PacifiCorp or ScottishPower if:                                                 

.  the merger has not been consummated on or before September 6, 1999 and   
  such failure is not caused by any breach by the terminating party of any
  obligation under the merger agreement. However, if on September 6, 1999,
ScottishPower and PacifiCorp have not received all of the approvals of
governmental authorities required to satisfy the conditions in the    
merger agreement but all other conditions are fulfilled or are capable
of being fulfilled, then, at the option of either ScottishPower or    
 PacifiCorp, the term of the merger agreement may be extended until June
6, 2000;                                                              

.  the PacifiCorp shareholders have not approved the merger agreement or    
  the ScottishPower shareholders have not approved the merger by reason of
 the failure to obtain the requisite vote on a vote of the shareholders;

.  there has been a material breach of any representation, warranty,        
covenant or agreement on the part of the non-terminating party in the 
merger agreement, which is determined in all cases as if the terms    
 "material" or "materially" were not included in any such representation
or warranty, which breach is not curable or, if curable, has not been 
 cured within 30 days following the receipt by the non-terminating party
of notice of such breach from the terminating party and which breach, 
when taken together with any other breaches of representations,       
warranties, covenants and agreements of the non-terminating party     
contained in the merger agreement, has or would reasonably be expected
  to have a significant negative impact on PacifiCorp and its subsidiaries
taken as a whole; or                                                  

.  any court of competent jurisdiction or other competent governmental or   
regulatory authority shall have issued an order making illegal or     
  otherwise preventing or prohibiting the merger and such order shall have
become final and non-appealable.                                      

The merger agreement may be terminated by PacifiCorp if:                  

.  the PacifiCorp Board of Directors determines in good faith that a        
failure to terminate the merger agreement could reasonably be expected
  to result in a breach of its fiduciary duties to shareholders imposed by
law by reason of an unsolicited alternative proposal having been made;
or                                                                    

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.  the ScottishPower Board of Directors withdraws or modifies in a manner   
materially adverse to PacifiCorp its approval or recommendation of the
merger agreement or the merger; or                                    

.  there has been a change in control of ScottishPower.                     

For purposes of the merger agreement, a "change of control" shall occur if  
any of the following applies:                                         

.  Any "Person", as such term is used in Sections 13(d) and 14(d) of the    
  Securities Exchange Act is or becomes the "beneficial owner", as defined
  in Rule 13d-3 under the Securities Exchange Act, directly or indirectly,
 of securities of ScottishPower representing 30% or more of the combined
voting power of ScottishPower's outstanding capital stock;            

.  the shareholders of ScottishPower approve a merger or other              
consolidation of ScottishPower with any other company, other than a   
merger or consolidation effected to implement a recapitalization of   
 ScottishPower in which no Person acquires more than 30% of the combined
voting power of ScottishPower's then outstanding securities;          

.  tender or exchange offer is made for the ordinary shares of              
ScottishPower or securities convertible into ordinary shares of       
ScottishPower and the offer results in a portion of those securities  
being purchased and the offeror after the consummation of the offer is
the beneficial owner, as determined under Section 13(d) of the        
Securities Exchange Act, directly or indirectly, of securities        
 representing at least 30% of the voting power of outstanding securities
of ScottishPower; or                                                  

.  ScottishPower sells 30% or more of its operating assets or, if           
applicable, New ScottishPower sells 30% or more of the shares of      
ScottishPower, in each case, to a buyer that is not a member of the   
ScottishPower controlled group of corporations.                       

The merger agreement may be terminated by ScottishPower if the PacifiCorp   
Board of Directors:                                                             

.  withdraws or modifies in a manner materially adverse to ScottishPower    
its approval or recommendation of the merger agreement or the merger; 

.  fails to reaffirm its approval or recommendation upon ScottishPower's    
request;                                                              

.  approves, recommends or takes no position with respect to an alternative 
proposal to the shareholders of PacifiCorp; or                        

.  resolves to take any of the foregoing actions.                           

Termination Fee. If any person or group shall have made an alternative    
proposal and thereafter:                                                        

.  the merger agreement is terminated                                       

(1) by PacifiCorp as a result of the PacifiCorp Board of Directors      
determination in good faith, based upon the advice of outside       
counsel, that a failure to terminate the merger agreement could     
reasonably be expected to result in a breach of its fiduciary duties
to shareholders imposed by law by reason of an unsolicited          
alternative proposal,                                               

(2) by ScottishPower because PacifiCorp has materially breached any     
representation, warranty, covenant or agreement or because the      
PacifiCorp Board of Directors (a) withdraws or modifies in a manner 
 materially adverse to ScottishPower its approval or recommendation of
 the merger agreement or merger, (b) fails to reaffirm its approval or
 recommendation upon ScottishPower's request, (c) approves, recommends
or takes no position with respect to an alternative proposal to its 
shareholders, or (d) resolves to take any of the foregoing actions, 
or                                                                  

(3) by either party as a result of the approval and adoption of the     
merger agreement by PacifiCorp shareholders not being obtained; or  

.  the merger agreement is terminated for any other reason, other than by   
reason of the breach of the merger agreement by ScottishPower, or a   
 change of control, or as a result of ScottishPower shareholder approval
 of the merger not being obtained or the withdrawal or modification in a
manner                                                                

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materially adverse to PacifiCorp its approval or recommendation of the
merger agreement or the merger by ScottishPower's Board of Directors, 
and a definitive agreement with respect to the alternative proposal is
executed within one year after the termination;                       

then PacifiCorp shall pay to ScottishPower a termination fee of $250 million.   

If the merger agreement is terminated by PacifiCorp following a change of 
control, other than through the scheme of arrangement, of ScottishPower, then   
ScottishPower shall pay to PacifiCorp a termination fee of $250 million.        

 If the merger agreement is terminated by either PacifiCorp or ScottishPower
due to the failure to obtain the requisite vote of shareholders of PacifiCorp   
or ScottishPower and the termination fee described above is not payable, (1) in 
the case of the merger agreement not being approved by the PacifiCorp           
shareholders and the merger being approved by the ScottishPower shareholders,   
PacifiCorp shall pay to ScottishPower $10 million, or (2) in the case of        
proposal to merge not being approved by the ScottishPower shareholders and the  
merger agreement being approved by the PacifiCorp shareholders, ScottishPower   
shall pay to PacifiCorp $10 million.                                            

Amendment; Waiver. The merger agreement may be amended, supplemented or   
modified by written action taken by or on behalf of the respective boards of    
directors of the parties to the merger agreement at any time before the merger, 
whether before or after the approval of the shareholders of PacifiCorp and      
ScottishPower has been obtained, but after the adoption and approval only to    
the extent permitted by applicable law.                                         

At any time before the merger, any of the parties to the merger agreement 
may, to the extent permitted by applicable law: (1) waive any inaccuracies in   
the representations and warranties of the other parties; (2) extend the time    
for performance of the obligations or other acts of the other parties; or (3)   
waive compliance with any of the covenants, agreements or conditions of the     
other parties.                                                                  

Expenses. The merger agreement provides that each party to the merger     
agreement will pay its own expenses in connection with the merger, except that  
PacifiCorp shall not have any obligation with respect to any fee or expenses    
relating to ScottishPower's obligation to demonstrate the existence of adequate 
working capital in connection with the filing of listing particulars with the   
London Stock Exchange.                                                          

Regulatory Matters                                                              

  As indicated below, consummation of the merger is conditioned upon obtaining
numerous regulatory approvals. Set forth below is a summary of the material     
regulatory requirements affecting the merger.                                   

PacifiCorp is a public utility and, as a result, will remain subject to   
regulation by the FERC and state regulatory commissions in Oregon, Washington,  
California, Utah, Idaho and Wyoming with respect to rate matters, the issuance  
of securities and corporate reorganization. Applications in connection with the 
proposed transaction have been filed with the FERC and with the California      
Public Utility Commission, the Oregon Public Utility Commission, the Washington 
Utilities and Transportation Commission, the Idaho Public Utilities Commission, 
the Utah Public Service Commission and the Wyoming Public Service Commission.   
The Commissions are being requested to either disclaim jurisdiction over the    
transaction or approve it. Generally, approval by the Commissions is            
conditioned upon a finding that the transaction is consistent with the public   
interest. The Commissions may attach conditions to their approval. While the    
outcome of regulatory proceedings can never be predicted with certainty, it is  
currently anticipated that the regulatory process can be completed in late      
1999.                                                                           

  Testimony has been filed in Oregon, Idaho, Washington, Wyoming and Utah, and
hearings have been scheduled in those states in July and early August 1999.     
Testimony has also been filed in California but a hearing has not been          
scheduled as it currently appears that all matters will be resolved without the 
need for hearings.                                                              

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Section 203 of the Federal Power Act provides that no public utility shall
sell or otherwise dispose of its jurisdictional facilities or directly or       
indirectly merge or consolidate those facilities with those of any other person 
without having first obtained authorization from the FERC. Section 203 approval 
is to be granted if the FERC finds it to be "consistent with the public         
interest". PacifiCorp has filed an application with the FERC seeking approval   
of the proposed transaction to the extent it constitutes an indirect transfer   
of control of its jurisdictional facilities and those of its subsidiaries to    
ScottishPower. The FERC has established May 10, 1999 as the date by which       
petitions to intervene must be filed. In recent proceedings under Section 203   
of the Federal Power Act, the FERC has focused on the effect a proposed         
transaction may have on:                                                        

.  competition in domestic power markets;                                   

.  the applicant's wholesale power and transmission customers; and          

.  state and federal regulation of the applicant.                           

  PacifiCorp also has Federal Power Act hydroelectric licenses subject to FERC
jurisdiction. However, PacifiCorp does not believe FERC approval with respect   
to its hydroelectric licenses is required to consummate the merger. It is not   
expected that the merger will give rise to substantial FERC concern in any of   
these areas. The FERC has authority to impose conditions to its approval.       

SEC approval of the merger under the Public Utility Holding Company Act of
1935 is not required. Following the completion of the merger, however,          
ScottishPower plans to register as a holding company as required under Section  
5 of the 1935 Act. It may be the first company domiciled outside of the United  
States to do so.                                                                

  As discussed earlier, ScottishPower plans to reorganize prior to the closing
of the merger to put New ScottishPower over ScottishPower as a holding company. 
If the reorganization is completed, New ScottishPower would register as the     
holding company under the 1935 Act. Following the reorganization, the U.S. and  
U.K. utility businesses will be in separate subsidiaries and the U.K.           
subsidiaries will qualify for exemption from regulation as foreign utility      
companies under the 1935 Act. Because there are registered U.S. utility holding 
companies that currently conduct the same types of non-utility businesses as    
those currently conducted by ScottishPower, it is anticipated that registration 
will not affect the conduct of ScottishPower's non-utility businesses. If the   
reorganization is not completed before the merger, ScottishPower will register  
as a holding company under the 1935 Act and will operate its U.S. businesses in 
separate subsidiaries and its U.K. businesses, including those that are         
divisions, as if they were separate subsidiaries subject to regulation under    
the 1935 Act. ScottishPower will, in any event, implement a future              
reorganization to place the divisions in separate subsidiaries pursuant to the  
assurances given to the U.K. Secretary of State for Trade and Industry          
described under "U.K. Approvals" below. A pre-merger reorganization is not      
subject to SEC approval under the 1935 Act, but a post-merger reorganization    
would be. While ScottishPower currently believes that the pre-merger            
reorganization will become effective, it cannot predict the outcome of the      
approvals needed for that reorganization or the regulatory proceedings for any  
future reorganization.                                                          

Following consummation of the merger, PacifiCorp, as a public utility     
company, and ScottishPower (which in the following discussion refers to the     
holding company--either New ScottishPower or ScottishPower), as a holding       
company, and other non-utility subsidiaries of ScottishPower will be subject to 
regulation under the 1935 Act, unless specific subsidiaries or transactions are 
otherwise exempt by SEC rules or orders, as follows:                            

.  Issuances of securities by PacifiCorp and ScottishPower will be          
 regulated but certain exemptions may be available to PacifiCorp because
it is also regulated by state commissions as to the issuance of       
  securities. Foreign utility companies held as separate subsidiaries will
be exempt from regulation.                                            

.  Acquisitions of securities and utility assets by PacifiCorp and          
ScottishPower will be regulated.                                      

.  Any affiliate transactions among members of the group after the merger   
  would be regulated. It is not expected that there will be many affiliate
transactions due to business separation requirements                  

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imposed by regulators in the U.K. and U.S. and because PacifiCorp     
provides most of its own services. The 1935 Act regulates and, in some
cases, prohibits affiliate financing transactions and the pricing and 
supply of services and goods among affiliates.                        

.  Later acquisitions of businesses by ScottishPower and PacifiCorp must be 
reasonably incidental, economically necessary or appropriate to the   
operations of an integrated public utility system.                    

.  In certain cases, the payment of dividends and the repurchase of         
securities by PacifiCorp and ScottishPower would be subject to        
regulation by the SEC.                                                

While there are increased burdens imposed by 1935 Act regulation, ScottishPower 
does not believe increased regulation will have a material adverse effect on    
ScottishPower or its subsidiaries.                                              

As a non-operating, 2.5% owner of the Trojan nuclear power plant, which is
in the decommissioning process, PacifiCorp must obtain approval from the        
Nuclear Regulatory Commission to the extent there is a change in control of the 
licensee and must assure the Commission that all safety-related matters remain  
under the control of the operator or under the supervision of United States     
citizens.                                                                       

The completion of the merger is subject to the Foreign Acquisitions and   
Takeovers Act 1975 of Australia. Under that Act, the Treasurer of Australia has 
broad powers to prohibit or place conditions on the acquisition of interests in 
Australian business operations by foreign investors if the acquisitions are     
found to be contrary to the national interest. The parties have notified the    
Australian Foreign Investment Review Board of the proposed merger as a result   
of PacifiCorp's ownership of Powercor Australia Ltd. and an interest in the     
Hazelwood power station and adjacent brown coal mine in Victoria. The           
Australian Treasurer is precluded from taking any action in connection with the 
acquisition after the expiration of a 40-day review period, although this       
period may be extended for up to 90 additional days. On March 25, 1999, the     
Australian Federal Treasurer confirmed that he had no objection to the merger.  

Provisions promulgated under the Omnibus Trade and Competitiveness Act of 
1988 ("Exon-Florio") empower the President of the United States to prohibit or  
suspend an acquisition of, or investment in, a U.S. company by a foreign person 
if the President finds, after investigation, credible evidence that the foreign 
person might take action that threatens to impair the national security of the  
U.S. and that other provisions of existing law do not provide adequate and      
appropriate authority to protect the national security. Any determination that  
an investigation is called for must be made within 30 days of notice of the     
proposed transaction. In the event this determination is made, any              
investigation must be completed within 45 days of the determination.            
Thereafter, any decision to take action must be announced within 15 days of     
completion of the investigation. Authority for administering Exon-Florio has    
been delegated to the Committee on Foreign Investment in the United States.     
PacifiCorp and ScottishPower will make a voluntary filing to CFIUS seeking a    
finding that the merger does not impair the national security of the United     
States.                                                                         

Antitrust Considerations. The Hart-Scott-Rodino Antitrust Improvements Act
of 1976 provides that some specific transactions, including the merger, may not 
be consummated until certain information has been submitted to the Antitrust    
Division of the Department of Justice and the Federal Trade Commission and      
specified HSR Act waiting period requirements have been satisfied. On February  
12, 1999, PacifiCorp and ScottishPower were granted early termination of the    
waiting period requirements of the HSR Act. However, the early termination of   
the waiting period does not preclude the Antitrust Division or the Federal      
Trade Commission from challenging the merger on antitrust grounds. Neither      
ScottishPower nor PacifiCorp believes that the merger will violate federal      
antitrust laws. If the merger is not completed within 12 months after the       
expiration or earlier termination of the initial HSR Act waiting period,        
ScottishPower and PacifiCorp would be required to submit new information to the 
Antitrust Division and the Federal Trade Commission, and a new HSR Act waiting  
period would have to expire or be earlier terminated before the merger could be 
completed.                                                                      

U.K. Approvals. Authorization of the merger by the U.K. Secretary of State
for Trade and Industry or any other U.K. regulatory authority is not mandatory. 
The U.K. Fair Trading Act 1973 provides the U.K.                                

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Secretary of State with a discretion to refer some specific transactions        
(including the merger) within four months following their announcement to the   
U.K. Monopolies and Mergers Commission on the grounds that the relevant         
transaction may operate against the public interest. The merger is conditioned  
upon:                                                                           

(1) the U.K. Secretary of State indicating that he does not intend to refer 
the merger to the Monopolies and Mergers Commission; or                     

(2) if he makes this reference, the Monopolies and Mergers Commission       
concluding that the merger does not or may not be expected to operate       
against the public interest; or                                             

(3) if, following this reference, the Monopolies and Mergers Commission     
concludes that the merger does or may be expected to operate against the    
public interest, the U.K. Secretary of State indicating in writing that it  
is his intention to approve the merger provided that if any indication by   
the U.K. Secretary of State referred to in (1) or (3) above is subject to   
undertakings, assurances or any other terms or conditions, such             
undertakings, assurances, terms or conditions would not have, or would not  
reasonably be expected to have, individually or in the aggregate, a         
material adverse effect on the business, properties, assets, liabilities,   
financial condition or results of operations of the ScottishPower group     
taken as a whole.                                                           

 Some of ScottishPower's businesses are regulated by the U.K. Director General
of Electricity Supply and others by the U.K. Director General of Water          
Services. The merger is conditioned on the Director General of Electricity      
Supply and the Director General of Water Services indicating that it is not     
their intention to seek modifications to the relevant regulatory licenses which 
would have, or would reasonably be expected to have, a material adverse effect  
(as described above) on the ScottishPower group, that they will give consents   
and/or directions (if any) as are necessary or appropriate with respect to the  
regulatory licences on terms which would not have, or would not reasonably be   
expected to have, a material adverse effect (as described above) on the         
ScottishPower group, and that neither the Director General of Electricity       
Supply nor the Director General of Water Services shall have sought             
undertakings or assurances from any member of the ScottishPower group which     
would have, or would reasonably be expected to have, a material adverse effect  
(as described above) on the ScottishPower group.                                

On April 13, 1999, the U.K. Secretary of State for Trade and Industry     
announced that it was not his intention to refer the merger to the Monopolies   
and Merger Commission (now the Competition Commission). In making that          
decision, the U.K. Secretary of State accepted certain assurances from          
ScottishPower to address the regulatory concerns of the Director General of     
Electricity Supply. These include assurances relating to the establishment of a 
holding company for the ScottishPower group, to the financial and management    
resources of ScottishPower and Manweb, and to ensuring that the Director        
General of Electricity Supply continues to have access to the information which 
he needs to carry out his duties.                                               

ScottishPower has given assurances that it will secure the holding company
will restructure its business in Great Britain as soon as is reasonably         
practicable, and in any event within three years, so as to place generation and 
any non-electricity activities in separate group companies. ScottishPower has   
assured the U.K. Secretary of State for Trade and Industry that, following      
restructuring, a financial ring-fence will be placed around the electricity     
supply and transmission businesses currently carried on ScottishPower, on       
similar terms to the standard ring-fence terms developed by the Director        
General of Electricity Supply.                                                  

To the extent that these assurances require license modifications to be   
implemented, ScottishPower has assured the U.K. Secretary of State that it will 
agree to the modifications and will secure that Manweb will do likewise.        

Other. PacifiCorp has environmental permits and licenses with respect to  
which the consent of the issuing authority may be required as a result of the   
merger. In addition, PacifiCorp and its subsidiaries own aircraft subject to    
regulation by the Federal Aviation Administration and hold various              
communication licenses issued by the Federal Communications Commission.         
Consents or approvals from these authorities also will be required as a result  
of the merger. PacifiCorp does not anticipate any difficulties at the present   
time in obtaining these consents and approvals in connection with the merger.   

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General. Under the merger agreement, ScottishPower and PacifiCorp have    
agreed to proceed cooperatively and in good faith to, as promptly as            
practicable, obtain all necessary material permits, licenses, franchises and    
other governmental authorizations necessary or advisable to consummate or       
effect the transactions contemplated by the merger agreement. Various parties   
may seek intervention in these proceedings to oppose the merger or to have      
conditions imposed upon the receipt of necessary approvals. While ScottishPower 
and PacifiCorp believe that they will receive the requisite regulatory          
approvals for the merger, there can be no assurance as to the timing of these   
approvals or the ability of ScottishPower and PacifiCorp to obtain these        
approvals on satisfactory terms or otherwise. It is a condition to the          
consummation of the merger that final orders approving the merger be obtained   
from the various U.K. regulatory authorities and U.S. federal and state         
commissions described above on terms and conditions which would not have, or    
would not be reasonably likely to have, a material adverse effect on the        
business, assets, financial condition or results of operations of PacifiCorp    
and its subsidiaries taken as a whole. There can be no assurance that any       
approvals will be forthcoming, nor that they will not contain terms or          
conditions that would cause these approvals to fail to satisfy a condition to   
the completion of the merger.                                                   

Dividend Policy                                                                 

ScottishPower currently pays regular dividends on the ordinary shares on a
semi-annual basis. Following the merger, ScottishPower intends to adopt the     
practice of paying regular dividends on a quarterly basis with respect to all   
ordinary shares. ScottishPower expects to pay dividends in February, May,       
August and November of each year.                                               

ScottishPower is committed to its stated aim of achieving 7%-8% real      
dividend growth annually until at least the U.K. regulatory reviews which take  
effect from April 1, 2000, while maintaining a prudent level of dividend cover. 
It is ScottishPower's current aim to deliver real dividend growth thereafter    
and this will be re-examined once the outcome of these regulatory reviews is    
known.                                                                          

In addition, ScottishPower and PacifiCorp have agreed in the merger       
agreement to coordinate with each other with respect to the declaration of      
dividends in respect of ordinary shares and PacifiCorp common stock, with the   
intention that the holders of PacifiCorp common stock receive dividends in      
respect of the PacifiCorp common stock for all periods before the merger but do 
not receive dividends in respect of the ADS consideration and the ordinary      
share consideration after the merger in respect of periods before the merger.   

Conduct of PacifiCorp's Business After the Merger                               

 Following completion of the merger, PacifiCorp will continue to conduct its
business and be regulated as a utility by the FERC and by the relevant state    
commissions of Oregon, Washington, California, Utah, Idaho and Wyoming.         

Immediately following the merger, PacifiCorp will continue to conduct its 
everyday business in the same way as at present. Operational management and     
decision-making will take place with the same authority and at the same levels  
of the organization. Regulatory oversight will be unimpaired. Some aspects of   
its business will be subject to regulation by the SEC under the Public Utility  
Holding Company Act of 1935 as discussed above under "--Regulatory Matters".    

 PacifiCorp's pre-merger Board of Directors will be replaced by a new board,
comprised of some current members of ScottishPower's board, as well as Richard  
O'Brien. PacifiCorp's business planning will be brought in line with            
ScottishPower's current practice, with the annual business plan prepared by     
PacifiCorp executives and presented to the PacifiCorp board for approval. As    
with all other ScottishPower businesses, the plan would then be presented to    
the ScottishPower board for review and authorization. PacifiCorp would then be  
operated within the framework outlined in the approved plan, with further       
ScottishPower approval only being required for significant or unplanned         
involvement.                                                                    

In addition, promptly following the merger, specific non-executive members
of the PacifiCorp Board of Directors, together with Mr. O'Brien, will be        
elected and appointed to a PacifiCorp advisory board, the function of which     
shall be to advise the PacifiCorp Board of Directors regarding general business 
strategy, opportunities and activities in PacifiCorp's market area and customer 
relationships.                                                                  

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ScottishPower will lead a joint integration team which will review        
PacifiCorp's business and develop a plan to enhance business performance. The   
joint integration planning process may propose changes to PacifiCorp's current  
method of operation that could lead to improvements in the performance and      
efficiency of PacifiCorp. These may include: (1) changes to organizational      
accountabilities to provide greater alignment of responsibilities with service  
delivery, (2) changes to planning, budgeting and reporting systems to focus on  
efficiency and customer service, (3) greater use of technology to improve       
productivity and respond better to customers' requirements, (4) development of  
working practices at all levels in the organization to more closely match the   
operating priorities of the different parts of the business, and (5)            
simplifying business processes around service delivery. Additionally, certain   
of the changes may involve the physical integration of similar corporate        
functions. It is believed that the opportunity for such integration between the 
U.K. and the U.S. is limited due to geography and regulation. Any planned       
integration of activities will be designed to ensure that neither the           
accountability nor operational flexibility of PacifiCorp's executives and       
management is removed or impaired. Following the merger, joint teams from       
ScottishPower and PacifiCorp, coordinated under a single integration program,   
will undertake a review of all operations to establish the opportunity to       
transfer best practices between the organizations.                              

  ScottishPower intends to achieve cost savings which would bring PacifiCorp's
non-generation costs per customer in the U.S. in line with some of the most     
efficient comparable utilities, based on FERC comparisons. Although it is       
difficult to predict the source of the cost savings, ScottishPower expects      
most, if not all, to come from the application of best practices in operational 
and overhead areas (as discussed in items 1-5 above) rather than through        
elimination of costs duplicated between PacifiCorp and ScottishPower. In        
addition, ScottishPower intends to provide benefits to PacifiCorp's customers   
through improvements in network performance and customer service and the        
introduction of customer service guarantees. ScottishPower has also advised     
PacifiCorp's regulators of its belief that employee training will be a key      
component in its efforts to reduce costs and increase PacifiCorp customer       
satisfaction.                                                                   

New York Stock Exchange and London Stock Exchange Listing                       

Under the merger agreement, ScottishPower has agreed to cause (1) the ADSs
to be issued under the merger agreement to be approved for listing on the New   
York Stock Exchange before the merger and (2) each of the ordinary shares       
underlying the ADSs and the ordinary shares to be issued as merger              
consideration to be admitted to the Official List of the London Stock Exchange. 
Obtaining approvals for these listings is a condition to the obligations of     
ScottishPower and PacifiCorp to consummate the merger.                          

Material Tax Consequences                                                       

This section describes (1) the material United States federal income tax  
consequences to U.S. Holders, as defined below, of PacifiCorp common stock who  
exchange such stock for ADSs or ordinary shares, (2) the material U.S. federal  
income and U.K. tax consequences to U.S. Holders of the ownership and           
disposition of ADSs and ordinary shares, and (3) the material U.S. federal      
income tax consequences to U.S. Holders of PacifiCorp preferred stock who       
dissent from the merger. This discussion assumes that U.S. Holders hold         
PacifiCorp common stock, and will hold ScottishPower ordinary shares and ADSs,  
as capital assets. For purposes of this section, "U.S. Holder" means a          
beneficial owner of PacifiCorp common stock or ScottishPower ordinary shares or 
ADSs that is:                                                                   

.  an individual citizen or resident of the United States;                  

.  a corporation created or organized in or under the laws of the United    
States, any state thereof or the District of Columbia;                

.  a domestic partnership as defined in Section 7701(a)(4) of the Internal  
Revenue Code of 1986 and regulations thereunder;                      

.  an estate other than a foreign estate as defined in Section 7701(a)(31)  
of the Internal Revenue Code; or                                      

.  a trust under the primary jurisdiction of a court within the United      
States and over which one or more U.S. persons have control.          

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For the purposes of this section, "Eligible U.S. Holder" means a U.S. Holder
of ScottishPower's ordinary shares or ADSs and of the cash dividends paid on    
those shares that:                                                              

.  is resident in the U.S. for purposes of the U.S.-U.K. income tax treaty  
 and, in the case of a corporation, is not also resident in the U.K. for
U.K. tax purposes;                                                    

.  holds the ordinary shares or ADSs in a manner which is not effectively   
connected with a permanent establishment in the U.K. through which the
U.S. person carries on business or with a fixed base in the U.K. from 
which the U.S. person performs independent personal services; and     

.  is not otherwise ineligible for benefits under the U.S.-U.K. income tax  
treaty with respect to income and gains derived in connection with the
ordinary shares or ADSs.                                              

  This section does not describe all aspects of U.S. taxation or U.K. taxation
that may be relevant to a U.S. Holders in light of their particular             
circumstances, such as U.S. Holders whose stock or ADS was acquired as a result 
of the exercise of an employee stock option or otherwise as compensation or     
U.S. Holders subject to special treatment under the U.S. federal income tax     
laws (for example, U.S. Holders that hold stock or ADSs as part of a straddle,  
hedge or conversion transaction, financial institutions, insurance companies,   
tax-exempt organizations, dealers, traders in securities that elect to adjust   
the valuation of these securities to reflect current market values and          
recognize gain or loss annually based on fair market value at year end, persons 
subject to alternative minimum tax, or persons that own actually or             
constructively 10% or more of the voting power of ScottishPower or that are 5%  
shareholders of PacifiCorp within the meaning of Section 367(a) of the Internal 
Revenue Code and the regulations thereunder). This section also does not        
address any aspects of state or local taxation or foreign taxation, other than  
material U.K. tax consequences.                                                 

The discussion of U.S. federal income tax consequences is based on the tax
laws of the United States, including the Internal Revenue Code, its legislative 
history, existing and proposed regulations thereunder, published rulings and    
court decisions, as in effect on the date this proxy statement/prospectus       
becomes effective, as well as on the U.S.-U.K. income tax treaty, all of which  
are subject to change or changes in interpretation, possibly with retroactive   
effect. The United Kingdom recently changed its taxation system with respect to 
dividends, effective for dividends paid on or after April 6, 1999. The United   
States and the United Kingdom have announced that they intend to enter into     
negotiations to update their income tax treaty. The discussion of U.K. tax      
consequences is based on the new U.K. tax law, current Inland Revenue practice  
and the present U.S.-U.K. income tax treaty. The discussion of U.K. taxation    
relating to dividends deals only with dividends paid with respect to            
ScottishPower ADSs or ordinary shares on or after April 6, 1999 and addresses   
only Eligible U.S. Holders who are not resident or, in the case of individuals, 
ordinarily resident in the U.K. for U.K. tax purposes.                          

  Each U.S. Holder is advised to consult his or her own tax advisors as to the
U.S. and U.K. tax consequences of the merger, including the facts and           
circumstances that may be unique to the U.S. Holder, and as to any estate,      
gift, state, local or non-U.S. tax consequences of the merger and the ownership 
and disposition of ADSs or ordinary shares. These tax advisors are urged to     
review the merger agreement for a full description of the technical details of  
the merger.                                                                     

United States Tax Consequences                                                  

United States Tax Consequences of the Merger to U.S. Holders of PacifiCorp    
Common Stock                                                                    

PacifiCorp has received from its counsel, Stoel Rives LLP, and its special
counsel, LeBoeuf, Lamb, Greene & MacRae, LLP, and ScottishPower has received    
from its counsel, Milbank, Tweed, Hadley & McCloy LLP, tax opinions which state 
that in the opinion of counsel:                                                 

.   the merger will be treated as a reorganization within the meaning of    
Section 368(a) of the Internal Revenue Code;                        

.   no gain or loss will be recognized by any PacifiCorp shareholder for    
 U.S. federal income tax purposes on the exchange of PacifiCorp common
  stock for ADSs or ordinary shares except with respect to cash received
on the sale of a fractional interest in an ADS or ordinary share;   

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.  the aggregate tax basis of the ADSs or ordinary shares received,         
including fractional units treated as received as discussed below, by 
the U.S. Holder will be the same as the aggregate tax basis of the    
 PacifiCorp common stock surrendered in exchange therefor in the merger;
and                                                                   

.  the holding period of the ADSs or ordinary shares, including fractional  
units treated as received as discussed below, will include the holding
period of the PacifiCorp common stock held as a capital asset and     
surrendered in exchange therefor in the merger.                       

The tax opinions are expressly based upon the consummation of the merger        
according to the merger agreement, the accuracy of representations made to      
their counsel by PacifiCorp and ScottishPower, and compliance with the          
covenants in the merger agreement. A breach of certain covenants in the merger  
agreement could cause the merger to fail to qualify as a tax free               
reorganization within the meaning of Section 368(a) of the Internal Revenue     
Code. In particular, it is a condition to the merger qualifying as a            
reorganization within the meaning of Section 368(a) of the Internal Revenue     
Code and, therefore, an assumption of the tax opinions, that immediately after  
the merger there be no PacifiCorp "nonvoting preferred stock", as that term is  
used in Section 368 of the Internal Revenue Code, of which at least 80 percent  
is not owned indirectly by ScottishPower. The PacifiCorp $1.16, $1.18 and $1.28 
series of no par serial preferred stock each constitute PacifiCorp "nonvoting   
preferred stock" and will be redeemed by PacifiCorp before the merger.          

It is a waivable condition of the merger that PacifiCorp and ScottishPower
each receive tax opinions from their counsel that (1) the merger will be        
treated as a reorganization within the meaning of Section 368(a) of the         
Internal Revenue Code and (2) that no gain or loss will be recognized by any    
PacifiCorp shareholder for U.S. federal income tax purposes on the exchange of  
PacifiCorp common stock for ADSs or ordinary shares, except with respect to     
cash received on the sale of a fractional interest in an ADS or ordinary share. 
These opinions will be based on assumptions and updated representations of      
PacifiCorp and ScottishPower to be delivered at the time of the merger. The tax 
opinions cannot be relied upon if any of the factual representations is, or     
later becomes, inaccurate. PacifiCorp does not intend to waive receipt of the   
tax opinions from its counsel and will not waive receipt of both opinions       
without first circulating revised proxy materials and resoliciting the vote of  
its shareholders.                                                               

 The tax opinions are not binding on the Internal Revenue Service or a court
and do not preclude the Internal Revenue Service or a court from adopting a     
contrary position. Neither PacifiCorp nor ScottishPower will seek a ruling from 
the Internal Revenue Service as to the tax treatment of the merger.             

  PacifiCorp shareholders will receive cash instead of fractional interests in
ADSs and ordinary shares. A U.S. Holder who receives cash instead of a          
fractional ADS or ordinary share will be treated as having received the         
fractional ADS or share in the merger and then as having sold the fractional    
ADS or share for cash. The amount of any capital gain or loss of the U.S.       
Holder attributable to that sale will be equal to the difference between the    
cash received with respect to the fractional ADS or ordinary share and the tax  
basis that is allocated to the fractional ADS or ordinary share. In the case of 
an individual U.S. Holder, any such gain will be subject to U.S. federal income 
tax at a maximum rate of 20% if the U.S. Holder has a holding period for the    
fractional ADS or ordinary share of more than 12 months at the time of the      
merger.                                                                         

United States Tax Consequences to Dissenting U.S. Holders of PacifiCorp     
Preferred Stock.                                                                

  A U.S. Holder of PacifiCorp preferred stock who exercises dissenters' rights
as described below under "The Merger--Dissenters' Rights" will recognize gain   
or loss for U.S. federal income tax purposes equal to the difference between    
the tax basis of the PacifiCorp preferred stock with respect to which these     
rights are exercised and the amount received through the exercise of these      
rights. If immediately following the merger, the holder actually and            
constructively owns no ADSs or ordinary shares, any gain or loss recognized     
generally:                                                                      

.  will be capital gain or loss if the PacifiCorp preferred stock is held   
as a capital asset by the shareholder at the time of the merger; and  

.  will be long-term capital gain or loss if the shareholder's holding      
 period for the PacifiCorp preferred stock is more than 12 months at the
time of the merger.                                                   

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United States Tax Consequences of the Ownership of Ordinary Shares and ADSs   

Taxation of Dividends                                                       

  As discussed below under "United Kingdom Tax Consequences," an Eligible U.S.
Holder is entitled to a U.K. tax credit that is offset by the U.K. withholding  
tax. Under the present U.S.-U.K. income tax treaty, Eligible U.S. Holders will  
include as ordinary income the amount of any dividend paid by ScottishPower out 
of its current or accumulated earnings and profits, as determined for United    
States federal income tax purposes (the "base dividend") plus the amount of any 
U.K. credit, before reduction for U.K. withholding tax. If ScottishPower paid a 
dividend of $90, for example, for U.S. federal income tax purposes an Eligible  
U.S. Holder would recognize ordinary income of $90 plus the $10 U.K. tax        
credit, or a total of $100. The income is recognized when the dividend is       
actually or constructively received by the Eligible U.S. Holder, in the case of 
ordinary shares, or by the depository, in the case of ADSs. The dividend will   
not be eligible for the dividends-received deduction generally allowed to U.S.  
corporations in respect of dividends received from other U.S. corporations.     
Distributions in excess of ScottishPower current and accumulated earnings and   
profits, as determined for U.S. federal income tax purposes, will be treated as 
a return of capital to the extent of the Eligible U.S. Holder's basis in the    
ordinary shares or ADSs and thereafter as capital gain. In determining the U.S. 
dollar amount of dividend income, an Eligible U.S. Holder will use the spot     
currency exchange rate on the date the dividend is included in income. Any      
difference between that U.S. dollar amount and the dollars actually received    
may constitute foreign currency gain or loss, which is ordinary gain or loss.   
Individual Eligible U.S. Holders, however, are not required to recognize gain   
of less than $200 from the exchange of foreign currency in a "personal          
transaction" as defined in Section 988(e) of the Internal Revenue Code.         

Subject to some specific limitations and requirements, an Eligible U.S.   
Holder will be entitled under the U.S.-U.K. income tax treaty to credit the     
U.K. withholding tax against the Eligible U.S. Holder's United States federal   
income tax liability. Claiming a U.S. foreign tax credit with respect to the    
U.K. withholding tax imposed under the U.S.-U.K. income tax treaty upon the     
refunded U.K. tax credit may result in a lower effective U.S. federal income    
tax rate on dividends paid by ScottishPower for certain Eligible U.S. Holders.  
It is not clear whether inclusion of the U.K. tax credit in income and          
entitlement to the U.S. foreign tax credit are dependent on the Eligible U.S.   
Holder filing a claim with the U.K. Inland Revenue. Eligible U.S. Holders that  
do not elect to claim foreign tax credits may instead claim a deduction for     
U.K. withholding tax. For foreign tax credit limitation purposes, the dividend  
will be income from sources without the U.S., but generally will be treated     
separately, together with other items of "passive income" or, in the case of    
certain holders, "financial services income". The rules relating to the         
computation of foreign taxes are complex and Eligible U.S. Holders should       
consult their own tax advisors to determine whether and to what extent a credit 
would be available and whether any filings or other actions may be required to  
substantiate their foreign tax credit claim.                                    

  It is possible that, in the future, ScottishPower will be at least 50% owned
by U.S. persons. Under Section 904(g) of the Internal Revenue Code, dividends   
paid by a foreign corporation that is at least 50% owned by U.S. persons may be 
treated as U.S. source income, rather than foreign source income, for foreign   
tax credit purposes to the extent the foreign corporation has more than an      
insignificant amount of U.S. source income, and the effect of this rule may be  
to treat a portion of the dividends paid by ScottishPower as U.S. source        
income. Under the Treaty, Section 904(g)(10) of the Internal Revenue Code would 
permit an Eligible U.S. Holder to elect to treat ScottishPower dividends as     
foreign source income for foreign tax credit limitation purposes, if the        
dividend income is separated from other income items for purposes of            
calculating the holder's foreign tax credit.                                    

Taxation of Capital Gains                                                   

In general, for U.S. tax purposes, U.S. Holders of ADSs will be treated as
the owners of the underlying ordinary shares that are represented by the ADSs   
and deposits and withdrawals of ordinary shares by U.S. Holders in exchange for 
ADSs will not be treated as a sale or other disposition for U.S. federal income 
tax purposes.                                                                   

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Upon a sale or other disposition of ordinary shares or ADSs, a U.S. Holder
will recognize gain or loss for U.S. federal income tax purposes in an amount   
equal to the difference between the U.S. dollar value of the amount realized    
and the U.S. Holder's tax basis (determined in U.S. dollars) in the ordinary    
shares or ADSs. Generally, the gain or loss will be a long-term capital gain or 
loss if the U.S. Holder's holding period for the ordinary shares or ADSs        
exceeds one year and any gain or loss generally will be income from sources     
within the United States for foreign tax credit limitation purposes. Long-term  
capital gain for a non-corporate U.S. Holder is generally subject to a maximum  
tax rate of 20%.                                                                

Backup Withholding and Information Reporting                                

In general, information reporting requirements will apply to dividend     
payments, or other taxable distributions, in respect of ordinary shares or ADSs 
made within the United States to a non-corporate U.S. person. Accordingly,      
individual U.S. Holders will receive an annual statement showing the amount of  
taxable dividends paid to them during the year. "Backup withholding" at the     
rate of 31% will apply to these payments:                                       

.  if the holder or beneficial owner fails to provide an accurate taxpayer  
identification number in the manner required by United States law and 
applicable regulations;                                               

.  if there has been notification from the Internal Revenue Service of a    
failure by the holder or beneficial owner to report all interest or   
dividends required to be shown on its federal income tax returns; or  

.  in some limited circumstances, if the holder or beneficial owner fails   
to comply with applicable certification requirements.                 

  In general, payment of the proceeds from the sale of ordinary shares or ADSs
to or through a U.S. office of a broker is subject to both U.S. backup          
withholding and information reporting requirements, unless the holder or        
beneficial owner establishes an exemption. Different rules apply to payments    
made outside the U.S. through an office outside the U.S.                        

 Amounts withheld under the backup withholding rules may be credited against
a U.S. Holder's U.S. tax liability, and a U.S. Holder may obtain a refund of    
any excess amounts withheld under the backup withholding rules by filing the    
appropriate claim for refund with the Internal Revenue Service.                 

United Kingdom Tax Consequences to U.S. Holders of the Ownership of Ordinary
Shares and ADSs.                                                          

 For the purposes of the U.S.-U.K. income tax treaty, Eligible U.S. Holders of
ADSs will be treated as owners of the ordinary shares underlying the ADSs.      

Taxation of Dividends                                                       

An Eligible U.S. Holder that receives a dividend payment of $90 from      
ScottishPower on or after April 6, 1999 will be entitled under the U.S.-U.K.    
income tax treaty to a U.K. tax credit amount of $10, subject to a U.K.         
withholding tax of an equal amount (i.e., $10) resulting in a net receipt,      
before applicable U.S. taxes, of $90 (i.e., an amount equal to the dividend).   
Accordingly, an Eligible U.S. Holder who receives as beneficial owner a         
dividend from ScottishPower will not be entitled under the U.S.-U.K. income tax 
treaty to receive any additional payment in respect of the tax credit from the  
U.K. Inland Revenue. See also "United States Tax Consequences--Taxation of      
Dividends" above.                                                               

Taxation of Capital Gains                                                   

An Eligible U.S. Holder who is not resident or ordinarily resident for tax
purposes in the U.K. will not generally be liable for U.K. tax on capital gains 
realized on the disposal of his ordinary shares or ADSs. This general rule does 
not apply if, at the time of the disposal, the Eligible U.S. Holder carries on  
a trade, profession or vocation in the U.K. through a branch or agency and the  
ordinary shares or ADSs are or have been used,                                  

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held or acquired for the purposes of such trade, profession or vocation, or for 
the purposes of such branch or agency. A U.S. Holder who is an individual and   
who has, on or after March 17, 1998, ceased to be resident or ordinarily        
resident for tax purposes in the U.K. for a period of less than five tax years  
and who disposes of ordinary shares or ADSs during that period may be liable    
for U.K. tax on capital gains realized, subject to any available exemption or   
relief.                                                                         

Stamp Duty and Stamp Duty Reserve Tax                                       

U.K. stamp duty is charged in respect of certain documents and U.K. stamp 
duty reserve tax is imposed in respect of certain transactions in securities.   

Transfers of the ordinary shares will generally be subject to U.K. stamp  
duty at the rate of 50p for every (Pounds)100, or part thereof, of the          
consideration given for the transfer. An agreement to transfer ordinary shares  
or any interest in the ordinary shares for money or money's worth will normally 
give rise to a charge of stamp duty reserve tax at the rate of 0.5% of the      
consideration given. If an agreement to transfer ordinary shares is completed   
by a duly stamped transfer within six years, then the charge to stamp duty      
reserve tax will be cancelled or, where the stamp duty reserve tax charge has   
been paid, the stamp duty reserve tax will, provided that a claim for repayment 
is made, be repaid.                                                             

 Transfers of shares through the electronic transfer system known as "CREST"
are generally subject to stamp duty reserve tax rather than stamp duty. A       
charge to stamp duty or stamp duty reserve tax respectively at the rates of     
(Pounds)1.50 for every (Pounds)100, or part thereof, or 1.5% of the value of    
the consideration or, in some circumstances, the value of the ordinary shares   
concerned, may arise on a transfer of the ordinary shares to, or to the         
custodian of, the depositary or to certain persons providing a clearance        
service or their nominees or agents and will generally be payable by the        
depositary or person providing the clearance service. Any tax or duty payable   
by the depositary or the custodian of the depositary on deposit of ordinary     
shares will be charged by the depositary to the party to whom ADRs are          
delivered against the deposits. However, any SDRT or stamp duty arising on the  
issue of the ADSs constituting merger consideration will be paid by PacifiCorp. 

No liability for stamp duty will arise on any transfer of an ADS or       
beneficial ownership of such an ADS, provided that the ADS and any instrument   
of transfer or written agreement to transfer is executed outside the U.K., and  
remains at all times outside the U.K. In any other case, a charge to ad valorem 
stamp duty may arise.                                                           

 Stamp duty reserve tax will not be payable on any agreement to transfer the
depositary receipts representing ADSs or beneficial ownership of the depositary 
receipts. A transfer of the underlying ordinary shares from the depositary to   
the holder of an ADS upon cancellation of the ADS generally will be subject to  
a fixed U.K. stamp duty of 50p per instrument of transfer.                      

Accounting Treatment                                                            

  The merger will be accounted for as a "purchase," as this term is used under
generally accepted accounting principles. Accordingly, from and after the       
merger, PacifiCorp's consolidated results of operations will be included in     
ScottishPower's consolidated results of operations. PacifiCorp's financial      
statements will be kept under U.S. GAAP. For purposes of preparing              
ScottishPower's consolidated financial statements under U.K. GAAP,              
ScottishPower will convert PacifiCorp's financial statements from U.S. GAAP to  
U.K. GAAP and establish a new accounting basis for PacifiCorp's assets and      
liabilities based upon the fair market values thereof and the purchase price    
for PacifiCorp. Therefore, the purchase accounting adjustments made in          
connection with the development of the Unaudited Pro Forma Condensed Combined   
Financial Information appearing elsewhere in this proxy statement/prospectus    
are preliminary and have been made solely for purposes of developing the        
Unaudited Pro Forma Condensed Combined Financial Information to comply with the 
disclosure requirements of the SEC. Although the final allocation will differ,  
the Unaudited Pro Forma Condensed Combined Financial Information reflects       
ScottishPower's best estimate based upon currently available information.       

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Dissenters' Rights                                                              

PacifiCorp Common Stock. Under Oregon law, no holder of PacifiCorp common 
stock will have dissenters' rights with respect to the merger as a result of    
the holder's shares of PacifiCorp common stock.                                 

 PacifiCorp Preferred Stock. Under Sections 60.551 to 60.594 of the Business
Corporation Act of Oregon, any holder of PacifiCorp preferred stock who gives   
proper notice and who does not vote in favor of the merger will, upon proper    
demand, have the right under Oregon law to obtain payment of the fair value of  
his or her shares of PacifiCorp preferred stock. All references in this section 
to a "shareholder" are to the record holder or holders of shares of PacifiCorp  
preferred stock and to "shares" are to shares of PacifiCorp preferred stock.    

Sections 60.551 to 60.594 of the Business Corporation Act of Oregon are   
reprinted in their entirety as Appendix E to this proxy statement/prospectus.   
The following discussion is necessarily a summary of the law relating to        
dissenters' rights and is qualified in its entirety by reference to Appendix E. 
The discussion contained in this proxy statement/prospectus and in Appendix E   
should be reviewed carefully by any holder of PacifiCorp preferred stock who    
wishes to exercise statutory dissenters' rights or who wishes to preserve the   
right to do so, as failure to comply with the procedures set forth in this      
proxy statement/prospectus or in Appendix E will result in the loss of          
dissenters' rights.                                                             

A shareholder who wishes to exercise dissenters' rights generally must    
dissent with respect to all the shares the shareholder owns or over which the   
shareholder has power to direct the vote. However, if a record shareholder is a 
nominee for several shareholders, some of whom wish to dissent and some of whom 
do not, then the record shareholder may dissent with respect to all the shares  
beneficially owned by any one person by notifying PacifiCorp in writing of the  
name and address of each person on whose behalf the record shareholder asserts  
dissenters' rights. A beneficial holder may assert dissenters' rights directly  
by submitting to PacifiCorp the record shareholder's written consent to the     
dissent and by dissenting with respect to all the shares of which the           
shareholder is the beneficial shareholder or over which the shareholder has     
power to direct the vote.                                                       

  A shareholder who does not deliver to PacifiCorp before the vote being taken
at the PacifiCorp annual meeting a written notice of the shareholder's intent   
to demand payment for the fair value of the shares will lose the right to       
exercise dissenters' rights. Notice must be delivered to PacifiCorp, Suite      
2000, 825 NE Multnomah, Portland, Oregon 97232, Attention: William E.           
Peressini, Vice President and Treasurer, before the vote on June 17, 1999. In   
addition, any shareholder electing dissenters' rights must not vote his or her  
shares in favor of the merger. A vote in favor of the merger will constitute a  
waiver of dissenters' rights. A vote against the merger will not be regarded as 
a written notice for purposes of asserting dissenters' rights.                  

If the merger is completed, PacifiCorp will, within 10 days after the     
merger, deliver written notice to all shareholders who properly perfected their 
dissenters' rights. The notice will, among other things:                        

.  state where the payment demand must be sent and where and when           
certificates must be deposited;                                       

.  inform holders of uncertificated shares to what extent transfer of the   
shares will be restricted after the payment demand is received;       

.  supply a form for demanding payment, which includes the date of the      
 first announcement of the terms of the merger and requires shareholders
 to certify that they acquired beneficial ownership of the shares before
the date on which the merger was first announced; and                 

.  set a date by which PacifiCorp must receive the payment demand, which    
  date will be between 30 and 60 days after PacifiCorp delivers the notice
to dissenting shareholders.                                           

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A shareholder wishing to exercise dissenters' rights must file the payment
demand, certify as to whether beneficial ownership of the shares was acquired   
before the merger was announced, and deliver share certificates, in the manner  
and by the time stated in the notice. Failure to do so will cause the person to 
lose his or her dissenters' rights.                                             

As soon as the merger is completed, or upon receipt of the payment demand,
PacifiCorp shall pay to each dissenter with properly perfected dissenters'      
rights PacifiCorp's estimate of the fair value of the shareholder's shares,     
plus accrued interest from the date of the merger. PacifiCorp will provide,     
along with the payment, certain financial information with respect to           
PacifiCorp, including PacifiCorp's balance sheet and income statement for or as 
of a fiscal year ending not more than 16 months before the date of payment and  
its latest available interim financial statements, if any, an explanation of    
how PacifiCorp estimated the fair value of the shares, an explanation of how    
the accrued interest was calculated and other related information. With respect 
to a dissenter who did not beneficially own PacifiCorp shares before the public 
announcement of the merger, PacifiCorp is required to send an offer to make     
payment to the dissenter, conditioned upon the dissenter's agreement to accept  
the payment in full satisfaction of the dissenter's demands.                    

A dissenter dissatisfied with PacifiCorp's estimate of the fair value may,
within 30 days of payment or offer for payment by PacifiCorp of PacifiCorp's    
estimate of the fair value of the shareholder's shares, notify PacifiCorp in    
writing of the shareholder's estimate of fair value of his or her shares and    
the amount of interest due, and demand payment. If PacifiCorp does not accept   
the dissenter's estimate and the parties do not otherwise settle on a fair      
value, Oregon law requires that PacifiCorp commence a proceeding in Multnomah   
County Circuit Court, and petition the court to determine the fair value of the 
shares and accrued interest, naming all the PacifiCorp dissenting shareholders  
whose demands remain unsettled as parties to the proceeding. The court may      
appoint one or more persons as appraisers to receive evidence and recommend the 
fair value of the PacifiCorp preferred stock. The dissenters will be entitled   
to the same discovery rights as parties in other civil actions. Each dissenter  
made a party to the proceeding will be entitled to judgement for the amount, if 
any, by which the court finds the fair value of his or her shares, plus accrued 
interest, exceeds the amount, if any, previously paid to the dissenter by       
PacifiCorp.                                                                     

  Court costs and appraisers' fees will be assessed against PacifiCorp, except
that the court may assess these costs against some or all of the dissenters to  
the extent that the court finds the dissenters acted arbitrarily, vexatiously   
or not in good faith in demanding payment. The court may also assess the fees   
and expenses of counsel and experts of the respective parties in amounts that   
the court finds equitable (1) against PacifiCorp, if the court finds that       
PacifiCorp did not substantially comply with provisions of the Business         
Corporation Act of Oregon concerning dissenters' rights and (2) against either  
the dissenter or PacifiCorp, if the court finds that the party against whom the 
fees and expenses are assessed acted arbitrarily, vexatiously or not in good    
faith. If the court finds that services of counsel for any dissenter were of    
substantial benefit to other dissenters similarly situated, and that fees       
should not be assessed against PacifiCorp, the court may award to counsel       
reasonable fees to be paid out of the amounts awarded to all dissenters who     
benefited from the proceedings.                                                 

A shareholder entitled to dissent and obtain payment for the shareholder's
shares of PacifiCorp preferred stock under Sections 60.551 to 60.594 of the     
Business Corporation Act of Oregon may not challenge the merger unless          
PacifiCorp fails to comply with the procedural requirements imposed by the      
Business Corporation Act of Oregon, the PacifiCorp articles or bylaws or is     
fraudulent with respect to the shareholder or PacifiCorp.                       

Holders of PacifiCorp preferred stock who dissent from the merger will    
generally recognize taxable gain or loss for federal income tax purposes. See   
"--Material Tax Consequences--United States Tax Consequences to Dissenting U.S. 
Holders of PacifiCorp Preferred Stock" above.                                   

In view of the complexity of Sections 60.551 to 60.594 of the Business    
Corporation Act of Oregon, holders of PacifiCorp preferred stock who may wish   
to dissent from the merger and pursue dissenters' rights should consult their   
legal advisors.                                                                 

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Federal Securities Law Consequences                                             

All ADSs to be received by PacifiCorp shareholders in the merger will be  
freely transferable, except that ADSs received by persons who are deemed to be  
"affiliates" as such term is defined under the Securities Act of PacifiCorp     
before the merger may be resold by them only in transactions permitted by the   
resale provisions of Rule 145 promulgated under the Securities Act or Rule 144  
in the case of persons who become affiliates of ScottishPower or as otherwise   
permitted under the Securities Act. Persons who may be deemed to be affiliates  
of ScottishPower or PacifiCorp generally include individuals or entities that   
control, are controlled by, or are under common control with such party and may 
include officers and directors of each party as well as principal shareholders  
of each party. The merger agreement requires PacifiCorp to use its best efforts 
to cause each of its affiliates to execute a written agreement to the effect    
that the affiliate will not offer or sell or otherwise dispose of any of the    
ADSs issued to such affiliate in or under the merger in violation of the        
Securities Act or the rules and regulations promulgated by the SEC thereunder.  

SCHEME OF ARRANGEMENT 

ScottishPower announced on February 25, 1999 its intention to recommend to
ScottishPower shareholders a proposal to introduce a new holding company for    
the ScottishPower group. The holding company structure will be effected through 
a "scheme of arrangement" which must be sanctioned by a Scottish court and      
approved by ScottishPower's shareholders. Under the scheme, New ScottishPower   
will issue one share of New ScottishPower in exchange for each outstanding      
ScottishPower share. As a result, New ScottishPower will become the holding     
company for ScottishPower. The special share in ScottishPower will be cancelled 
and New ScottishPower will issue a special share to the holder of the           
ScottishPower special share.                                                    

In addition, ordinary shares of New ScottishPower will be listed on the   
London Stock Exchange, New ScottishPower ADSs will be listed on the New York    
Stock Exchange and New ScottishPower will be subject to the registration and    
information requirements of U.S. securities laws.                               

The rights attaching to the New ScottishPower ordinary shares will be     
substantially the same as those currently attaching to the ScottishPower        
ordinary shares. Thus, after the scheme is implemented, holders of              
ScottishPower ordinary shares will have their interest in ScottishPower         
replaced by an equivalent proportionate interest in New ScottishPower and,      
subject to the effect of exercise of options to subscribe for ScottishPower     
shares granted under ScottishPower share schemes, their proportionate interests 
in the profits, net assets and dividends in the ScottishPower group will not be 
affected.                                                                       

If the scheme of arrangement is not implemented by June 30, 2000, the     
holders of ScottishPower shares will remain as such, ScottishPower ordinary     
shares will continue to be listed on the London Stock Exchange and its ADSs     
will continue to be listed on the New York Stock Exchange.                      

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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

Introductory Note                                                               

The following Unaudited Pro Forma Condensed Combined Financial Information
gives pro forma effect to the merger, after giving effect to the pro forma      
adjustments described in the accompanying notes. The Unaudited Pro Forma        
Condensed Combined Financial Information has been prepared from, and should be  
read in conjunction with, the respective historical consolidated financial      
statements and notes thereto of ScottishPower and PacifiCorp, which are         
incorporated by reference in this proxy statement/prospectus. See "Where You    
Can Find More Information". The historical consolidated financial statements of 
ScottishPower and PacifiCorp have been subject to certain adjustments as        
detailed in Notes 1 to 4 to the Unaudited Pro Forma Condensed Combined          
Financial Information.                                                          

  The Unaudited Pro Forma Condensed Combined Financial Information is provided
for illustrative purposes only and does not purport to represent what the       
actual results of operations or the financial position of the Combined Group    
would have been had the merger occurred on the respective dates assumed, nor is 
it necessarily indicative of the Combined Group's future operating results,     
combined financial position or dividend payment policies. No account has been   
taken, within the Unaudited Pro Forma Condensed Combined Financial Information, 
of any synergies (including cost savings) or any severance and restructuring    
costs, which may or are expected to occur following the merger. See "The        
Merger--Reasons for the Merger".                                                

The Combined Group intends to account for the merger using the acquisition
method of accounting under U.K. GAAP and the merger qualifies for the purchase  
method of accounting under U.S. GAAP. The pro forma financial information has   
been prepared on this basis. For the purposes of the acquisition method of      
accounting under U.K. GAAP and the purchase method of accounting under U.S.     
GAAP, ScottishPower is treated as the acquiring entity and PacifiCorp is        
treated as the entity being acquired. Subsequent to the merger, PacifiCorp's    
financial statements will continue to be maintained on a U.S. GAAP basis but    
will be converted to U.K. GAAP upon consolidation with ScottishPower.           

As described in Note 1 to the Unaudited Pro Forma Condensed Combined      
Financial Information, adjustments have been made to the historical             
consolidated financial statements of PacifiCorp to reflect reclassifications to 
conform to ScottishPower's presentation under U.K. GAAP, and to remove the      
impact of discontinued operations and extraordinary items. An adjustment has    
also been made to the historical consolidated financial statements of           
ScottishPower for the six months ended September 30, 1997 as described in Note  
1.                                                                              

The historical financial statements of PacifiCorp have been prepared in   
accordance with U.S. GAAP. For the purposes of presenting the Unaudited Pro     
Forma Condensed Combined Financial Information, financial information relating  
to PacifiCorp has been adjusted to conform with ScottishPower's accounting      
policies under U.K. GAAP as described in Note 2 to the Unaudited Pro Forma      
Condensed Combined Financial Information.                                       

The historical financial statements of PacifiCorp are presented in U.S.   
dollars. For purposes of presenting the Unaudited Pro Forma Condensed Combined  
Financial Information:                                                          
.  the adjusted PacifiCorp results of operations for all periods presented  
have been translated into pounds sterling at the average noon buying  
rate for the period concerned; and                                    
.  the unaudited historical condensed combined balance sheet of PacifiCorp  
at September 30, 1998 has been translated into pounds sterling at the 
effective noon buying rate at September 30, 1998. See Note 3 to the   
Unaudited Pro Forma Condensed Combined Financial Information.         

 The pro forma amounts pertaining to the Combined Group in the Unaudited Pro
Forma Condensed Combined Financial Information are presented in pounds sterling 
and are also expressed in U.S. dollars at the rates detailed in Note 3 to the   
Unaudited Pro Forma Condensed Combined Financial Information. The use of these  
exchange rates in the Unaudited Pro Forma Condensed Combined Financial          
Information should not be construed to signify that the U.S. dollar amounts     
actually represent such pounds sterling amounts or could be converted into U.S. 
dollars at the rate indicated or at any other rate, at any time.                

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 The pro forma purchase accounting adjustments reflected in the accompanying
Unaudited Pro Forma Condensed Combined Financial Information are described in   
Note 4 to the Unaudited Pro Forma Condensed Combined Financial Information.     
Actual amounts will differ from those reflected in the Unaudited Pro Forma      
Condensed Combined Financial Information.                                       

Holders of PacifiCorp common stock will be entitled to receive 0.58 ADSs, 
each of which represents four ordinary shares, or, if so elected, 2.32 ordinary 
shares for each share of PacifiCorp common stock held. The precise number of    
shares of PacifiCorp common stock to be converted in the merger cannot be       
determined until the time of the merger.                                        

The Unaudited Pro Forma Condensed Combined Financial Information has been 
prepared in accordance with U.K. GAAP which differs in certain significant      
respects from U.S. GAAP. Note 33 to the consolidated financial statements of    
ScottishPower included in ScottishPower's Form 20-F filed on October 14, 1998   
provides a description of the principal differences between U.K. GAAP and U.S.  
GAAP as they relate to ScottishPower for the years ended March 31, 1998, 1997   
and 1996. A reconciliation of the pro forma profit and pro forma equity         
shareholders' funds to U.S. GAAP is included in Note 5 to the Unaudited Pro     
Forma Condensed Combined Financial Information.                                 

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UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT 
For the Six Months Ended September 30, 1998 

The following Unaudited Pro Forma Condensed Combined Income Statement for 
the six months ended September 30, 1998 is derived from the unaudited           
historical condensed consolidated income statements of ScottishPower for the    
six months then ended and of PacifiCorp for the six months ended June 30, 1998, 
after giving effect to the pro forma adjustments described in Notes 1 to 4 to   
the Unaudited Pro Forma Condensed Combined Financial Information. Such          
adjustments have been determined as if the merger took place on April 1, 1997,  
the first day of the earliest financial period of ScottishPower presented in    
the Unaudited Pro Forma Condensed Combined Financial Information. The Unaudited 
Pro Forma Condensed Combined Financial Information has been prepared from, and  
should be read in conjunction with, and supplemental to, the respective         
historical consolidated financial statements and notes thereto of ScottishPower 
and PacifiCorp, which are incorporated by reference in this proxy               
statement/prospectus. The pro forma amounts for the Combined Group presented in 
U.S. dollars comply with U.K. GAAP.                                             

                                                        [Enlarge/Download Table]

                         ScottishPower                                                                             
                          Six months                                                                               
                             ended                                                 Purchase                        
                         September 30,               PacifiCorp                   Accounting                       
                             1998          Six months ended June 30, 1998         Adjustments   Combined Group     
                         ------------- ----------------------------------------   ----------- ---------------------
                                         U.S.                  U.K.      U.K.                                      
                           U.K. GAAP     GAAP    Adjustments   GAAP      GAAP      U.K. GAAP  U.K. GAAP   U.K. GAAP
                         ------------- --------  ----------- --------  --------   ----------- ---------   ---------
                           (Pounds)       $           $         $      (Pounds)    (Pounds)   (Pounds)        $    
                                       (Note 1)   (Note 2)             (Note 3)    (Note 4)               (Note 3) 
                                             (in millions, except for per share amounts)                           
                                                                                                                   
Group turnover from                                                                                                
 continuing operations..    1,443.9     2,471.9      32.0     2,503.9  1,517.5         --      2,961.4     4,886.3 
Cost of sales...........     (830.3)   (1,591.4)      0.8    (1,590.6)  (964.0)        --     (1,794.3)   (2,960.6)
                            -------    --------     -----    --------  -------       -----    --------    -------- 
Gross profit from                                                                                                  
 continuing operations..      613.6       880.5      32.8       913.3    553.5         --      1,167.1     1,925.7 
Transmission and                                                                                                   
 distribution costs.....     (122.0)     (288.1)      0.8      (287.3)  (174.1)        --       (296.1)     (488.6)
Administrative                                                                                                     
 expenses...............     (183.0)     (330.9)      4.1      (326.8)  (198.1)      (30.0)     (411.1)     (678.3)
Other operating income..       15.8        12.1       --         12.1      7.3         --         23.1        38.1 
                            -------    --------     -----    --------  -------       -----    --------    -------- 
Operating profit from                                                                                              
 continuing operations                                                                                             
 before merger goodwill                                                                                            
 amortization...........      324.4       273.6      37.7       311.3    188.6         --        513.0       846.4 
Merger goodwill                                                                                                    
 amortization...........        --          --        --          --       --        (30.0)      (30.0)      (49.5)
Operating profit from                                                                                              
 continuing operations..      324.4       273.6      37.7       311.3    188.6       (30.0)      483.0       796.9 
Share of operating                                                                                                 
 profit in joint                                                                                                   
 ventures and                                                                                                      
 associates.............        0.2         6.0       --          6.0      3.6         --          3.8         6.3 
                            -------    --------     -----    --------  -------       -----    --------    -------- 
Profit on ordinary                                                                                                 
 activities before                                                                                                 
 interest...............      324.6       279.6      37.7       317.3    192.2       (30.0)      486.8       803.2 
Net interest charge.....      (77.3)     (193.1)    (30.5)     (223.6)  (135.5)        --       (212.8)     (351.1)
                            -------    --------     -----    --------  -------       -----    --------    -------- 
Profit on ordinary                                                                                                 
 activities before                                                                                                 
 taxation...............      247.3        86.5       7.2        93.7     56.7       (30.0)      274.0       452.1 
Taxation................      (56.9)      (22.8)     (5.2)      (28.0)   (17.0)        --        (73.9)     (122.0)
                            -------    --------     -----    --------  -------       -----    --------    -------- 
Profit after ordinary                                                                                              
 taxation...............      190.4        63.7       2.0        65.7     39.7       (30.0)      200.1       330.1 
Exceptional taxation -                                                                                             
 windfall tax...........        --          --        --          --       --          --          --          --  
                            -------    --------     -----    --------  -------       -----    --------    -------- 
Profit after taxation...      190.4        63.7       2.0        65.7     39.7       (30.0)      200.1       330.1 
Minority interests......       (0.3)        0.7       --          0.7      0.4        (5.8)       (5.7)       (9.4)
                            -------    --------     -----    --------  -------       -----    --------    -------- 
Profit for the period...      190.1        64.4       2.0        66.4     40.1       (35.8)      194.4       320.7 
Dividends--preferred....        --         (9.6)      --         (9.6)    (5.8)        5.8         --          --  
Dividends--ordinary.....      (89.9)     (160.6)      --       (160.6)   (97.3)        --       (187.2)     (308.9)
                            -------    --------     -----    --------  -------       -----    --------    -------- 
Profit/(loss) retained..      100.2      (105.8)      2.0      (103.8)   (63.0)      (30.0)        7.2        11.8 
                            =======    ========     =====    ========  =======       =====    ========    ======== 
Earnings per                                                                                                       
 ordinary/common share..      16.05 p                        $   0.19    11.54 p                 10.37 p  $   0.17 
Adjusting item--merger                                                                                             
 goodwill amortization..        --                                --       --                     1.60 p  $   0.03 
                            -------                          --------  -------                --------    -------- 
Adjusted earnings per                                                                                              
 ordinary/common share..      16.05 p                        $   0.19    11.54 p                 11.97 p  $   0.20 
                            -------                          --------  -------                --------    -------- 
Diluted earnings per                                                                                               
 ordinary/common share..      15.87 p                        $   0.19    11.54 p                 10.30 p  $   0.17 
Adjusting item--merger                                                                                             
 goodwill amortization..        --                                --       --                     1.59 p  $   0.03 
                            -------                          --------  -------                --------    -------- 
Adjusted diluted                                                                                                   
 earnings per                                                                                                      
 ordinary/common share..      15.87 p                        $   0.19    11.54 p                 11.89 p  $   0.20 
                            -------                          --------  -------                --------    -------- 
Weighted average number                                                                                            
 of shares outstanding                                                                                             
 (millions of shares)                                                                                              
Basic...................    1,184.6                             297.2    297.2                 1,874.1     1,874.1 
Diluted.................    1,197.5                             297.2    297.2                 1,887.0     1,887.0 
                            =======                          ========  =======                ========    ======== 

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UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT 
For the Six Months Ended September 30, 1997 

The following Unaudited Pro Forma Condensed Combined Income Statement for 
the six months ended September 30, 1997 is derived from the unaudited           
historical condensed consolidated income statements of ScottishPower for the    
six months then ended and of PacifiCorp for the six months ended June 30, 1997, 
after giving effect to the pro forma adjustments described in Notes 1 to 4 to   
the Unaudited Pro Forma Condensed Combined Financial Information. Such          
adjustments have been determined as if the merger took place on April 1, 1997,  
the first day of the earliest financial period of ScottishPower presented in    
the Unaudited Pro Forma Condensed Combined Financial Information. The Unaudited 
Pro Forma Condensed Combined Financial Information has been prepared from, and  
should be read in conjunction with, and supplemental to, the respective         
historical consolidated financial statements and notes thereto of ScottishPower 
and PacifiCorp, which are incorporated by reference in this proxy               
statement/prospectus. The pro forma amounts for the Combined Group presented in 
U.S. dollars comply with U.K. GAAP.                                             

                                                        [Enlarge/Download Table]

                          ScottishPower                                                                              
                           Six months                                                                                
                              ended                                                  Purchase                        
                          September 30,                PacifiCorp                   Accounting                       
                              1997           Six months ended June 30, 1997         Adjustments   Combined Group     
                          ------------- ------------------------------------------- ----------- ---------------------
                            U.K. GAAP   U.S. GAAP  Adjustments U.K. GAAP  U.K. GAAP  U.K. GAAP  U.K. GAAP   U.K. GAAP
                          ------------- ---------  ----------- ---------  --------- ----------- ---------   ---------
                            (Pounds)        $           $          $      (Pounds)   (Pounds)   (Pounds)        $    
                            (Note 1)    (Note 1)    (Note 2)              (Note 3)   (Note 4)               (Note 3) 
                                                (in millions, except for per share amounts)                          
                                                                                                                     
Group turnover from                                                                                                  
 continuing operations..     1,369.6     2,007.5       33.2     2,040.7    1,252.0       --      2,621.6     4,273.2 
Cost of sales...........      (798.8)   (1,076.9)       1.4    (1,075.5)    (659.8)      --     (1,458.6)   (2,377.5)
                             -------    --------      -----    --------    -------     -----    --------    -------- 
Gross profit from                                                                                                    
 continuing operations..       570.8       930.6       34.6       965.2      592.2       --      1,163.0     1,895.7 
Transmission and                                                                                                     
 distribution costs.....      (113.2)     (227.5)       0.9      (226.6)    (139.0)      --       (252.2)     (411.1)
Administrative                                                                                                       
 expenses...............      (157.5)     (217.2)      10.1      (207.1)    (127.1)    (30.0)     (314.6)     (512.8)
Other operating income..        16.8        16.8        --         16.8       10.3       --         27.1        44.2 
                             -------    --------      -----    --------    -------     -----    --------    -------- 
Operating profit from                                                                                                
 continuing operations                                                                                               
 before merger goodwill                                                                                              
 amortization...........       316.9       502.7       45.6       548.3      336.4       --        653.3     1,064.9 
Merger goodwill                                                                                                      
 amortization...........         --          --         --          --         --      (30.0)      (30.0)      (48.9)
Operating profit from                                                                                                
 continuing operations..       316.9       502.7       45.6       548.3      336.4     (30.0)      623.3     1,016.0 
Share of operating                                                                                                   
 profit in joint                                                                                                     
 ventures and                                                                                                        
 associates.............         0.5         6.9        --          6.9        4.2       --          4.7         7.7 
                             -------    --------      -----    --------    -------     -----    --------    -------- 
Profit on ordinary                                                                                                   
 activities before                                                                                                   
 interest...............       317.4       509.6       45.6       555.2      340.6     (30.0)      628.0     1,023.7 
Net interest charge.....       (72.4)     (229.1)     (31.4)     (260.5)    (159.8)      --       (232.2)     (378.5)
                             -------    --------      -----    --------    -------     -----    --------    -------- 
Profit on ordinary                                                                                                   
 activities before                                                                                                   
 taxation...............       245.0       280.5       14.2       294.7      180.8     (30.0)      395.8       645.2 
Ordinary taxation.......       (58.1)      (98.1)       9.6       (88.5)     (54.3)      --       (112.4)     (183.2)
                             -------    --------      -----    --------    -------     -----    --------    -------- 
Profit after ordinary                                                                                                
 taxation...............       186.9       182.4       23.8       206.2      126.5     (30.0)      283.4       462.0 
Exceptional taxation--                                                                                               
 windfall tax...........      (317.0)        --         --          --         --        --       (317.0)     (516.7)
                             -------    --------      -----    --------    -------     -----    --------    -------- 
Profit/(loss) after                                                                                                  
 taxation...............      (130.1)      182.4       23.8       206.2      126.5     (30.0)      (33.6)      (54.7)
Minority interests......         --         (1.3)       --        (1.3)       (0.8)     (7.5)       (8.3)      (13.5)
                             -------    --------      -----    --------    -------     -----    --------    -------- 
Profit/(loss) for the                                                                                                
 period.................      (130.1)      181.1       23.8       204.9      125.7     (37.5)      (41.9)      (68.2)
Dividends--preferred....         --        (12.2)       --        (12.2)      (7.5)      7.5         --          --  
Dividends--ordinary.....       (80.4)     (159.7)       --       (159.7)     (98.0)      --       (178.4)     (290.8)
                             -------    --------      -----    --------    -------     -----    --------    -------- 
Profit/(loss) retained..      (210.5)        9.2       23.8        33.0       20.2     (30.0)     (220.3)     (359.0)
                             =======    ========      =====    ========    =======     =====    ========    ======== 
Earnings per                                                                                                         
 ordinary/common share..      (11.04)p                            $0.65     39.99p                 (2.25)p  $  (0.04)
Adjusting item--merger                                                                                               
 goodwill amortization..         --                                 --         --                   1.61p   $   0.03 
Adjusting item--windfall                                                                                             
 tax....................       26.89p                               --         --                  17.00p   $   0.28 
                             -------                           --------    -------              --------    -------- 
Adjusted earnings per                                                                                                
 ordinary/common share..       15.85p                             $0.65      39.99p                16.36p   $   0.27 
                             =======                           ========    =======              ========    ======== 
Diluted earnings per                                                                                                 
 ordinary/common share..      (10.93)p                            $0.65      39.99p                (2.23)p  $  (0.04)
Adjusting item--merger                                                                                               
 goodwill amortization..         --                                 --         --                   1.60p   $   0.03 
Adjusting item--windfall                                                                                             
 tax....................       26.64p                               --         --                  16.90p   $   0.28 
                             -------                           --------    -------              --------    -------- 
Adjusted diluted                                                                                                     
 earnings per                                                                                                        
 ordinary/common share..       15.71p                             $0.65      39.99p                16.27p   $   0.27 
                             =======                           ========    =======              ========    ======== 
Weighted average number                                                                                              
 of shares outstanding                                                                                               
 (millions of shares)...                                                                                             
Basic...................     1,178.8                              295.6      295.6               1,864.6     1,864.6 
Diluted.................     1,189.8                              295.6      295.6               1,875.6     1,875.6 
                             =======                           ========    =======              ========    ======== 

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UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT 
For the Year Ended March 31, 1998 
The following Unaudited Pro Forma Condensed Combined Income Statement for 
the year ended March 31, 1998 is derived from the audited historical condensed  
consolidated income statements of ScottishPower for the year then ended and of  
PacifiCorp for the year ended December 31, 1997, after giving effect to the pro 
forma adjustments described in Notes 1 to 4 to the Unaudited Pro Forma          
Condensed Combined Financial Information. Such adjustments have been determined 
as if the merger took place on April 1, 1997, the first day of the earliest     
financial period of ScottishPower presented in the Unaudited Pro Forma          
Condensed Combined Financial Information. The Unaudited Pro Forma Condensed     
Combined Financial Information has been prepared from, and should be read in    
conjunction with, and supplemental to, the respective historical consolidated   
financial statements and notes thereto of ScottishPower and PacifiCorp, which   
are incorporated by reference in this proxy statement/prospectus. The pro forma 
amounts for the Combined Group presented in U.S. dollars comply with U.K. GAAP. 

                                                        [Enlarge/Download Table]

                          ScottishPower                                                                              
                           Year ended                                                 Purchase                       
                            March 31,                  PacifiCorp                    Accounting                      
                              1998            Year ended December 31, 1997           Adjustments   Combined Group    
                          ------------- -------------------------------------------  ----------- --------------------
                            U.K. GAAP   U.S. GAAP  Adjustments U.K. GAAP  U.K. GAAP   U.K. GAAP  U.K. GAAP  U.K. GAAP
                          ------------- ---------  ----------- ---------  ---------  ----------- ---------  ---------
                            (Pounds)        $           $          $      (Pounds)    (Pounds)   (Pounds)       $    
                                        (Note 1)    (Note 2)              (Note 3)    (Note 4)              (Note 3) 
                                                (in millions, except for per share amounts)                          
                                                                                                                     
Group turnover from                                                                                                  
 continuing operations..     3,128.2     4,561.6       54.3     4,615.9    2,814.6        --      5,942.8    9,746.2 
Cost of sales...........    (1,850.7)   (2,707.0)       2.7    (2,704.3)  (1,649.0)       --     (3,499.7)  (5,739.5)
                            --------    --------      -----    --------   --------      -----    --------   -------- 
Gross profit from                                                                                                    
 continuing operations..     1,277.5     1,854.6       57.0     1,911.6    1,165.6        --      2,443.1    4,006.7 
Transmission and                                                                                                     
 distribution costs.....      (219.1)     (465.1)       1.7      (463.4)    (282.6)       --       (501.7)    (822.8)
Administrative                                                                                                       
 expenses...............      (303.0)     (687.3)      20.0      (667.3)    (406.9)     (60.0)     (769.9)  (1,262.6)
Other operating income..        29.7        31.5        --         31.5       19.2        --         48.9       80.2 
                            --------    --------      -----    --------   --------      -----    --------   -------- 
Operating profit from                                                                                                
 continuing operations                                                                                               
 before merger goodwill                                                                                              
 amortization...........       785.1       733.7       78.7       812.4      495.3        --      1,280.4    2,099.9 
Merger goodwill                                                                                                      
 amortization...........         --          --         --          --         --       (60.0)      (60.0)     (98.4)
Operating profit from                                                                                                
 continuing operations..       785.1       733.7       78.7       812.4      495.3      (60.0)    1,220.4    2,001.5 
Share of operating                                                                                                   
 profit in joint                                                                                                     
 ventures and                                                                                                        
 associates.............         1.9        18.1        --         18.1       11.0        --         12.9       21.2 
                            --------    --------      -----    --------   --------      -----    --------   -------- 
Profit on ordinary                                                                                                   
 activities before                                                                                                   
 exceptional items and                                                                                               
 interest...............       787.0       751.8       78.7       830.5      506.3      (60.0)    1,233.3    2,022.7 
Exceptional item--profit                                                                                             
 on sale of business....         --         56.5        --         56.5       34.5        --         34.5       56.6 
                            --------    --------      -----    --------   --------      -----    --------   -------- 
Profit on ordinary                                                                                                   
 activities before                                                                                                   
 interest...............       787.0       808.3       78.7       887.0      540.8      (60.0)    1,267.8    2,079.3 
Net interest charge.....      (147.4)     (461.7)     (50.8)     (512.5)    (312.5)       --       (459.9)    (754.2)
                            --------    --------      -----    --------   --------      -----    --------   -------- 
Profit on ordinary                                                                                                   
 activities before                                                                                                   
 taxation...............       639.6       346.6       27.9       374.5      228.3      (60.0)      807.9    1,325.1 
Ordinary taxation.......      (151.6)     (111.8)      (0.5)     (112.3)     (68.5)       --       (220.1)    (361.0)
                            --------    --------      -----    --------   --------      -----    --------   -------- 
Profit after ordinary                                                                                                
 taxation...............       488.0       234.8       27.4       262.2      159.8      (60.0)      587.8      964.1 
Exceptional taxation--                                                                                               
 windfall tax...........      (317.0)        --         --          --         --         --       (317.0)    (519.9)
                            --------    --------      -----    --------   --------      -----    --------   -------- 
Profit after taxation...       171.0       234.8       27.4       262.2      159.8      (60.0)      270.8      444.2 
Minority interests......        (0.9)       (1.9)       --         (1.9)      (1.2)     (13.9)      (16.0)     (26.2)
                            --------    --------      -----    --------   --------      -----    --------   -------- 
Profit for the financial                                                                                             
 year...................       170.1       232.9       27.4       260.3      158.6      (73.9)      254.8      418.0 
Dividends--preferred....         --        (22.8)       --        (22.8)     (13.9)      13.9         --         --  
Dividends--ordinary.....      (243.3)     (320.0)       --       (320.0)    (195.1)       --       (438.4)    (719.0)
                            --------    --------      -----    --------   --------      -----    --------   -------- 
Loss retained...........       (73.2)     (109.9)      27.4       (82.5)     (50.4)     (60.0)     (183.6)    (301.0)
                            ========    ========      =====    ========   ========      =====    ========   ======== 
Earnings per                                                                                                         
 ordinary/common share..       14.41p                          $   0.80      48.87p                 13.65p  $   0.22 
Adjusting item--merger                                                                                               
 goodwill amortization..         --                                 --         --                    3.21p  $   0.05 
Adjusting item--windfall                                                                                             
 tax....................       26.87p                               --         --                   16.98p  $   0.28 
                            --------                           --------   --------               --------   -------- 
Adjusted earnings per                                                                                                
 ordinary/common share..       41.28p                          $   0.80      48.87p                 33.84p  $   0.55 
                            ========                           ========   ========               ========   ======== 
Diluted earnings per                                                                                                 
 ordinary/common share..       14.27p                          $   0.80      48.87p                 13.56p  $   0.22 
Adjusting item--merger                                                                                               
 goodwill amortization..         --                                 --         --                    3.20p  $   0.05 
Adjusting item--windfall                                                                                             
 tax....................       26.60p                               --         --                   16.87p  $   0.28 
                            --------                           --------   --------               --------   -------- 
Adjusted diluted                                                                                                     
 earnings per                                                                                                        
 ordinary/common share..       40.87p                          $   0.80      48.87p                 33.63p  $   0.55 
                            ========                           ========   ========               ========   ======== 
Weighted average number                                                                                              
 of shares outstanding                                                                                               
 (millions of shares)                                                                                                
Basic...................     1,180.1                              296.1      296.1                1,867.1    1,867.1 
Diluted.................     1,191.9                              296.1      296.1                1,878.9    1,878.9 
                            ========                           ========   ========               ========   ======== 

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UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
At September 30, 1998 

The following Unaudited Pro Forma Condensed Combined Balance Sheet        
consolidates the respective unaudited historical condensed consolidated balance 
sheets of ScottishPower and PacifiCorp at September 30, 1998 and has been       
prepared to reflect the merger after giving effect to the pro forma adjustments 
described in Notes 1 to 4 to the Unaudited Pro Forma Condensed Combined         
Financial Information. The Unaudited Pro Forma Condensed Combined Financial     
Information has been prepared from, and should be read in conjunction with and  
supplemental to, the respective historical consolidated financial statements    
and notes thereto of ScottishPower and PacifiCorp which are incorporated by     
reference in this proxy statement/prospectus. The pro forma amounts for the     
Combined Group presented in U.S. dollars comply with U.K. GAAP.                 

                                                        [Enlarge/Download Table]

                          ScottishPower                                                                              
                               At                                                     Purchase                       
                          September 30,                PacifiCorp                    Accounting                      
                              1998                At September 30, 1998              Adjustments   Combined Group    
                          ------------- -------------------------------------------  ----------- --------------------
                            U.K. GAAP   U.S. GAAP  Adjustments U.K. GAAP  U.K. GAAP   U.K. GAAP  U.K. GAAP  U.K. GAAP
                          ------------- ---------  ----------- ---------  ---------  ----------- ---------  ---------
                            (Pounds)        $           $          $      (Pounds)    (Pounds)   (Pounds)       $    
                                                                                                                     
                                        (Note 1)    (Note 2)              (Note 3)    (Note 4)              (Note 3) 

                                                               (in millions)                                         
Fixed assets                                                                                                         
                                                                                                                     
Intangible assets.......        72.0       468.1      (468.1)       --         --      1,199.6    1,271.6    2,161.7 
Tangible assets.........     4,954.0     9,246.4       (43.5)   9,202.9    5,413.5         --    10,367.5   17,624.8 
Investments.............        73.4       283.9         --       283.9      167.0         --       240.4      408.7 
                            --------    --------    --------   --------   --------    --------   --------   -------- 
                             5,099.4     9,998.4      (511.6)   9,486.8    5,580.5     1,199.6   11,879.5   20,195.2 
                            --------    --------    --------   --------   --------    --------   --------   -------- 
Current assets                                                                                                       
Stocks..................       137.3       266.9         --       266.9      157.0         --       294.3      500.3 
Debtors: amounts falling                                                                                             
 due after one year.....         --      1,636.1      (191.0)   1,445.1      850.0        63.4      913.4    1,552.8 
Debtors: amounts falling                                                                                             
 due within one year....       498.3     1,132.9        29.0    1,161.9      683.5         --     1,181.8    2,009.1 
Investments.............         --        616.0         --       616.0      362.4         --       362.4      616.1 
Short term bank and                                                                                                  
 other deposits.........       235.0        63.4         --        63.4       37.3         --       272.3      462.9 
                            --------    --------    --------   --------   --------    --------   --------   -------- 
                               870.6     3,715.3      (162.0)   3,553.3    2,090.2        63.4    3,024.2    5,141.2 
                            --------    --------    --------   --------   --------    --------   --------   -------- 
Creditors: amounts                                                                                                   
 falling due within one                                                                                              
 year                                                                                                                
Loans and other                                                                                                      
 borrowings.............      (509.0)     (629.0)      (29.0)    (658.0)    (387.1)     (147.0)  (1,043.1)  (1,773.3)
Other creditors.........    (1,515.9)   (1,784.1)       13.8   (1,770.3)  (1,041.4)        --    (2,557.3)  (4,347.4)
                            --------    --------    --------   --------   --------    --------   --------   -------- 
                            (2,024.9)   (2,413.1)      (15.2)  (2,428.3)  (1,428.5)     (147.0)  (3,600.4)  (6,120.7)
                            --------    --------    --------   --------   --------    --------   --------   -------- 
Net current                                                                                                          
 assets/(liabilities)...    (1,154.3)    1,302.2      (177.2)   1,125.0      661.7       (83.6)    (576.2)    (979.5)
                            --------    --------    --------   --------   --------    --------   --------   -------- 
Total assets less                                                                                                    
 current liabilities....     3,945.1    11,300.6      (688.8)  10,611.8    6,242.2     1,116.0   11,303.3   19,215.7 
Creditors: amounts                                                                                                   
 falling due after one                                                                                               
 year                                                                                                                
Loans and other                                                                                                      
 borrowings.............    (1,716.8)   (4,651.6)     (459.1)  (5,110.7)  (3,006.3)        --    (4,723.1)  (8,029.3)
Other creditors.........         --        (63.4)        --       (63.4)     (37.3)        --       (37.3)     (63.4)
Provisions for                                                                                                       
 liabilities and                                                                                                     
 charges................       (37.2)   (1,856.8)    1,386.1     (470.7)    (276.9)        --      (314.1)    (534.0)
Deferred income.........      (378.2)     (485.0)        --      (485.0)    (285.3)        --      (663.5)  (1,128.0)
                            --------    --------    --------   --------   --------    --------   --------   -------- 
Net assets..............     1,812.9     4,243.8       238.2    4,482.0    2,636.4     1,116.0    5,565.3    9,461.0 
                            ========    ========    ========   ========   ========    ========   ========   ======== 
Called up share                                                                                                      
 capital................       599.3       241.4         --       241.4      142.0       208.3      949.6    1,614.3 
Share premium...........       393.4         --          --         --         --      2,882.1    3,275.5    5,568.3 
Merger reserve..........         --          --          --         --         --        393.4      393.4      668.8 
Common shareholders'                                                                                                 
 capital................         --      3,283.6         --     3,283.6    1,931.5    (1,931.5)       --         --  
Revaluation reserve.....       225.6         --          --         --         --          --       225.6      383.5 
Profit and loss                                                                                                      
 account................       592.4       720.0       238.2      958.2      563.6      (563.6)     592.4    1,007.1 
                            --------    --------    --------   --------   --------    --------   --------   -------- 
Shareholders' funds.....     1,810.7     4,245.0       238.2    4,483.2    2,637.1       988.7    5,436.5    9,242.0 
Minority interests......         2.2        (1.2)        --        (1.2)      (0.7)      127.3      128.8      219.0 
                            --------    --------    --------   --------   --------    --------   --------   -------- 
Capital employed........     1,812.9     4,243.8       238.2    4,482.0    2,636.4     1,116.0    5,565.3    9,461.0 
                            ========    ========    ========   ========   ========    ========   ========   ======== 

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NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL 
INFORMATION 

Note 1. Reclassifications, discontinued operations and restatement              

(a) Reclassifications have been made to the PacifiCorp historical financial 
information presented under U.S. GAAP to conform to ScottishPower's             
presentation under U.K. GAAP.                                                   

(b) In accordance with SEC Regulation S-X, Rule 11-02, pro forma adjustments
have been made to eliminate the effects of an extraordinary item and            
discontinued operations from the PacifiCorp income statements for all periods   
presented. These pro forma adjustments can be summarized as follows:            

                                                                [Download Table]

                                     Six months ended June 30,    Year ended 
                                     -------------------------   December 31,
                                         1998         1997           1997    
                                     ------------ -------------  ------------
                                                  ($ millions)               
                                                                             
Net income for the period as                                                 
 reported..........................          25.7         215.8      663.7   
Pro Forma adjustments                                                        
  Total net (income)/loss from                                               
   discontinued operations.........          38.7         (34.7)    (446.8)  
  Extraordinary loss from                                                    
   regulatory asset impairment.....           --            --        16.0   
                                     ------------ -------------     ------   
Pro Forma net income for the period                                          
 from continuing operations........          64.4         181.1      232.9   
                                     ============ =============     ======   

There is no change to the net assets of PacifiCorp as a result of these     
adjustments.                                                                    

(c) To comply with the recommendations of the U.K. Accounting Standards     
Board's Statement on Interim Reports, the results for ScottishPower for the six 
month period to September 30, 1997 have been restated to eliminate seasonal     
adjustments in relation to accounting for the cost of electricity sales. The    
Statement on Interim Reports recommends that revenues and costs, wherever       
possible, should be recognised on a discrete basis for the purposes of the      
Interim Reports and not treated as a component of the full year's results, as   
was previously the policy adopted. The adjustments relate to the interim        
figures only and do not affect the full year results.                           

                                                                [Download Table]

                                                              Six months     
                                                                 ended       
                                                             September 30,   
                                                                 1997        
                                                          -------------------
                                                          ((Pounds) millions)
                                                                             
Loss for the period as previously reported...............       (133.6)      
Effect of implementing new accounting policy.............          3.5       
                                                                ------       
As restated..............................................       (130.1)      
                                                                ======       

Note 2. U.K. GAAP adjustments to historical PacifiCorp financial information    

PacifiCorp prepares its financial statements in accordance with U.S. GAAP.
For the purposes of preparing the Unaudited Pro Forma Condensed Combined        
Financial Information, the financial statements of PacifiCorp have been         
restated to conform with ScottishPower's accounting policies under U.K. GAAP by 
giving effect to the adjustments described below.                               

(a) Goodwill                                                                    

Under U.S. GAAP, goodwill arising from the purchase of operating entities 
should be held as an intangible asset in the balance sheet and amortized over   
its expected useful life.                                                       

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Under U.K. GAAP, Financial Reporting Standard No. 10, "Goodwill and       
Intangible Assets" has been adopted by ScottishPower in the preparation of its  
financial statements for the year ended March 31, 1999 and in respect of the    
six months ended September 30, 1998. Accordingly, under U.K. GAAP goodwill on   
acquisitions after March 31, 1998 is capitalized and amortized through the      
income statement over its useful economic life. Previously, all acquired        
goodwill was written off directly to reserves; such goodwill is not required to 
be reinstated.                                                                  

(b) Deferred taxation                                                           

Under U.S. GAAP, full provision for deferred tax is required to the extent
that accounting profit differs from taxable profit due to temporary timing      
differences. Provision is made at enacted rates.                                

Under U.K. GAAP, provision for deferred tax is only required to the extent
that it is probable that a taxation liability or asset will crystallize in the  
foreseeable future as a result of timing differences between taxable profit and 
accounting profit. Provision is made at known rates of tax.                     

The U.S. GAAP to U.K. GAAP adjustment of $1,389.8 million to the balance  
sheet of PacifiCorp at September 30, 1998 relates mainly to deferred tax in     
respect of property, plant and equipment. PacifiCorp's capital expenditure      
plans indicate that, for the foreseeable future, amortization of property,      
plant and equipment for taxation purposes will exceed amortization for          
accounting purposes. As a result, it is unlikely that a net liability to        
taxation arising from these differences will crystallize. Accordingly, for U.K. 
GAAP purposes, the associated U.S. GAAP deferred tax provision has been         
reversed.                                                                       

(c) Pension costs                                                               

 The fundamental differences between U.S. GAAP and U.K. GAAP are as follows:

(1)Under U.S. GAAP, the aim is to accrue the cost of providing pension      
benefits in the year in which the employee provides the related service.    
Under U.K. GAAP, the annual pension charge is determined so that it is a    
substantially level percentage of the current and expected future payroll.  

(2)Under U.S. GAAP, pension liabilities are discounted using the current    
rates at which the pension liability could be settled. Under U.K. GAAP,     
pension liabilities are usually discounted using an interest rate that      
represents the expected long term return on plan assets.                    

(3)Under U.S. GAAP, variations from plan must be amortized separately over  
remaining service lives. Under U.K. GAAP, variations can be aggregated and  
amortized over the remaining employee service lives.                        

(4)Under U.S. GAAP, plan assets should be valued at market or at market     
related values. Under U.K. GAAP, alternative bases can be used.             

(d) Other post retirement benefits                                              

SFAS 106 "Employers' Accounting for Post-retirement Benefits other than   
Pensions" requires the use of a discount rate which reflects current market     
rates in determining the provision for post retirement benefits. U.K. GAAP      
permits the use of longer term discount rates.                                  

(e) Debt and equity finance costs                                               

Under U.S. GAAP, as applied by regulated electricity utilities, both the  
cost of debt and the cost of equity applicable to domestic utility properties   
are capitalized during construction. Under U.K. GAAP, only interest on the debt 
funding attributable to capital projects may be capitalized during the period   
of construction.                                                                

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(f) Leveraged leases                                                            

  Under U.S. GAAP, lessors can offset borrowings used to acquire leased assets
against amounts receivable from lessees. It is also permissible to offset       
finance charges receivable from lessees against the finance charges arising on  
the borrowings used to fund the leased asset. This is referred to as linked     
presentation.                                                                   

Under U.K. GAAP, linked presentation is allowed only in specific          
circumstances that are not met in respect of the assets of PacifiCorp that are  
the subject of such leases. Accordingly, the amounts due from lessees and       
related indebtedness are disclosed separately in the balance sheet, and the     
finance charges receivable from lessees and finance charges payable are         
disclosed separately in the income statement. This treatment has no impact on   
net income.                                                                     

(g) Regulatory assets                                                           

 SFAS 71 establishes U.S. GAAP for utilities whose regulators have the power
to approve and/or regulate rates that may be charged to customers. Provided     
that, through the regulatory process, the utility is substantially assured of   
recovering its allowable costs by the collection of revenue from its customers, 
such costs not yet recovered are deferred as regulatory assets. Due to the      
different regulatory environment, no equivalent GAAP applies in the U.K.        

Under U.K. GAAP, regulatory assets established in accordance with SFAS 71 
are recognized where they comprise rights or other access to future economic    
benefits which arise as a result of past transactions or events which have      
created an obligation to transfer economic benefit to a third party.            
Measurement of the past transaction or event and hence of the regulatory asset  
is determined in accordance with U.K. GAAP. Where the application of U.K. GAAP  
results in the non or partial recognition of an obligation compared to U.S.     
GAAP, any related regulatory asset is either not or partially recognized.       

The U.S. GAAP to U.K. GAAP adjustment of $650.1 million to PacifiCorp's   
balance sheet at September 30, 1998 is the reversal of a FAS 71 regulatory      
asset relating to deferred tax. The application of U.K. GAAP to the related     
deferred tax provision (Note 2(b) above) has resulted in reversal of that       
provision. Accordingly, the application of U.K. GAAP as described in this note  
has resulted in reversal of the associated FAS 71 asset.                        

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Increases/(decreases) in profit for the period and shareholders' funds of       
PacifiCorp as a result of the adjustments can be summarized as follows:         

                                                                [Download Table]

                                                         PacifiCorp            
                                               --------------------------------
                                                Six months ended               
                                                    June 30,        Year ended 
                                               ------------------- December 31,
                                         Notes 1998      1997          1997    
                                         ----- ----  ------------- ------------
                                                        ($ millions)           
                                                                               
Net income for the period under U.S.                                           
 GAAP..................................        64.4       181.1       232.9    
U.K. GAAP adjustments:                                                         
  Goodwill.............................   (a)   4.9         6.2        12.1    
  Deferred taxation....................   (b)  (5.6)       11.3         2.8    
  Pension costs........................   (c)  (2.0)        0.4         0.9    
  Other post retirement benefits.......   (d)   1.4         2.2         4.5    
  Debt and equity finance costs........   (e)   3.3         3.7         7.1    
                                               ----     -------       -----    
Profit for the period under U.K. GAAP..        66.4       204.9       260.3    
                                               ====     =======       =====    

                                                     PacifiCorp at             
                                                     September 30,             
                                                         1998                  
                                                     -------------             
                                                     ($ millions)              
                                                                               
Stockholders' equity under U.S. GAAP...                 4,245.0                
U.K. GAAP adjustments:                                                         
  Goodwill.............................   (a)            (468.1)               
  Deferred taxation....................   (b)           1,389.8                
  Pension costs........................   (c)              (4.1)               
  Other post retirement benefits.......   (d)              10.2                
  Debt and equity finance costs........   (e)             (39.5)               
  Regulatory assets....................   (g)            (650.1)               
                                                        -------                
Shareholders' funds under U.K. GAAP....                 4,483.2                
                                                        =======                

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Increases/(decreases) in profit of PacifiCorp for the period by caption         
headings as a result of the adjustments are as follows:                         

                                                                [Download Table]

                                                         PacifiCorp            
                                               --------------------------------
                                               Six months ended                
                                                   June 30,         Year ended 
                                               ------------------  December 31,
                                          Note   1998      1997        1997    
                                          ---- --------  --------  ------------
                                                        ($ millions)           
                                                                               
Goodwill................................. (a)                                  
  Cost of sales..........................           --        0.6       1.1    
  Administrative expenses................           4.9       5.6      11.0    
                                               --------  --------     -----    
                                                    4.9       6.2      12.1    
                                               ========  ========     =====    
Deferred taxation........................ (b)                                  
  Ordinary taxation......................          (5.6)     11.3       2.8    
                                               ========  ========     =====    
Pension costs............................ (c)                                  
  Administrative expenses................          (3.2)      0.7       1.4    
  Ordinary taxation......................           1.2      (0.3)     (0.5)   
                                               --------  --------     -----    
                                                   (2.0)      0.4       0.9    
                                               ========  ========     =====    
Other post retirement benefits........... (d)                                  
  Administrative expenses................           2.2       3.6       7.3    
  Ordinary taxation......................          (0.8)     (1.4)     (2.8)   
                                               --------  --------     -----    
                                                    1.4       2.2       4.5    
                                               ========  ========     =====    
Debt and equity finance costs............ (e)                                  
  Cost of sales..........................           0.8       0.8       1.6    
  Transmission and distribution costs....           0.8       0.9       1.7    
  Administrative expenses................           0.2       0.2       0.3    
  Net interest charge ...................           1.5       1.8       3.5    
                                               --------  --------     -----    
                                                    3.3       3.7       7.1    
                                               ========  ========     =====    
Leveraged leases......................... (f)                                  
  Group turnover from continuing                                               
   operations............................          32.0      33.2      54.3    
  Net interest charge....................         (32.0)    (33.2)    (54.3)   
                                               --------  --------     -----    
                                                    --        --        --     
                                               ========  ========     =====    

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The adjustments can be summarized by profit and loss account caption headings   
as follows:                                                                     

                                                                [Download Table]

                                                          PacifiCorp            
                                                --------------------------------
                                                Six months ended                
                                                    June 30,         Year ended 
                                                ------------------  December 31,
                                                  1998      1997        1997    
                                                --------  --------  ------------
                                                         ($ millions)           
                                                                                
Group turnover from continuing operations                                       
  Leveraged leases.............................     32.0      33.2      54.3    
                                                ========  ========     =====    
Cost of sales                                                                   
  Goodwill.....................................      --        0.6       1.1    
  Debt and equity finance costs................      0.8       0.8       1.6    
                                                --------  --------     -----    
                                                     0.8       1.4       2.7    
                                                ========  ========     =====    
Transmission and distribution costs                                             
  Debt and equity finance costs................      0.8       0.9       1.7    
                                                ========  ========     =====    
Administrative expenses                                                         
  Goodwill.....................................      4.9       5.6      11.0    
  Pension costs................................     (3.2)      0.7       1.4    
  Other post retirement benefits...............      2.2       3.6       7.3    
  Debt and equity finance costs................      0.2       0.2       0.3    
                                                --------  --------     -----    
                                                     4.1      10.1      20.0    
                                                ========  ========     =====    
Net interest charge                                                             
  Debt and equity finance costs................      1.5       1.8       3.5    
  Leveraged leases.............................    (32.0)    (33.2)    (54.3)   
                                                --------  --------     -----    
                                                   (30.5)    (31.4)    (50.8)   
                                                ========  ========     =====    
Ordinary taxation                                                               
  Deferred taxation............................     (5.6)     11.3       2.8    
  Pension costs................................      1.2      (0.3)     (0.5)   
  Other post retirement benefits...............     (0.8)     (1.4)     (2.8)   
                                                --------  --------     -----    
                                                    (5.2)      9.6      (0.5)   
                                                ========  ========     =====    

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Increases/(decreases) in net assets or shareholders' funds of PacifiCorp by     
caption heading as a result of the adjustments are as follows:                  

                                                                [Download Table]

                                                           PacifiCorp          
                                                          -------------        
                                                                   At          
                                                              September 30,    
                                                     Note         1998         
                                                     ----     -------------    
                                                          ($  millions)        
                                                                               
Goodwill............................................ (a)                       
  Intangible assets.................................          (468.1)          
  Profit and loss account...........................          (468.1)          
Deferred taxation................................... (b)                       
  Provisions for liabilities and charges............         1,389.8           
  Profit and loss account...........................         1,389.8           
Pension costs....................................... (c)                       
  Tangible assets...................................             3.0           
  Creditors: amounts falling due within one year                               
    Other creditors.................................            (9.6)          
  Provisions for liabilities and charges............             2.5           
  Profit and loss account...........................            (4.1)          
Other post retirement benefits...................... (d)                       
  Tangible assets...................................            (7.0)          
  Creditors: amounts falling due within one year                               
    Other creditors.................................            23.4           
  Provisions for liabilities and charges............            (6.2)          
  Profit and loss account...........................            10.2           
Debt and equity finance costs....................... (e)                       
  Tangible assets...................................           (39.5)          
  Profit and loss account...........................           (39.5)          
Leveraged leases.................................... (f)                       
  Debtors: amounts falling due within one year......            29.0           
  Debtors: amounts falling due after one year.......           459.1           
  Creditors: amounts falling due within one year                               
    Loans and other borrowings......................           (29.0)          
  Creditors: amounts falling due after one year                                
    Loans and other borrowings......................          (459.1)          
Regulatory assets................................... (g)                       
  Debtors: amounts falling due after more than one                             
   year.............................................          (650.1)          
  Profit and loss account...........................          (650.1)          

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The adjustments can be summarized by balance sheet caption heading as follows:  

                                                                [Download Table]

                                                                    PacifiCorp  
                                                                   -------------
                                                                        At      
                                                                   September 30,
                                                                       1998     
                                                                   -------------
                                                                   ($  millions)
                                                                                
Intangible assets                                                               
  Goodwill........................................................     (468.1)  
                                                                      =======   
Tangible assets                                                                 
  Other post retirement benefits..................................       (7.0)  
  Pension costs...................................................        3.0   
  Debt and equity finance costs...................................      (39.5)  
                                                                      -------   
                                                                        (43.5)  
                                                                      =======   
Debtors: amounts falling due after more than one year                           
  Leveraged leases................................................      459.1   
  Regulatory assets...............................................     (650.1)  
                                                                      -------   
                                                                       (191.0)  
                                                                      =======   
Debtors: amounts falling due within one year                                    
  Leveraged leases................................................       29.0   
                                                                      =======   
Creditors: amounts falling due within one year                                  
  Loans and other borrowings                                                    
  Leveraged leases................................................      (29.0)  
                                                                      =======   
Creditors: amounts falling due within one year                                  
  Other creditors                                                               
  Pension costs...................................................       (9.6)  
  Other post retirement benefits..................................       23.4   
                                                                      -------   
                                                                         13.8   
                                                                      =======   
Creditors: amounts falling due after more than one year                         
  Loans and other borrowings                                                    
  Leveraged leases................................................     (459.1)  
                                                                      =======   
Provision for liabilities and charges                                           
  Deferred taxation...............................................    1,389.8   
  Pension costs...................................................        2.5   
  Other post retirement benefits..................................       (6.2)  
                                                                      -------   
                                                                      1,386.1   
                                                                      =======   
Profit and loss account                                                         
  Goodwill........................................................     (468.1)  
  Deferred taxation...............................................    1,389.8   
  Pension costs...................................................       (4.1)  
  Other post retirement benefits..................................       10.2   
  Debt and equity finance costs...................................      (39.5)  
  Regulatory assets...............................................     (650.1)  
                                                                      -------   
                                                                        238.2   
                                                                      =======   

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Note 3. Translation of PacifiCorp and Unaudited Pro Forma Condensed Combined    
Financial Information                                                           

  PacifiCorp presents its financial statements in U.S. dollars. The results of
PacifiCorp as restated under U.K. GAAP have been translated into sterling at    
the average noon buying rates of $1.65:(Pounds)1.00 for the six months ended    
June 30, 1998, $1.63:(Pounds)1.00 for the six months ended June 30, 1997 and    
$1.64:(Pounds)1.00 for the year ended December 31, 1997.                        

The Unaudited Pro Forma Condensed Combined Income Statements have been    
translated into U.S. dollars, solely for the convenience of the reader, at the  
average noon buying rates of $1.65:(Pounds)1.00 for the six months ended        
September 30, 1998, $1.63:(Pounds)1.00 for the six months ended September 30,   
1997 and $1.64:(Pounds)1.00 for the year ended March 31, 1998.                  

The historical PacifiCorp balance sheet at September 30, 1998 in U.S.     
dollars, as restated into U.K. GAAP, and the Unaudited Pro Forma Condensed      
Combined Balance Sheet at September 30, 1998 have been translated into pounds   
sterling and U.S. dollars respectively at $1.70:(Pounds)1.00, the effective     
noon buying rate at September 30, 1998.                                         

Note 4. Purchase accounting adjustments to the Unaudited Pro Forma Condensed    
Combined Financial Information                                                  

The purchase accounting adjustments to the pro forma financial information
reflect those adjustments detailed below. At the time of the merger,            
ScottishPower will establish a new accounting basis for PacifiCorp's assets and 
liabilities based upon the fair market values thereof and the purchase price    
for PacifiCorp, including the direct costs of the acquisition.                  

A preliminary allocation of the purchase price has been reflected in the  
Unaudited Pro Forma Condensed Combined Financial Information to the extent that 
the excess of the purchase price over the historical net asset position of      
PacifiCorp has been allocated to goodwill. A final allocation of the purchase   
price is dependent upon certain valuations and other studies which have not     
progressed to a stage where there is sufficient information to make such an     
allocation in the Unaudited Pro Forma Condensed Combined Financial Information. 
Certain valuations of significant assets and liabilities will have to be        
carried out by independent valuation experts. ScottishPower will not complete   
the valuations and studies of other significant assets, liabilities and the     
operations of PacifiCorp until after the consummation of the merger.            

ScottishPower believes that the portion of the purchase price in excess of
the existing carrying value of PacifiCorp's net assets comprises primarily      
goodwill, which will be assigned an economic life, under both U.S. and U.K.     
GAAP, of 20 years. Once assessments are complete, ScottishPower may allocate a  
portion of the purchase price to other long-lived intangible assets such as     
trademarks, operating licences and customer lists, if their value can be        
measured reliably. These other long-lived intangible assets would be identified 
separately from goodwill, and typically be assigned lives not significantly     
different from the 20 years assigned to goodwill.                               

ScottishPower does not expect to make any significant purchase accounting 
adjustments to the historical book value of PacifiCorp's generation,            
transmission and distribution operating assets. The historical net book value   
of these assets is supported by the regulatory environment in which PacifiCorp  
operates. As a result, it is likely that book value will closely approximate    
fair value at the date of the merger, provided the regulatory environment       
remains substantially unchanged.                                                

It is expected that once specialist valuations are completed, adjustments 
will be made to other assets and liabilities in the PacifiCorp balance sheet at 
the date of merger, including pensions, other post retirement benefits and      
financial instruments. To comply with U.K. and U.S. GAAP rules for purchase     
accounting,                                                                     
financial instruments will be restated to reflect market values at the merger   
date. In the case of pensions and other post retirement benefits, full          
provision will be required for the transition obligations which are currently   

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being recognized on a straight line basis over 12 and 20 years, respectively.   
An assessment of the benefit obligation will also be required taking into       
account market conditions at the date of the merger. These adjustments are not  
expected to have a material impact on the income statement after taking account 
of the associated change in goodwill amortization.                              

ScottishPower intends to implement a share buyback program of up to       
(Pounds)500 million in the period between the PacifiCorp and ScottishPower      
shareholder meetings and the date of the merger. It is anticipated that the     
buyback will be undertaken through market purchases and is intended to achieve  
further financial efficiency. For the purposes of the Unaudited Pro Forma       
Condensed Combined Financial Information, no account has been taken of the      
financial effect of the proposed buyback.                                       

(a) Purchase consideration                                                      

PacifiCorp shareholders will be entitled to receive for each PacifiCorp   
share held as of the time of the merger 0.58 ADSs or, if elected, 2.32 ordinary 
shares. The precise number of PacifiCorp shares to be converted in the merger   
cannot be determined until the time of the merger.                              

  For the purposes of the purchase accounting adjustments within the Unaudited
Pro Forma Financial Information, the number of ordinary shares to be issued on  
completion of the merger has been calculated as 700.6 million. This is based on 
a diluted number of shares of PacifiCorp common stock issued and outstanding on 
September 30, 1998 of 302.0 million multiplied by the agreed exchange ratio of  
2.32 ordinary shares for each share of PacifiCorp common stock.                 

The diluted number of PacifiCorp shares comprises 297.3 million shares    
issued and outstanding, and 4.7 million options granted, but not exercised, to  
acquire PacifiCorp common stock. At the time of the merger, the PacifiCorp      
options will be replaced by options to acquire ADSs under the same terms and    
conditions on which the PacifiCorp options were originally granted, other than  
acceleration of their respective vesting schedules. For the purposes of the     
Unaudited Pro Forma Condensed Combined Financial Information, the fair value of 
the consideration assumes that, at the time of the merger, the PacifiCorp       
options are converted to ScottishPower options, which are subsequently          
exercised. This will result in the issue of 10.9 million ScottishPower shares   
(included in the total of 700.6 million), and the receipt, by ScottishPower, of 
approximately (Pounds)63 million in total over the period of exercise, being    
the exercise price of those options.                                            

In connection with the merger, the Combined Group will incur fees and     
expenses of approximately (Pounds)147 million. Share issue costs of             
approximately (Pounds)65 million and the costs of redemption of PacifiCorp      
preferred share capital of approximately (Pounds)15 million will be incurred by 
PacifiCorp. Other costs, totalling approximately (Pounds)68 million, relate     
principally to investment banking fees as well as legal, accounting and         
regulatory filing fees. These other costs have been taken into account in       
calculating goodwill in the Unaudited Pro Forma Condensed Combined Financial    
Information.                                                                    

The purchase consideration may be summarized as follows:                  

                                                                [Download Table]

                                              At         
                                         September 30,   
                                             1998        
                                      -------------------
                                      ((Pounds) millions)
                                                         
Shares issued........................       3,625.8      
Acquisition expenses.................          67.6      
Proceeds receivable from exercise of                     
 PacifiCorp common stock options.....         (63.4)     
                                            -------      
Total purchase consideration.........       3,630.0      
                                            =======      

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(b) Amortization of goodwill                                                    

For the purposes of the Unaudited Pro Forma Condensed Combined Income     
Statements, adjustments have been made to reflect the estimated amortization of 
goodwill arising upon acquisition through the income statement on the basis of  
an estimated useful life of 20 years. Under Financial Reporting Standard No. 10 
"Goodwill and Intangible Assets," purchased goodwill is required to be          
amortized over its expected useful life which generally is presumed to be       
limited to a period of 20 years.                                                

These adjustments may be summarized as follows:                           

                                                                [Download Table]

                                              At         
                                           September     
                                           30, 1998      
                                      -------------------
                                      ((Pounds) millions)
                                                         
Purchase consideration...............       3,630.0      
Net book value of assets acquired                        
 (note (i))..........................       2,430.4      
                                            -------      
Goodwill arising on acquisition......       1,199.6      
                                            =======      

--------                                                                    
(i)Net of preferred share capital of (Pounds)142.0 million and share issue
costs of (Pounds)64.7 million.                                                  

 The amortization of merger goodwill over its estimated expected useful life
gives rise to the following charges to net income in the Unaudited Pro Forma    
Condensed Combined Income Statements:                                           

                                                                [Download Table]
                                                                          
Six months ended September 30, 1998.................. (Pounds)30.0 million
Six months ended September 30, 1997.................. (Pounds)30.0 million
Year ended March 31, 1998............................ (Pounds)60.0 million

(c) Preferred Stock                                                             

PacifiCorp preferred stock outstanding as at September 30, 1998 has been  
reclassified as minority interests in the Unaudited Pro Forma Condensed         
Combined Balance Sheet. Dividends on PacifiCorp preferred stock have been       
reclassified as minority interests in the Unaudited Pro Forma Condensed         
Combined Income Statements.                                                     

(d) Merger reserve                                                              

  New ScottishPower will be the new holding company of the Combined Group. For
the purposes of the Unaudited Pro Forma Condensed Combined Balance Sheet, this  
results in the balance in the share premium account of ScottishPower at         
September 30, 1998 of (Pounds)393.4 million being accounted for as a merger     
reserve in the balance sheet of the Combined Group.                             

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(e) Purchase accounting adjustments                                             

The adjustments can be summarized by balance sheet caption heading as     
follows:                                                                        

                                                                [Download Table]

                                                                  Purchase      
                                                                 Accounting     
                                                                 Adjustments    
                                                             -------------------
                                                                     At         
                                                                September 30,   
                                                                    1998        
                                                             -------------------
                                                             ((Pounds) millions)
                                                                                
Intangible assets                                                               
 Goodwill...................................................       1,199.6      
                                                                  ========      
Debtors: amounts falling due within one year                                    
 Proceeds from exercising PacifiCorp common stock options...          63.4      
                                                                  ========      
Creditors: amounts falling due within one year                                  
 Transaction fees...........................................         (67.6)     
 Redemption of preferred share capital......................         (14.7)     
 Share issue costs..........................................         (64.7)     
                                                                  --------      
                                                                    (147.0)     
                                                                  ========      
Called up share capital                                                         
 Shares issued at par.......................................         350.3      
 Preferred share capital....................................        (142.0)     
                                                                  --------      
                                                                     208.3      
                                                                  ========      
Share premium                                                                   
 Share premium..............................................       3,275.5      
 Merger reserve.............................................        (393.4)     
                                                                  --------      
                                                                   2,882.1      
                                                                  ========      

Common shareholders' capital................................      (1,931.5)     
                                                                  ========      
Merger reserve                                                                  
 Share premium..............................................         393.4      
                                                                  ========      
Profit and loss account                                                         
 Retained profits...........................................        (563.6)     
                                                                  ========      

Minority interests                                                              
 Preferred share capital....................................         142.0      
 Redemption of preferred share capital......................         (14.7)     
                                                                  --------      
                                                                     127.3      
                                                                  ========      

The purchase accounting adjustments to common shareholders' capital and   
profit and loss account represent normal consolidation adjustments made under   
both U.K. GAAP and U.S. GAAP. These adjustments eliminate the common stock and  
retained profits in PacifiCorp's accounts as of the date of the merger.         

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Note 5. Significant differences between U.K. GAAP and U.S. GAAP                 

The Unaudited Pro Forma Condensed Combined Financial Information has been 
prepared in accordance with U.K. GAAP, which differs in certain significant     
respects from U.S. GAAP.                                                        

The main differences between U.K. GAAP and U.S. GAAP that are relevant to 
the Combined Group's Unaudited Pro Forma Condensed Combined Financial           
Information relate to:                                                          

(a) Goodwill, intangible assets and business combinations                       

Goodwill and intangible assets                                                

  Under U.S. GAAP, goodwill and intangible assets arising from the purchase of
operating entities should be held as an intangible asset in the balance sheet   
and amortized over its expected useful life.                                    

Under U.K. GAAP, goodwill arising from the purchase of operating entities 
before March 31, 1998 has been written off directly to reserves. Goodwill       
arising on acquisitions after March 31, 1998 is capitalized and amortized       
through the income statement over its useful economic life. Under U.K. GAAP,    
intangible assets other than goodwill are recognized only where they are        
separately identifiable, capable of reliable measurement and disposal           
independent of the business of the entity to which they relate. Otherwise, such 
amounts are included as part of purchased goodwill.                             

  The goodwill adjustment is made to recognize goodwill previously written off
to reserves under U.K. GAAP, as an intangible asset under U.S. GAAP. This       
goodwill, which is capitalized under U.S. GAAP, is then amortized over its      
useful economic life with the effect being a reduction in profit reflecting the 
amortization charge for the period.                                             

Business combinations                                                         

In addition to re-instating the goodwill calculated under U.K. GAAP as    
described above, goodwill must also be recalculated in accordance with U.S.     
GAAP. This is required due to differences between U.K. GAAP and U.S. GAAP in    
the determination of acquisition price and valuation of assets and liabilities  
at the merger date. The adjustment referred to as business combinations         
reflects the impact of recalculating the goodwill arising on the acquisitions   
of Manweb, Southern Water and PacifiCorp under U.S. GAAP.                       

(b) Deferred taxation                                                           

Under U.S. GAAP, full provision for deferred tax is required to the extent
that accounting profit differs from taxable profit due to temporary timing      
differences. Provision is made at future enacted rates.                         

Under U.K. GAAP, provision for deferred tax is only required to the extent
that it is probable that a taxation liability or asset will crystallize, in the 
foreseeable future, as a result of timing differences between taxable profit    
and accounting profit. Provision is made at known rates of tax.                 

The item "effect of differences in methodology" reflects the impact of    
making full provision for deferred tax in respect of the ScottishPower and      
PacifiCorp U.K. GAAP balance sheets at September 30, 1998.                      

  The item "effect of U.S. GAAP adjustments" reflects the additional impact of
making full provision for deferred tax in respect of adjustments made in        
restating the ScottishPower and PacifiCorp U.K. GAAP balance sheets at          
September 30, 1998 to U.S. GAAP.                                                

(c) Pension costs                                                               

 The fundamental differences between U.S. GAAP and U.K. GAAP are as follows:

(i)  Under U.S. GAAP, the aim is to accrue the cost of providing pension    
benefits in the year in which the employee provides the related   
  service. Under U.K. GAAP, the annual pension charge is determined so
that it is a substantially level percentage of the current and    
expected future payroll.                                          

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(ii)  Under U.S. GAAP, pension liabilities are discounted using the current 
 rates at which the pension liability could be settled. Under U.K.
  GAAP, pension liabilities are usually discounted using an interest
  rate that represents the expected long term return on plan assets.

(iii)  Under U.S. GAAP, variations from plan must be amortized separately   
  over remaining service lives. Under U.K. GAAP, variations can be
     aggregated and amortized over the remaining employee service lives.

(iv)  Under U.S. GAAP, plan assets should be valued at market or at market  
related values. Under U.K. GAAP, alternative bases can be used. 

(d) Revaluation of fixed assets                                                 

  The revaluation of Manweb distribution assets and Southern Water operational
assets is not permitted under U.S. GAAP. Accordingly, the reconciliation        
restates fixed assets to historical cost and the depreciation charge has been   
adjusted.                                                                       

(e) Ordinary dividends                                                          

Previously under U.K. GAAP, final ordinary dividends and the related U.K. 
advance corporation tax ("ACT") were recognized in the financial year in        
respect of which they were recommended by the Board of Directors for approval   
by shareholders. ACT was accounted for by the creation of a corresponding asset 
and liability and, as such, had no impact on net assets or shareholders'        
equity. Under U.S. GAAP, such dividends and tax are not recognized until the    
dividends are formally declared by the Board of Directors.                      

(f) ESOP shares held in trust                                                   

Under U.K. GAAP, shares held by an Employee Share Ownership Plan ("ESOP") 
are recorded as fixed asset investments at cost less amounts written off. Under 
U.S. GAAP, shares held in trust are recorded at cost in the balance sheet as a  
deduction from shareholders' funds. No dividends have been paid on the shares   
held by the ScottishPower ESOP and future dividends have been waived.           

(g) Other post retirement benefits                                              

SFAS 106 "Employer's Accounting for Post-retirement Benefits other than   
Pensions" requires the use of a discount rate which reflects current market     
rates in determining the provision for post retirement benefits. U.K. GAAP      
permits the use of longer term discount rates.                                  

(h) Debt and equity finance costs                                               

Under U.S. GAAP, as applied by regulated electricity utilities, both the  
cost of debt and the cost of equity applicable to domestic utility properties   
are capitalized during construction. Under U.K. GAAP, only interest on the debt 
funding attributable to capital projects may be capitalized during the period   
of construction.                                                                

(i) Regulatory assets                                                           

 SFAS 71 establishes U.S. GAAP for utilities whose regulators have the power
to approve and/or regulate rates that may be charged to customers. Provided     
that, through the regulatory process, the utility is substantially assured of   
recovering its allowable costs by the collection of revenue from its customers, 
such costs not yet recovered are deferred as regulatory assets. Due to the      
different regulatory environment, no equivalent GAAP applies in the U.K.        

Under U.K. GAAP, regulatory assets established in accordance with SFAS 71 
are recognized where they comprise rights or other access to future economic    
benefits which arise as a result of past transactions or events which have      
created an obligation to transfer economic benefit to a third party.            
Measurement of the past transaction or event and hence of the regulatory asset  
is determined in accordance with U.K. GAAP.                                     

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  Where the application of U.K. GAAP results in the non or partial recognition
of an obligation compared to U.S. GAAP, any related regulatory asset is either  
not or partially recognized.                                                    

(j) Earnings per share                                                          

  Under U.K. GAAP, earnings per share is calculated by dividing the net profit
or loss for the period by the weighted average number of shares (for basic and  
diluted number of shares) outstanding for the period. U.K. GAAP permits the     
presentation of more than one measure of earnings per share provided that all   
such measures are clearly explained and are given equal prominence on the face  
of the income statement.                                                        

 Under U.S. GAAP, earnings per share is calculated by dividing earnings from
continuing operations, excluding extraordinary items, by the weighted average   
number of shares (for basic and diluted number of shares) outstanding for the   
period. U.S. GAAP permits only one measure of earnings per share as a           
performance measure.                                                            

 Following the adoption of Financial Reporting Standard No. 10 "Goodwill and
Intangible Assets", as permitted under U.K. GAAP, ScottishPower will provide as 
an additional measure of underlying performance, earnings per share calculated  
excluding the impact of goodwill amortization, and pro forma earnings per share 
have been calculated on this basis. Pro forma earnings per share have also been 
presented using U.S. GAAP earnings which have been adjusted to exclude the      
impact of goodwill amortization in addition to the exclusion of the impact of   
windfall tax.                                                                   

(k) Purchase consideration                                                      

Under U.K. GAAP, the fair value of the purchase consideration will be     
determined by multiplying the number of ScottishPower ordinary shares to be     
issued at the time of the merger by the ScottishPower share price at the close  
of trading on the London Stock Exchange the day before the merger. For the      
purposes of the U.K. GAAP Unaudited Pro Forma Condensed Combined Financial      
Information, a value of (Pounds)5.17 1/2 has been used, this being the market   
price of ScottishPower ordinary shares as at April 27, 1999, the latest         
practicable date for which such information was available before the date of    
this proxy statement/prospectus.                                                

Under U.S. GAAP, the fair value of the purchase consideration will be     
determined by multiplying the number of ScottishPower ordinary shares to be     
issued at the time of the merger by an average of the ScottishPower ordinary    
share price for a short period before and after the announcement of the         
intended merger with PacifiCorp on December 7, 1998. This share price has been  
calculated as (Pounds)6.38 per ordinary share.                                  

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 The following statements summarize the material adjustments which reconcile
the Combined Group unaudited pro forma profit/(loss) and equity shareholders'   
interest under U.K. GAAP to the amounts that would have been reported had U.S.  
GAAP been applied.                                                              

                                                                [Download Table]

                                                         Combined Group         
                                                  ------------------------------
                                                  Six months ended              
                                                    September 30,     Year ended
                                                  ------------------  March 31, 
                                        Note        1998      1997       1998   
                                        ----      --------  --------  ----------
                                                      ((Pounds) millions)       
                                                                                
Profit/(loss) for the period under U.K.                                         
 GAAP..................................              194.4     (41.9)   254.8   
U.S. GAAP adjustments:                                                          
  Goodwill and intangible assets.......  (a)         (42.6)    (43.1)   (86.4)  
  Deferred tax.........................  (b)         (11.7)     (1.3)   (29.8)  
  Pension costs........................  (c)          10.1      10.3     21.8   
  Depreciation on revaluation uplift...  (d)           1.7       --       1.7   
  Other post retirement benefits.......  (g)          (1.3)     (2.2)    (4.5)  
  Debt and equity finance costs........  (h)          (2.0)     (2.4)    (4.3)  
                                                  --------  --------    -----   
                                                     148.6     (80.6)   153.3   
Deferred tax effect of U.S. GAAP                                                
 adjustments:                                                                   
  Pension costs and other post                                                  
   retirement benefits.................  (c),(g)      (2.7)     (2.5)    (4.8)  
                                                  --------  --------    -----   
Net income/(loss) for the period under                                          
 U.S. GAAP.............................              145.9     (83.1)   148.5   
                                                  ========  ========    =====   

                                                                [Download Table]

                                                                 Combined Group 
                                                                at September 30,
                                                                      1998      
                                                                ----------------
                                                                   ((Pounds)    
                                                                   millions)    
                                                                                
Shareholders' funds under U.K. GAAP........................          5,436.5    
U.S. GAAP adjustments for:                                                      
  Goodwill and intangible assets........................... (a)      1,312.1    
  Business combinations.................................... (a)      1,147.4    
  Amortization of goodwill................................. (a)        (77.1)   
  Pension costs............................................ (c)        111.3    
  Revaluation of fixed assets.............................. (d)      (229.0)    
  Depreciation of revaluation uplift....................... (d)          3.4    
  Dividends................................................ (e)         89.9    
  ESOP shares held in trust................................ (f)        (34.2)   
  Other post retirement benefits........................... (g)         (9.6)   
  Debt and equity finance costs............................ (h)         23.2    
  Regulatory assets........................................ (i)        382.4    
  Deferred tax:                                             (b)                 
    Effect of U.S. GAAP adjustments........................            (30.7)   
    Effect of differences in methodology...................         (1,393.3)   
                                                                    --------    
Stockholders' equity under U.S. GAAP.......................          6,732.3    
                                                                    ========    

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Note 6. Earnings per ordinary/common share on a U.S. GAAP basis                 

                                                                [Download Table]

                                      Combined Group                            
                                     -----------------                          
                                                 Pro    PacifiCorp ScottishPower
                                     Pro forma  forma   Historical  Historical  
                                     --------- -------  ---------- -------------
                                     (Pounds)     $         $        (Pounds)   
                                                         Note (a)               
                                     (in millions except for per share and ADS  
                                                      amounts)                  
                                                                                
Year ended March 31, 1998                                                       
Profit for the period from continu-                                             
 ing operations applicable to                                                   
 ordinary/common shares............     148.5    243.5    210.1         129.8   
Earnings for the period from con-                                               
 tinuing operations:                                                            
Per ordinary/common share (see Note                                             
 (b))                                                                           
  Basic............................      7.95p    0.13     0.71         11.00 p 
  Diluted..........................      7.90p    0.13     0.71         10.89 p 
Per ADS (see Note (b))                                                          
  Basic............................      0.32     0.52      N/A          0.44   
  Diluted..........................      0.32     0.52      N/A          0.44   
Average number of ordinary/common                                               
 shares outstanding                                                             
  Basic............................   1,867.1  1,867.1    296.1       1,180.1   
  Assuming dilution................   1,878.9  1,878.9    296.1       1,191.9   
Six months ended September 30, 1998                                             
Profit for the period from continu-                                             
 ing operations applicable to                                                   
 ordinary/common shares............     145.9    240.7     54.8         167.4   
Earnings for the period from con-                                               
 tinuing operations:                                                            
Per ordinary/common share (see Note                                             
 (b))                                                                           
  Basic............................      7.79p    0.13     0.18         14.13 p 
  Diluted..........................      7.73p    0.13     0.18         13.98 p 
Per ADS (see Note (b))                                                          
  Basic............................      0.31     0.52      N/A          0.57   
  Diluted..........................      0.31     0.52      N/A          0.56   
Average number of ordinary/common                                               
 shares outstanding                                                             
  Basic............................   1,874.1  1,874.1    297.2       1,184.6   
  Assuming dilution................   1,887.0  1,887.0    297.2       1,197.5   
Six months ended September 30, 1997                                             
Profit/(loss) for the period from                                               
 continuing operations applicable                                               
 to                                                                             
 ordinary/common shares............     (83.1)  (135.5)   168.9        (132.0)  
Earnings for the period from con-                                               
 tinuing operations:                                                            
Per ordinary/common share (see Note                                             
 (b))                                                                           
  Basic............................    (4.46)p   (0.07)    0.57        (11.20)p 
  Diluted..........................    (4.43)p   (0.07)    0.57        (11.09)p 
Per ADS (see Note (b))                                                          
  Basic............................    (0.18)    (0.28)     N/A          0.45   
  Diluted..........................    (0.18)    (0.28)     N/A          0.44   
Average number of ordinary/common                                               
 shares outstanding                                                             
  Basic............................   1,864.6  1,864.6    295.6       1,178.8   
  Assuming dilution................   1,875.6  1,875.6    295.6       1,189.8   

--------                                                                        
Notes:                                                                    
(a) PacifiCorp historical comparative per share data are given for the year     
   ended December 31, 1997 and for the six months ended June 30, 1998 and June
30, 1997.                                                               

(b) In accordance with U.S. GAAP, earnings per share has been presented above   
based on U.S. GAAP earnings of ScottishPower and the Combined Group,    
  without adjustment for the impact of windfall tax ((Pounds)317 million for
Fiscal 1998) or goodwill amortization (September 30, 1998: (Pounds)69.6 
million; September 30, 1997: (Pounds)69.3 million; March 31, 1998:      
(Pounds)139.0 million).                                                 

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The inclusion of these amounts in the determination of earnings for the   
purposes of computation of earnings per share in accordance with U.S. GAAP      
decreased earnings per share as follows:                                        

                                                                [Download Table]

                                                        PacifiCorp              
                                                        Pro Forma  ScottishPower
                                         Combined Group Equivalent  Historical  
                                         ------------------------- -------------
                                            P      $        $            P      
                                                                                
March 31, 1998                                                                  
 Per ordinary/common share                                                      
  Windfall tax..........................   16.98   0.28    0.65         26.87   
  Goodwill amortisation.................    7.44   0.12    0.28          2.53   
 Per ADS                                                                        
  Windfall tax..........................   67.92   1.12    2.60       107.48    
  Goodwill amortisation.................   29.76   0.48    1.12        10.12    
September 30, 1998                                                              
 Per ordinary/common share                                                      
  Windfall tax..........................     --     --      --           --     
  Goodwill amortisation.................    3.71   0.06    0.14         1.27    
 Per ADS                                                                        
  Windfall tax..........................     --     --      --           --     
  Goodwill amortisation.................   14.84   0.24    0.56         5.08    
September 30, 1997                                                              
 Per ordinary/common share                                                      
  Windfall tax..........................   17.00   0.28    0.65        26.89    
  Goodwill amortisation.................    3.72   0.06    0.14         1.25    
 Per ADS                                                                        
  Windfall tax..........................   68.00   1.12    2.60       107.56    
  Goodwill amortisation.................   14.88   0.24    0.56         5.00    

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DESCRIPTION OF ORDINARY SHARES

This section contains information relating to the ordinary shares of      
ScottishPower, including brief summaries of parts of ScottishPower's memorandum 
and articles of association and the U.K. Companies Act 1985 as amended and      
modified by the Companies Act 1989, in each case as currently in effect. These  
summaries do not purport to be complete and are qualified in their entirety by  
reference to the ScottishPower articles, which have been filed as an exhibit to 
the registration statement of which this proxy statement/prospectus is a part,  
and to the Companies Act 1985. Under Scots law, holders of shares in            
ScottishPower are bound by and are deemed to have notice of the ScottishPower   
articles. Except where stated, the following description applies to the         
ScottishPower articles and the New ScottishPower articles.                      

General                                                                         

The presently authorized share capital of ScottishPower consists of 1.7   
billion ordinary shares of 50 pence each and one special rights non-voting      
redeemable preference share of (Pounds)1. As of April 27, 1999, 1,199,323,636   
ordinary shares were issued and outstanding and fully paid. The ordinary shares 
are held in certificated and uncertificated (paperless) form. The presently     
authorized capital stock of New ScottishPower consists of 1,699,900,004         
ordinary shares of 50p each, 49,998 limited voting redeemable shares of         
(Pounds)1 each, and one special rights non-voting redeemable preference share   
of (Pounds)1. As of April 29, 1999, four ordinary shares and 49,998 limited     
voting redeemable shares were issued and outstanding and fully paid. Details of 
the provisions of the articles relating to the special share are described      
under "--Limitations on Holdings" below and "Comparison of Rights of PacifiCorp 
Shareholders and ScottishPower Shareholders--ScottishPower Special Share".      

Voting                                                                          

 At a general meeting of ScottishPower, subject to the restrictions referred
to under "--Restrictions on Voting" below and subject to any special rights or  
restrictions as to voting attached to any class of shares, on a show of hands   
every shareholder who is present in person and entitled to vote shall have one  
vote, and on a poll every shareholder who is present in person or by proxy and  
entitled to vote shall have one vote for every share held by each shareholder.  
The expression "present in person" in the articles includes a person present as 
the duly authorized representative of a corporate shareholder acting in that    
capacity.                                                                       

Unless otherwise required by the Companies Act or the articles, voting at 
any general meeting is by ordinary resolution. An ordinary resolution, such as  
a resolution for the election of directors, the declaration of a dividend, the  
appointment of auditors, the increase of authorized share capital or the grant  
of authority to allot shares, requires the affirmative vote of a majority of    
votes cast on the resolution by members present in person, in the case of a     
vote by show of hands, or present in person or by proxy, in the case of a vote  
by poll. A special resolution, such as a resolution amending the articles,      
changing the name of ScottishPower or waiving preemption rights under the       
Companies Act 1985, or an extraordinary resolution, such as modifying the       
rights of any class of shares at a meeting of the holders of the class or       
relating to matters concerning the liquidation of ScottishPower, requires the   
affirmative vote of not less than three-quarters of the votes cast on the       
resolution by the shareholders present in person, in the case of a vote by show 
of hands, or present in person or by proxy, in the case of a vote by poll. In   
the case of an equality of votes, whether on a show of hands or on a poll, the  
chairman of the meeting is entitled to a casting vote, in addition to any other 
vote he may have.                                                               

Meetings must be convened upon 21 days' notice where a special or         
extraordinary resolution is being proposed or where the meeting is an annual    
general meeting, or 14 days' notice where only ordinary or extraordinary        
resolutions are being proposed and the meeting is not an annual general         
meeting, in each case not including the date on which the notice is served or   
deemed to be served and the day on which the meeting is held. The practice      
under U.K. corporate governance guidelines is for annual general meetings to be 
held after at least 20 working days' notice. The quorum required to transact    
business at general meetings is three shareholders who are present in person or 
by proxy or by a duly authorized representative of a corporation and            

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entitled to vote on the business to be transacted. In relation to the rights of 
holders of ADRs in respect of general meetings of ScottishPower, see also       
"Description of ScottishPower American Depositary Shares--"Future Proposals"    
and "--Voting of the Underlying Deposited Securities".                          

  Any general meeting may be convened at, or adjourned to, more than one place
provided that persons attending at any particular place shall be able to see    
and hear, and be seen and heard by, persons attending at the other places at    
which the meeting is convened or adjourned. The meeting shall be treated as     
held at the place at which the chairman presides.                               

Restrictions on Voting                                                          

Any person appearing to be interested in shares may be served by          
ScottishPower with a notice under Section 212 of the Companies Act requiring    
confirmation as to whether or not such person is interested in the shares, and  
if not holding beneficially, on whose behalf they are held and, if so, certain  
information with respect to such interest. The directors may by notice direct   
that no holder of ordinary shares shall be entitled in respect of any ordinary  
shares held by it to vote either personally or by proxy at a general meeting or 
a meeting of the holders of ordinary shares if he or any other person appearing 
to be interested in the shares has been served with notice under Section 212    
and has failed to give ScottishPower any information required by the notice     
within 14 days from the date of the notice.                                     

  A shareholder shall not be entitled to attend or vote at any general meeting
of ScottishPower or meeting of the holders of separate classes of shares if     
amounts payable in respect of the shares held by him have not been fully paid   
or in the circumstances referred to under "--Limitations on Holdings" below.    

Dividends and Other Distributions                                               

ScottishPower may, by ordinary resolution, declare dividends in accordance
with the respective rights of the shareholders, provided that no dividends are  
payable except out of the profits of ScottishPower available for distribution   
under the provisions of the Companies Act and the ScottishPower articles and no 
dividends are payable in excess of the amount recommended by the directors.     
Subject to any preferential or special rights attaching to any shares of        
ScottishPower, all dividends are apportioned and paid pro rata according to the 
amounts paid on the shares during any portion or portions of the period in      
respect of which the dividends are paid. Interim dividends may be paid, if      
profits are available for distribution and if the directors so resolve. No      
dividend payable in respect of an ordinary share shall bear interest. The       
directors may, if authorized by an ordinary resolution at an annual general     
meeting of ScottishPower, offer any holders of ordinary shares the right to     
elect to receive ordinary shares, credited as fully paid, instead of cash in    
respect of the whole, or some part, to be determined by the directors, of any   
dividend specified by the ordinary resolution. Any dividend unclaimed for a     
period of 12 years from the date it became due for payment shall be forfeited   
and cease to remain owing by ScottishPower.                                     

If any person appearing to be interested in shares representing at least  
0.25% of the nominal value of their class has failed to give ScottishPower any  
information required by a notice under Section 212 of the Companies Act served  
upon a shareholder within 14 days, the directors may direct that, except on a   
winding-up of ScottishPower, no payment shall be made by way of dividend and no 
scrip shares shall be allotted in respect of the shares. Any direction shall    
cease to have effect when the directors are satisfied that all the information  
required by the Section 212 notice has been given to ScottishPower.             

 On a winding-up, the balance of the assets available for distribution after
repayment of the capital paid up or credited as paid up on the special share    
and subject to any preferential or special rights attached to any other class   
of shares, shall be applied in repaying to the holders of ordinary shares the   
amounts paid up or credited as paid up on those shares, and any surplus assets  
will belong to the holders of ordinary shares in proportion to the numbers of   
ordinary shares held by them, having taken account of the amounts paid up or    
credited as paid up on those shares.                                            

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Untraced Shareholders                                                           

ScottishPower may sell any share if, for a period of 12 years during which
at least three dividends in respect of the share have been payable, no check or 
warrant payable in respect of the share has been cashed and no communication in 
respect of the share has been received by ScottishPower from the relevant       
shareholder or other person entitled to the share. ScottishPower must advertise 
notice of its intention to sell the share in a Scottish newspaper, leading      
London daily newspaper and a newspaper circulating in the area to which the     
checks and warrants were sent. Notice of the intention to sell must also be     
given to the London Stock Exchange.                                             

If no communication in respect of the share is received within a further  
three months, ScottishPower may sell the share in a manner as the directors     
think fit at the best price reasonably obtainable. ScottishPower shall be       
indebted to the former shareholder or other person previously entitled to the   
share for an amount equal to the net proceeds of sale, but no trust shall be    
created and no interest shall be payable in respect of the proceeds of sale.    

Transfer of ScottishPower Ordinary Shares--Certificated                         

Transfers of certificated shares shall be effected by a written instrument
of transfer in a usual form or in any other form acceptable to the directors.   
The transferor is deemed to remain the holder of the shares concerned until the 
name of the transferee is entered in the register of members. The directors     
may, in their absolute discretion, decline to register a transfer of a share    
which is not fully paid, provided that the refusal does not prevent dealings    
from taking place on an open and proper basis. The directors may also refuse to 
register a transfer unless it is:                                               

.  lodged and duly stamped at the registered office of ScottishPower or at  
 such other place as the directors may appoint and is accompanied by the
certificate for the shares to which it relates and such other evidence
as the directors may reasonably require to show the right of the      
transferor to make the transfer; and                                  

.  in respect of only one class of shares; and                              

.  in favor of not more than four transferees jointly, or if it is made in  
the circumstances described under "--Limitations on Holdings" below.  

If a shareholder or any other person appearing to be interested in        
certificated shares representing at least 0.25% of the nominal value of their   
class has been served with notice under Section 212 of the Companies Act 1985   
and has failed to give ScottishPower any information required by the notice     
within 14 days, the directors may, by notice, direct that no transfer of any of 
those shares shall be registered. Any direction shall cease to have effect when 
the directors are satisfied that all the information required by the Section    
212 of the Companies Act 1985 has been given to ScottishPower, or where the     
shares are transferred pursuant to a take-over offer for ScottishPower, on a    
stock exchange or a market outside the United Kingdom on which the ordinary     
shares are normally traded or in consequence of a bona fide sale to an          
unconnected person.                                                             

Transfer of ScottishPower Ordinary Shares--Uncertificated                       

 Transfers of uncertificated shares must be made in accordance with the U.K.
Uncertificated Securities Regulations 1995. Consequently, in relation to        
uncertificated shares, it may not be possible to enforce the provisions of the  
articles regarding refusal to register transfers. The regulations only permit a 
company to refuse to register a transfer of uncertificated shares in very       
limited circumstances, including where an order of the court prohibits the      
transfer. Consequently, the articles contain provisions designed to enable      
ScottishPower to direct that a shareholder take specific actions to ensure that 
an uncertificated share is not effectively transferred in circumstances where a 
transfer of that share would not be registered were it in certificated form.    

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Variation of Class Rights and Alteration of Share Capital                       

Except as the provisions of the Companies Act 1985 provide otherwise,     
whenever the share capital is divided into different classes of shares, as is   
currently the case, the class rights, as determined in accordance with Scots    
law, attached to any class may be varied or abrogated, whether or not           
ScottishPower is being wound up, either with the consent in writing of the      
holders of not less than three-quarters of the issued shares of the class, or   
with the sanction of an extraordinary resolution passed at a separate general   
meeting of such holders, but not otherwise. The quorum for any separate general 
meeting shall be two persons holding or representing by proxy at least one-     
third in nominal amount of the issued shares of the relevant class. Any holder  
of shares of the relevant class who is present in person may demand a poll and  
every holder shall on a poll have one vote for every share of the class held by 
him. Unless otherwise provided by the rights attached to any shares or class of 
shares, those rights shall not be deemed to be varied by the creation or issue  
of further shares ranking equally with, or behind, the shares. If at any time   
the above capital of ScottishPower is not divided into different classes, the   
creation or issue of shares ranking in priority to the ordinary shares would    
not constitute a variation of the class rights of the ordinary shares.          

  Subject to the provisions of the Companies Act 1985 and without prejudice to
any rights attached to any existing shares or class of shares, ScottishPower    
may issue shares with such rights or restrictions as it may by ordinary         
resolution determine or, if ScottishPower does not so determine, as the         
directors shall determine. Redeemable shares may be issued on the terms and in  
a manner as may be provided by the ScottishPower articles.                      

ScottishPower may by ordinary resolution increase its share capital,      
consolidate and divide all or any of its share capital into shares of a larger  
amount, sub-divide all or any of its share capital into shares of a smaller     
amount or cancel any shares not taken or agreed to be taken by any person and   
diminish the amount of its authorized share capital by the amount of the shares 
so canceled.                                                                    

Preemptive Rights                                                               

The articles do not contain any preemptive rights. The Companies Act 1985 
confers on shareholders, to the extent not waived or disapplied, rights of      
preemption in respect of equity securities that are, or are to be, issued for   
cash. The term "equity securities" means in relation to ScottishPower:          

.  shares of ScottishPower, other than shares which, with respect to      
dividends and capital, carry a right to participate only up to a specified      
amount in a distribution and shares allotted under an employee's share scheme;  
and                                                                             

.   rights to subscribe for or to convert into such shares.               

Under the Companies Act 1985, these provisions may be disapplied by a     
special resolution of the shareholders, either generally or specifically.       
ScottishPower currently has a general disapplication in place in respect of any 
future rights issue or an allotment of a number of shares equal to              
approximately 5% of the issued current share capital. These general             
disapplications are normally sought annually.                                   

Limitations on Holdings                                                         

  The ScottishPower articles contain provisions preventing a person or persons
acting in concert from owning or controlling 15% or more of the voting rights   
of ScottishPower. Following the privatization of ScottishPower, the Secretary   
of State for Scotland retained the right to hold the so-called "special share", 
with a nominal value of (Pounds)1 which prevents certain arrangements,          
including, in particular, the 15% ownership limitation referred to above, from  
being altered or removed without the prior written consent of the holder of the 
special share. The special share may only be held by a person acting on behalf  
of the U.K. government and entitles the holder to attend and speak at general   
meetings but not to vote. It is redeemable at the U.K. government's discretion  
at any time following consultation with ScottishPower. See "Comparison of       
Rights of PacifiCorp Shareholders and ScottishPower Shareholders--ScottishPower 
Voting Rights; Generally" and "The ScottishPower Special Share."                

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  Any person holding an interest, as defined in the articles, of 3% or more in
any class of the company's issued share capital carrying rights to vote in all  
circumstances at general meetings is required to notify the company of that     
interest and of any percentage point change in the level of that interest.      

The articles provide that if a person has, or appears to the directors to 
have, an interest in shares which carry 15% or more of the total votes          
attaching to the relevant share capital of all classes, taken as a whole, of    
the company and capable of being cast on a poll or is deemed to have such an    
interest, the directors shall give notice to all persons who appear to the      
directors to have interest in the shares concerned and, if different, to the    
holders of those shares. The notice shall set out the restrictions referred to  
below and will call for the interest concerned to be reduced to less than 15%   
by a disposal of shares within 21 days of the giving of the notice to the       
holder, or a longer period as the directors consider reasonable. Until a        
disposal is made or the notice is withdrawn, no transfer of any of the shares   
to which the interest relates may be registered.                                

If the notice is not complied with in all respects to the satisfaction of 
the directors and has not been withdrawn, the directors shall, so far as they   
are able, make a disposal through any officer or employee of the company and    
shall give written notice of the disposal to those persons on whom the notice   
was served. The terms of the sale, including the price, are to be determined by 
the directors on taking advice from professional advisers.                      

Any transfer shall be as effective as if it had been executed by the holder 
of the transferred shares and the title of the transferee shall not be affected 
by any irregularity or invalidity in the proceedings relating thereto. The net  
proceeds of the disposal, without interest and after deduction of the expenses  
of sale, shall be paid to the former holder and he shall be given, if           
appropriate, a new certificate in respect of the balance of the shareholding,   
on the surrender of any certificate(s) in respect of the shares sold.           

The registered holder of shares to whom a notice referred to above has been 
given is not, in respect of any of the shares to which the notice relates,      
entitled to attend or vote at any general or class meeting of the company or to 
exercise any other right conferred on him by membership in relation to any      
meeting until the notice has been complied with to the satisfaction of the      
directors or withdrawn. Those rights vest in the chairman of any meeting who    
may exercise or refrain from exercising those rights entirely at his            
discretion. The directors shall inform the chairman of any meeting of any       
shares in respect of which the notice as referred to above has been given.      

 Any resolution or determination of, or decision or exercise of any discretion
or power by, the directors or by the chairman of any meeting under the above    
provision shall be final and conclusive and any disposal or transfer made       
pursuant to such provision is binding on all persons concerned and is not open  
to challenge. The directors shall not be required to give any reasons for any   
decision, determination or declaration taken or made in accordance with these   
provisions.                                                                     

The U.K. government is not subject to these limitations and there are       
exceptions for a limited category of permitted persons, principally recognized  
clearing houses, recognized investment exchanges, trustees of employees' share  
schemes and persons whose holdings are of a fiduciary, contingent or temporary  
nature.                                                                         

It is proposed that if the scheme of arrangement becomes effective, these 
limitations on holdings will be removed from the ScottishPower articles and     
will be inserted in the New ScottishPower articles.                             

Purchase of Shares                                                              

Subject to the provisions of the Companies Act and with the sanction of a 
special resolution of the holders of any class of shares carrying rights to     
convert into equity share capital of ScottishPower, ScottishPower may purchase  
a percentage of its own shares. At the annual general meeting held in July      
1998, the shareholders granted authority to the directors to purchase up to     
119,796,734 ordinary shares. As of April 30, 1999, the directors have not       
exercised this authority. However, ScottishPower intends to implement a share   
buyback                                                                         

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program of up to (Pounds)500 million following approval of the merger agreement 
by PacifiCorp's shareholders and approval of the proposal to merge by           
ScottishPower's shareholders but prior to consummation of the merger. The       
purpose of this share buyback program is to achieve an efficient capital        
structure for the combined group. PacifiCorp does not intend to pursue the $750 
million share repurchase program that it had announced on October 23, 1998. No  
shares have been repurchased under that program. See "Summary--The              
ScottishPower Extraordinary General Meeting."                                   

Notices                                                                         

A shareholder who has no registered address in the U.K. or who has not    
supplied ScottishPower with an address in the U.K. for service of notices shall 
not be entitled to receive notices. In some limited circumstances,              
ScottishPower may give notices to shareholders by advertisement in newspapers   
in the U.K.                                                                     

The Redeemable Shares in New ScottishPower                                      

The holders of the redeemable shares in New ScottishPower are not entitled
to participate in any of the profits of New ScottishPower. On a winding-up or   
other return of capital the holders of the redeemable shares are entitled, in   
priority to any holder of any other class of shares in New ScottishPower, other 
than the special share, to receive in full the amounts paid up on such shares.  
Subject to the provisions of the Companies Act 1985, New ScottishPower may      
redeem the redeemable shares at any time by notice. The holders only have       
voting rights in limited circumstances. New ScottishPower proposes to redeem    
the redeemable shares before completion of the merger. ScottishPower holds      
these redeemable shares of New ScottishPower.                                   

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DESCRIPTION OF AMERICAN DEPOSITARY SHARES 

The following is a summary of all material provisions of the Amended and  
Restated Deposit Agreement dated as of December 18, 1991, as amended and        
restated as of September 4, 1997 among ScottishPower, The Bank of New York, as  
depositary and the holders from time to time of ADRs issued thereunder. If the  
holding company structure is adopted, New ScottishPower will replace            
ScottishPower as a party to the deposit agreement. The deposit agreement is     
governed by the laws of the State of New York.                                  

This summary does not purport to be complete and is subject to, and       
qualified in its entirety by reference to, the deposit agreement. Copies of the 
deposit agreement, the ScottishPower articles and the New ScottishPower         
articles are available for inspection at the principal executive office of the  
depositary, currently located at 101 Barclay Street, New York, New York 10286.  

American Depositary Receipts                                                    

ADRs evidencing ADSs are issuable by the depositary under the deposit     
agreement. Each ADR will represent a specified number of ADSs. Each ADS         
represents the right to receive four ordinary shares and a pro rata share in    
any other deposited securities (defined below) deposited with the custodian.    
Only persons in whose name ADRs are registered will be treated by ScottishPower 
and the depositary as holders or owners of ADRs.                                

ADRs will be issued under the deposit agreement subject to the conditions 
and other provisions described under "--Deposit and Withdrawal of Deposited     
Securities", upon deposit with the custodian in London of ordinary shares or    
rights to receive ordinary shares.                                              

Deposited Securities                                                            

 As used herein, "deposited securities" as of any time means ordinary shares
at such time deposited under the deposit agreement and any and all other        
securities, property and cash received at any time by the depositary or the     
custodian in respect instead of ordinary shares, other securities, property or  
cash previously received by the depositary or the custodian and at such time    
held under the deposit agreement.                                               

Deposit and Withdrawal of Deposited Securities                                  

  The depositary has agreed that, upon deposit with the custodian in London of
ordinary shares, accompanied by an appropriate instrument of transfer or        
endorsement, in a form satisfactory to the custodian, together with all         
certifications, payments and evidence of payments as may be required by the     
custodian or the depositary and a written order directing the depositary to     
deliver ADRs in respect of the ordinary shares, and subject to the terms of the 
deposit agreement, the depositary will, upon payment of the fees, charges and   
taxes provided in the deposit agreement, execute and deliver at the             
depositary's office, to or upon the order of the person or persons specified by 
the depositor, ADR or ADRs, registered in the name of the person or persons,    
evidencing the number of ADSs issuable in respect of the deposit. Every person  
depositing ordinary shares under the deposit agreement will be deemed to        
represent and warrant that the ordinary shares and each certificate therefor    
are validly issued and outstanding, fully paid, non-assessable and free of      
preemptive rights, and that the person making the deposit is duly authorized so 
to do. Other than ScottishPower, every person will also be deemed to represent  
that the deposit of ordinary shares or the sale of the ADRs issued upon the     
deposit is not restricted under the securities laws of the United States. In    
addition, such person will be deemed to represent that such ordinary shares or  
ADRs:                                                                           

.  are not a holding, or part of a holding, representing an "interest" as   
defined in the Article 51 of the ScottishPower articles, other than   
interests permitted by the article; and                               

.  are not liable to disenfranchisement or disposal by ScottishPower under  
either Article 50 or 51 of the ScottishPower articles.                

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Without limitation to the foregoing, the depositary will not knowingly    
accept for deposit under the deposit agreement any ordinary shares which (a) if 
sold by the holder of the ordinary shares in the United States as defined in    
Regulation S, would be subject to the registration provisions of the Securities 
Act, unless a registration statement is in effect as to the ordinary shares or  
such sale would be exempt from such provisions or (b) would thereby infringe    
any provision of the ScottishPower articles. Without limiting the generality of 
the above, ordinary shares which the depositary believes have been withdrawn    
from a restricted ADR facility established or maintained by a depositary bank   
may be accepted for deposit under the deposit agreement only if the ordinary    
shares have been acquired in a transaction:                                     

.  registered under the Securities Act;                                     

.  in compliance with Regulation S under the Securities Act; or             

.  in accordance with Rule 144 under the Securities Act and the depositary  
may, as a condition to accepting the deposit of the ordinary shares   
  hereunder, require the person depositing such ordinary shares to provide
it with a certificate in writing to the foregoing effect.             

The depositary will comply with written instructions of ScottishPower 
not to accept for deposit hereunder any ordinary shares identified in 
  the instructions at times and under circumstances as may be specified in
the instructions to facilitate ScottishPower's compliance with the    
securities laws of the United States.                                 

Subject to the terms and conditions of the deposit agreement and any      
limitations established by the depositary, the depositary may execute and       
deliver ADRs before the receipt of ordinary shares (a "pre-release"). The       
depositary will not make a pre-release of any ADRs unless:                      

.  the person to, or upon the order of, which pre-released ADR are          
delivered is obligated to deliver to the depositary or the custodian  
either (a) the same number of ordinary shares as the ordinary shares  
represented by the pre-released ADR or (b) ADRs representing the same 
number of ordinary shares as are represented by the pre-released ADR; 
and                                                                   

.  the obligation of such person to deliver ordinary shares, or ADRs        
instead of the ordinary shares, is, at all times, fully collateralized
with cash or United States government securities.                     

Upon surrender of ADRs at the depositary's office, and upon payment of the
charges provided in the deposit agreement and subject to the terms of the       
deposit agreement, the ScottishPower articles and the deposited securities, ADR 
holders are entitled to delivery at the office of the custodian in London of    
documents of title representing the deposited securities and, at such office of 
the custodian or, at the discretion of the depositary, at the depositary's      
office, any other property evidenced by the ADRs so surrendered. The forwarding 
of share certificates, other documents of title and other property, including   
cash, for delivery at the depositary's office is at the request, risk and       
expense of the ADR holder. Under General Instruction I.A.1 of Form F-6,         
notwithstanding any provisions of the deposit agreement or the form of ADR to   
the contrary, ADR holders are entitled to withdraw the deposited securities at  
any time subject only to:                                                       

.  temporary delays caused by closing transfer books of the depositary or   
ScottishPower of the deposited securities or the deposit of ordinary  
shares in connection with voting at a shareholders' meeting, or the   
payment of dividends;                                                 

.  the payment of fees, taxes, and similar charges; and                     

.  compliance with any laws or governmental regulations relating to the     
ADRs or to the withdrawal of deposited securities.                    

Dividends, Other Distributions, Rights and Changes Affecting Deposited          
Securities                                                                      

Whenever the depositary receives any cash dividends or other cash         
distributions by ScottishPower denominated in a currency other than U.S.        
dollars, it shall, to the extent that in its judgment it can convert the        
foreign currency on a reasonable basis into U.S. dollars and transfer the       
resulting amount to the United States,                                          

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convert the dividends and distributions into U.S. dollars and distribute the    
amounts to the holders of ADRs in proportion to the number of ADSs representing 
the deposited securities held by each of them. The amount distributed will be   
reduced as appropriate by any amounts required to be withheld by ScottishPower  
or the depositary on account of taxes. See "--Liability of Holder for Taxes"    
below. If the depositary determines that in its judgment any foreign currency   
received by it cannot be so converted and transferred, the depositary may       
distribute the foreign currency received by it, or in its discretion hold such  
foreign currency for the respective accounts of the ADR holders entitled to     
receive the same.                                                               

Whenever the depositary shall receive any distribution other than cash or 
ordinary shares upon any deposited securities, the depositary shall cause the   
securities or property received by it to be distributed promptly to the ADR     
holders entitled to the distribution, in proportion to the number of ADSs       
representing the deposited securities held by each of them in any manner that   
the depositary may deem equitable and practicable for accomplishing such        
distribution; provided, however, that if in the opinion of the depositary such  
distribution cannot be made proportionately among the ADR holders entitled to   
the distribution, or if for any other reason the depositary deems the           
distribution not to be feasible, the depositary may adopt a method as it may    
deem equitable and practicable for the purpose of effecting the distribution,   
including the public or private sale of the securities or property thus         
received, or any part the securities or properties received, and the net        
proceeds of any such sale shall be distributed by the depositary to the ADR     
holders entitled to the distribution as in the case of a distribution received  
in cash.                                                                        

If a distribution upon any deposited securities consists of a dividend in,
or free distribution of, ordinary shares, the depositary may, in accordance     
with the provisions of the deposit agreement, distribute to the holders of      
outstanding ADRs, in proportion to their holdings, additional ADRs evidencing   
an aggregate number of ADSs that represent the number of ordinary shares        
received as a dividend or free distribution. Instead of delivering ADRs for     
fractional ADSs in the event of any such distribution, the depositary will sell 
the number of ordinary shares represented by the aggregate of such fractions    
and distribute the net proceeds to holders of ADRs in accordance with the       
deposit agreement. If additional ADRs are not so distributed, each ADS shall    
thereafter also represent the additional ordinary shares distributed in respect 
of the deposited securities represented by the ADS before the distribution.     

 If ScottishPower offers or causes to be offered to the holders of deposited
securities any rights to subscribe for additional ordinary shares or any rights 
of any other nature, the depositary will, after consultation with               
ScottishPower, have discretion as to the procedure to be followed in making the 
rights available to holders of ADRs or in disposing of the rights for the       
benefit of such holders and making the net proceeds available in U.S. dollars   
or pounds sterling to the holders, provided that the depositary will, at the    
request of ScottishPower, either:                                               

.  make the rights available to holders of ADRs by means of warrants or     
  otherwise, if the depositary determines it to be lawful and feasible; or

.  if the depositary determines that making the rights available is not     
lawful or feasible, or if the rights represented by the warrants or   
other instruments appear to be about to lapse, sell the rights or     
  warrants or other instruments at public or private sale, at the place or
places and upon the terms as the depositary may deem proper, and      
allocate the proceeds of such sale for the account of the holders of  
ADRs otherwise entitled to the proceeds upon an averaged or other     
practicable basis without regard to any distinctions among the holders
because of exchange restrictions, the date of delivery of any ADR or  
otherwise.                                                            

  Such a disposal of rights may reduce the equity interest in ScottishPower of
the holders of ADRs. The depositary will not be responsible for any failure to  
determine that it may be unlawful or not feasible to make the rights available  
to holders in general or any holder or holders in particular.                   

Without limiting the generality of the preceding paragraph, if a          
registration statement under the Securities Act is required with respect to the 
securities to which any rights relate in order for ScottishPower to offer such  

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rights to holders of ADRs and sell the securities represented by the rights,    
the depositary shall not offer the rights to holders of ADRs having an address  
in the United States, as defined in Regulation S under the Securities Act,      
unless and until a registration statement is in effect or unless the offering   
and sale of the securities and the rights to holders are exempt from            
registration under the Securities Act.                                          

If the depositary determines that any distribution in property, including 
ordinary shares or rights to subscribe therefor, is subject to any tax or       
governmental charge that the depositary is obligated to withhold, the           
depositary may dispose of all or a portion of the property in amounts and in a  
manner, by public or private sale, as the depositary deems necessary and        
practicable, and the depositary will distribute the net proceeds of any such    
sale or the balance of any such property after deduction of such taxes to the   
ADR holders entitled to the proceeds.                                           

Upon any change in par value, split-up, consolidation or any other        
reclassification of deposited securities, or upon any recapitalization,         
reorganization, merger or consolidation or sale of assets affecting             
ScottishPower or to which ScottishPower is a party, any securities which shall  
be received by the depositary or the custodian in exchange for, in conversion   
of, or in respect of, deposited securities shall be treated as new deposited    
securities under the deposit agreement, and ADSs shall then represent the right 
to receive the new deposited securities so received, unless additional ADRs are 
delivered or unless the depositary calls for the surrender of outstanding ADRs  
to be exchanged for new ADRs.                                                   

Record Dates                                                                    

 Whenever any cash dividend or other cash distribution shall become payable,
or any distribution other than cash shall be made, or whenever rights shall be  
issued, with respect to the deposited securities, or whenever the depositary    
shall receive notice of any meeting of holders of deposited securities, the     
depositary shall, after consultation with ScottishPower, fix a record date,     
which date shall, to the extent practicable, be the same as the record date     
fixed by ScottishPower for the determination of the holders of ADRs who shall   
be entitled to receive a dividend, distribution or rights, or the net proceeds  
of the sale thereof, or to give instructions for the exercise of voting rights  
at any meeting, subject to the provisions of the deposit agreement.             

Voting of the Underlying Deposited Securities                                   

  Upon receipt of notice of any meeting of holders of ordinary shares or other
deposited securities, the depositary shall, as soon as practicable thereafter   
and to the extent permitted by law, mail notice of the meeting to the holders   
of ADRs. The holders of ScottishPower ADRs at the close of business on the date 
specified by the depositary are entitled under the deposit agreement, subject   
to any applicable provisions of law, the ScottishPower articles and the         
deposited securities, to instruct the depositary as to the exercise of the      
voting rights, if any, pertaining to the deposited securities represented by    
the ADSs evidenced by their respective ADRs. The depositary has agreed that it  
will endeavor, insofar as practicable, to vote or cause to be voted the         
deposited securities so represented in accordance with any written instructions 
of holders of ADRs. The depositary has agreed not to vote the deposited         
securities so represented unless it has received the written instructions from  
the holders of ADRs. See also "--Future Proposals."                             

Disclosure of Interests; Limitations on Shareholdings                           

Each holder of an ADR agrees that the holder is bound by, and subject to, 
the ScottishPower articles and that the holder will provide within the          
prescribed time period the information as ScottishPower may request in a        
disclosure notice given under the ScottishPower articles and the Companies Act. 
Failure of a holder to provide in a timely fashion the information requested in 
any disclosure notice may result in the suspension of certain rights in respect 
of the holder's ADSs, including:                                                

.  voting rights in respect of the ordinary shares represented by the ADSs; 
and                                                                   

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.  if the ADSs represent ordinary shares which, together with all other     
 ordinary shares in which the holder has an interest, represent 0.25% or
 more of the ordinary shares of ScottishPower, the right to transfer the
ordinary shares and the right to receive dividends and other          
distributions in respect of the ordinary shares.                      

Each ADR holder agrees to comply with the provisions of the ScottishPower 
articles and the Companies Act with regard to notification to ScottishPower of  
interests in ordinary shares, which include provisions requiring a ADR holder   
to disclose within a prescribed period of time (currently two days) interests   
in ordinary shares equal to or in excess of the specified percentage (currently 
3%) of the ordinary shares.                                                     

If, to the knowledge of the directors of ScottishPower, a person has, or  
appears to have, an interest in ADSs representing ordinary shares which,        
together with all other ordinary shares in which the person has an interest,    
represent 15% or more of the ordinary shares of ScottishPower (a "Relevant      
Holder"), the directors of ScottishPower are required to serve on the Relevant  
Holder a written notice under the ScottishPower articles requiring disposal     
within 21 days of the giving of the notice (or such longer period as the        
directors considered reasonable) of the number of ordinary shares and/or ADSs   
of the Relevant Holder representing ordinary shares the disposal of which would 
cause such Relevant Holder to cease to be a Relevant Holder. If the depositary  
or the custodian (or the nominee of either) as registered holder of any         
ordinary shares receives a required disposal notice, it shall forward a copy of 
the notice to each Relevant Holder specified in the notice. Each ADR holder     
acknowledges and agrees that it will comply with the terms of any required      
disposal notice it receives.                                                    

A Relevant Holder on whom a required disposal notice has been served will 
not, until such time as the required disposal notice has been withdrawn or      
complied with to the satisfaction of ScottishPower, be entitled to attend or    
vote at any general meeting of ScottishPower or any meeting of holders of       
ordinary shares of ScottishPower. If the depositary receives a required         
disposal notice from ScottishPower, then until such time as the required        
disposal notice has been withdrawn or complied with, the depositary will not,   
except in the case of a required disposal notice, register any transfer of the  
ADRs relating to the ordinary shares referred to in the required disposal       
notice (the "Relevant ScottishPower ADRs") and the depositary will deny the     
Relevant Holder the voting rights attaching to the Relevant ScottishPower ADRs. 

 If (1) a Relevant Holder surrenders any Relevant ScottishPower ADRs for the
purposes of transfer and withdrawal of all or part of the deposited securities  
represented thereby, (2) the required disposal notice relating to the relevant  
ADRs has not been withdrawn by ScottishPower and (3) ScottishPower has not      
notified the depositary that a required disposal has been made by or on behalf  
of the Relevant Holder, then, as soon as practicable after delivery to or upon  
the order of such Relevant Holder of the deposited securities, the depositary   
will notify ScottishPower that the delivery was made (and to whom it was made)  
and provide all reasonably necessary identifying information in respect of any  
the deposited securities so delivered.                                          

If a Relevant Holder fails to comply with the terms of any disposal notice
served on it, the directors of ScottishPower, so far as they are able, are      
required to procure a disposal of the ordinary shares underlying the Relevant   
ScottishPower ADRs under the ScottishPower articles. If any ordinary shares     
underlying the Relevant ScottishPower ADRs are so disposed of, such             
ScottishPower ADRs shall thereafter represent only the right to receive any     
cash received by the depositary in respect of the disposition (without any      
liability for interest thereon), less any taxes or expenses incurred or paid in 
selling the ordinary shares or in distributing the cash to the Relevant Holder. 
Upon surrender of an ADR evidencing the ADSs, the Relevant Holder shall be      
entitled to withdraw the cash and, to the extent the ADR evidences ADSs other   
than those relating to excess shares, the deposited securities represented by   
the ADSs.                                                                       

Any holder of a ADR holding through a nominee should be aware that the    
nominee may be required to provide ScottishPower with certain information as to 
the identity of the nominee's beneficial holders and that, to the extent that   
the nominee does not provide the information, the holders may be deemed to be   
in violation of the provisions regarding restrictions on ownership and voting   
referred to above. In addition to the direct effects described above,           
application of the provisions may have other adverse effects on ADR holders.    
The required disposal or forced sale of ordinary shares or ADSs in which        
Relevant Holders have interests could adversely affect the market price of      
ordinary shares and ADSs.                                                       

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Except to the extent (if at all) provided in the ScottishPower articles,  
ScottishPower will not be under any obligation to give, modify or withdraw a    
required disposal notice or to give any instructions to the depositary or the   
custodian in connection with any of the foregoing, and ScottishPower will not   
have any liability whatsoever to any person in respect of any of the foregoing. 
Any resolution or determination of, or decision or exercise of any discretion   
or power by, ScottishPower, its directors, the depositary or the custodian,     
under the deposit agreement or under the ScottishPower articles with respect to 
the limitation on holdings described in this proxy statement/prospectus, any    
disposal of ordinary shares or otherwise, will be final, conclusive and binding 
on any holder of ADRs thereby affected and all other persons concerned and will 
not be open to challenge, whether as to its validity or otherwise, on any       
ground whatsoever. Neither ScottishPower, the depositary nor the custodian will 
have any liability whatsoever to any person in respect thereof, or be required  
to give any reason for any decision, determination or declaration taken or made 
with respect thereto.                                                           

The provisions of the ScottishPower articles regarding limitations on     
shareholdings described above may be amended or deleted only by special         
resolution of the shareholders of ScottishPower and will not expire             
automatically upon the redemption of the special share of ScottishPower. Such   
redemption may occur at any time, but only by action of the Secretary of State  
for Scotland. See "Description of Ordinary Shares--Limitations On Holdings."    

Reports and Other Information                                                   

The depositary will make available for inspection by ADR holders at the   
depositary's office and any other designated transfer office any reports and    
communications received from ScottishPower which are both:                      

.  received by the depositary or the custodian or the nominee of either as  
the holder of the deposited securities; and                           

.  made generally available to the holders of the deposited securities by   
ScottishPower.                                                        

  The depositary will also mail or, when requested by ScottishPower, otherwise
make available to ADR holders, copies of such reports and communications as     
provided in the deposit agreement.                                              

Resignation and Removal of Depositary                                           

The depositary may resign or may be removed by ScottishPower under the    
deposit agreement at any time.                                                  

  No resignation or termination of the appointment of the depositary under the
deposit agreement will take effect until a new depositary has been appointed by 
ScottishPower on substantially the terms set out in the deposit agreement.      
Notice of the change of the depositary will be given to the holders of ADRs     
within 30 days of the appointment of the successor depositary thereunder.       

Amendment and Termination of the Deposit Agreement                              

 ScottishPower and the depositary may at any time, upon agreement, amend any
provision of the deposit agreement or the ADRs issued under the deposit         
agreement. Any amendment to the deposit agreement which imposes or increases    
any fees or charges, other than the fees of the depositary for the execution    
and delivery or the cancellation of ADRs referred to below, taxes or other      
governmental charges, or which otherwise prejudices any substantial existing    
right of ADR holders, will not take effect as to outstanding ADRs until the     
expiration of three months after notice of the amendment has been given to the  
holders of outstanding ADRs; provided, however, that the parties to the deposit 
agreement, including ADR holders, agree that any amendments which (1) are       
reasonably necessary, as agreed by ScottishPower and the depositary, in order   
for ADSs or ordinary shares to be traded solely in electronic book-entry form   
and (2) do not impose or increase any fees or charges to be borne by holders,   
shall be deemed not to prejudice any substantial rights of holders. Every       
holder of a ADR at the time such amendment so becomes effective will be deemed  
by continuing to hold such ADR to consent and agree to the amendment and to be  
bound by the deposit agreement or the ADR, or both of them, as applicable, as   
amended thereby. In no event shall any amendment impair the right of any ADR    
holder to surrender the ADRs held by the holder and receive the deposited       
securities represented by the ADRs, except to comply with mandatory provisions  
of applicable law.                                                              

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Whenever so directed by ScottishPower, the depositary will terminate the  
deposit agreement by mailing notice of the termination to the record holders of 
all ADRs then outstanding at least 30 days before the date fixed in notice for  
termination. The depositary may terminate the deposit agreement if, at any time 
90 days after the depositary shall have delivered to ScottishPower a written    
notice of its election to resign, a successor depositary shall not have been    
appointed.                                                                      

 If any ADRs remain outstanding after the date of termination of the deposit
agreement, the depositary thereafter will discontinue the registration of       
transfers of ADRs, will suspend the distribution of dividends to the holders of 
ADRs and will not give any further notices or perform any further acts under    
the deposit agreement, except:                                                  

.  the collection of dividends and other distributions pertaining to the  
deposited securities;                                                           

  .  the sale of rights and property as provided in the deposit agreement; and

.  the delivery of deposited securities, together with any dividends or     
other distributions received with respect to the ADRs and the net     
proceeds of the sale of any rights or other property, in exchange for 
surrendered ADRs.                                                     

 At any time after the expiration of two years from the date of termination,
the depositary may sell the deposited securities and hold uninvested the net    
proceeds, together with any other cash then held, unsegregated and without      
liability for interest, for the pro rata benefit of the holders of the ADRs     
that have not been surrendered and without liability for interest, for the pro  
rata benefit of the holders of the ADRs that have not been surrendered, the     
holders thereupon becoming general creditors of the depositary with respect to  
the net proceeds.                                                               

Future Proposals                                                                

ScottishPower has agreed to include for consideration at its 2000 annual  
general meeting by its shareholders and, subject to the ScottishPower Board of  
Director's fiduciary duties, to recommend a special resolution to amend the     
ScottishPower articles to provide, to the extent reasonably possible, that      
record holders of ADRs will be entitled to attend, vote and speak at any        
general meeting of holders of ordinary shares. It is intended that the          
amendments to be proposed will provide for the appointment of multiple proxies  
by approved depositaries, for such proxies themselves to be able to appoint a   
proxy, for the holding of special and extraordinary resolution on a poll and    
for certain other minor amendments to the ScottishPower articles.               

In addition, ScottishPower has agreed to use its commercially reasonable  
efforts to amend the deposit agreement to provide holders of ADRs with the      
right to:                                                                       

.  participate in rights offerings;                                       

.  attend, speak at, call for a poll at and examine documents made          
available at ScottishPower shareholder meetings;                      

.  instruct the depositary to vote its ADSs in a particular fashion;      

.  generally be counted individually as present and/or voting with respect  
to resolutions adopted at ScottishPower shareholder meetings; and     

.  decide at ScottishPower shareholder meetings how to vote on particular   
resolutions, in each case on the same basis as the holders of ordinary
shares.                                                               

  Any amendments to the deposit agreement relating to attendance, speaking and
voting at general meetings would depend, for their effectiveness, upon the      
changes to the ScottishPower articles referred to above having been made.       

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Charges of Depositary                                                           

The depositary may charge the party to whom ADRs are delivered against    
deposits of ordinary shares up to $5.00 for each 100 ADSs or portion thereof    
evidenced by the ADRs issued, and the depositary may charge the party           
surrendering ADRs, including any party surrendering ADRs after termination of   
the deposit agreement, for delivery of deposited securities up to $5.00 for     
each 100 ADSs evidenced by the ADRs surrendered. With the exception of the      
charges and expenses set out in the deposit agreements as being payable by the  
holders of the ADRs, all other charges and expenses of the depositary will be   
paid by ScottishPower or the depositary as provided in the deposit agreement.   

Liability of Holder for Taxes                                                   

Any tax, duty or other governmental charge, including, without limitation,
any stamp tax, or expense payable by the custodian, the depositary or the       
nominee of either as the registered holder of any deposited securities          
underlying any ADR will be payable by the holder of the ADR who will pay the    
required amount to the depositary. The depositary may refuse to effect          
registration of transfer of the ADR or any transfer and withdrawal of deposited 
securities underlying such ADR until the payment is made, and may withhold any  
dividends or other cash distributions constituting deposited securities         
underlying the ADR or may sell for the account of the holder of the ADR any     
part or all of the other deposited securities underlying the ADR and may apply  
the cash or the proceeds of any sale in payment of any such tax, duty or other  
governmental charge or expense (and any taxes or expenses arising out of the    
sale), the holder of the ADR remaining liable for any deficiency.               

General                                                                         

  Neither the depositary nor ScottishPower nor its directors will be liable to
the holders of ScottishPower ADRs if prevented or delayed by law or by reason   
of any provision, present or future, of the ScottishPower articles, the         
deposited securities or any circumstances beyond its control from performing    
its obligations under the deposit agreement. The obligations of ScottishPower   
and the depositary under the deposit agreement are expressly limited to using   
reasonable efforts and good faith in the performance of their respective        
obligations under the deposit agreement.                                        

 The ADRs are transferable on the books of the depositary, provided that the
depositary may close the transfer books at any time or from time to time, after 
consultation with ScottishPower, when deemed expedient by it in connection with 
the performance of its duties or at the request of ScottishPower. As a          
condition precedent to the execution and delivery, registration of transfer,    
split-up, combination or surrender of any ADR or withdrawal of deposited        
securities, the depositary or the custodian may require payment of a sum        
sufficient to reimburse it for any tax, duty or other governmental charges,     
including, without limitation, any amounts in respect of applicable stamp taxes 
payable by a holder in accordance with the deposit agreement, and any share     
transfer or registration fee and payment of any applicable fees payable by the  
holders of ADRs. The depositary may refuse to deliver ADRs, to register the     
transfer of any ADR or to make any distribution of, or related to, deposited    
securities until it or the custodian has received such proof of citizenship,    
residence, exchange control approval or other information as it may deem        
necessary or proper or as ScottishPower may require by written request to the   
depositary or the custodian. The delivery, transfer and surrender of ADRs       
generally may be suspended during any period when the transfer books of the     
depositary are closed, or if any the action is deemed necessary or advisable by 
the depositary or ScottishPower, at any time or from time to time because of    
any requirement of law or of any government or governmental body or commission. 

The depositary will keep books, at its transfer office in the Borough of  
Manhattan, The City of New York, for the registration and transfer of ADRs that 
at all reasonable times will be open for inspection by the holders of ADRs and  
ScottishPower; provided, however, that the inspection shall not be for the      
purpose of communicating with holders of ADRs in the interest of a business or  
object other than the business of the group or a matter related to the deposit  
agreement, the ADRs, the ordinary shares or the ScottishPower articles.         

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COMPARISON OF RIGHTS OF PACIFICORP SHAREHOLDERS 
AND SCOTTISHPOWER SHAREHOLDERS

As a result of the merger, holders of PacifiCorp common stock will receive
either (a) ordinary shares or (b) ADSs, each of which represents four ordinary  
shares. ScottishPower is a public limited company incorporated under the laws   
of Scotland. PacifiCorp is a corporation organized under the laws of the State  
of Oregon. The following is a summary of material differences between the       
rights of PacifiCorp shareholders and the rights of ScottishPower shareholders  
arising from the differences between the corporate laws of the State of Oregon  
and Scotland, the governing instruments of the two companies, and as a result   
of London Stock Exchange requirements. For information as to where the          
governing instruments of ScottishPower may be obtained, see "Where You Can Find 
More Information."                                                              

  Rights attaching to ordinary shares underlying the ADSs are exercisable only
by the depositary, as the registered holder of those shares. Rights as between  
the depositary and holders of the ADSs are set out in the deposit agreement.    
For further details, including details of future proposals in relation to ADSs, 
see "Description of American Depositary Shares."                                

Limitations on Enforceability of Civil Liabilities Under U.S. Federal           
Securities Laws                                                                 

ScottishPower is and will continue to be a Scottish company. Most of      
ScottishPower's directors and officers and some of the experts named in this    
proxy statement/prospectus are residents of the U.K. and not the U.S. In        
addition, following the merger, a majority of ScottishPower's directors and     
officers will be residents of the U.K. and not the U.S. A large portion of the  
assets of ScottishPower are and, after consummation of the merger, will be      
located outside of the U.S., although ScottishPower will indirectly have very   
substantial assets in the U.S. As a result, it may be difficult for investors   
to effect service within the U.S. upon persons located outside the U.S. or to   
enforce in U.S. courts or outside the U.S. judgments obtained against persons   
in U.S. courts, or to enforce in U.S. courts judgments obtained against such    
persons in courts in jurisdictions outside the U.S., in each case, in any       
action, including actions predicated upon the civil liability provisions of     
U.S. securities laws. ScottishPower believes that there may be doubt as to the  
enforceability against persons in the U.K., whether in original actions or in   
actions for the enforcement of judgments of U.S. courts, of civil liabilities   
predicated solely upon the laws of the U.S., including its federal securities   
laws. Unlike directors and officers of PacifiCorp presently, directors and      
officers of ScottishPower, a foreign private issuer under the Securities        
Exchange Act, will not be subject to rules under the Securities Exchange Act    
that under certain circumstances would require directors and officers to        
forfeit to ScottishPower any "short swing" profits realized from purchases and  
sales, as determined under the Securities Exchange Act and the rules            
thereunder, of ScottishPower equity securities.                                 

Proxy Statements and Reports                                                    

Under Section 14(a) of the Securities Exchange Act and the rules enacted  
pursuant to Section 14(a) (the "Proxy Rules"), PacifiCorp is required to comply 
with notice and disclosure requirements relating to the solicitation of proxies 
in respect of shareholder meetings. As a foreign private issuer, ScottishPower  
is not subject to the Proxy Rules. However, ScottishPower is, and will be,      
subject to notice and disclosure requirements under the U.K. Financial Services 
Act 1986, the Companies Act 1985 and the Listing Rules of the London Stock      
Exchange. As a foreign private issuer with securities listed on the New York    
Stock Exchange and registered under Section 12 of the Securities Exchange Act,  
ScottishPower will also be required under the Securities Exchange Act to        
publicly file with the SEC and the New York Stock Exchange, as the case may be, 
annual reports and other information.                                           

PacifiCorp Voting Rights; Generally                                             

The issued and outstanding capital stock of PacifiCorp consists of the    
PacifiCorp common stock and three classes of preferred stock: the 5% preferred  
stock, the serial preferred stock and the no par serial preferred stock. The    
holders of the 5% preferred stock, the serial preferred stock and the           
PacifiCorp common stock are entitled to one vote for each share held on matters 
presented to shareholders generally. The holders of the no                      

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par serial preferred stock are entitled to the voting rights set forth in the   
PacifiCorp articles upon creation of each series of no par serial preferred     
stock. During any periods when dividends on any class of PacifiCorp preferred   
stock are in default in an amount equal to four full quarterly payments or      
more, the holders of all classes of PacifiCorp preferred stock, voting as one   
class separately from the holders of PacifiCorp common stock, have the right to 
elect a majority of the full PacifiCorp Board of Directors. No PacifiCorp       
preferred stock dividends are in arrears at the date of this proxy              
statement/prospectus.                                                           

None of PacifiCorp's outstanding shares of capital stock has cumulative   
voting rights, which means that the holders of more than 50% of all outstanding 
shares entitled to vote for the election of PacifiCorp directors can elect 100% 
of the directors if they choose to do so, and, in such event, the holders of    
the remaining less than 50% of the shares will not be able to elect any person  
or persons to the PacifiCorp Board of Directors. Nominees who receive the most  
votes by shareholders are elected directors. A quorum consists of a majority of 
the shares entitled to vote, unless otherwise required by law.                  

See "--Annual Meeting of Shareholders" for a discussion of who may call   
meetings of shareholders of PacifiCorp.                                         

ScottishPower Voting Rights; Generally                                          

Under Scots law, the voting rights of shareholders are governed by a      
company's articles of association, subject to the statutory rights of           
shareholders, including the right to demand a poll (a vote by the number of     
shares held) at a general meeting. Each shareholder present in person and       
entitled to vote at a general meeting has one vote on a show of hands and, on a 
poll, one vote for every share held by him. The ScottishPower articles provide  
that a poll may be demanded by:                                                 

.the Chairman of the meeting; or                                            

.by at least five shareholders present in person or by proxy and having the 
right to vote at the meeting; or                                            

.by any shareholder or shareholders representing at least 10% of the voting 
rights of all shareholders having the right to vote at the meeting or by    
any shareholder or shareholders holding shares conferring a right to vote   
at the meeting on which the aggregate sum paid up on the shares is equal to 
not less than 10% of the total sum paid upon all the shares conferring the  
right to vote.                                                              

See "Description of American Depositary Shares--Future Proposals" for           
information concerning proposed changes to the voting rights of ScottishPower   
shareholders.                                                                   

Cumulative voting is essentially unknown under Scots law. Under Scots law,
two shareholders present in person constitute a quorum for purposes of a        
general meeting, unless the company's articles of association specify           
otherwise. The ScottishPower articles specify that three shareholders present   
in person or by proxy or by a duly authorized representative of a corporation   
and entitled to vote constitute a quorum. See "Description of Ordinary Shares-- 
Voting" and "Description of American Depositary Shares--Future Proposals."      

Under the ScottishPower articles, if a person, other than specified       
permitted persons, including the depositary, has, or appears to the             
ScottishPower Board of Directors to have, an interest, except those of a        
nominee or custodian trustee, in ordinary shares which carry the right to cast  
15% or more of the total votes attaching to the entire share capital of         
ScottishPower, such person is not entitled to attend or vote at any general     
meeting of shareholders of ScottishPower or to exercise any other right         
conferred by ownership of the ordinary shares in relation to any such meeting,  
and the right to attend, to speak and to demand and vote on a poll which would  
have attached to the ordinary shares shall vest in the chairman of the meeting, 
in whose complete discretion the ordinary shares may be voted. Such rights will 
not reattach to the ordinary shares until the ScottishPower Board of Directors  
is satisfied that the person has disposed of a sufficient amount of ordinary    
shares. See "Description of Ordinary Shares--Voting."                           

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The ScottishPower Special Share                                                 

The U.K. Government (through the Secretary of State for Scotland) holds a 
special rights non-voting redeemable preference share, which is redeemable at   
par ((Pounds)1) only at the option of the Secretary of State for Scotland.      
ScottishPower may not redeem the special share unless requested to do so by the 
Secretary of State for Scotland. The special share, which may only be held by   
the U.K. government, does not carry any rights to vote at general meetings, but 
does entitle the holder to receive notice of, attend and speak at general       
meetings. The articles specify matters, in particular the alteration of         
specified provisions of the articles including the provision relating to        
limitations which prevent a person from owning or having an interest in 15% or  
more of ScottishPower voting shares require the written consent of the holder   
of the special share. The U.K. government, as holder of the special share, does 
not have a right to appoint or nominate directors to the ScottishPower Board of 
Directors.                                                                      

If the holding company structure is adopted, the special share in         
ScottishPower will be cancelled and replaced by an equivalent special share in  
New ScottishPower, which will be issued to the Secretary of State for Scotland. 
The New ScottishPower special share will have the same rights as the special    
share in ScottishPower, together with additional consent rights specified in    
the articles, the purpose of which will be to ensure that no persons other than 
New ScottishPower will be able to own or have an interest in more than 15% in   
aggregate of the ScottishPower voting shares without the Secretary of State's   
consent.                                                                        

Shareholder Action by Written Consent                                           

 Under Oregon law and the PacifiCorp bylaws, PacifiCorp shareholders may act
by written consent instead of a meeting only if, before the action, all         
shareholders entitled to vote on the action sign a written consent setting      
forth the action. However, if notice is required by law to be given to non-     
voting shareholders and the action is taken by unanimous consent of the voting  
shareholders, the action is not effective unless, at least 10 days before the   
action is taken, the non-voting shareholders have been given the notice.        

Under Scots law, a company's articles of association may provide that a   
resolution in writing executed by or on behalf of each shareholder who would    
have been entitled to vote upon it if it had been proposed at a general meeting 
at which he was present will be as valid and effectual as if it had been passed 
at a general meeting properly convened and held. Such a written resolution      
requires the unanimous consent of all such shareholders entitled to attend and  
vote. The ScottishPower articles do not contain such a provision.               

Shareholder Proposals and Shareholder Nominations of Directors                  

  PacifiCorp shareholders wishing to present proposals for action at an annual
or other meeting of shareholders must do so in accordance with the PacifiCorp   
bylaws and the Proxy Rules. A shareholder must give timely notice of the        
proposed business to the Corporate Secretary of PacifiCorp. To be timely, a     
shareholder's notice must be in writing, delivered to or mailed and received at 
the principal executive offices of PacifiCorp not less than 60 days nor more    
than 90 days before the meeting; provided, however, that if less than 70 days'  
notice or prior public disclosure of the date of the meeting is given or made,  
notice by the shareholder, to be timely, must be received no later than the     
close of business on the tenth day following the earlier of the day on which    
the notice of the date of the meeting was mailed or public disclosure was made. 
For each matter the shareholder proposes to bring before the meeting, the       
notice to the Corporate Secretary must include:                                 

.  a brief description of the business desired to be brought before the     
meeting and the reasons for conducting the business at the meeting;   

.  the name and address of the shareholder proposing the business;        

  .  the class and number of PacifiCorp shares which are beneficially owned by
the shareholder; and                                                            

.  any material interest of the shareholder in the business.                

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If the shareholder is not a shareholder of record at the time of giving the 
notice, the notice must be accompanied by appropriate documentation of the      
shareholder's claim of beneficial ownership. The officer presiding at the       
shareholders meeting may, if in the officer's opinion the facts warrant,        
determine that business was not properly brought before the meeting in          
accordance with the PacifiCorp bylaws. If the officer does so, such officer     
shall so declare to the meeting and any such business not properly brought      
before the meeting shall not be transacted.                                     

  PacifiCorp shareholders wishing to directly nominate candidates for election
to the PacifiCorp Board of Directors must do so in accordance with the          
PacifiCorp bylaws by giving timely notice in writing to the Corporate Secretary 
of PacifiCorp. The notice must set forth:                                       

.  as to each person whom the shareholder proposes to nominate            

(1) all information relating to the person that is required to be       
disclosed in proxy solicitations pursuant to the Proxy Rules and

(2) the written consent of the person to be named in the proxy          
 statement as a nominee and to serve as a director if elected; and

.  as to the shareholder giving the notice,                                 

(1)the name and address of the shareholder and                          

(2)the class and number of PacifiCorp shares which are beneficially     
owned by the shareholder.                                           

If the shareholder is not a shareholder of record at the time of giving the     
notice, the notice must be accompanied by appropriate documentation of the      
shareholder's claim of beneficial ownership. No person is eligible to serve as  
a director of PacifiCorp unless nominated in accordance with the procedures     
under the PacifiCorp bylaws. The officer presiding at the meeting may, if in    
the officer's opinion the facts warrant, determine that a nomination was not    
made in accordance with the procedures prescribed by the PacifiCorp bylaws. If  
the officer does so, the officer will so declare to the meeting and the         
defective nomination will be disregarded.                                       

Under Scots law, shareholders may requisition a resolution, including a   
resolution to appoint a director-- see "--Vacancies on the Board of Directors"  
below, to be voted on at a general meeting if:                                  

.  the requisition is made by the holders of shares which represent not     
 less than one twentieth of the voting rights of all shareholders having
at the date of the requisition a right to vote at the meeting to which
the requisition relates; or                                           

.  the requisition is made by not less than 100 shareholders holding shares 
 on which there has been paid up an average sum, per shareholder, of not
less than (Pounds)100.                                                

The requisition must be deposited at the company's registered office not less   
than six weeks before the general meeting to which it relates. At a general     
meeting, a resolution to appoint two or more directors by a single resolution   
may not be proposed unless a resolution approving that it may be proposed is    
passed by the general meeting with no dissenting votes.                         

The ScottishPower articles provide that a person, other than a retiring   
director or a person recommended by the board, is only eligible for election to 
the ScottishPower Board of Directors by shareholders at a general meeting if a  
shareholder who is qualified to attend and vote at that meeting directly        
nominates that other person by written notice to ScottishPower signed by the    
shareholder and by the nominee, and giving details in relation to the proposed  
director.                                                                       

Sources and Payment of Dividends                                                

Oregon law provides that, subject to any restrictions contained in the    
articles of incorporation, an Oregon corporation may make a distribution to its 
shareholders unless, after giving effect to the distribution, which is defined  
to include a repurchase of shares, (a) the corporation would not be able to pay 
its debts as they become due in the usual course of business or (b) the         
corporation's total assets would be less than the sum of its total              

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liabilities plus the amount that would be needed for preferential rights upon   
dissolution. The board of directors of an Oregon corporation may base a         
determination that a distribution is not prohibited either on the corporation's 
financial statements prepared on the basis of accounting practices and          
principles that are reasonable under the circumstances, on a fair valuation, or 
other method that is reasonable under the circumstances.                        

The PacifiCorp articles provide that each class of PacifiCorp preferred   
stock is entitled, equally with each other class and in preference to the       
PacifiCorp common stock, to accumulate dividends at the rate or rates, which    
may be subject to adjustment, determined in accordance with the PacifiCorp      
articles at the time of creation of each series. Subject to the prior rights of 
each class of PacifiCorp preferred stock and to the rights of any other classes 
of preferred stock subsequently authorized, the PacifiCorp common stock alone   
is entitled to all dividends other than those payable in respect of each class  
of PacifiCorp preferred stock.                                                  

 Under Scots law, a company may pay dividends, only out of its distributable
profits and not out of share capital, which includes share premiums. Amounts    
credited to the share premium account, representing the excess of the           
consideration for the issue of shares over the aggregate par value of the       
shares, may not be paid out as cash dividends but may be used, among other      
things, to pay up unissued shares which may then be distributed to shareholders 
in proportion to their holdings. In addition, a public company, such as         
ScottishPower, may make a distribution at any time only if, at that time, the   
amount of its net assets is not less than the aggregate of its issued and paid  
up share capital and undistributable reserves. ScottishPower has historically   
paid two dividends per year. The ScottishPower Board of Directors has the power 
under the ScottishPower articles to declare and pay interim dividends or, in    
the case of New ScottishPower, any dividends. Subject to any preferential       
rights attached to any class of shares, the ordinary shares are entitled to all 
dividends paid by ScottishPower. See "--Preferred Stock and Preference Stock"   
and "Description of Ordinary Shares--Dividends and Other Distributions."        

Rights of Purchase and Redemption                                               

Under Oregon law , the repurchase and redemption of stock by an Oregon    
corporation are subject to the same limitations as payment of dividends. See    
"--Sources and Payment of Dividends." However, the PacifiCorp articles require  
that if PacifiCorp purchases any of its outstanding stock subject to            
redemption, the price paid therefor shall not exceed the price at which it is   
redeemable.                                                                     

  Under Scots law and its articles, ScottishPower may issue redeemable shares.
A Scottish company may purchase its own shares, including any redeemable        
shares, if so authorized by its articles of association and provided that the   
purchase has been previously approved by an ordinary resolution of its          
shareholders, in the case of an on-market purchase, which approval may be       
general or specific, or a special resolution, in the case of an off-market      
purchase. The shares may be redeemed or repurchased only if fully paid and, in  
the case of public companies such as ScottishPower, only, subject as provided   
below, out of distributable profits or the proceeds of a new issue of shares    
issued for the purpose of the repurchase or redemption. The ScottishPower       
articles do permit the purchase of its own shares. As with many other companies 
listed on the London Stock Exchange, ScottishPower customarily seeks an annual  
special resolution generally to approve on-market purchases subject to          
specified limitations. When a company purchases its own shares wholly out of    
profits, an amount equal to the nominal amount of the share purchased and       
subsequently cancelled must be transferred to the capital redemption reserve,   
which is generally treated as paid-up share capital. In addition, any amount    
payable by the company on purchase of its shares in excess of the par value may 
be paid out of the proceeds of a fresh issue of shares up to an amount equal to 
whichever is the lesser of the aggregate of the original premiums received by   
the company on the issue of those shares or the amount of the company's share   
premium account as at the time of the repurchase including any sum transferred  
to that account in respect of premiums on the new issue. The London Stock       
Exchange, on which the ordinary shares are listed, usually requires that on-    
market purchases of 15% or more of a company's equity share capital pursuant to 
a general shareholder authority must be made by way of either a tender or       
partial offer to all shareholders, and in the case of a tender                  

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offer, at a stated maximum or fixed price. Purchases pursuant to a general      
shareholder authority below the 15% threshold may be made through the market in 
the ordinary way provided that the price may not usually be more than 5% above  
the average of the middle market quotations taken from the Daily Official List  
of the London Stock Exchange for the five business days before the purchase     
date.                                                                           

Regulation Under Public Utility Holding Company Act of 1935                     

Following completion of the merger, ScottishPower will be the holding     
company of PacifiCorp, a public utility company. Therefore, both ScottishPower  
and PacifiCorp will be subject to regulation under the 1935 Act. This           
regulation may affect ScottishPower's and PacifiCorp's ability to issue, sell,  
purchase or repurchase securities, pay dividends or engage in affiliate         
transactions. See "The Merger--Regulatory Matters" above.                       

Special Meeting of Shareholders                                                 

The PacifiCorp bylaws provide that special meetings of shareholders may be
called by the Chairman of the Board, the President or the PacifiCorp Board of   
Directors. In addition, the Chairman of the Board shall call a special meeting  
of the shareholders if the holders of not less than one-tenth of all the        
outstanding votes of PacifiCorp entitled to be cast on any issues proposed to   
be considered at the meeting sign, date and deliver, to the Corporate           
Secretary, a written demand for the meeting describing the purposes for which   
it is to be held. Moreover, the business permitted to be conducted at any       
special meeting of shareholders is limited to the business specified in the     
notice of the meeting.                                                          

Under Scots law, an extraordinary general meeting of shareholders may be  
called by the board of directors or, notwithstanding any provision to the       
contrary in a company's articles of association, by a requisition of            
shareholders holding not less than one-tenth of the paid-up capital of the      
company carrying voting rights at general meetings. An ordinary resolution      
requires 14 clear days' notice. An extraordinary resolution (as defined below)  
also requires 14 clear days' notice. A special resolution requires 21 clear     
days' notice. Extraordinary resolutions are relatively unusual and are confined 
to matters out of the ordinary course of business such as a proposal to wind up 
the affairs of the company. Special resolutions generally involve proposals to  
change the name of the company, to alter its capital structure, to change or    
amend the rights of shareholders, to permit the company to issue new shares for 
cash without applying the shareholders' pre-emptive rights, to amend the        
company's objects (purpose) clause in its memorandum of association, to amend   
the company's articles of association, or to carry out certain other matters    
where either the company's articles of association or the Companies Act 1985    
prescribe that a special resolution is required. All other proposals relating   
to the ordinary course of the company's business, such as the election of       
directors, would be the subject of an ordinary resolution. An annual general    
meeting requires 21 clear days' notice, although best practice under certain    
U.K. corporate governance guidelines would be to give at least 20 working days' 
notice.                                                                         

Dissenters' Rights                                                              

Under Oregon law, with certain exceptions, a shareholder is entitled to   
dissent from, and obtain payment of the fair value of the shareholder's shares  
in the event of a merger, stock exchange, sale or exchange of all or            
substantially all of the property of the corporation other than in the usual    
and regular course of business, or certain specified charter amendments. Under  
Oregon law, unless the articles of incorporation of an Oregon corporation       
provide otherwise (which the PacifiCorp articles do not), dissenters' rights do 
not apply to the holders of shares of any class or series if the shares of the  
class or series are registered on a national securities exchange or quoted on   
the Nasdaq as a National Market System issue on the record date for the meeting 
of shareholders at which the corporate action giving rise to dissenters' rights 
is to be approved. PacifiCorp's common stock is listed on the New York Stock    
Exchange and the Pacific Stock Exchange and, therefore, PacifiCorp common stock 
holders have no dissenters' rights of appraisal with respect to the merger. As  
to the dissenters' rights of the holders of PacifiCorp preferred stock, see     
"The Merger--Dissenters' Rights."                                               

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Scots law does not generally provide for dissenters' rights. However, see 
"--Shareholders' Voting Rights on Certain Transactions" and "--Shareholders'    
Suits" below.                                                                   

Pre-emptive Rights                                                              

  The PacifiCorp articles expressly eliminate pre-emptive rights in accordance
with Oregon law.                                                                

Under Scots law, the issue for cash of equity securities or rights to     
subscribe for or convert into equity securities must be offered in the first    
instance to the existing equity shareholders in proportion to the respective    
nominal values of their holdings, unless a special resolution has been passed   
in a general meeting of shareholders disapplying (whether generally or          
specifically) this requirement. As is the custom of many companies listed on    
the London Stock Exchange, at its annual general meeting each year,             
ScottishPower proposes a resolution to authorize the ScottishPower Board to     
allot up to a specified amount of share capital for cash otherwise than pro     
rata to its existing shareholders. See "Description of Ordinary Shares--        
Preemptive Rights."                                                             

Amendment of Governing Instruments                                              

Under Oregon law, an Oregon corporation's board of directors may propose, 
and its shareholders may adopt, one or more amendments to its articles if the   
votes cast by a voting group entitled to vote favoring the amendment exceed the 
votes cast by the voting group opposing the action, except that a charter       
amendment that would result in a voting group having dissenters' rights         
requires the affirmative vote of a majority of the shares of such voting group. 
Oregon law requires, among other things, a class vote if the articles of        
incorporation are amended to create a new class of shares having rights or      
preferences prior to or on a parity with the shares of the class or to increase 
the rights or preferences of another authorized class so that the other class   
becomes prior to or on a parity with the shares of a class. Oregon law provides 
that directors of an Oregon corporation may make amendments to the articles of  
incorporation without shareholder approval in some limited circumstances,       
including making changes to the corporation's name or extending the duration of 
the corporation.                                                                

  PacifiCorp's articles require a consent, given by a vote at a meeting called
for that purpose, of the holders of at least two-thirds of the total number of  
votes entitled to be cast by the shares of the (a) 5% preferred stock, (b)      
serial preferred stock and (c) no par serial preferred stock then outstanding   
to amend, alter, change or repeal any of the express terms of the securities    
then outstanding in a manner substantially prejudicial to the holders of the    
securities. The PacifiCorp articles further provide that amending, altering,    
changing or repealing the provisions thereof relating to the removal or         
classification of directors requires the affirmative vote of holders of at      
least 80% of the shares entitled to vote on the election of directors.          

The PacifiCorp bylaws provide that they may be amended or repealed, or new
bylaws made, by the affirmative vote of either:                                 

.  the holders of record of a majority of the outstanding capital stock of  
PacifiCorp; or                                                        

.  a majority of the entire PacifiCorp Board of Directors, in each case     
upon required notice.                                                 

Under Scots law, the shareholders have the authority to alter, delete     
substitute or add to the objects clause in a company's memorandum of            
association and all provisions of its articles of association by a special      
resolution subject, in the case of alterations to the objects clause in the     
memorandum of association, to the right of dissenting shareholders to apply to  
the courts to cancel the alterations. Under Scots law, the board of directors   
is not authorized to change the memorandum of association or the articles of    
association. Amendments affecting the rights of the holders of any class of     
shares may, depending on the rights attached to the class and the nature of the 
amendments, also require approval of the classes affected in separate class     
meetings.                                                                       

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Preferred Stock and Preference Stock                                            

 PacifiCorp's articles provide that serial preferred stock and no par serial
preferred stock each may be issued in one or more series and that all series of 
each class shall constitute one and the same class of stock, shall be of equal  
rank and shall be identical in all respects except as to the designation        
thereof and except that each series may vary, as fixed and determined by the    
PacifiCorp Board of Directors at the time of its creation and expressed in a    
resolution, as to:                                                              

.  the dividend rate or rates, which may be subject to adjustment;          

.  the date or dates from which dividends shall be cumulative;              

.  the dividend payment dates;                                              

.  the amount to be paid upon redemption, if redeemable, or in the event of 
voluntary liquidation, dissolution or winding up of PacifiCorp;       

.  the rights of conversion, if any, into shares of PacifiCorp common stock 
and the terms and conditions of any conversion;                       

.  provisions, if any, for the redemption or purchase of shares, which may  
be at the option of PacifiCorp or upon the happening of a specified   
event or events, including the times, prices or rates, which may be   
subject to adjustment; and                                            

.  with respect to the no par serial preferred stock, voting rights.        

The PacifiCorp articles prohibit the issuance of additional PacifiCorp    
preferred stock, without first obtaining the consent of a majority of the       
voting power of the 5% preferred stock, the serial preferred stock and the no   
par serial preferred stock, unless three tests are met. Under the first test,   
the net income of PacifiCorp for a period of 12 consecutive months within the   
15 months immediately preceding the issuance, after deducting depreciation and  
all taxes, available for the payment of dividends must be at least twice the    
annual dividend requirements on all outstanding shares of PacifiCorp preferred  
stock, including the new issue. Under the second test, the gross income of      
PacifiCorp for a period of 12 consecutive months within the 15 months           
immediately preceding such issuance, after deducting depreciation and all       
taxes, available for the payment of interest, must be at least one and one-half 
times the sum of (1) the annual interest charges on all interest bearing        
indebtedness of PacifiCorp and (2) the annual dividend requirements on all      
outstanding shares of PacifiCorp preferred stock, including the new issue.      
Finally, the third test requires that the sum of (1) the aggregate capital of   
PacifiCorp applicable to the PacifiCorp common stock and (2) the surplus of     
PacifiCorp must not be less than the aggregate amount payable on the            
involuntary dissolution, liquidation or winding up of PacifiCorp in respect of  
all outstanding shares of PacifiCorp preferred stock, including the new issue.  

Subject to Scots law and without prejudice to any rights attached to any  
existing shares or class of shares, ScottishPower may issue shares, including   
preferred shares, with the rights or restrictions that its shareholders may by  
ordinary resolution determine or, if its shareholders do not so determine, the  
directors determine. See "Description of Ordinary Shares--Variation of Class    
Rights and Alteration of Share Capital."                                        

Debt Limitations                                                                

The PacifiCorp articles currently limit the amount of unsecured debt that 
PacifiCorp may issue to the equivalent of 30% of the total of PacifiCorp's      
secured indebtedness and its capital and surplus. See "Proposal to Increase     
Unsecured Debt Limit."                                                          

With specified exceptions, the ScottishPower articles provide that the    
borrowings of ScottishPower should not exceed a sum equal to two and a half     
times ScottishPower's adjusted capital and reserves (as defined in the          
ScottishPower articles), unless approved by an ordinary resolution of the       
shareholders.                                                                   

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Shareholders' Voting Rights on Certain Transactions                             

Under Oregon law, the vote of a majority of the outstanding shares of     
capital stock entitled to vote thereon generally is necessary to approve a      
merger or other reorganization or a sale of all or substantially all of the     
assets of the corporation out of the ordinary course of business. After         
adoption by the board of directors, a merger agreement must be submitted to the 
shareholders of an Oregon corporation for approval.                             

Under the rules of the New York Stock Exchange, acquisitions involving    
substantial security holders or the issuance of additional shares of common     
stock of a listed company aggregating 20% or more of the outstanding shares of  
common stock require the approval of the holders of a majority of the shares    
voting thereon.                                                                 

The Oregon Business Combination Law generally prohibits an Oregon         
corporation, such as PacifiCorp, from engaging in certain "business             
combinations" with an "interested shareholder" for a period of three years from 
the date the person becomes an interested shareholder unless;                   

.  before the person became an interested shareholder, the board of         
  directors of the corporation approved either the business combination or
  the transaction which resulted in the shareholder becoming an interested
shareholder;                                                          

.  upon consummation of the transaction that resulted in the person         
  becoming an interested shareholder, that person owns at least 85% of the
 voting stock of the corporation outstanding at the time the transaction
 commenced, excluding shares owned by persons who are both directors and
 officers and shares owned by employee stock plans in which participants
 do not have the right to determine whether shares will be tendered in a
tender or exchange offer; or                                          

.  the business combination is approved by the board of directors and       
authorized by the affirmative vote of at least two-thirds of the      
outstanding voting stock not owned by the interested shareholder.     

"Interested shareholder" is defined as any person that is the beneficial    
owner, directly or indirectly, of 15% or more of the outstanding voting stock   
of the corporation, or an affiliate or associate of the corporation who within  
the past three years was a beneficial owner of 15% or more of the outstanding   
voting stock of the corporation. Although an Oregon corporation may elect,      
under its articles of incorporation or bylaws, not to be governed by these      
provisions, neither the PacifiCorp articles nor the PacifiCorp bylaws contain   
such an election.                                                               

 Under the PacifiCorp articles, certain business transactions with a Related
Person (as defined below), including a merger, consolidation or plan of         
exchange of PacifiCorp or its subsidiaries, or certain recapitalizations, or    
the sale or exchange of a substantial part of the assets of PacifiCorp or its   
subsidiaries, or any issuance of voting securities of PacifiCorp, require in    
addition to existing voting requirements, approval by at least 80% of the       
outstanding voting stock. For purposes of this provision, voting stock is       
defined as all of the outstanding shares of capital stock of PacifiCorp         
entitled to vote generally in the election of directors, considered as one      
class. A Related Person includes any shareholder that is, directly or           
indirectly, the beneficial owner of 20% or more of the voting stock. The 80%    
voting requirement will not apply in the following instances:                   

.  The Related Person has no direct or indirect interest in the proposed    
transaction except as a shareholder;                                  

.  The shareholders, other than the Related Person, will receive            
consideration for their Voting Stock having a fair market value per   
share at least equal to, or in the opinion of a majority of the       
  continuing directors at least equivalent to, the highest per-share price
paid by the Related Person for any voting stock acquired by it;       

.  At least two-thirds of the continuing directors expressly approved in    
advance the acquisition of the Voting Stock that caused the Related   
Person to become a Related Person; or                                 

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.  The transaction is approved by at least two-thirds of the Continuing     
Directors.                                                            

This provision of the PacifiCorp articles may be amended or replaced only 
upon the approval of the holders of at least 80% of the voting stock.           

Under the rules of the London Stock Exchange, shareholder approval is     
usually required for an acquisition or disposal by a listed company, if the     
gross assets of the company or business to be acquired or disposed of represent 
25% or more of the gross assets of the company or if various other size ratios  
prescribed by the Listing Rules of the London Stock Exchange are satisfied, and 
is also required in some circumstances relating to the giving by the listed     
company of indemnities and similar arrangements. Where the size of the          
acquisition or disposal falls below that level, information may nevertheless be 
required to be published. Shareholder approval may also be required for an      
acquisition or disposal of assets between a listed company and related parties  
including:                                                                      

(1)directors of the company or its subsidiaries;                            

(2)holders of 10% of the nominal value of any class of the company's or any 
holding company's or subsidiary's shares having the right to vote in all
circumstances at general meetings of the relevant company; or           

(3)any associate of persons described in (1) or (2) above.                  

See also "--Certain Provisions Relating to Share Acquisitions" below.     

Scots law provides for schemes of arrangement, which are arrangements or  
compromises between a company and its shareholders or creditors or any class of 
its shareholders, or any class of its creditors, and are used for certain types 
of reconstructions, amalgamations, capital reorganizations or takeovers. They   
require the approval at a meeting of the company convened by an order of the    
Court of Session of a majority in number of the shareholders or creditors or    
class of shareholders or creditors representing 75% in value of the capital or  
debt held by the creditors or shareholders or class of shareholders or          
creditors present and voting, either in person or by proxy, and the sanction of 
the court. Once the scheme becomes effective, all creditors and shareholders    
(or, if it applies to a class, the creditors or shareholders of the relevant    
class) are bound by the terms of the scheme; a dissenting shareholder would not 
have rights comparable to dissenters' rights described above.                   

Scots law also provides that where a takeover offer is made for the shares
of a company incorporated in the U.K. and, within four months of the date of    
the offer the offeror has, by virtue of acceptances of the offer, acquired or   
contracted to acquire not less than nine-tenths in value of the shares of any   
class to which the offer relates, the offeror may, within two months of         
reaching the nine-tenths level, by notice require shareholders who do not       
accept the offer to transfer their shares on the terms of the offer. A          
dissenting shareholder may apply to the court within six weeks of the date on   
which the notice was given objecting to the transfer or its proposed terms. The 
court is unlikely, absent unfair treatment, fraud or oppression, to exercise    
its discretion to order that the acquisition not take effect, but it may        
specify the terms of the transfer as it finds appropriate. A minority           
shareholder is also entitled in these circumstances to require the offeror to   
acquire his shares on the terms of the offer.                                   

  Mergers are sometimes effected through the use of a voluntary liquidation of
a company pursuant to the U.K. Insolvency Act 1986, which provides for the      
transfer of the whole or part of the assets of that company to another company  
in return for shares in the transferee company. To effect the transfer, a       
resolution passed by 75% of shareholders conferring authority on the liquidator 
is required. Any shareholder who does not vote in favour of the resolution may  
express his dissent by writing to the liquidator within seven days after the    
passing of the resolution, requiring the liquidator either to abstain from      
carrying the resolution into effect or to purchase the shareholder's interest   
at a price to be determined by agreement or by arbitration. The liquidator may  
apply to the court if it disputes the shareholder's contention and the court    
may make such order on the application as it thinks just.                       

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Rights of Inspection                                                            

Oregon law allows any shareholder of an Oregon corporation, upon five     
business days' written notice to the corporation, to have the right, during     
regular business hours, to inspect the corporation's shareholder list, minutes  
of board and shareholder meetings, records of action taken by the board or      
shareholders without a meeting, accounting records and other corporate records. 
With respect to records of director and shareholder actions, the shareholder    
list and accounting records, the shareholder's notice must:                     

. be made in good faith and for a proper purpose;                           

. must describe with reasonable particularity the shareholder's purpose and 
the records the shareholder desires to inspect; and                     

. the records must be directly connected with the shareholder's purpose.    

Except when closed in accordance with Scots law, the register and index of
names of shareholders of a Scottish company may be inspected during business    
hours by its shareholders, without charge and by other persons upon payment of  
a fee, and copies may be obtained on payment of a fee. The shareholders of a    
Scottish public company may, without charge also inspect the minutes of         
meetings of the shareholders during business hours and obtain copies upon       
payment of a fee. The published annual accounts of a public company are         
required to be laid before the shareholders in a general meeting and a          
shareholder is entitled to a copy of the accounts. The shareholders of          
ScottishPower have no rights to inspect its accounting records or minutes of    
meetings of its directors. Some registers required to be kept by the company    
are open to public inspection and service contracts of directors of the         
company, which have more than 12 months unexpired or require more than 12       
months notice to terminate, must be available for inspection during normal      
business hours and each business day at specific times for periods longer than  
two hours.                                                                      

Standard of Conduct for Directors                                               

  Oregon law provides that directors of an Oregon corporation are obligated as
fiduciaries to discharge their duties in good faith, with the care an           
ordinarily prudent person in a like position would exercise under similar       
circumstances and in a manner the director reasonably believes to be the best   
interests of the corporation. Decisions made on that basis are protected by the 
so-called "business judgment rule." In discharging their duties, directors are  
entitled to rely on information prepared or presented by certain officers or    
employees of the corporation whom the director reasonably believes to be        
reliable and competent in the matters presented, legal counsel, public          
accountants and certain other professionals as to matters within the person's   
professional or expert competence, and any committee of the board of directors  
if the director reasonably believes the committee merits confidence.            

  Under general Scots law, a director of a company is under a number of duties
to that company, including: a duty to act in the company's bona fide best       
interests; a duty not to put himself in a position where there is an actual or  
potential conflict between his duty to his company and his duties to any other  
person or his personal interests; and a duty to act for a proper purpose and to 
exercise his powers only in accordance with the articles of association of the  
company. In addition, directors are under a duty to exercise reasonable skill   
and care in the performance of their duties. Various duties, including          
disclosure obligations, are also imposed upon directors of a company by statute 
and by the Listing Rules of the London Stock Exchange, where applicable.        
Executive directors will also have duties under their service contracts.        

Classification of the Board of Directors                                        

  Under Oregon law, the articles of incorporation of an Oregon corporation may
provide for the classification of the board of directors to stagger the terms   
of directors. The term "classified board" generally means the specification of  
selected board seats for a term of more than one year but not more than three   
years, with different classes of board seats coming up for election each year.  
The PacifiCorp articles and PacifiCorp bylaws provide for a classified board of 
directors consisting of three classes of directors, each class elected for      

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a term of three years. The PacifiCorp articles also provide that amending,      
altering, changing or repealing the director classification provision of the    
PacifiCorp articles requires the affirmative vote of holders of at least 80% of 
the shares entitled to vote on the election of directors.                       

Scots law permits a company to provide for the classification of the board
of directors with respect to the time for which directors severally hold        
office. The ScottishPower articles provide that there shall not be less than    
four directors and not more than sixteen. All directors are subject to the      
general corporation law requirements concerning the removal of directors. At    
each annual general meeting one-third of the directors shall retire from office 
by rotation. The directors concerned may be re-appointed or deemed to be re-    
appointed under the articles. The directors to retire are selected on the basis 
of time in office since their last election but, in the case of the New         
ScottishPower articles, if any director has at the start of the annual general  
meeting been in office for more than three years since his last appointment or  
re-appointment, he must retire and if there is only one director who is subject 
to retirement by rotation he must retire. Any director appointed by the         
directors since the last annual general meeting is required to retire at the    
next following annual general meeting and then is eligible for election, but is 
not taken into account in determining which directors are to retire by rotation 
at the meeting.                                                                 

Removal of Directors                                                            

 Under Oregon law, directors of an Oregon corporation may be removed with or
without cause, unless the articles of incorporation provide only for for-cause  
removal. The PacifiCorp articles provide that directors may be removed:         

. without cause, at a meeting of shareholders called expressly for that     
 purpose, by the vote of 80% of the outstanding shares entitled to vote at
an election of directors; or                                            

. with cause, at a meeting of shareholders called expressly for that        
purpose by the vote of two-thirds of the outstanding shares entitled to 
vote at an election of directors.                                       

Under Scots law, shareholders have the right to remove a director without 
cause by ordinary resolution of which special notice (28 clear days' notice)    
has been given to the company. The ScottishPower articles provide that a        
director may be removed from office by notice in writing served upon him signed 
by all his co-directors.                                                        

Vacancies on the Board of Directors                                             

Under Oregon law, the board of directors or the shareholders of an Oregon 
corporation may fill any vacancy on the board of directors, including vacancies 
resulting from an increase in the number of directors unless the articles of    
incorporation provide otherwise. Under the PacifiCorp bylaws, in case of a      
vacancy among the directors, the remaining directors, although less than a      
quorum, by an affirmative vote of a majority of the directors or a sole         
remaining director, may fill the vacancy.                                       

Under Scots law, shareholders of a public company may, by ordinary        
resolution, appoint a person who is willing to be a director either to fill a   
vacancy or, subject to any maximum provided in the company's articles of        
association, as an additional director. The board of directors also has the     
power to appoint a director to fill a vacancy or as an additional director,     
subject to such conditions as may be set out in the company's articles of       
association, provided that such appointment will only last until the next       
following annual general meeting of the company, at which the director          
concerned may be re-elected.                                                    

Liability of Directors and Officers                                             

  Under Oregon law, neither a director nor an officer of an Oregon corporation
is liable for any action taken as a director or officer, or any failure to take 
any action, if the person performed their duties in compliance with Oregon law. 
Under the PacifiCorp articles, no director of PacifiCorp shall be personally    
liable to PacifiCorp or                                                         

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its shareholders for monetary damages for conduct as a director; but such       
provision does not eliminate the liability of a director for any act or         
omission for which such elimination of liability is not permitted under Oregon  
law.                                                                            

 Scots law does not permit a company to exempt any director or other officer
of the company or any person employed by the company as auditor from any        
liability which by virtue of any rule of law would otherwise attach to him in   
respect of any negligence, default, breach of duty or breach of trust of which  
he may be guilty in relation to the company.                                    

Indemnification of Directors and Officers                                       

Oregon law permits an Oregon corporation to indemnify directors, officers,
employees and agents made party to a proceeding because the individual holds or 
held such capacity, against liabilities and expenses incurred in such           
proceeding if the individual acted in good faith and reasonably believed that   
his conduct was in the corporation's best interests, or at least not opposed to 
its best interests. In the case of any criminal proceeding, the individual must 
have had no reasonable cause to believe such individual's conduct was unlawful. 
Oregon law provides that statutory indemnification is not exclusive of rights   
to indemnification which may be provided in a corporation's articles of         
incorporation or bylaws, any agreement, or through resolutions of its board of  
directors or shareholders or otherwise.                                         

 The PacifiCorp articles and PacifiCorp bylaws provide that PacifiCorp shall
indemnify to the fullest extent not prohibited by law any person who is made,   
or threatened to be made, a party to an action, suit or proceeding of any kind, 
including a derivative proceeding, by reason of the fact such person is or was  
a director, officer, employee or agent, or ERISA fiduciary of PacifiCorp, or    
serves or served, at the request of PacifiCorp, in such capacity for another    
entity. PacifiCorp will advance expenses in any such proceeding to the fullest  
extent not prohibited by law.                                                   

  Scots law does not permit a company to indemnify a director or an officer of
the company or any person employed by the company as auditor against any        
liability which by virtue of any rule of law would otherwise attach to him in   
respect of negligence, default, breach of duty or breach of trust in relation   
to the company, except as liability incurred by such director, officer or       
auditor in defending any legal proceedings in which judgement is given in his   
favor or in which he is acquitted or in certain instances where, although he is 
liable, a court finds that such director, officer or auditor acted honestly and 
reasonably and that having regard to all the circumstances he ought fairly to   
be excused and relief is granted by the court. Scots law enables companies to   
purchase and maintain insurance for directors, officers and auditors against    
any liability which would otherwise attach them in respect of any negligence,   
default, breach of duty or breach of trust in relation to the company.          
ScottishPower maintains director's and officer's insurance.                     

Additional Provisions of Oregon Law                                             

Oregon law specifically authorizes directors of an Oregon corporation, in 
considering whether a tender offer, merger, or sale of all or substantially all 
of the assets of the corporation is in the best interests of the corporation,   
to consider: the social, legal and economic effects of any such action on       
employees, suppliers, and customers of the corporation and communities and      
geographic areas in which the corporation operates; the economy of the state    
and nation; the long-term and short-term interests of the corporation and its   
shareholders, including the possibility that these interests may be best served 
by the continual independence of the corporation; and other relevant factors.   

Shareholders' Suits                                                             

Under Oregon law, a shareholder of an Oregon corporation may institute a  
lawsuit against one or more directors, either on his own behalf or derivatively 
on behalf of the corporation. A shareholder's derivative complaint must include 
details of any demand made on the board of directors, or the reason or reasons  
why a                                                                           

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demand was not made. The board of directors may conduct an investigation of any 
action. No discontinuance or settlement of the proceeding may occur without     
court approval.                                                                 

In addition to having the right to institute a lawsuit on behalf of and in
the name of the company in certain limited circumstances, Scots law permits a   
shareholder whose name is on the register of shareholders of the company,       
including U.S. persons, to petition the court for an order when the company's   
affairs are being or have been conducted in a manner unfairly prejudicial to    
the interests of the shareholders generally or some part of the shareholders,   
including at least such shareholder, or when any actual or proposed act or      
omission of the company is or would be so prejudicial. A court when granting    
relief by making an order in respect of the matters complained of has wide      
discretion, including authorizing civil proceedings to be brought in the name   
of the company by a shareholder on terms as the court may direct and providing  
for the purchase of the shares of any shareholders by other shareholders or by  
the company. To become a shareholder and enforce such rights under Scots law,   
holders of ADRs will be required to convert at least one of the ADRs into       
ordinary shares in accordance with the terms of the deposit agreement. Except   
in these limited respects, Scots law does not permit class action lawsuits by   
shareholders on behalf of the company or on behalf of other shareholders.       

Certain Provisions Relating to Share Acquisitions                               

Oregon law also includes a control share acquisition statute, which       
generally provides that any person or group of persons that acquires the power  
to vote more than one-fifth, one-third, or one-half of certain Oregon           
corporations' shares in a transaction not approved by the corporation's board   
of directors will not have the right to vote the shares unless granted voting   
rights by the holders of a majority of all the votes entitled to be cast,       
excluding "interested shares." Interested shares are those shares held by the   
acquiring persons and by officers of the corporation and employees of the       
corporation who are also directors of the corporation. If the approval of       
voting power for the shares is obtained at one of the specified levels,         
additional shareholder approvals are required when a shareholder seeks to       
acquire the power to vote shares at the next level. In the absence of approval, 
the additional shares acquired by the shareholder may not be voted. The Oregon  
control share acquisition statute is applicable only to a corporation that has: 

.one hundred or more shareholders;                                          

.its principal place of business, its principal office, or substantial    
assets within Oregon; and                                                       

. either (a) more than ten percent of its shareholders resident in Oregon;  
 (b) more than ten percent of its shares owned by Oregon residents; or (c)
ten thousand shareholders resident in Oregon. Although an Oregon        
 corporation may elect, under its articles of incorporation or bylaws, not
 to be governed by this provision, neither the PacifiCorp articles nor the
PacifiCorp bylaws contains such an election.                            

In the case of a company listed on the London Stock Exchange, shareholder 
approval must be obtained for certain acquisitions or disposals of assets       
involving directors or substantial shareholders or their associates. See "--    
Shareholders' Voting Rights on Certain Transactions". In addition, takeovers of 
public companies are regulated by the City Code, non-statutory rules not        
enforceable at law but administered by the Takeover Panel, a body comprising    
representatives of certain City of London financial and professional            
institutions which oversees the conduct of such takeovers. One of the           
provisions of the City Code provides that, unless shareholders otherwise        
approve by ordinary resolution:                                                 

. when any person acquires, whether by a series of transactions over a      
period of time or not, shares which, taken together with shares held or 
acquired by persons acting in concert with him, carry 30% or more of the
voting rights of a public company; or                                   

. when any person, together with persons acting in concert with him, holds  
not less than 30% but not more than 50% of the voting rights and such   
person, or any person acting in concert with him, acquires additional   
shares carrying voting rights, such person must generally make an offer 
for all of the equity shares of the company, whether voting or non-     
voting, and any class of voting non-equity                              

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shares of the company held by the person or any person acting in concert
with him, for cash, or accompanied by a cash alternative, at not less   
than the highest price paid for the relevant shares during the 12 months
preceding the date of the offer.                                        

Disclosure of Interests                                                         

 Acquirors of PacifiCorp shares are subject to disclosure requirements under
Section 13(d)(1) of the Securities Exchange Act and Rule 13d-1 thereunder,      
which provide that any person who becomes the beneficial owner of more than     
five percent of the issued and outstanding PacifiCorp shares shall, within ten  
days after such acquisition, file a Schedule 13D with the SEC disclosing        
certain specified information, and send a copy of the Schedule 13D to           
PacifiCorp and to the securities exchanges on which the security is traded.     

After the merger, acquirors of ADSs will be required to comply with, among
other things, the provisions of Section 13(d) of the Securities Exchange Act    
and Rule 13d-1 thereunder with respect to their attributed ownership of the     
underlying ordinary shares.                                                     

Scots law provides that a person, including a company and other legal     
entities, who acquires an interest or becomes aware that he has acquired an     
interest of three percent or more of any class of shares comprised in a public  
company's "relevant share capital", which, for these purposes, means that       
company's issued share capital carrying rights to vote in all circumstances at  
general meetings of the company, is obliged to notify that company of his       
interest within two days following the day on which the obligation arises.      
Thereafter any changes in respect of whole percentage figure increases or       
decreases rounded down to the next whole number or which reduce the interest    
below three percent, must be notified to the company. The ordinary shares are   
"relevant share capital" for this purpose.                                      

In addition, Scots law provides that a public company may, by giving a    
Section 212 notice, require a person whom the company knows or has reasonable   
cause to believe to be, or to have been at any time during the three years      
immediately preceding the date on which the notice is issued, interested in     
shares comprised in the company's "relevant share capital" to confirm that fact 
or, as the case may be, to indicate whether or not that is the case, and when   
he or she holds or has during relevant time held an interest in such shares, to 
give further information as may be required by ScottishPower relating to his    
interest and any other interest in the share of which he is aware. The          
disclosure must be made within a reasonable period as may be specified in the   
relevant notice, which may, depending on the circumstances, be as short as one  
or two days.                                                                    

  For the purpose of the above obligations, the interest of a person in shares
means any kind of interest in shares including interests in any shares:         

.  in which his spouse, or his child or stepchild under the age of 18 is    
interested;                                                           

.  if a corporate body is interested in them and either (a) that corporate  
body is or its directors are accustomed to act in accordance with that
person's directors or instructions or (b) that person is entitled to  
control or controls one-third or more of the voting power of that     
corporate body; or                                                    

.  if another party is interested in shares and the person and that other   
  party are parties to an agreement which provides for one or more parties
  to it to acquire interests in shares of a particular public company, and
which imposes obligations or restrictions on any one or more of the   
parties as to the use, retention or disposal of the interests acquired
  under the agreement, and any interest in the company's shares is in fact
acquired by any of the parties under the agreement.                   

The holding of an ADR would generally constitute an interest in the         
underlying ordinary shares.                                           

When a Section 212 Notice is served by a company on a person who is or was
interested in shares of the company and that person fails to give the company   
any information required by the notice within the time specified in the notice, 
the company may apply to the court for an order directing that the shares in    
question be subject to restrictions prohibiting, inter alia, any transfer of    
those shares, the exercise of voting rights in respect of the shares, the issue 
of further shares in respect of the shares and, other than in a liquidation,    
payments,                                                                       

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including dividends, in respect of the shares. Such restrictions may also avoid 
any agreement to transfer the shares. In addition, a person who fails to        
fulfill the obligations described above is subject to criminal penalties in the 
U.K. Under the ScottishPower articles, certain of the powers of imposing        
restrictions granted to the courts may be exercised by the ScottishPower Board  
of Directors in certain circumstances.                                          

Certain London Stock Exchange Listing Requirements                              

In addition to the provisions of the ScottishPower articles and the       
Companies Act 1985, ScottishPower is subject to the Listing Rules of the London 
Stock Exchange made under Section 142 of the U.K. Financial Services Act 1986   
and in particular to the continuing obligations under those rules. Among other  
things these require a listed company to notify the London Stock Exchange of    
any major new developments in its sphere of activities which are not public     
knowledge which may by virtue of the effect of these developments on its assets 
and liabilities of financial positions on the general course of its business,   
lead to a substantial movement in the price of its listed securities. The       
company must usually ensure equality of treatment for all holders of listed     
securities who are in the same position and, when its securities are listed on  
more than one stock exchange, must usually ensure that equivalent information   
is made available to the market on each exchange on which its securities are    
listed. In addition, the ScottishPower articles, the general law and/or the     
Listing Rules impose obligations on listed companies to send the following      
information to shareholders:                                                    

.  details relating to certain acquisitions, disposals, takeovers, mergers  
and offers either made by or in respect of the company, and           

.  an explanatory circular, whenever a general meeting of the shareholders  
is convened.                                                          

If the meeting includes any business other than routine business at an    
annual general meeting, it must specify the general nature of such business.    

In addition to the above requirements, a company is required to notify the
London Stock Exchange of certain notifications received by the company of       
persons holding an interest in 3% or more of any class of the company's         
relevant share capital, any changes on the company's board of directors, any    
purchase or redemption by the company of its own equity securities, any         
interests, including changes, in the shares or the debentures of their company  
and changes in the capital structure of the company. Unaudited half yearly      
reports of results for the first six months of any fiscal year and an unaudited 
preliminary announcement of results for each full fiscal year must also be      
published.                                                                      

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PROPOSAL TO INCREASE UNSECURED DEBT LIMIT 

Introduction                                                                    

The PacifiCorp articles provide that the consent of the holders of a      
majority of the total voting power of PacifiCorp's preferred stock, voting      
together as a single class separate from the PacifiCorp common stock, is        
required before PacifiCorp may merge or consolidate with or into any other      
corporation. A vote in favor of the merger proposal will constitute a consent   
for this purpose. A similar consent is also required under the PacifiCorp       
articles before PacifiCorp may issue unsecured indebtedness in excess of the    
amount permitted by a formula set forth in the PacifiCorp articles. At the      
PacifiCorp annual meeting, holders of the PacifiCorp preferred stock will be    
asked to approve the merger and separately to consent to an increase in the     
unsecured debt limitation. In certain circumstances described below, PacifiCorp 
will make cash payments to holders of PacifiCorp preferred stock who vote "FOR" 
the merger or "FOR" the unsecured debt consent. See "Special Cash Payments"     
below.                                                                          

The consent of the holders of a majority of the total voting power of the 
PacifiCorp preferred stock, voting together as one class (the "Required         
Majority Preferred Vote"), is required for the unsecured debt consent to become 
effective. The three classes of PacifiCorp preferred stock are the only classes 
of securities entitled to vote with respect to the unsecured debt consent.      
There were approximately 3,275 holders of record of shares of PacifiCorp        
preferred stock as of April 30, 1999. To the knowledge of PacifiCorp, as of the 
PacifiCorp record date, there are no beneficial owners of more than five        
percent of the outstanding shares of any class of PacifiCorp preferred stock    
and none of PacifiCorp's directors or executive officers own any shares of      
PacifiCorp preferred stock.                                                     

Increase in Unsecured Debt Limit                                                

 General. PacifiCorp is seeking the consent of the holders of the PacifiCorp
preferred stock to increase the amount of unsecured indebtedness which          
PacifiCorp may issue from time-to-time under Article III, Section (18)(b) of    
the PacifiCorp articles. Under the PacifiCorp articles, PacifiCorp cannot,      
without the Required Majority Preferred Vote, issue unsecured notes, debentures 
or other securities representing unsecured indebtedness if immediately          
following such issuance the total principal amount of all unsecured notes,      
debentures or other securities representing unsecured indebtedness issued or    
assumed by PacifiCorp would exceed 30% of the aggregate of (a) the total        
principal amount of all outstanding secured indebtedness of PacifiCorp and (b)  
the capital and surplus of PacifiCorp as then stated on its books of account.   
The unsecured debt consent is not dependent upon the vote on any other matter   
presented at the PacifiCorp annual meeting.                                     

  Reasons for the Unsecured Debt Consent. PacifiCorp is seeking the consent of
the holders of the PacifiCorp preferred stock to issue up to $5 billion of      
unsecured indebtedness in addition to the amount permitted to be issued under   
the present unsecured debt limit. As of March 31, 1999, PacifiCorp had          
approximately $4.1 billion of indebtedness outstanding, of which approximately  
$1.2 billion was unsecured. Under the present limit, PacifiCorp could issue     
approximately $1.0 billion of additional unsecured indebtedness. In recent      
years, PacifiCorp has used subordinated and short-term unsecured debt to        
finance its utility operations in order to achieve certain capital structure    
and cost advantages over traditional sources of long-term capital, including    
first mortgage bonds and preferred stock.                                       

 As competition intensifies in the electric utility industry, as a result of
regulatory, legislative and market developments, flexibility and cost structure 
will be even more crucial to success in the future. Given that the electric     
industry is extremely capital intensive, controlling and optimizing financing   
costs are essential ingredients to operating effectively in the new competitive 
environment.                                                                    

PacifiCorp believes that the unsecured debt consent is key to meeting the 
objectives of flexibility and favorable cost structure. Historically,           
PacifiCorp's debt financing generally has been accomplished through the         
issuance of long-term first mortgage bonds. First mortgage bonds represent      
secured indebtedness because                                                    

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PacifiCorp's mortgage, under which its first mortgage bonds are issued, creates 
a first priority lien on substantially all of PacifiCorp's utility assets.      
PacifiCorp's mortgage contains certain covenants that restrict, among other     
things, the disposition of its assets and its ability to issue additional first 
mortgage bonds. PacifiCorp expects to continue to rely on first mortgage bond   
financings, but approval of the unsecured debt consent will provide PacifiCorp  
with greater flexibility in matching its financing requirements to prevailing   
capital market conditions. PacifiCorp has managed, and expects to continue to   
manage, its capital structure through policies intended to result in an "A"     
rating for its long-term secured debt.                                          

For the above reasons, the PacifiCorp Board of Directors believes the best
long-term interests of shareholders are served by, and encourages holders of    
PacifiCorp preferred stock to approve, the unsecured debt consent.              

  Certain Effects of the Unsecured Debt Consent. At present, PacifiCorp cannot
incur more than approximately $2.15 billion of unsecured indebtedness without   
the Required Majority Preferred Vote, but can incur secured indebtedness        
without that vote, subject to the restrictive covenants contained in            
PacifiCorp's mortgage. While PacifiCorp's debt instruments contain restrictions 
on the amount of indebtedness, both secured and unsecured, that may be          
incurred, these restrictions could be waived. Both secured and unsecured        
indebtedness rank prior to the position of the PacifiCorp preferred stock.      
Accordingly, to the extent the unsecured debt consent allows PacifiCorp to      
incur a greater amount of total indebtedness, and that indebtedness increases   
the credit risks of PacifiCorp, the market price and credit rating of the       
PacifiCorp preferred stock could decline.                                       

Rating Agencies. Moody's Investors Service and Standard & Poor's Ratings  
Services have been advised of the unsecured debt consent. The rating agencies   
have advised PacifiCorp that approval of the unsecured debt consent, in and of  
itself, will not result in a reduction of the current ratings of the PacifiCorp 
preferred stock. Ratings are not recommendations to purchase, hold or sell      
shares of the PacifiCorp preferred stock inasmuch as the ratings do not comment 
as to market price or suitability for a particular investor. The ratings are    
based on current information furnished to the rating agencies by PacifiCorp and 
obtained from other sources. The ratings may be changed, suspended or withdrawn 
as a result of changes in, or the unavailability of, such information.          

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Consent Procedures                                                              

Voting Securities. Record holders of the PacifiCorp preferred stock on the
PacifiCorp record date will vote together as one class with respect to the      
unsecured debt consent. The shares of PacifiCorp preferred stock outstanding on 
the PacifiCorp record date and the vote to which each share is entitled with    
respect to the consent are set forth in the following table:                    

                                                                [Download Table]

                                       Stated                                  
                             CUSIP    Value Per   Shares      Votes   Aggregate
      Series                Number      Share   Outstanding Per Share   Votes  
      ------              ----------- --------- ----------- --------- ---------
                                                                               
Serial Preferred Stock                                                         
  4.52% Series........... 695114-20-7   $100         2,065       1        2,065
  4.56% Series........... 695114-30-6   $100        84,592       1       84,592
  4.72% Series........... 695114-40-5   $100        69,890       1       69,890
  5.00% Series........... 695114-60-3   $100        41,970       1       41,970
  5.40% Series........... 695114-70-2   $100        65,960       1       65,960
  6.00% Series........... 695114-80-1   $100         5,932       1        5,932
  7.00% Series........... 695114-88-4   $100        18,060       1       18,060
No Par Serial Preferred                                                        
 Stock                                                                         
  $7.48 Series........... 695114-65-2   $100       750,000       1      750,000
  $7.70 Series........... 695114-67-8   $100     1,000,000       1    1,000,000
  $1.16 Series(1)........ 695114-73-6   $ 25       193,102     1/4       48,275
  $1.18 Series(1)........ 695114-74-4   $ 25       420,116     1/4      105,029
  $1.28 Series(1)........ 695114-75-1   $ 25       381,220     1/4       95,305
5% Preferred Stock....... 695114-50-4   $100       126,463       1      126,463
                                                                      ---------
Total Votes Entitled to                                                        
 be Cast.................                                             2,413,541
                                                                      =========

--------                                                                        
(1) Under the merger agreement, PacifiCorp is required to redeem these series   
prior to the merger.                                                    

Required Majority Preferred Vote.  The unsecured debt consent will become 
effective only if it is approved by a majority of the total voting power of the 
PacifiCorp preferred stock on the PacifiCorp record date. Failing to execute,   
date and return the proxy form for holders of PacifiCorp preferred stock will   
have the same effect as executing, dating and returning a proxy form marked     
"AGAINST" or "ABSTAIN" as to the consent. If no instructions are indicated on a 
properly executed proxy form, the relevant shares will be voted FOR the         
unsecured debt consent.                                                         

Revocation of Consents. Executed proxies may be revoked as described above
under "PacifiCorp Annual Meeting, Voting and Proxies--PacifiCorp Annual         
Meeting--Voting and Revocation of Proxies."                                     

Dissenters' Rights. No dissenters' rights are or will be available under  
Oregon law in connection with the unsecured debt consent.                       

Special Cash Payments                                                           

  If, but only if, the merger is approved at the PacifiCorp annual meeting and
all regulatory approvals for the merger required under the merger agreement     
have been obtained, PacifiCorp will make a special cash payment in the amount   
of $1.00 per share ($0.25 per share for $1.16, $1.18 and $1.28 series) to each  
holder of                                                                       
record of PacifiCorp preferred stock on the PacifiCorp record date that voted   
FOR the merger. These special cash payments will be paid out of PacifiCorp's    
general funds, promptly after receipt of the last regulatory approval for the   
merger but prior to the merger. However, no accrued interest will be paid on    
the special cash payments regardless of any delay in making payments.           

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In addition, if, but only if, the unsecured debt consent is approved,     
PacifiCorp will make a special cash payment in the amount of $1.00 per share    
($0.25 per share for $1.16, $1.18 and $1.28 series) to each holder of record of 
PacifiCorp preferred stock on the PacifiCorp record date that voted FOR the     
unsecured debt consent. These special cash payments will be made irrespective   
of the vote on any other matters presented at the PacifiCorp annual meeting. If 
the unsecured debt consent is approved, special cash payments will be paid out  
of PacifiCorp's general funds, promptly after the PacifiCorp annual meeting.    
However, no accrued interest will be paid on the special cash payments          
regardless of any delay in making payments. Special cash payments are estimated 
to be a maximum of $5 million. This amount will be expensed on the books of     
PacifiCorp when incurred.                                                       

  Only holders of PacifiCorp preferred stock on the PacifiCorp record date (or
their legal representatives or attorneys-in-fact) are entitled to receive       
special cash payments. Any beneficial owner of shares who is not the registered 
holder of such shares as of the PacifiCorp record date must arrange with the    
record holder to receive his or her proportionate interest in the special cash  
payments made to such record holder. PacifiCorp will have no responsibility or  
liability for any aspect of the records relating to, or payments made on        
account of, any beneficial owner's interest in the special cash payment made to 
a record holder of PacifiCorp preferred stock.                                  

United States Income Tax Considerations                                         

 Holders of PacifiCorp preferred stock should consult their own tax advisors
in light of their particular circumstances as to the application of United      
States income tax laws, as well as the effect of any state, local, or foreign   
tax laws, to the special cash payments.                                         

Special Cash Payments. PacifiCorp believes that the special cash payments 
are dividends for U.S. income tax purposes, and will treat such payments        
accordingly.                                                                    

  Backup Withholding and Information Reporting. The amount of the special cash
payment paid to a holder of PacifiCorp preferred stock will be reported to the  
holder and to the Internal Revenue Service in the same way all cash dividends   
are reported. Backup withholding at a rate of 31% will apply to any such        
payments made to holders for whom backup withholding applies with regards to    
the payment of regular cash dividends.                                          

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PROPOSAL FOR ELECTION OF DIRECTORS

  The persons named in the proxy form will vote your stock for the election of
two directors to serve in Class III of the PacifiCorp Board of Directors for    
terms expiring at the annual meeting in the year 2002 and until their           
successors are duly elected and qualified. If any of the nominees becomes       
unavailable for election for any reason (although none are currently known),    
the proxy holders will have discretionary authority to vote pursuant to the     
proxy form for a suitable substitute. Each nominee for director to serve in     
Class III is now serving on the PacifiCorp board. There are no family           
relationships among the directors and executive officers of PacifiCorp.         

Directors are elected by a simple majority of the votes cast by holders of
the shares entitled to vote at the PacifiCorp annual meeting if a quorum is     
present. Abstentions and broker non-votes are counted for purposes of           
determining whether a quorum exists at the meeting with respect to election of  
directors, but have no effect on the determination of whether a simple majority 
exists with respect to a given nominee.                                         

The PacifiCorp board is divided into three classes: Class I, Class II and 
Class III, each class as nearly equal in number as possible. The directors in   
each class hold office for three-year terms. The two current Class III          
directors, whose present terms expire in 1999, are being proposed for election  
at the PacifiCorp annual meeting for new three-year terms expiring in 2002. The 
tables that follow include information with respect to each director's business 
experience for the past five years. See "Security Ownership of Certain          
Beneficial Owners and Management" for information concerning share ownership of 
nominees and directors.                                                         

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The PacifiCorp board recommends a vote FOR the election of these nominees.

Nominees for Election at the PacifiCorp Annual Meeting

                                                                [Download Table]

                                                                       Director
Name, Age, Class, Principal Occupation and Other Directorships          Since  
---------------------------------------------------------------------- --------
                                                                               
Nancy Wilgenbusch, 51 (Class III, 2002)...............................   1986  
  President, Marylhurst University, Portland, Oregon, since 1984;              
  Director of Federal Reserve Bank of San Francisco, Portland Branch,          
  Cascade Corporation; PacifiCorp Group Holdings Company and Powercor          
  Australia Ltd.                                                               
Peter I. Wold, 51, (Class III, 2002)..................................   1995  
  Partner, Wold Oil & Gas Company, an oil and gas exploration and              
  production company, Casper, Wyoming, since 1981; Director of Federal         
  Reserve Bank of Kansas City, Denver Branch, and PacifiCorp Group             
  Holdings Company.                                                            

                         Directors Whose Terms Continue                        


                                                                       Director
Name, Age, Class, Principal Occupation and Other Directorships          Since  
---------------------------------------------------------------------- --------
                                                                               
W. Charles Armstrong, 54 (Class I, 2000)..............................   1996  
  Consultant, East Sound, Washington; formerly Chief Executive Officer         
  of Epitope, Inc., May-November 1997; Chief Executive Officer, Bank           
  of America Oregon, 1992-1996; Director of Epitope, Inc., Agritope,           
  Inc. and PacifiCorp Group Holdings Company                                   
C. Todd Conover, 59 (Class I, 2000)...................................   1991  
  Managing Director, Starmont Asset Management, LLC, San Francisco,            
  California since 1998 and President and Chief Executive Officer, The         
  Vantage Company, a business consulting firm, Los Altos, California,          
  since 1992; formerly General Manager, Finance Industry Group, Tandem         
  Computers Incorporated, 1994-1995; Director of Blount International,         
  Inc., Tracy Bankshares, Inc. and PacifiCorp Group Holdings Company.          
Nolan E. Karras, 54 (Class I, 2000)...................................   1993  
  President, The Karras Company, Inc., investment advisers, Roy, Utah,         
  since 1983; formerly Member of Utah House of Representatives, 1981-          
  1990; Speaker of the House, 1989-1990; Director of PacifiCorp Group          
  Holdings Company.                                                            
Kathryn Braun Lewis, 47 (Class II, 2001)..............................   1994  
  formerly President and Chief Operating Officer, Storage Division,            
  since 1997, and Executive Vice President, Western Digital                    
  Corporation, a computer equipment company, Irvine, California, 1978-         
  1998; Director of PacifiCorp Group Holdings Company and Artisoft,            
  Inc.                                                                         
Keith R. McKennon, 65 (Class I, 2000).................................   1990  
  Chairman of the PacifiCorp Board, since 1994, and President and              
  Chief Executive Officer, since 1998; formerly Chairman (1992-1994)           
  and Chief Executive Officer (1992-1993), Dow Corning Corporation,            
  Midland, Michigan; Chairman of the Board, PacifiCorp Group Holdings          
  Company.                                                                     
Robert G. Miller, 54 (Class II, 2001).................................   1994  
  Vice Chairman and Chief Executive Officer, since 1998, formerly              
  President and Chief Executive Officer, since 1997, and Chairman,             
  Fred Meyer, Inc., a retail merchandising company, Portland, Oregon,          
  since 1991; Director of PacifiCorp Group Holdings Company, SMG II            
  Holdings Corporation and Path Mark Stores, Inc.                              
Alan K. Simpson, 67 (Class II, 2001)..................................   1997  
  formerly U.S. Senator, 1976-1996; Director of PacifiCorp Group               
  Holdings Company, IDS Mutual Fund Group and Biogen Corporation.              
Verl R. Topham, 64 (Class II, 2001)...................................   1994  
  Senior Vice President and General Counsel of PacifiCorp since 1994;          
  formerly President, Utah Power & Light Company, 1990-1994; Director          
  of PacifiCorp Group Holdings Company and Powercor Australia, Ltd.            

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Director Compensation and Certain Transactions                                  

PacifiCorp's non-officer directors are compensated for their board service
by a combination of cash and PacifiCorp common stock under a non-employee       
directors' stock compensation plan that seeks to increase the community of      
interest between PacifiCorp's shareholders and its directors. Under this plan,  
non-employee directors of PacifiCorp are granted approximately $75,000 worth of 
PacifiCorp common stock every five years. Non-employee directors having fewer   
than five years of service remaining before reaching retirement age receive     
stock valued at approximately $15,000 for each remaining year. Stock granted    
under this plan vests over the five-year period following the grant or shorter  
period to retirement, and unvested shares are forfeited if the recipient ceases 
to be a director. The shares are purchased in the market with funds supplied by 
PacifiCorp, and the certificates are then held by PacifiCorp until the shares   
vest. During 1998, an aggregate of 13,894 shares previously granted under the   
plan vested.                                                                    

  PacifiCorp's non-officer directors receive the balance of their compensation
in cash. They are paid $16,000 per year plus $1,000 for each PacifiCorp board   
or committee meeting attended. Until his election as President and Chief        
Executive Officer in 1998, Mr. McKennon was paid annually with PacifiCorp       
common stock valued at $155,000 for his service as Chairman of the Board, plus  
his $15,000 per year participation in the non-employee directors' stock         
compensation plan. Members of the Executive Committee and chairs of the other   
committees of the PacifiCorp board are paid an additional $2,500 per year. Non- 
employee members of the regional boards are paid $9,000 per year plus $1,000    
for each board or subcommittee meeting attended. See "Regional Boards." In      
addition, members of the Utah Board who are former directors of Utah Power &    
Light Company, including Dr. Peterson, participate in a retirement plan under   
which they are eligible to receive benefits of $560 per month upon retirement   
at age 65 or older and certain death benefits.                                  

During 1998, Messrs. Conover and Karras received $11,000 and $12,000 in   
directors' fees, respectively, from PacifiCorp Group Holdings Company; Dr.      
Wilgenbusch received $7,500 in directors' fees from Powercor Australia Ltd.     

Don M. Wheeler, who retired as a PacifiCorp director on February 10, 1999,
was Chairman and Chief Executive Officer of Wheeler Machinery Company, a        
company engaged in sales and service of large earth-moving and grading          
equipment, engines and related machinery, until July 1996 when he became        
Chairman and Chief Executive Officer of ICM Equipment Company ("ICM"). ICM is a 
materials handling and rental services company serving industrial construction  
and mining markets in the intermountain area and a former division of Wheeler   
Machinery Company. Mr. Wheeler continued to serve as a director of Wheeler      
Machinery Company until his resignation in April 1998. In January 1998, the     
assets of ICM were sold to ICM Equipment Company L.L.C. Mr. Wheeler owns a      
significant interest in ICM Equipment Company and serves as its Chairman and    
Chief Executive Officer.                                                        

During 1998, PacifiCorp and its subsidiaries purchased equipment and      
services from Wheeler Machinery Company in the ordinary course of business for  
a total of approximately $757,904. Of this amount, $336,526 was purchased from  
ICM and $421,378 was purchased from Wheeler Machinery Company. Richard E.       
Wheeler, Mr. Wheeler's brother, is the owner of Wyoming Machinery Company.      
During 1998, PacifiCorp and its subsidiaries purchased equipment and services   
from Wyoming Machinery Company in the ordinary course of business for a total   
of approximately $9,012,874. PacifiCorp believes that the terms of these        
transactions were no less favorable to PacifiCorp than those available from     
other parties. Similar purchases have been made by PacifiCorp or its            
predecessors from these companies since 1951.                                   

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Board Committees                                                                

 The PacifiCorp Board of Directors is responsible for the overall affairs of
PacifiCorp. To assist in carrying out its responsibilities, the PacifiCorp      
board has delegated certain authority to several standing committees. The       
PacifiCorp board generally appoints members of committees at its annual meeting 
in May of each year. The membership of these committees as of April 30, 1999 is 
as follows:                                                                     

                                                                [Download Table]

     Executive               Audit              Committee on    
     Committee             Committee             Directors      
     ---------             ---------            ------------    
                                                                
Keith R. McKennon*    Nancy Wilgenbusch*    C. Todd Conover*    
C. Todd Conover       Nolan E. Karras       W. Charles Armstrong
Nolan E. Karras       Kathryn Braun Lewis   Alan K. Simpson     
Robert G. Miller      Alan K. Simpson       Peter I. Wold       
Nancy Wilgenbusch     Peter I. Wold                             


     Personnel              Finance               Pricing       
     Committee             Committee             Committee      
     ---------             ---------             ---------      
                                                                
Nolan E. Karras*      Robert G. Miller*     Keith R. McKennon   
W. Charles Armstrong  W. Charles Armstrong  Verl R. Topham      
Kathryn Braun Lewis   C. Todd Conover                           
Robert G. Miller      Keith R. McKennon                         
Nancy Wilgenbusch     Peter I. Wold                             

--------                                                                        
* Chair                                                                         

 The Executive Committee took action by consent on one occasion in 1998. The
committee has and may exercise all of the powers of the PacifiCorp board during 
the intervals between its meetings that may be lawfully delegated, subject to   
such limitations as may be provided by resolution of the PacifiCorp board.      

The Committee on Directors, which held four meetings in 1998, does the    
following:                                                                      

.  seeks and recommends specific candidates for directors;                  

.  reviews and recommends to the PacifiCorp board policies on the           
qualifications, tenure, compensation and retirement of directors; and 

.  monitors compliance by individual directors with the policies adopted by 
the PacifiCorp board.                                                 

Shareholders who wish to submit names to the Committee on Directors for         
consideration should do so in writing addressed to the Committee on Directors,  
c/o Corporate Secretary, PacifiCorp, 825 NE Multnomah, Portland, Oregon 97232.  

The Audit Committee, which held five meetings in 1998, does the following:

.  nominates the independent auditor of PacifiCorp for approval by the      
PacifiCorp board and shareholders;                                    

.  reviews the planned scope and results of the annual audit;               

.  confers with the independent auditor and reviews its recommendations     
with respect to accounting, internal controls and other matters;      

.  confers periodically with accounting officers of PacifiCorp;             

.  reviews assessments of risk within each organizational unit and          
important regulatory and accounting pronouncements;                   

.  meets with management and the internal auditors to review the scope and  
results of internal audit activity, as appropriate;                   

.  periodically reviews the adequacy of PacifiCorp's accounting and         
financial personnel resources; and                                    

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.  reports the results of its reviews and meetings to the PacifiCorp board. 

The Personnel Committee, which held six meetings in 1998, does the        
following:                                                                      

.  makes recommendations to the PacifiCorp board on executive compensation  
plans;                                                                

.  approves salaries for officers of PacifiCorp and significant             
compensation and benefit changes; and                                 

.  administers the Long-Term Incentive Plan, Supplemental Executive         
Retirement Plan, Compensation Reduction Plan, Stock Incentive Plan and
Executive Severance Plan.                                             

The Personnel Committee consists of five directors who are not current or       
former officers or employees of PacifiCorp or any of its subsidiaries. See      
"Personnel Committee Report on Executive Compensation" below.                   

The Finance Committee, to the extent authority is delegated to it by the  
PacifiCorp board with respect to each issuance of securities, approves the      
final terms of issuance. The committee, which held six meetings in 1998, also   
does the following:                                                             

.  consults with appropriate officers of PacifiCorp concerning requirements 
for capital, the condition of the capital markets and the most        
appropriate means of obtaining capital as needed from time to time;   

.  reviews the general terms of proposed financings when requested by the   
 Chairman of the Board, the President or any Vice President, and reports
thereon to the PacifiCorp board;                                      

.  reviews and approves PacifiCorp's interest, currency rate and other      
hedging arrangements; and                                             

.  oversees PacifiCorp's use of derivative products involving electricity   
and other commodities.                                                

The Pricing Committee, to the extent authority is delegated to it by the  
PacifiCorp board with respect to each issuance of securities, approves the      
final terms of issuance within parameters set by the PacifiCorp board. The      
Pricing Committee also authorizes redemption of PacifiCorp's debt and equity    
securities in accordance with their terms. The Pricing Committee did not meet   
during 1998, but approved one transaction by consent.                           

 The PacifiCorp board held seventeen meetings in 1998, and it took action by
written consent on one occasion. All board members attended at least 75% of the 
aggregate of the meetings of the PacifiCorp board and the committees of which   
they were members.                                                              

Regional Boards                                                                 

In February 1995, the PacifiCorp board established the Pacific Board, the 
Utah Board and the Wyoming Board, each of which has been requested to review    
the business and operations of PacifiCorp in a designated service territory,    
including policies and practices with respect to customer service and strategic 
planning. Membership of these boards includes persons who are not directors of  
PacifiCorp. In 1998, each of these boards held four meetings. The Australian    
Regional Board was organized during 1997 but has not yet held a meeting.        

                                                                [Download Table]

Pacific Board             Utah Board                Wyoming Board          
-------------             ----------                -------------          
                                                                           
John A. Bohling,* Chair   John A. Bohling,* Chair   John A. Bohling,* Chair
William B. Douglas*       Nolan E. Karras           Deborah Healy Hammons* 
Michael D. Naumes*        Chase N. Peterson*        John W. Hay III*       
Linda Shelk*              Peggy A. Stock*           Brent R. Kunz*         
Ethel Simon-McWilliams*   Verl R. Topham            Maggi Maier Murdock*   
Verl R. Topham                                      Verl R. Topham         
                                                    Peter I. Wold          

Australian Board                                                           
----------------                                                           
                                                                           
Megan Cornelius*                                                           
Grant Latta*                                                               

--------                                                                    
* Not a director of PacifiCorp                                              

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Security Ownership of Certain Beneficial Owners and Management                  

The following table sets forth certain information as of April 30, 1999   
regarding the beneficial ownership of PacifiCorp common stock by (1) each       
director or nominee for director of PacifiCorp, (2) each of the executive       
officers named in the Summary Compensation Table below and (3) all executive    
officers and directors of PacifiCorp as a group. As of April 30, 1999, each of  
the directors and executive officers identified below and all executive         
officers and directors of PacifiCorp as a group owned less than 0.3% of the     
PacifiCorp common stock outstanding. PacifiCorp knows of no person who          
beneficially owns more than 5% of any class of PacifiCorp's stock.              

                                                                [Download Table]

                                                     Number of Shares (1)
Beneficial Owner                                     ------------------- 
                                                                         
Directors and Nominees                                                   
  W. Charles Armstrong.............................          3,887       
  Kathryn Braun Lewis..............................          4,260       
  C. Todd Conover..................................         13,249       
  Nolan E. Karras..................................          9,119       
  Keith R. McKennon................................         46,804       
  Robert G. Miller.................................          4,286       
  Alan K. Simpson..................................          5,604       
  Verl R. Topham...................................         75,172       
  Nancy Wilgenbusch................................          9,943       
  Peter I. Wold....................................         11,567       
Nondirector Executive Officers                                           
  John A. Bohling..................................         56,706       
  Paul G. Lorenzini................................         31,202       
  Richard T. O'Brien...............................         55,095       
  Dennis P. Steinberg..............................         60,172       
All executive officers and directors as a group (23                      
 persons)..........................................        603,183       

--------                                                              
(1) Includes ownership of (a) shares held by family members even      
   though beneficial ownership of such shares may be disclaimed, (b)
  shares granted and subject to vesting as to which the individual
   has voting but not investment power under individual compensation
   arrangements or one or more of the stock-based compensation plans
   of PacifiCorp and (c) shares held for the account of such persons
pursuant to the Compensation Reduction Plan.                  

Personnel Committee Report on Executive Compensation                            

 The Personnel Committee of the PacifiCorp board, which is composed entirely
of independent, non-employee directors, is responsible for approving            
compensation levels for officers of PacifiCorp, administering executive         
compensation plans as authorized by the PacifiCorp board and recommending       
executive compensation plans and compensation of the Chief Executive Officer to 
the PacifiCorp board for approval. The committee is also responsible for        
approving incentive plans for all employees, salary structure and merit         
programs for senior management and changes in policy relating to employee       
benefits. The following report of the Personnel Committee describes the         
components of PacifiCorp's executive compensation program and the basis upon    
which 1998 compensation determinations were made.                               

Compensation Philosophy                                                       

PacifiCorp's philosophy is that executive compensation should be linked   
closely to corporate performance and increases in shareholder value.            
PacifiCorp's compensation program has the following objectives:                 

.  Provide competitive total compensation that enables PacifiCorp to        
attract and retain key executives.                                    

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.  Provide variable compensation opportunities that are linked to company   
and individual performance.                                           

.  Establish an appropriate balance between incentives focused on short-    
  term objectives and those encouraging sustained earnings performance and
increases in shareholder value.                                       

  Qualifying compensation for deductibility under IRC Section 162(m) is one of
the factors the committee considers in designing its incentive compensation     
arrangements. IRC Section 162(m) limits to $1,000,000 the annual deduction by a 
publicly held corporation of compensation paid to any executive, except with    
respect to certain forms of incentive compensation that qualify for exclusion.  
Although it is the committee's intent to design and administer compensation     
programs that maximize deductibility, the committee views the objectives        
outlined above as more important than compliance with the technical             
requirements necessary to exclude compensation from the deductibility limit of  
IRC Section 162(m). Nevertheless, the committee believes that nearly all        
compensation paid to the current executive officers for services rendered in    
1998 is fully deductible.                                                       

Compensation Program Components                                               

The Personnel Committee, assisted by its outside consultant, evaluates the
total compensation package of executives annually in relation to competitive    
pay levels. Given the increasingly competitive global environment in which      
PacifiCorp must operate and the competitive marketplace for executive talent    
required for future success, in 1996 PacifiCorp reevaluated its historical      
practice of using the electric utility industry as its primary market reference 
point. In 1997, the committee began using the general industry as the market    
reference base for long-term incentive purposes. The transition of base salary  
and annual incentives to the relevant industry was expected to be accomplished  
over a three-year time frame.                                                   

  In 1998, the committee continued the transition by focusing its market-based
comparisons on the relevant industry for each officer. The committee utilized   
the electric utility industry as its exclusive basis for market comparison for  
positions with a principal focus on electric operations. For positions with a   
corporate-wide focus, the committee began the transition toward general         
industry comparisons by using a weighting of approximately 67% general industry 
and 33% electric utility industry.                                              

Although most of the electric utility companies represented in the        
performance graph set forth below are part of PacifiCorp's comparison group,    
not all of these companies are considered PacifiCorp's competitors for          
executive talent. For officers with responsibilities outside the electric       
operations, relevant industry data were used for comparison. In all cases,      
compensation is targeted at market median levels, with a recognition that total 
compensation greater than market median requires, in any specific time period,  
that company performance exceed the median performance of peer companies.       

 PacifiCorp's executive compensation programs have three principal elements:
base salary, annual incentive compensation and long-term incentive              
compensation, as described below.                                               

Base Salaries                                                                 

Base salaries and target incentive amounts are reviewed for adjustment at 
least annually based upon competitive pay levels, individual performance and    
potential, and changes in duties and responsibilities. Base salary and the      
incentive target are set at a level such that total annual compensation for     
satisfactory performance would approximate the midpoint of pay levels in the    
comparison group used to develop competitive data. In 1998, the base salaries   
of executive officers were increased, based on market analysis, within a range  
of zero to 20% to reflect competitive market changes and changes in the         
responsibilities of some officers.                                              

Annual Incentives                                                             

All electric operations employees participated in an annual incentive plan
during 1998. Awards under the plan were to be earned based upon such factors as 
company earnings per share and business unit performance in relation to         
established objectives. The relative weights of the performance criteria varied 
among organizational units in accordance with the nature of their operations.   

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All corporate officers, including those listed in the Summary Compensation
Table, participated in the PacifiCorp executive incentive program. Performance  
goals included company earnings per share. All executive incentive program      
participants may have their incentive awards modified (in the range of zero to  
120%) by their individual performance, relative to established objectives, as   
evaluated by their immediate supervisor. The maximum allowable award from the   
executive incentive program for all participants is 150% of their guideline     
award. As PacifiCorp did not achieve the earnings per share target established  
for the year, neither the Chief Executive Officer nor the Chief Operating       
Officer received an award for 1998 performance. Other executive officers listed 
in the Summary Compensation Table received from 10% to about 32% of their       
guideline awards based upon achieving certain business unit performance         
objectives for the year. Other executive officers also received partial target  
incentive awards based upon achieving business unit performance objectives.     

Long-Term Incentives                                                          

The Personnel Committee approved grants of restricted stock and stock     
options in early 1998 under the Stock Incentive Plan. The committee considered  
such criteria as:                                                               

. total shareholder return relative to peer companies;                  

. earnings per share growth over time relative to peer companies;       

. achievement of long-term goals, strategies and plan; and              

. maintenance of competitive position.                                  

  Based on a subjective assessment of these criteria, PacifiCorp established a
pool of restricted stock equal to 100% of competitive award levels. The shares  
in the pool were allocated to participants based on individual performance. The 
committee also approved grants of stock options based upon competitive award    
levels and special stock option awards based on achievement of significant      
stock appreciation during 1997. The committee concluded that the use of stock   
options to reward performance contributing to the stock appreciation was        
appropriate and would result in long-term benefit to the recipients only if the 
stock price increased.                                                          

  Restricted stock awards under the Stock Incentive Plan are subject to terms,
conditions and restrictions as may be determined by the committee to be         
consistent with the plan and the best interests of the shareholders. The        
restrictions include stock transfer restrictions and forfeiture provisions      
designed to facilitate the participants' achievement of specified stock         
ownership goals. Participants are also required to invest their own personal    
resources in PacifiCorp common stock in order to meet the vesting requirements  
associated with these grants. The Summary Compensation Table below shows the    
grants of restricted stock made to the listed executive officers under the plan 
in 1998 and under the PacifiCorp Long-Term Incentive Plan for 1996 and 1997.    

  During 1998, the committee established a restricted stock program that would
govern future grants of restricted stock. This program includes objective       
performance criteria and involves a two-part process. The first part involves   
establishing a pool of shares by adjusting competitive award levels by a        
formula which includes a measure of three-year average total shareholder return 
performance relative to a peer group and a subjective assessment by the         
committee of performance relative to established strategic goals and            
objectives, other than shareholder return. Total shareholder return accounts    
for 75% of the formula and the remaining 25% will be subjectively determined.   
The peer group is comprised of the companies that make up the S & P Electrics   
Index. Once the size of the pool is established, restricted stock awards, if    
any, will be allocated considering individual performance.                      

  All stock options awarded to officers and senior management of PacifiCorp in
1998 are non-statutory, non-discounted options with a three-year vesting        
requirement and a ten-year term to exercise from the date of the grant. Grants  
of stock options in 1997 and 1998 to named executives are shown in the table    
below.                                                                          

In May 1998, the committee also approved a grant of non-statutory and non-
discounted stock options to all employees except officers and senior managers.  
Full-time employees received options for 100 shares while part-time employees   
were granted options for 75 shares. These grants become fully vested two years  
from the grant, and employees have ten years to exercise option shares.         

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Change-in-Control                                                             

In 1998, the Personnel Committee, with the assistance of outside          
consultants, reviewed the change-in-control provisions in all of PacifiCorp's   
compensation and benefit plans and found that the definition of change-in-      
control, as well as the provisions associated with the change-in-control,       
varied significantly from plan to plan. The committee recommended adoption of a 
common definition of change-in-control, which was approved by the PacifiCorp    
board. The PacifiCorp board also amended several plans to change the provisions 
relating to change-in-control. These amendments include changes to the annual   
and long-term incentive programs summarized below:                              

.  Executives would receive a payment of a bonus in an amount no less than  
 their target bonus award in the year of a qualifying change-in-control.

.  Stock options and restricted stock awards granted prior to 1999 would    
become fully vested upon a qualifying change-in-control.              

Amendments to the PacifiCorp executive severance plan and the supplemental      
executive retirement plan are described under "Executive Compensation" below.   

Compensation of the Chief Executive Officer                                   

  In February 1998, the PacifiCorp board approved a grant of 21,000 restricted
shares of PacifiCorp common stock to Mr. Buckman under the Stock Incentive Plan 
based upon a review of company performance during 1997. The PacifiCorp board    
also granted to Mr. Buckman, in February 1998, non-qualified stock options for  
276,000 shares of PacifiCorp common stock as part of its effort to provide      
motivation for future stock price appreciation. Additionally, the PacifiCorp    
board approved a special grant to Mr. Buckman of non-qualified stock options    
for 80,000 shares of PacifiCorp common stock to reward achievement of strategic 
initiatives during 1997 that resulted in added shareholder value, as reflected  
in increased total shareholder return. In May 1998, the PacifiCorp board        
approved a salary increase of 14.72% for Mr. Buckman.                           

On September 1, 1998, Mr. Buckman resigned as Chief Executive Officer and 
President after discussions with the PacifiCorp board about disappointing       
company performance. The committee approved severance pay and benefits as part  
of Mr. Buckman's separation package. The details of these arrangements are      
provided in the compensation tables that follow this report.                    

In September 1998, Mr. McKennon assumed Mr. Buckman's responsibilities as 
Chief Executive Officer and, later, President in addition to his role as        
Chairman of the Board. The Personnel Committee approved an employment agreement 
with Mr. McKennon that provided him with a base salary of $780,000 and set a    
target incentive award for 1998 of 20% of his prorated salary for 1998. No      
incentive award was earned by Mr. McKennon for 1998. Mr. McKennon's employment  
agreement supersedes and replaces his agreement for compensation as Chairman of 
the Board for so long as he remains Chief Executive Officer. Mr. McKennon's     
employment agreement provides for participation in the executive long-term      
incentive programs described above, although no restricted shares or stock      
options were granted to him in 1998.                                            

Mr. McKennon has waived participation in the executive severance plan and 
the supplemental executive retirement plan as part of his employment agreement. 
The Personnel Committee believes that Mr. McKennon's compensation pursuant to   
his employment agreement provides a competitive base salary based on market     
comparisons. However, as a result of Mr. McKennon's decision to waive           
participation in the executive severance and supplemental executive retirement  
plans, the committee believes that his total compensation is below PacifiCorp's 
goal of providing competitive total compensation.                               

PERSONNEL COMMITTEE 

Nolan E. Karras, Chair
W. Charles Armstrong
Kathryn Braun Lewis 
Robert G. Miller
Nancy Wilgenbusch 

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Comparison of Five Year Cumulative Total Return 
Among PacifiCorp, S&P 500 Index and the S&P Electrics Index 

 The following graph provides comparisons of the annual percentage change in
the cumulative total shareholder return on PacifiCorp common stock, with the    
cumulative total return of (a) the S&P 500 Index, and (b) the S&P Electrics     
Index. The comparisons assume that $100 was invested on December 31, 1993 in    
PacifiCorp common stock and in each of the foregoing indices and assumes the    
reinvestment of dividends.                                                      

COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN   

            1993         1994      1995     1996     1997     1998
---------------------------------------------------------------------------     
PACIFICORP       $100.00       100.15    123.32   125.95   175.81   142.45      
S&P 500          $100.00       101.36    139.31   171.21   228.26   293.36      
S&P ELECTRICS    $100.00        87.04    113.97   113.56   143.16   165.02      
---------------------------------------------------------------------------     

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Executive Compensation                                                          

The following table sets forth information concerning compensation for    
services in all capacities to PacifiCorp and its subsidiaries for fiscal years  
ended December 31, 1998, 1997 and 1996 of those persons who were the Chief      
Executive Officer of PacifiCorp during any portion of 1998 and the four other   
most highly compensated executive officers of PacifiCorp during 1998.           

Summary Compensation Table

                                                        [Enlarge/Download Table]

                              Annual Compensation(1)    Long-Term Compensation              
                             -------------------------- -----------------------             
                                                         Restricted  Securities  All Other  
  Name and Principal                                       Stock     Underlying Compensation
       Position         Year Salary($)(2)   Bonus($)(3) Awards($)(4) Options(#)    ($)(5)   
  ------------------    ---- ------------   ----------- ------------ ---------- ------------
                                                                                            
Keith R. McKennon...... 1998  $  363,349           --           (7)        --     $ 1,785   
 President and Chief                                                                        
  Executive Officer(6)                                                                      
Frederick W. Buckman... 1998  $1,474,602(9)       --     $ 509,250    356,000     $ 9,326   
 President and Chief    1997     635,004          --       469,848    165,000       9,022   
  Executive Officer(8)  1996     590,000     $486,750      498,419        --        8,350   
Richard T. O'Brien..... 1998  $  348,046          --     $ 194,000    111,000     $ 8,252   
 Executive Vice         1997     287,500          --       127,530     41,000       7,690   
 President and Chief    1996     215,627     $135,000      505,557        --        7,811   
 Operating Officer                                                                          
Dennis P. Steinberg.... 1998  $  317,502     $ 13,400    $ 169,750     86,000     $ 8,628   
 Senior Vice President  1997     280,002          --       145,429     41,000       8,010   
                        1996     220,008      132,000      469,292        --        7,817   
John A. Bohling........ 1998  $  307,500     $ 40,257    $ 121,250     66,000     $12,050   
 Senior Vice President  1997     285,000          --       145,429     41,000      10,092   
                        1996     240,000      144,000      169,292        --        7,846   
Verl R. Topham......... 1998  $  300,000     $ 31,500    $ 138,225     80,000     $ 9,404   
 Senior Vice President  1997     277,500          --       127,530     35,000       8,737   
  and General Counsel   1996     270,000      162,000      281,190        --        7,889   

--------                                                                        
(1) May include amounts deferred pursuant to the Compensation Reduction Plan,   
 under which key executives and directors may defer, until retirement or a
 preset future date, receipt of cash compensation to a stock account to be
  invested in PacifiCorp common stock or to a cash account on which interest
is paid at a rate equal to the Moody's Intermediate Corporate Bond Yield
for Aa rated Public Utility Bonds.                                      

(2) Base salary for named officers did not increase in 1996. 1997 increases in  
annual compensation include both increases in base salary and lump sum  
payments that were effective July 1, 1997. Allocations between a base   
salary increase and a lump sum payment differed among officers.         

(3) Please refer to the Personnel Committee Report on Executive Compensation    
for a description of PacifiCorp's annual executive incentive plans.     
 Incentive amounts are reported for the year in which the related services
were performed.                                                         

(4) Includes restricted stock grants made in (a) February 1998, 1997 and 1996   
 pursuant to the Long-Term Plan, (b) March 1996 as special recognition for
1995 performance and (c) August 1996 under the Stock Incentive Plan. In 
   general, restricted stock awards vest over a four-year period from the date
   of grant, subject to compliance with the stock ownership and other terms of
the grant. At December 31, 1998, the aggregate value of all restricted  
stock holdings, based on the market value of the shares at December 31, 
1998, without giving effect to the diminution of value attributed to the
restrictions on such stock, and the aggregate number of restricted share
 holdings of Messrs. O'Brien, Steinberg, Bohling and Topham were $717,974,
$679,387, $321,316 and $439,880 and 34,087, 32,255, 15,255 and 20,884,  
respectively. Mr. Buckman resigned on September 1, 1998 and, thereafter,
   his 51,963 shares of restricted stock became fully vested. These shares had
a market value of $1,043,417 as of October 23, 1998. Regular quarterly  
  dividends are paid on the restricted stock. Participants may defer receipt
 of restricted stock awards to their stock accounts under the Compensation
Reduction Plan.                                                         

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(5) Amounts shown for 1998 include (a) contributions of $8,000 to the           
PacifiCorp K Plus Employee Savings and Stock Ownership Plan for each of 
   Messrs. Buckman, O'Brien, Steinberg, Bohling and Topham and (b) portions of
  premiums on term life insurance policies which PacifiCorp paid for Messrs.
   McKennon, Buckman, O'Brien, Steinberg, Bohling and Topham in the amounts of
   $1,785, $1,326, $252, $628, $4,050 and $1,404, respectively. These benefits
are available to all employees.                                         

(6) Mr. McKennon became President and Chief Executive Officer after Mr.         
 Buckman's resignation in September 1998. The amount listed under "Salary"
  for Mr. McKennon includes $109,538 paid in PacifiCorp common stock for his
service as Chairman of the PacifiCorp board prior to his election as    
President and Chief Executive Officer, and $18,159 paid in PacifiCorp   
common stock as a result of his participation in the non-employee       
directors' stock compensation plan through September 1, 1998.           

(7) Mr. McKennon was compensated as Chairman of the Board in restricted shares  
 of PacifiCorp common stock. In September 1998, when Mr. McKennon accepted
the position of Chief Executive Officer, his unvested restricted stock  
granted under the non-employee directors' stock compensation plan was   
forfeited.                                                              

(8) Mr. Buckman resigned as President and Chief Executive Officer on September  
1, 1998.                                                                

(9) Includes $939,600 of severance compensation. Mr. Buckman's restricted stock 
awards vested as a consequence of his employment separation. He will    
 receive additional cash severance payments in 1999 and 2000 of $1,098,000
and $1,000,000, respectively.                                           

Option Grants in Last Fiscal Year 

                                                        [Enlarge/Download Table]

                                                                        Potential Realizable Value at 
                                                                        Assumed Annual Rates of Stock 
                                                                           Price Appreciation for     
                                       Individual Grants                         Option Term          
                         ---------------------------------------------- ------------------------------
                         Number of   % of Total                                                       
                         Securities   Options                                                         
                         Underlying  Granted to  Exercise or                                          
                           Options  Employees in Base Price  Expiration                               
          Name           Granted(1) Fiscal Year    ($/Sh)       Date        5% ($)        10% ($)     
          ----           ---------- ------------ ----------- ---------- -------------- ---------------
                                                                                                      
Frederick W.                                                                                          
 Buckman(2).............  356,000      10.26%      $24.00     2/10/08              N/A            N/A 
Keith R. McKennon.......      --          --          --          --               --             --  
Richard T. O'Brien......  111,000       3.20%      $24.00     2/10/08       $1,675,375     $4,245,730 
Dennis P. Steinberg.....   86,000       2.48%      $24.00     2/10/08       $1,298,039     $3,289,484 
John A. Bohling.........   66,000       1.90%      $24.00     2/10/08         $996,169     $2,524,488 
Verl R. Topham..........   80,000       2.31%      $24.00     2/10/08       $1,207,478     $3,059,986 

--------                                                                        

(1) All options become exercisable for one-third of the shares covered by the   
option on each of the first three anniversaries of the grant date. The  
  grant date for each option shown in the table above was February 10, 1998.
  All options become fully exercisable upon a qualifying "change in control"
of PacifiCorp or an "employer disposition," each as defined in the      
 applicable option agreement. A "change in control" generally includes (a)
   the acquisition by any person of 20% or more of PacifiCorp common stock and
  (b) the election of a new majority of PacifiCorp's directors. An "employer
 disposition" generally includes a disposition by PacifiCorp of all of its
equity ownership in the optionee's employer.                            

(2) Mr. Buckman forfeited all of the options granted on February 10, 1998 upon  
his resignation.                                                        

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Aggregated Option Exercises in Last Fiscal Year 
and FY-End Option Values

                                                        [Enlarge/Download Table]

                                                 Number of                               
                                                 Securities      Value of                
                                                 Underlying     Unexercised              
                                                Unexercised    In-the-Money              
                                                  Options       Options at               
                           Shares              at FY-End (#)    FY-End ($)               
                         Acquired on   Value   -------------- ---------------            
                          Exercise   Realized   Exercisable/   Exercisable/              
                             (#)        ($)    Unexercisable   Unexercisable             
          Name           ----------- --------- -------------- --------------- --- --- ---
                                                                                         
Frederick W.                                                                             
 Buckman(1).............   55,000    19,421.58            --              --             
Keith R. McKennon.......      --           --             --              --             
Richard T. O'Brien......      --           --  13,667/152,000 $17,945/$53,833            
Dennis P. Steinberg.....      --           --  13,667/127,000 $17,945/$53,833            
John A. Bohling.........      --           --  13,667/107,000 $17,945/$53,833            
Verl R. Topham..........      --           --  11,667/115,000 $15,319/$45,955            

--------                                                                        

(1) Mr. Buckman forfeited all unvested options upon his resignation.            

Severance Arrangements                                                          

The Severance Plan provides severance benefits to certain executive level 
employees who are designated by the Personnel Committee, in its sole            
discretion, including the executive officers named in the Summary Compensation  
Table, other than Mr. McKennon. To qualify for severance benefits, the          
executive must have terminated employment for one of the following reasons:     

(1) voluntary termination as a result of a material alteration in the       
   executive's assignment that has a detrimental impact on the executive's
 employment. A "material alteration in assignment" includes any of the
following:                                                          

(a)a material reduction in the scope of the executive's duties and      
responsibilities;                                                       

(b)a material reduction in the executive's authority; or                

(c)any reduction in base pay or a reduction in annualized base salary   
and target bonus of at least 15%, if the change is not due to a general 
reduction unrelated to the change in assignment; or                     

(2)involuntary termination (including a company-initiated resignation) for  
reasons other than for cause.                                               

 In addition, the Severance Plan provides enhanced severance benefits in the
event of certain terminations during the 24-month period following a qualifying 
change-in-control transaction, including the consummation of the proposed       
merger with ScottishPower described elsewhere in this proxy                     
statement/prospectus. Executives designated by the Personnel Committee are      
eligible for change-in-control benefits resulting from either a PacifiCorp-     
initiated termination without "cause", or a resignation within two months after 
a "material alteration of position". During the 24-month protection period      
under the Severance Plan, "cause" means the executive's gross misconduct or     
gross negligence or conduct which indicates a reckless disregard for the        
consequences and has a material adverse effect on PacifiCorp or its affiliates, 
and "material alteration in position" means the occurrence of any of the        
following:                                                                      

(1)a change in reporting relationship to a lower level;                     

(2)a material reduction in the scope of duties and responsibilities;        

(3)a material reduction in authority;                                       

(4)a "material reduction in compensation"; or                               

(5) relocation of executive's work location to an office more than 100      
miles from the executive's office or more than 60 miles from the    
executive's home.                                                   

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A "material reduction in compensation" occurs when an executive's annualized    
base salary is reduced by any amount or the annualized base salary and target   
bonus opportunity combined is reduced by at least 15 percent of the combined    
total opportunity before the change in compensation. In addition, for the Chief 
Operating Officer, the Severance Plan has a "walkaway" right under which he     
would be eligible for benefits if he resigns for any reason effective no        
earlier than 12 months and no later than 14 months after the proposed merger    
with ScottishPower becomes effective.                                           

  If qualified, an executive would receive severance pay in an amount equal to
either two, two and one-half or three times the "annual cash compensation" of   
such executive, depending on the level set by the Personnel Committee. "Annual  
cash compensation" is defined as annualized base salary, target annual          
incentive opportunity and annualized auto allowance in effect on a material     
alteration or termination, whichever is greater. If the payment would result in 
imposition of an excise tax under IRC Section 4999, PacifiCorp is required to   
make an additional payment to compensate the executive for the effect of such   
excise tax. The executive would also receive continuation of subsidized health  
insurance from six to 24 months depending on length of service, and a minimum   
of 12 months' executive-level outplacement services.                            

Other than in connection with a change-in-control, the definition of cause
is determined by PacifiCorp in its discretion and by the Personnel Committee in 
the event of an appeal by the employee. The Severance Plan does not apply to    
the termination of an executive for reasons of normal retirement, death or      
total disability or to a termination for cause or for voluntary termination     
other than as specified above. Other than in connection with a change-in-       
control, executives named in the Summary Compensation Table (other than Mr.     
McKennon) are eligible for a severance payment equal to twice the executive's   
total cash compensation, three months of health insurance benefits and          
outplacement benefits. Total cash compensation is defined as the annualized     
base salary, target annual incentive opportunity and the annualized auto        
allowance in effect on the earlier of a material alteration or termination.     

During 1998, the Personnel Committee negotiated additional severance      
benefits for Mr. Buckman, the details of which are set forth in the Summary     
Compensation Table.                                                             

Retirement Plans                                                                

  PacifiCorp and most of its subsidiaries have adopted noncontributory defined
benefit retirement plans for their employees, other than employees subject to   
collective bargaining agreements that do not provide for coverage. Certain      
executive officers, including the executive officers named in the Summary       
Compensation Table (other than Mr. McKennon), are also eligible to participate  
in PacifiCorp's non-qualified supplemental executive retirement plan. The       
following description assumes participation in both the retirement plans and    
the supplemental plan. Participants receive benefits at retirement payable for  
life based on length of service with PacifiCorp or its subsidiaries and average 
pay in the 60 consecutive months of highest pay out of the last 120 months, and 
pay for this purpose would include salary and bonuses as reflected in the       
Summary Compensation Table above. Benefits are based on 50% of final average    
pay plus up to an additional 15% of final average pay depending upon whether    
PacifiCorp meets certain performance goals set for each calendar year by the    
Personnel Committee. Participants may also elect actuarially equivalent         
alternative forms of benefits. Retirement benefits are reduced to reflect       
Social Security benefits as well as certain prior employer retirement benefits. 
Participants are entitled to receive full benefits upon retirement after age 60 
with at least 15 years of service. Participants are also entitled to receive    
reduced benefits upon early retirement after age 55 or after age 50 with at     
least 15 years of service.                                                      

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 The supplemental plan provides executives "involuntarily terminated" during
the 24 months following the proposed ScottishPower merger, or who resign for    
any reason effective no earlier than 12 months and no later than 14 months      
after the merger, with enhanced supplemental retirement benefits. For purposes  
of the plan, a termination of employment is "involuntary" if the participant is 
discharged for reasons other than cause or resigns under certain circumstances  
following a change-in-control. A resignation is treated as an involuntary       
termination when any of the following occur:                                    

(1)the executive's annualized base salary or target bonus opportunity is    
decreased;                                                                  

(2) the executive is reassigned to a position in an office located more     
than 100 miles from the executive's then-current office or 60 miles 
from the executive's residence, whichever is greater;               

(3) the executive's reporting level in PacifiCorp is changed and is lower   
after the change than it was before;                                

(4)there is a material reduction in the scope of the executive's duties or  
responsibilities; or                                                        

(5)there is a material reduction in the executive's authority.              

  See "The Merger--Interests of PacifiCorp's Officers and Directors--Effect of
Change in Control on Compensation and Benefits" for additional information with 
respect to the retirement of Mr. Topham.                                        

The following table shows the estimated annual retirement benefit payable 
upon retirement at age 60 as of January 1, 1999. Amounts in the table reflect   
payments from the retirement plans and the supplemental plan combined.          

Estimated Annual Pension at Retirement(1) 

             Years of Service(2)

                                                                [Download Table]

 Annual Pay at                                         
Retirement Date     5         15        25        30   
---------------  --------  --------  --------  --------
                                                       
   $ 200,000     $ 43,333  $130,000  $130,000  $130,000
     400,000       86,667   260,000   260,000   260,000
     600,000      130,000   390,000   390,000   390,000
     800,000      173,333   520,000   520,000   520,000
   1,000,000      216,667   650,000   650,000   650,000

--------                                                                        
(1) The benefits shown in this table assume that the individual will remain in  
the employ of PacifiCorp until retirement at age 60, that the plans will
   continue in their present form and that PacifiCorp achieves its performance
goals under the supplemental plan in all years. Amounts shown do not    
reflect the Social Security offset.                                     
(2) The number of credited years of service used to compute benefits under the  
plans for Messrs. Buckman, O'Brien, Steinberg, Bohling and Topham are 4,
15, 20, 34 and 26, respectively. Mr. Buckman was not vested in any      
 retirement benefits at the time of separation of employment. Mr. McKennon
is not a participant in this plan.                                      

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PROPOSAL FOR
APPOINTMENT OF INDEPENDENT AUDITOR

 The PacifiCorp Board of Directors, on recommendation of the Audit Committee
and subject to ratification by shareholders, has appointed Deloitte & Touche    
LLP to perform an examination of the consolidated financial statements of       
PacifiCorp and its subsidiaries for the year 1999 and to render its opinion     
thereon.                                                                        

Deloitte & Touche LLP is an international accounting firm with substantial
experience in public utility accounting matters, an accounting area subject to  
detailed regulation at both the national and state levels. The firm has acted   
as independent auditor for PacifiCorp since 1933 and has competent,             
professionally qualified personnel who are familiar with the history and        
operations of PacifiCorp. Deloitte & Touche LLP follows the established         
guidelines for periodic rotation of audit personnel for companies that are      
reporting companies under the Securities and Exchange Act of 1934, as amended.  
The purpose of this planned rotation is to periodically introduce a fresh view  
of the client's operations without losing the benefits of continuity. The       
PacifiCorp board believes that the firm is well qualified to serve as           
PacifiCorp's independent auditor for 1999.                                      

Representatives of the firm are expected to be present at the PacifiCorp  
annual meeting with an opportunity to make a statement if they desire to do so  
and to be available to respond to appropriate questions.                        

The PacifiCorp board recommends a vote FOR this proposal.                 

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SECTION 16(a) 
BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires PacifiCorp's
executive officers and directors, and persons who own more than 10% of the      
PacifiCorp common stock outstanding, to file reports of ownership and changes   
in ownership with the Securities and Exchange Commission and the New York Stock 
Exchange. Based solely on reports and other information submitted by executive  
officers and directors, PacifiCorp believes that during the year ended December 
31, 1998, each of its executive officers, directors and persons who own more    
than 10% of the PacifiCorp common stock outstanding filed all reports required  
by Section 16(a).                                                               

ANNUAL REPORT 

  PacifiCorp's annual report on Form 10-K for the year 1998 is being mailed to
shareholders with this proxy statement/prospectus.                              

OTHER MATTERS 

Shareholder Proposals to be Included in PacifiCorp's Proxy Statement. A   
shareholder proposal to be considered for inclusion in proxy material for       
PacifiCorp's 2000 annual meeting must be received by PacifiCorp not later than  
December 1, 1999.                                                               

Shareholder Proposals Not in PacifiCorp's Proxy Statement. Shareholders   
wishing to present proposals for action at the PacifiCorp special meeting or at 
another shareholders' meeting must do so in accordance with PacifiCorp's        
bylaws. A shareholder must give timely notice of the proposed business to the   
Secretary of PacifiCorp. For annual meetings, notice must be received not less  
than 45 days nor more than 75 days prior to the date in the current year        
corresponding to the day and month of mailing of PacifiCorp's proxy statement   
for the prior year's annual meeting. For other meetings, such notice must be    
given not less than 90 days nor more than 120 days prior to the date of the     
meeting; provided, however, that in the event that less than 100 days' notice   
or prior public disclosure of the date of such meeting is given or made, notice 
by the shareholder to be timely must be received no later than the close of     
business on the 10th day following the day on which such notice of the date of  
such other meeting was mailed or such public disclosure was made. For each      
matter the shareholder proposes to bring before the meeting, the notice to the  
Secretary must include the following:                                           

(1) a brief description of the business desired to be brought before the    
meeting and the reasons for conducting such business at the meeting;

(2) the name and address of the shareholder proposing such business;        

(3) the class and number of shares of PacifiCorp which are beneficially     
owned by the shareholder; and                                       

(4) any material interest of the shareholder in such business.              

 If the shareholder is not a shareholder of record at the time of giving the
notice, the notice must be accompanied by appropriate documentation of the      
shareholder's claim of beneficial ownership. The officer presiding at the       
meeting may, if in the officer's opinion the facts warrant, determine that      
business was not properly brought before the meeting in accordance with         
PacifiCorp's bylaws. If such officer does so, such officer shall so declare to  
the meeting and any such business not properly brought before the meeting shall 
not be transacted.                                                              

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Shareholder Nominations for Directors. Shareholders wishing to directly   
nominate candidates for election to the PacifiCorp board must do so in          
accordance with PacifiCorp's bylaws by giving timely notice in writing to the   
Secretary as described above. The notice must set forth the following:          

(1) as to each person whom the shareholder proposes to nominate:            

(a) all information relating to such person that is required to be      
 disclosed in proxy solicitations pursuant to Regulation 14A under
the Exchange Act; and                                           

(b) the written consent of such person to be named in the proxy         
 statement as a nominee and to serve as a director if elected; and

(2) as to the shareholder giving the notice:                                

(a) the name and address of such shareholder; and                       

(b) the class and number of shares of PacifiCorp which are beneficially 
owned by such shareholder.                                      

 If the shareholder is not a shareholder of record at the time of giving the
notice, the notice must be accompanied by appropriate documentation of the      
shareholder's claim of beneficial ownership. No person shall be eligible to     
serve as a director of PacifiCorp unless nominated in accordance with the       
procedures set forth in PacifiCorp's bylaws. The officer presiding at the       
meeting may, if in the officer's opinion the facts warrant, determine that a    
nomination was not made in accordance with the procedures prescribed by         
PacifiCorp's bylaws. If such officer does so, such officer shall so declare to  
the meeting and the defective nomination shall be disregarded.                  

  Other Business. While the notice of PacifiCorp's annual meeting provides for
the transaction of such other business as may properly come before the meeting, 
the PacifiCorp board has no knowledge of any other matters to be presented at   
the meeting. If any other business should properly come before the meeting, the 
shares represented by the proxies solicited hereby may be discretionarily voted 
on such business in accordance with the judgment of the persons named in the    
proxy form to the extent allowed by the rules of the SEC, unless otherwise      
indicated on the proxy form.                                                    

Whether or not you expect to be present at the meeting, please sign the   
accompanying form of proxy and return it promptly in the enclosed stamped       
return envelope.                                                                

UK LISTING PARTICULARS AND CIRCULAR 

  A copy of a document comprising the U.K. listing particulars relating to New
ScottishPower in accordance with the Listing Rules will be delivered to the     
Registrar of Companies in Scotland for registration and will be available for   
inspection at the offices of Freshfields, 65 Fleet Street, London EC4Y 1HS,     
England, until the date on which the merger becomes effective. Summary listing  
particulars are attached as Annex F to this proxy statement/prospectus. Neither 
the listing particulars nor the documents listed in the summary listing         
particulars as available for inspection form part of, or are incorporated into, 
this proxy statement/prospectus, except to the extent specifically provided in  
this proxy statement/prospectus. In addition, ScottishPower is convening the    
ScottishPower Extraordinary General Meeting, and distributing to its            
shareholders a circular relating to the merger, a copy of which will also be    
available for inspection at the offices of Freshfields at the above address     
until the date on which the merger becomes effective and at the ScottishPower   
Extraordinary General Meeting. The contents of the circular do not form part    
of, nor are they incorporated into, this proxy statement/prospectus.            

LEGAL MATTERS 

 The legality of the ordinary shares to be issued under the merger agreement
is being passed upon for ScottishPower by Shepherd & Wedderburn WS. Certain tax 
matters in connection with the merger are being passed upon for ScottishPower   
by Milbank, Tweed, Hadley & McCloy LLP, and for PacifiCorp by Stoel Rives LLP   
and LeBoeuf, Lamb, Greene & MacRae, LLP.                                        

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EXPERTS 

The consolidated financial statements incorporated in this proxy          
statement/prospectus by reference from PacifiCorp's Annual Report on Form 10-K  
for the year ended December 31, 1998 and the consolidated financial statements  
from which the Selected Historical Financial Information of PacifiCorp included 
in this proxy statement/prospectus have been derived, have been audited by      
Deloitte & Touche LLP, independent auditors, as stated in their reports, which  
are incorporated herein by reference, and have been so incorporated in reliance 
upon the reports of such firm given upon their authority as experts in          
accounting and auditing.                                                        

With respect to the unaudited interim financial information which is      
incorporated into this proxy statement/prospectus by reference, Deloitte &      
Touche LLP have applied limited procedures in accordance with professional      
standards for a review of such information. However, as stated in their reports 
included in the PacifiCorp's Quarterly Reports on Form 10-Q and incorporated by 
reference into this proxy statement/prospectus, they did not audit and they do  
not express an opinion on that interim financial information. Accordingly, the  
degree of reliance on their reports on the information should be restricted in  
light of the limited nature of the review procedures applied. Deloitte & Touche 
LLP are not subject to the liability provisions of Section 11 of the Securities 
Act for their reports on the unaudited interim financial information because    
those reports are not "reports" or a "part" of the registration statement       
prepared or certified by an accountant within the meaning of Sections 7 and 11  
of the Securities Act.                                                          

 The consolidated financial statements of ScottishPower as of March 31, 1998
and 1997 and for each of the three years in the period ended March 31, 1998     
included or incorporated by reference in this proxy statement/prospectus have   
been audited by Coopers & Lybrand Chartered Accountants and Registered Auditors 
("C&L"), independent auditors, as stated in their reports appearing or          
incorporated into this proxy statement/prospectus and elsewhere in this         
registration statement, and have been so included in reliance upon the reports  
of such firm given upon their authority as experts in accounting and auditing.  

Following the merger in the U.K. of C&L and Price Waterhouse, which was   
completed on July 1, 1998, the resulting partnership is conducting business     
under the name of PricewaterhouseCoopers. References in this document to C&L    
are in respect of the roles, opinions given, procedures undertaken and other    
matters arising prior to July 1, 1998 and in their capacity as auditors of      
ScottishPower, before October 2, 1998, the date on which PricewaterhouseCoopers 
were appointed auditors and references to PricewaterhouseCoopers are in respect 
of roles, opinions given, procedures undertaken and other matters arising in    
their capacity as auditors of ScottishPower on or after their appointment as    
auditors on October 2, 1998 and in any other respect on or after July 1, 1998.  

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                                                                         ANNEX A

                                                                  Execution Copy

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

AGREEMENT AND PLAN OF MERGER

dated as of December 6, 1998

by and among

SCOTTISH POWER PLC, 

NA GENERAL PARTNERSHIP, 

and 

PACIFICORP

December 6, 1998

--------------------------------------------------------------------------------
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TABLE OF CONTENTS 

This Table of Contents is not part of the Agreement to
which it is attached but is inserted for convenience only.

                                                                [Download Table]

                                                                           Page
                                                                           No. 
                                                                           ----
                                                                               
ARTICLE I THE MERGER......................................................   1 
  1.01 The Merger.........................................................   1 
  1.02 Closing............................................................   2 
  1.03 Effective Time.....................................................   2 
  1.04 Governing Instrument...............................................   2 
  1.05 Directors and Officers of the Surviving Corporation................   2 
  1.06 Effects of the Merger..............................................   2 
  1.07 Further Assurances.................................................   2 
ARTICLE II CONVERSION OF SHARES...........................................   2 
  2.01 Conversion of Capital Stock........................................   2 
  2.02 Procedure for Election.............................................   4 
  2.03 Exchange of Certificates...........................................   5 
  2.04 Withholding Rights.................................................   7 
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................   7 
  3.01 Organization and Qualification.....................................   7 
  3.02 Capital Stock......................................................   8 
  3.03 Authority Relative to this Agreement...............................   9 
  3.04 Non-Contravention; Approvals and Consents..........................  10 
  3.05 SEC Reports, Financial Statements and Utility Reports..............  11 
  3.06 Absence of Certain Changes or Events...............................  11 
  3.07 Absence of Undisclosed Liabilities.................................  12 
  3.08 Legal Proceedings..................................................  12 
  3.09 Information Supplied...............................................  12 
  3.10 Permits; Compliance with Laws and Orders...........................  13 
  3.11 Compliance with Agreements.........................................  13 
  3.12 Taxes..............................................................  13 
  3.13 Employee Benefit Plans; ERISA......................................  14 
  3.14 Labor Matters......................................................  16 
  3.15 Environmental Matters..............................................  16 
  3.16 Intellectual Property Rights.......................................  18 
  3.17 Regulation as a Utility............................................  18 
  3.18 Insurance..........................................................  18 
  3.19 Vote Required......................................................  19 
  3.20 Opinion of Financial Advisor.......................................  19 
  3.21 Ownership of Parent Common Stock...................................  19 
  3.22 Article VII of the Company's Articles of Incorporation and Sections     
      60.825-60.845 of the BCA Not Applicable.............................  19 
  3.23 Certain Contracts..................................................  19 
  3.24 Year 2000..........................................................  19 
  3.25 Joint Venture Representations......................................  19 
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PARTNERSHIP...  20 
  4.01 Organization and Qualification.....................................  20 
  4.02 Capital Stock......................................................  20 
  4.03 Authority Relative to this Agreement...............................  21 

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                                                                [Download Table]

                                                                            Page
                                                                            No. 
                                                                            ----
                                                                                
  4.04 Non-Contravention; Approvals and Consents...........................  22 
  4.05 SEC Reports and Financial Statements................................  23 
  4.06 Absence of Certain Changes or Events................................  23 
  4.07 Absence of Undisclosed Liabilities..................................  23 
  4.08 Legal Proceedings...................................................  24 
  4.09 Information Supplied................................................  24 
  4.10 Permits; Compliance with Laws and Orders............................  24 
  4.11 Compliance with Agreements..........................................  25 
  4.12 Taxes...............................................................  25 
  4.13 Parent Employee Benefit Plans.......................................  26 
  4.14 Labor Matters.......................................................  27 
  4.15 Environmental Matters...............................................  27 
  4.16 Intellectual Property Rights........................................  28 
  4.17 Vote Required.......................................................  29 
  4.18 Opinion of Financial Advisor........................................  29 
  4.19 Ownership of Company Common Stock...................................  29 
  4.20 Insurance...........................................................  29 
  4.21 Year 2000...........................................................  29 
  4.22 Joint Venture Representations.......................................  29 
ARTICLE V COVENANTS........................................................  30 
  5.01 Covenants of the Company............................................  30 
  5.02 Covenants of Parent.................................................  33 
  5.03 Joint Executive Committee...........................................  36 
  5.04 Tax Matters.........................................................  36 
  5.05 Discharge of Liabilities............................................  36 
  5.06 Contracts...........................................................  36 
  5.07 No Solicitations....................................................  37 
  5.08 Conduct of Business of Merger Sub...................................  37 
  5.09 Third Party Standstill Agreements...................................  38 
  5.10 Control of Other Party's Business...................................  38 
ARTICLE VI ADDITIONAL AGREEMENTS...........................................  38 
  6.01 Access to Information...............................................  38 
  6.02 Preparation of Registration Statement and Proxy Statement...........  38 
  6.03 Approval of Shareholders............................................  39 
  6.04 Company Affiliates..................................................  40 
  6.05 Auditors' Letters...................................................  40 
  6.06 Stock Exchange Listing; Deposit Agreement...........................  40 
  6.07 Restructuring of Merger.............................................  41 
  6.08 Regulatory and Other Approvals......................................  41 
  6.09 Employee Benefit Plans..............................................  41 
  6.10 Company Stock Plan..................................................  42 
  6.11 Directors' and Officers' Indemnification and Insurance..............  43 
  6.12 Parent Governance; Additional Matters...............................  43 
  6.13 Expenses............................................................  43 
  6.14 Brokers or Finders..................................................  44 
  6.15 Takeover Statutes...................................................  44 
  6.16 Conveyance Taxes....................................................  44 
  6.17 Rate Matters........................................................  44 
  6.18 Tax Matters.........................................................  44 
  6.19 Dividends...........................................................  45 

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ARTICLE VII CONDITIONS....................................................  45 
  7.01 Conditions to Each Party's Obligation to Effect the Merger.........  45 
  7.02 Conditions to Obligation of Parent and the Merger Sub to Effect the     
      Merger..............................................................  47 
  7.03 Conditions to Obligation of the Company to Effect the Merger.......  48 
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER............................  49 
  8.01 Termination........................................................  49 
  8.02 Effect of Termination..............................................  50 
  8.03 Amendment..........................................................  51 
  8.04 Waiver.............................................................  51 
ARTICLE IX GENERAL PROVISIONS.............................................  52 
  9.01 Non-Survival of Representations, Warranties, Covenants and              
      Agreements..........................................................  52 
  9.02 Notices............................................................  52 
  9.03 Entire Agreement; Incorporation of Exhibits........................  53 
  9.04 Public Announcements...............................................  53 
  9.05 No Third Party Beneficiary.........................................  53 
  9.06 No Assignment; Binding Effect......................................  53 
  9.07 Headings...........................................................  53 
  9.08 Invalid Provisions.................................................  53 
  9.09 Governing Law......................................................  54 
  9.10 Submission to Jurisdiction; Waivers................................  54 
  9.11 Enforcement of Agreement...........................................  54 
  9.12 Certain Definitions................................................  54 
  9.13 Counterparts.......................................................  55 
  9.14 WAIVER OF JURY TRIAL...............................................  55 
EXHIBITS                                                                       
EXHIBIT A Allotment of Shares............................................. A-1 
EXHIBIT B Form of Affiliate Agreement.....................................     

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GLOSSARY OF DEFINED TERMS 

The following terms, when used in this Agreement, have the meanings   
ascribed to them in the corresponding Sections of this Agreement listed below:  

                                                                [Download Table]
                                                                           
"1935 Act"............................................. Section 3.02(c)    
"ADR Depositary"....................................... Section 2.01(e)    
"ADR Holder Proposal".................................. Section 6.03(c)    
"ADS Consideration".................................... Section 2.01(c)(i) 
"Advisory Board"....................................... Section 6.12(b)    
"affiliate"............................................ Section 9.12(a)    
"Affiliate Agreement".................................. Section 6.04       
"Agreement"............................................ Preamble           
"Alternative Proposal"................................. Section 5.08       
"Antitrust Division"................................... Section 6.08       
"Articles of Merger"................................... Section 1.03       
"BCA".................................................. Section 1.01       
"beneficially"......................................... Section 9.12(b)    
"business day"......................................... Section 9.12(c)    
"Certificates"......................................... Section 2.03(b)    
"Circular"............................................. Section 3.09(b)    
"Closing".............................................. Section 1.02       
"Closing Date"......................................... Section 1.02       
"Code"................................................. Preamble           
"Companies Act"........................................ Section 4.02(a)    
"Company".............................................. Preamble           
"Company Affiliates"................................... Section 6.04       
"Company Budget"....................................... Section 5.01(e)    
"Company Common Stock"................................. Preamble           
"Company Disclosure Letter"............................ Section 3.01(a)    
"Company Employee Benefit Plan"........................ Section 3.13(b)(i) 
"Company Financial Statements"......................... Section 3.05(a)    
"Company Joint Venture"................................ Section 3.01(b)(ii)
"Company Option"....................................... Section 2.01(f)    
"Company Option Plan".................................. Section 2.01(f)    
"Company Permits"...................................... Section 3.10       
"Company Preferred Stock".............................. Section 3.02(a)    
"Company SEC Reports".................................. Section 3.05(a)    
"Company Stock Option"................................. Section 6.10(a)    
"Company Stockholders' Approval"....................... Section 6.03(b)    
"Company Stockholders' Meeting"........................ Section 6.03(b)    
"Confidentiality Agreement"............................ Section 6.01       
"Constituent Corporations"............................. Section 1.01       
"Contracts"............................................ Section 3.04(a)    
"control," "controlling," "controlled by" and                              
 "under common control with"........................... Section 9.12(a)    
"Converted Shares"..................................... Section 2.01(c)(i) 
"DOE".................................................. Section 3.05(b)    
"Effective Time"....................................... Section 1.03       
"Election Date"........................................ Section 2.02(a)    
"Environmental Claims"................................. Section 3.15(g)(i) 
"Environmental Laws"................................... Section 3.15(g)(ii)

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                                                                [Download Table]
                                                                           
"Environmental Permits"............................... Section 3.15(b)     
"ERISA"............................................... Section 3.13(b)(i)  
"ERISA Affiliate"..................................... Section 3.13(b)(iii)
"Exchange Act"........................................ Section 3.04(b)     
"Exchange Agent"...................................... Section 2.03(a)     
"Exchange Fund"....................................... Section 2.03(a)     
"FERC"................................................ Section 3.05(b)     
"FSA"................................................. Section 3.09(b)     
"FTA"................................................. Section 7.01(k)     
"FTC"................................................. Section 6.08        
"Governmental or Regulatory Authority"................ Section 3.04(a)     
"group"............................................... Section 9.12(f)     
"Hazardous Materials"................................. Section 3.15(g)(iii)
"HSR Act"............................................. Section 3.04(b)     
"Intellectual Property"............................... Section 3.16        
"Joint Executive Committee"........................... Section 5.03(a)     
"Joint Venture"....................................... Section 301(b)(i)   
"knowledge"........................................... Section 9.13(d)     
"laws"................................................ Section 3.04(a)     
"Lien"................................................ Section 3.02(b)     
"Listing Particulars"................................. Section 3.09(b)     
"LSE"................................................. Section 2.03(e)     
"material adverse effect"............................. Section 9.12(e)     
"Merger".............................................. Preamble            
"Merger Consideration"................................ Section 2.01(c)(i)  
"Merger Ordinary Shares".............................. Preamble            
"Merger Sub".......................................... Preamble            
"Merger Sub Common Stock"............................. Section 2.01        
"MMC"................................................. Section 7.01(k)     
"NYSE"................................................ Section 2.03(e)     
"OFFER"............................................... Section 7.01(l)     
"OFT"................................................. Section 7.01(k)     
"OFWAT"............................................... Section 7.01(l)     
"Options"............................................. Section 3.02(a)     
"orders".............................................. Section 3.04(a)     
"Ordinary Share Consideration"........................ Section 2.01(c)(i)  
"Ordinary Share Election"............................. Section 2.02        
"Ordinary Share Election Form"........................ Section 2.02        
"Parent".............................................. Preamble            
"Parent ADRs"......................................... Preamble            
"Parent ADSs"......................................... Preamble            
"Parent Budget"....................................... Section 5.02(e)     
"Parent Disclosure Documents"......................... Section 3.09(b)     
"Parent Disclosure Letter"............................ Section 4.01(a)     
"Parent Employee Benefit Plans"....................... Section 4.13        
"Parent Financial Statements"......................... Section 4.05        
"Parent Group"........................................ Section 5.02(k)     
"Parent Joint Venture"................................ Section 3.01(b)(iii)
"Parent Ordinary Shares".............................. Preamble            
"Parent Permits"...................................... Section 4.10        
"Parent SEC Reports".................................. Section 4.05        
"Parent Share Schemes"................................ Section 4.02(a)     

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"Parent Shareholders' Approval"........................ Section 6.03(a)    
"Parent Shareholders' Meeting"......................... Section 6.03(a)    
"Partnership".......................................... Preamble           
"Partnership Agreement"................................ Section 4.01(a)    
"Partnership Loan Note"................................ Section 2.01(e)    
"person"............................................... Section 9.12(f)    
"Plan"................................................. Section 3.12(b)(ii)
"Policies"............................................. Section 4.14(b)    
"Power Act"............................................ Section 3.05(b)    
"Proxy Statement"...................................... Section 3.09(a)    
"qualified stock options".............................. Section 6.10(a)    
"Registration Statement"............................... Section 4.09       
"Release".............................................. Section 3.15(g)(iv)
"Representatives"...................................... Section 9.12(g)    
"Review Material"...................................... Section 6.01       
"Sales Price".......................................... Section 2.03(e)    
"SEC".................................................. Section 3.04(b)    
"Secretary of State"................................... Section 1.03       
"Securities Act"....................................... Section 3.04(b)    
"SOS".................................................. Section 7.01(k)    
"Special Share"........................................ Section 4.02(a)    
"Subsidiary"........................................... Section 9.13(h)    
"Surviving Corporation"................................ Section 1.01       
"Surviving Corporation Common Stock"................... Section 2.01       
"taxes"................................................ Section 3.12(g)    
"Trading Day".......................................... Section 2.03(e)    
"UK Code".............................................. Section 6.03(a)    

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This AGREEMENT AND PLAN OF MERGER, dated as of December 6, 1998 (this 
"Agreement"), is made and entered into by and among SCOTTISH POWER PLC, a       
public limited company incorporated under the laws of Scotland ("Parent"), NA   
GENERAL PARTNERSHIP, a Nevada general partnership indirectly wholly owned by    
Parent (the "Partnership"), and PACIFICORP, an Oregon corporation (the          
"Company"), and, with respect to Section 2.01 hereof only, Scottish Power NA 1  
Limited, a limited liability company incorporated under the laws of Scotland    
("UKSub1") and Scottish Power NA 2 Limited, a limited liability company         
incorporated under the laws of Scotland ("UKSub2").                             

WHEREAS, the Boards of Directors of Parent and the Company and the    
partners of the Partnership, have each determined that it is advisable and in   
the best interests of their respective stockholders and partners, as the case   
may be, to consummate, and have approved, the business combination transaction  
provided for herein in which Merger Sub (as defined below) would merge with     
and into the Company and the Company would become an indirect, wholly-owned     
subsidiary of Parent (the "Merger") pursuant to the terms of this Agreement,    
whereby each issued and outstanding share of common stock of the Company (the   
"Company Common Stock"), other than shares owned directly or indirectly by      
Parent, the Partnership, Merger Sub or the Company, will be converted into the  
right to receive either (i) ordinary shares of Parent represented by American   
Depositary Shares of Parent ("Parent ADSs"), each representing four (4)         
ordinary shares of 50 pence each of Parent ("Parent Ordinary Shares") and       
evidenced by American Depositary Receipts ("Parent ADRs"); or (ii) Parent       
Ordinary Shares (the "Merger Ordinary Shares");                                 

WHEREAS, immediately prior to the Closing Date (as defined in Section 
1.02), an Oregon corporation wholly-owned by the Partnership ("Merger Sub")     
will be formed for the purpose of effectuating the Merger;                      

WHEREAS, the respective Boards of Directors of Parent and the Company,
and the partners of the Partnership, have determined that the Merger is in      
furtherance of and consistent with their respective long-term business          
strategies and is fair to and in the best interests of their respective         
shareholders and stockholders, Parent has approved this Agreement and the       
Merger, UKSub1 and UKSub2 in their capacity as general partners of the          
Partnership and as parties to Section 2.01 have approved this Agreement and     
the Merger, and the Partnership has agreed that, immediately following the      
formation of Merger Sub, it will approve this Agreement and the Merger as the   
sole stockholder of Merger Sub;                                                 

  WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the   
Internal Revenue Code of 1986, as amended (the "Code"); and                     

 WHEREAS, Parent, the Partnership and the Company desire to make certain
representations, warranties and agreements in connection with the Merger and    
also to prescribe various conditions to the Merger;                             

 NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration,     
the receipt and sufficiency of which are hereby acknowledged, the parties       
hereto agree as follows:                                                        

ARTICLE I 

THE MERGER  

1.01 The Merger. Upon the terms and subject to the conditions of this 
Agreement, at the Effective Time (as defined in Section 1.03), Merger Sub       
shall be merged with and into the Company in accordance with the Business       
Corporation Act of the State of Oregon (the "BCA"). At the Effective Time, the  
separate existence of Merger Sub shall cease and the Company shall continue as  
the surviving corporation in the Merger (the "Surviving Corporation"). Merger   
Sub and the Company are sometimes referred to herein as the "Constituent        
Corporations". As a result of the Merger, the outstanding shares of capital     
stock of the Constituent Corporations shall be converted and cancelled in the   
manner provided in Article II.                                                  

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1.02 Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section  
8.01, and subject to the satisfaction or waiver (where applicable) of the       
conditions set forth in Article VII, the consummation of the Merger (the        
"Closing") will take place at the offices of Milbank, Tweed, Hadley & McCloy,   
1 Chase Manhattan Plaza, New York, New York 10005, at 10:00 a.m., local time,   
on the fifth business day following satisfaction or waiver (where applicable)   
of the conditions set forth in Article VII, unless another date, time or place  
is agreed to in writing by the parties hereto (the "Closing Date"). At the      
Closing there shall be delivered to Parent, the Partnership, Merger Sub and     
the Company the certificates and other documents and instruments required to    
be delivered under Article VII.                                                 

 1.03 Effective Time. At the Closing, the parties shall cause to be duly
prepared and executed by the Company as the Surviving Corporation and Merger    
Sub articles of merger (the "Articles of Merger") for filing on, or as soon as  
practicable after, the Closing Date with the Secretary of State of the State    
of Oregon (the "Secretary of State"), as provided in Section 60.494 of the      
BCA. The Merger shall become effective at the time of the filing of the         
Articles of Merger with the Secretary of State (such date and time being        
referred to herein as the "Effective Time").                                    

1.04 Governing Instrument. At the Effective Time, (i) the Articles of 
Incorporation of the Company as in effect immediately prior to the Effective    
Time shall be the Articles of Incorporation of the Surviving Corporation until  
thereafter amended as provided by law and such Articles of Incorporation, and   
(ii) the Bylaws of the Company as in effect immediately prior to the Effective  
Time shall be the Bylaws of the Surviving Corporation until thereafter amended  
as provided by law, the Articles of Incorporation of the Surviving Corporation  
and such Bylaws.                                                                

   1.05 Directors and Officers of the Surviving Corporation. The individuals
listed on Schedule I shall, from and after the Effective Time, be the           
directors and executive officers, respectively, of the Company as the           
Surviving Corporation until their successors shall have been duly elected or    
appointed and qualified or until their earlier death, resignation or removal    
in accordance with the Surviving Corporation's Articles of Incorporation and    
Bylaws.                                                                         

  1.06 Effects of the Merger. Subject to the foregoing, the effects of the
Merger shall be as provided in the applicable provisions of the BCA.            

   1.07 Further Assurances. Each party hereto will, either prior to or after
the Effective Time, execute such further documents, instruments, deeds, bills   
of sale, assignments and assurances and take such further actions as may        
reasonably be requested by one or more of the other parties hereto to           
consummate the Merger, to vest the Surviving Corporation with full title to     
all assets, properties, privileges, rights, approvals, immunities and           
franchises of either of the Constituent Corporations or to effect the other     
purposes of this Agreement.                                                     

ARTICLE II  

CONVERSION OF SHARES  

   2.01 Conversion of Capital Stock. At the Effective Time, by virtue of the
Merger and, with respect to clauses (a)-(c), (f) and (g) hereof, without any    
action on the part of the holder thereof:                                       

 (a) Capital Stock of Merger Sub. Each issued and outstanding share of the
common stock of Merger Sub ("Merger Sub Common Stock") outstanding          
immediately prior to the Effective Time shall be cancelled and the          
Surviving Corporation shall issue to the Partnership at the Effective Time  
such number of shares of common stock as is equal to the number of shares   
of Merger Sub Common Stock, with the same rights, powers and privileges as  
the Merger Sub Common Stock, and shall constitute the only outstanding      
shares of common stock of the Surviving Corporation ("Surviving Corporation 
Common Stock").                                                             

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(b) Cancellation of Treasury Stock and Stock Owned by Parent and        
Subsidiaries. All shares of Company Common Stock that are owned by the      
Company as treasury stock and any shares of Company Common Stock owned by   
Parent, the Partnership, Merger Sub or any other wholly-owned Subsidiary    
(as defined in Section 9.12) of Parent shall be canceled and retired and    
shall cease to exist and no stock of Parent or other consideration shall be 
delivered in exchange therefor.                                             

(c) Conversion of Company Common Stock. (i) Each issued and outstanding 
share of Company Common Stock (other than shares to be cancelled in         
accordance with Section 2.01(b)), shall be converted into the right to      
receive (A) .58 Parent ADSs (the "ADS Consideration"), or (B) if a properly 
completed Ordinary Share Election Form (as defined in Section 2.02) shall   
have been submitted to the Exchange Agent (as defined in Section 2.02) on a 
timely basis with respect to such share of Company Common Stock, 2.32 fully 
paid and nonassessable Merger Ordinary Shares (the "Ordinary Share          
Consideration"; the Ordinary Share Consideration and the ADS Consideration  
are each sometimes referred to herein as the "Merger Consideration"). All   
shares of Company Common Stock to be converted into shares of Parent ADSs   
or Merger Ordinary Shares pursuant to this Section 2.01(c) are hereinafter  
referred to as "Converted Shares."                                          

 (ii) If, prior to the Effective Time, Parent shall pay a dividend in,
subdivide, consolidate or issue by capitalization of its reserves, any  
Parent Ordinary Shares, the Merger Consideration shall be multiplied by 
a fraction, the numerator of which shall be the number of Parent        
Ordinary Shares outstanding immediately after, and the denominator of   
which shall be the number of such shares outstanding immediately        
before, the occurrence of such event, and the resulting product shall   
from and after the date of such event be the Merger Consideration       
subject to further adjustment in accordance with this sentence.         

 (iii) All shares of Company Common Stock converted in accordance with
paragraph (i) of this Section 2.01(c) shall no longer be outstanding    
and shall, as part of the consideration for the allotment and issue by  
Parent referred to in Section 2.01(e) below, automatically be canceled  
and retired and shall cease to exist, and each holder of a certificate  
representing any such shares shall cease to have any rights with        
respect thereto, except the right to receive the Merger Consideration   
and any cash in lieu of fractional Parent ADSs or Merger Ordinary       
Shares (determined in accordance with Section 2.03(e)), upon the        
surrender of such certificate in accordance with Section 2.03, without  
interest.                                                               

(d) UKSub 1 shall continue to be the owner of a 90% general partnership 
interest in the Partnership, and UKSub 2 shall continue to be the owner of  
a 10% general partnership interest in the Partnership.                      

(e) As consideration for the acquisition by the Partnership of the      
Surviving Corporation Common Stock in accordance with Section 2.01(a): (i)  
the Partnership agrees to issue a loan note to Parent in the form and in an 
amount to be mutually agreed upon by Parent and the Partnership (the        
"Partnership Loan Note"), (ii) UKSub 1 agrees to allot and issue to Parent  
fully paid ordinary shares of 1 each and (iii) UKSub 2 agrees to allot and  
issue to Parent fully paid ordinary shares of 1 each. In consideration of   
the other steps referred to in this Section 2.01 (including, to the extent  
set out in column A of Exhibit A attached hereto, the issue of the          
Partnership Loan Note by the Partnership), Parent shall allot and issue (i) 
the number of Parent Ordinary Shares represented by Parent ADSs to be       
issued in the Merger to Parent's United States Depositary (the "ADR         
Depositary") on behalf of the holders of Company Common Stock entitled      
thereto for the purposes of giving effect to the conversion and exchange    
referred to in this Article II, and (ii) the number of Merger Ordinary      
Shares to be issued in the Merger. In consideration of the other steps      
referred to in this Section 2.01, (including, to the extent set out in      
column B of Exhibit A, the issues of ordinary shares by UKSub 1 and UKSub 2 
referred to above), Parent shall allot and issue (i) the number of Parent   
Ordinary Shares represented by Parent ADSs to be issued in the Merger to    
the ADR Depositary on behalf of the holders of Company Common Stock         
entitled thereto for the purposes of giving effect to the conversion and    
exchange referred to in this Article II, and (ii) the number of Merger      
Ordinary Shares to be issued in the Merger.                                 

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(f) Subject to the terms and conditions of the Company's Stock Incentive
Plan (the "Company Option Plan") and the stock option agreements executed   
pursuant thereto, each option to purchase Company Common Stock granted      
thereunder that is outstanding at the Effective Time (a "Company Option")   
shall be converted into an option to acquire, on the same terms and         
conditions as were applicable under the Company Option Plan at the          
Effective Time, a number of (i) Parent ADSs equal to the ADS Consideration, 
or (ii) Merger Ordinary Shares equal to the Ordinary Share Consideration,   
in each case multiplied by the number of shares of Company Common Stock     
subject to such option immediately prior to the Effective Time, on the      
basis described in Section 6.10. The Company as the Surviving Corporation   
and Parent shall take all action necessary to ensure that Parent has        
control of the operation of the Company Option Plan and the Company         
Restricted Stock Plans.                                                     

(g) Subject to Section 5.01 (c)(iv)(C), the Company Preferred Stock (as 
defined below) shall not be affected by the Merger and shall continue to    
have the same rights and preferences as were in effect prior to             
consummation of the Merger.                                                 

2.02 Procedure for Election. At such time as shall be sufficient to   
permit the holders of Company Common Stock to exercise their right to make an   
election pursuant to this Section 2.02, Parent will make available to all       
holders of Company Common Stock of record a letter of transmittal and election  
form and other appropriate materials (collectively, the "Ordinary Share         
Election Form") providing for such holder to elect to receive the Ordinary      
Share Consideration with respect to all or any portion of such holder's shares  
of Company Common Stock ("Ordinary Share Election"). As of the Election Date    
(as hereinafter defined), any share of Company Common Stock with respect to     
which there shall not have been effected such election by submission to the     
Exchange Agent (as defined in Section 2.03) of an effective, properly           
completed Ordinary Share Election Form shall be converted in the Merger into    
the right to receive the ADS Consideration.                                     

(a) Any election to receive the Ordinary Share Consideration shall have 
been validly made only if the Exchange Agent shall have received by 5:00    
p.m., New York City time, on or prior to the Election Date, an Ordinary     
Share Election Form properly completed and executed (with the signature or  
signatures thereon guaranteed if required by the Ordinary Share Election    
Form) by such holder of shares of Company Common Stock. As used herein,     
"Election Date" means a date announced by Parent, in a news release         
delivered to the Dow Jones News Service, as the last day on which an        
Ordinary Share Election Form will be accepted; provided, however, that such 
date shall be a business day no earlier than five (5) business days prior   
to the date on which the Effective Time occurs and shall be at least five   
(5), and not more than 20, business days following the date of such news    
release; provided further, that, subsequent to such announcement, Parent    
shall have the right to change such Election Date to a later date so long   
as such later date is (i) at least five (5) business days following the     
date of notice of such change and (ii) not later than the date on which the 
Effective Time occurs. Parent shall have the right to make reasonable       
determinations and to establish reasonable procedures (not inconsistent     
with the terms of this Agreement) in guiding the Exchange Agent in its      
determination as to the validity of Ordinary Share Election Forms and of    
any revision, revocation or withdrawal thereof.                             

(b) Two or more holders of shares of Company Common Stock who are       
determined to constructively own such shares owned by each other by virtue  
of Section 318(a) of the Code and who so certify to Parent's reasonable     
satisfaction, and any single holder of shares of Company Common Stock who   
holds such shares in two or more different names and who so certifies to    
Parent's reasonable satisfaction, may submit a joint Ordinary Share         
Election Form covering the aggregate shares of Company Common Stock owned   
by all such holders or by such single holder, as the case may be. For all   
purposes of this Agreement, each such group of holders which, and each such 
single holder who, submits a joint Ordinary Share Election Form shall be    
treated as a single holder of shares of Company Common Stock.               

(c) Record holders of shares of Company Common Stock who are nominees   
only may submit a separate Ordinary Share Election Form for each beneficial 
owner for whom such record holder is a nominee; provided, however, that, at 
the request of Parent, such record holder shall certify to the reasonable   
satisfaction of Parent that such record holder holds such shares as nominee 
for the beneficial owner thereof.                                           

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For purposes of this Agreement, each beneficial owner for which an Ordinary 
Share Election Form is submitted will be treated as a separate holder of    
shares of Company Common Stock subject, however, to Section 2.02(b).        

 (d) Any holder of shares of Company Common Stock may at any time prior to
5:00 p.m. New York City time, on the Election Date revoke such holder's     
election by written notice to the Exchange Agent received at any time prior 
to 5:00 p.m., New York City time, on the Election Date.                     

   2.03 Exchange of Certificates. (a) Exchange Agent. Promptly following the
Effective Time, (i) Parent shall issue to and deposit with the ADR Depositary,  
for the benefit of the holders of shares of Company Common Stock converted      
into the ADS Consideration in accordance with Section 2.01(c), Parent Ordinary  
Shares in an amount sufficient to permit the ADR Depositary to issue Parent     
ADRs representing the number of Parent ADSs issuable pursuant to Section        
2.01(c) and (ii) Parent shall, for the benefit of the holders of the shares of  
Company Common Stock converted into Merger Ordinary Shares in the Merger, make  
available to the Surviving Corporation for deposit with a bank or trust         
company designated before the Closing Date by Parent and reasonably acceptable  
to the Company (the "Exchange Agent"), (A) certificates representing the        
number of duly authorized whole Merger Ordinary Shares issuable in accordance   
with Section 2.01(c), and (B) an amount of cash equal to the aggregate amount   
payable in lieu of fractional Parent ADSs and Merger Ordinary Shares in         
accordance with Section 2.03(e) (such cash, certificates representing Merger    
Ordinary Shares and Parent ADRs representing Parent ADSs, together with any     
dividends or distributions with respect thereto being hereinafter referred to   
as the "Exchange Fund"), to be held for the benefit of and distributed to the   
holders of Converted Shares in accordance with this Section. The Exchange       
Agent shall agree to hold such Merger Ordinary Shares and funds for delivery    
as contemplated by this Section and upon such additional terms as may be        
agreed upon by the Exchange Agent, the Company and Parent. Parent shall cause   
the ADR Depositary to issue through and upon the instructions of the Exchange   
Agent, for the benefit of the holders of shares of the Company Common Stock     
converted into the ADS Consideration in accordance with Section 2.01(c),        
Parent ADRs representing the number of Parent ADSs issuable pursuant to         
Section 2.01(c). Neither Parent, Parent's affiliates nor holders of Converted   
Shares shall be responsible for any stamp duty reserve tax payable in           
connection with the ADS Consideration. The Exchange Agent shall invest any      
cash included in the Exchange Fund as directed by the Surviving Corporation on  
a daily basis. Any interest and other income resulting from such investments    
shall promptly be paid to the Surviving Corporation.                            

(b) Exchange Procedures. As soon as reasonably practicable after the  
Effective Time, the Surviving Corporation shall cause the Exchange Agent to     
mail to each holder of record of a certificate or certificates which            
immediately prior to the Effective Time represented outstanding shares of       
Company Common Stock (the "Certificates") whose shares are converted pursuant   
to this Article II into the right to receive Parent ADSs or Merger Ordinary     
Shares (i) a letter of transmittal (which shall specify that delivery shall be  
effected, and risk of loss and title to the Certificates shall pass, only upon  
delivery of the Certificates to the Exchange Agent and shall be in such form    
and have such other provisions as the Surviving Corporation or Parent may       
reasonably specify) and (ii) instructions for use in effecting the surrender    
of the Certificates in exchange for certificates representing Parent ADRs       
which represent Parent ADSs, and Merger Ordinary Shares and cash in lieu of     
fractional Parent ADSs or Merger Ordinary Shares. Upon surrender of a           
Certificate for cancellation to the Exchange Agent, together with such letter   
of transmittal duly executed and completed in accordance with its terms, the    
holder of such Certificate shall be entitled to receive in exchange therefor    
(i) one or more Parent ADRs representing, in the aggregate, that whole number   
of Parent ADSs and/or a certificate or certificates representing that whole     
number of Merger Ordinary Shares elected to be received in accordance with      
Section 2.02, (ii) the amount of dividends or other distributions, if any,      
with a record date on or after the Effective Time which theretofore became      
payable with respect to such Parent ADSs and Merger Ordinary Shares, and (iii)  
the cash amount payable in lieu of fractional Parent ADSs and Merger Ordinary   
Shares in accordance with Section 2.03(e), in each case which such holder has   
the right to receive pursuant to the provisions of this Article II, and the     
Certificate so surrendered shall forthwith be canceled. In no event shall the   
holder of any Certificate be entitled to receive interest on any funds to be    
received in the Merger. In the event of a transfer of ownership of Company      
Common                                                                          

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Stock which is not registered in the transfer records of the Company, one or    
more Parent ADRs representing, in the aggregate, that whole number of Parent    
ADSs and/or a certificate or certificates representing that whole number of     
Merger Ordinary Shares elected to be received in accordance with Section 2.02,  
plus the cash amount payable in lieu of fractional Parent ADSs and Merger       
Ordinary Shares in accordance with Section 2.03(e), may be issued to a          
transferee if the Certificate representing such Company Common Stock is         
presented to the Exchange Agent accompanied by all documents required to        
evidence and effect such transfer and by evidence that any applicable stock     
transfer taxes have been paid. Until surrendered as contemplated by this        
Section 2.03(b), each Certificate shall be deemed at any time after the         
Effective Time for all corporate purposes of Parent, except as limited by       
Section 2.03(c) below and subject to applicable law, to represent ownership of  
the whole number of Parent ADSs and/or Merger Ordinary Shares into which the    
number of shares of Company Common Stock shown thereon have been converted as   
contemplated by this Article II. Notwithstanding the foregoing, Certificates    
representing Company Common Stock surrendered for exchange by any person        
constituting an "affiliate" of the Company for purposes of Section 6.04 shall   
not be exchanged until Parent has received an Affiliate Agreement (as defined   
in Section 6.04) as provided in Section 6.04.                                   

(c) Distributions with Respect to Unexchanged Shares. No dividends or 
other distributions declared, made or paid after the Effective Time with        
respect to Parent Ordinary Shares with a record date on or after the Effective  
Time shall be paid to the holder of any unsurrendered Certificate with respect  
to the Parent ADSs and Merger Ordinary Shares represented thereby and no cash   
payment in lieu of fractional Parent ADSs and Merger Ordinary Shares shall be   
paid to any such holder pursuant to Section 2.03(e) until the holder of record  
of such Certificate shall surrender such Certificate in accordance with this    
Section. Subject to the effect of applicable laws, following surrender of any   
such Certificate, there shall be paid to the record holder of the certificates  
representing the Parent ADRs which represent Parent ADSs and Merger Ordinary    
Shares issued in exchange therefor, without interest, (i) at the time of such   
surrender, the amount of dividends or other distributions, if any, with a       
record date on or after the Effective Time which theretofore became payable,    
but which were not paid by reason of the immediately preceding sentence, with   
respect to such Parent ADSs and Merger Ordinary Shares and (ii) at the          
appropriate payment date, the amount of dividends or other distributions with   
a record date on or after the Effective Time but prior to surrender and a       
payment date subsequent to surrender payable with respect to such Parent ADSs   
and Merger Ordinary Shares.                                                     

  (d) No Further Ownership Rights in Company Common Stock. All Parent ADSs
and Merger Ordinary Shares issued upon the surrender for exchange of            
Certificates in accordance with the terms hereof (including any cash paid       
pursuant to Section 2.03(e)) shall be deemed to have been issued at the         
Effective Time in full satisfaction of all rights pertaining to the Converted   
Shares represented thereby, subject, however, to the Surviving Corporation's    
obligation to pay any dividends which may have been declared by the Company on  
the shares of Company Common Stock in accordance with the terms of this         
Agreement and which remained unpaid at the Effective Time. From and after the   
Effective Time, the stock transfer books of the Company shall be closed and     
there shall be no further registration of transfers thereon of the shares of    
Company Common Stock which were outstanding immediately prior to the Effective  
Time. If, after the Effective Time, Certificates are presented to the           
Surviving Corporation for any reason, they shall be canceled and exchanged as   
provided in this Section.                                                       

   (e) No Fractional Shares. No certificate or scrip representing fractional
Parent ADSs or Merger Ordinary Shares will be issued in the Merger upon the     
surrender for exchange of Certificates, and such fractional Parent ADS or       
Merger Ordinary Share interests will not entitle the owner thereof to vote or   
to any rights of a holder of Parent ADSs or Merger Ordinary Shares. In lieu of  
any such fractional Parent ADS or Merger Ordinary Share, each holder of         
Certificates who would otherwise have been entitled to a fraction of a Parent   
ADS or Merger Ordinary Share in exchange for such Certificates pursuant to      
this Section shall receive from the Exchange Agent, as applicable, (i) a cash   
payment in lieu of such fractional Parent ADS determined by multiplying (A)     
the Sales Price (as defined below) of a Parent ADS on the last Trading Day (as  
defined below) immediately preceding the Closing Date by (B) the fractional     
Parent ADS interest to which such holder would otherwise be entitled, and/or    
(ii) a cash payment in lieu of such fractional Merger Ordinary Share            
determined by multiplying (A) the Sales Price of a Parent Ordinary Share on     
the last Trading Day immediately preceding the Closing Date                     

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by (B) the fractional Merger Ordinary Share interest to which such holder       
would otherwise be entitled. The term "Sales Price" shall mean, on any Trading  
Day, with respect to Parent ADSs, the closing sales price of Parent ADSs        
reported on the New York Stock Exchange, Inc. ("NYSE") Composite Tape on such   
day and, with respect to Merger Ordinary Shares, the closing middle market      
quotation of a Parent Ordinary Share as reported in the Daily Official List of  
the London Stock Exchange ("LSE") for such date. The term "Trading Day" shall   
mean any day on which securities are traded, with respect to Parent ADSs, on    
the NYSE, and with respect to Parent Ordinary Shares, on the LSE.               

  (f) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the stockholders of the Company for one (1) year       
after the Effective Time shall be delivered to Parent, upon demand, and any     
holders of Certificates who have not theretofore complied with this Article II  
shall thereafter look only to Parent (subject to abandoned property, escheat    
and other similar laws) as general creditors for payment of their claim for     
Parent ADSs, Merger Ordinary Shares, any cash in lieu of fractional Parent      
ADSs and Merger Ordinary Shares and any dividends or distributions with         
respect to Parent ADSs and Merger Ordinary Shares. Neither Parent nor the       
Surviving Corporation shall be liable to any holder of any Certificate for      
Parent ADSs or Merger Ordinary Shares (or dividends or distributions with       
respect to either), or cash payable in respect of fractional Parent ADSs or     
Merger Ordinary Shares, delivered to a public official pursuant to any          
applicable abandoned property, escheat or similar law.                          

   (g) Lost Certificates. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming  
such Certificate to be lost, stolen or destroyed and, if required by Parent,    
the posting by such person of a bond in such reasonable amount as Parent may    
direct as indemnity against any claim that may be made against it with respect  
to such Certificate, the Exchange Agent will deliver in exchange for such       
lost, stolen or destroyed Certificate the applicable Merger Consideration with  
respect to the shares of Company Common Stock formerly represented thereby,     
any cash in lieu of fractional Parent ADSs or Merger Ordinary Shares, and       
unpaid dividends and distributions in respect of or on Parent ADSs or Merger    
Ordinary Shares deliverable in respect thereof, pursuant to this Agreement.     

2.04 Withholding Rights. Each of the Surviving Corporation and Parent 
shall be entitled to deduct and withhold from the consideration otherwise       
payable pursuant to this Agreement to any holder of shares of Company Common    
Stock such amounts as it is required to deduct and withhold with respect to     
the making of such payment under the Code, or any provision of state, local or  
foreign tax law, including the tax laws of the United Kingdom. To the extent    
that amounts are so withheld by the Surviving Corporation or Parent, as the     
case may be, such withheld amounts shall be treated for all purposes of this    
Agreement as having been paid to the holder of the shares of Company Common     
Stock in respect of which such deduction and withholding was made by the        
Surviving Corporation or Parent, as the case may be.                            

ARTICLE III 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY 

   The Company represents and warrants to Parent, the Partnership and Merger
Sub as follows:                                                                 

3.01 Organization and Qualification. (a) Each of the Company and its  
Subsidiaries is duly organized, validly existing and in good standing (with     
respect to jurisdictions which recognize the concept of good standing) under    
the laws of its jurisdiction of organization and has full corporate or          
partnership, as the case may be, power and authority to conduct its business    
as and to the extent now conducted and to own, use and lease its assets and     
properties, except for such failures to be so organized, existing and in good   
standing (with respect to jurisdictions which recognize the concept of good     
standing) or to have such power and authority which, individually or in the     
aggregate, are not having and would not reasonably be expected to have a        
material adverse effect (as defined in Section 9.12) on the Company and its     
Subsidiaries taken as a whole. Each of the Company and its Subsidiaries is      
duly qualified, licensed or admitted to do business and is in good standing     
(with respect to jurisdictions which recognize the concept of good standing)    
in each jurisdiction in which the ownership, use or leasing of its assets       

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and properties, or the conduct or nature of its business, makes such            
qualification, licensing or admission necessary, except for such failures to    
be so qualified, licensed or admitted and in good standing (with respect to     
jurisdictions that recognize the concept of good standing) which, individually  
or in the aggregate, are not having and would not reasonably be expected to     
have a material adverse effect on the Company and its Subsidiaries taken as a   
whole. Section 3.01 of the letter dated the date hereof and delivered to        
Parent, the Partnership and Merger Sub by the Company concurrently with the     
execution and delivery of this Agreement (the "Company Disclosure Letter")      
sets forth (i) the name and jurisdiction of organization of each Subsidiary of  
the Company and (x) with respect to Subsidiaries that are corporations, (a)     
such Subsidiary's authorized capital stock, (b) the number of issued and        
outstanding shares of such Subsidiary's capital stock and (c) the record        
owners of such Subsidiary's shares and, (y) with respect to Subsidiaries that   
are partnerships, the names and ownership interests of the partners thereof.    
The Company has previously delivered to Parent correct and complete copies of   
the certificate or articles of incorporation and bylaws (or other comparable    
charter documents) of the Company and its Subsidiaries.                         

(b) Section 3.01 of the Company Disclosure Letter sets forth a        
description as of the date hereof, of all Company Joint Ventures, including     
(i) the name of each such entity and the Company's interest therein, and (ii)   
a brief description of the principal line or lines of business conducted by     
each such entity. For purposes of this Agreement:                               

(i) "Joint Venture" of a person or entity shall mean any corporation or 
other entity (including partnerships and other business associations) that  
is not a Subsidiary of such person or entity, in which such person or one   
or more of its Subsidiaries owns directly or indirectly an equity interest, 
other than equity interests which are less than 5% of each class of the     
outstanding voting securities or equity interests of any such entity;       

(ii) "Company Joint Venture" shall mean any Joint Venture of the Company
or any of its Subsidiaries; and                                             

(iii) "Parent Joint Venture" shall mean any Joint Venture of Parent or  
any of its Subsidiaries.                                                    

  (c) Except for interests in the Subsidiaries of the Company, the Company
Joint Ventures and as disclosed in the Company SEC Reports (as defined in       
Section 3.05) filed prior to the date of this Agreement or Section 3.01 of the  
Company Disclosure Letter, the Company does not directly or indirectly own any  
equity or similar interest in, or any interest convertible into or              
exchangeable or exercisable for any equity or similar interest in, any          
material corporation, partnership, limited liability company, joint venture or  
other business association or entity (other than non-controlling investments    
in the ordinary course of business and corporate partnering, development,       
cooperative marketing and similar undertakings and arrangements entered into    
in the ordinary course of business).                                            

3.02 Capital Stock. (a) The authorized capital stock of the Company   
consists of:                                                                    

(i) 750 million shares of Company Common Stock, of which 297,335,056    
shares were issued and outstanding as of November 30, 1998, and             

(ii) 126,533 shares of 5% preferred stock, of which 126,533 were issued 
and outstanding as of November 30, 1998, 3.5 million shares of serial       
preferred stock, of which 288,499 were issued and outstanding as of         
November 30, 1998 and of which 2,065 shares were designated the 4.52%       
Series, 18,060 shares were designated the 7.00% Series, 5,932 shares were   
designated the 6.00% Series, 42,000 were designated the 5.00% Series,       
65,960 were designated the 5.40% Series, 69,890 were designated the 4.72%   
Series, and 84,592 were designated the 4.56% Series, respectively; and 16   
million shares of no par serial preferred stock, of which 2,744,438 were    
issued and outstanding as of November 30, 1998 and of which 381,220 shares  
were designated the $1.28 Series, 420,116 shares were designated the $1.18  
Series, 193,102 shares were designated the $1.16 Series, 1,000,000 shares   
were designated the $7.70 Series, and 750,000 shares were designated the    
$7.48 Series, respectively (collectively, the "Company Preferred Stock").   

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 As of November 30, 1998, 28,817,971 shares of Company Common Stock were
reserved or held for issuance under the PacifiCorp Stock Incentive Plan, the    
PacifiCorp Long Term Incentive Plan, the PacifiCorp K-Plus Employee Savings     
and Stock Ownership Plan and the PacifiCorp Dividend Reinvestment and Stock     
Purchase Plan. All of the issued and outstanding shares of Company Common       
Stock are, and all shares reserved for issuance will be, upon issuance in       
accordance with the terms specified in the instruments or agreements pursuant   
to which they are issuable, duly authorized, validly issued, fully paid and     
nonassessable. Except pursuant to this Agreement and except as described in     
Section 3.02 of the Company Disclosure Letter, on the date hereof there are no  
outstanding subscriptions, options, warrants, rights (including stock           
appreciation rights), preemptive rights or other contracts, commitments,        
understandings or arrangements, including any right of conversion or exchange   
under any outstanding security, instrument or agreement (together, "Options"),  
obligating the Company or any of its Subsidiaries to issue or sell any shares   
of capital stock of the Company or to grant, extend or enter into any Option    
with respect thereto.                                                           

(b) Except as disclosed in the Company SEC Reports filed prior to the 
date of this Agreement or Section 3.02 of the Company Disclosure Letter, all    
of the outstanding shares of capital stock of each Subsidiary of the Company    
are duly authorized, validly issued, fully paid and nonassessable and are       
owned, beneficially and of record, by the Company or a Subsidiary wholly        
owned, directly or indirectly, by the Company, free and clear of any liens,     
claims, mortgages, encumbrances, pledges, security interests, equities and      
charges of any kind (each a "Lien"), other than Liens or failures to so own     
which are immaterial. Each outstanding share of Company Preferred Stock, other  
than shares of the $1.28 Series, $1.18 Series and $1.16 Series of no par        
serial preferred stock, is entitled to one vote per share, voting together      
with the holders of Company Common Stock as a single class, on all matters      
generally submitted to the stockholders of the Company for a vote. Except as    
disclosed in the Company SEC Reports filed prior to the date of this Agreement  
or Section 3.02 of the Company Disclosure Letter, there are no (i) outstanding  
Options obligating the Company or any of its Subsidiaries to issue or sell any  
shares of capital stock of any Subsidiary of the Company or to grant, extend    
or enter into any such Option or (ii) voting trusts, proxies or other           
commitments, understandings, restrictions or arrangements in favor of any       
person other than the Company or a Subsidiary wholly owned, directly or         
indirectly, by the Company with respect to the voting of or the right to        
participate in dividends or other earnings on any capital stock of any          
Subsidiary of the Company.                                                      

   (c) None of the Subsidiaries of the Company or the Company Joint Ventures
is a "public utility company," a "holding company," a "subsidiary company" or   
an "affiliate" of any public utility company within the meaning of Section      
2(a)(5), 2(a)(7), 2(a)(8) or 2(a)(11) of the Public Utility Holding Company     
Act of 1935, as amended (the "1935 Act"), respectively.                         

(d) Except as disclosed in the Company SEC Reports filed prior to the 
date of this Agreement or Section 3.02 of the Company Disclosure Letter, there  
are no outstanding contractual obligations of the Company or any Subsidiary of  
the Company to repurchase, redeem or otherwise acquire any shares of Company    
Common Stock or any material capital stock of any Subsidiary of the Company or  
to provide any material amount of funds to, or make any material investment     
(in the form of a loan, capital contribution or otherwise) in, any Subsidiary   
of the Company or any other person.                                             

   3.03 Authority Relative to this Agreement. The Company has full corporate
power and authority to enter into this Agreement, and, subject to obtaining     
the Company Stockholders' Approval (as defined in Section 6.03 (b)), to         
perform its obligations hereunder and to consummate the transactions            
contemplated hereby. The execution, delivery and performance of this Agreement  
by the Company and the consummation by the Company of the transactions          
contemplated hereby have been duly and validly approved by the Board of         
Directors of the Company, the Board of Directors of the Company has             
recommended approval of this Agreement by the stockholders of the Company and   
directed that this Agreement be submitted to the stockholders of the Company    
for their consideration, and no other corporate proceedings on the part of the  
Company or its stockholders are necessary to authorize the execution, delivery  
and performance of this Agreement by the Company and the consummation by the    
Company of the transactions contemplated hereby, other than obtaining the       
Company Stockholders' Approval. This Agreement has been duly and validly        
executed and delivered by the Company and                                       

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constitutes a legal, valid and binding obligation of the Company enforceable    
against the Company in accordance with its terms, except as enforceability may  
be limited by bankruptcy, insolvency, reorganization, moratorium or other       
similar laws affecting the enforcement of creditors' rights generally and by    
general equitable principles (regardless of whether such enforceability is      
considered in a proceeding in equity or at law).                                

3.04 Non-Contravention; Approvals and Consents. (a) The execution and 
delivery of this Agreement by the Company do not, and the performance by the    
Company of its obligations hereunder and the consummation of the transactions   
contemplated hereby will not, conflict with, result in a violation or breach    
of, constitute (with or without notice or lapse of time or both) a default      
under, result in or give to any person any right of payment or reimbursement,   
termination, cancellation, modification or acceleration of, or result in the    
creation or imposition of any Lien upon any of the assets or properties of the  
Company or any of its Subsidiaries or any of the Company Joint Ventures under,  
any of the terms, conditions or provisions of (i) the certificates or articles  
of incorporation or bylaws (or other comparable charter documents) of the       
Company or any of its Subsidiaries, or (ii) subject to the obtaining of the     
Company Stockholders' Approval and the taking of the actions described in       
Section 3.04(b), (x) any statute, law, rule, regulation or ordinance            
(together, "laws"), or any judgment, decree, order, writ, permit or license     
(together, "orders"), of any court, tribunal, arbitrator, authority, agency,    
commission, official or other instrumentality of the United States, any         
foreign country or any domestic or foreign state, county, city or other         
political subdivision (a "Governmental or Regulatory Authority") applicable to  
the Company or any of its Subsidiaries or any of the Company Joint Ventures or  
any of their respective assets or properties, or (y) any note, bond, mortgage,  
security agreement, indenture, license, franchise, permit, concession,          
contract, lease or other instrument, obligation or agreement of any kind        
(together, "Contracts") to which the Company or any of its Subsidiaries or any  
of the Company Joint Ventures is a party or by which the Company or any of its  
Subsidiaries or any of the Company Joint Ventures or any of their respective    
assets or properties is bound, excluding from the foregoing clauses (x) and     
(y) conflicts, violations, breaches, defaults, rights of payment and            
reimbursement, terminations, modifications, accelerations and creations and     
impositions of Liens which, individually or in the aggregate, would not         
reasonably be expected to have a material adverse effect on the Company and     
its Subsidiaries taken as a whole or on the ability of the Company to           
consummate the transactions contemplated by this Agreement.                     

(b)Except (i) for the filing of a premerger notification report by the      
Company under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as  
amended, and the rules and regulations thereunder (the "HSR Act"), (ii) for 
the filing of the Proxy Statement (as defined in Section 3.09) and the      
Registration Statement (as defined in Section 4.09) with the Securities and 
Exchange Commission (the "SEC") pursuant to the Securities Exchange Act of  
1934, as amended, and the rules and regulations thereunder (the "Exchange   
Act"), and the Securities Act of 1933, as amended, and the rules and        
regulations thereunder (the "Securities Act"), the declaration of the       
effectiveness of the Registration Statement by the SEC and filings with     
various state securities authorities that are required in connection with   
the transactions contemplated by this Agreement, (iii) for the filing of an 
application under Section 203 and any directly related Section of, or       
regulation under, the Power Act (as defined in Section 3.05(b)) for the     
sale or disposition of jurisdictional facilities of the Company; (iv) for   
the filing of the Articles of Merger and other appropriate merger documents 
required by the BCA with the Secretary of State and appropriate documents   
with the relevant authorities of other states in which the Constituent      
Corporations are qualified to do business; and (v) as disclosed in Section  
3.04 of the Company Disclosure Letter, no consent, approval or action of,   
filing with or notice to any Governmental or Regulatory Authority or other  
public or private third party is necessary or required under any of the     
terms, conditions or provisions of any law or order of any Governmental or  
Regulatory Authority or any Contract to which the Company or any of its     
Subsidiaries or any of the Company Joint Ventures is a party or by which    
the Company or any of its Subsidiaries or any of the Company Joint Ventures 
or any of their respective assets or properties is bound for the execution  
and delivery of this Agreement by the Company, the performance by the       
Company of its obligations hereunder or the consummation of the             
transactions contemplated hereby, other than such consents, approvals,      
actions, filings and notices which the failure to make or obtain, as the    
case may be, individually or in the aggregate, would not reasonably be      
expected to have a material adverse effect on the Company and its           
Subsidiaries                                                                

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taken as a whole or on the ability of the Company to consummate the         
transactions contemplated by this Agreement.                                

3.05 SEC Reports, Financial Statements and Utility Reports. (a) The   
Company delivered to Parent prior to the execution of this Agreement a true     
and complete copy of each form, report, schedule, registration statement,       
registration exemption, if applicable, definitive proxy statement and other     
document (together with all amendments thereof and supplements thereto) filed   
by the Company or any of its Subsidiaries with the SEC since December 31, 1995  
(as such documents have since the time of their filing been amended or          
supplemented, the "Company SEC Reports"), which are all the documents (other    
than preliminary materials) that the Company and its Subsidiaries were          
required to file with the SEC since such date. As of their respective dates,    
the Company SEC Reports (i) complied as to form in all material respects with   
the requirements of the Securities Act or the Exchange Act, if applicable, as   
the case may be, and (ii) did not contain any untrue statement of a material    
fact or omit to state a material fact required to be stated therein or          
necessary in order to make the statements therein, in light of the              
circumstances under which they were made, not misleading. The audited           
consolidated financial statements and unaudited interim consolidated financial  
statements (including, in each case, the notes, if any, thereto) included in    
the Company SEC Reports (the "Company Financial Statements") complied as to     
form in all material respects with the published rules and regulations of the   
SEC with respect thereto, were prepared in accordance with U.S. generally       
accepted accounting principles applied on a consistent basis during the         
periods involved (except as may be indicated therein or in the notes thereto    
and except with respect to unaudited statements as permitted by Form 10-Q of    
the SEC) and fairly present (subject, in the case of the unaudited interim      
financial statements, to normal, recurring year-end audit adjustments (which    
are not expected to be, individually or in the aggregate, materially adverse    
to the Company and its Subsidiaries taken as a whole)) the consolidated         
financial position of the Company and its consolidated subsidiaries as at the   
respective dates thereof and the consolidated results of their operations and   
cash flows for the respective periods then ended. Except as set forth in        
Section 3.05 of the Company Disclosure Letter, each Subsidiary of the Company   
is treated as a consolidated subsidiary of the Company in the Company           
Financial Statements for all periods covered thereby.                           

(b)All material filings required to be made by the Company or any of its    
Subsidiaries since December 31, 1995, under the Federal Power Act (the      
"Power Act") and applicable state laws and regulations, have been filed     
with the Federal Energy Regulatory Commission (the "FERC"), the Department  
of Energy (the "DOE") or any appropriate state public utilities commission  
(including, without limitation, the state utility regulatory agencies of    
California, Idaho, Montana, Oregon, Utah, Washington and Wyoming), as the   
case may be, including all material written forms, statements, reports,     
agreements and all material documents, exhibits, amendments and supplements 
appertaining thereto, including but not limited to all material rates,      
tariffs, franchises, service agreements and related documents, complied, as 
of their respective dates, in all material respects with all applicable     
requirements of the appropriate statute and the rules and regulations       
thereunder.                                                                 

3.06 Absence of Certain Changes or Events. Except as disclosed in the 
Company SEC Reports filed prior to the date of this Agreement or Section 3.06   
of the Company Disclosure Letter, (a) between December 31, 1997 and the date    
hereof, there has not been any change, event or development having, or that     
would reasonably be expected to have, individually or in the aggregate, a       
material adverse effect on the Company and its Subsidiaries taken as a whole    
(other than those changes, events or developments occurring as a result of      
general economic or financial conditions or which are not unique to the         
Company and its Subsidiaries but also affect other entities who participate or  
are engaged in the lines of business in which the Company and its Subsidiaries  
are engaged), and (b) between December 31, 1997 and the date hereof (i) the     
Company, its Subsidiaries and the Company Joint Ventures have conducted their   
respective businesses only in the ordinary course substantially consistent      
with past practice and (ii) neither the Company nor any of its Subsidiaries     
nor any of the Company Joint Ventures has (x) acquired or agreed to acquire     
(by merging or consolidating with, or by purchasing a substantial equity        
interest in or a substantial portion of the assets of, or by any other manner)  
any business or any corporation, partnership, association or other business     
organization or division thereof for a purchase price (including the amount of  
any indebtedness assumed in connection therewith) of $25 million or more in     
any one                                                                         

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transaction or (y) sold, leased or otherwise disposed of any of its assets or   
properties (or agreed to do so) other than dispositions in the ordinary course  
of business consistent with past practice or having a net book value of $25     
million or less in any one transaction.                                         

  3.07 Absence of Undisclosed Liabilities. Except for matters reflected or
reserved against in the balance sheet for the period ended December 31, 1997    
included in the Company Financial Statements or as disclosed in the Company     
SEC Reports filed prior to the date hereof or in Section 3.07 of the Company    
Disclosure Letter, neither the Company nor any of its Subsidiaries had at such  
date, or has incurred since such date, any liabilities or obligations (whether  
absolute, accrued, contingent, fixed or otherwise, or whether due or to become  
due) of any nature that would be required by U.S. generally accepted            
accounting principles to be reflected on a consolidated balance sheet of the    
Company and its consolidated subsidiaries (including the notes thereto),        
except liabilities or obligations (i) which were incurred in the ordinary       
course of business consistent with past practice or (ii) which are not having,  
and would not reasonably be expected to have, individually or in the            
aggregate, a material adverse effect on the Company and its Subsidiaries taken  
as a whole.                                                                     

3.08 Legal Proceedings. Except as disclosed in the Company SEC Reports
filed prior to the date of this Agreement or in Section 3.08 of the Company     
Disclosure Letter and except for environmental matters which are governed by    
Section 3.15, (i) there are no actions, suits, arbitrations or proceedings      
pending or, to the knowledge of the Company, threatened against, nor to the     
knowledge of the Company are there any Governmental or Regulatory Authority     
investigations or audits pending or threatened against, the Company or any of   
its Subsidiaries or any of the Company Joint Ventures or any of their           
respective assets and properties which, individually or in the aggregate,       
would reasonably be expected to have a material adverse effect on the Company   
and its Subsidiaries taken as a whole or on the ability of the Company to       
consummate the transactions contemplated by this Agreement, and (ii) neither    
the Company nor any of its Subsidiaries is subject to any order of any          
Governmental or Regulatory Authority which, individually or in the aggregate,   
is having or would reasonably be expected to have a material adverse effect on  
the Company and its Subsidiaries taken as a whole or on the ability of the      
Company to consummate the transactions contemplated by this Agreement.          

3.09 Information Supplied. (a) The proxy statement relating to the    
Company Stockholders' Meeting (as defined in Section 6.03(b)), as amended or    
supplemented from time to time (as so amended and supplemented, the "Proxy      
Statement"), and any other documents to be filed by the Company with the SEC    
(including, without limitation, under the 1935 Act) in connection with the      
Merger and the other transactions contemplated hereby will (in the case of the  
Proxy Statement and any such other documents filed with the SEC under the       
Exchange Act or the Securities Act), comply as to form in all material          
respects with the requirements of the Exchange Act and the Securities Act,      
respectively, and will not, on the date of its filing or, in the case of the    
Proxy Statement, at the date it is mailed to stockholders of the Company and    
at the time of the Company Stockholders' Meeting, contain any untrue statement  
of a material fact or omit to state any material fact required to be stated     
therein or necessary in order to make the statements therein, in light of the   
circumstances under which they are made, not misleading, except that no         
representation is made by the Company with respect to information supplied in   
writing by or on behalf of Parent, the Partnership or Merger Sub expressly for  
inclusion therein and information incorporated by reference therein from        
documents filed by Parent or any of its Subsidiaries with the SEC.              

(b) The information supplied or to be supplied by the Company for     
inclusion in any filing by Parent with the LSE in respect of the Merger         
(including, without limitation, the Super Class 1 circular to be issued to      
shareholders of Parent (the "Circular") and the listing particulars under Part  
IV of the Financial Services Act 1986 of the United Kingdom (the "FSA")         
relating to Parent Ordinary Shares (the "Listing Particulars")) (together with  
any amendments or supplements thereto, the "Parent Disclosure Documents")       
will, at all relevant times, include all information relating to the Company,   
and information which is within the knowledge of each of the directors of the   
Company (or which it would be reasonable for them to obtain by making           
enquiries), which, in each case, is required to enable the Parent Disclosure    
Documents and the parties hereto to comply in all material respects with all    
United Kingdom statutory and other legal and regulatory provisions (including,  
without limitation, the Companies Act (as defined in Section 4.02(a), the FSA   
and the rules and regulations made                                              

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thereunder, and the rules and requirements of the LSE) and all such             
information contained in such documents will be substantially in accordance     
with the facts and will not omit anything material likely to affect the import  
of such information.                                                            

(c) Notwithstanding the foregoing provisions of this Section 3.09, no 
representation or warranty is made by the Company with respect to statements    
made or incorporated by reference in the Registration Statement, the Proxy      
Statement or the Parent Disclosure Documents based on information supplied by   
Parent expressly for inclusion or incorporation by reference therein or based   
on information which is not incorporated by reference in such documents but     
should have been disclosed pursuant to Section 4.09.                            

3.10 Permits; Compliance with Laws and Orders. The Company, its       
Subsidiaries and the Company Joint Ventures hold all permits, licenses,         
franchises, variances, exemptions, orders and approvals of all Governmental     
and Regulatory Authorities (other than environmental permits which are          
governed by Section 3.15) necessary for the lawful conduct of their respective  
businesses (the "Company Permits"), except for failures to hold such Company    
Permits which, individually or in the aggregate, are not having and would not   
reasonably be expected to have a material adverse effect on the Company and     
its Subsidiaries taken as a whole. The Company, its Subsidiaries and the        
Company Joint Ventures are in compliance with the terms of the Company          
Permits, except failures so to comply which, individually or in the aggregate,  
are not having and would not reasonably be expected to have a material adverse  
effect on the Company and its Subsidiaries taken as a whole. Except as          
disclosed in the Company SEC Reports filed prior to the date of this Agreement  
or Section 3.10 of the Company Disclosure Letter, the Company, its              
Subsidiaries and the Company Joint Ventures are not in violation of or default  
under any law or order of any Governmental or Regulatory Authority, except for  
such violations or defaults which, individually or in the aggregate, are not    
having and would not reasonably be expected to have a material adverse effect   
on the Company and its Subsidiaries taken as a whole.                           

 3.11 Compliance with Agreements. Except as disclosed in the Company SEC
Reports filed prior to the date of this Agreement or Section 3.11 of the        
Company Disclosure Letter, neither the Company nor any of its Subsidiaries nor  
any of the Company Joint Ventures nor, to the knowledge of the Company, any     
other party thereto is in breach or violation of, or in default in the          
performance or observance of any term or provision of, and no event has         
occurred which, with notice or lapse of time or both, would reasonably be       
expected to result in a default under, (i) the certificates or articles of      
incorporation or bylaws (or other comparable charter documents) of the Company  
or any of its Subsidiaries or (ii) any Contract to which the Company or any of  
its Subsidiaries or any of the Company Joint Ventures is a party or by which    
the Company or any of its Subsidiaries, or any of the Company Joint Ventures    
or any of their respective assets or properties is bound, except in the case    
of clause (ii) for breaches, violations and defaults which, individually or in  
the aggregate, are not having and would not reasonably be expected to have a    
material adverse effect on the Company and its Subsidiaries taken as a whole.   

   3.12 Taxes. Except as disclosed in the Company SEC Reports filed prior to
the date hereof or Section 3.12 of the Company Disclosure Letter:               

(a) Each of the Company and its Subsidiaries has filed all material tax 
returns and reports required to be filed by it, or requests for extensions  
to file such returns or reports have been timely filed or granted and have  
not expired, and all tax returns and reports are complete and accurate in   
all respects, except to the extent that such failures to either file, to    
have extensions granted that remain in effect or to file returns complete   
and accurate in all respects, as applicable, would not reasonably be        
expected to have, individually or in the aggregate, a material adverse      
effect on the Company and its Subsidiaries taken as a whole. The Company    
and each of its Subsidiaries has paid (or the Company has paid on its       
behalf) all taxes shown as due on such tax returns and reports. The most    
recent financial statements contained in the Company SEC Reports reflect an 
adequate reserve for all taxes payable by the Company and its Subsidiaries  
for all taxable periods and portions thereof accrued through the date of    
such financial statements, and no deficiencies for any taxes have been      
proposed, asserted or assessed against the Company or any of its            
Subsidiaries that are not adequately reserved for, except for inadequately  
reserved taxes and inadequately reserved deficiencies that would not        
reasonably be expected to, individually or in the aggregate, have a         
material adverse effect on                                                  

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the Company and its Subsidiaries taken as a whole. No requests for waivers  
of the time to assess any taxes against the Company or any of its           
Subsidiaries have been granted or are pending, except for requests with     
respect to such taxes that have been adequately reserved for in the most    
recent financial statements contained in the Company SEC Reports, or, to    
the extent not adequately reserved, the assessment of which would not       
reasonably be expected to have, individually or in the aggregate, a         
material adverse effect on the Company and its Subsidiaries taken as a      
whole.                                                                      

(b) Neither the Company nor any of its Subsidiaries has taken any action
or has any knowledge of any fact or circumstance that is reasonably likely  
to prevent the Merger from qualifying as a tax-free reorganization within   
the meaning of Code Section 368(a).                                         

(c) Neither the Company nor any of its Subsidiaries has filed a consent 
under Code Section 341(f) concerning collapsible corporations, neither the  
Company nor any of its Subsidiaries has made any payments, is obligated to  
make any payment, or is a party to any agreement that under certain         
circumstances could obligate it to make any payments that will not be       
deductible under Code Section 280G.                                         

 (d) Each of the Company and its Subsidiaries has disclosed on its federal
income tax returns all positions taken therein that could give rise to a    
substantial understatement of United States federal income tax within the   
meaning of Code Section 6662.                                               

 (e) Neither the Company nor any of its Subsidiaries is a party to any tax
allocation or sharing agreement. Neither the Company nor any of its         
Subsidiaries (i) has been a member of an affiliated group filing a          
consolidated federal income tax return (other than a group the common       
parent of which was the Company) or (ii) has any material liability for the 
taxes of any person (other than any of the Company and its Subsidiaries)    
under United States Treasury Regulation Section 1.1502-6 (or any similar    
provision or state, local, or foreign law), as a transferee or successor,   
by contract, or otherwise.                                                  

(f) As used in this Section 3.12 and in Section 4.12, "taxes" shall     
include all federal, state, local and foreign income, franchise, gross      
receipts, property, sales, use, excise, alternative-minimum, estimated and  
other taxes and duties of any jurisdiction, including obligations for       
withholding taxes from payments due or made to any other person and any     
interest, penalties or additions to tax.                                    

3.13 Employee Benefit Plans; ERISA. (a) Except as disclosed in the    
Company SEC Reports filed prior to the date of this Agreement or Section 3.13   
of the Company Disclosure Letter or as would not reasonably be expected to      
have a material adverse effect on the Company and its Subsidiaries taken as a   
whole, (i) all Company Employee Benefit Plans (as defined below) are in         
compliance with all applicable requirements of law, including without           
limitation ERISA (as defined below) and the Code, and (ii) neither the Company  
nor any of its Subsidiaries has any liabilities or obligations with respect to  
any such Company Employee Benefit Plans, whether accrued, contingent or         
otherwise, nor to the knowledge of the Company are any such liabilities or      
obligations expected to be incurred. Except as specifically set forth in        
Section 3.13 of the Company Disclosure Letter, the execution of, and            
performance of the transactions contemplated in, this Agreement will not        
(either alone or upon the occurrence of any additional or subsequent events)    
constitute an event under any Company Employee Benefit Plan that will or would  
reasonably be expected to result in any payment (whether of severance pay or    
otherwise), acceleration, forgiveness of indebtedness, vesting, distribution,   
increase in benefits or obligation to fund benefits with respect to any         
employee. The only severance agreements or severance policies applicable to     
the Company or any of its Subsidiaries are the agreements and policies          
specifically referred to in Section 3.13 of the Company Disclosure Letter.      

(b) As used herein:                                                   

(i) "Company Employee Benefit Plan" means any Plan (other than any      
"multiemployer plan," as that term is defined in Section 4001 of ERISA)     
entered into, established, maintained, sponsored, contributed to or         
required to be contributed to by the Company or any of its Subsidiaries for 
the benefit of the current or former employees or directors of the Company  
or any of its Subsidiaries and existing on the date of this Agreement or at 
any time subsequent thereto and on or prior to the Effective Time and, in   
the case of a Plan which is subject to Part 3 of Title I of the Employee    
Retirement Income Security Act of 1974, as                                  

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amended, and the rules and regulations thereunder ("ERISA"), Section 412 of 
the Code or Title IV of ERISA, at any time during the five-year period      
immediately preceding the date of this Agreement; and                       

 (ii) "Plan" means any employment, bonus, incentive compensation, deferred
compensation, long term incentive, pension, profit sharing, retirement,     
stock purchase, stock option, stock ownership, stock appreciation rights,   
phantom stock, leave of absence, layoff, vacation, day or dependent care,   
legal services, cafeteria, life, health, medical, accident, disability,     
severance, separation, termination, change of control or other benefit      
plan, agreement, practice, policy, program, scheme or arrangement, whether  
written or oral, and whether applicable to only one individual or a group   
of individuals, including, but not limited to any "employee benefit plan"   
within the meaning of Section 3(3) of ERISA.                                

(iii) "ERISA Affiliate" means any person, who on or before the Effective
Time, is under common control with the Company within the meaning of        
Section 414 of the Code.                                                    

   (c) Complete and correct copies of the following documents have been made
available to Parent, as of the date of this Agreement: (i) all material         
Company Employee Benefit Plans and any related trust agreements or related      
insurance contracts and pro forma option agreements, (ii) the most current      
summary plan descriptions of each Company Employee Benefit Plan subject to the  
requirement to give a summary plan description under ERISA, (iii) the most      
recent Form 5500 and Schedules thereto for each Company Employee Benefit Plan   
subject to such reporting, (iv) the most recent determination of the Internal   
Revenue Service with respect to the qualified status of each Company Employee   
Benefit Plan that is intended to qualify under Section 401(a) of the Code, (v)  
the most recent accountings with respect to each Company Employee Benefit Plan  
funded through a trust, (vi) the most recent actuarial report of the qualified  
actuary of each Company Employee Benefit Plan with respect to which actuarial   
valuations are conducted.                                                       

(d) Except as disclosed in the Company SEC Reports filed prior to the 
date of this Agreement or Section 3.13 of the Company Disclosure Letter,        
neither the Company nor any Subsidiary maintains or is obligated to provide     
benefits under any life, medical or health Plan (other than as an incidental    
benefit under a Plan qualified under Section 401(a) of the Code) which          
provides benefits to retirees or other terminated employees other than benefit  
continuations rights under the Consolidated Omnibus Budget Reconciliation Act   
of 1985, as amended.                                                            

   (e) Except as set forth in Section 3.13 of the Company Disclosure Letter,
each Company Employee Benefit Plan covers only employees who are employed by    
the Company or a Subsidiary (or former employees or beneficiaries with respect  
to service with the Company or a Subsidiary), so that the transactions          
contemplated by this Agreement will require no spin-off of assets and           
liabilities or other division or transfer of rights with respect to any such    
plan.                                                                           

(f) Except as disclosed in the Company SEC Reports filed prior to the 
date of this Agreement or Section 3.13 of the Company Disclosure Letter,        
neither the Company, any Subsidiary, any ERISA Affiliate nor any other          
corporation or organization controlled by or under common control with any of   
the foregoing within the meaning of Section 4001 of ERISA has at any time       
during the five (5) year period preceding the date hereof contributed to any    
"multiemployer plan", as that term is defined in Section 4001 of ERISA. With    
respect to each "multiemployer plan", as defined above, in which the Company,   
any Subsidiary or any ERISA Affiliate participates or has participated, (i)     
neither the Company, any Subsidiary nor any ERISA Affiliate has incurred, any   
material withdrawal liability, (ii) neither the Company, any Subsidiary nor     
any ERISA Affiliate has received any notice that (A) any such plan is being     
reorganized in a manner that will result, or would reasonably be expected to    
result, in material liability, (B) increased contributions of a material        
amount may be required to avoid a reduction in plan benefits or the imposition  
of an excise tax, or (C) any such plan is, or would reasonably be expected to   
become, insolvent, and (iii) to the knowledge of the Company, there are no      
PBGC (as defined below) proceedings against any such plan.                      

(g) Except as disclosed in the Company SEC Reports filed prior to the 
date of this Agreement or Section 3.13 of the Company Disclosure Letter, no     
event has occurred, and there exists no condition or set of circumstances in    
connection with any Company Employee Benefit Plan, under which the Company or   
any                                                                             

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Subsidiary, directly or indirectly (through any indemnification agreement or    
otherwise), could reasonably be expected to be subject to any risk of material  
liability under Section 409 of ERISA, Section 502(i) of ERISA, Title IV of      
ERISA or Section 4975 of the Code.                                              

(h) No transaction contemplated by this Agreement will result in      
liability to the Pension Benefit Guaranty Corporation ("PBGC") under Section    
302(c)(11), 4062, 4063, 4064 or 4069 of ERISA, or otherwise, with respect to    
the Company, any Subsidiary, Parent or any corporation or organization          
controlled by or under common control with any of the foregoing within the      
meaning of Section 4001 of ERISA, and, to the knowledge of the Company, no      
event or condition exists or has existed which would reasonably be expected to  
result in any material liability to the PBGC with respect to Parent, the        
Company, any Subsidiary or any such corporation or organization. Except as set  
forth in Section 3.13 of the Company Disclosure Schedule, no "reportable        
event" within the meaning of Section 4043 of ERISA has occurred with respect    
to any Company Employee Benefit Plan that is a defined benefit plan under       
Section 3(35) of ERISA other than "reportable events" as to which the           
requirement of notice to the PBGC within thirty days has been waived.           

(i) Except as set forth in Section 3.13 of the Company Disclosure     
Schedule, no employer securities, employer real property or other employer      
property is included in the assets of any Company Employee Benefit Plan.        

  (j) No stock appreciation rights are outstanding under the Company Stock
Incentive Plan or any other plan or arrangement maintained by the Company or    
any affiliate of the Company.                                                   

3.14 Labor Matters. (a) Except as set forth in Section 3.14 of the    
Company Disclosure Letter, neither the Company nor any of its Subsidiaries is   
a party to any collective bargaining agreement or other labor agreement with    
any union or labor organization. Except as disclosed in the Company SEC         
Reports filed prior to the date of this Agreement or in Section 3.14 of the     
Company Disclosure Letter, there are no disputes pending or, to the knowledge   
of the Company, threatened between the Company or any of its Subsidiaries or    
any of the Company Joint Ventures and any trade union or other representatives  
of its employees, except as would not, individually or in the aggregate,        
reasonably be expected to have a material adverse effect on the Company and     
its Subsidiaries taken as a whole, and, to the knowledge of the Company,        
except as set forth in Section 3.14 of the Company Disclosure Letter, there     
are no material organizational efforts presently being made involving any of    
the now unorganized employees of the Company or any of its Subsidiaries or any  
of the Company Joint Ventures. Since December 31, 1995, there has been no work  
stoppage, or strike by employees of the Company or any of its Subsidiaries or   
any of the Company Joint Ventures except as would not, individually or in the   
aggregate, reasonably be expected to have a material adverse effect on the      
Company and its Subsidiaries taken as a whole.                                  

 (b) To the knowledge of the Company, neither the Company nor any of its
Subsidiaries nor any of the Company Joint Ventures is in material violation of  
any labor laws in any country (or political subdivision thereof) in which they  
transact business except for such violations as would not, individually or in   
the aggregate, reasonably be expected to have a material adverse effect on the  
Company and its Subsidiaries taken as a whole.                                  

3.15 Environmental Matters. Except as disclosed in the Company SEC    
Reports filed prior to the date of this Agreement or in Section 3.15 of the     
Company Disclosure Letter and except as would not, individually or in the       
aggregate, reasonably be expected to have a material adverse effect on the      
Company and its Subsidiaries taken as a whole:                                  
(a) (i) Each of the Company, its Subsidiaries and the Company Joint     
Ventures is in compliance with all applicable Environmental Laws (as        
hereinafter defined); and                                                   

(ii) Neither the Company nor any of its Subsidiaries nor any of the     
Company Joint Ventures has received any written communication from any      
person or Governmental or Regulatory Authority that alleges that the        
Company or any of its Subsidiaries or any of the Company Joint Ventures is  
not in such compliance with applicable Environmental Laws.                  

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  (b) Each of the Company, its Subsidiaries and the Company Joint Ventures
has obtained all environmental, health and safety permits and governmental      
authorizations (collectively, the "Environmental Permits") necessary for the    
construction of its facilities and the conduct of its operations, as            
applicable, and all such Environmental Permits are in good standing or, where   
applicable, a renewal application has been timely filed and is pending agency   
approval, and the Company, its Subsidiaries and the Company Joint Ventures are  
in compliance with all terms and conditions of the Environmental Permits.       

(c) There is no Environmental Claim (as hereinafter defined) pending  

(i) against the Company or any of its Subsidiaries or any of the Company
Joint Ventures;                                                             

(ii) to the knowledge of the Company, against any person or entity whose
liability for any such Environmental Claim the Company or any of its        
Subsidiaries or any of the Company Joint Ventures has or may have retained  
or assumed either contractually or by operation of law; or                  

(iii) against any real or personal property or operations which the     
Company or any of its Subsidiaries or any of the Company Joint Ventures     
owns, leases or manages, in whole or in part.                               

   (d) To the knowledge of the Company, there have not been any Releases (as
hereinafter defined) of any Hazardous Material (as hereinafter defined) that    
would be reasonably likely to form the basis of any material Environmental      
Claim against the Company or any of its Subsidiaries or any of the Company      
Joint Ventures, or against any person or entity whose liability for any         
Environmental Claim the Company or any of its Subsidiaries or any of the        
Company Joint Ventures has or may have been retained or assumed either          
contractually or by operation of law.                                           

 (e) To the knowledge of the Company, with respect to any predecessor of
the Company or any of its Subsidiaries, there is no Environmental Claim         
pending or threatened in writing, and there has been no Release of Hazardous    
Materials that would be reasonably likely to form the basis of any              
Environmental Claim.                                                            

(f) There are no material facts specific to the Company that have not 
been disclosed to Parent which the Company reasonably believes are likely to    
form the basis of a Environmental Claim against the Company or any of its       
Subsidiaries or any of the Company Joint Ventures arising from (x) current      
environmental remediation or mining reclamation costs of the Company, its       
Subsidiaries and the Company Joint Ventures or such                             
 remediation or reclamation costs known to be required in the future, or (y)
any other environmental matter affecting the Company or its Subsidiaries or     
any of the Company Joint Ventures.                                              

(g) As used in this Section 3.15:                                     

(i) "Environmental Claims" means any and all administrative, regulatory 
or judicial actions, suits, demands, demand letters, directives, claims,    
liens, investigations, proceedings or written notices of noncompliance,     
liability or violation by any person or entity (including any Governmental  
or Regulatory Authority) alleging potential liability (including, without   
limitation, potential responsibility or liability for enforcement,          
investigatory costs, cleanup costs, governmental response costs, removal    
costs, remedial costs, natural resources damages, property damages,         
personal injuries or penalties) arising out of, based on or resulting from  

(A) the presence, or Release or threatened Release into the         
environment, of any Hazardous Materials at any location, whether or not 
owned, operated, leased or managed by the Company or any of its         
Subsidiaries or any of the Company Joint Ventures; or                   

(B) circumstances forming the basis of any violation, or alleged    
violation, of any Environmental Law; or                                 

(C) any and all claims by any third party seeking damages,          
contribution, indemnification, cost recovery, compensation or           
injunctive relief resulting from the presence or Release of any         
Hazardous Materials;                                                    

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(ii) "Environmental Laws" means all Federal, state and local laws, rules
and regulations relating to pollution, the environment (including, without  
limitation, ambient air, surface water, groundwater, land surface or        
subsurface strata) or protection of human health as it relates to the       
environment including, without limitation, laws and regulations relating to 
Releases or threatened Releases of Hazardous Materials, or otherwise        
relating to the manufacture, processing, distribution, use, treatment,      
storage, disposal, transport or handling of Hazardous Materials;            

(iii) "Hazardous Materials" means (a) any petroleum or petroleum        
products, radioactive materials, asbestos in any form that is or could      
become friable, urea formaldehyde foam insulation, and transformers or      
other equipment that contain dielectric fluid containing polychlorinated    
biphenyls; and (b) any chemicals, materials or substances which are now     
defined as or included in the definition of "hazardous substances",         
"hazardous wastes", "hazardous materials", "extremely hazardous wastes",    
"restricted hazardous wastes", "toxic substances", "toxic pollutants", or   
words of similar import, under any Environmental Law; and (c) any other     
chemical, material, substance or waste, exposure to which is now            
prohibited, limited or regulated under any Environmental Law in a           
jurisdiction in which the Company or any of its Subsidiaries or any of the  
Company Joint Ventures operates or any jurisdiction which has received such 
chemical, material, substance or waste from the Company or its              
Subsidiaries; and                                                           

(iv) "Release" means any release, spill, emission, leaking, injection,  
deposit, disposal, discharge, dispersal, leaching or migration into the     
atmosphere, soil, surface water, groundwater or property.                   

  3.16 Intellectual Property Rights. The Company and its Subsidiaries have
all right, title and interest in, or a valid and binding license to use, all    
Intellectual Property (as defined below) individually or in the aggregate       
material to the conduct of the businesses of the Company and its Subsidiaries   
taken as a whole. Neither the Company nor any Subsidiary of the Company is in   
default (or with the giving of notice or lapse of time or both, would be in     
default) under any license to use such Intellectual Property and, to the        
knowledge of the Company, such Intellectual Property is not being infringed by  
any third party, and neither the Company nor any Subsidiary of the Company is   
infringing any Intellectual Property of any third party, except for such        
defaults and infringements which, individually or in the aggregate, are not     
having and would not reasonably be expected to have a material adverse effect   
on the Company and its Subsidiaries taken as a whole. For purposes of this      
Agreement, "Intellectual Property" means patents and patent rights, trademarks  
and trademark rights, trade names and trade name rights, service marks and      
service mark rights, service names and service name rights, copyrights and      
copyright rights and other proprietary intellectual property rights and all     
pending applications for and registrations of any of the foregoing.             

3.17 Regulation as a Utility. (a) The Company is not regulated as a   
public utility by any state other than the States of California, Idaho,         
Montana, Oregon, Utah, Washington and Wyoming. Section 3.17 of the Company      
Disclosure Letter lists each Subsidiary of the Company which is a public        
utility or is otherwise engaged in the regulated supply (including generation,  
transmission or distribution) of electricity, natural gas and/or                
telecommunications. Except as set forth in Section 3.17 of the Company          
Disclosure Letter, neither the Company nor any "subsidiary company" or          
"affiliate" of the Company is subject to regulation as a public utility or      
public service company (or similar designation) by any state in the United      
States or any foreign country. The Company is not a public utility holding      
company under the 1935 Act.                                                     

(b) As used in this Section 3.17, the terms "subsidiary company" and  
"affiliate" shall have the respective meanings ascribed to them in the 1935     
Act.                                                                            

3.18 Insurance.  Except as set forth in Section 3.18 of the Company   
Disclosure letter, each of the Company and its Subsidiaries is, and has been    
continuously since January 1, 1994, insured with financially responsible        
insurers in such amounts and against such risks and losses as are customary in  
all material respects for companies conducting the business conducted by the    
Company and its Subsidiaries during such time period. Except as set forth in    
Section 3.18 of the Company Disclosure Letter, neither the Company nor any of   
its Subsidiaries has received any notice of cancellation or termination with    
respect to any material insurance policy of the Company or any of its           
Subsidiaries. The material insurance policies of the Company and each of its    
Subsidiaries are valid and enforceable policies.                                

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3.19 Vote Required. Assuming the accuracy of the representation and   
warranty contained in Section 4.19, the affirmative vote of the holders of      
record of at least (i) a majority of voting power of the outstanding shares of  
Company Common Stock and Company Preferred Stock voting together and (ii) a     
majority of the voting power of the Company Preferred Stock voting separately   
from the Company Common Stock as a single class with respect to the approval    
of this Agreement are the only votes of the holders of any class or series of   
the capital stock of the Company or its Subsidiaries required to approve this   
Agreement and approve the Merger and the other transactions contemplated        
hereby.                                                                         

 3.20 Opinion of Financial Advisor. The Company has received the opinion
of Salomon Smith Barney, dated the date hereof, to the effect that, as of the   
date hereof, the consideration to be received in the Merger by the              
stockholders of the Company is fair from a financial point of view to the       
stockholders of the Company, and a true and complete copy of such opinion has   
been delivered to Parent prior to the execution of this Agreement.              

   3.21 Ownership of Parent Common Stock. Neither the Company nor any of its
Subsidiaries beneficially owns any Parent Ordinary Shares or Parent ADSs.       

  3.22 Article VII of the Company's Articles of Incorporation and Sections
60.825-60.845 of the BCA Not Applicable. The Company has taken all necessary    
actions so that neither the provisions of Article VII of the Company's          
Articles of Incorporation nor the provisions of Sections 60.825-60.845 of the   
BCA (i.e., affiliated transactions and fair price provisions) will, before the  
termination of this Agreement, apply to this Agreement or the Merger or the     
other transactions contemplated hereby.                                         

3.23 Certain Contracts. Except as set forth in Section 3.23 of the    
Company Disclosure Letter, neither the Company nor any of its Subsidiaries or   
Joint Ventures is a party to, or bound by, any Contract containing any          
provision or covenant prohibiting or materially limiting the ability of the     
Company or any Company Subsidiary to engage in any business activity or         
compete with any person.                                                        

3.24 Year 2000.  The Company and its Subsidiaries have put into effect
practices and programs which the Company reasonably believes will enable all    
material software, hardware and equipment (including microprocessors) that is   
owned or utilized by the Company or any of its Subsidiaries in the operations   
of its or their respective business to be capable, by December 31, 1999, of     
accounting for all calculations using a century and date sensitive algorithm    
for the year 2000 and the fact that the year 2000 is a leap year and to         
otherwise continue to function without any material interruption caused by the  
occurrence of the year 2000.                                                    

  3.25 Joint Venture Representations. Each representation or warranty made
by the Company in this Article III relating to a Company Joint Venture that is  
neither operated nor managed by the Company or a Subsidiary of the Company      
shall be deemed to be made only to the Company's knowledge.                     

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ARTICLE IV  

REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PARTNERSHIP  

Parent (on behalf of itself and on behalf of Merger Sub) and the      
Partnership represent and warrant to the Company as follows (which              
representations and warranties of Parent on behalf of Merger Sub shall only be  
true and correct as of the Closing Date):                                       

4.01 Organization and Qualification. (a) Each of Parent and its       
Subsidiaries (other than the Partnership) is a corporation duly incorporated,   
validly existing and in good standing (with respect to jurisdictions which      
recognize the concept of good standing) under the laws of its jurisdiction of   
incorporation and has full corporate power and authority to conduct its         
business as and to the extent now conducted and to own, use and lease its       
assets and properties, except for such failures to be so incorporated,          
existing and in good standing (with respect to jurisdictions which recognize    
the concept of good standing) or to have such power and authority which,        
individually or in the aggregate, are not having and would not reasonably be    
expected to have a material adverse effect on Parent and its Subsidiaries       
taken as a whole. The Partnership is a general partnership validly existing     
under the laws of the State of Nevada. Each of the Partnership and Merger Sub   
was formed solely for the purpose of engaging in the transactions contemplated  
by this Agreement (other than, with respect to the Partnership, in connection   
with the investment of the initial partnership capital pursuant to or in        
accordance with the Partnership Agreement, dated December 3, 1998, by and       
between UKSub 1 and UKSub 2 (the "Partnership Agreement")), has engaged in no   
other business activities and has conducted its operations only as              
contemplated hereby (or, with respect to the Partnership, as contemplated by    
the Partnership Agreement). Except as disclosed in Section 4.01 of the Parent   
Disclosure Letter (as defined below), each of UKSub 1 and UKSub 2 was formed    
solely for the purpose of engaging in the transactions contemplated by this     
Agreement, has engaged in no other business activities and has conducted its    
operations only as contemplated hereby. Each of Parent and its Subsidiaries is  
duly qualified, licensed or admitted to do business and is in good standing     
(with respect to jurisdictions which recognize the concept of good standing)    
in each jurisdiction in which the ownership, use or leasing of its assets and   
properties, or the conduct or nature of its business, makes such                
qualification, licensing, admission or good standing necessary, except for      
such failures to be so qualified, licensed or admitted and in good standing     
(with respect to jurisdictions which recognize the concept of good standing)    
which, individually or in the aggregate, are not having and would not           
reasonably be expected to have a material adverse effect on Parent and its      
Subsidiaries taken as a whole. Section 4.01 of the letter dated the date        
hereof and delivered by Parent and Merger Sub to the Company concurrently with  
the execution and delivery of this Agreement (the "Parent Disclosure Letter")   
sets forth (i) the name and jurisdiction of incorporation of each Subsidiary    
of Parent, (ii) its authorized capital stock, (iii) the number of issued and    
outstanding shares of its capital stock and (iv) the record owners of such      
shares. Parent has previously delivered to the Company correct and complete     
copies of the memorandum and articles of association and bylaws (or other       
comparable charter documents) of Parent and each of its Subsidiaries, and the   
Partnership Agreement.                                                          

   (b) Section 4.01 of the Parent Disclosure Letter sets forth a description
as of the date hereof, of all Parent Joint Ventures, including (i) the name of  
each such party and Parent's interest therein, and (ii) a brief description of  
the principal line or lines of business conducted by each such entity.          

 (c) Except for interests in the Subsidiaries of Parent and as disclosed
in Section 4.01 of the Parent Disclosure Letter, Parent does not directly or    
indirectly own any equity or similar interest in, or any interest convertible   
into or exchangeable or exercisable for any equity or similar interest in, (i)  
any material corporation, partnership, joint venture or other business          
association or entity (other than non-controlling investments in the ordinary   
course of business and corporate partnering, development, cooperative           
marketing and similar undertakings and arrangements entered into in the         
ordinary course of business) or (ii) any other business association or entity   
the effect of which is having or could reasonably be expected to have a         
material adverse effect on Parent and its Subsidiaries taken as a whole.        

 4.02 Capital Stock. (a) The authorized share capital of Parent consists
solely of (i) 1,700,000,000 Parent Ordinary Shares, of which 1,198,629,102      
shares were issued as of November 30, 1998, and (ii) one                        

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Special Rights Non-Voting Redeemable Preference Share of (Pounds)1 (the         
"Special Share") which was issued as of such date. Since November 30, 1998,     
except as disclosed in the Parent SEC Reports filed prior to the date of this   
Agreement or Section 4.02 of the Parent Disclosure Letter, there has been no    
change in the number of issued Parent Ordinary Shares other than the issuance   
of Parent Ordinary Shares pursuant to options or rights outstanding as of such  
date to subscribe or purchase Parent Ordinary Shares, which options or rights   
are described in Section 4.02 of the Parent Disclosure Letter. All of the       
issued Parent Ordinary Shares are, and all Merger Ordinary Shares and all       
Parent Ordinary Shares to be issued to the ADR Depositary pursuant to Section   
2.01 will be, upon issuance, duly authorized, validly issued and fully paid     
and voting, and no class of shares is entitled to preemptive rights, except as  
provided in Section 89 of the Companies Act of 1985 of the United Kingdom (the  
"Companies Act"). Except pursuant to this Agreement, the Parent employee share  
schemes listed in Section 4.02 of the Parent Disclosure Letter (the "Parent     
Share Schemes") and except as disclosed in the Parent SEC Reports filed prior   
to the date of this Agreement or Section 4.02 of the Parent Disclosure Letter,  
on the date hereof there are no outstanding Options obligating Parent or any    
of its Subsidiaries to issue or sell any capital or other shares of Parent or   
to grant, extend or enter into any Option with respect thereto.                 

   (b) Except as disclosed in the Parent SEC Reports filed prior to the date
of this Agreement or Section 4.02 of the Parent Disclosure Letter, all of the   
outstanding shares of each Subsidiary of Parent are duly authorized, validly    
issued, fully paid and nonassessable and are owned, beneficially and of         
record, by Parent or a Subsidiary wholly owned, directly or indirectly, by      
Parent, free and clear of any Liens. Except as disclosed in the Parent SEC      
Reports filed prior to the date of this Agreement or Section 4.02 of the        
Parent Disclosure Letter, there are no (i) outstanding Options obligating       
Parent or any of its Subsidiaries to issue or sell any shares of any            
Subsidiary of Parent or to grant, extend or enter into any such Option or (ii)  
voting trusts, proxies or other commitments, understandings, restrictions or    
arrangements in favor of any person other than Parent or a Subsidiary wholly    
owned, directly or indirectly, by Parent with respect to the voting of or the   
right to participate in dividends or other earnings in respect of any shares    
of any Subsidiary of Parent.                                                    

   (c) Except as disclosed in the Parent SEC Reports filed prior to the date
of this Agreement or Section 4.02 of the Parent Disclosure Letter and except    
for the right of the holder of the Special Share to require Parent to redeem    
the Special Share pursuant to the Articles of Association of Parent, there are  
no outstanding contractual obligations of Parent or any Subsidiary of Parent    
to repurchase, redeem or otherwise acquire any Parent Ordinary Shares or any    
shares of any Subsidiary of Parent or to provide funds to, or make any          
investment (in the form of a loan, capital contribution or otherwise) in, any   
Subsidiary of Parent or any other person.                                       

(d) As of the date of this Agreement, no bonds, debentures, notes or  
other indebtedness of Parent having the right to vote on any matters on which   
shareholders may vote are issued or outstanding.                                

4.03 Authority Relative to this Agreement. Each of Parent, the        
Partnership and Merger Sub (and, with respect to Section 2.01 only, UKSub 1     
and UKSub 2) has full power and authority to enter into this Agreement, and,    
subject (in the case of this Agreement) to obtaining the Parent Shareholders'   
Approval (as defined in Section 6.03(a)), to perform its obligations            
hereunder, and to consummate the transactions contemplated hereby. The          
execution, delivery and performance of this Agreement by each of Parent, the    
Partnership and Merger Sub (and, with respect to Section 2.01 only, UKSub 1     
and UKSub 2) and the consummation by each of Parent, the Partnership and        
Merger Sub (and, with respect to Section 2.01 only, UKSub 1 and UKSub 2) of     
the transactions contemplated hereby have been duly and validly approved by     
the Board of Directors of Parent and Merger Sub (and, with respect to Section   
2.01 only, UKSub 1 and UKSub 2) and the general partners of the Partnership,    
and by the Partnership in its capacity as sole stockholder of Merger Sub, the   
Board of Directors of Parent has passed a resolution declaring the              
advisability of the Merger and resolving that the Merger and the creation of,   
and the authorization of the Board of Directors to allot, the Parent Ordinary   
Shares in connection with the Merger be submitted for consideration by the      
shareholders of Parent, and no other corporate proceedings on the part of       
Parent or Merger Sub or their shareholders, or the Partnership or its general   
partners are necessary to authorize the execution, delivery and performance of  
this Agreement by Parent, the Partnership or Merger Sub (and, with respect to   
Section 2.01 only, UKSub 1 and UKSub 2) and the consummation by Parent, the     
Partnership and Merger Sub (and, with respect to Section 2.01 only, UKSub 1     
and UKSub 2) of the transactions contemplated hereby, other than obtaining the  
Parent Shareholders' Approval. This                                             

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Agreement has been duly and validly executed and delivered by each of Parent,   
the Partnership and Merger Sub (and, with respect to Section 2.01 only, UKSub   
1 and UKSub 2) and constitutes a legal, valid and binding obligation of each    
of Parent, the Partnership and Merger Sub (and, with respect to Section 2.01    
only, UKSub 1 and UKSub 2) enforceable against each of Parent, the Partnership  
and Merger Sub (and, with respect to Section 2.01 only, UKSub 1 and UKSub 2)    
in accordance with its terms, except as enforceability may be limited by        
bankruptcy, insolvency, reorganization, moratorium or other similar laws        
affecting the enforcement of creditors' rights generally and by general         
equitable principles (regardless of whether such enforceability is considered   
in a proceeding in equity or at law).                                           

4.04 Non-Contravention; Approvals and Consents. The execution and     
delivery of this Agreement by each of Parent, the Partnership and Merger Sub    
(and, with respect to Section 2.01 only, UKSub 1 and UKSub 2) do not, and the   
performance by each of Parent, the Partnership and Merger Sub (and, with        
respect to Section 2.01 only, UKSub 1 and UKSub 2) of its obligations           
hereunder and the consummation of the transactions contemplated hereby will     
not, conflict with, result in a violation or breach of, constitute (with or     
without notice or lapse of time or both) a default under, result in or give to  
any person any right of payment or reimbursement, termination, cancellation,    
modification or acceleration of, or result in the creation or imposition of     
any Lien upon any of the assets or properties of Parent or any of its           
Subsidiaries or any of the Parent Joint Ventures under, any of the terms,       
conditions or provisions of (i) the memorandum or articles of association or    
bylaws (or other comparable charter documents) of Parent or any of its          
Subsidiaries or any of the Parent Joint Ventures, (ii) the Partnership          
Agreement; or (iii) subject to the obtaining of the Parent Shareholders'        
Approval and the taking of the actions described in paragraph (b) of this       
Section, (x) any laws or orders of any Governmental or Regulatory Authority     
applicable to Parent or any of its Subsidiaries or any of the Parent Joint      
Ventures or any of their respective assets or properties, or (y) any Contracts  
to which Parent or any of its Subsidiaries or any of the Parent Joint Ventures  
is a party or by which Parent or any of its Subsidiaries or any of the Parent   
Joint Ventures or any of their respective assets or properties is bound,        
excluding from the foregoing clauses (x) and (y) conflicts, violations,         
breaches, defaults, rights of payment or reimbursement, terminations,           
modifications, accelerations and creations and impositions of Liens which,      
individually or in the aggregate, would not reasonably be expected to have a    
material adverse effect on Parent and its Subsidiaries taken as a whole or on   
the ability of Parent, the Partnership and Merger Sub to consummate the         
transactions contemplated by this Agreement.                                    

(b) Except (i) for the filing of a premerger notification report by   
Parent under the HSR Act, (ii) for the filing of the Registration Statement     
with the SEC pursuant to the Securities Act, the declaration of the             
effectiveness of the Registration Statement by the SEC and filings with         
various state securities authorities that are required in connection with the   
transactions contemplated by this Agreement, (iii) for the filing of the        
Articles of Merger and other appropriate merger documents required by the BCA   
with the Secretary of State and appropriate documents with the relevant         
authorities of other states in which the Constituent Corporations are           
qualified to do business, (iv) for the filings with, notices to, and approvals  
of, the LSE and NYSE, (v) the filing of a notice pursuant to Section 721 of     
the Defense Production Act of 1950, or any successor thereto ("Exon-Florio"),   
(vi) the approval of the FERC pursuant to the Power Act, (vii) the approval of  
any jurisdictional state regulating agencies, (viii) the giving of indications  
by the OFT, SOS, OFFER and OFWAT as described in Sections 7.01(k) and (l) and   
(ix) as disclosed in Section 4.04 of the Parent Disclosure Letter, no consent,  
approval or action of, filing with or notice to any Governmental or Regulatory  
Authority or other public or private third party is necessary or required       
under any of the terms, conditions or provisions of any law or order of any     
Governmental or Regulatory Authority or any Contract to which Parent or any of  
its Subsidiaries or any of the Parent Joint Ventures is a party or by which     
Parent or any of its Subsidiaries or any of the Parent Joint Ventures or any    
of their respective assets or properties is bound for the execution and         
delivery of this Agreement by each of Parent, the Partnership and Merger Sub,   
the performance by each of Parent, the Partnership and Merger Sub of its        
obligations hereunder or the consummation of the transactions contemplated      
hereby, other than such consents, approvals, actions, filings and notices       
which the failure to make or obtain, as the case may be, individually or in     
the aggregate, would not reasonably be expected to have a material adverse      
effect on Parent and its Subsidiaries taken as a whole or on the ability of     
Parent, the Partnership and Merger Sub to consummate the transactions           
contemplated by this Agreement.                                                 

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4.05 SEC Reports and Financial Statements. (a) Parent delivered to the
Company prior to the execution of this Agreement a true and complete copy of    
each form, report, schedule, registration statement, definitive proxy           
statement and other document (together with all amendments thereof and          
supplements thereto) filed by Parent or any of its Subsidiaries with the SEC    
since December 31, 1995 (as such documents have since the time of their filing  
been amended or supplemented, the "Parent SEC Reports"), which are all the      
documents (other than preliminary materials) that Parent and its Subsidiaries   
were required to file with the SEC since such date. As of their respective      
dates, the Parent SEC Reports (i) complied as to form in all material respects  
with the requirements of the Securities Act or the Exchange Act, as the case    
may be, and (ii) did not contain any untrue statement of a material fact or     
omit to state a material fact required to be stated therein or necessary in     
order to make the statements therein, in light of the circumstances under       
which they were made, not misleading. The audited consolidated financial        
statements and unaudited interim consolidated financial statements (including,  
in each case, the notes, if any, thereto) included in the Parent SEC Reports    
(the "Parent Financial Statements") complied as to form in all material         
respects with the published rules and regulations of the SEC with respect       
thereto, were prepared in accordance with generally accepted accounting         
principles in the United Kingdom applied on a consistent basis during the       
periods involved (except as may be indicated therein or in the notes thereto    
and except with respect to unaudited statements) and fairly present (subject,   
in the case of the unaudited interim financial statements, to normal,           
recurring year-end audit adjustments (which are not expected to be,             
individually or in the aggregate, materially adverse to Parent and its          
Subsidiaries taken as a whole)) the consolidated financial position of Parent   
and its consolidated subsidiaries as at the respective dates thereof and the    
consolidated results of their operations and cash flows for the respective      
periods then ended. Except as set forth in Section 4.05 of the Parent           
Disclosure Letter, each Subsidiary of Parent is treated as a consolidated       
subsidiary of Parent in the Parent Financial Statements for all periods         
covered thereby.                                                                

(b) All material filings required to be made by Parent or any of its  
Subsidiaries since December 31, 1995 in the United Kingdom under the            
Electricity Act 1989, the Water Industry Act 1991, the Water Resources Act      
1991 and the Telecommunications Act 1984 have been filed with OFFER, OFWAT and  
the Office of Telecommunications Services or any other appropriate              
Governmental or Regulatory Authority, as the case may be, including all         
material forms, statements, reports, agreements and all material documents,     
exhibits, amendments and supplements appertaining thereto, including but not    
limited to all material rates, tariffs, franchises, service agreements and      
related documents, complied, as of their respective dates, in all material      
respects with all applicable requirements of the statute and the rules and      
regulations thereunder.                                                         

4.06 Absence of Certain Changes or Events. Except as disclosed in the 
Parent SEC Reports filed prior to the date of this Agreement or Section 4.06    
of the Parent Disclosure Letter, (a) since March 31, 1998 there has not been    
any change, event or development having, or that would reasonably be expected   
to have, individually or in the aggregate, a material adverse effect on Parent  
and its Subsidiaries taken as a whole (other than those changes, events, or     
developments occurring as a result of general economic or financial conditions  
or which are not unique to Parent and its Subsidiaries but also affect other    
entities who participate or are engaged in the lines of business in which       
Parent and its Subsidiaries are engaged), and (b) between March 31, 1998 and    
the date hereof (i) Parent, its Subsidiaries and the Parent Joint Ventures      
have conducted their respective businesses only in the ordinary course          
substantially consistent with past practice.                                    

  4.07 Absence of Undisclosed Liabilities. Except for matters reflected or
reserved against in the balance sheet for the period ended March 31, 1998       
included in the Parent Financial Statements or as disclosed in Section 4.07 of  
the Parent Disclosure Letter, neither Parent nor any of its Subsidiaries had    
at such date, or has incurred since that date, any liabilities or obligations   
(whether absolute, accrued, contingent, fixed or otherwise, or whether due or   
to become due) of any nature that would be required by generally accepted       
accounting principles in the United Kingdom to be reflected on a consolidated   
balance sheet of Parent and its consolidated subsidiaries (including the notes  
thereto), except liabilities or obligations (i) which were incurred in the      
ordinary course of business consistent with past practice or (ii) which have    
not been, and would not reasonably be expected to be, individually or in the    
aggregate, materially adverse to Parent and its Subsidiaries taken as a whole.  

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4.08 Legal Proceedings. Except as disclosed in the Parent SEC Reports 
filed prior to the date of this Agreement or in Section 4.08 of the Parent      
Disclosure Letter and except for environmental matters which are governed by    
Section 4.15, (i) there are no actions, suits, arbitrations or proceedings      
pending or, to the knowledge of Parent, threatened against, nor to the          
knowledge of Parent are there any Governmental or Regulatory Authority          
investigations or audits pending or threatened against, Parent or any of its    
Subsidiaries or any of the Parent Joint Ventures or any of their respective     
assets and properties which, individually or in the aggregate, would            
reasonably be expected to have a material adverse effect on Parent, and its     
Subsidiaries taken as a whole or on the ability of Parent, the Partnership and  
Merger Sub to consummate the transactions contemplated by this Agreement, and   
(ii) neither Parent nor any of its Subsidiaries nor any of the Parent Joint     
Ventures is subject to any order of any Governmental or Regulatory Authority    
which, individually or in the aggregate, is having or would reasonably be       
expected to have a material adverse effect on Parent and its Subsidiaries       
taken as a whole or on the ability of Parent, the Partnership and Merger Sub    
to consummate the transactions contemplated by this Agreement.                  

  4.09 Information Supplied. (a) The registration statement on Form F-4 to
be filed with the SEC by Parent in connection with the issuance of Parent ADSs  
in the Merger, as amended or supplemented from time to time (as so amended and  
supplemented, the "Registration Statement"), and any other documents to be      
filed by Parent with the SEC or any other Governmental or Regulatory Authority  
in connection with the Merger and the other transactions contemplated hereby    
will (in the case of the Registration Statement and any such other documents    
filed with the SEC under the Securities Act or the Exchange Act) comply as to   
form in all material respects with the requirements of the Exchange Act and     
the Securities Act, respectively, and will not, on the date of its filing or,   
in the case of the Registration Statement, at the time it becomes effective     
under the Securities Act, or at the date the Proxy Statement is mailed to       
stockholders of the Company and at the time of the Company Stockholders'        
Meeting, contain any untrue statement of a material fact or omit to state any   
material fact required to be stated therein or necessary in order to make the   
statements therein, in light of the circumstances under which they are made,    
not misleading, except that no representation is made by Parent, the            
Partnership or Merger Sub with respect to information supplied in writing by    
or on behalf of the Company expressly for inclusion therein and information     
incorporated by reference therein from documents filed by the Company or any    
of its Subsidiaries with the SEC.                                               

  (b) The Parent Disclosure Documents will, at all relevant times, include
all information relating to Parent, and information which is within the         
knowledge of each of the directors of Parent (or which it would be reasonable   
for them to obtain by making enquiries), which, in each case, is required to    
enable the Parent Disclosure Documents and the parties hereto to comply in all  
material respects with all United Kingdom statutory and other legal and         
regulatory provisions (including, without limitation, the Companies Act, the    
FSA and the rules and regulations made thereunder, and the rules and            
requirements of the LSE) and all such information contained in such documents   
will be substantially in accordance with the facts and will not omit anything   
material likely to affect the import of such information.                       

(c) Notwithstanding the foregoing provisions of this Section 4.09, no 
representation or warranty is made by Parent with respect to statements made    
or incorporated by reference in the Registration Statement, the Proxy           
Statement, the Listing Particulars or the Circular based on information         
supplied by the Company expressly for inclusion or incorporation by reference   
therein or based on information which is not made in or incorporated by         
reference in such documents but which should have been disclosed pursuant to    
Section 3.09.                                                                   

 4.10 Permits; Compliance with Laws and Orders. Parent. its Subsidiaries
and the Parent Joint Ventures hold all permits, licenses, franchises            
variances, exemptions, orders and approvals of all Governmental and Regulatory  
Authorities (other than environmental permits which are governed by Section     
4.15) necessary for the lawful conduct of their respective businesses (the      
"Parent Permits"), except for failures to hold such Parent Permits which,       
individually or in the aggregate, are not having and would not reasonably be    
expected to have a material adverse effect on Parent and its Subsidiaries       
taken as a whole. Parent, its Subsidiaries and the Parent Joint Ventures are    
in compliance with the terms of the Parent Permits, except failures so to       
comply which, individually or in the aggregate, are not having and would not    
reasonably be expected to have a material adverse                               

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effect on Parent and its Subsidiaries taken as a whole. Except as disclosed in  
the Parent SEC Reports filed prior to the date of this Agreement, Parent and    
its Subsidiaries and the Parent Joint Ventures are not in violation of or       
default under any law or order of any Governmental or Regulatory Authority,     
except for such violations or defaults which, individually or in the            
aggregate, are not having and would not reasonably be expected to have a        
material adverse effect on Parent and its Subsidiaries taken as a whole.        

4.11 Compliance with Agreements. Except as disclosed in the Parent SEC
Reports filed prior to the date of this Agreement or Section 4.11 of the        
Parent Disclosure Letter, neither Parent nor any of its Subsidiaries nor, to    
the knowledge of Parent, any other party thereto is in breach or violation of,  
or in default in the performance or observance of any term or provision of,     
and no event has occurred which, with notice or lapse of time or both, would    
reasonably be expected to result in a default under, (i) the memorandum or      
articles of association (or other comparable charter documents) of Parent or    
any of its material Subsidiaries or (ii) any Contract to which Parent or any    
of its Subsidiaries is a party or by which Parent or any of its Subsidiaries    
or any of their respective assets or properties is bound, except in the case    
of clause (ii) for breaches, violations and defaults which, individually or in  
the aggregate, are not having and would not reasonably be expected to have a    
material adverse effect on Parent and its Subsidiaries taken as a whole.        

4.12 Taxes. (a) Each of Parent and its Subsidiaries has filed all     
material tax returns and reports required to be filed by it, or requests for    
extensions to file such returns or reports have been timely filed or granted    
and have not expired and all tax returns and reports are complete and accurate  
in all material respects. Parent and each of its Subsidiaries has paid (or      
Parent has paid on its behalf) all taxes shown as due on such tax returns and   
reports. The most recent financial statements contained in the Parent SEC       
Reports reflect an adequate reserve for all taxes payable by Parent and its     
Subsidiaries for all taxable periods and portions thereof accrued through the   
date of such financial statements, and no deficiencies for any taxes have been  
proposed, asserted or assessed against Parent or any of its Subsidiaries that   
are not adequately reserved for, except for inadequately reserved taxes and     
inadequately reserved deficiencies that would not, individually or in the       
aggregate, have a material adverse effect on Parent and its Subsidiaries taken  
as a whole. No requests for waivers of the time to assess any taxes against     
Parent or any of its Subsidiaries have been granted or are pending, except for  
requests with respect to such taxes that have been adequately reserved for in   
the most recent financial statements contained in the Parent SEC Reports, or,   
to the extent not adequately reserved, the assessment of which would not,       
individually or in the aggregate, have a material adverse effect on Parent and  
its Subsidiaries taken as a whole.                                              

(b) Neither Parent nor any of its Subsidiaries has taken any action or
has any knowledge of any fact or circumstance that is reasonably likely to      
prevent the Merger from qualifying as a tax-free reorganization within the      
meaning of Code Section 368(a).                                                 

(c) UKSub 1 and UKSub 2 are not public limited corporations.          

   (d) Parent directly owns the whole of the issued share capital of UKSub 1
and UKSub 2.                                                                    

 (e) UKSub 1 and UKSub 2 directly own all of the equity interests in the
Partnership.                                                                    

 (f) Prior to the Closing Date, Parent will make an election pursuant to
Section 301.7701-3 of the U.S. Treasury regulations promulgated under the Code  
to treat UKSub 1 and UKSub 2 as entities disregarded as separate from Parent    
and will make an election under Section 301.7701-3 of the U.S. Treasury         
regulations to treat the Partnership as an association taxable as a             
corporation. Neither Parent nor any of its Subsidiaries has taken any action    
that (or has failed to take any action if such failure) would reasonably be     
likely to cause UKSub 1 or UKSub 2 to be characterized as an association        
taxable as a corporation for U.S. federal income tax purposes.                  

(g) Parent has satisfied, and until the Closing Date will satisfy, the
active trade or business test specified in Section 1.367(a)-3(c)(3) of the      
U.S. Treasury regulations for a minimum period of three years prior to the      
Closing Date.                                                                   

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(h) None of Parent, UKSub 1, UKSub 2, the Partnership, nor any other  
affiliate of Parent has any intention to redeem, acquire, or to cause the       
Company or any affiliate of the Company to acquire, or to arrange for another   
person to acquire, any of the ADS Consideration or the Ordinary Share           
Consideration.                                                                  

  (i) Neither Parent nor any Parent affiliate, directly or indirectly, has
paid any expense incurred by the Company, any Company affiliate or any Company  
stockholder in connection with the transactions contemplated by this            
Agreement.                                                                      

  (j) Neither Parent nor any Parent affiliate, directly or indirectly, has
loaned any funds to any escrow account, trust or other fund established to pay  
any expenses incurred by the Company, any Company affiliate or any Company      
stockholder in connection with the transactions contemplated by this            
Agreement.                                                                      

   (k) Neither Parent nor any Parent affiliate, directly or indirectly, owns
any stock issued by the Company unless acquired directly from the Company.      

  4.13 Parent Employee Benefit Plans. (a) Parent has made available to the
Company complete and correct copies, as of the date of this Agreement, of: (i)  
the current trust deeds and rules of each of the material employee benefit      
plans to which Parent and its Subsidiaries make or could become liable to make  
payments for providing retirement, death, disability or life assurance          
benefits (the "Parent Employee Benefit Plans") (including any draft             
amendments); (ii) the most recently prepared explanatory booklets and           
announcements relating to each of the Parent Employee Benefit Plans; (iii) a    
copy of the actuary's report on the latest actuarial valuation of the Parent    
Employee Benefit Plans, if applicable; and (iv) the rules of the Parent Share   
Schemes.                                                                        

(b) The Parent Employee Benefit Plans are the only material schemes to
which Parent and its Subsidiaries make or could become liable to make payments  
for providing retirement, death, disability or life assurance benefits.         

(c) To the extent such exemption is intended by Parent, the Parent    
Employee Benefit Plans are exempt approved schemes within the meaning of        
Chapter 1 Part XIV of the Income and Corporation Taxes Act 1988. Except as      
specifically set forth in Section 4.13 of the Parent Disclosure Letter,         
members of the Parent Employee Benefit Plans are contracted-out of the State    
Earnings Related Pension Scheme.                                                

(d) To the knowledge of Parent, there is no amount which is treated by
Section 144 of the Pension Schemes Act 1993 or Section 75 of the Pensions Act   
1995 as a debt due to the trustees of the Parent Employee Benefit Plans or      
from Parent or any of its Subsidiaries to the trustees of any other benefit     
plan except for such debts which would not reasonably be expected to have a     
material adverse effect on the Parent and its Subsidiaries taken as a whole.    
The Parent Employee Benefit Plans have not ceased to admit new members.         

 (e) Except as set forth in Section 4.13 of the Parent Disclosure Letter
and except for disputes which would not reasonably be expected to have a        
material adverse effect on Parent and its Subsidiaries taken as a whole, there  
is no dispute about the benefits payable under the Parent Employee Benefit      
Plans and, to the knowledge of Parent, there are no circumstances which might   
give rise to any such dispute.                                                  

(f) To the knowledge of Parent, the actuary's report on the latest    
actuarial valuation accurately describes the financial position of each Parent  
Employee Benefit Plan for which an actuarial valuation is required by law at    
its effective date and in accordance with the assumptions employed for that     
valuation. Except as set forth in Section 4.13 of the Parent Disclosure         
Letter, nothing has happened since that date which would, to a material         
extent, affect the level of funding of any Parent Employee Benefit Plan and,    
since that date, contributions have been paid to each Parent Employee Benefit   
Plan at the rate recommended by the actuary. Except as set forth in Section     
4.13 of the Parent Disclosure Letter, no assets have been withdrawn by Parent   
or any of its Subsidiaries from any Parent Employee Benefit Plan (except to     
pay benefits or by way of reimbursement of expenses) since the effective date   
of the latest actuarial valuation of that plan.                                 

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 (g) Except as set forth in Section 4.13 of the Parent Disclosure Letter
or as would not reasonably be expected to have a material adverse effect on     
Parent and its Subsidiaries taken as a whole, the Parent Employee Benefit       
Plans comply with and have been administered in accordance with all applicable  
laws, regulations and requirements. All amounts due to the Parent Employee      
Benefit Plans at any time prior to the month in which this Agreement is signed  
have been paid.                                                                 

   4.14 Labor Matters. (a) Except as set forth in Section 4.14 of the Parent
Disclosure Letter, neither Parent nor any of its Subsidiaries is a party to     
any collective bargaining agreement, recognition agreement, European Works      
Council or other labor agreement with any union, labor organization or other    
responsible body. Except as disclosed in the Parent SEC Reports filed prior to  
the date of this Agreement or in Section 4.14 of the Parent Disclosure Letter,  
there are no disputes pending or, to the knowledge of Parent, threatened        
between Parent or any of its Subsidiaries or any of the Parent Joint Ventures   
and any trade union or other representatives of its employees, except as would  
not, individually or in the aggregate, reasonably be expected to have a         
material adverse effect on Parent and its Subsidiaries taken as a whole, and,   
to the knowledge of Parent, there are no material organization efforts          
presently being made involving any of the now unorganized employees of the      
Parent or any of its Subsidiaries or any of the Parent Joint Ventures. Since    
December 31, 1995, there has been no work stoppage, strike or other concerted   
action by employees of Parent or any of its Subsidiaries except as would not,   
individually or in the aggregate, reasonably be expected to have a material     
adverse effect on Parent and its Subsidiaries taken as a whole.                 

(b) To the knowledge of Parent, neither Parent nor any of its         
Subsidiaries nor any of the Parent Joint Ventures is in violation of any labor  
laws in any country (or political subdivision thereof) in which they transact   
business, except for such violations as would not, individually or in the       
aggregate, reasonably be expected to have a material adverse effect on Parent   
and its Subsidiaries taken as a whole.                                          

   4.15 Environmental Matters. Except as disclosed in the Parent SEC Reports
filed prior to the date of this Agreement or in Section 4.15 of the Parent      
Disclosure Letter and except as would not, individually or in the aggregate,    
reasonably be expected to have a material adverse effect on Parent and its      
Subsidiaries taken as a whole:                                                  

 (a) (i) Each of Parent, its Subsidiaries and the Parent Joint Ventures is
in compliance with all applicable Environmental Laws (as hereinafter        
defined); and                                                               

 (ii) Neither Parent nor any of its Subsidiaries nor any of the Parent
Joint Ventures has received any written communication from any person   
or Governmental or Regulatory Authority that alleges that Parent or any 
of its Subsidiaries or Joint Ventures is not in such compliance with    
applicable Environmental Laws.                                          

(b) Each of Parent, its Subsidiaries and the Parent Joint Ventures has  
obtained all environmental, health and safety permits and governmental      
authorizations (collectively, the "Environmental Permits") necessary for    
the construction of its facilities and the conduct of their operations, as  
applicable, and all such Environmental Permits are in full force and effect 
or, where applicable, a renewal application has been timely filed and is    
pending agency approval, and Parent, its Subsidiaries and the Parent Joint  
Venture are in compliance with all terms and conditions of the              
Environmental Permits.                                                      

(c) There is no Environmental Claim (as hereinafter defined) pending    

(i) against Parent or any of its Subsidiaries or any of the Parent  
Joint Ventures;                                                         

(ii) to the knowledge of Parent, against any person or entity whose 
liability for any Environmental Claim Parent or any of its Subsidiaries 
or any of the Parent Joint Ventures has or may have retained or assumed 
either contractually or by operation of law; or                         

(iii) against any real or personal property or operations which     
Parent or any of its Subsidiaries or any of the Parent Joint Ventures   
owns, leases or manages in whole or in part.                            

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(d) To Parent's knowledge, there have not been any Releases (as         
hereinafter defined) of any Hazardous Material (as hereinafter defined)     
that would be reasonably likely to form the basis of any Environmental      
Claim against Parent or any of its Subsidiaries or any of the Parent Joint  
Ventures, or against any person or entity whose liability for any           
Environmental Claim Parent or any of its Subsidiaries or any of the Parent  
Joint Ventures has or may have retained or assumed either contractually or  
by operation of law.                                                        

(e) As used in this Section 4.15:                                       

(i) "Environmental Claims" means any and all administrative,        
regulatory or judicial actions, suits, demands, demand letters,         
directives, claims, liens, investigations, proceedings or notices of    
noncompliance, liability or violation (written or oral) by any person   
or entity (including any Governmental or Regulatory Authority) alleging 
potential liability (including, without limitation, potential           
responsibility or liability for enforcement, investigatory costs,       
cleanup costs, governmental response costs, removal costs, remedial     
costs, natural resources damages, property damages, personal injuries   
or penalties) arising out of, based on or resulting from                

(A) the presence, or Release or threatened Release into the     
environment, of any Hazardous Materials at any location, whether or 
not owned, operated, leased or managed by the Parent or any of its  
Subsidiaries or any of the Parent Joint Ventures; or                

(B) circumstances forming the basis of any violation, or alleged
violation, of any Environmental Law; or                             

(C) any and all claims by any third party seeking damages,      
contribution, indemnification, cost recovery, compensation or       
injunctive relief resulting from the presence or Release of any     
Hazardous Materials;                                                

(ii) "Environmental Laws" means all European Union, national,       
regional, or local laws, rules and regulations relating to pollution,   
the environment (including, without limitation, ambient air, surface    
water, groundwater, land surface or subsurface strata) or protection of 
human health as its relates to the environmental including, without     
limitation, laws and regulations relating to Releases or threatened     
Releases of Hazardous Materials, or otherwise relating to the           
manufacture, processing, distribution, use, treatment, storage,         
disposal, transport or handling of Hazardous Materials including,       
without limitation, Part II and paragraphs 161 and 162 of Schedule 22   
of the Environment Act 1995 and the Department of the Environment       
Transport and the Regions Consultation Draft Guidance on Contaminated   
Land dated October 1998 but not to the extent that any modification     
thereof introduced in the final form of this guidance imposes           
materially more onerous or stringent requirements in respect of         
contaminated land or pollution.                                         

(iii) "Hazardous Materials" means (a) any petroleum or petroleum    
products, radioactive materials, asbestos in any form that is or could  
become friable, urea formaldehyde foam insulation, and transformers or  
other equipment that contain dielectric fluid containing                
polychlorinated biphenyls; and (b) any chemicals, materials or          
substances which are now defined as or included in the definition of    
"hazardous substances", "hazardous wastes", "hazardous materials",      
"extremely hazardous wastes", "restricted hazardous wastes", "toxic     
substances", "toxic pollutants", or words of similar import, under any  
Environmental Law; and (c) any other chemical, material, substance or   
waste, exposure to which is now prohibited, limited or regulated under  
any Environmental Law in a jurisdiction in which Parent or any of its   
Subsidiaries or any of the Parent Joint Ventures operates or any        
jurisdiction which has received such chemical, material, substance or   
waste from Parent or its Subsidiaries; and                              

(iv) "Release" means any release, spill, emission, leaking,         
injection, deposit, disposal, discharge, dispersal, leaching or         
migration into the atmosphere, soil, surface water, groundwater or      
property.                                                               

 4.16 Intellectual Property Rights. Parent and its Subsidiaries have all
right, title and interest in, or a valid and binding license to use, all        
Intellectual Property individually or in the aggregate material to the conduct  

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of the businesses of Parent and its Subsidiaries taken as a whole. Neither      
Parent nor any Subsidiary of Parent is in default (or with the giving of        
notice or lapse of time or both, would be in default) under any license to use  
such Intellectual Property, to the knowledge of Parent, such Intellectual       
Property is not being infringed by any third party, and neither Parent nor any  
Subsidiary of Parent is infringing any Intellectual Property of any third       
party, except for such defaults and infringements which, individually or in     
the aggregate, are not having and would not reasonably be expected to have a    
material adverse effect on Parent and its Subsidiaries taken as a whole.        

  4.17 Vote Required. The only votes of the holders of any class of shares
of Parent required to approve the Merger and the other transactions             
contemplated hereby (other than any vote which may be required in order to      
give effect to the conversion of the Company Stock Options in accordance with   
Section 6.10) are the affirmative vote of a majority of such ordinary           
shareholders of Parent as (being entitled to do so) are present and vote (or,   
in the case of a vote taken on a poll, the affirmative vote by shareholders or  
their proxies representing a majority of the Parent Ordinary Shares in respect  
of which votes were validly exercised) at the Parent Shareholders Meeting in    
relation to the approval of the Merger, the creation of, and authorization of   
the Board of Directors of Parent to allot, the Parent Ordinary Shares in        
connection with the Merger.                                                     

4.18 Opinion of Financial Advisor. Parent has received the opinion of 
Morgan Stanley Dean Witter Discover Inc., dated the date hereof, to the effect  
that, as of the date hereof, the consideration to be paid in the Merger by      
Parent is fair from a financial point of view to Parent, and a true and         
complete copy of such opinion has been delivered to the Company prior to the    
execution of this Agreement.                                                    

4.19 Ownership of Company Common Stock. Neither Parent nor any of its 
Subsidiaries or other affiliates beneficially owns any shares of Company        
Common Stock.                                                                   

4.20 Insurance. Except as set forth in Section 4.20 of the Parent     
Disclosure Letter, each of Parent and its Subsidiaries is, and has been         
continuously since January 1, 1994, insured with financially responsible        
insurers in such amounts and against such risks and losses as are customary in  
all material respects for companies conducting the business conducted by        
Parent and its Subsidiaries during such time period. Except as set forth in     
Section 4.20 of the Parent Disclosure Letter, neither Parent nor any of its     
Subsidiaries has received any notice of cancellation or termination with        
respect to any material insurance policy of Parent or any of its Subsidiaries.  
The insurance policies of Parent and each of its Subsidiaries are valid and     
enforceable policies.                                                           

4.21 Year 2000. Parent and its Subsidiaries have put into effect      
practices and programs which Parent reasonably believes will enable all         
material software, hardware and equipment (including microprocessors) that are  
owned or utilized by Parent or any of its Subsidiaries in the operations of     
its or their respective business to be capable, by December 31, 1999 of         
accounting for all calculations using a century and date sensitive algorithm    
for the year 2000, and the fact that the year 2000 is a leap year and to        
otherwise continue to function without material interruption caused by the      
occurrence of the year 2000.                                                    

   4.22 Joint Venture Representations. Each representation and warranty made
by Parent in this Article IV relating to a Parent Joint Venture that is         
neither operated nor managed by Parent or a Subsidiary of Parent shall be       
deemed to be made only to Parent's knowledge.                                   

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ARTICLE V 

COVENANTS 

5.01 Covenants of the Company. At all times from and after the date   
hereof until the Effective Time, the Company covenants and agrees as to itself  
and its Subsidiaries that (except as expressly contemplated or permitted by     
this Agreement, or to the extent that Parent shall otherwise previously         
consent in writing, which consent shall not be unreasonably withheld or         
delayed):                                                                       

(a) Ordinary Course. The Company and each of its Subsidiaries shall     
conduct their businesses only in, and the Company and each of its           
Subsidiaries shall not take any action except in, the ordinary course       
substantially consistent with past business practice. Without limiting the  
generality of the foregoing, the Company and its Subsidiaries shall use all 
commercially reasonable efforts to preserve intact in all material respects 
their present business organizations, to maintain in effect all existing    
material permits, to keep available the services of their key officers and  
employees, to maintain their assets and properties in good working order    
and condition, ordinary wear and tear excepted, to maintain insurance on    
their tangible assets and businesses in substantially the same amounts and  
against substantially the same risks and losses as are currently in effect, 
to preserve their relationships with customers and suppliers and others     
having significant business dealings with them and to comply in all         
material respects with all laws and orders of all Governmental or           
Regulatory Authorities applicable to them.                                  

(b) Charter Documents. The Company shall not, nor shall it permit any of
its Subsidiaries to, amend or propose to amend its certificate or articles  
of incorporation or bylaws or its memorandum and articles of association    
(or other comparable corporate charter documents).                          

(c) Dividends. The Company shall not, nor shall it permit any of its    
Subsidiaries to, (i) declare, set aside or pay any dividends on or make     
other distributions in respect of any of its capital stock or share         
capital, except:                                                            

(A) that the Company may continue the declaration and payment of    
regular cash dividends (including increases consistent with past        
practice) on Company Common Stock and the Company Preferred Stock, with 
usual record and payment dates for such dividends in accordance with    
past dividend practice; provided, that no such dividend on the Company  
Common Stock shall exceed the amount budgeted therefor in the Company   
Budget (as hereinafter defined), and                                    

(B) for the declaration and payment of dividends by (x) a wholly-   
owned Subsidiary solely to its parent corporation, (y) Bridger Coal     
Company in accordance with past practice and (z) Subsidiaries of        
regular cash dividends with usual record and payment dates (including   
increases consistent with past practice) in accordance with past        
dividend practice, and                                                  

(ii) split, combine, reclassify or take similar action with respect to  
any of its capital stock or share capital or issue or authorize or propose  
the issuance of any other securities in respect of, in lieu of or in        
substitution for shares of its capital stock or comprised in its share      
capital, (iii) except as disclosed in Section 5.01(c) of the Company        
Disclosure Letter, adopt a plan of complete or partial liquidation or       
resolutions providing for or authorizing such liquidation or a dissolution, 
merger, consolidation, restructuring, recapitalization or other             
reorganization or (iv) except as disclosed in Section 5.01(c) of the        
Company Disclosure Letter, directly or indirectly redeem, repurchase or     
otherwise acquire any shares of its capital stock or comprised in its share 
capital or any Option with respect thereto except:                          

(A) in connection with intercompany purchases of capital stock or   
share capital,                                                          

(B) for the purpose of funding employee stock ownership or dividend 
reinvestment, stock purchase plans and other incentive plans disclosed  
in Section 5.01(d) of the Company Disclosure Letter in accordance with  
past practice, and                                                      

(C) Prior to the Closing Date, the Company shall redeem all         
outstanding shares of its $1.28 Series, $1.18 Series and $1.16 Series   
of no par serial preferred stock.                                       

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(d) Share Issuances. The Company shall not, nor shall it permit any of  
its Subsidiaries to, issue, deliver or sell, or authorize or propose the    
issuance, delivery or sale of, any shares of its capital stock or comprised 
in its share capital or any Option with respect thereto (other than (i) the 
issuance of Company Common Stock upon the exercise of Options issued        
pursuant to the Company's Stock Incentive Plan outstanding on the date of   
this Agreement and in accordance with their present terms, (ii) except as   
specifically set forth under the heading "Long-Term Incentive Awards" on    
the Schedule of Ongoing Compensation Obligations attached to Section        
5.01(d) of the Company Disclosure Letter, the issuance of options or awards 
pursuant to the Company's Stock Incentive Plan in accordance with its       
present terms and only in connection with the hiring of new employees, and  
the issuance of shares of Company Common Stock upon exercise of such        
options or awards, (iii) the issuance by a wholly-owned Subsidiary of its   
capital stock to its parent corporation, or modify or amend any right of    
any holder of outstanding shares of capital stock or Options with respect   
thereto) and (iv) shares of Company Preferred Stock with a stated value of  
up to an aggregate of $250 million.                                         

(e) Acquisitions. Except as set forth in Section 5.01(e) of the Company 
Disclosure Letter and other than as provided in the 1999 operating budget   
of the Company, a copy of which has been disclosed to and discussed with    
Parent, or any other budget of the Company thereafter approved by Parent,   
which approval shall not be unreasonably withheld (collectively, the        
"Company Budget"), the Company shall not, nor shall it permit any of its    
Subsidiaries to, acquire (by merging or consolidating with, or by           
purchasing a substantial equity interest in or a substantial portion of the 
assets of, or by any other manner) any business or any corporation,         
partnership, association or other business organization or division thereof 
or otherwise acquire or agree to acquire any assets in excess of $25        
million in any one transaction; provided, that this Section 5.01(e) shall   
not prohibit any capital expenditures made in accordance with Section       
5.01(j).                                                                    

(f) Dispositions. Other than as set forth in Section 5.01(f) of the     
Company Disclosure Letter, the Company shall not, nor shall it permit any   
of its Subsidiaries to, sell, lease, grant any security interest in or      
otherwise dispose of or encumber any of its assets or properties, other     
than dispositions in the ordinary course of its business consistent with    
past practice or having an aggregate net book value of $25 million or less  
in any one transaction.                                                     

 (g) Indebtedness. Other than as expressly provided in the Company Budget,
the Company shall not, nor shall it permit any of its Subsidiaries to,      
incur or guarantee any indebtedness (including any debt borrowed or         
guaranteed or otherwise assumed, including, without limitation, the         
issuance of debt securities or warrants or rights to acquire debt) or enter 
into any "keep well" or other agreement to maintain any financial condition 
of another person or enter into any arrangement having the economic effect  
of any of the foregoing other than (i) short-term indebtedness in the       
ordinary course of business consistent with past practice (such as the      
issuance of commercial paper or the use of existing credit facilities) in   
an aggregate amount not exceeding $500 million; (ii) long-term indebtedness 
not aggregating more than $200 million and (iii) indebtedness entered into  
in connection with the refinancing of indebtedness outstanding on the date  
of this Agreement or incurred in compliance with this Section 5.01(g).      

(h) Employee Benefits. Except as set forth on Section 5.01(h) of the    
Company Disclosure Letter, the Company shall not, nor shall it permit any   
of its Subsidiaries to, enter into, adopt, amend (except as may be required 
by applicable law) or terminate any Company Employee Benefit Plan, or       
increase in any manner the compensation or fringe benefits of any director  
or executive officer, or, except for normal increases in the ordinary       
course of business consistent with past practice that, in the aggregate, do 
not result in a material increase in benefits or compensation expense to    
the Company and its Subsidiaries taken as a whole, increase in any manner   
the compensation or fringe benefits of any employee, or pay any benefit not 
required by any plan or arrangement in effect as of the date hereof and, in 
no event shall the Company or its Subsidiaries be permitted to grant to any 
employee any rights that are not in effect on the date hereof to any        
payment (whether of severance pay or otherwise), acceleration, forgiveness  
of indebtedness, vesting, distribution, increase in benefits or increase in 
obligations to fund benefits with respect to that employee resulting from a 
change in control or change in ownership of the Company or any of its       
Subsidiaries.                                                               

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(i) Affiliate Contracts. Except as disclosed in Section 5.01(i) of the  
Company Disclosure Letter, the Company shall not, nor shall it permit any   
of its Subsidiaries or, within the exercise of its reasonable commercial    
efforts, its Joint Ventures to, except as otherwise expressly provided for  
in this Agreement, enter into any Contract or amend or modify any existing  
Contract, or engage in any new transaction outside the ordinary course of   
business consistent with past practice or not on an arm's length basis,     
with any affiliate of such party or any of its Subsidiaries.                

(j) Capital Expenditures. The Company shall not, nor shall it permit any
of its Subsidiaries to, make any capital expenditures or commitments other  
than (i) as required by applicable law, (ii) capital expenditures incurred  
in connection with the repair or replacement of facilities destroyed or     
damaged due to casualty or accident (whether or not covered by insurance),  
and (iii) other capital expenditures in excess of 110% of the aggregate     
amount provided for such purposes in the Company Budget.                    

(k) 1935 Act. The Company shall not, nor shall it permit any of its     
Subsidiaries to, engage in any activities which would cause a change in its 
status, or that of its Subsidiaries, under the 1935 Act, including any      
action or inaction that would cause the prior approval of the SEC under the 
1935 Act to be required for the consummation of the transactions            
contemplated hereby.                                                        

(l) Regulatory Status. The Company shall not, nor shall it permit any of
its Subsidiaries to, agree or consent to any material agreements or         
modifications of material existing agreements with any Government or        
Regulatory Authority in respect of the operations of their businesses       
except where following discussion with the relevant authority such          
agreements or modifications are imposed upon the Company.                   

(m) Transmission, Generation. Except as required pursuant to tariffs on 
file with the FERC as of the date hereof, or as set forth in Section        
5.02(m) of the Company Disclosure Letter, the Company shall not, nor shall  
it permit its Subsidiaries to:                                              

(i) commence construction of any additional generating, transmission
or delivery capacity in excess of 500 megawatts, or                     

(ii) obligate itself to purchase or otherwise acquire, or to sell or
otherwise dispose of, or to share, any additional generating,           
transmission or delivery plants or facilities, in an amount in excess   
of $25 million in any one transaction, except as set forth in the       
Company Budget. Any regulatory order potentially imposing any such      
obligation shall be immediately forwarded to Parent.                    

(n) Accounting. The Company shall not, nor shall it permit any of its   
Subsidiaries to, make any material changes in their accounting methods,     
except as required by law, rule, regulation or applicable generally         
accepted accounting principles.                                             

(o) Tax Matters. The Company shall not take any action which (or fail to
take any action if such failure) would cause the Merger to fail to qualify  
as a reorganization described in Code Section 368(a).                       

(p) No Breach. The Company shall not, nor shall it permit any of its    
Subsidiaries to willfully take or fail to take any action that would or is  
reasonably likely to result (i) in a material breach of any provision of    
this Agreement, or (ii) in any of its representations and warranties set    
forth in this Agreement being untrue on and as of the Closing Date.         

 (q) No Litigation. The Company shall not, nor shall it permits any of its
Subsidiaries to, initiate any material actions, suits, arbitrations or      
proceedings.                                                                

(r) Tax-Exempt Status. The Company shall not, nor shall it permit any of
its Subsidiaries to, except as otherwise expressly provided for in this     
Agreement, take any action that would be reasonably likely to jeopardize    
the qualification of any material amount of outstanding revenue bonds which 
qualify on the date hereof under Section 142(a) of the Code as "exempt      
facility bonds" or as tax-exempt industrial development bonds under Section 
103(b)(4) of the Internal Revenue Code of 1954, as amended, prior to the    
enactment of the Tax Reform Act of 1986.                                    

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(s) Advice of Changes. The Company shall confer with Parent on a regular
and frequent basis with respect to the Company's business and operations    
and other matters relevant to the Merger, and shall promptly advise Parent, 
orally and in writing, of any material change or event, including, without  
limitation, any complaint, investigation or hearing by any Governmental or  
Regulatory Authority (or communication indicating the same may be           
contemplated) or the institution or threat of material litigation; provided 
that the Company shall not be required to make any disclosure to the extent 
such disclosure would constitute a violation of any applicable law or       
regulation.                                                                 

(t) Notice and Cure. The Company will notify Parent in writing of, and  
will use all commercially reasonable efforts to cure before the Closing,    
any event, transaction or circumstance, as soon as practical after it       
becomes known to the Company, that causes or will cause any covenant or     
agreement of the Company under this Agreement to be breached or that        
renders or will render untrue in any material respect any representation or 
warranty of the Company contained in this Agreement. The Company also will  
notify Parent in writing of, and will use all commercially reasonable       
efforts to cure, before the Closing, any violation or breach, as soon as    
practical after it becomes known to the Company, of any representation,     
warranty, covenant or agreement made by the Company. No notice given        
pursuant to this paragraph shall have any effect on the representations,    
warranties, covenants or agreements contained in this Agreement for         
purposes of determining satisfaction of any condition contained herein.     

(u) Fulfillment of Conditions. Subject to the terms and conditions of   
this Agreement, the Company will take or cause to be taken all commercially 
reasonable steps necessary or desirable and will proceed diligently and in  
good faith to satisfy each condition to its obligations contained in this   
Agreement and to consummate and make effective the transactions             
contemplated by this Agreement, and the Company will not, nor will it       
permit any of its Subsidiaries to, take or fail to take any action that     
would reasonably be expected to result in the nonfulfillment of any such    
condition.                                                                  

5.02 Covenants of Parent. At all times from and after the date hereof 
until the Effective Time, Parent covenants and agrees as to itself and its      
Subsidiaries that (except as expressly contemplated or permitted by this        
Agreement, or to the extent that the Company shall otherwise previously         
consent in writing, which consent shall not be unreasonably withheld or         
delayed):                                                                       

(a) Ordinary Course. Parent and each of its Subsidiaries shall conduct  
their businesses only in, and Parent and each of its Subsidiaries shall not 
take any action except in, the ordinary course consistent with past         
practice. Without limiting the generality of the foregoing, Parent and its  
Subsidiaries shall use all commercially reasonable efforts to preserve      
intact in all material respects their present business organizations and    
reputation, to maintain in effect all existing permits, to keep available   
the services of their key officers and employees, to maintain their assets  
and properties in good working order and condition, ordinary wear and tear  
excepted, to maintain insurance on their tangible assets and businesses in  
such amounts and against such risks and losses as are currently in effect,  
to preserve their relationships with customers and suppliers and others     
having significant business dealings with them and to comply in all         
material respects with all laws and orders of all Governmental or           
Regulatory Authorities applicable to them.                                  

(b) Charter Documents. Parent shall not, nor shall it permit any of its 
Subsidiaries to, amend or propose to amend its certificate or articles of   
incorporation or bylaws or its memorandum and articles of association (or   
other comparable corporate charter documents).                              

(c) Dividends. Other than as set forth in the Parent Budget (as defined 
in Section 5.02(e)), Parent shall not, nor shall it permit any of its       
Subsidiaries to,                                                            

(i) declare, set aside or pay any dividends on or make other        
distributions in respect of any of its capital stock or share capital,  
except:                                                                 

(A) that Parent may continue the declaration and payment of     
regular cash dividends (including increases consistent with past    
practice) on Parent Ordinary Shares, with usual record and payment  
dates for such dividends in accordance with past dividend practice; 
provided, that no                                                   

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such dividend shall exceed by more than 12% the dividend payable    
during the prior fiscal year in respect of the comparable time      
period, and                                                         

  (B) for the declaration and payment of dividends by a wholly-owned
Subsidiary solely to its parent corporation, and                    

(ii) other than in connection with the restructuring of the         
transactions contemplated hereby pursuant to Section 6.07, split,       
combine, reclassify or take similar action with respect to any of its   
capital stock or share capital or issue or authorize or propose the     
issuance of any other securities in respect of, in lieu of or in        
substitution for shares of its capital stock or comprised in its share  
capital, (iii) adopt a plan of complete or partial liquidation or       
resolutions providing for or authorizing such liquidation or a          
dissolution, merger, consolidation, restructuring, recapitalization or  
other reorganization or (iv) other than as described in Section 5.02(c) 
of the Parent Disclosure Letter, directly or indirectly redeem,         
repurchase or otherwise acquire any shares of its capital stock or      
comprised in its share capital or any Option with respect thereto       
except:                                                                 

 (A) in connection with intercompany purchases of capital stock or
share capital,                                                      

 (B) for the purpose of funding employee share ownership, dividend
reinvestment, stock purchase and other incentive plans disclosed in 
Section 5.02 (c) of the Parent Disclosure Letter in accordance with 
past practice or                                                    

(C) the redemption of the Special Share in accordance with its  
terms.                                                              

(d) Share Issuances. Parent shall not, nor shall it permit any of its   
Subsidiaries to, issue, deliver or sell, or authorize or propose the        
issuance, delivery or sale of, any shares of its capital stock or comprised 
in its share capital or any Option with respect thereto (other than (i) up  
to 125 million shares of Parent Ordinary Shares for general corporate       
purposes, (ii) the issuance of Parent Ordinary Shares or stock              
appreciation, share awards or similar rights, as the case may be, pursuant  
to the Parent Share Schemes, in each case outstanding on the date of this   
Agreement and in accordance with their present terms or pursuant to any     
share scheme of Parent to be adopted in the ordinary course consistent with 
past practice, (iii) the issuance of options or awards pursuant to Parent   
Share Schemes in accordance with their present terms and, except as set     
forth in Section 5.02(d) of the Parent Disclosure Letter, only in           
connection with the hiring of new employees, and the issuance of shares of  
Parent Ordinary Shares upon exercise of such options or awards, and (iv)    
the issuance by a wholly-owned Subsidiary of its capital stock to its       
parent corporation, or modify or amend any right of any holder of           
outstanding shares of capital stock or Options with respect thereto.        

(e) Acquisitions. Other than as provided in the 1999 operating budget of
Parent, a copy of which has been disclosed to and discussed with the        
Company, or any subsequently-adopted budget of Parent disclosed to the      
Company (collectively, the "Parent Budget"), Parent shall not, nor shall it 
permit any of its Subsidiaries to, acquire (by merging or consolidating     
with, or by purchasing a substantial equity interest in or a substantial    
portion of the assets of, or by any other manner) any business or any       
corporation, partnership, association or other business organization or     
division thereof (i) in excess of (Pounds)750 million or (ii) if such       
acquisition would have a material adverse affect on Parent and its          
Subsidiaries taken as a whole, without the prior written consent of the     
Company.                                                                    

(f) Dispositions. Other than as provided in the Parent Budget, Parent   
shall not, nor shall it permit any of its Subsidiaries to, sell, lease,     
grant any security interest in or otherwise dispose of or encumber any of   
its assets or properties, other than dispositions in the ordinary course of 
its business consistent with past practice and having an aggregate value of 
less than (Pounds)750 million.                                              

(g) Indebtedness. Parent shall not, nor shall it permit any of its      
Subsidiaries to, incur or guarantee any indebtedness (including any debt    
borrowed or guaranteed or otherwise assumed, including, without limitation, 
the issuance of debt securities or warrants or rights to acquire debt) or   
enter into any "keep well" or other agreement to maintain any financial     
condition of another Person or enter into any arrangement                   

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having the economic effect of any of the foregoing, other than indebtedness 
in an aggregate amount not exceeding 110% of the amount of indebtedness     
provided for in the Parent Budget.                                          

 (h) Affiliate Contracts. Parent shall not, nor shall it permit any of its
Subsidiaries or, within the exercise of its reasonable commercial efforts,  
its Joint Ventures to, enter into any Contract or amend or modify any       
existing Contract, or engage in any new transaction outside the ordinary    
course of business consistent with past practice or not on an arm's length  
basis, with any affiliate of such party or any of its Subsidiaries.         

(i) Capital Expenditures. Parent shall not, nor shall it permit any of  
its Subsidiaries to, make any capital expenditures or commitments (except   
as required by law or regulation) in excess of 110% of the aggregate amount 
provided for such purposes in the Parent Budget.                            

(j) 1935 Act. Parent shall not, nor shall it permit any of its          
Subsidiaries to, engage in any activities which would cause a change in its 
status, or that of its Subsidiaries, under the 1935 Act, including any      
action or inaction that would cause the prior approval of the SEC under the 
1935 Act to be required for the consummation of the transactions            
contemplated hereby.                                                        

(k) UK Licensing Regime.  Parent shall not, nor shall it permit any of  
its Subsidiaries to, engage in any activities or omit to do anything which  
would entitle any Governmental or Regulatory Authority to revoke in whole   
or in material part any material license, authorization or appointment or   
which would otherwise materially change the status of Parent or any of its  
Subsidiaries (Parent and its Subsidiaries being referred to as the "Parent  
Group") thereunder.                                                         

(l) Transmission, Generation. Except as set forth in Section 5.02(l) of 
the Parent Disclosure Letter, Parent shall not, nor shall it permit its     
Subsidiaries to:                                                            

(i) commence construction of any additional generating, transmission
or delivery capacity in excess of 500 megawatts, or                     

(ii) obligate itself to purchase or otherwise acquire, or to sell or
otherwise dispose of, or to share, any additional generating,           
transmission or delivery plants or facilities, in an amount in excess   
of $200 million in any one transaction.                                 

(m) Accounting. Parent shall not, nor shall it permit any of its        
Subsidiaries to, make any changes in their accounting methods, except as    
required by law, rule, regulation or applicable generally accepted          
accounting principles.                                                      

(n) Tax Matters.  Parent shall not, nor shall it permit any of its      
Subsidiaries to, take any action which (or fail to take any action if such  
failure) would cause the Merger to fail to qualify as a reorganization      
described in Section 368(a) of the Code.                                    

(o) No Breach. Parent shall not, nor shall it permit any of its         
Subsidiaries to, willfully take or fail to take any action that would or is 
reasonably likely to result (i) in a material breach of any provision of    
this Agreement, or (ii) in any of its representations and warranties set    
forth in this Agreement being untrue on and as of the Closing Date.         

(p) Advice of Changes. Parent shall confer with the Company on a regular
and frequent basis with respect to Parent's business and operations and     
other matters relevant to the Merger, and shall promptly advise the         
Company, orally and in writing, of any material change or event, including, 
without limitation, any complaint, investigation or hearing by any          
Governmental or Regulatory Authority (or communication indicating the same  
may be contemplated) or the institution or threat of litigation, having, or 
which, insofar as can be reasonably foreseen, could have, a material        
adverse effect on Parent and its Subsidiaries taken as a whole or on the    
ability of Parent to consummate the transactions contemplated hereby;       
provided that Parent shall not be required to make any disclosure to the    
extent such disclosure would constitute a violation of any applicable law   
or regulation.                                                              

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(q) Notice and Cure. Parent will notify the Company in writing of, and  
will use all commercially reasonable efforts to cure before the Closing,    
any event, transaction or circumstance, as soon as practical after it       
becomes known to Parent, that causes or will cause any covenant or          
agreement of Parent under this Agreement to be breached or that renders or  
will render untrue any representation or warranty of Parent contained in    
this Agreement. Parent will also notify the Company in writing of, and will 
use all commercially reasonable efforts to cure, before the Closing, any    
violation or breach, as soon as practical after it becomes known to Parent, 
of any representation, warranty, covenant or agreement made by Parent. No   
notice given pursuant to this paragraph shall have any effect on the        
representations, warranties, covenants or agreements contained in this      
Agreement for purposes of determining the satisfaction of any condition     
contained herein.                                                           

(r) Fulfillment of Conditions.  Subject to the terms and conditions of  
this Agreement, Parent will take or cause to be taken all commercially      
reasonable steps necessary or desirable and proceed diligently and in good  
faith to satisfy each condition to the Company's obligations contained in   
this Agreement and to consummate and make effective the transactions        
contemplated by this Agreement, and Parent will not, nor will it permit any 
of its Subsidiaries to, take or fail to take any action that would          
reasonably be expected to result in the nonfulfillment of any such          
condition.                                                                  

5.03 Joint Executive Committee.  As soon as practicable after the date
hereof, Parent and the Company shall establish a joint executive committee      
(the "Joint Executive Committee") which shall be comprised of three nominees    
of Parent (one of whom, in the first instance, shall be Ian Robinson) and       
three nominees of the Company (one of whom, in the first instance, shall be     
Keith McKennon). The Joint Executive Committee shall be jointly chaired by Ian  
Robinson and Keith McKennon and shall have the objective of facilitating and    
achieving the Merger contemplated in this Agreement, integration planning,      
strategic development, developing recommendations concerning the future         
structure and the general operation of the Company after the Effective Time     
subject to applicable law. The Joint Executive Committee shall meet monthly in  
the United States or upon such other date or dates, and in such other places,   
as Parent and the Company may agree from time to time and may be convened by    
telephone, video conference or similar means.                                   

5.04 Tax Matters. Except as set forth in their respective Disclosure  
Letters, neither Parent nor the Company shall, nor shall any party permit its   
Subsidiaries to, make or rescind any material express or deemed election        
relating to taxes, or change any of its methods of reporting income or          
deductions for tax purposes from those employed in the preparation of its tax   
return(s) for the prior taxable year, except as may be required by applicable   
law or as agreed to by the other party. The Company shall inform Parent         
regarding the progress of any material claim, action, suit, litigation,         
proceeding, arbitration, investigation, audit or controversy relating to taxes  
and shall consult with Parent before entering into any settlements or           
compromises with regard to such matters.                                        

  5.05 Discharge of Liabilities. Neither Parent nor the Company shall, nor
shall any party permit its Subsidiaries to, pay, discharge or satisfy any       
material claims, liabilities or obligations (absolute accrued, asserted or      
unasserted, contingent or otherwise), other than the payment, discharge or      
satisfaction, in the ordinary course of business consistent with past practice  
(which includes the payment of final and unappealable judgments) or in          
accordance with their terms, of liabilities reflected or reserved against in,   
or contemplated by, the most recent consolidated financial statements (or the   
notes thereto) of such party included in such party's reports filed with the    
SEC or the Registrar of Corporations in Edinburgh, or incurred in the ordinary  
course of business consistent with past practice.                               

   5.06 Contracts. Neither Parent nor the Company shall, nor shall any party
permit its Subsidiaries or, within the exercise of its reasonable business      
efforts, its Joint Ventures to, except in the ordinary course of business       
consistent with past practice, modify, amend, terminate, renew or fail to use   
reasonable business efforts to renew any material contract or agreement to      
which such party or any Subsidiary of such party is a party or waive, release   
or assign any material rights or claims.                                        

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5.07 No Solicitations. (a) Except as disclosed in Section 5.07 of the 
Company Disclosure Letter, prior to the Effective Time, the Company agrees (i)  
that neither it nor any of its Subsidiaries or other affiliates shall, and it   
shall use its best efforts to cause their respective Representatives (as        
defined in Section 9.12) not to, initiate, solicit or encourage, directly or    
indirectly, any inquiries or the making or implementation of any proposal or    
offer (including, without limitation, any proposal or offer to its              
stockholders) with respect to a merger, consolidation or other business         
combination including the Company or any of its Subsidiaries or any             
acquisition or similar transaction (including, without limitation, a tender or  
exchange offer) involving the purchase of (A) all or any significant portion    
of the assets of the Company and its Subsidiaries taken as a whole, (B) 5% or   
more of the outstanding shares of Company Common Stock or (C) 5% of the         
outstanding shares of the capital stock of any Subsidiary of the Company (any   
such proposal or offer being hereinafter referred to as an "Alternative         
Proposal"), or engage in any negotiations concerning, or provide any            
confidential information or data to, or have any discussions with, any person   
or group relating to an Alternative Proposal (excluding the transactions        
contemplated by this Agreement), or otherwise facilitate any effort or attempt  
to make or implement an Alternative Proposal; (ii) that it will immediately     
cease and cause to be terminated any existing activities, discussions or        
negotiations with any parties with respect to any of the foregoing, and it      
will take the necessary steps to inform such parties of its obligations under   
this Section; and (iii) that it will notify Parent promptly if any such         
inquiries, proposals or offers are received by, any such information is         
requested from, or any such negotiations or discussions are sought to be        
initiated or continued with, it or any of such persons; provided, however,      
that nothing contained in this Section 5.07(a) shall prohibit the Board of      
Directors of the Company from (i) furnishing information to (but only pursuant  
to a confidentiality agreement in customary form and having terms and           
conditions no less favorable to the Company than the Confidentiality Agreement  
(as defined in Section 6.01)) or entering into discussions or negotiations      
with any person or group that makes an unsolicited bona fide Alternative        
Proposal, if, and only to the extent that, prior to receipt of the Company      
Stockholders' Approval, (A) the Board of Directors of the Company, based upon   
the advice of outside counsel, determines in good faith that a failure to       
perform such action could reasonably be expected to result in a breach of its   
fiduciary duties to stockholders imposed by law, (B) the Board of Directors     
has reasonably concluded in good faith (after consultation with its financial   
advisors) that the person or group making such Alternative Proposal will have   
adequate sources of financing to consummate such Alternative Proposal, (C) the  
Board of Directors has reasonably concluded in good faith that such             
Alternative Proposal is more favorable to the Company's stockholders than the   
Merger, (D) prior to furnishing such information to, or entering into           
discussions or negotiations with, such person or group, the Company provides    
written notice to Parent to the effect that it is furnishing information to,    
or entering into discussions or negotiations with, such person or group, which  
notice shall identify such person or group in reasonable detail, and (E) the    
Company keeps Parent appropriately informed of the status of any such           
discussions or negotiations; and (ii) to the extent required, complying with    
Rule 14e-2 promulgated under the Exchange Act with regard to an Alternative     
Proposal. Nothing in this Section 5.07 shall (x) permit the Company to          
terminate this Agreement (except as specifically provided in Article VIII),     
(y) permit the Company to enter into any agreement with respect to an           
Alternative Proposal for so long as this Agreement remains in effect (it being  
agreed that for so long as this Agreement remains in effect, the Company shall  
not enter into any agreement with any person or group that provides for, or in  
any way facilitates, an Alternative Proposal (other than a confidentiality      
agreement under the circumstances described above)), or (z) affect any other    
obligation of the Company under this Agreement.                                 

(b) Parent agrees that (i) neither it nor any of its Subsidiaries or    
other affiliates shall, and it shall use its best efforts to cause their    
respective Representatives (as defined in Section 9.12) not to, initiate,   
solicit or encourage, directly or indirectly, any inquiries or the making   
of any proposal or offer (including, without limitation, any proposal or    
offer to its shareholders) with respect to any transaction that would       
constitute a Change of Control (as defined in Section 8.01(e)), (ii) it     
will notify the Company promptly if any such inquiries, proposals or offers 
are received by Parent and (iii) will keep the Company appropriately        
informed of the status of any such inquiries, proposals or offers.          

5.08 Conduct of Business of Merger Sub. (a) Merger Sub shall not be   
formed until immediately prior to the Closing Date.                             

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(b) Prior to the Effective Time, Parent shall cause Merger Sub to (i)   
perform its obligations under this Agreement in accordance with its terms,  
(ii) not incur directly or indirectly any liabilities or obligations other  
than those incurred in connection with the Merger, (iii) not engage         
directly or indirectly in any business or activities of any type or kind    
and not enter into any agreements or arrangements with any person, or be    
subject to or bound by any obligation or undertaking, which is not          
contemplated by this Agreement and (iv) not create, grant or suffer to      
exist any Lien upon its properties or assets which would attach to any      
properties or assets of the Surviving Corporation after the Effective Time. 

 5.09 Third Party Standstill Agreements. During the period from the date
of this Agreement through the Effective Time, neither the Company nor any of    
its Subsidiaries shall terminate, amend, modify or waive any provision of any   
confidentiality or standstill agreement to which it is a party. During such     
period, the Company shall enforce, to the fullest extent permitted under        
applicable law, the provisions of any such agreement, including, but not        
limited to, by obtaining injunctions to prevent any breaches of such            
agreements and to enforce specifically the terms and provisions thereof in any  
court having jurisdiction.                                                      

5.10 Control of Other Party's Business.  Nothing contained in this    
Agreement shall give the Company, directly or indirectly, the right to control  
or direct Parent's operations prior to the Effective Time. Nothing contained    
in this Agreement shall give Parent, directly or indirectly, the right to       
control or direct the Company's operations prior to the Effective Time. Prior   
to the Effective Time, each of the Company and the Parent shall exercise,       
consistent with the terms and conditions of this Agreement, complete control    
and supervision over its respective operations.                                 

ARTICLE VI  

ADDITIONAL AGREEMENTS 

6.01 Access to Information. Each of the Company and Parent shall, and 
shall cause each of its Subsidiaries and, so long as consistent with its        
confidentiality obligations under its Joint Venture agreements, shall use       
commercially reasonable efforts to cause its Joint Ventures to, throughout the  
period from the date hereof to the Effective Time, (i) provide the other and    
its Representatives with full access, upon reasonable prior notice and during   
normal business hours, to all officers, employees, agents and accountants of    
the Company and Parent, as the case may be, and its Subsidiaries and Joint      
Ventures and their respective assets, properties, books and records, but only   
to the extent that such access does not unreasonably interfere with the         
business and operations of the Company and Parent, as the case may be, and its  
Subsidiaries and Joint Ventures, and (ii) furnish promptly to such persons (x)  
a copy of each report, statement, schedule and other document filed or          
received by the Company and Parent, as the case may be, or any of its           
Subsidiaries and Joint Ventures pursuant to the requirements of federal or      
state securities laws and each material report, statement, schedule and other   
document filed with any other Governmental or Regulatory Authority, and (y)     
all other information and data (including, without limitation, copies of        
Contracts, Company Employee Benefit Plans, and other books and records)         
concerning the business and operations of the Company and Parent, as the case   
may be, and its Subsidiaries and Joint Ventures as such party or any of such    
other persons reasonably may request. No investigation pursuant to this         
paragraph or otherwise shall affect any representation or warranty contained    
in this Agreement or any condition to the obligations of the parties hereto.    
Any such information or material obtained pursuant to this Section 6.01 that    
constitutes "Review Material" (as such term is defined in the letter agreement  
dated as of October 12, 1998 between the Company and Parent (the                
"Confidentiality Agreement")) shall be governed by the terms of the             
Confidentiality Agreement.                                                      

 6.02 Preparation of Registration Statement and Proxy Statement. As soon
as practicable after the date of this Agreement, the Company shall, in          
cooperation with Parent, prepare the Proxy Statement and Parent shall, in       
cooperation with the Company, prepare the Registration Statement, in which the  
Proxy Statement will be included as the prospectus. The Company shall, in       
cooperation with Parent, file the Proxy Statement with the SEC as its           
preliminary Proxy Statement and Parent shall, in cooperation with the Company,  
prepare and file with the SEC the Registration Statement in which the Proxy     
Statement will be included as the prospectus. Parent and                        

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the Company shall use commercially reasonable efforts to have the Registration  
Statement declared effective by the SEC as promptly as practicable after such   
filing. Parent and the Company shall also take any action (other than           
qualifying as a foreign corporation or taking any action which would subject    
it to service of process in any jurisdiction where Parent is not now so         
qualified or subject) required to be taken under applicable state blue sky or   
securities laws in connection with the issuance of Parent ADRs or Merger        
Ordinary Shares in connection with the Merger. If at any time prior to the      
Effective Time any event shall occur that should be set forth in an amendment   
of or a supplement to the Registration Statement, Parent shall prepare and      
file with the SEC such amendment or supplement as soon thereafter as is         
reasonably practicable. Parent and the Company shall cooperate with each other  
in the preparation of the Registration Statement and the Proxy Statement and    
any amendment or supplement thereto, and each shall notify the other of the     
receipt of any comments of the SEC with respect to the Registration Statement   
or the Proxy Statement and of any requests by the SEC for any amendment or      
supplement thereto or for additional information, and shall provide to the      
other promptly copies of all correspondence between Parent or the Company, as   
the case may be, or any of its Representatives with respect to the              
Registration Statement or the Proxy Statement. Parent and the Company shall     
give the other and its respective counsel the opportunity to review the         
Registration Statement and the Proxy Statement and all responses to requests    
for additional information by and replies to comments of the SEC before their   
being filed with, or sent to, the SEC. Each of the Company and Parent agrees    
to use commercially reasonable efforts, after consultation with each other, to  
respond promptly to all such comments of and requests by the SEC and to cause   
(x) the Registration Statement to be declared effective by the SEC at the       
earliest practicable time and to be kept effective as long as is necessary to   
consummate the Merger, and (y) the Proxy Statement to be mailed to the holders  
of Company Common Stock and Company Preferred Stock entitled to vote at the     
meeting of the stockholders of the Company at the earliest practicable time.    

6.03 Approval of Shareholders. (a) Parent shall, through its Board of 
Directors, duly call, give notice of, convene and hold a general meeting of     
its shareholders (the "Parent Shareholders' Meeting"), for the purpose of       
voting on the Merger and the creation of and the authorization of the Board of  
Directors to allot, the Parent Ordinary Shares in the Merger and under the      
Company Stock Plans after the Merger in accordance with this Agreement (the     
"Parent Shareholders' Approval"). Unless the Board of Directors of Parent,      
based upon the advice of outside counsel, determines in good faith that making  
such recommendation, or failing to amend, modify or withdraw any previously     
made recommendation, could reasonably be expected to result in a breach of its  
fiduciary duties to shareholders imposed by law, Parent shall, through its      
Board of Directors, include in the Circular the recommendation of the Board of  
Directors of Parent that the shareholders of Parent approve such matters, and   
shall use its reasonable best efforts to obtain such approval. In connection    
with the Parent Shareholders' Meeting, subject to applicable law, (i) Parent    
shall, as soon as practicable after the date of this Agreement and in           
accordance with the listing rules of the LSE, prepare and submit to the LSE     
for approval the Circular and the Listing Particulars, and shall use all        
reasonable efforts to have such documents formally approved by the LSE and      
shall thereafter publish the Circular and the Listing Particulars and dispatch  
the Circular to its shareholders in compliance with all legal requirements      
applicable to the Parent Stockholders Meeting and the listing rules of the LSE  
and (ii) if necessary, after the Circular has been so dispatched, promptly      
publish or circulate amended, supplemental or supplemented materials and, if    
required in connection therewith, resolicit votes. In the event that the        
Parent Shareholders' Approval is not obtained without the vote having been      
taken on the date on which the Parent Shareholders' Meeting is initially        
convened, the Board of Directors of Parent agrees to use its reasonable best    
efforts to adjourn such Parent Shareholders' Meeting for the purpose of         
obtaining the Parent Shareholders' Approval and to use commercially reasonable  
efforts during any such adjournments to obtain the Parent Shareholders'         
Approval.                                                                       

(b) The Company shall, through its Board of Directors, duly call, give
notice of, convene and hold a meeting of its stockholders (the "Company         
Stockholders' Meeting") for the purpose of voting on the approval of this       
Agreement (the "Company Stockholders' Approval") as soon as reasonably          
practicable after the date hereof. Unless the Board of Directors of the         
Company, based on the advice of outside counsel, determines in good faith that  
making such recommendation, or failing to amend, modify or withdraw any         
previously made recommendation, could reasonably be expected to result in a     
breach of its fiduciary duties to stockholders                                  

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imposed by law, the Company shall, through its Board of Directors, include in   
the Proxy Statement the recommendation of the Board of Directors of the         
Company that the stockholders of the Company approve this Agreement, and shall  
use its reasonable best efforts to obtain such approval. The Company shall      
consult and discuss in good faith with Parent regarding the alternatives        
available for obtaining the Company Stockholders' Approval. In the event that   
the Company Stockholders' Approval is not obtained without the vote having      
been taken on the date on which the Company Stockholders' Meeting is initially  
convened, the Board of Directors of the Company will use its reasonable best    
efforts to adjourn such Company Stockholders' Meeting for the purpose of        
obtaining the Company Stockholders' Approval and to use commercially            
reasonable efforts during any such adjournments to obtain the Company           
Stockholders' Approval.                                                         

 (c) Parent shall, through its Board of Directors, at the Annual General
Meeting of Parent next following the date of this Agreement, include for        
consideration by its shareholders and, subject to its fiduciary duties,         
recommend the approval of a resolution to approve amendments to the Articles    
of Association of Parent in order to provide, to the extent reasonably          
possible, for the holders of Parent ADRs substantially the same rights as       
holders of Parent Ordinary Shares to receive notice of, attend, speak and vote  
at general meetings of holders of Parent Ordinary Shares (the "ADR Holder       
Proposal"). In the event the ADR Holder Proposal is not adopted by Parent's     
shareholders at such Annual General Meeting, Parent shall, through its Board    
of Directors, include for consideration by its shareholders and, subject to     
its fiduciary duties, recommend approval of the ADR Holder Proposal at          
Parent's Annual General Meeting next following the Effective Time.              

 6.04 Company Affiliates. At least thirty (30) days prior to the Closing
Date the Company shall deliver a letter to Parent identifying all persons who,  
at the time of the Company Stockholders' Meeting, may, in the Company's         
reasonable judgment, be deemed to be "affiliates" (as such term is used in      
Rule 145 under the Securities Act) of the Company ("Company Affiliates"). The   
Company shall use its best efforts to cause each Company Affiliate to deliver   
to Parent on or prior to the Closing Date a written agreement substantially in  
the form and to the effect of Exhibit B hereto (an "Affiliate Agreement").      
Parent shall be entitled to place legends as specified in such Affiliate        
Agreements on the certificates evidencing any Parent ADSs to be received by     
such Company Affiliates pursuant to the terms of this Agreement, and to issue   
appropriate stop transfer instructions to the transfer agent for the Parent     
ADSs, consistent with the terms of such Affiliate Agreements.                   

6.05 Auditors' Letters. Each of the Company and Parent shall use all  
reasonable efforts to cause to be delivered to the other party and such other   
party's Board of Directors a letter of its independent auditors, dated the      
date on which the Registration Statement shall become effective, and addressed  
to the other party and such other party's Board of Directors, in form and       
substance customary for "comfort" letters delivered by independent public       
accountants in connection with registration statements on Form F-4 and Form S-  
4.                                                                              

  6.06 Stock Exchange Listing; Deposit Agreement. (a) Parent shall use its
commercially reasonable efforts, and the Company shall cooperate in respect     
thereto, to cause (a) the Parent ADSs to be issued in the Merger and under the  
Company Stock Plans after the Merger in accordance with this Agreement to be    
approved for listing on the NYSE, subject to official notice of issuance,       
prior to the Closing Date; and (b) each of (i) the Parent Ordinary Shares to    
be represented by the Parent ADSs to be issued in the Merger to be admitted to  
the Official List of the London Stock Exchange and (ii) the Merger Ordinary     
Shares to be issued in the Merger to be admitted to the Official List of the    
London Stock Exchange.                                                          

(b) Following the execution of this Agreement, Parent shall promptly  
prepare and shall use its commercially reasonable efforts to have executed, an  
amendment to the Deposit Agreement, dated as of December 18, 1991, as amended   
and restated as of September 4, 1997, among Parent, The Bank of New York and    
the holders of Parent ADRs thereunder and shall take such other action as may   
reasonably be required, all on terms and conditions reasonably satisfactory to  
the Company, that will provide holders of Parent ADRs with the right to (i)     
participate in rights offerings, (ii) attend Parent shareholder meetings,       
(iii) speak at Parent shareholder meetings, (iv) call for a poll at Parent      
shareholder meetings, (v) examine documents made available at Parent            
shareholder meetings, (vi) instruct the Depository to vote its Parent ADSs in   
a particular fashion, (vii) generally be counted individually as present        
and/or voting with respect to resolutions adopted at Parent                     

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shareholder meetings, and (viii) decide at Parent shareholder meetings how to   
vote on particular resolutions, in each case on the same basis as the holders   
of Parent Ordinary Shares.                                                      

   6.07 Restructuring of Merger. The parties expressly acknowledge and agree
that, although it is their current intention to effect a business combination   
among themselves in the form contemplated by this Agreement, it may be          
preferable to effectuate such a business combination by means of an             
alternative structure in light of the conditions set forth in Sections          
7.01(i), 7.02(d) and 7.03(d). Accordingly, if the only conditions to the        
parties' obligations to consummate the Merger which are not satisfied or        
waived are receipt of any one or more of those set forth in Sections 7.01(i),   
7.02(d) and 7.03(d), and the adoption of an alternative structure (that         
otherwise substantially preserves for the parties the economic and other        
material benefits of the Merger) would result in such conditions being          
satisfied or waived, then the parties shall use their respective reasonable     
best efforts to effect a business combination among themselves by means of a    
mutually agreed upon structure other than the Merger that so preserves such     
benefits; provided that, prior to closing any such restructured transaction,    
all material third party and Governmental and Regulatory Authority              
declarations, filings, registrations, notices, authorizations, consents or      
approvals necessary to effect such alternative business combination shall have  
been obtained and all other conditions to the parties' obligations to           
consummate the Merger, as applied to such alternative business combination,     
shall have been satisfied or waived. The parties further agree that, under the  
circumstances described in Schedule II hereto the obligations of the parties    
will be as set forth in Schedule II.                                            

  6.08 Regulatory and Other Approvals. Subject to the terms and conditions
of this Agreement and without limiting the provisions of Sections 6.02, 6.03    
and 6.06, each of the Company and Parent shall jointly develop a regulatory     
approval plan and proceed cooperatively and in good faith to, as promptly as    
practicable, (i) obtain all consents, approvals or actions of, make all         
filings with and give all notices to Governmental or Regulatory Authorities or  
any other public or private third parties required of Parent, the Company or    
any of their Subsidiaries or Joint Ventures to consummate the Merger and the    
other matters contemplated hereby (including without limitation those set       
forth on Section 3.04 of the Company Disclosure Letter and Section 4.04 of the  
Parent Disclosure Letter), and (ii) provide such other information and          
communications to such Governmental or Regulatory Authorities or other public   
or private third parties as the other party or such Governmental or Regulatory  
Authorities or other public or private third parties may reasonably request in  
connection therewith. In addition to and not in limitation of the foregoing,    
each of the parties will (w) take promptly all actions necessary to make the    
filings required of Parent and the Company or their affiliates under the HSR    
Act and to comply with filing and approval requirements of the FERC and each    
state Governmental or Regulatory Authority, (x) comply at the earliest          
practicable date with any request for additional information received by such   
party or its affiliates from the Federal Trade Commission (the "FTC") or the    
Antitrust Division of the Department of Justice (the "Antitrust Division")      
pursuant to the HSR Act, (y) cooperate with the other party in connection with  
such party's filings under the HSR Act and in connection with resolving any     
investigation or other inquiry concerning the Merger or the other matters       
contemplated by this Agreement commenced by either the FTC or the Antitrust     
Division or state attorneys general or by the FERC or any State Governmental    
or Regulatory Authority having jurisdiction with respect to the Merger or       
another transaction contemplated by this Agreement, and (z) provide to the      
other promptly copies of all correspondence between such party and the          
applicable Governmental or Regulatory Authority with respect to any filings     
referred to in this Section 6.08, and shall give the other party the            
opportunity to review such filings and all responses to requests for            
additional information by such Governmental or Regulatory Authority prior to    
their being filed therewith.                                                    

   6.09 Employee Benefit Plans. Parent shall use its reasonable best efforts
to cause the Company Employee Benefit Plans in effect at the date of this       
Agreement that have been disclosed to Parent prior to such date to remain in    
effect until the second anniversary of the Effective Time or, to the extent     
such Company Employee Benefit Plans are not continued, Parent will maintain     
until such date benefit plans which are no less favorable, in the aggregate,    
to the employees covered by such Company Employee Benefit Plans provided,       
however, that nothing contained herein shall be construed as requiring Parent   
or the Surviving Corporation to                                                 

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continue any specific plan or as preventing Parent or the Surviving             
Corporation from (a) establishing and, if necessary, seeking shareholder        
approval to establish, any other benefit plans in respect of all or any of the  
employees covered by such Company Employee Benefit Plans or any other           
employees, or (b) amending such Company Employee Benefit Plans (or any          
replacement benefit plans therefor) where required by applicable law or where   
such amendment is with the consent of the affected employees. From and after    
the Effective Time, Parent shall honor, and shall cause its Subsidiaries to     
honor, in accordance with its express terms, each existing employment, change   
of control, severance and termination agreement between the Company or any of   
its Subsidiaries, and any officer, director or employee of such company,        
including without limitation all legal and contractual obligations pursuant to  
outstanding restoration plans, severance plans, bonus deferral plans, vested    
and accrued benefits and similar employment and benefit arrangements, policies  
and agreements that have been disclosed to Parent as of the date hereof and     
other obligations entered into in accordance with Sections 5.01(d) and (h).     

6.10 Company Stock Plan. (a) At the Effective Time, each outstanding  
option to purchase shares of Company Common Stock (a "Company Stock Option")    
under the Company Option Plan, whether vested or unvested, shall be converted   
into an option to acquire, on the same terms and conditions as were applicable  
under such Company Stock Option, except as amended by this Section 6.10, a      
number of Parent ADSs equal to the product (rounded down to the nearest whole   
number) of (i) the number of shares of Company Common Stock subject to the      
option immediately prior to the Effective Time and (ii) the ADS Consideration   
and the option exercise price per Parent ADS at which such option is            
exercisable shall be the amount (rounded up to the nearest whole cent)          
obtained by dividing (iii) the option exercise price per share of Company       
Common Stock at which such option is exercisable immediately prior to the       
Effective Time by (iv) the ADS Consideration; provided, however, that, in the   
case of any Company Stock Option to which Section 421 of the Code applies by    
reason of its qualification under any of Sections 422-424 of the Code           
("qualified stock options"), the option exercise price, the number of shares    
which may be acquired pursuant to such option and the terms and conditions of   
exercise of such option shall be determined in order to comply with Section     
424(a) of the Code; provided, further, that, under no circumstances shall the   
option exercise price per Parent ADS be less than the aggregate par value of    
the Parent Ordinary Shares represented by a Parent ADS.                         

   (b) As soon as practicable after the Effective Time, Parent shall deliver
to the participants in the Company Option Plan appropriate notices setting      
forth such participants' rights pursuant thereto and the grants pursuant to     
the Company Option Plan shall continue in effect on the same terms and          
conditions (subject to the adjustments required by this Section after giving    
effect to the Merger).                                                          

   (c) Parent shall take all corporate action necessary to have a sufficient
number of shares of Parent ADSs available for delivery under the Company        
Option Plan as adjusted in accordance with this Section. As soon as             
practicable after the Effective Time, Parent shall file a registration          
statement on Form F-8 promulgated by the SEC under the Securities Act (or any   
successor or other appropriate form) with respect to the Parent ADSs subject    
to such options and shall use its reasonable best efforts to maintain the       
effectiveness of such registration statement or registration statements (and    
maintain the current status of the prospectus or prospectuses contained         
therein) for so long as such options remain outstanding.                        

 (d) For purposes of Section 2.01(c), Company Common Stock shall include
shares of restricted Company Common Stock issued under the Company's Non-       
Employee Director's Stock Compensation Plan, Stock Incentive Plan and Long      
Term Incentive Plan (collectively, the "Company Restricted Stock Plans"). The   
Company shall take all corporate action necessary and obtain all relevant       
consents to ensure that the consideration received under such Section 2.01(c)   
upon the conversion of each outstanding share of restricted Company Common      
Stock will continue to be subject to the same restrictions that such shares     
were subject to under the Company Restricted Stock Plans and the applicable     
award agreements thereunder, including, without limitation, any forfeiture      
restrictions subject to amendment or modification of such plans or award        
agreements to reflect action of the Board of Directors of the Company taken     
prior to the date of this Agreement and previously disclosed to Parent.         

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 6.11 Directors' and Officers' Indemnification and Insurance. (a) Except
to the extent required by law, until the sixth anniversary of the Effective     
Time, Parent will not take any action so as to amend, modify or repeal the      
provisions for indemnification of directors or officers contained in the        
certificate or articles of incorporation or bylaws (or other comparable         
charter documents) of the Surviving Corporation and its Subsidiaries (which     
after the Effective Time shall be substantially identical to those of the       
Company in effect on the date hereof) in such a manner as would adversely       
affect the rights of any individual who shall have served as a director or      
officer of the Company or any of its Subsidiaries prior to the Effective Time   
to be indemnified by such corporations in respect of their serving in such      
capacities prior to the Effective Time.                                         

(b) Parent and the Surviving Corporation shall, until the sixth       
anniversary of the Effective Time, cause to be maintained in effect, to the     
extent available, the policies of directors' and officers' liability insurance  
maintained by the Company and its Subsidiaries as of the date hereof (or        
policies of at least the same coverage and amounts containing terms that are    
no less advantageous to the insured parties) with respect to claims arising     
from facts or events that occurred on or prior to the Effective Time; provided  
that in no event shall Parent or the Surviving Corporation be obligated to      
expend in order to maintain or procure insurance coverage pursuant to this      
paragraph any amount per annum in excess of two hundred percent (200%) of the   
aggregate premiums payable by the Company and its Subsidiaries in 1998 (on an   
annualized basis) for such purpose.                                             

 6.12 Parent Governance; Additional Matters. (a) Subject to the exercise
of fiduciary duties and to the extent permitted by applicable law, Parent's     
Board of Directors shall take action to cause the full Board of Directors of    
Parent at the Effective Time to include Keith McKennon, as Deputy Chairman of   
Parent, and two additional non-executive members of the Company's current       
Board of Directors to be designated by the Company at least thirty (30) days    
prior to the Effective Time.                                                    

   (b) Parent shall, promptly following the Effective Time, cause certain of
the non-executive members of the Company's Board of Directors immediately       
prior to the Effective Time who do not become directors of Parent pursuant to   
Section 6.12(a) hereof, and who are willing to so serve, to be elected or       
appointed as members of an advisory board (the "Advisory Board") established    
by the Company, the function of which shall be to meet no less frequently than  
semi-annually in order to advise the Company's Board of Directors with respect  
to general business as well as opportunities and activities in the Company's    
market area and to maintain and develop customer relationships. The Advisory    
Board shall be chaired by Ian Robinson, and shall also include Duncan Whyte,    
Richard O'Brien, and such other representatives from the communities served by  
the Company (including but not limited to non-executive members of the          
Company's Board of Directors immediately prior to the Effective Time) as shall  
be mutually agreed by Ian Robinson and Keith McKennon. The members of the       
Advisory Board who are willing to so serve initially shall be elected or        
appointed for a term of two years. Parent agrees to cause the Company to re-    
elect or re-appoint each of the initial members of the Advisory Board to one    
successive one-year term following the initial term; provided, however, that    
Parent shall have no obligation to cause the Company to elect or appoint, or    
re-elect or re-appoint, and may cause the Company to remove, any member if      
Parent reasonably determines that such member has a conflict of interest that   
compromises such member's ability to serve effectively as a member of the       
Advisory Board or any cause exists that otherwise would allow for removal of    
such person as a director of the Company if such person were a member of the    
Company's Board of Directors.                                                   

   (c) Immediately following the Effective Time, the Company's United States
headquarters shall continue to be in Portland, Oregon. In recognition of        
Parent's commitment to the community of Portland and the State of Oregon,       
following the Effective Time Parent will contribute to The PacifiCorp           
Foundation the sum of $5 million.                                               

6.13 Expenses. Except as set forth in Section 8.02, whether or not the
Merger is consummated, all costs and expenses incurred in connection with this  
Agreement and the transactions contemplated hereby shall be paid by the party   
incurring such cost or expense. The Company shall not be obligated for any      
fees or expenses relating to Parent's obligation to demonstrate the existence   
of adequate working capital in connection with the filing of the Listing        
Particulars. Notwithstanding any provision of this Agreement, in no event       
shall Parent or                                                                 

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any affiliate of Parent pay any expenses of the Company, any Company affiliate  
or any Company stockholder in connection with the transactions contemplated by  
this Agreement.                                                                 

   6.14 Brokers or Finders. Each of Parent and the Company represents, as to
itself and its affiliates, that, except as set forth on Section 6.14 of the     
Company Disclosure Letter, no agent, broker, investment banker, financial       
advisor or other firm or person is or will be entitled to any broker's or       
finder's fee or any other commission or similar fee in connection with any of   
the transactions contemplated by this Agreement except Salomon Smith Barney,    
whose fees and expenses will be paid by the Company in accordance with the      
Company's agreement with such firm (a true and complete copy of which has been  
delivered by the Company to Parent prior to the execution of this Agreement),   
and Morgan Stanley Dean Witter Discover Inc. whose fees and expenses will be    
paid by Parent in accordance with Parent's agreement with such firm (a true     
and complete copy of which has been delivered by Parent to the Company prior    
to the execution of this Agreement), and each of Parent and the Company shall   
indemnify and hold the other harmless from and against any and all claims,      
liabilities or obligations with respect to any other such fee or commission or  
expenses related thereto asserted by any person on the basis of any act or      
statement alleged to have been made by such party or its affiliate.             

   6.15 Takeover Statutes. If any "fair price", "moratorium", "control share
acquisition" or other form of antitakeover statute or regulation shall become   
applicable to the transactions contemplated hereby, the Company and the         
members of the Board of Directors of the Company shall grant such approvals     
and take such actions as are reasonably necessary so that the transactions      
contemplated hereby may be consummated as promptly as practicable on the terms  
contemplated hereby and thereby and otherwise act to eliminate or minimize the  
effects of such statute or regulation on the transactions contemplated hereby   
and thereby.                                                                    

6.16 Conveyance Taxes.  The Company and Parent shall cooperate in the 
preparation, execution and filing of all returns, questionnaires, applications  
or other documents regarding any real property transfer or gains, sales, use,   
transfer, value added, stock transfer and stamp taxes and duties, any           
transfer, recording, registration and other fees, and any similar taxes which   
become payable in connection with the transactions contemplated by this         
Agreement that are required or permitted to be filed on or before the           
Effective Time. The Company shall pay, without deduction or withholding         
(except where such deduction or withholding is required by applicable law)      
from any amount payable to the holders of Company Common Stock, any such taxes  
which become payable in connection with the transfer of Company Common Stock    
in exchange for the Ordinary Share Consideration and the ADS Consideration.     
The Company shall also pay any stamp duty or stamp duty reserve tax arising in  
connection with the issue of the Parent ADSs and ADRs.                          

 6.17 Rate Matters.  During the period commencing on the date hereof and
ending on the Effective Date, the Company shall, and shall cause its            
Subsidiaries to, obtain Parent's approval, not to be unreasonably withheld or   
delayed, prior to initiating any general rate case and shall consult with       
Parent prior to making any material changes in its or its Subsidiaries' rates   
or charges, standards of service or accounting from those in effect on the      
date hereof and shall further consult with Parent prior to making any filing    
(or any amendment thereto), or effecting any agreement, commitment,             
arrangement or consent, whether written or oral, formal or informal, with       
respect thereto.                                                                

6.18 Tax Matters. Parent agrees that:                                 

(a) Prior to the Closing Date, Parent will make an election pursuant to 
Section 301.7701-3 of the U.S. Treasury regulations promulgated under the   
Code to treat UKSub 1 and UKSub 2 as entities disregarded as separate from  
the Parent and will not change such election during the period beginning on 
the date such election is effective for U.S. federal income tax purposes    
and ending on the date that is three years after the Closing Date.          

 (b) Throughout the period beginning on the date the election described in
Section 6.18(a) of this Agreement is effective for U.S. federal income tax  
purposes and ending on the date that is three years after the Closing Date, 
Parent: (i) will not make an election under Section 301.7701-3 of the U.S.  
Treasury regulations to treat UKSub 1 or UKSub 2 as an association taxable  
as a corporation; (ii) will directly own the whole of the share capital of  
UKSub 1 and UKSub 2; and (iii) will cause UKSub 1 and UKSub 2 to directly   
own all of the equity interests in the Partnership.                         

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(c) Throughout the period beginning at the Effective Time and ending on 
the date that is three years after the Closing Date, the Partnership will   
directly own all of the Common Stock of the Surviving Corporation, except   
for contribution to a controlled subsidiary described in Code Section       
368(a)(2)(C) and the regulations promulgated thereunder.                    

(d) Throughout the period beginning at the Effective Time and ending on 
the date that is three years after the Closing Date, none of Parent, UKSub  
1, UKSub 2, the Partnership, nor any other affiliate of Parent will redeem, 
acquire, convert, exchange, or cause the Company or any affiliate of the    
Company to acquire, convert or exchange or arrange for another person to    
acquire, convert or exchange any of the ADS Consideration or the Ordinary   
Share Consideration, unless Parent has received a written opinion of        
counsel that such action will not cause those persons who were stockholders 
of the Company at the time of the Merger to recognize gain or loss for US   
federal income tax purposes either with respect to the Merger or with       
respect to a subsequent exchange or conversion;                             

(e) Neither Parent nor any affiliate of Parent will, directly or        
indirectly, pay any expense incurred by (i) the Company, (ii) any affiliate 
of the Company or (iii) any Company stockholder, in each case, in           
connection with the transactions contemplated by this Agreement.            

(f) For a period of three years following the Closing Date, without the 
receipt of a written opinion of counsel that such action will not affect    
the tax-free status of the transactions contemplated by this Agreement,     
neither Parent nor any affiliate of Parent, will, directly or indirectly,   
(i) make contributions (whether or not in exchange for shares) or loan      
additional funds to (x) the Company, (y) any affiliate of the Company or    
(z) any escrow account, trust or other fund established to pay any expenses 
incurred by the Company, any affiliate of the Company or any Company        
stockholder in connection with the transactions contemplated by this        
Agreement or (ii) permit the Company or any Company affiliate to incur      
additional indebtedness guaranteed by Parent or any Parent affiliate;       

(g) Neither Parent nor any affiliate of Parent will, directly or        
indirectly reimburse (or otherwise pay) any amounts paid to the holders of  
$1.28 Series, $1.18 Series or $1.16 Series no par serial preferred stock of 
the Company in connection with the redemption of their preferred stock      
prior to the Closing Date.                                                  

(h) Neither Parent nor any affiliate of Parent will, directly or        
indirectly, acquire any Company stock except for the Company stock acquired 
solely in exchange for the ADS Consideration or the Ordinary Share          
Consideration unless acquired directly from the Company.                    

 6.19 Dividends. Parent hereby acknowledges its intention, following the
Effective Time, to adopt a practice of paying, with respect to Parent's         
Ordinary Shares and ADSs, quarterly dividends on regular quarterly dividend     
dates in roughly equal amounts. After the date hereof, each of Parent and the   
Company shall coordinate with the other with respect to the declaration of      
dividends in respect of Parent Ordinary Shares and Company Common Stock and     
the record dates and payment dates with respect thereto prior to the Effective  
Time, with the intention that the holders of Company Common Stock receive       
dividends in respect of the Company Common Stock for all periods prior to the   
Effective Time but do not receive dividends on the ADS Consideration and the    
Ordinary Share Consideration after the Effective Time in respect of periods     
prior to the Effective Time.                                                    

ARTICLE VII 

CONDITIONS  

7.01 Conditions to Each Party's Obligation to Effect the Merger. The  
respective obligation of each party to effect the Merger is subject to the      
fulfillment, at or prior to the Closing, of each of the following conditions:   

(a) Stockholder Approval. This Agreement shall have been approved by the
requisite vote of the stockholders of the Company under the BCA. The        
shareholders of Parent shall have approved the Merger                       

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and the creation of, and authorization of the Board of Directors to allot,  
the Parent Ordinary Shares in connection with the Merger by the requisite   
vote under applicable law or under the applicable regulations of any        
national securities exchange, as the case may be.                           

(b) Registration Statement; State Securities Laws. The Registration     
Statement shall have become effective in accordance with the provisions of  
the Securities Act, and no stop order suspending such effectiveness shall   
have been issued and remain in effect and no proceeding seeking such an     
order shall be pending or threatened. Parent shall have received all state  
securities or "Blue Sky" permits and other authorizations necessary to      
issue the Parent ADSs pursuant to this Agreement and under the Company      
Stock Plans after the Merger.                                               

(c) Exchange Listing. The LSE shall have agreed to admit to the Official
List (subject to allotment) the new Parent Ordinary Shares to be issued in  
connection with the Merger and such agreement shall not have been withdrawn 
and the Parent ADSs issuable to the Company stockholders in the Merger and  
under the Company Stock Plans after the Merger in accordance with this      
Agreement shall have been authorized for listing on the NYSE, upon official 
notice of issuance.                                                         

 (d) HSR Act. Any waiting period (and any extension thereof) applicable to
the consummation of the Merger under the HSR Act shall have expired or been 
terminated.                                                                 

(e) Injunctions or Restraints. No court of competent jurisdiction or    
other competent Governmental or Regulatory Authority shall have enacted,    
issued, promulgated, enforced or entered any law or order (whether          
temporary, preliminary or permanent) which is then in effect and has the    
effect of making illegal or otherwise restricting, preventing or            
prohibiting consummation of the Merger or the other transactions            
contemplated by this Agreement.                                             

(f) Exon-Florio. The review and investigation under Exon-Florio shall   
have been terminated and the President shall have taken no action           
authorized thereunder.                                                      

(g) Power Act; Atomic Energy Act. The final approval of (i) the FERC and
(ii) the Nuclear Regulatory Commission under the Atomic Energy Act, with    
respect to the Merger and the transactions contemplated by this Agreement   
shall have been obtained.                                                   

(h) H.M. Treasury Consent. Parent shall have received consent from H.M. 
Treasury pursuant to Section 765 of the U.K. Income and Corporation Taxes   
Act 1988 in respect of the Merger and any other matter contemplated hereby, 
or confirmation that no consent is required.                                

(i) Governmental and Regulatory Consents and Approvals. Other than the  
filings provided for by Section 1.03 and any filing required in connection  
with the registration or exemption of Parent under the 1935 Act, all        
consents, approvals and actions of, filings with and notices to any         
Governmental or Regulatory Authority (including under the HSR Act and Exon- 
Florio Act and the approvals by FERC pursuant to the Power Act) required of 
Parent, the Company or any of their Subsidiaries to consummate the Merger   
and the other matters contemplated hereby shall have been made or obtained  
(as the case may be) and become Final Orders (as defined in this Section    
below), and such Final Orders shall not, individually or in the aggregate,  
contain terms or conditions that would have, or would reasonably be         
expected to have, a material adverse effect on the Surviving Corporation    
and its Subsidiaries, taken as a whole. A "Final Order" means an action by  
the relevant Governmental or Regulatory Authority that has not been         
reversed, stayed, enjoined, set aside, annulled or suspended, with respect  
to which any waiting period prescribed by applicable law before the         
transactions contemplated hereby may be consummated has expired, and as to  
which all conditions to the consummation of such transactions prescribed by 
applicable law, regulation or order have been satisfied.                    

(j) Other Consents and Approvals. The consent or approval of each person
(other than a Governmental or Regulatory Authority) whose consent or        
approval is required of Parent, the Company or any of their Subsidiaries    
under any Contract in order to consummate the Merger and the other          
transactions contemplated hereby shall have been obtained, except for those 
consents and approvals which, if not obtained, would not have, or would not 
reasonably be expected to have, a material adverse effect on the            

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Company and its Subsidiaries taken as a whole or on the ability of Parent   
or the Company to consummate the transactions contemplated hereby.          

(k) UK Fair Trading Act. Any of:                                        

(i) the Office of Fair Trading (the "OFT") shall have indicated in  
writing that the Secretary of State for Trade and Industry (the "SOS")  
in the exercise of his powers under the Fair Trading Act 1973 (the      
"FTA") does not intend to refer the Merger or any matter relating       
thereto to the Monopolies and Mergers Commission ("MMC"); or            

(ii) in the event of an MMC reference, the MMC shall have concluded 
that the Merger does not or may not be expected to operate against the  
public interest; or                                                     

(iii) if on a reference the MMC shall have concluded that the Merger
does or may be expected to operate against the public interest, the SOS 
shall have indicated in writing that it is his intention to approve the 
Merger,                                                                 

provided that if any indication by the SOS referred to in (i) or (iii)      
above is subject to undertakings, assurances or any other terms or          
conditions, such undertakings, assurances, terms or conditions would not    
have, or would reasonably be expected not to have, individually or in the   
aggregate, a material adverse effect on the Parent Group taken as a whole.  

 (l) UK Regulators. Each of the Office of Electricity Regulation ("OFFER")
and the Office of Water Services ("OFWAT") shall have indicated:            

(i) that it is not its intention to seek any modifications to any   
conditions of the licenses or appointments held by any member of the    
Parent Group under any applicable statute, law, regulation, order or    
determination which would have, or would reasonably be expected to      
have, individually or in the aggregate, a material adverse effect on    
the Parent Group taken as a whole; and                                  

(ii) that it will give such consents and/or directions (if any) as  
are necessary or appropriate with respect to such licenses or           
appointments in connection with the Merger on terms which would not     
have, or would reasonably be expected not to have, individually or in   
the aggregate, a material adverse effect on the Parent Group taken as a 
whole.                                                                  

 (m) UK Undertakings/Assurances. Neither OFFER nor OFWAT shall have sought
undertakings or assurances from any member of the Parent Group which would  
have, or would reasonably be expected to have, individually or in the       
aggregate, a material adverse effect on the Parent Group taken as a whole.  

  7.02 Conditions to Obligation of Parent and the Merger Sub to Effect the
Merger. The obligation of Parent and Merger Sub to effect the Merger is         
further subject to the fulfillment, at or prior to the Closing, of each of the  
following additional conditions (all or any of which may be waived in whole or  
in part by Parent and Merger Sub in their sole discretion):                     
(a) Representations and Warranties. The representations and warranties  
made by the Company in this Agreement shall be true and correct, in all     
material respects, taken as a whole, as of the Closing Date as though made  
on and as of the Closing Date or, in the case of representations and        
warranties made as of a specified date earlier than the Closing Date, on    
and as of such earlier date, except as affected by the transactions         
contemplated by this Agreement, and the Company shall have delivered to     
Parent a certificate, dated the Closing Date and executed in the name and   
on behalf of the Company by its Chairman of the Board, President or any     
Executive or Senior Vice President, to such effect.                         

(b) Performance of Obligations. The Company shall have performed and    
complied with, in all material respects, the agreements, covenants and      
obligations, taken as a whole, which are required by this Agreement to be   
so performed or complied with by the Company at or prior to the Closing,    
and the                                                                     

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Company shall have delivered to Parent a certificate, dated the Closing     
Date and executed in the name and on behalf of the Company by its Chairman  
of the Board, President or any Executive or Senior Vice President, to such  
effect.                                                                     

(c) Material Adverse Effect. Since the date of this Agreement, no       
material adverse effect shall have occurred with respect to the Company and 
its Subsidiaries taken as a whole and there shall exist no facts or         
circumstances arising after the date hereof, which in the aggregate would,  
or insofar as reasonably can be foreseen, could, when taken together with   
any breaches or violations of any representations, warranties, covenants    
and agreements of the Company contained herein, have a material adverse     
effect on the Company and its Subsidiaries taken as a whole. For purposes   
of this Section 7.02(c), (i) any tax benefits relating directly to the      
structure of the transactions contemplated by this Agreement as of the date 
hereof which are not realized by Parent, and (ii) any adverse effects on    
the Company and its Subsidiaries resulting from general economic or         
financial conditions, shall not be taken into account in determining        
whether a material adverse effect has occurred under this Section 7.02(c).  

(d) Tax Opinion. Parent and the Partnership shall have received the     
opinion, based on appropriate representations of the Company and Parent, of 
Milbank, Tweed, Hadley & McCloy, special counsel to Parent, dated on or     
about the date on which the Registration Statement (or the last amendment   
thereto) shall have become effective, which opinion shall have been         
confirmed in writing on and as of the Closing Date, to the effect that the  
Merger will constitute a "reorganization" within the meaning of Code        
Section 368(a) and that no gain or loss will be recognized for US federal   
income tax purposes by the stockholders of the Company who exchange Company 
Common Stock for Parent ADSs or Merger Ordinary Shares pursuant to the      
Merger (except with respect to cash received in lieu of fractional Parent   
ADSs or Merger Ordinary Shares).                                            

(e) Proceedings. All proceedings to be taken on the part of the Company 
in connection with the transactions contemplated by this Agreement and all  
documents incident thereto shall be reasonably satisfactory in form and     
substance to Parent, and Parent shall have received copies of all such      
documents and other evidences as Parent may reasonably request in order to  
establish the consummation of such transactions and the taking of all       
proceedings in connection therewith.                                        

7.03 Conditions to Obligation of the Company to Effect the Merger. The
obligation of the Company to effect the Merger is further subject to the        
fulfillment, at or prior to the Closing, of each of the following additional    
conditions (all or any of which may be waived in whole or in part by the        
Company in its sole discretion):                                                

(a) Representations and Warranties. The representations and warranties  
made by Parent and Merger Sub in this Agreement shall be true and correct,  
in all material respects, taken as a whole, as of the Closing Date as       
though made on and as of the Closing Date or, in the case of                
representations and warranties made as of a specified date earlier than the 
Closing Date, on and as of such earlier date, except as affected by the     
transactions contemplated by this Agreement, and Parent and Merger Sub      
shall each have delivered to the Company a certificate, dated the Closing   
Date and executed in the name and on behalf of Parent by its Chairman of    
the Board, President or any Executive or Senior Vice President and in the   
name and on behalf of Merger Sub by its Chairman of the Board, President or 
any Vice President, to such effect.                                         

(b) Performance of Obligations. Parent and Merger Sub shall have        
performed and complied with, in all material respects, each agreement,      
covenant and obligation required by this Agreement to be so performed or    
complied with by Parent or Merger Sub at or prior to the Closing, and       
Parent and Merger Sub shall each have delivered to the Company a            
certificate, dated the Closing Date and executed in the name and on behalf  
of Parent by its Chairman of the Board, President or any Executive or       
Senior Vice President and in the name and on behalf of Merger Sub by its    
Chairman of the Board, President or any Vice President, to such effect.     

(c) Material Adverse Effect. Since the date of this Agreement, no       
material adverse effect shall have occurred with respect to Parent and its  
Subsidiaries taken as a whole and there shall exist no facts or             
circumstances arising after the date hereof which in the aggregate would,   
or insofar as reasonably can be foreseen, could, when taken together with   
any breaches or violations of any representations, warranties,              

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covenants and agreements of Parent contained herein, have a material        
adverse effect on Parent and its Subsidiaries taken as a whole. For         
purposes of this Section 7.03(c), any adverse effects on Parent and its     
Subsidiaries resulting from general economic or financial conditions shall  
not be taken into account in determining whether a material adverse effect  
has occurred under this Section 7.03(c).                                    

(d) Tax Opinion. The Company shall have received the opinion, based on  
appropriate representations of the Company and Parent, of Stoel Rives LLP,  
counsel to the Company, and LeBoeuf, Lamb, Greene & MacRae, LLP, special    
counsel to the Company, dated on or about the date on which the             
Registration Statement (or the last amendment thereto) shall have become    
effective, which opinion shall have been confirmed in writing on and as of  
the Closing Date to the effect that the Merger will constitute a            
"reorganization" within the meaning of Code Section 368(a) and that no gain 
or loss will be recognized for US federal income tax purposes by the        
stockholders of the Company who exchange Company Common Stock for Parent    
ADSs or Merger Ordinary Shares pursuant to the Merger (except with respect  
to cash received in lieu of fractional Parent ADSs or Merger Ordinary       
Shares).                                                                    

(e) Proceedings. All proceedings to be taken on the part of Parent and  
Merger Sub in connection with the transactions contemplated by this         
Agreement and all documents incident thereto shall be reasonably            
satisfactory in form and substance to the Company, and the Company shall    
have received copies of all such documents and other evidences as the       
Company may reasonably request in order to establish the consummation of    
such transactions and the taking of all proceedings in connection           
therewith.                                                                  

ARTICLE VIII  

TERMINATION, AMENDMENT AND WAIVER 

  8.01 Termination. This Agreement may be terminated, and the transactions
contemplated hereby may be abandoned, at any time prior to the Effective Time,  
whether prior to or after the Company Stockholders' Approval or the Parent      
Shareholders' Approval:                                                         

(a) By mutual written agreement of the parties hereto duly authorized by
action taken by or on behalf of their respective Boards of Directors;       

(b) By either the Company or Parent upon notification to the non-       
terminating party by the terminating party:                                 

 (i) at any time after the date which is nine (9) months following the
date of this Agreement if the Merger shall not have been consummated on 
or prior to such date and such failure to consummate the Merger is not  
caused by a breach of this Agreement by the terminating party;          
provided, however, that if on such date Parent and the Company have not 
received all of the approvals required in order to satisfy the          
conditions set forth in Section 7.01(i) but all other conditions to     
effect the Merger shall be fulfilled or shall be capable of being       
fulfilled, then, at the option of either Parent or the Company (which   
shall be exercised by written notice), the term of this Agreement shall 
be extended until the expiration of such date which is eighteen (18)    
months after the date of this Agreement;                                

(ii) if the Company Stockholders' Approval or the Parent            
Shareholders' Approval shall not be obtained by reason of the failure   
to obtain the requisite vote upon a vote actually held at a meeting of  
such stockholders or shareholders, or any adjournment thereof, called   
therefor;                                                               

(iii) if there has been a material breach of any representation,    
warranty, covenant or agreement on the part of the non-terminating      
party set forth in this Agreement (determined in all cases as if the    
terms "material" or "materially" were not included in any such          
representation or warranty), which breach is not curable or, if         
curable, has not been cured within thirty (30) days following receipt   
by the non-terminating party of notice of such breach from the          
terminating party which breach, when taken together with any other      
breaches of representations, warranties, covenants and agreements of    
the non-terminating party contained in this Agreement, has or would     
reasonably be expected to have a material adverse effect on the Company 
and its Subsidiaries taken as a whole; or                               

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(iv) if any court of competent jurisdiction or other competent      
Governmental or Regulatory Authority shall have issued an order making  
illegal or otherwise preventing or prohibiting the Merger and such      
order shall have become final and nonappealable;                        

(c) By the Company upon five (5) days' prior notice to Parent if (i) the
Board of Directors of the Company determines in good faith, that a failure  
to terminate this Agreement could reasonably be expected to result in a     
breach of its fiduciary duties to stockholders imposed by law by reason of  
an unsolicited bona fide Alternative Proposal meeting the requirements of   
clauses (B) and (C) of Section 5.07 having been made; provided that         

(A) The Board of Directors of the Company shall have been advised by
outside counsel, that notwithstanding a binding commitment to           
consummate an agreement of the nature of this Agreement entered into in 
the proper exercise of its applicable fiduciary duties, and             
notwithstanding all concessions which may be offered by Parent in       
negotiations entered into pursuant to clause (B) below, a failure to    
reconsider such commitment as a result of such Alternative Proposal     
could reasonably be expected to result in a breach of its fiduciary     
duties to stockholders imposed by law, and                              

 (B) prior to any such termination, the Company shall, and shall cause
its respective financial and legal advisors to, negotiate with Parent   
to make such adjustments in the terms and conditions of this Agreement  
as would enable the Company to proceed with the transactions            
contemplated herein on such adjusted terms;                             

and provided further that the Company's ability to terminate this Agreement 
pursuant to this clause (i) is conditioned upon the prior payment by the    
Company to Parent of any amounts owed by it pursuant to Section 8.02(b);    

or (ii) the Board of Directors of Parent (or any committee thereof) shall   
have withdrawn or modified in a manner materially adverse to the Company    
its approval or recommendation of this Agreement or the Merger; or          

(d) By Parent if the Board of Directors of the Company (or any committee
thereof) (i) shall have withdrawn or modified in a manner materially        
adverse to Parent its approval or recommendation of this Agreement or the   
Merger, (ii) shall fail to reaffirm such approval or recommendation upon    
Parent's request, (iii) shall have approved, recommended or taken no        
position with respect to an Alternative Proposal to the stockholders of the 
Company or (iv) shall resolve to take any of the foregoing actions; or      

(e) By the Company if there has been a Change of Control prior to the   
Effective Time. A "Change of Control" shall occur if any of the following   
applies: (A) Any "Person", as such term is used in Sections 13(d) and 14(d) 
of the Exchange Act is or becomes the "beneficial owner" (as defined in     
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities   
of Parent representing 30 percent or more of the combined voting power of   
Parent's outstanding capital stock; (B) the shareholders of Parent approve  
a merger or other consolidation of Parent with any other company, other     
than a merger or consolidation effected to implement a recapitalization of  
Parent (or similar transaction) in which no Person acquires more than 30    
percent of the combined voting power of Parent's then outstanding           
securities; (C) a tender or exchange offer is made for the ordinary shares  
of Parent (or securities convertible into ordinary shares of Parent) and    
such offer results in a portion of those securities being purchased and the 
offeror after the consummation of the offer is the beneficial owner (as     
determined pursuant to Section 13(d) of the Exchange Act), directly or      
indirectly, of securities representing at least 30 percent of the voting    
power of outstanding securities of Parent; or (D) Parent sells 30 percent   
or more of its operating assets to a buyer that is not a member of Parent   
controlled group of corporations.                                           

 8.02 Effect of Termination. (a) If this Agreement is validly terminated
by either the Company or Parent pursuant to Section 8.01, this Agreement will   
forthwith become null and void and there will be no liability or obligation on  
the part of either the Company or Parent (or any of their respective            
Representatives or affiliates), except (i) that the provisions of Sections      
6.13, 6.14 and 6.16, this Section 8.02, and Sections 9.10 and 9.11 will         
continue to apply following any such termination, (ii) that nothing contained   
herein shall relieve any party hereto                                           

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from liability for willful breach of its representations, warranties,           
covenants or agreements contained in this Agreement and (iii) as provided in    
paragraphs (b) and (c) below.                                                   

(b) In the event that any person or group shall have made an Alternative
Proposal and thereafter (i) this Agreement is terminated (x) by the Company 
pursuant to Section 8.01(c)(i), (y) by Parent pursuant to Section           
8.01(b)(iii) or Section 8.01(d) or (z) by either party pursuant to Section  
8.01(b)(ii) as a result of the Company Stockholders' Approval not being     
obtained or (ii) this Agreement is terminated for any other reason (other   
than by reason of the breach of this Agreement by Parent or pursuant to     
Section 8.01(b)(ii) as a result of the Parent Shareholders' Approval not    
being obtained or Section 8.01(c)(ii)) or 8.01(e) and, in the case of this  
clause (ii) only, a definitive agreement with respect to such Alternative   
Proposal is executed within one year after such termination, then the       
Company shall pay to Parent, by wire transfer of same day funds, either on  
the date contemplated in Section 8.01(c) if applicable, or otherwise,       
within two (2) business days after such amount becomes due, a termination   
fee of $250,000,000.                                                        

(c) In the event that this Agreement is terminated by the Company       
following a Change of Control, then Parent shall pay to the Company, by     
wire transfer of same day funds, within two (2) business days following     
such termination, a termination fee of $250,000,000.                        

(d) In the event that this Agreement is terminated by either party      
pursuant to Section 8.01(b)(ii) in circumstances in which the termination   
fee set forth in clause (b) above is not payable, (i) in the case of the    
Company Stockholders' Approval not being obtained and the Parent            
Shareholders' Approval having been obtained, the Company shall pay to       
Parent or (ii) in the case of the Parent Shareholders' Approval not being   
obtained and the Company Stockholders' Approval having been obtained,       
Parent shall pay to the Company, in each case an amount equal to            
$10,000,000.                                                                

(e) If the Company fails promptly to pay the amount due pursuant to the 
preceding paragraphs, and in order to obtain such payment, Parent or Merger 
Sub commences a suit which results in a judgment against the Company for    
the fee set forth in such paragraph, the Company shall pay to Parent or     
Merger Sub, as the case may be, its cost and expenses (including reasonable 
attorneys' fees and expenses) in connection with such suit, together with   
interest on the amount of the fee at the prime rate of The Chase Manhattan  
Bank in effect on the date such payment was required to be made.            

 8.03 Amendment. This Agreement may be amended, supplemented or modified
by action taken by or on behalf of the respective Boards of Directors of the    
parties hereto at any time prior to the Effective Time, whether prior to or     
after the Company Stockholders' Approval or the Parent Shareholders' Approval   
shall have been obtained, but after such adoption and approval only to the      
extent permitted by applicable law. No such amendment, supplement or            
modification shall be effective unless set forth in a written instrument duly   
executed by or on behalf of each party hereto.                                  

   8.04 Waiver. At any time prior to the Effective Time any party hereto, by
action taken by or on behalf of its Board of Directors, may to the extent       
permitted by applicable law (i) extend the time for the performance of any of   
the obligations or other acts of the other parties hereto, (ii) waive any       
inaccuracies in the representations and warranties of the other parties hereto  
contained herein or in any document delivered pursuant hereto or (iii) waive    
compliance with any of the covenants, agreements or conditions of the other     
parties hereto contained herein. No such extension or waiver shall be           
effective unless set forth in a written instrument duly executed by or on       
behalf of the party extending the time of performance or waiving any such       
inaccuracy or non-compliance. No waiver by any party of any term or condition   
of this Agreement, in any one or more instances, shall be deemed to be or       
construed as a waiver of the same or any other term or condition of this        
Agreement on any future occasion.                                               

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ARTICLE IX  

GENERAL PROVISIONS  

9.01 Non-Survival of Representations, Warranties, Covenants and       
Agreements. The representations, warranties, covenants and agreements           
contained in this Agreement or in any instrument delivered pursuant to this     
Agreement shall not survive the Merger but shall terminate at the Effective     
Time, except for the agreements contained in Article I and Article II, in       
Sections 5.01(o), 5.02(k), 6.09, 6.10, 6.11, 6.12, 6.14, 6.16 and 6.18, this    
Article IX and the agreements of the "affiliates" of the Company delivered      
pursuant to Section 6.04, which shall survive the Effective Time.               

9.02 Notices. All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given only if           
delivered personally or by facsimile transmission or mailed (first class        
postage prepaid) to the parties at the following addresses or facsimile         
numbers:                                                                        

If to Parent, the Partnership or Merger Sub, to:                      

Scottish Power plc                                                      
1 Atlantic Quay                                                         
Glasgow G2 8FP                                                          
Facsimile No.: 011-44-141-248-8300                                      
Attn: Company Secretary                                                 

with a copy to:                                                         

Milbank, Tweed, Hadley & McCloy                                         
1 Chase Manhattan Plaza                                                 
New York, N.Y. 10005                                                    
Facsimile No.: (212) 530-5219                                           
Attn: M. Douglas Dunn                                                   

and to:                                                                 

Freshfields                                                             
65 Fleet Street                                                         
London EC4Y 1HS                                                         
Facsimile No.: 011-44-171-832-7001                                      
Attn: Simon Marchant                                                    

If to the Company, to:                                                  

PacifiCorp                                                              
700 N.E. Multnomah                                                      
Portland, Oregon 97232-4116                                             
Facsimile No.: (503) 813-7250                                           
Attn: Executive Vice President and Chief Operating Officer              

with a copy to:                                                         

Stoel Rives LLP                                                         
900 S.W. Fifth Avenue                                                   
Suite 2300                                                              
Portland, Oregon 97232                                                  
Facsimile No.: (503) 220-2480                                           
Attn: Dexter E. Martin                                                  

and to:                                                                 

LeBoeuf, Lamb, Greene & MacRae, LLP                                     
125 West 55th Street                                                    
New York, NY 10019                                                      
Facsimile No.: (212) 424-8500                                           
Attn: William S. Lamb                                                   

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   All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon     
delivery, (ii) if delivered by facsimile transmission to the facsimile number   
as provided in this Section, be deemed given upon receipt, and (iii) if         
delivered by mail in the manner described above to the address as provided in   
this Section, be deemed given upon receipt (in each case regardless of whether  
such notice, request or other communication is received by any other person to  
whom a copy of such notice, request or other communication is to be delivered   
pursuant to this Section). Any party from time to time may change its address,  
facsimile number or other information for the purpose of notices to that party  
by giving notice specifying such change to the other parties hereto.            

9.03 Entire Agreement; Incorporation of Exhibits. (a) This Agreement  
supersedes all prior discussions and agreements among the parties hereto with   
respect to the subject matter hereof, other than the Confidentiality            
Agreement, which shall survive the execution and delivery of this Agreement in  
accordance with its terms, and contains, together with the Confidentiality      
Agreement, the sole and entire agreement among the parties hereto with respect  
to the subject matter hereof.                                                   

(b) The Company Disclosure Letter, the Parent Disclosure Letter and any 
Exhibit or Schedule attached to this Agreement and referred to herein are   
hereby incorporated herein and made a part hereof for all purposes as if    
fully set forth herein.                                                     

9.04 Public Announcements. Except as otherwise required by law or the 
rules of any applicable securities exchange or national market system or any    
other Regulatory Authority (including the U.K. Takeover Panel) , so long as     
this Agreement is in effect, Parent and the Company will not, and will not      
permit any of their respective Subsidiaries or Representatives to, issue or     
cause the publication of any press release or make any other public             
announcement with respect to the transactions contemplated by this Agreement    
without the consent of the other party, which consent shall not be              
unreasonably withheld. Parent and the Company will cooperate with each other    
in the development and distribution of all press releases and other public      
announcements with respect to this Agreement and the transactions contemplated  
hereby, and will furnish the other with drafts of any such releases and         
announcements as far in advance as practicable.                                 

9.05 No Third Party Beneficiary. The terms and provisions of this     
Agreement are intended solely for the benefit of each party hereto and their    
respective successors or permitted assigns, and except as provided in Sections  
6.09, 6.10, 6.11 and 6.12 (which are intended to be for the benefit of the      
persons entitled to therein, and may be enforced by any of such persons), it    
is not the intention of the parties to confer third-party beneficiary rights    
upon any other person.                                                          

   9.06 No Assignment; Binding Effect. Neither this Agreement nor any right,
interest or obligation hereunder may be assigned by any party hereto without    
the prior written consent of the other parties hereto and any attempt to do so  
will be void, except that Parent may cause Merger Sub to assign any or all of   
its rights, interests and obligations hereunder to another direct or indirect   
wholly-owned Subsidiary of Parent, provided that any such Subsidiary agrees in  
writing to be bound by all of the terms, conditions and provisions contained    
herein. This Agreement is binding upon, inures to the benefit of and is         
enforceable by the parties hereto and their respective successors and assigns.  

   9.07 Headings. The headings used in this Agreement have been inserted for
convenience of reference only and do not define, modify or limit the            
provisions hereof.                                                              

   9.08 Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law or order,     
and if the rights or obligations of any party hereto under this Agreement will  
not be materially and adversely affected thereby, (i) such provision will be    
fully severable, (ii) this Agreement will be construed and enforced as if such  
illegal, invalid or unenforceable provision had never comprised a part hereof,  
and (iii) the remaining provisions of this Agreement will remain in full force  
and effect and will not be affected by the illegal, invalid or unenforceable    
provision or by its severance herefrom.                                         

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9.09 Governing Law. Except to the extent that the BCA is mandatorily  
applicable to the Merger and the rights of the stockholders of the Constituent  
Corporations, this Agreement shall be governed by and construed in accordance   
with the laws of the State of New York applicable to a contract executed and    
performed in such State, without giving effect to the conflicts of laws         
principles thereof.                                                             

9.10 Submission to Jurisdiction; Waivers. Each of Parent (on behalf of
itself and Merger Sub), the Partnership, UKSub 1, UKSub 2 and the Company       
irrevocably agree that any legal action or proceeding with respect to this      
Agreement or for recognition and enforcement of any judgment in respect hereof  
brought by another party hereto or its successors or assigns may be brought     
and determined in the Supreme Court of the State of New York in New York        
County or in the United States District Court for the Southern District of New  
York, and each of Parent (on behalf of itself and Merger Sub), the              
Partnership, and the Company hereby irrevocably submits with regard to any      
such action or proceeding for itself and in respect to its property, generally  
and unconditionally, to the nonexclusive jurisdiction of the aforesaid courts.  
Any service of process to be made in such action or proceeding may be made by   
delivery of process in accordance with the notice provisions contained in       
Section 9.02. Each of Parent, the Partnership, Merger Sub, and the Company      
hereby irrevocably waives, and agrees not to assert, by way of motion, as a     
defense, counterclaim or otherwise, in any action or proceeding with respect    
to this Agreement, (a) the defense of sovereign immunity, (b) any claim that    
it is not personally subject to the jurisdiction of the above-named courts for  
any reason other than the failure to serve process in accordance with this      
Section 9.10, (c) that it or its property is exempt or immune from              
jurisdiction of any such court or from any legal process commenced in such      
courts (whether through service of notice, attachment prior to judgment,        
attachment in aid of execution of judgment, execution of judgment or            
otherwise), and (d) to the fullest extent permitted by applicable law that (i)  
the suit, action or proceeding in any such court is brought in an inconvenient  
forum, (ii) the venue of such suit, action or proceeding is improper and (iii)  
this Agreement, or the subject matter hereof, may not be enforced in or by      
such courts.                                                                    

  9.11 Enforcement of Agreement. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement    
was not performed in accordance with its specified terms or was otherwise       
breached. It is accordingly agreed that the parties shall be entitled to an     
injunction or injunctions to prevent breaches of this Agreement and to enforce  
specifically the terms and provisions hereof in any court of competent          
jurisdiction, this being in addition to any other remedy to which they are      
entitled at law or in equity.                                                   

9.12 Certain Definitions. As used in this Agreement:                  

(a) except as used in Sections 2.03(b), 3.02(c), 3.17 and 6.04, the term
"affiliate," as applied to any person, shall mean any other person directly 
or indirectly controlling, controlled by, or under common control with,     
that person; for purposes of this definition, "control" (including, with    
correlative meanings, the terms "controlling," "controlled by" and "under   
common control with"), as applied to any person, means the possession,      
directly or indirectly, of the power to direct or cause the direction of    
the management and policies of that person, whether through the ownership   
of voting securities, by contract or otherwise;                             

(b) a person will be deemed to " beneficially" own securities if such   
person would be the beneficial owner of such securities under Rule 13d-3    
under the Exchange Act, including securities which such person has the      
right to acquire (whether such right is exercisable immediately or only     
after the passage of time);                                                 

(c) the term "business day" means a day other than Saturday, Sunday or  
any day on which banks located in the State of Oregon or London, England    
are authorized or obligated to close;                                       

(d) the term "knowledge" or any similar formulation of "knowledge" shall
mean, with respect to any party hereto, the actual knowledge after due      
inquiry of the executive officers of Parent or the Company and its          
Subsidiaries, respectively, set forth in Section 9.12(d) of the Parent      
Disclosure Letter or Section 9.12(d) of the Company Disclosure Letter.      

(e) any reference to any event, change or effect having a "material     
adverse effect" on or with respect to an entity (or group of entities taken 
as a whole) means such event, change or effect is materially adverse to the 
business, properties, assets, liabilities, financial condition or results   
of operations of such entity (or of such group of entities taken as a       
whole);                                                                     

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(f) the term "person" shall include individuals, corporations,          
partnerships, trusts, other entities and groups (which term shall include a 
"group" as such term is defined in Section 13(d)(3) of the Exchange Act);   

(g) the "Representatives" of any entity means such entity's directors,  
officers, employees, legal, investment banking and financial advisors,      
accountants and any other agents and representatives;                       

(h) except as used in Sections 3.02(d) and 3.17, the term "Subsidiary"  
means, with respect to any party, any corporation or other organization,    
whether incorporated or unincorporated, of which more than fifty percent    
(50%) of either the equity interests in, or the voting control of, such     
corporation or other organization is, directly or indirectly through        
Subsidiaries or otherwise, beneficially owned by such party.                

9.13 Counterparts. This Agreement may be executed in any number of    
counterparts, each of which will be deemed an original, but all of which        
together will constitute one and the same instrument.                           

9.14 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE    
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL    
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR        
RELATING TO THIS AGREEMENT OR THE TRANSACTION CONTEMPLATED HEREBY (WHETHER      
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES   
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,   
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF        
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT   
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT     
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.  

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IN WITNESS WHEREOF, each party hereto has caused this Agreement to be 
signed by its officer thereunto duly authorized as of the date first above      
written.                                                                        

                      Scottish Power PLC

                        By: /s/ Ian Robinson
                                        ------------------------------
                            Name: Ian Robinson
                                Title: Chief Executive

                          NA General Partnership
                                    By: Scottish Power NA 2 Limited,
                           a General Partner

                                        By:  /s/ Ian Simon MacGregor Russell
                                            ----------------------------------
                                           Name: Ian Simon MacGregor Russell
                Title:

              Pacificorp

                              By:  /s/ Keith R. McKennon
                                            ----------------------------------
                                 Name: Keith R. McKennon
                                   Title: Chairman and Chief
                             Executive Officer

                                      For purposes of Section 2.01 only:

                               Scottish Power NA 1 Limited

                                        By:  /s/ Ian Simon MacGregor Russell
                                            ----------------------------------
                                           Name: Ian Simon MacGregor Russell
                Title:

                                      For purposes of Section 2.01 only:

                               Scottish Power NA 2 Limited

                                        By:  /s/ Ian Simon MacGregor Russell
                                            ----------------------------------
                                           Name: Ian Simon MacGregor Russell
                Title:

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                                                                       EXHIBIT A

                                                                [Download Table]

                                          Column A          Column B     
                                      ----------------- -----------------
                                                                         
Proportion of Parent Ordinary Shares                                     
 represented by Parent ADSs           not more than 75% not less than 25%
Proportion of Merger Ordinary Shares  not more than 75% not less than 25%

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                                                                     EXHIBIT B

[Form of Affiliate's Agreement] 

[Date]                                                                    

[name]                                                                    

[address]                                                                 

Ladies and Gentlemen:                                                     

 I have been advised that as of the date hereof I may be deemed to be an
"affiliate" of PacifiCorp, an Oregon corporation (the "Company"), as that term  
is defined for purposes of paragraphs (c) and (d) of Rule 145 of the rules and  
regulations (the "Rules and Regulations") of the Securities and Exchange        
Commission (the "Commission") under the Securities Act of 1933, as amended      
(the "Act"). Neither my entering into this agreement, nor anything contained    
herein, shall be deemed an admission on my part that I am such an "affiliate".  

Pursuant to the terms of the Agreement and Plan of Merger dated as of 
December 6, 1998 (the "Merger Agreement"), among Scottish Power plc, a public   
limited company incorporated under the laws of Scotland ("Parent"), NA General  
Partnership, a Nevada general partnership (the "Partnership"), and the Company  
providing for the merger of a wholly-owned subsidiary of the Partnership with   
and into the Company (the "Merger"), and as a result of the Merger, I may       
receive shares of Parent's American Depositary Shares, each representing four   
Parent Ordinary Shares (the "Parent Securities"), in exchange for the shares    
of common stock, without par value, of the Company owned by me at the           
Effective Time (as defined in the Merger Agreement) of the Merger.              

I represent and warrant to Parent that in such event:                 

 A. I shall not make any sale, transfer or other disposition of the Parent
Securities in violation of the Act or the Rules and Regulations             

B. I have carefully read this letter and the Merger Agreement and       
discussed its requirements and other applicable limitations upon my ability 
to sell, transfer or otherwise dispose of Parent Securities, to the extent  
I felt necessary, with my counsel or counsel for the Company.               

C. I have been advised that the issuance of Parent Securities to me     
pursuant to the Merger has been registered with the Commission under the    
Act on a Registration Statement on Form F-4. However, I have also been      
advised that, since at the time the Merger was submitted for a vote of the  
stockholders of the Company I may have been deemed to have been an          
affiliate of the Company and a distribution by me of Parent Securities has  
not been registered under the Act, the Parent Securities must be held by me 
indefinitely unless (i) a distribution of Parent Securities by me has been  
registered under the Act, (ii) a sale of Parent Securities by me is made in 
conformity with the volume and other limitations of Rule 145 promulgated by 
the Commission under the Act or (iii) in the opinion of counsel reasonably  
acceptable to Parent, some other exemption from registration is available   
with respect to a proposed sale, transfer or other disposition of the       
Parent Securities by me.                                                    

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D. I understand that Parent is under no obligation to register the sale,
transfer or other disposition of Parent Securities by me or on my behalf or 
to take any other action necessary in order to make compliance with an      
exemption from registration available.                                      

E. I also understand that stop transfer instructions will be given to   
Parent's transfer agents with respect to the Parent Securities and that     
there will be placed on the certificates for the Parent Securities, or any  
substitutions therefor, a legend stating in substance:                      

"The shares represented by this certificate were issued in a        
transaction to which Rule 145 promulgated under the Securities Act of   
1933, as amended, applies. The shares represented by this certificate   
may only be transferred in accordance with the terms of an agreement    
dated             ,     , between the registered holder hereof and      
         (the "Corporation"), a copy of which agreement is on file
at the principal offices of the Corporation."                           

F. I also understand that unless the transfer by me of my Parent        
Securities has been registered under the Act or is a sale made in           
conformity with the provisions of Rule 145, Parent reserves the right to    
put the following legend on the certificates issued to my transferee:       

"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and were acquired from a  
person who received such shares in a transaction to which Rule 145      
promulgated under such Act applies. The shares have been acquired by    
the holder not with a view to, or for resale in connection with, any    
distribution thereof within the meaning of such Act and may not be      
sold, pledged or otherwise transferred except in accordance with an     
exemption from the registration requirements of such Act."              

   It is understood and agreed that the legends set forth in paragraph E and
F above shall be removed by delivery of substitute certificates without such    
legend if the undersigned shall have delivered to Parent a copy of a letter     
from the staff of the Commission, or an opinion of counsel reasonably           
acceptable to Parent to the effect that such legend is not required for         
purposes of the Act.                                                            

                     Very truly yours,

                                         -------------------------------------
         Name:

Accepted this    day of                                                   

,  , by:                                                    

SCOTTISH POWER plc                                                        

By: _________________________________                                           
Name:                                                                       
Title:                                                                      

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                                                                         ANNEX B

                                                                  Execution Copy
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
dated as of December 6, 1998, 
as amended as of January 29, 1999 and February 9, 1999, 
and amended and restated as of February 23, 1999, 
by and among
NEW SCOTTISH POWER PLC, 
SCOTTISH POWER PLC, 
NA GENERAL PARTNERSHIP
and 
PACIFICORP

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

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TABLE OF CONTENTS 

This Table of Contents is not part of the Agreement to which it is attached but 
is inserted for convenience only. 

                                                                [Download Table]

                                                                         Page
                                                                         No. 
                                                                         ----
                                                                             
ARTICLE I THE MERGER....................................................   2 
   1.01 The Merger.....................................................    2 
   1.02 Closing........................................................    2 
   1.03 Effective Time.................................................    2 
   1.04 Governing Instrument...........................................    2 
   1.05 Directors and Officers of the Surviving Corporation............    3 
   1.06 Effects of the Merger..........................................    3 
   1.07 Further Assurances.............................................    3 
ARTICLE II CONVERSION OF SHARES.........................................   3 
   2.01 Conversion of Capital Stock....................................    3 
   2.02 Procedure for Election.........................................    4 
   2.03 Exchange of Certificates.......................................    5 
   2.04 Withholding Rights.............................................    8 
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY...............   8 
   3.01 Organization and Qualification.................................    8 
   3.02 Capital Stock..................................................    9 
   3.03 Authority Relative to this Agreement...........................   10 
   3.04 Non-Contravention; Approvals and Consents......................   10 
   3.05 SEC Reports, Financial Statements and Utility Reports..........   11 
   3.06 Absence of Certain Changes or Events...........................   12 
   3.07 Absence of Undisclosed Liabilities.............................   12 
   3.08 Legal Proceedings..............................................   13 
   3.09 Information Supplied...........................................   13 
   3.10 Permits; Compliance with Laws and Orders.......................   13 
   3.11 Compliance with Agreements.....................................   14 
   3.12 Taxes..........................................................   14 
   3.13 Employee Benefit Plans; ERISA..................................   15 
   3.14 Labor Matters..................................................   17 
   3.15 Environmental Matters..........................................   17 
   3.16 Intellectual Property Rights...................................   19 
   3.17 Regulation as a Utility........................................   19 
   3.18 Insurance......................................................   19 
   3.19 Vote Required..................................................   20 
   3.20 [Intentionally Omitted]........................................   20 
   3.21 Ownership of HoldCo or ScottishPower Stock.....................   20 
   3.22 Article VII of the Company's Articles of Incorporation and           
        Sections 60.825-60.845 of the BCA Not Applicable...............   20 
   3.23 Certain Contracts..............................................   20 
   3.24 Year 2000......................................................   20 
   3.25 Joint Venture Representations..................................   20 
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF HOLDCO, SCOTTISHPOWER AND       
   THE PARTNERSHIP......................................................  20 
   4.01 Organization and Qualification.................................   20 
   4.02 Capital Stock..................................................   22 
   4.03 Authority Relative to this Agreement...........................   23 

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                                                                           Page
                                                                           No. 
                                                                           ----
                                                                               
   4.04 Non-Contravention; Approvals and Consents........................   23 
   4.05 SEC Reports and Financial Statements.............................   24 
   4.06 Absence of Certain Changes or Events.............................   25 
   4.07 Absence of Undisclosed Liabilities...............................   25 
   4.08 Legal Proceedings................................................   25 
   4.09 Information Supplied.............................................   26 
   4.10 Permits; Compliance with Laws and Orders.........................   26 
   4.11 Compliance with Agreements.......................................   27 
   4.12 Taxes............................................................   27 
   4.13 ScottishPower Employee Benefit Plans.............................   28 
   4.14 Labor Matters....................................................   29 
   4.15 Environmental Matters............................................   29 
   4.16 Intellectual Property Rights.....................................   31 
   4.17 Vote Required....................................................   31 
   4.18 [Intentionally Omitted]..........................................   31 
   4.19 Ownership of Company Common Stock................................   31 
   4.20 Insurance........................................................   31 
   4.21 Year 2000........................................................   32 
   4.22 Joint Venture Representations....................................   32 
ARTICLE V COVENANTS.......................................................  32 
   5.01 Covenants of the Company.........................................   32 
   5.02 Covenants of HoldCo and ScottishPower............................   36 
   5.03 Joint Executive Committee........................................   39 
   5.04 Tax Matters......................................................   40 
   5.05 Discharge of Liabilities.........................................   40 
   5.06 Contracts........................................................   40 
   5.07 No Solicitations.................................................   40 
   5.08 Conduct of Business of Merger Sub................................   41 
   5.09 Third Party Standstill Agreements................................   41 
   5.10 Control of Other Party's Business................................   41 
ARTICLE VI ADDITIONAL AGREEMENTS..........................................  42 
   6.01 Access to Information............................................   42 
   6.02 Preparation of Registration Statement and Proxy Statement........   42 
   6.03 Approval of Shareholders.........................................   43 
   6.04 Company Affiliates...............................................   44 
   6.05 Auditors' Letters................................................   44 
   6.06 Stock Exchange Listing; Deposit Agreement........................   44 
   6.07 Restructuring of Merger..........................................   44 
   6.08 Regulatory and Other Approvals...................................   45 
   6.09 Employee Benefit Plans...........................................   45 
   6.10 Company Stock Plan...............................................   45 
   6.11 Directors' and Officers' Indemnification and Insurance...........   46 
   6.12 HoldCo Governance; Additional Matters............................   47 
   6.13 Expenses.........................................................   47 
   6.14 Brokers or Finders...............................................   47 
   6.15 Takeover Statutes................................................   48 
   6.16 Conveyance Taxes.................................................   48 
   6.17 Rate Matters.....................................................   48 
   6.18 Tax Matters......................................................   48 
   6.19 Dividends........................................................   49 

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                                                                         Page
                                                                         No. 
                                                                         ----
                                                                             
ARTICLE VII CONDITIONS..................................................  50 
   7.01 Conditions to Each Party's Obligation to Effect the Merger.....   50 
        Conditions to Obligation of HoldCo, ScottishPower and Merger         
   7.02 Sub to Effect the Merger.......................................   51 
   7.03 Conditions to Obligation of the Company to Effect the Merger...   52 
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER..........................  53 
   8.01 Termination....................................................   53 
   8.02 Effect of Termination..........................................   55 
   8.03 Amendment......................................................   56 
   8.04 Waiver.........................................................   56 
ARTICLE IX GENERAL PROVISIONS...........................................  56 
        Non-Survival of Representations, Warranties, Covenants and           
   9.01 Agreements.....................................................   56 
   9.02 Notices........................................................   56 
   9.03 Entire Agreement; Incorporation of Exhibits....................   57 
   9.04 [Intentionally Omitted]........................................   57 
   9.05 Public Announcements...........................................   57 
   9.06 No Third Party Beneficiary.....................................   58 
   9.07 No Assignment; Binding Effect..................................   58 
   9.08 Headings.......................................................   58 
   9.09 Invalid Provisions.............................................   58 
   9.10 Governing Law..................................................   58 
   9.11 Submission to Jurisdiction; Waivers............................   58 
   9.12 Enforcement of Agreement.......................................   59 
   9.13 Certain Definitions............................................   59 
   9.14 Counterparts...................................................   60 
   9.15 WAIVER OF JURY TRIAL...........................................   60 

                                                                [Download Table]
                                             
SCHEDULES                                    
SCHEDULE I  Scheme Consents                  
SCHEDULE II Articles of Association of Holdco
EXHIBITS                                     
EXHIBIT A   Scheme of Arrangement            
EXHIBIT B   Allotment of Shares              
EXHIBIT C   Form of Affiliate Agreement      

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GLOSSARY OF DEFINED TERMS 

The following terms, when used in this Agreement, have the meanings   
ascribed to them in the corresponding Sections of this Agreement listed below:  

                                                                [Download Table]
                                                                          
"1935 Act"............................................ Section 3.02(c)    
"ADR Depositary"...................................... Section 2.01(e)    
"ADR Holder Proposal.................................. Section 6.03(c)    
"ADS Consideration"................................... Section 2.01(c)(i) 
"Advisory Board"...................................... Section 6.12(b)    
"affiliate"........................................... Section 9.12 (a)   
"Affiliate Agreement"................................. Section 6.04       
"Agreement"........................................... Preamble           
"Alternative Proposal"................................ Section 5.08       
"Antitrust Division".................................. Section 6.08       
"Articles of Merger".................................. Section 1.03       
"BCA"................................................. Section 1.01       
"beneficially"........................................ Section 9.12(b)    
"business day"........................................ Section 9.12(c)    
"Certificates"........................................ Section 2.03(b)    
"Circular"............................................ Section 3.09(b)    
"Closing"............................................. Section 1.02       
"Closing Date"........................................ Section 1.02       
"Code"................................................ Preamble           
"Companies Act"....................................... Section 4.02(a)    
"Company"............................................. Preamble           
"Company Affiliates".................................. Section 6.04       
"Company Budget"...................................... Section 5.01(e)    
"Company Common Stock"................................ Preamble           
"Company Disclosure Letter"........................... Section 3.01(a)    
"Company Employee Benefit Plan"....................... Section 3.13(b)(i) 
"Company Financial Statements"........................ Section 3.05(a)    
"Company Joint Venture"............................... Section 3.01(b)(ii)
"Company Option"...................................... Section 2.01(f)    
"Company Option Plan"................................. Section 2.01(f)    
"Company Permits"..................................... Section 3.10       
"Company Preferred Stock"............................. Section 3.02(a)    
"Company SEC Reports"................................. Section 3.05(a)    
"Company Stock Option"................................ Section 6.10(a)    
"Company Stockholders' Approval"...................... Section 6.03(b)    
"Company Stockholders' Meeting"....................... Section 6.03(b)    
"Confidentiality Agreement"........................... Section 6.01       
"Constituent Corporations"............................ Section 1.01       
"Contracts"........................................... Section 3.04(a)    
"control," "controlling," "controlled by"                                 
 and "under common control with"...................... Section 9.12(a)    
"Converted Shares".................................... Section 2.01(c)(i) 
"DOE"................................................. Section 3.05(b)    
"Effective Time"...................................... Section 1.03       
"Election Date"....................................... Section 2.02(a)    
"Environmental Claims"................................ Section 3.15(g)(i) 
"Environmental Laws".................................. Section 3.15(g)(ii)
"Environmental Permits"............................... Section 3.15(b)    

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                                                                [Download Table]
                                                                         
"ERISA"............................................. Section 3.13(b)(i)  
"ERISA Affiliate"................................... Section 3.13(b)(iii)
"Exchange Act"...................................... Section 3.04(b)     
"Exchange Agent".................................... Section 2.03(a)     
"Exchange Fund"..................................... Section 2.03(a)     
"FERC".............................................. Section 3.05(b)     
"FSA"............................................... Section 3.09(b)     
"FTA"............................................... Section 7.01(k)     
"FTC"............................................... Section 6.08        
"Governmental or Regulatory Authority".............. Section 3.04(a)     
"group"............................................. Section 9.12(f)     
"Hazardous Materials"............................... Section 3.15(g)(iii)
"HoldCo ADRs"....................................... Preamble            
"HoldCo ADSs"....................................... Preamble            
"HoldCo Employee Benefit Plans"..................... Section 4.13(b)     
"HoldCo Group"...................................... Section 5.02(k)     
"HoldCo Ordinary Shares"............................ Preamble            
"HoldCo Share Schemes".............................. Section 4.02(a)     
"HoldCo Special Share".............................. Schedule II         
"HSR Act"........................................... Section 3.04(b)     
"Intellectual Property"............................. Section 3.16        
"Joint Executive Committee"......................... Section 5.03(a)     
"Joint Venture"..................................... Section 301(b)(i)   
"knowledge"......................................... Section 9.13(d)     
"laws".............................................. Section 3.04(a)     
"Lien".............................................. Section 3.02(b)     
"Listing Particulars"............................... Section 3.09(b)     
"LSE"............................................... Section 2.03(e)     
"material adverse effect"........................... Section 9.12(e)     
"Merger"............................................ Preamble            
"Merger Consideration".............................. Section 2.01(c)(i)  
"Merger Ordinary Shares"............................ Preamble            
"Merger Sub"........................................ Preamble            
"Merger Sub Common Stock"........................... Section 2.01        
"MMC"............................................... Section 7.01(k)     
"New Facilities".................................... Section 9.13(f)     
"NYSE".............................................. Section 2.03(e)     
"OFFER"............................................. Section 7.01(l)     
"OFT"............................................... Section 7.01(k)     
"OFWAT"............................................. Section 7.01(l)     
"Options"........................................... Section 3.02(a)     
"orders"............................................ Section 3.04(a)     
"Ordinary Share Consideration"...................... Section 2.01(c)(i)  
"Ordinary Share Election"........................... Section 2.02        
"Ordinary Share Election Form"...................... Section 2.02        
"Original Agreement"................................ Preamble            
"Partnership"....................................... Preamble            
"Partnership Agreement"............................. Section 4.01(a)     
"Partnership Loan Note"............................. Section 2.01(e)     
"person"............................................ Section 9.13(g)     
"Plan".............................................. Section 3.12(b)(ii) 
"Policies".......................................... Section 4.14(b)     

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                                                                [Download Table]
                                                                         
"Power Act"......................................... Section 3.05(b)     
"Proxy Statement"................................... Section 3.09(a)     
"qualified stock options"........................... Section 6.10(a)     
"RCF"............................................... Section 9.13(h)     
"Registration Statement"............................ Section 4.09        
"Release"........................................... Section 3.15(g)(iv) 
"Representatives"................................... Section 9.13(i)     
"Review Material"................................... Section 6.01        
"Sales Price"....................................... Section 2.03(e)     
"Scheme of Arrangement"............................. Preamble            
"Scheme Consents"................................... Section 9.13(k)     
"Scheme Date"....................................... Section 2.01(c)     
"Scheme Document"................................... Section 9.13(l)     
"ScottishPower"..................................... Preamble            
"ScottishPower ADRs"................................ Preamble            
"ScottishPower ADSs"................................ Preamble            
"ScottishPower Budget".............................. Section 5.02(e)     
"ScottishPower Disclosure Documents"................ Section 3.09(b)     
"ScottishPower Disclosure Letter"................... Section 4.01(a)     
"ScottishPower Employee Benefit Plans".............. Section 4.13        
"ScottishPower Financial Statements"................ Section 4.05        
"ScottishPower Joint Venture"....................... Section 3.01(b)(iii)
"ScottishPower Ordinary Shares"..................... Preamble            
"ScottishPower Permits"............................. Section 4.10        
"ScottishPower SEC Reports"......................... Section 4.05        
"ScottishPower Share Schemes"....................... Section 4.02(a)     
"ScottishPower Shareholders' Approval".............. Section 6.03(a)     
"ScottishPower Shareholders' Meeting"............... Section 6.03(a)     
"ScottishPower Special Share"....................... Section 4.02(a)     
"SEC"............................................... Section 3.04(b)     
"Secretary of State"................................ Section 1.03        
"Securities Act".................................... Section 3.04(b)     
"Share Transfer".................................... Preamble            
"SOS"............................................... Section 7.01(k)     
"Subsidiary"........................................ Section 9.13(j)     
"Surviving Corporation"............................. Section 1.01        
"Surviving Corporation Common Stock"................ Section 2.01        
"taxes"............................................. Section 3.12(g)     
"Trading Day"....................................... Section 2.03(e)     
"UK Code"........................................... Section 6.03(a)     

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This AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated as of   
December 6, 1998 and amended as of January 29, 1999 and February 9, 1999, and   
amended and restated as of February 23, 1999 (this "Agreement"), is made and    
entered into by and among NEW SCOTTISH POWER PLC, a public limited company      
incorporated under the laws of Scotland ("HoldCo"), SCOTTISH POWER PLC, a       
public limited company incorporated under the laws of Scotland                  
("ScottishPower"), NA GENERAL PARTNERSHIP, a Nevada general partnership         
indirectly wholly owned by ScottishPower (the "Partnership"), and PACIFICORP,   
an Oregon corporation (the "Company"), and, with respect to Section 2.01 hereof 
only, Scottish Power NA 1 Limited, a limited liability company incorporated     
under the laws of Scotland ("UKSub1") and Scottish Power NA 2 Limited, a        
limited liability company incorporated under the laws of Scotland ("UKSub2").   

 WHEREAS, ScottishPower, the Partnership, UKSub1, UKSub2 and the Company
entered into an Agreement and Plan of Merger dated as of December 6, 1998 and   
amended as of January 29, 1999 and February 9, 1999 (the "Original Agreement"); 

 WHEREAS, HoldCo, ScottishPower, the Partnership, UKSub1, UKSub2 and the
Company wish to amend and restate the Original Agreement in its entirety,       
effective as of the date set forth in Section 9.03(c);                          

  WHEREAS, the Board of Directors of ScottishPower intends to recommend to
its shareholders a proposal to introduce HoldCo as a new holding company for    
the ScottishPower group pursuant to a scheme of arrangement sanctioned by the   
Court of Session, Edinburgh (the "Scheme of Arrangement"), substantially in the 
form of the draft Scheme of Arrangement attached hereto as Exhibit A subject to 
such amendments as ScottishPower may reasonably deem necessary or desirable;    
provided, that if such amendments would have a material adverse effect on the   
benefits of the Merger for the holders of Company Common Stock, such amendments 
may only be effected with the prior written consent of the Company;             

    WHEREAS, pursuant to the Scheme of Arrangement, (A) all ordinary shares of
50 pence each of ScottishPower ("ScottishPower Ordinary Shares") will be        
cancelled and the holders thereof will receive in place of the ScottishPower    
Ordinary Shares then held by them an identical number of ordinary shares of 50  
pence each of HoldCo ("HoldCo Ordinary Shares"), and (B) all ScottishPower      
Ordinary Shares represented by American Depositary Shares of ScottishPower      
("ScottishPower ADSs"), each representing four (4) ScottishPower Ordinary       
Shares and evidenced by American Depositary Receipts ("ScottishPower ADRs"),    
will be cancelled and the holders thereof will receive in place of the          
ScottishPower ADSs then held by them an identical number of American Depositary 
Shares of HoldCo ("HoldCo ADSs"), each representing four (4) HoldCo Ordinary    
Shares and evidenced by American Depositary Receipts ("HoldCo ADRs");           

  WHEREAS, after the Scheme Date (as defined in Section 2.01) and prior to
the Closing Date (as defined in Section 1.02) ScottishPower shall transfer to   
HoldCo all of the outstanding shares of UKSub 1 and UKSub 2 ("Share Transfer"); 

   WHEREAS, the Boards of Directors of HoldCo, ScottishPower and the Company
and the partners of the Partnership, have each determined that it is advisable  
and in the best interests of their respective stockholders and partners, as the 
case may be, to consummate, and have approved, the business combination         
transaction provided for herein in which Merger Sub (as defined below) would    
merge with and into the Company and the Company would become an indirect,       
wholly-owned subsidiary of HoldCo (the "Merger") pursuant to the terms of this  
Agreement, whereby each issued and outstanding share of common stock of the     
Company (the "Company Common Stock"), other than shares owned directly or       
indirectly by HoldCo, ScottishPower, the Partnership, Merger Sub or the         
Company, will be converted into the right to receive either (i) HoldCo ADSs     
evidenced by HoldCo ADRs or (ii) HoldCo Ordinary Shares (the "Merger Ordinary   
Shares");                                                                       

WHEREAS, immediately prior to the Closing Date (as defined in Section 
1.02), an Oregon corporation wholly-owned by the Partnership ("Merger Sub")     
will be formed for the purpose of effectuating the Merger;                      

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  WHEREAS, the respective Boards of Directors of HoldCo, ScottishPower and
the Company, and the partners of the Partnership, have determined that the      
Merger is in furtherance of and consistent with their respective long-term      
business strategies and is fair to and in the best interests of their           
respective shareholders and stockholders, each of HoldCo and ScottishPower has  
approved this Agreement and the Merger, UKSub 1 and UKSub 2 in their capacity   
as general partners of the Partnership and as parties to Section 2.01 have      
approved this Agreement and the Merger, and the Partnership has agreed that,    
immediately following the formation of Merger Sub, it will approve this         
Agreement and the Merger as the sole stockholder of Merger Sub;                 

  WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the   
Internal Revenue Code of 1986, as amended (the "Code"); and                     

   WHEREAS, HoldCo, ScottishPower, the Partnership and the Company desire to
make certain representations, warranties and agreements in connection with the  
Merger and also to prescribe various conditions to the Merger;                  

 NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the 
receipt and sufficiency of which are hereby acknowledged, the parties hereto    
agree as follows:                                                               

ARTICLE I 

THE MERGER

1.01 The Merger. Upon the terms and subject to the conditions of this 
Agreement, at the Effective Time (as defined in Section 1.03), Merger Sub shall 
be merged with and into the Company in accordance with the Business Corporation 
Act of the State of Oregon (the "BCA"). At the Effective Time, the separate     
existence of Merger Sub shall cease and the Company shall continue as the       
surviving corporation in the Merger (the "Surviving Corporation"). Merger Sub   
and the Company are sometimes referred to herein as the "Constituent            
Corporations". As a result of the Merger, the outstanding shares of capital     
stock of the Constituent Corporations shall be converted and cancelled in the   
manner provided in Article II.                                                  

1.02 Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section  
8.01, and subject to the satisfaction or waiver (where applicable) of the       
conditions set forth in Article VII, the consummation of the Merger (the        
"Closing") will take place at the offices of Milbank, Tweed, Hadley & McCloy, 1 
Chase Manhattan Plaza, New York, New York 10005, at 10:00 a.m., local time, on  
the fifth business day following satisfaction or waiver (where applicable) of   
the conditions set forth in Article VII, unless another date, time or place is  
agreed to in writing by the parties hereto (the "Closing Date"). At the Closing 
there shall be delivered to HoldCo, ScottishPower, the Partnership, Merger Sub  
and the Company the certificates and other documents and instruments required   
to be delivered under Article VII.                                              

 1.03 Effective Time. At the Closing, the parties shall cause to be duly
prepared and executed by the Company as the Surviving Corporation and Merger    
Sub articles of merger (the "Articles of Merger") for filing on, or as soon as  
practicable after, the Closing Date with the Secretary of State of the State of 
Oregon (the "Secretary of State"), as provided in Section 60.494 of the BCA.    
The Merger shall become effective at the time of the filing of the Articles of  
Merger with the Secretary of State (such date and time being referred to herein 
as the "Effective Time").                                                       

1.04 Governing Instrument. At the Effective Time, (i) the Articles of 
Incorporation of the Company as in effect immediately prior to the Effective    
Time shall be the Articles of Incorporation of the Surviving Corporation until  
thereafter amended as provided by law and such Articles of Incorporation, and   
(ii) the Bylaws of the Company as in effect immediately prior to the Effective  
Time shall be the Bylaws of the Surviving Corporation until thereafter amended  
as provided by law, the Articles of Incorporation of the Surviving Corporation  
and such Bylaws.                                                                

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   1.05 Directors and Officers of the Surviving Corporation. The individuals
listed on Schedule I shall, from and after the Effective Time, be the directors 
and executive officers, respectively, of the Company as the Surviving           
Corporation until their successors shall have been duly elected or appointed    
and qualified or until their earlier death, resignation or removal in           
accordance with the Surviving Corporation's Articles of Incorporation and       
Bylaws.                                                                         

  1.06 Effects of the Merger. Subject to the foregoing, the effects of the
Merger shall be as provided in the applicable provisions of the BCA.            

   1.07 Further Assurances. Each party hereto will, either prior to or after
the Effective Time, execute such further documents, instruments, deeds, bills   
of sale, assignments and assurances and take such further actions as may        
reasonably be requested by one or more of the other parties hereto to           
consummate the Merger, to vest the Surviving Corporation with full title to all 
assets, properties, privileges, rights, approvals, immunities and franchises of 
either of the Constituent Corporations or to effect the other purposes of this  
Agreement.                                                                      

ARTICLE II

CONVERSION OF SHARES

   2.01 Conversion of Capital Stock. At the Effective Time, by virtue of the
Merger and, with respect to clauses (a)-(c), (f) and (g) hereof, without any    
action on the part of the holder thereof:                                       

 (a) Capital Stock of Merger Sub. Each issued and outstanding share of the
common stock of Merger Sub ("Merger Sub Common Stock") outstanding          
immediately prior to the Effective Time shall be cancelled and the          
Surviving Corporation shall issue to the Partnership at the Effective Time  
such number of shares of common stock as is equal to the number of shares   
of Merger Sub Common Stock, with the same rights, powers and privileges as  
the Merger Sub Common Stock, and shall constitute the only outstanding      
shares of common stock of the Surviving Corporation ("Surviving Corporation 
Common Stock").                                                             

(b) Cancellation of Treasury Stock and Stock Owned by HoldCo,           
ScottishPower and Subsidiaries. All shares of Company Common Stock that are 
owned by the Company as treasury stock and any shares of Company Common     
Stock owned by HoldCo, ScottishPower, the Partnership, Merger Sub or any    
other wholly-owned Subsidiary (as defined in Section 9.12) of HoldCo or     
ScottishPower, shall be canceled and retired and shall cease to exist and   
no stock of HoldCo or other consideration shall be delivered in exchange    
therefor.                                                                   

(c) Conversion of Company Common Stock. (i) Each issued and outstanding 
share of Company Common Stock (other than shares to be cancelled in         
accordance with Section 2.01(b)), shall be converted into the right to      
receive (A) .58 HoldCo ADSs (the "ADS Consideration"), or (B) if a properly 
completed Ordinary Share Election Form (as defined in Section 2.02) shall   
have been submitted to the Exchange Agent (as defined in Section 2.02) on a 
timely basis with respect to such share of Company Common Stock, 2.32 fully 
paid and nonassessable Merger Ordinary Shares (the "Ordinary Share          
Consideration"; the Ordinary Share Consideration and the ADS Consideration  
are each sometimes referred to herein as the "Merger Consideration"). All   
shares of Company Common Stock to be converted into shares of HoldCo ADSs   
or Merger Ordinary Shares pursuant to this Section 2.01(c) are hereinafter  
referred to as "Converted Shares."                                          

 (ii) If, (A) prior to the time at which the Scheme of Arrangement becomes
effective (the "Scheme Date"), ScottishPower shall pay a dividend in,       
subdivide, consolidate or, except pursuant to the Scheme of Arrangement,    
issue by capitalization of its reserves, any ScottishPower Ordinary Shares  
or (B) following the Scheme Date and prior to the Effective Time, HoldCo    
shall pay a dividend in, subdivide, consolidate or issue by capitalization  
of its reserves, any HoldCo Ordinary Shares, as applicable, the             

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Merger Consideration shall be multiplied by a fraction, the numerator of    
which shall be the number of ScottishPower Ordinary Shares or HoldCo        
Ordinary Shares, as applicable, outstanding immediately after, and the      
denominator of which shall be the number of such shares outstanding         
immediately before, the occurrence of such event, and the resulting product 
shall from and after the date of such event be the Merger Consideration     
subject to further adjustment in accordance with this sentence.             

 (iii) All shares of Company Common Stock converted in accordance with
paragraph (i) of this Section 2.01(c) shall no longer be outstanding    
and shall, as part of the consideration for the allotment and issue by  
HoldCo referred to in Section 2.01(e) below, automatically be canceled  
and retired and shall cease to exist, and each holder of a certificate  
representing any such shares shall cease to have any rights with        
respect thereto, except the right to receive the Merger Consideration   
and any cash in lieu of fractional HoldCo ADSs or Merger Ordinary       
Shares (determined in accordance with Section 2.03(e)), upon the        
surrender of such certificate in accordance with Section 2.03, without  
interest.                                                               

(d) UKSub 1 shall continue to be the owner of a 90% general partnership 
interest in the Partnership, and UKSub 2 shall continue to be the owner of  
a 10% general partnership interest in the Partnership.                      

(e) As consideration for the acquisition by the Partnership of the      
Surviving Corporation Common Stock in accordance with Section 2.01(a): (i)  
the Partnership agrees to issue a loan note to HoldCo in the form and in an 
amount to be mutually agreed upon by HoldCo and the Partnership (the        
"Partnership Loan Note"), (ii) UKSub 1 agrees to allot and issue to HoldCo  
fully paid ordinary shares of (Pounds)1 each and (iii) UKSub 2 agrees to    
allot and issue to HoldCo fully paid ordinary shares of (Pounds)1 each. In  
consideration of the other steps referred to in this Section 2.01           
(including, to the extent set out in column A of Exhibit B attached hereto, 
the issue of the Partnership Loan Note by the Partnership), HoldCo shall    
allot and issue (i) the number of HoldCo Ordinary Shares represented by     
HoldCo ADSs to be issued in the Merger to HoldCo's United States Depositary 
(the "ADR Depositary") on behalf of the holders of Company Common Stock     
entitled thereto for the purposes of giving effect to the conversion and    
exchange referred to in this Article II, and (ii) the number of Merger      
Ordinary Shares to be issued in the Merger. In consideration of the other   
steps referred to in this Section 2.01 (including, to the extent set out in 
column B of Exhibit B, the issues of ordinary shares by UKSub 1 and UKSub 2 
referred to above), HoldCo shall allot and issue (i) the number of HoldCo   
Ordinary Shares represented by HoldCo ADSs to be issued in the Merger to    
the ADR Depositary on behalf of the holders of Company Common Stock         
entitled thereto for the purposes of giving effect to the conversion and    
exchange referred to in this Article II, and (ii) the number of Merger      
Ordinary Shares to be issued in the Merger.                                 

(f) Subject to the terms and conditions of the Company's Stock Incentive
Plan (the "Company Option Plan") and the stock option agreements executed   
pursuant thereto, each option to purchase Company Common Stock granted      
thereunder that is outstanding at the Effective Time (a "Company Option")   
shall be converted into an option to acquire, on the same terms and         
conditions as were applicable under the Company Option Plan at the          
Effective Time, a number of (i) HoldCo ADSs equal to the ADS Consideration, 
or (ii) Merger Ordinary Shares equal to the Ordinary Share Consideration,   
in each case multiplied by the number of shares of Company Common Stock     
subject to such option immediately prior to the Effective Time, on the      
basis described in Section 6.10. The Company as the Surviving Corporation   
and HoldCo shall take all action necessary to ensure that HoldCo has        
control of the operation of the Company Option Plan and the Company         
Restricted Stock Plans.                                                     

(g) Subject to Section 5.01 (c)(iv)(C), the Company Preferred Stock (as 
defined below) shall not be affected by the Merger and shall continue to    
have the same rights and preferences as were in effect prior to             
consummation of the Merger.                                                 

    2.02 Procedure for Election. At such time as shall be sufficient to permit
the holders of Company Common Stock to exercise their right to make an election 
pursuant to this Section 2.02, HoldCo will make available to all holders of     
Company Common Stock of record a letter of transmittal and election form and    
other appropriate materials (collectively, the "Ordinary Share Election Form")  
providing for such holder to elect to                                           

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receive the Ordinary Share Consideration with respect to all or any portion of  
such holder's shares of Company Common Stock ("Ordinary Share Election"). As of 
the Election Date (as hereinafter defined), any share of Company Common Stock   
with respect to which there shall not have been effected such election by       
submission to the Exchange Agent (as defined in Section 2.03) of an effective,  
properly completed Ordinary Share Election Form shall be converted in the       
Merger into the right to receive the ADS Consideration.                         

(a) Any election to receive the Ordinary Share Consideration shall have 
been validly made only if the Exchange Agent shall have received by 5:00    
p.m., New York City time, on or prior to the Election Date, an Ordinary     
Share Election Form properly completed and executed (with the signature or  
signatures thereon guaranteed if required by the Ordinary Share Election    
Form) by such holder of shares of Company Common Stock. As used herein,     
"Election Date" means a date announced by HoldCo, in a news release         
delivered to the Dow Jones News Service, as the last day on which an        
Ordinary Share Election Form will be accepted; provided, however, that such 
date shall be a business day no earlier than five (5) business days prior   
to the date on which the Effective Time occurs and shall be at least five   
(5), and not more than 20, business days following the date of such news    
release; provided further, that, subsequent to such announcement, HoldCo    
shall have the right to change such Election Date to a later date so long   
as such later date is (i) at least five (5) business days following the     
date of notice of such change and (ii) not later than the date on which the 
Effective Time occurs. HoldCo shall have the right to make reasonable       
determinations and to establish reasonable procedures (not inconsistent     
with the terms of this Agreement) in guiding the Exchange Agent in its      
determination as to the validity of Ordinary Share Election Forms and of    
any revision, revocation or withdrawal thereof.                             

(b) Two or more holders of shares of Company Common Stock who are       
determined to constructively own such shares owned by each other by virtue  
of Section 318(a) of the Code and who so certify to HoldCo's reasonable     
satisfaction, and any single holder of shares of Company Common Stock who   
holds such shares in two or more different names and who so certifies to    
HoldCo's reasonable satisfaction, may submit a joint Ordinary Share         
Election Form covering the aggregate shares of Company Common Stock owned   
by all such holders or by such single holder, as the case may be. For all   
purposes of this Agreement, each such group of holders which, and each such 
single holder who, submits a joint Ordinary Share Election Form shall be    
treated as a single holder of shares of Company Common Stock.               

(c) Record holders of shares of Company Common Stock who are nominees   
only may submit a separate Ordinary Share Election Form for each beneficial 
owner for whom such record holder is a nominee; provided, however, that, at 
the request of HoldCo, such record holder shall certify to the reasonable   
satisfaction of HoldCo that such record holder holds such shares as nominee 
for the beneficial owner thereof. For purposes of this Agreement, each      
beneficial owner for which an Ordinary Share Election Form is submitted     
will be treated as a separate holder of shares of Company Common Stock      
subject, however, to Section 2.02(b).                                       

 (d) Any holder of shares of Company Common Stock may at any time prior to
5:00 p.m. New York City time, on the Election Date revoke such holder's     
election by written notice to the Exchange Agent received at any time prior 
to 5:00 p.m., New York City time, on the Election Date.                     

   2.03 Exchange of Certificates. (a) Exchange Agent. Promptly following the
Effective Time, (i) HoldCo shall issue to and deposit with the ADR Depositary,  
for the benefit of the holders of shares of Company Common Stock converted into 
the ADS Consideration in accordance with Section 2.01(c), HoldCo Ordinary       
Shares in an amount sufficient to permit the ADR Depositary to issue HoldCo     
ADRs representing the number of HoldCo ADSs issuable pursuant to Section        
2.01(c) and (ii) HoldCo shall, for the benefit of the holders of the shares of  
Company Common Stock converted into Merger Ordinary Shares in the Merger, make  
available to the Surviving Corporation for deposit with a bank or trust company 
designated before the Closing Date by HoldCo and reasonably acceptable to the   
Company (the "Exchange Agent"), (A) certificates representing the number of     
duly authorized whole Merger Ordinary Shares issuable in accordance with        
Section 2.01(c), and (B) an amount of cash equal to the aggregate amount        
payable in lieu of fractional HoldCo ADSs and Merger Ordinary Shares in         
accordance with Section 2.03(e) (such cash, certificates representing Merger    

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Ordinary Shares and HoldCo ADRs representing HoldCo ADSs, together with any     
dividends or distributions with respect thereto being hereinafter referred to   
as the "Exchange Fund"), to be held for the benefit of and distributed to the   
holders of Converted Shares in accordance with this Section. The Exchange Agent 
shall agree to hold such Merger Ordinary Shares and funds for delivery as       
contemplated by this Section and upon such additional terms as may be agreed    
upon by the Exchange Agent, the Company and HoldCo. HoldCo shall cause the ADR  
Depositary to issue through and upon the instructions of the Exchange Agent,    
for the benefit of the holders of shares of the Company Common Stock converted  
into the ADS Consideration in accordance with Section 2.01(c), HoldCo ADRs      
representing the number of HoldCo ADSs issuable pursuant to Section 2.01(c).    
Neither HoldCo, ScottishPower, their respective affiliates nor holders of       
Converted Shares shall be responsible for any stamp duty reserve tax payable in 
connection with the ADS Consideration. The Exchange Agent shall invest any cash 
included in the Exchange Fund as directed by the Surviving Corporation on a     
daily basis. Any interest and other income resulting from such investments      
shall promptly be paid to the Surviving Corporation.                            

(b) Exchange Procedures.  As soon as reasonably practicable after the 
Effective Time, the Surviving Corporation shall cause the Exchange Agent to     
mail to each holder of record of a certificate or certificates which            
immediately prior to the Effective Time represented outstanding shares of       
Company Common Stock (the "Certificates") whose shares are converted pursuant   
to this Article II into the right to receive HoldCo ADSs or Merger Ordinary     
Shares (i) a letter of transmittal (which shall specify that delivery shall be  
effected, and risk of loss and title to the Certificates shall pass, only upon  
delivery of the Certificates to the Exchange Agent and shall be in such form    
and have such other provisions as the Surviving Corporation or HoldCo may       
reasonably specify) and (ii) instructions for use in effecting the surrender of 
the Certificates in exchange for certificates representing HoldCo ADRs which    
represent HoldCo ADSs, and Merger Ordinary Shares and cash in lieu of           
fractional HoldCo ADSs or Merger Ordinary Shares. Upon surrender of a           
Certificate for cancellation to the Exchange Agent, together with such letter   
of transmittal duly executed and completed in accordance with its terms, the    
holder of such Certificate shall be entitled to receive in exchange therefor    
(i) one or more HoldCo ADRs representing, in the aggregate, that whole number   
of HoldCo ADSs and/or a certificate or certificates representing that whole     
number of Merger Ordinary Shares elected to be received in accordance with      
Section 2.02, (ii) the amount of dividends or other distributions, if any, with 
a record date on or after the Effective Time which theretofore became payable   
with respect to such HoldCo ADSs and Merger Ordinary Shares, and (iii) the cash 
amount payable in lieu of fractional HoldCo ADSs and Merger Ordinary Shares in  
accordance with Section 2.03(e), in each case which such holder has the right   
to receive pursuant to the provisions of this Article II, and the Certificate   
so surrendered shall forthwith be canceled. In no event shall the holder of any 
Certificate be entitled to receive interest on any funds to be received in the  
Merger. In the event of a transfer of ownership of Company Common Stock which   
is not registered in the transfer records of the Company, one or more HoldCo    
ADRs representing, in the aggregate, that whole number of HoldCo ADSs and/or a  
certificate or certificates representing that whole number of Merger Ordinary   
Shares elected to be received in accordance with Section 2.02, plus the cash    
amount payable in lieu of fractional HoldCo ADSs and Merger Ordinary Shares in  
accordance with Section 2.03(e), may be issued to a transferee if the           
Certificate representing such Company Common Stock is presented to the Exchange 
Agent accompanied by all documents required to evidence and effect such         
transfer and by evidence that any applicable stock transfer taxes have been     
paid. Until surrendered as contemplated by this Section 2.03(b), each           
Certificate shall be deemed at any time after the Effective Time for all        
corporate purposes of HoldCo, except as limited by Section 2.03(c) below and    
subject to applicable law, to represent ownership of the whole number of HoldCo 
ADSs and/or Merger Ordinary Shares into which the number of shares of Company   
Common Stock shown thereon have been converted as contemplated by this Article  
II. Notwithstanding the foregoing, Certificates representing Company Common     
Stock surrendered for exchange by any person constituting an "affiliate" of the 
Company for purposes of Section 6.04 shall not be exchanged until HoldCo has    
received an Affiliate Agreement (as defined in Section 6.04) as provided in     
Section 6.04.                                                                   

(c) Distributions with Respect to Unexchanged Shares. No dividends or 
other distributions declared, made or paid after the Effective Time with        
respect to HoldCo Ordinary Shares with a record date on or after the Effective  
Time shall be paid to the holder of any unsurrendered Certificate with respect  
to the                                                                          

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HoldCo ADSs and Merger Ordinary Shares represented thereby and no cash payment  
in lieu of fractional HoldCo ADSs and Merger Ordinary Shares shall be paid to   
any such holder pursuant to Section 2.03(e) until the holder of record of such  
Certificate shall surrender such Certificate in accordance with this Section.   
Subject to the effect of applicable laws, following surrender of any such       
Certificate, there shall be paid to the record holder of the certificates       
representing the HoldCo ADRs which represent HoldCo ADSs and Merger Ordinary    
Shares issued in exchange therefor, without interest, (i) at the time of such   
surrender, the amount of dividends or other distributions, if any, with a       
record date on or after the Effective Time which theretofore became payable,    
but which were not paid by reason of the immediately preceding sentence, with   
respect to such HoldCo ADSs and Merger Ordinary Shares and (ii) at the          
appropriate payment date, the amount of dividends or other distributions with a 
record date on or after the Effective Time but prior to surrender and a payment 
date subsequent to surrender payable with respect to such HoldCo ADSs and       
Merger Ordinary Shares.                                                         

  (d) No Further Ownership Rights in Company Common Stock. All HoldCo ADSs
and Merger Ordinary Shares issued upon the surrender for exchange of            
Certificates in accordance with the terms hereof (including any cash paid       
pursuant to Section 2.03(e)) shall be deemed to have been issued at the         
Effective Time in full satisfaction of all rights pertaining to the Converted   
Shares represented thereby, subject, however, to the Surviving Corporation's    
obligation to pay any dividends which may have been declared by the Company on  
the shares of Company Common Stock in accordance with the terms of this         
Agreement and which remained unpaid at the Effective Time. From and after the   
Effective Time, the stock transfer books of the Company shall be closed and     
there shall be no further registration of transfers thereon of the shares of    
Company Common Stock which were outstanding immediately prior to the Effective  
Time. If, after the Effective Time, Certificates are presented to the Surviving 
Corporation for any reason, they shall be canceled and exchanged as provided in 
this Section.                                                                   

   (e) No Fractional Shares. No certificate or scrip representing fractional
HoldCo ADSs or Merger Ordinary Shares will be issued in the Merger upon the     
surrender for exchange of Certificates, and such fractional HoldCo ADS or       
Merger Ordinary Share interests will not entitle the owner thereof to vote or   
to any rights of a holder of HoldCo ADSs or Merger Ordinary Shares. In lieu of  
any such fractional HoldCo ADS or Merger Ordinary Share, each holder of         
Certificates who would otherwise have been entitled to a fraction of HoldCo ADS 
or Merger Ordinary Share in exchange for such Certificates pursuant to this     
Section shall receive from the Exchange Agent, as applicable, (i) a cash        
payment in lieu of such fractional HoldCo ADS determined by multiplying (A) the 
Sales Price (as defined below) of a HoldCo ADS on the last Trading Day (as      
defined below) immediately preceding the Closing Date by (B) the fractional     
HoldCo ADS interest to which such holder would otherwise be entitled, and/or    
(ii) a cash payment in lieu of such fractional Merger Ordinary Share determined 
by multiplying (A) the Sales Price of a HoldCo ADS Ordinary Share on the last   
Trading Day immediately preceding the Closing Date by (B) the fractional Merger 
Ordinary Share interest to which such holder would otherwise be entitled. The   
term "Sales Price" shall mean, on any Trading Day, with respect to HoldCo ADSs, 
the closing sales price of HoldCo ADSs reported on the New York Stock Exchange, 
Inc. ("NYSE") Composite Tape on such day and, with respect to Merger Ordinary   
Shares, the closing middle market quotation of a HoldCo Ordinary Share as       
reported in the Daily Official List of the London Stock Exchange ("LSE") for    
such date. The term "Trading Day" shall mean any day on which securities are    
traded, with respect to HoldCo ADSs, on the NYSE, and with respect to HoldCo    
Ordinary Shares, on the LSE.                                                    

  (f) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the stockholders of the Company for one (1) year after 
the Effective Time shall be delivered to HoldCo, upon demand, and any holders   
of Certificates who have not theretofore complied with this Article II shall    
thereafter look only to HoldCo (subject to abandoned property, escheat and      
other similar laws) as general creditors for payment of their claim for HoldCo  
ADSs, Merger Ordinary Shares, any cash in lieu of fractional HoldCo ADSs and    
Merger Ordinary Shares and any dividends or distributions with respect to       
HoldCo ADSs and Merger Ordinary Shares. Neither HoldCo, ScottishPower nor the   
Surviving Corporation shall be liable to any holder of any Certificate for      
HoldCo ADSs or Merger Ordinary Shares (or dividends or distributions with       
respect to either), or cash payable in respect of fractional HoldCo ADSs or     
Merger Ordinary Shares, delivered to a public official pursuant to any          
applicable abandoned property, escheat or similar law.                          

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   (g) Lost Certificates. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming  
such Certificate to be lost, stolen or destroyed and, if required by HoldCo,    
the posting by such person of a bond in such reasonable amount as HoldCo may    
direct as indemnity against any claim that may be made against it with respect  
to such Certificate, the Exchange Agent will deliver in exchange for such lost, 
stolen or destroyed Certificate the applicable Merger Consideration with        
respect to the shares of Company Common Stock formerly represented thereby, any 
cash in lieu of fractional HoldCo ADSs or Merger Ordinary Shares, and unpaid    
dividends and distributions in respect of or on HoldCo ADSs or Merger Ordinary  
Shares deliverable in respect thereof, pursuant to this Agreement.              

2.04 Withholding Rights. Each of the Surviving Corporation and HoldCo 
shall be entitled to deduct and withhold from the consideration otherwise       
payable pursuant to this Agreement to any holder of shares of Company Common    
Stock such amounts as it is required to deduct and withhold with respect to the 
making of such payment under the Code, or any provision of state, local or      
foreign tax law, including the tax laws of the United Kingdom. To the extent    
that amounts are so withheld by the Surviving Corporation or HoldCo, as the     
case may be, such withheld amounts shall be treated for all purposes of this    
Agreement as having been paid to the holder of the shares of Company Common     
Stock in respect of which such deduction and withholding was made by the        
Surviving Corporation or HoldCo, as the case may be.                            

ARTICLE III 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY 

The Company represents and warrants to HoldCo, ScottishPower, the     
Partnership and Merger Sub, as of December 6, 1998 (except for the              
representations and warranties contained in Sections 3.03 and 3.04, which are   
made as of the date hereof), as follows:                                        

3.01 Organization and Qualification. (a) Each of the Company and its  
Subsidiaries is duly organized, validly existing and in good standing (with     
respect to jurisdictions which recognize the concept of good standing) under    
the laws of its jurisdiction of organization and has full corporate or          
partnership, as the case may be, power and authority to conduct its business as 
and to the extent now conducted and to own, use and lease its assets and        
properties, except for such failures to be so organized, existing and in good   
standing (with respect to jurisdictions which recognize the concept of good     
standing) or to have such power and authority which, individually or in the     
aggregate, are not having and would not reasonably be expected to have a        
material adverse effect (as defined in Section 9.12) on the Company and its     
Subsidiaries taken as a whole. Each of the Company and its Subsidiaries is duly 
qualified, licensed or admitted to do business and is in good standing (with    
respect to jurisdictions which recognize the concept of good standing) in each  
jurisdiction in which the ownership, use or leasing of its assets and           
properties, or the conduct or nature of its business, makes such qualification, 
licensing or admission necessary, except for such failures to be so qualified,  
licensed or admitted and in good standing (with respect to jurisdictions that   
recognize the concept of good standing) which, individually or in the           
aggregate, are not having and would not reasonably be expected to have a        
material adverse effect on the Company and its Subsidiaries taken as a whole.   
Section 3.01 of the letter dated December 6, 1998 and delivered to              
ScottishPower, the Partnership and Merger Sub by the Company on such date (the  
"Company Disclosure Letter") sets forth (i) the name and jurisdiction of        
organization of each Subsidiary of the Company and (x) with respect to          
Subsidiaries that are corporations, (a) such Subsidiary's authorized capital    
stock, (b) the number of issued and outstanding shares of such Subsidiary's     
capital stock and (c) the record owners of such Subsidiary's shares and, (y)    
with respect to Subsidiaries that are partnerships, the names and ownership     
interests of the partners thereof. The Company has previously delivered to      
ScottishPower correct and complete copies of the certificate or articles of     
incorporation and bylaws (or other comparable charter documents) of the Company 
and its Subsidiaries.                                                           

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    (b) Section 3.01 of the Company Disclosure Letter sets forth a description
as of December 6, 1998, of all Company Joint Ventures, including (i) the name   
of each such entity and the Company's interest therein, and (ii) a brief        
description of the principal line or lines of business conducted by each such   
entity. For purposes of this Agreement:                                         

(i) "Joint Venture" of a person or entity shall mean any corporation or 
other entity (including partnerships and other business associations) that  
is not a Subsidiary of such person or entity, in which such person or one   
or more of its Subsidiaries owns directly or indirectly an equity interest, 
other than equity interests which are less than 5% of each class of the     
outstanding voting securities or equity interests of any such entity;       

(ii) "Company Joint Venture" shall mean any Joint Venture of the Company
or any of its Subsidiaries; and                                             

(iii) "Scottish Power Joint Venture" shall mean any Joint Venture of    
ScottishPower, HoldCo or any of their respective Subsidiaries.              

  (c) Except for interests in the Subsidiaries of the Company, the Company
Joint Ventures and as disclosed in the Company SEC Reports (as defined in       
Section 3.05) filed prior to December 6, 1998 or Section 3.01 of the Company    
Disclosure Letter, the Company does not directly or indirectly own any equity   
or similar interest in, or any interest convertible into or exchangeable or     
exercisable for any equity or similar interest in, any material corporation,    
partnership, limited liability company, joint venture or other business         
association or entity (other than non-controlling investments in the ordinary   
course of business and corporate partnering, development, cooperative marketing 
and similar undertakings and arrangements entered into in the ordinary course   
of business).                                                                   

3.02 Capital Stock. (a) The authorized capital stock of the Company   
consists of:                                                                    

(i) 750 million shares of Company Common Stock, of which 297,335,056  
shares were issued and outstanding as of November 30, 1998, and                 

 (ii) 126,533 shares of 5% preferred stock, of which 126,533 were issued
and outstanding as of November 30, 1998, 3.5 million shares of serial preferred 
stock, of which 288,499 were issued and outstanding as of November 30, 1998 and 
of which 2,065 shares were designated the 4.52% Series, 18,060 shares were      
designated the 7.00% Series, 5,932 shares were designated the 6.00% Series,     
42,000 were designated the 5.00% Series, 65,960 were designated the 5.40%       
Series, 69,890 were designated the 4.72% Series, and 84,592 were designated the 
4.56% Series, respectively; and 16 million shares of no par serial preferred    
stock, of which 2,744,438 were issued and outstanding as of November 30, 1998   
and of which 381,220 shares were designated the $1.28 Series, 420,116 shares    
were designated the $1.18 Series, 193,102 shares were designated the $1.16      
Series, 1,000,000 shares were designated the $7.70 Series, and 750,000 shares   
were designated the $7.48 Series, respectively (collectively, the "Company      
Preferred Stock").                                                              

 As of November 30, 1998, 28,817,971 shares of Company Common Stock were
reserved or held for issuance under the PacifiCorp Stock Incentive Plan, the    
PacifiCorp Long Term Incentive Plan, the PacifiCorp K-Plus Employee Savings and 
Stock Ownership Plan and the PacifiCorp Dividend Reinvestment and Stock         
Purchase Plan. All of the issued and outstanding shares of Company Common Stock 
are, and all shares reserved for issuance will be, upon issuance in accordance  
with the terms specified in the instruments or agreements pursuant to which     
they are issuable, duly authorized, validly issued, fully paid and              
nonassessable. Except pursuant to this Agreement and except as described in     
Section 3.02 of the Company Disclosure Letter, as of December 6, 1998 there     
were no outstanding subscriptions, options, warrants, rights (including stock   
appreciation rights), preemptive rights or other contracts, commitments,        
understandings or arrangements, including any right of conversion or exchange   
under any outstanding security, instrument or agreement (together, "Options"),  
obligating the Company or any of its Subsidiaries to issue or sell any shares   
of capital stock of the Company or to grant, extend or enter into any Option    
with respect thereto.                                                           

    (b) Except as disclosed in the Company SEC Reports filed prior to December
6, 1998 or Section 3.02 of the Company Disclosure Letter, all of the            
outstanding shares of capital stock of each Subsidiary of the                   

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Company are duly authorized, validly issued, fully paid and nonassessable and   
are owned, beneficially and of record, by the Company or a Subsidiary wholly    
owned, directly or indirectly, by the Company, free and clear of any liens,     
claims, mortgages, encumbrances, pledges, security interests, equities and      
charges of any kind (each a "Lien"), other than Liens or failures to so own     
which are immaterial. Each outstanding share of Company Preferred Stock, other  
than shares of the $1.28 Series, $1.18 Series and $1.16 Series of no par serial 
preferred stock, is entitled to one vote per share, voting together with the    
holders of Company Common Stock as a single class, on all matters generally     
submitted to the stockholders of the Company for a vote. Except as disclosed in 
the Company SEC Reports filed prior to December 6, 1998 or Section 3.02 of the  
Company Disclosure Letter, there are no (i) outstanding Options obligating the  
Company or any of its Subsidiaries to issue or sell any shares of capital stock 
of any Subsidiary of the Company or to grant, extend or enter into any such     
Option or (ii) voting trusts, proxies or other commitments, understandings,     
restrictions or arrangements in favor of any person other than the Company or a 
Subsidiary wholly owned, directly or indirectly, by the Company with respect to 
the voting of or the right to participate in dividends or other earnings on any 
capital stock of any Subsidiary of the Company.                                 

  (c) None of the Subsidiaries of the Company or the Company Joint Ventures is
a "public utility company," a "holding company," a "subsidiary company" or an   
"affiliate" of any public utility company within the meaning of Section         
2(a)(5), 2(a)(7), 2(a)(8) or 2(a)(11) of the Public Utility Holding Company Act 
of 1935, as amended (the "1935 Act"), respectively.                             

(d) Except as disclosed in the Company SEC Reports filed prior to December
6, 1998 or Section 3.02 of the Company Disclosure Letter, there are no          
outstanding contractual obligations of the Company or any Subsidiary of the     
Company to repurchase, redeem or otherwise acquire any shares of Company Common 
Stock or any material capital stock of any Subsidiary of the Company or to      
provide any material amount of funds to, or make any material investment (in    
the form of a loan, capital contribution or otherwise) in, any Subsidiary of    
the Company or any other person.                                                

3.03 Authority Relative to this Agreement. The Company has full corporate 
power and authority to enter into this Agreement, and, subject to obtaining the 
Company Stockholders' Approval (as defined in Section 6.03 (b)), to perform its 
obligations hereunder and to consummate the transactions contemplated hereby.   
The execution, delivery and performance of this Agreement by the Company and    
the consummation by the Company of the transactions contemplated hereby have    
been duly and validly approved by the Board of Directors of the Company, the    
Board of Directors of the Company has recommended approval of this Agreement by 
the stockholders of the Company and directed that this Agreement be submitted   
to the stockholders of the Company for their consideration, and no other        
corporate proceedings on the part of the Company or its stockholders are        
necessary to authorize the execution, delivery and performance of this          
Agreement by the Company and the consummation by the Company of the             
transactions contemplated hereby, other than obtaining the Company              
Stockholders' Approval. This Agreement has been duly and validly executed and   
delivered by the Company and constitutes a legal, valid and binding obligation  
of the Company enforceable against the Company in accordance with its terms,    
except as enforceability may be limited by bankruptcy, insolvency,              
reorganization, moratorium or other similar laws affecting the enforcement of   
creditors' rights generally and by general equitable principles (regardless of  
whether such enforceability is considered in a proceeding in equity or at law). 

3.04 Non-Contravention; Approvals and Consents. (a) The execution and     
delivery of this Agreement by the Company do not, and the performance by the    
Company of its obligations hereunder and the consummation of the transactions   
contemplated hereby will not, conflict with, result in a violation or breach    
of, constitute (with or without notice or lapse of time or both) a default      
under, result in or give to any person any right of payment or reimbursement,   
termination, cancellation, modification or acceleration of, or result in the    
creation or imposition of any Lien upon any of the assets or properties of the  
Company or any of its Subsidiaries or any of the Company Joint Ventures under,  
any of the terms, conditions or provisions of (i) the certificates or articles  
of incorporation or bylaws (or other comparable charter documents) of the       
Company or any of its Subsidiaries, or (ii) subject to the obtaining of the     
Company Stockholders' Approval and the taking                                   

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of the actions described in Section 3.04(b), (x) any statute, law, rule,        
regulation or ordinance (together, "laws"), or any judgment, decree, order,     
writ, permit or license (together, "orders"), of any court, tribunal,           
arbitrator, authority, agency, commission, official or other instrumentality of 
the United States, any foreign country or any domestic or foreign state,        
county, city or other political subdivision (a "Governmental or Regulatory      
Authority") applicable to the Company or any of its Subsidiaries or any of the  
Company Joint Ventures or any of their respective assets or properties, or (y)  
any note, bond, mortgage, security agreement, indenture, license, franchise,    
permit, concession, contract, lease or other instrument, obligation or          
agreement of any kind (together, "Contracts") to which the Company or any of    
its Subsidiaries or any of the Company Joint Ventures is a party or by which    
the Company or any of its Subsidiaries or any of the Company Joint Ventures or  
any of their respective assets or properties is bound, excluding from the       
foregoing clauses (x) and (y) conflicts, violations, breaches, defaults, rights 
of payment and reimbursement, terminations, modifications, accelerations and    
creations and impositions of Liens which, individually or in the aggregate,     
would not reasonably be expected to have a material adverse effect on the       
Company and its Subsidiaries taken as a whole or on the ability of the Company  
to consummate the transactions contemplated by this Agreement.                  

(b) Except (i) for the filing of a premerger notification report by the   
Company under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as      
amended, and the rules and regulations thereunder (the "HSR Act"), (ii) for the 
filing of the Proxy Statement (as defined in Section 3.09) and the Registration 
Statement (as defined in Section 4.09) with the Securities and Exchange         
Commission (the "SEC") pursuant to the Securities Exchange Act of 1934, as      
amended, and the rules and regulations thereunder (the "Exchange Act"), and the 
Securities Act of 1933, as amended, and the rules and regulations thereunder    
(the "Securities Act"), the declaration of the effectiveness of the             
Registration Statement by the SEC and filings with various state securities     
authorities that are required in connection with the transactions contemplated  
by this Agreement, (iii) for the filing of an application under Section 203 and 
any directly related Section of, or regulation under, the Power Act (as defined 
in Section 3.05(b)) for the sale or disposition of jurisdictional facilities of 
the Company; (iv) for the filing of the Articles of Merger and other            
appropriate merger documents required by the BCA with the Secretary of State    
and appropriate documents with the relevant authorities of other states in      
which the Constituent Corporations are qualified to do business; and (v) as     
disclosed in Section 3.04 of the Company Disclosure Letter, no consent,         
approval or action of, filing with or notice to any Governmental or Regulatory  
Authority or other public or private third party is necessary or required under 
any of the terms, conditions or provisions of any law or order of any           
Governmental or Regulatory Authority or any Contract to which the Company or    
any of its Subsidiaries or any of the Company Joint Ventures is a party or by   
which the Company or any of its Subsidiaries or any of the Company Joint        
Ventures or any of their respective assets or properties is bound for the       
execution and delivery of this Agreement by the Company, the performance by the 
Company of its obligations hereunder or the consummation of the transactions    
contemplated hereby, other than such consents, approvals, actions, filings and  
notices which the failure to make or obtain, as the case may be, individually   
or in the aggregate, would not reasonably be expected to have a material        
adverse effect on the Company and its Subsidiaries taken as a whole or on the   
ability of the Company to consummate the transactions contemplated by this      
Agreement.                                                                      

 3.05 SEC Reports, Financial Statements and Utility Reports. (a) The Company
has delivered to ScottishPower a true and complete copy of each form, report,   
schedule, registration statement, registration exemption, if applicable,        
definitive proxy statement and other document (together with all amendments     
thereof and supplements thereto) filed by the Company or any of its             
Subsidiaries with the SEC since December 31, 1995 (as such documents have since 
the time of their filing been amended or supplemented, the "Company SEC         
Reports"), which are all the documents (other than preliminary materials) that  
the Company and its Subsidiaries were required to file with the SEC since such  
date. As of their respective dates, the Company SEC Reports (i) complied as to  
form in all material respects with the requirements of the Securities Act or    
the Exchange Act, if applicable, as the case may be, and (ii) did not contain   
any untrue statement of a material fact or omit to state a material fact        
required to be stated therein or necessary in order to make the statements      
therein, in light of the circumstances under which they were made, not          
misleading. The audited consolidated financial statements and unaudited interim 
consolidated financial statements (including, in each case, the notes,          

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if any, thereto) included in the Company SEC Reports (the "Company Financial    
Statements") complied as to form in all material respects with the published    
rules and regulations of the SEC with respect thereto, were prepared in         
accordance with U.S. generally accepted accounting principles applied on a      
consistent basis during the periods involved (except as may be indicated        
therein or in the notes thereto and except with respect to unaudited statements 
as permitted by Form 10-Q of the SEC) and fairly present (subject, in the case  
of the unaudited interim financial statements, to normal, recurring year-end    
audit adjustments (which are not expected to be, individually or in the         
aggregate, materially adverse to the Company and its Subsidiaries taken as a    
whole)) the consolidated financial position of the Company and its consolidated 
subsidiaries as at the respective dates thereof and the consolidated results of 
their operations and cash flows for the respective periods then ended. Except   
as set forth in Section 3.05 of the Company Disclosure Letter, each Subsidiary  
of the Company is treated as a consolidated subsidiary of the Company in the    
Company Financial Statements for all periods covered thereby.                   

(b) All material filings required to be made by the Company or any of its 
Subsidiaries since December 31, 1995, under the Federal Power Act (the "Power   
Act") and applicable state laws and regulations, have been filed with the       
Federal Energy Regulatory Commission (the "FERC"), the Department of Energy     
(the "DOE") or any appropriate state public utilities commission (including,    
without limitation, the state utility regulatory agencies of California, Idaho, 
Montana, Oregon, Utah, Washington and Wyoming), as the case may be, including   
all material written forms, statements, reports, agreements and all material    
documents, exhibits, amendments and supplements appertaining thereto, including 
but not limited to all material rates, tariffs, franchises, service agreements  
and related documents, complied, as of their respective dates, in all material  
respects with all applicable requirements of the appropriate statute and the    
rules and regulations thereunder.                                               

3.06 Absence of Certain Changes or Events. Except as disclosed in the     
Company SEC Reports filed prior to December 6, 1998 or Section 3.06 of the      
Company Disclosure Letter, (a) between December 31, 1997 and December 6, 1998,  
there has not been any change, event or development having, or that would       
reasonably be expected to have, individually or in the aggregate, a material    
adverse effect on the Company and its Subsidiaries taken as a whole (other than 
those changes, events or developments occurring as a result of general economic 
or financial conditions or which are not unique to the Company and its          
Subsidiaries but also affect other entities who participate or are engaged in   
the lines of business in which the Company and its Subsidiaries are engaged),   
and (b) between December 31, 1997 and December 6, 1998 (i) the Company, its     
Subsidiaries and the Company Joint Ventures have conducted their respective     
businesses only in the ordinary course substantially consistent with past       
practice and (ii) neither the Company nor any of its Subsidiaries nor any of    
the Company Joint Ventures has (x) acquired or agreed to acquire (by merging or 
consolidating with, or by purchasing a substantial equity interest in or a      
substantial portion of the assets of, or by any other manner) any business or   
any corporation, partnership, association or other business organization or     
division thereof for a purchase price (including the amount of any indebtedness 
assumed in connection therewith) of $25 million or more in any one transaction  
or (y) sold, leased or otherwise disposed of any of its assets or properties    
(or agreed to do so) other than dispositions in the ordinary course of business 
consistent with past practice or having a net book value of $25 million or less 
in any one transaction.                                                         

3.07 Absence of Undisclosed Liabilities. Except for matters reflected or  
reserved against in the balance sheet for the period ended December 31, 1997    
included in the Company Financial Statements or as disclosed in the Company SEC 
Reports filed prior to December 6, 1998 or in Section 3.07 of the Company       
Disclosure Letter, neither the Company nor any of its Subsidiaries had at such  
date, or has incurred since such date, any liabilities or obligations (whether  
absolute, accrued, contingent, fixed or otherwise, or whether due or to become  
due) of any nature that would be required by U.S. generally accepted accounting 
principles to be reflected on a consolidated balance sheet of the Company and   
its consolidated subsidiaries (including the notes thereto), except liabilities 
or obligations (i) which were incurred in the ordinary course of business       
consistent with past practice or (ii) which are not having, and would not       
reasonably be expected to have, individually or in the aggregate, a material    
adverse effect on the Company and its Subsidiaries taken as a whole.            

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3.08 Legal Proceedings. Except as disclosed in the Company SEC Reports
filed prior to December 6, 1998 or in Section 3.08 of the Company Disclosure    
Letter and except for environmental matters which are governed by Section 3.15, 
(i) there are no actions, suits, arbitrations or proceedings pending or, to the 
knowledge of the Company, threatened against, nor to the knowledge of the       
Company are there any Governmental or Regulatory Authority investigations or    
audits pending or threatened against, the Company or any of its Subsidiaries or 
any of the Company Joint Ventures or any of their respective assets and         
properties which, individually or in the aggregate, would reasonably be         
expected to have a material adverse effect on the Company and its Subsidiaries  
taken as a whole or on the ability of the Company to consummate the             
transactions contemplated by this Agreement, and (ii) neither the Company nor   
any of its Subsidiaries is subject to any order of any Governmental or          
Regulatory Authority which, individually or in the aggregate, is having or      
would reasonably be expected to have a material adverse effect on the Company   
and its Subsidiaries taken as a whole or on the ability of the Company to       
consummate the transactions contemplated by this Agreement.                     

    3.09 Information Supplied. (a) The proxy statement relating to the Company
Stockholders' Meeting (as defined in Section 6.03(b)), as amended or            
supplemented from time to time (as so amended and supplemented, the "Proxy      
Statement"), and any other documents to be filed by the Company with the SEC    
(including, without limitation, under the 1935 Act) in connection with the      
Merger and the other transactions contemplated hereby will (in the case of the  
Proxy Statement and any such other documents filed with the SEC under the       
Exchange Act or the Securities Act), comply as to form in all material respects 
with the requirements of the Exchange Act and the Securities Act, respectively, 
and will not, on the date of its filing or, in the case of the Proxy Statement, 
at the date it is mailed to stockholders of the Company and at the time of the  
Company Stockholders' Meeting, contain any untrue statement of a material fact  
or omit to state any material fact required to be stated therein or necessary   
in order to make the statements therein, in light of the circumstances under    
which they are made, not misleading, except that no representation is made by   
the Company with respect to information supplied in writing by or on behalf of  
HoldCo, ScottishPower, the Partnership or Merger Sub expressly for inclusion    
therein and information incorporated by reference therein from documents filed  
by HoldCo, ScottishPower or any of their respective Subsidiaries with the SEC.  

(b) The information supplied or to be supplied by the Company for     
inclusion in any filing by HoldCo or ScottishPower with the LSE in respect of   
the Merger (including, without limitation, the Class 1 circular to be issued to 
shareholders of ScottishPower (the "Circular"), and the listing particulars     
under Part IV of the Financial Services Act 1986 of the United Kingdom (the     
"FSA") relating to HoldCo Ordinary Shares (the "Listing Particulars") and the   
Scheme Document (together with any amendments or supplements thereto, the       
"ScottishPower Disclosure Documents") will, at all relevant times, include all  
information relating to the Company, and information which is within the        
knowledge of each of the directors of the Company (or which it would be         
reasonable for them to obtain by making inquiries), which, in each case, is     
required to enable the ScottishPower Disclosure Documents and the parties       
hereto to comply in all material respects with all United Kingdom statutory and 
other legal and regulatory provisions (including, without limitation, the       
Companies Act (as defined in Section 4.02(a), the FSA and the rules and         
regulations made thereunder, and the rules and requirements of the LSE) and all 
such information contained in such documents will be substantially in           
accordance with the facts and will not omit anything material likely to affect  
the import of such information.                                                 

(c) Notwithstanding the foregoing provisions of this Section 3.09, no 
representation or warranty is made by the Company with respect to statements    
made or incorporated by reference in the Registration Statement, the Proxy      
Statement or the ScottishPower Disclosure Documents based on information        
supplied by HoldCo, ScottishPower or the Partnership expressly for inclusion or 
incorporation by reference therein or based on information which is not         
incorporated by reference in such documents but should have been disclosed      
pursuant to Section 4.09.                                                       

3.10 Permits; Compliance with Laws and Orders. The Company, its       
Subsidiaries and the Company Joint Ventures hold all permits, licenses,         
franchises, variances, exemptions, orders and approvals of all Governmental and 
Regulatory Authorities (other than environmental permits which are governed by  
Section                                                                         

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3.15) necessary for the lawful conduct of their respective businesses (the      
"Company Permits"), except for failures to hold such Company Permits which,     
individually or in the aggregate, are not having and would not reasonably be    
expected to have a material adverse effect on the Company and its Subsidiaries  
taken as a whole. The Company, its Subsidiaries and the Company Joint Ventures  
are in compliance with the terms of the Company Permits, except failures so to  
comply which, individually or in the aggregate, are not having and would not    
reasonably be expected to have a material adverse effect on the Company and its 
Subsidiaries taken as a whole. Except as disclosed in the Company SEC Reports   
filed prior to December 6, 1998 or Section 3.10 of the Company Disclosure       
Letter, the Company, its Subsidiaries and the Company Joint Ventures are not in 
violation of or default under any law or order of any Governmental or           
Regulatory Authority, except for such violations or defaults which,             
individually or in the aggregate, are not having and would not reasonably be    
expected to have a material adverse effect on the Company and its Subsidiaries  
taken as a whole.                                                               

 3.11 Compliance with Agreements. Except as disclosed in the Company SEC
Reports filed prior to December 6, 1998 or Section 3.11 of the Company          
Disclosure Letter, neither the Company nor any of its Subsidiaries nor any of   
the Company Joint Ventures nor, to the knowledge of the Company, any other      
party thereto is in breach or violation of, or in default in the performance or 
observance of any term or provision of, and no event has occurred which, with   
notice or lapse of time or both, would reasonably be expected to result in a    
default under, (i) the certificates or articles of incorporation or bylaws (or  
other comparable charter documents) of the Company or any of its Subsidiaries   
or (ii) any Contract to which the Company or any of its Subsidiaries or any of  
the Company Joint Ventures is a party or by which the Company or any of its     
Subsidiaries, or any of the Company Joint Ventures or any of their respective   
assets or properties is bound, except in the case of clause (ii) for breaches,  
violations and defaults which, individually or in the aggregate, are not having 
and would not reasonably be expected to have a material adverse effect on the   
Company and its Subsidiaries taken as a whole.                                  

   3.12 Taxes. Except as disclosed in the Company SEC Reports filed prior to
December 6, 1998 or Section 3.12 of the Company Disclosure Letter:              

(a) Each of the Company and its Subsidiaries has filed all material tax 
returns and reports required to be filed by it, or requests for extensions  
to file such returns or reports have been timely filed or granted and have  
not expired, and all tax returns and reports are complete and accurate in   
all respects, except to the extent that such failures to either file, to    
have extensions granted that remain in effect or to file returns complete   
and accurate in all respects, as applicable, would not reasonably be        
expected to have, individually or in the aggregate, a material adverse      
effect on the Company and its Subsidiaries taken as a whole. The Company    
and each of its Subsidiaries has paid (or the Company has paid on its       
behalf) all taxes shown as due on such tax returns and reports. The most    
recent financial statements contained in the Company SEC Reports reflect an 
adequate reserve for all taxes payable by the Company and its Subsidiaries  
for all taxable periods and portions thereof accrued through the date of    
such financial statements, and no deficiencies for any taxes have been      
proposed, asserted or assessed against the Company or any of its            
Subsidiaries that are not adequately reserved for, except for inadequately  
reserved taxes and inadequately reserved deficiencies that would not        
reasonably be expected to, individually or in the aggregate, have a         
material adverse effect on the Company and its Subsidiaries taken as a      
whole. No requests for waivers of the time to assess any taxes against the  
Company or any of its Subsidiaries have been granted or are pending, except 
for requests with respect to such taxes that have been adequately reserved  
for in the most recent financial statements contained in the Company SEC    
Reports, or, to the extent not adequately reserved, the assessment of which 
would not reasonably be expected to have, individually or in the aggregate, 
a material adverse effect on the Company and its Subsidiaries taken as a    
whole.                                                                      

(b) Neither the Company nor any of its Subsidiaries has taken any action
or has any knowledge of any fact or circumstance that is reasonably likely  
to prevent the Merger from qualifying as a tax-free reorganization within   
the meaning of Code Section 368(a).                                         

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(c) Neither the Company nor any of its Subsidiaries has filed a consent 
under Code Section 341(f) concerning collapsible corporations, neither the  
Company nor any of its Subsidiaries has made any payments, is obligated to  
make any payment, or is a party to any agreement that under certain         
circumstances could obligate it to make any payments that will not be       
deductible under Code Section 280G.                                         

 (d) Each of the Company and its Subsidiaries has disclosed on its federal
income tax returns all positions taken therein that could give rise to a    
substantial understatement of United States federal income tax within the   
meaning of Code Section 6662.                                               

 (e) Neither the Company nor any of its Subsidiaries is a party to any tax
allocation or sharing agreement. Neither the Company nor any of its         
Subsidiaries (i) has been a member of an affiliated group filing a          
consolidated federal income tax return (other than a group the common       
parent of which was the Company) or (ii) has any material liability for the 
taxes of any person (other than any of the Company and its Subsidiaries)    
under United States Treasury Regulation Section 1.1502-6 (or any similar    
provision or state, local, or foreign law), as a transferee or successor,   
by contract, or otherwise.                                                  

(f) As used in this Section 3.12 and in Section 4.12, "taxes" shall     
include all federal, state, local and foreign income, franchise, gross      
receipts, property, sales, use, excise, alternative-minimum, estimated and  
other taxes and duties of any jurisdiction, including obligations for       
withholding taxes from payments due or made to any other person and any     
interest, penalties or additions to tax.                                    

    3.13 Employee Benefit Plans; ERISA. (a) Except as disclosed in the Company
SEC Reports filed prior to December 6, 1998 or Section 3.13 of the Company      
Disclosure Letter or as would not reasonably be expected to have a material     
adverse effect on the Company and its Subsidiaries taken as a whole, (i) all    
Company Employee Benefit Plans (as defined below) are in compliance with all    
applicable requirements of law, including without limitation ERISA (as defined  
below) and the Code, and (ii) neither the Company nor any of its Subsidiaries   
has any liabilities or obligations with respect to any such Company Employee    
Benefit Plans, whether accrued, contingent or otherwise, nor to the knowledge   
of the Company are any such liabilities or obligations expected to be incurred. 
Except as specifically set forth in Section 3.13 of the Company Disclosure      
Letter, the execution of, and performance of the transactions contemplated in,  
this Agreement will not (either alone or upon the occurrence of any additional  
or subsequent events) constitute an event under any Company Employee Benefit    
Plan that will or would reasonably be expected to result in any payment         
(whether of severance pay or otherwise), acceleration, forgiveness of           
indebtedness, vesting, distribution, increase in benefits or obligation to fund 
benefits with respect to any employee. The only severance agreements or         
severance policies applicable to the Company or any of its Subsidiaries are the 
agreements and policies specifically referred to in Section 3.13 of the Company 
Disclosure Letter.                                                              

(b) As used herein:                                                   

(i) "Company Employee Benefit Plan" means any Plan (other than any      
"multiemployer plan," as that term is defined in Section 4001 of ERISA)     
entered into, established, maintained, sponsored, contributed to or         
required to be contributed to by the Company or any of its Subsidiaries for 
the benefit of the current or former employees or directors of the Company  
or any of its Subsidiaries and existing on December 6, 1998 or at any time  
subsequent thereto and on or prior to the Effective Time and, in the case   
of a Plan which is subject to Part 3 of Title I of the Employee Retirement  
Income Security Act of 1974, as amended, and the rules and regulations      
thereunder ("ERISA"), Section 412 of the Code or Title IV of ERISA, at any  
time during the five-year period immediately preceding December 6, 1998;    
and                                                                         

 (ii) "Plan" means any employment, bonus, incentive compensation, deferred
compensation, long term incentive, pension, profit sharing, retirement,     
stock purchase, stock option, stock ownership, stock appreciation rights,   
phantom stock, leave of absence, layoff, vacation, day or dependent care,   
legal services, cafeteria, life, health, medical, accident, disability,     
severance, separation, termination, change of control or other benefit      
plan, agreement, practice, policy, program, scheme or arrangement, whether  

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written or oral, and whether applicable to only one individual or a group   
of individuals, including, but not limited to any "employee benefit plan"   
within the meaning of Section 3(3) of ERISA.                                

(iii) "ERISA Affiliate" means any person, who on or before the Effective
Time, is under common control with the Company within the meaning of        
Section 414 of the Code.                                                    

   (c) Complete and correct copies of the following documents have been made
available to ScottishPower, as of December 6, 1998: (i) all material Company    
Employee Benefit Plans and any related trust agreements or related insurance    
contracts and pro forma option agreements, (ii) the most current summary plan   
descriptions of each Company Employee Benefit Plan subject to the requirement   
to give a summary plan description under ERISA, (iii) the most recent Form 5500 
and Schedules thereto for each Company Employee Benefit Plan subject to such    
reporting, (iv) the most recent determination of the Internal Revenue Service   
with respect to the qualified status of each Company Employee Benefit Plan that 
is intended to qualify under Section 401(a) of the Code, (v) the most recent    
accountings with respect to each Company Employee Benefit Plan funded through a 
trust, (vi) the most recent actuarial report of the qualified actuary of each   
Company Employee Benefit Plan with respect to which actuarial valuations are    
conducted.                                                                      

    (d) Except as disclosed in the Company SEC Reports filed prior to December
6, 1998 or Section 3.13 of the Company Disclosure Letter, neither the Company   
nor any Subsidiary maintains or is obligated to provide benefits under any      
life, medical or health Plan (other than as an incidental benefit under a Plan  
qualified under Section 401(a) of the Code) which provides benefits to retirees 
or other terminated employees other than benefit continuations rights under the 
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.             

   (e) Except as set forth in Section 3.13 of the Company Disclosure Letter,
each Company Employee Benefit Plan covers only employees who are employed by    
the Company or a Subsidiary (or former employees or beneficiaries with respect  
to service with the Company or a Subsidiary), so that the transactions          
contemplated by this Agreement will require no spin-off of assets and           
liabilities or other division or transfer of rights with respect to any such    
plan.                                                                           

    (f) Except as disclosed in the Company SEC Reports filed prior to December
6, 1998 or Section 3.13 of the Company Disclosure Letter, neither the Company,  
any Subsidiary, any ERISA Affiliate nor any other corporation or organization   
controlled by or under common control with any of the foregoing within the      
meaning of Section 4001 of ERISA has at any time during the five (5) year       
period preceding December 6, 1998 contributed to any "multiemployer plan", as   
that term is defined in Section 4001 of ERISA. With respect to each             
"multiemployer plan", as defined above, in which the Company, any Subsidiary or 
any ERISA Affiliate participates or has participated, (i) neither the Company,  
any Subsidiary nor any ERISA Affiliate has incurred, any material withdrawal    
liability, (ii) neither the Company, any Subsidiary nor any ERISA Affiliate has 
received any notice that (A) any such plan is being reorganized in a manner     
that will result, or would reasonably be expected to result, in material        
liability, (B) increased contributions of a material amount may be required to  
avoid a reduction in plan benefits or the imposition of an excise tax, or (C)   
any such plan is, or would reasonably be expected to become, insolvent, and     
(iii) to the knowledge of the Company, there are no PBGC (as defined below)     
proceedings against any such plan.                                              

    (g) Except as disclosed in the Company SEC Reports filed prior to December
6, 1998 or Section 3.13 of the Company Disclosure Letter, no event has          
occurred, and there exists no condition or set of circumstances in connection   
with any Company Employee Benefit Plan, under which the Company or any          
Subsidiary, directly or indirectly (through any indemnification agreement or    
otherwise), could reasonably be expected to be subject to any risk of material  
liability under Section 409 of ERISA, Section 502(i) of ERISA, Title IV of      
ERISA or Section 4975 of the Code.                                              

    (h) No transaction contemplated by this Agreement will result in liability
to the Pension Benefit Guaranty Corporation ("PBGC") under Section 302(c)(11),  
4062, 4063, 4064 or 4069 of ERISA, or otherwise, with respect to the Company,   
any Subsidiary, HoldCo, ScottishPower or any corporation or organization        

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controlled by or under common control with any of the foregoing within the      
meaning of Section 4001 of ERISA, and, to the knowledge of the Company, no      
event or condition exists or has existed which would reasonably be expected to  
result in any material liability to the PBGC with respect to HoldCo,            
ScottishPower, the Company, any Subsidiary or any such corporation or           
organization. Except as set forth in Section 3.13 of the Company Disclosure     
Schedule, no "reportable event" within the meaning of Section 4043 of ERISA has 
occurred with respect to any Company Employee Benefit Plan that is a defined    
benefit plan under Section 3(35) of ERISA other than "reportable events" as to  
which the requirement of notice to the PBGC within thirty days has been waived. 

(i) Except as set forth in Section 3.13 of the Company Disclosure     
Schedule, no employer securities, employer real property or other employer      
property is included in the assets of any Company Employee Benefit Plan.        

  (j) No stock appreciation rights are outstanding under the Company Stock
Incentive Plan or any other plan or arrangement maintained by the Company or    
any affiliate of the Company.                                                   

3.14 Labor Matters. (a) Except as set forth in Section 3.14 of the Company
Disclosure Letter, neither the Company nor any of its Subsidiaries is a party   
to any collective bargaining agreement or other labor agreement with any union  
or labor organization. Except as disclosed in the Company SEC Reports filed     
prior to December 6, 1998 or in Section 3.14 of the Company Disclosure Letter,  
there are no disputes pending or, to the knowledge of the Company, threatened   
between the Company or any of its Subsidiaries or any of the Company Joint      
Ventures and any trade union or other representatives of its employees, except  
as would not, individually or in the aggregate, reasonably be expected to have  
a material adverse effect on the Company and its Subsidiaries taken as a whole, 
and, to the knowledge of the Company, except as set forth in Section 3.14 of    
the Company Disclosure Letter, there are no material organizational efforts     
presently being made involving any of the now unorganized employees of the      
Company or any of its Subsidiaries or any of the Company Joint Ventures. Since  
December 31, 1995, there has been no work stoppage, or strike by employees of   
the Company or any of its Subsidiaries or any of the Company Joint Ventures     
except as would not, individually or in the aggregate, reasonably be expected   
to have a material adverse effect on the Company and its Subsidiaries taken as  
a whole.                                                                        

 (b) To the knowledge of the Company, neither the Company nor any of its
Subsidiaries nor any of the Company Joint Ventures is in material violation of  
any labor laws in any country (or political subdivision thereof) in which they  
transact business except for such violations as would not, individually or in   
the aggregate, reasonably be expected to have a material adverse effect on the  
Company and its Subsidiaries taken as a whole.                                  

3.15 Environmental Matters. Except as disclosed in the Company SEC Reports
filed prior to December 6, 1998 or in Section 3.15 of the Company Disclosure    
Letter and except as would not, individually or in the aggregate, reasonably be 
expected to have a material adverse effect on the Company and its Subsidiaries  
taken as a whole:                                                               

(a) (i) Each of the Company, its Subsidiaries and the Company Joint     
Ventures is in compliance with all applicable Environmental Laws (as        
hereinafter defined); and                                                   

(ii) Neither the Company nor any of its Subsidiaries nor any of the     
Company Joint Ventures has received any written communication from any      
person or Governmental or Regulatory Authority that alleges that the        
Company or any of its Subsidiaries or any of the Company Joint Ventures is  
not in such compliance with applicable Environmental Laws.                  

(b) Each of the Company, its Subsidiaries and the Company Joint Ventures
has obtained all environmental, health and safety permits and governmental  
authorizations (collectively, the "Environmental Permits") necessary for    
the construction of its facilities and the conduct of its operations, as    
applicable, and all such Environmental Permits are in good standing or,     
where applicable, a renewal application has been timely filed and is        
pending agency approval, and the Company, its Subsidiaries and              

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the Company Joint Ventures are in compliance with all terms and conditions  
of the Environmental Permits.                                               

(c) There is no Environmental Claim (as hereinafter defined) pending    

(i) against the Company or any of its Subsidiaries or any of the    
Company Joint Ventures;                                                 

(ii) to the knowledge of the Company, against any person or entity  
whose liability for any such Environmental Claim the Company or any of  
its Subsidiaries or any of the Company Joint Ventures has or may have   
retained or assumed either contractually or by operation of law; or     

(iii) against any real or personal property or operations which the 
Company or any of its Subsidiaries or any of the Company Joint Ventures 
owns, leases or manages, in whole or in part.                           

   (d) To the knowledge of the Company, there have not been any Releases (as
hereinafter defined) of any Hazardous Material (as hereinafter defined) that    
would be reasonably likely to form the basis of any material Environmental      
Claim against the Company or any of its Subsidiaries or any of the Company      
Joint Ventures, or against any person or entity whose liability for any         
Environmental Claim the Company or any of its Subsidiaries or any of the        
Company Joint Ventures has or may have been retained or assumed either          
contractually or by operation of law.                                           

 (e) To the knowledge of the Company, with respect to any predecessor of
the Company or any of its Subsidiaries, there is no Environmental Claim pending 
or threatened in writing, and there has been no Release of Hazardous Materials  
that would be reasonably likely to form the basis of any Environmental Claim.   

    (f) There are no material facts specific to the Company that have not been
disclosed to ScottishPower which the Company reasonably believes are likely to  
form the basis of a Environmental Claim against the Company or any of its       
Subsidiaries or any of the Company Joint Ventures arising from (x) current      
environmental remediation or mining reclamation costs of the Company, its       
Subsidiaries and the Company Joint Ventures or such remediation or reclamation  
costs known to be required in the future, or (y) any other environmental matter 
affecting the Company or its Subsidiaries or any of the Company Joint Ventures. 

(g) As used in this Section 3.15:                                     

(i) "Environmental Claims" means any and all administrative, regulatory 
or judicial actions, suits, demands, demand letters, directives, claims,    
liens, investigations, proceedings or written notices of noncompliance,     
liability or violation by any person or entity (including any Governmental  
or Regulatory Authority) alleging potential liability (including, without   
limitation, potential responsibility or liability for enforcement,          
investigatory costs, cleanup costs, governmental response costs, removal    
costs, remedial costs, natural resources damages, property damages,         
personal injuries or penalties) arising out of, based on or resulting from  

(A) the presence, or Release or threatened Release into the         
environment, of any Hazardous Materials at any location, whether or not 
owned, operated, leased or managed by the Company or any of its         
Subsidiaries or any of the Company Joint Ventures; or                   

(B) circumstances forming the basis of any violation, or alleged    
violation, of any Environmental Law; or                                 

(C) any and all claims by any third party seeking damages,          
contribution, indemnification, cost recovery, compensation or           
injunctive relief resulting from the presence or Release of any         
Hazardous Materials;                                                    

(ii) "Environmental Laws" means all Federal, state and local laws, rules
and regulations relating to pollution, the environment (including, without  
limitation, ambient air, surface water, groundwater, land surface or        
subsurface strata) or protection of human health as it relates to the       
environment including,                                                      

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without limitation, laws and regulations relating to Releases or threatened 
Releases of Hazardous Materials, or otherwise relating to the manufacture,  
processing, distribution, use, treatment, storage, disposal, transport or   
handling of Hazardous Materials;                                            

(iii) "Hazardous Materials" means (a) any petroleum or petroleum        
products, radioactive materials, asbestos in any form that is or could      
become friable, urea formaldehyde foam insulation, and transformers or      
other equipment that contain dielectric fluid containing polychlorinated    
biphenyls; and (b) any chemicals, materials or substances which are now     
defined as or included in the definition of "hazardous substances",         
"hazardous wastes", "hazardous materials", "extremely hazardous wastes",    
"restricted hazardous wastes", "toxic substances", "toxic pollutants", or   
words of similar import, under any Environmental Law; and (c) any other     
chemical, material, substance or waste, exposure to which is now            
prohibited, limited or regulated under any Environmental Law in a           
jurisdiction in which the Company or any of its Subsidiaries or any of the  
Company Joint Ventures operates or any jurisdiction which has received such 
chemical, material, substance or waste from the Company or its              
Subsidiaries; and                                                           

(iv) "Release" means any release, spill, emission, leaking, injection,  
deposit, disposal, discharge, dispersal, leaching or migration into the     
atmosphere, soil, surface water, groundwater or property.                   

  3.16 Intellectual Property Rights. The Company and its Subsidiaries have
all right, title and interest in, or a valid and binding license to use, all    
Intellectual Property (as defined below) individually or in the aggregate       
material to the conduct of the businesses of the Company and its Subsidiaries   
taken as a whole. Neither the Company nor any Subsidiary of the Company is in   
default (or with the giving of notice or lapse of time or both, would be in     
default) under any license to use such Intellectual Property and, to the        
knowledge of the Company, such Intellectual Property is not being infringed by  
any third party, and neither the Company nor any Subsidiary of the Company is   
infringing any Intellectual Property of any third party, except for such        
defaults and infringements which, individually or in the aggregate, are not     
having and would not reasonably be expected to have a material adverse effect   
on the Company and its Subsidiaries taken as a whole. For purposes of this      
Agreement, "Intellectual Property" means patents and patent rights, trademarks  
and trademark rights, trade names and trade name rights, service marks and      
service mark rights, service names and service name rights, copyrights and      
copyright rights and other proprietary intellectual property rights and all     
pending applications for and registrations of any of the foregoing.             

    3.17 Regulation as a Utility. (a) The Company is not regulated as a public
utility by any state other than the States of California, Idaho, Montana,       
Oregon, Utah, Washington and Wyoming. Section 3.17 of the Company Disclosure    
Letter lists each Subsidiary of the Company which is a public utility or is     
otherwise engaged in the regulated supply (including generation, transmission   
or distribution) of electricity, natural gas and/or telecommunications. Except  
as set forth in Section 3.17 of the Company Disclosure Letter, neither the      
Company nor any "subsidiary company" or "affiliate" of the Company is subject   
to regulation as a public utility or public service company (or similar         
designation) by any state in the United States or any foreign country. The      
Company is not a public utility holding company under the 1935 Act.             

(b) As used in this Section 3.17, the terms "subsidiary company" and  
"affiliate" shall have the respective meanings ascribed to them in the 1935     
Act.                                                                            

3.18 Insurance. Except as set forth in Section 3.18 of the Company    
Disclosure Letter, each of the Company and its Subsidiaries is, and has been    
continuously since January 1, 1994, insured with financially responsible        
insurers in such amounts and against such risks and losses as are customary in  
all material respects for companies conducting the business conducted by the    
Company and its Subsidiaries during such time period. Except as set forth in    
Section 3.18 of the Company Disclosure Letter, neither the Company nor any of   
its Subsidiaries has received any notice of cancellation or termination with    
respect to any material insurance policy of the Company or any of its           
Subsidiaries. The material insurance policies of the Company and each of its    
Subsidiaries are valid and enforceable policies.                                

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3.19 Vote Required. Assuming the accuracy of the representation and   
warranty contained in Section 4.19, the affirmative vote of the holders of      
record of at least (i) a majority of voting power of the outstanding shares of  
Company Common Stock and Company Preferred Stock voting together and (ii) a     
majority of the voting power of the Company Preferred Stock voting separately   
from the Company Common Stock as a single class with respect to the approval of 
this Agreement are the only votes of the holders of any class or series of the  
capital stock of the Company or its Subsidiaries required to approve this       
Agreement and approve the Merger and the other transactions contemplated        
hereby.                                                                         

3.20 [Intentionally Omitted]                                          
  3.21 Ownership of HoldCo or ScottishPower Stock. Neither the Company nor
any of its Subsidiaries beneficially owns any ScottishPower Ordinary Shares,    
ScottishPower ADSs, HoldCo Ordinary Shares or HoldCo ADSs.                      

  3.22 Article VII of the Company's Articles of Incorporation and Sections
60.825-60.845 of the BCA Not Applicable. The Company has taken all necessary    
actions so that neither the provisions of Article VII of the Company's Articles 
of Incorporation nor the provisions of Sections 60.825-60.845 of the BCA (i.e., 
affiliated transactions and fair price provisions) will, before the termination 
of this Agreement, apply to this Agreement or the Merger or the other           
transactions contemplated hereby.                                               

    3.23 Certain Contracts. Except as set forth in Section 3.23 of the Company
Disclosure Letter, neither the Company nor any of its Subsidiaries or Joint     
Ventures is a party to, or bound by, any Contract containing any provision or   
covenant prohibiting or materially limiting the ability of the Company or any   
Company Subsidiary to engage in any business activity or compete with any       
person.                                                                         

3.24 Year 2000. The Company and its Subsidiaries have put into effect 
practices and programs which the Company reasonably believes will enable all    
material software, hardware and equipment (including microprocessors) that is   
owned or utilized by the Company or any of its Subsidiaries in the operations   
of its or their respective business to be capable, by December 31, 1999, of     
accounting for all calculations using a century and date sensitive algorithm    
for the year 2000 and the fact that the year 2000 is a leap year and to         
otherwise continue to function without any material interruption caused by the  
occurrence of the year 2000.                                                    

  3.25 Joint Venture Representations. Each representation or warranty made
by the Company in this Article III relating to a Company Joint Venture that is  
neither operated nor managed by the Company or a Subsidiary of the Company      
shall be deemed to be made only to the Company's knowledge.                     

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF HOLDCO, SCOTTISHPOWER AND 
THE PARTNERSHIP 
    ScottishPower and HoldCo (each on behalf of itself and on behalf of Merger
Sub) and the Partnership represent and warrant to the Company as follows (which 
representations and warranties (i) in respect of ScottishPower and its          
Subsidiaries are made as of December 6, 1998 (except for the representations    
and warranties contained in Sections 4.03 and 4.04, which are made as of the    
date hereof), (ii) in respect of HoldCo and its Subsidiaries are made as of the 
date of this Agreement and (iii) of ScottishPower and HoldCo on behalf of       
Merger Sub shall only be true and correct as of the Closing Date), it being     
agreed that HoldCo and ScottishPower shall not be in breach or deemed to be in  
breach of any representation or warranty contained in this Article IV by virtue 
of the fact that any Scheme Consent (as defined in Section 9.13(k)) has not     
been obtained by the date of this Agreement:                                    

    4.01 Organization and Qualification. (a) Each of HoldCo, ScottishPower and
their respective Subsidiaries (other than the Partnership) is a corporation     
duly incorporated, validly existing and in good standing (with respect to       
jurisdictions which recognize the concept of good standing) under the laws of   
its                                                                             

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jurisdiction of incorporation and has full corporate power and authority to     
conduct its business as and to the extent now conducted and to own, use and     
lease its assets and properties, except for such failures to be so              
incorporated, existing and in good standing (with respect to jurisdictions      
which recognize the concept of good standing) or to have such power and         
authority which, individually or in the aggregate, are not having and would not 
reasonably be expected to have a material adverse effect on HoldCo,             
ScottishPower and their respective Subsidiaries taken as a whole. The           
Partnership is a general partnership validly existing under the laws of the     
State of Nevada. Each of the Partnership and Merger Sub was formed solely for   
the purpose of engaging in the transactions contemplated by this Agreement      
(other than, with respect to the Partnership, in connection with the investment 
of the initial partnership capital pursuant to or in accordance with the        
Partnership Agreement, dated December 3, 1998, by and between UKSub 1 and UKSub 
2 (the "Partnership Agreement")), has engaged in no other business activities   
and has conducted its operations only as contemplated hereby (or, with respect  
to the Partnership, as contemplated by the Partnership Agreement). HoldCo was   
formed solely for the purpose contemplated by the Scheme of Arrangement and     
this Agreement and has conducted its operations only as contemplated by the     
Scheme of Arrangement and this Agreement. Except as disclosed in Section 4.01   
of the ScottishPower Disclosure Letter (as defined below), each of UKSub 1 and  
UKSub 2 was formed solely for the purpose of engaging in the transactions       
contemplated by this Agreement, has engaged in no other business activities and 
has conducted its operations only as contemplated hereby. Each of               
ScottishPower, HoldCo and their respective Subsidiaries is duly qualified,      
licensed or admitted to do business and is in good standing (with respect to    
jurisdictions which recognize the concept of good standing) in each             
jurisdiction in which the ownership, use or leasing of its assets and           
properties, or the conduct or nature of its business, makes such qualification, 
licensing, admission or good standing necessary, except for such failures to be 
so qualified, licensed or admitted and in good standing (with respect to        
jurisdictions which recognize the concept of good standing) which, individually 
or in the aggregate, are not having and would not reasonably be expected to     
have a material adverse effect on HoldCo, ScottishPower and their respective    
Subsidiaries taken as a whole. Section 4.01 of the letter dated December 6,     
1998 and delivered by ScottishPower and Merger Sub to the Company on such date  
(the "ScottishPower Disclosure Letter") sets forth (i) the name and             
jurisdiction of incorporation of each Subsidiary of ScottishPower, (ii) its     
authorized capital stock, (iii) the number of issued and outstanding shares of  
its capital stock and (iv) the record owners of such shares. ScottishPower has  
previously delivered to the Company correct and complete copies of the          
memorandum and articles of association and bylaws (or other comparable charter  
documents) of ScottishPower and each of its Subsidiaries, and the Partnership   
Agreement. As of the Scheme Date, the articles of association and bylaws (or    
other comparable charter documents) of HoldCo shall substantially reflect the   
principles set out in Schedule II, subject to amendments required to comply     
with applicable law or the rules of the LSE and subject to such other           
amendments as ScottishPower may reasonably deem necessary or desirable,         
provided, that to the extent such other amendments deemed necessary or          
desirable by ScottishPower would materially adversely affect the benefits of    
the Merger for the holders of Company Common Stock, ScottishPower shall have    
received the prior written consent of the Company.                              

(b) Section 4.01 of the ScottishPower Disclosure Letter sets forth a  
description as of December 6, 1998, of all ScottishPower Joint Ventures,        
including (i) the name of each such party and ScottishPower's interest therein, 
and (ii) a brief description of the principal line or lines of business         
conducted by each such entity.                                                  

  (c) Except for interests in the Subsidiaries of ScottishPower and HoldCo
and as disclosed in Section 4.01 of the ScottishPower Disclosure Letter,        
neither HoldCo nor ScottishPower directly or indirectly owns any equity or      
similar interest in, or any interest convertible into or exchangeable or        
exercisable for any equity or similar interest in, (i) any material             
corporation, partnership, joint venture or other business association or entity 
(other than non-controlling investments in the ordinary course of business and  
corporate partnering, development, cooperative marketing and similar            
undertakings and arrangements entered into in the ordinary course of business)  
or (ii) any other business association or entity the effect of which is having  
or could reasonably be expected to have a material adverse effect on HoldCo,    
ScottishPower and their respective Subsidiaries taken as a whole.               

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4.02 Capital Stock. (a) The authorized share capital of ScottishPower 
consists solely of (i) 1,700,000,000 ScottishPower Ordinary Shares, of which    
1,198,629,102 shares were issued as of November 30, 1998, and (ii) one Special  
Rights Non-Voting Redeemable Preference Share of (Pounds)1 (the "Special        
Share") which was issued as of such date. The authorized share capital of       
HoldCo consists solely of (i) 50,000 HoldCo ordinary shares of (Pounds)1 each   
(to be subdivided into HoldCo Ordinary Shares of 50p each prior to the Scheme   
Date), of which 2 were issued as of the date of this Agreement, and (ii) 49,998 
non-voting redeemable ordinary shares of (Pounds)1 each, all of which were      
issued as of the date of this Agreement, are held by ScottishPower and shall be 
redeemed by HoldCo prior to the Effective Time. Since November 30, 1998, except 
as disclosed in the ScottishPower SEC Reports filed prior to December 6, 1998,  
Section 4.02 of the ScottishPower Disclosure Letter or pursuant to the Scheme   
of Arrangement, there has been no change in the number of issued ScottishPower  
Ordinary Shares other than the issuance of ScottishPower Ordinary Shares        
pursuant to options or rights outstanding as of such date to subscribe or       
purchase ScottishPower Ordinary Shares, which options or rights are described   
in Section 4.02 of the ScottishPower Disclosure Letter. All of the issued       
ScottishPower Ordinary Shares and HoldCo Ordinary Shares are, and all Merger    
Ordinary Shares and all HoldCo Ordinary Shares to be issued to the ADR          
Depositary pursuant to Section 2.01 will be, upon issuance, duly authorized,    
validly issued and fully paid and voting, and no class of shares is entitled to 
preemptive rights, except as provided in Section 89 of the Companies Act of     
1985 of the United Kingdom (the "Companies Act"). Except pursuant to this       
Agreement, the ScottishPower employee share schemes listed in Section 4.02 of   
the ScottishPower Disclosure Letter (the "ScottishPower Share Schemes"), the    
HoldCo employee share schemes established in connection with the Scheme of      
Arrangement to replace the ScottishPower Share Schemes and which are in all     
material respects similar to the ScottishPower Share Schemes (the "HoldCo Share 
Schemes"), and except as disclosed in the ScottishPower SEC Reports filed prior 
to December 6, 1998 or Section 4.02 of the ScottishPower Disclosure Letter, as  
of December 6, 1998 there were no outstanding Options obligating HoldCo,        
ScottishPower or any of their respective Subsidiaries to issue or sell any      
capital or other shares of ScottishPower or HoldCo or to grant, extend or enter 
into any Option with respect thereto.                                           

 (b) Except as disclosed in the ScottishPower SEC Reports filed prior to
December 6, 1998 or Section 4.02 of the ScottishPower Disclosure Letter, all of 
the outstanding shares of each Subsidiary of HoldCo and ScottishPower are duly  
authorized, validly issued, fully paid and nonassessable and are owned,         
beneficially and of record, by HoldCo or ScottishPower or a Subsidiary wholly   
owned, directly or indirectly, by HoldCo or ScottishPower, free and clear of    
any Liens. Immediately following the Scheme Date, all of the outstanding shares 
of ScottishPower will be duly authorized, validly issued, fully paid and        
nonassessable and owned, beneficially and of record, by HoldCo or its nominees. 
Except as disclosed in the ScottishPower SEC Reports filed prior to December 6, 
1998 or Section 4.02 of the ScottishPower Disclosure Letter, and except for the 
Share Transfer, there are no (i) outstanding Options obligating HoldCo,         
ScottishPower or any of their respective Subsidiaries to issue or sell any      
shares of any Subsidiary of HoldCo or ScottishPower or to grant, extend or      
enter into any such Option or (ii) voting trusts, proxies or other commitments, 
understandings, restrictions or arrangements in favor of any person other than  
HoldCo or ScottishPower or a Subsidiary wholly owned, directly or indirectly,   
by HoldCo or ScottishPower with respect to the voting of or the right to        
participate in dividends or other earnings in respect of any shares of any      
Subsidiary of HoldCo or ScottishPower.                                          

(c) Other than (i) as disclosed in the ScottishPower SEC Reports filed
prior to December 6, 1998 or Section 4.02 of the ScottishPower Disclosure       
Letter, (ii) the right of Holdco to redeem the 49,998 non-voting redeemable     
shares held by ScottishPower and referred to in Section 4.02(a), (iii) the      
right of the holder of the ScottishPower Special Share to require ScottishPower 
to redeem the ScottishPower Special Share pursuant to the Articles of           
Association of ScottishPower or, following the Scheme Date, the right of the    
holder of the HoldCo Special Share (as defined in Schedule II) to require       
HoldCo to redeem the HoldCo Special Share pursuant to the Articles of           
Association of HoldCo, and (iv) pursuant to the Scheme of Arrangement or        
pursuant to a proposed amendment to ScottishPower's Articles of Association     
which will provide for shares in ScottishPower to be issued to an optionholder  
under the ScottishPower Share Schemes to be transferred to HoldCo in            
consideration for HoldCo issuing to the optionholder the same number of HoldCo  
Ordinary Shares                                                                 

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as the number of ScottishPower shares so issued under the ScottishPower         
Schemes, there are no outstanding contractual obligations of HoldCo or          
ScottishPower or any Subsidiary of HoldCo or ScottishPower to repurchase,       
redeem or otherwise acquire any HoldCo Ordinary Shares or ScottishPower         
Ordinary Shares or any shares of any Subsidiary of HoldCo or ScottishPower or   
to provide funds to, or make any investment (in the form of a loan, capital     
contribution or otherwise) in, any Subsidiary of HoldCo or ScottishPower or any 
other person.                                                                   

(d) As of December 6, 1998, no bonds, debentures, notes or other      
indebtedness of HoldCo or ScottishPower having the right to vote on any matters 
on which shareholders may vote are issued or outstanding.                       

   4.03 Authority Relative to this Agreement. Each of HoldCo, ScottishPower,
the Partnership and Merger Sub (and, with respect to Section 2.01 only, UKSub 1 
and UKSub 2) has full power and authority to enter into this Agreement, and,    
subject (in the case of this Agreement) to obtaining the ScottishPower          
Shareholders' Approval (as defined in Section 6.03(a)) and the Scheme Consents, 
to perform its obligations hereunder, and to consummate the transactions        
contemplated hereby. The execution, delivery and performance of this Agreement  
by each of HoldCo, ScottishPower, the Partnership and Merger Sub (and, with     
respect to Section 2.01 only, UKSub 1 and UKSub 2) and the consummation by each 
of HoldCo, ScottishPower, the Partnership and Merger Sub (and, with respect to  
Section 2.01 only, UKSub 1 and UKSub 2) of the transactions contemplated hereby 
have been duly and validly approved by the Board of Directors of HoldCo,        
ScottishPower and Merger Sub (and, with respect to Section 2.01 only, UKSub 1   
and UKSub 2) and the general partners of the Partnership, and by the            
Partnership in its capacity as sole stockholder of Merger Sub. The Board of     
Directors of ScottishPower has passed a resolution declaring the advisability   
of the Merger and resolving that the Merger be submitted for consideration by   
the shareholders of ScottishPower. The Board of Directors of HoldCo has passed  
a resolution approving the Merger. No other corporate proceedings on the part   
of HoldCo, ScottishPower or Merger Sub or their shareholders, or the            
Partnership or its general partners are necessary to authorize the execution,   
delivery and performance of this Agreement by HoldCo, ScottishPower, the        
Partnership or Merger Sub (and, with respect to Section 2.01 only, UKSub 1 and  
UKSub 2) and the consummation by HoldCo, ScottishPower, the Partnership and     
Merger Sub (and, with respect to Section 2.01 only, UKSub 1 and UKSub 2) of the 
transactions contemplated hereby, other than obtaining the ScottishPower        
Shareholders' Approval and the Scheme Consents, and to the Scheme of            
Arrangement becoming effective. This Agreement has been duly and validly        
executed and delivered by each of HoldCo, ScottishPower, the Partnership and    
Merger Sub (and, with respect to Section 2.01 only, UKSub 1 and UKSub 2) and    
constitutes a legal, valid and binding obligation of each of HoldCo,            
ScottishPower, the Partnership and Merger Sub (and, with respect to Section     
2.01 only, UKSub 1 and UKSub 2) enforceable against each of HoldCo,             
ScottishPower, the Partnership and Merger Sub (and, with respect to Section     
2.01 only, UKSub 1 and UKSub 2) in accordance with its terms, except as         
enforceability may be limited by bankruptcy, insolvency, reorganization,        
moratorium or other similar laws affecting the enforcement of creditors' rights 
generally and by general equitable principles (regardless of whether such       
enforceability is considered in a proceeding in equity or at law).              

4.04 Non-Contravention; Approvals and Consents. (a) Subject to the    
requirement to obtain the Scheme Consents, the execution and delivery of this   
Agreement by each of HoldCo, ScottishPower, the Partnership and Merger Sub      
(and, with respect to Section 2.01 only, UKSub 1 and UKSub 2) do not, and the   
performance by each of HoldCo, ScottishPower, the Partnership and Merger Sub    
(and, with respect to Section 2.01 only, UKSub 1 and UKSub 2) of its            
obligations hereunder and the consummation of the transactions contemplated     
hereby will not, conflict with, result in a violation or breach of, constitute  
(with or without notice or lapse of time or both) a default under, result in or 
give to any person any right of payment or reimbursement, termination,          
cancellation, modification or acceleration of, or result in the creation or     
imposition of any Lien upon any of the assets or properties of HoldCo,          
ScottishPower or any of their respective Subsidiaries or any of the             
ScottishPower Joint Ventures under, any of the terms, conditions or provisions  
of (i) the memorandum or articles of association or bylaws (or other comparable 
charter documents) of HoldCo, ScottishPower or any of their respective          
Subsidiaries or any of the ScottishPower Joint Ventures, (ii) the Partnership   
Agreement, or (iii) subject to the obtaining of the ScottishPower Shareholders' 
Approval and the                                                                

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taking of the actions described in paragraph (b) of this Section, (x) any laws  
or orders of any Governmental or Regulatory Authority applicable to HoldCo,     
ScottishPower or any of their respective Subsidiaries or any of the             
ScottishPower Joint Ventures or any of their respective assets or properties,   
or (y) any Contracts to which HoldCo, ScottishPower or any of their respective  
Subsidiaries or any of the ScottishPower Joint Ventures is a party or by which  
HoldCo, ScottishPower or any of their respective Subsidiaries or any of the     
ScottishPower Joint Ventures or any of their respective assets or properties is 
bound, excluding from the foregoing clauses (x) and (y) conflicts, violations,  
breaches, defaults, rights of payment or reimbursement, terminations,           
modifications, accelerations and creations and impositions of Liens which,      
individually or in the aggregate, would not reasonably be expected to have a    
material adverse effect on HoldCo, ScottishPower and their respective           
Subsidiaries taken as a whole or on the ability of HoldCo, ScottishPower, the   
Partnership and Merger Sub to consummate the transactions contemplated by this  
Agreement.                                                                      

(b) Except (i) for the filing of a premerger notification report by   
ScottishPower under the HSR Act, (ii) for the filing of the Registration        
Statement with the SEC pursuant to the Securities Act, the declaration of the   
effectiveness of the Registration Statement by the SEC and filings with various 
state securities authorities that are required in connection with the           
transactions contemplated by this Agreement, (iii) for the filing of the        
Articles of Merger and other appropriate merger documents required by the BCA   
with the Secretary of State and appropriate documents with the relevant         
authorities of other states in which the Constituent Corporations are qualified 
to do business, (iv) for the filings with, notices to, and approvals of, the    
LSE and NYSE, (v) the filing of a notice pursuant to Section 721 of the Defense 
Production Act of 1950, or any successor thereto ("Exon-Florio"), (vi) the      
approval of the FERC pursuant to the Power Act, (vii) the approval of any       
jurisdictional state regulating agencies, (viii) the giving of indications by   
the OFT, SOS, OFFER and OFWAT as described in Sections 7.01(k) and (l), (ix) as 
disclosed in Section 4.04 of the ScottishPower Disclosure Letter and (x) for    
the Scheme Consents, no consent, approval or action of, filing with or notice   
to any Governmental or Regulatory Authority or other public or private third    
party is necessary or required under any of the terms, conditions or provisions 
of any law or order of any Governmental or Regulatory Authority or any Contract 
to which HoldCo, ScottishPower or any of their respective Subsidiaries or any   
of the ScottishPower Joint Ventures is a party or by which HoldCo,              
ScottishPower or any of their respective Subsidiaries or any of the             
ScottishPower Joint Ventures or any of their respective assets or properties is 
bound for the execution and delivery of this Agreement by each of HoldCo,       
ScottishPower, the Partnership and Merger Sub, the performance by each of       
HoldCo, ScottishPower, the Partnership and Merger Sub of its obligations        
hereunder or the consummation of the transactions contemplated hereby other     
than such consents, approvals, actions, filings and notices which the failure   
to make or obtain, as the case may be, individually or in the aggregate, would  
not reasonably be expected to have a material adverse effect on HoldCo,         
ScottishPower and their respective Subsidiaries taken as a whole or on the      
ability of HoldCo, ScottishPower, the Partnership and Merger Sub to consummate  
the transactions contemplated by this Agreement.                                

    4.05 SEC Reports and Financial Statements. (a) ScottishPower has delivered
to the Company a true and complete copy of each form, report, schedule,         
registration statement, definitive proxy statement and other document (together 
with all amendments thereof and supplements thereto) filed by HoldCo,           
ScottishPower or any of their respective Subsidiaries with the SEC since        
December 31, 1995 (as such documents have since the time of their filing been   
amended or supplemented, the "ScottishPower SEC Reports"), which are all the    
documents (other than preliminary materials) that HoldCo, ScottishPower and     
their respective Subsidiaries were required to file with the SEC since such     
date. As of their respective dates, the ScottishPower SEC Reports (i) complied  
as to form in all material respects with the requirements of the Securities Act 
or the Exchange Act, as the case may be, and (ii) did not contain any untrue    
statement of a material fact or omit to state a material fact required to be    
stated therein or necessary in order to make the statements therein, in light   
of the circumstances under which they were made, not misleading. The audited    
consolidated financial statements and unaudited interim consolidated financial  
statements (including, in each case, the notes, if any, thereto) included in    
the ScottishPower SEC Reports (the "ScottishPower Financial Statements")        
complied as to form in all material respects with the published rules and       
regulations of the SEC with respect thereto, were prepared in accordance with   
generally accepted accounting principles in the United                          

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Kingdom applied on a consistent basis during the periods involved (except as    
may be indicated therein or in the notes thereto and except with respect to     
unaudited statements) and fairly present (subject, in the case of the unaudited 
interim financial statements, to normal, recurring year-end audit adjustments   
(which are not expected to be, individually or in the aggregate, materially     
adverse to HoldCo, ScottishPower and their respective Subsidiaries taken as a   
whole)) the consolidated financial position of ScottishPower and, in respect of 
periods ending after the Scheme Date, HoldCo and their respective consolidated  
subsidiaries as at the respective dates thereof and the consolidated results of 
their operations and cash flows for the respective periods then ended. Except   
as set forth in Section 4.05 of the ScottishPower Disclosure Letter, each       
Subsidiary of ScottishPower and, after the Scheme Date, of Holdco is treated as 
a consolidated subsidiary of ScottishPower or HoldCo, as the case may be, in    
the ScottishPower Financial Statements for all periods covered thereby.         

 (b) All material filings required to be made by ScottishPower or any of
its Subsidiaries since December 31, 1995 in the United Kingdom under the        
Electricity Act 1989, the Water Industry Act 1991, the Water Resources Act 1991 
and the Telecommunications Act 1984 have been filed with OFFER, OFWAT and the   
Office of Telecommunications Services or any other appropriate Governmental or  
Regulatory Authority, as the case may be, including all material forms,         
statements, reports, agreements and all material documents, exhibits,           
amendments and supplements appertaining thereto, including but not limited to   
all material rates, tariffs, franchises, service agreements and related         
documents, complied, as of their respective dates, in all material respects     
with all applicable requirements of the statute and the rules and regulations   
thereunder.                                                                     

4.06 Absence of Certain Changes or Events. Except as disclosed in the 
ScottishPower SEC Reports filed prior to December 6, 1998 or Section 4.06 of    
the ScottishPower Disclosure Letter, (a) since March 31, 1998 there has not     
been any change, event or development having, or that would reasonably be       
expected to have, individually or in the aggregate, a material adverse effect   
on HoldCo, ScottishPower and their respective Subsidiaries taken as a whole     
(other than those changes, events, or developments occurring as a result of     
general economic or financial conditions or which are not unique to HoldCo,     
ScottishPower and their respective Subsidiaries but also affect other entities  
who participate or are engaged in the lines of business in which HoldCo,        
ScottishPower and their respective Subsidiaries are engaged), and (b) between   
March 31, 1998 and December 6, 1998 ScottishPower, its Subsidiaries and the     
ScottishPower Joint Ventures have conducted their respective businesses only in 
the ordinary course substantially consistent with past practice.                

  4.07 Absence of Undisclosed Liabilities. Except for matters reflected or
reserved against in the balance sheet for the period ended March 31, 1998       
included in the ScottishPower Financial Statements or as disclosed in Section   
4.07 of the ScottishPower Disclosure Letter, neither HoldCo, ScottishPower nor  
any of their respective Subsidiaries had at such date, or has incurred since    
that date, any liabilities or obligations (whether absolute, accrued,           
contingent, fixed or otherwise, or whether due or to become due) of any nature  
that would be required by generally accepted accounting principles in the       
United Kingdom to be reflected on a consolidated balance sheet of ScottishPower 
and, in respect of periods ending after the Scheme Date, HoldCo and their       
respective consolidated subsidiaries (including the notes thereto), except      
liabilities or obligations (i) which were incurred in the ordinary course of    
business consistent with past practice or (ii) which have not been, and would   
not reasonably be expected to be, individually or in the aggregate, materially  
adverse to HoldCo, ScottishPower and their respective Subsidiaries taken as a   
whole.                                                                          

4.08 Legal Proceedings. Except as disclosed in the ScottishPower SEC  
Reports filed prior to December 6, 1998 or in Section 4.08 of the ScottishPower 
Disclosure Letter and except for environmental matters which are governed by    
Section 4.15, (i) there are no actions, suits, arbitrations or proceedings      
pending or, to the knowledge of HoldCo or ScottishPower, threatened against,    
nor to the knowledge of HoldCo or ScottishPower are there any Governmental or   
Regulatory Authority investigations or audits pending or threatened against,    
HoldCo, ScottishPower or any of their respective Subsidiaries or any of the     
ScottishPower Joint Ventures or any of their respective assets and properties   
which, individually or in the aggregate, would reasonably be expected to have a 
material adverse effect on HoldCo, ScottishPower and their respective           
Subsidiaries taken as a whole or on the ability of HoldCo, ScottishPower, the   
Partnership and Merger Sub to consummate the transactions contemplated by this  
Agreement, and (ii) neither HoldCo, ScottishPower nor any                       

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of their respective Subsidiaries nor any of the ScottishPower Joint Ventures is 
subject to any order of any Governmental or Regulatory Authority which,         
individually or in the aggregate, is having or would reasonably be expected to  
have a material adverse effect on HoldCo, ScottishPower and their respective    
Subsidiaries taken as a whole or on the ability of HoldCo, ScottishPower, the   
Partnership and Merger Sub to consummate the transactions contemplated by this  
Agreement.                                                                      

  4.09 Information Supplied. (a) The registration statement on Form F-4 to
be filed with the SEC by HoldCo in connection with the issuance of HoldCo ADSs  
in the Merger, as amended or supplemented from time to time (as so amended and  
supplemented, the "Registration Statement"), and any other documents to be      
filed by HoldCo or ScottishPower with the SEC or any other Governmental or      
Regulatory Authority in connection with the Merger and the other transactions   
contemplated hereby will (in the case of the Registration Statement and any     
such other documents filed with the SEC under the Securities Act or the         
Exchange Act) comply as to form in all material respects with the requirements  
of the Exchange Act and the Securities Act, respectively, and will not, on the  
date of its filing or, in the case of the Registration Statement, at the time   
it becomes effective under the Securities Act, or at the date the Proxy         
Statement is mailed to stockholders of the Company and at the time of the       
Company Stockholders' Meeting, contain any untrue statement of a material fact  
or omit to state any material fact required to be stated therein or necessary   
in order to make the statements therein, in light of the circumstances under    
which they are made, not misleading, except that no representation is made by   
HoldCo, ScottishPower, the Partnership or Merger Sub with respect to            
information supplied in writing by or on behalf of the Company expressly for    
inclusion therein and information incorporated by reference therein from        
documents filed by the Company or any of its Subsidiaries with the SEC.         

 (b) The ScottishPower Disclosure Documents will, at all relevant times,
include all information relating to ScottishPower and HoldCo and their          
respective Subsidiaries, and information which is within the knowledge of each  
of the directors of ScottishPower and HoldCo (or which it would be reasonable   
for them to obtain by making inquiries), which, in each case, is required to    
enable the ScottishPower Disclosure Documents and the parties hereto to comply  
in all material respects with all United Kingdom statutory and other legal and  
regulatory provisions (including, without limitation, the Companies Act, the    
FSA and the rules and regulations made thereunder, and the rules and            
requirements of the LSE) and all such information contained in such documents   
will be substantially in accordance with the facts and will not omit anything   
material likely to affect the import of such information.                       

(c) Notwithstanding the foregoing provisions of this Section 4.09, no 
representation or warranty is made by ScottishPower or HoldCo with respect to   
statements made or incorporated by reference in the Registration Statement, the 
Proxy Statement, the Listing Particulars, the Circular or the Scheme Document   
based on information supplied by the Company expressly for inclusion or         
incorporation by reference therein or based on information which is not made in 
or incorporated by reference in such documents but which should have been       
disclosed pursuant to Section 3.09.                                             

4.10 Permits; Compliance with Laws and Orders. HoldCo, ScottishPower, 
their respective Subsidiaries and the ScottishPower Joint Ventures hold all     
permits, licenses, franchises variances, exemptions, orders and approvals of    
all Governmental and Regulatory Authorities (other than environmental permits   
which are governed by Section 4.15) necessary for the lawful conduct of their   
respective businesses (the "ScottishPower Permits"), except for failures to     
hold such ScottishPower Permits which, individually or in the aggregate, are    
not having and would not reasonably be expected to have a material adverse      
effect on HoldCo, ScottishPower and their respective Subsidiaries taken as a    
whole. HoldCo, ScottishPower, their respective Subsidiaries and the             
ScottishPower Joint Ventures are in compliance with the terms of the            
ScottishPower Permits, except failures so to comply which, individually or in   
the aggregate, are not having and would not reasonably be expected to have a    
material adverse effect on HoldCo, ScottishPower and their respective           
Subsidiaries taken as a whole. Except as disclosed in the ScottishPower SEC     
Reports filed prior to December 6, 1998, none of HoldCo, ScottishPower, their   
respective Subsidiaries or the ScottishPower Joint Ventures are in violation of 
or default under any law or order of any Governmental or Regulatory Authority,  
except for such violations or defaults which, individually or in the aggregate, 
are not having and would not reasonably be                                      

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expected to have a material adverse effect on HoldCo, ScottishPower and their   
respective Subsidiaries taken as a whole.                                       

   4.11 Compliance with Agreements. Except as disclosed in the ScottishPower
SEC Reports filed prior to December 6, 1998 or Section 4.11 of the              
ScottishPower Disclosure Letter, none of HoldCo, ScottishPower or any of their  
respective Subsidiaries or, to the knowledge of HoldCo or ScottishPower, any    
other party thereto is in breach or violation of, or in default in the          
performance or observance of any term or provision of, and no event has         
occurred which, with notice or lapse of time or both, would reasonably be       
expected to result in a default under, (i) the memorandum or articles of        
association (or other comparable charter documents) of HoldCo, ScottishPower or 
any of their material Subsidiaries or (ii) any Contract to which HoldCo,        
ScottishPower or any of their respective Subsidiaries is a party or by which    
HoldCo, ScottishPower or any of their respective Subsidiaries or any of their   
respective assets or properties is bound, except in the case of clause (ii) for 
breaches, violations and defaults which, individually or in the aggregate, are  
not having and would not reasonably be expected to have a material adverse      
effect on HoldCo, ScottishPower and their respective Subsidiaries taken as a    
whole.                                                                          

4.12 Taxes. (a) Each of HoldCo, ScottishPower and their respective    
Subsidiaries has filed all material tax returns and reports required to be      
filed by it, or requests for extensions to file such returns or reports have    
been timely filed or granted and have not expired and all tax returns and       
reports are complete and accurate in all material respects. HoldCo (if          
applicable), ScottishPower and each of their respective Subsidiaries has paid   
(or HoldCo or ScottishPower has paid on its behalf) all taxes shown as due on   
such tax returns and reports. The most recent financial statements contained in 
the ScottishPower SEC Reports reflect an adequate reserve for all taxes payable 
by ScottishPower and its Subsidiaries for all taxable periods and portions      
thereof accrued through the date of such financial statements, and no           
deficiencies for any taxes have been proposed, asserted or assessed against     
HoldCo, ScottishPower or any of their respective Subsidiaries that are not      
adequately reserved for, except for inadequately reserved taxes and             
inadequately reserved deficiencies that would not, individually or in the       
aggregate, have a material adverse effect on HoldCo, ScottishPower and their    
respective Subsidiaries taken as a whole. No requests for waivers of the time   
to assess any taxes against HoldCo, ScottishPower or any of their respective    
Subsidiaries have been granted or are pending, except for requests with respect 
to such taxes that have been adequately reserved for in the most recent         
financial statements contained in the ScottishPower SEC Reports, or, to the     
extent not adequately reserved, the assessment of which would not, individually 
or in the aggregate, have a material adverse effect on HoldCo, ScottishPower    
and their respective Subsidiaries taken as a whole.                             

    (b) Neither HoldCo, ScottishPower nor any of their respective Subsidiaries
has taken any action or has any knowledge of any fact or circumstance that is   
reasonably likely to prevent the Merger from qualifying as a tax-free           
reorganization within the meaning of Code Section 368(a).                       

(c) UKSub 1 and UKSub 2 are not public limited companies.             

 (d) From the date hereof through the Share Transfer, ScottishPower will
directly own the whole of the issued share capital of UKSub 1 and UKSub 2.      
Following the Share Transfer and through the Closing Date, HoldCo will directly 
own the whole of the issued share capital of UKSub 1 and UKSub 2.               

 (e) UKSub 1 and UKSub 2 directly own all of the equity interests in the
Partnership.                                                                    

  (f) Prior to the Closing Date, ScottishPower or HoldCo will make (i) the
elections necessary pursuant to Section 301.7701-3 of the U.S. Treasury         
regulations promulgated under the Code to treat UKSub 1 and UKSub 2 as entities 
disregarded as separate from ScottishPower and HoldCo and (ii) an election      
under Section 301.7701-3 of the U.S. Treasury regulations to treat the          
Partnership as an association taxable as a corporation. Neither ScottishPower,  
HoldCo, nor any of their respective Subsidiaries has taken any action that (or  
has failed to take any action if such failure) would reasonably be likely to    
cause UKSub 1 or UKSub 2 to be characterized as an association taxable as a     
corporation for U.S. federal income tax purposes.                               

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(g) Following the Scheme Date, HoldCo will satisfy either directly or 
indirectly, through the activities of one or more "qualified subsidiaries", the 
active trade or business test specified in Section 1.367(a)-3(c)(3) of the U.S. 
Treasury regulations for a minimum period of three years prior to the Closing   
Date.                                                                           

   (h) None of HoldCo, ScottishPower, UKSub 1, UKSub 2, the Partnership, nor
any other affiliate of HoldCo or ScottishPower has any intention to redeem,     
acquire, or to cause the Company or any affiliate of the Company to acquire, or 
to arrange for another person to acquire, any of the ADS Consideration or the   
Ordinary Share Consideration.                                                   

  (i) Neither HoldCo, ScottishPower nor any affiliate thereof, directly or
indirectly, has paid any expense incurred by the Company, any Company affiliate 
or any Company stockholder in connection with the transactions contemplated by  
this Agreement.                                                                 

  (j) Neither HoldCo, ScottishPower nor any affiliate thereof, directly or
indirectly, has loaned any funds to any escrow account, trust or other fund     
established to pay any expenses incurred by the Company, any Company affiliate  
or any Company stockholder in connection with the transactions contemplated by  
this Agreement.                                                                 

  (k) Neither HoldCo, ScottishPower nor any affiliate thereof, directly or
indirectly, owns any stock issued by the Company unless acquired directly from  
the Company.                                                                    

4.13 ScottishPower Employee Benefit Plans. (a) ScottishPower has made 
available to the Company complete and correct copies, as of December 6, 1998,   
of: (i) the current trust deeds and rules of each of the material employee      
benefit plans to which ScottishPower and its Subsidiaries make or could become  
liable to make payments for providing retirement, death, disability or life     
assurance benefits (the "ScottishPower Employee Benefit Plans") (including any  
draft amendments); (ii) the most recently prepared explanatory booklets and     
announcements relating to each of the ScottishPower Employee Benefit Plans;     
(iii) a copy of the actuary's report on the latest actuarial valuation of the   
ScottishPower Employee Benefit Plans, if applicable; and (iv) the rules of the  
ScottishPower Share Schemes.                                                    

    (b) The ScottishPower Employee Benefit Plans are the only material schemes
to which HoldCo, ScottishPower and their respective Subsidiaries make or could  
become liable to make payments for providing retirement, death, disability or   
life insurance benefits except for any schemes for providing retirement, death  
or disability or life insurance benefits ("HoldCo Employee Benefit Plans")      
which HoldCo establishes in connection with the Scheme of Arrangement which are 
in all material respects similar to the ScottishPower Employee Benefit Plans.   

(c) To the extent such exemption is intended by ScottishPower, the    
ScottishPower Employee Benefit Plans are exempt approved schemes within the     
meaning of Chapter 1 Part XIV of the Income and Corporation Taxes Act 1988.     
Except as specifically set forth in Section 4.13 of the ScottishPower           
Disclosure Letter, members of the ScottishPower Employee Benefit Plans are      
contracted-out of the State Earnings Related Pension Scheme.                    

   (d) To the knowledge of HoldCo or ScottishPower, there is no amount which
is treated by Section 144 of the Pension Schemes Act 1993 or Section 75 of the  
Pensions Act 1995 as a debt due to the trustees of the ScottishPower Employee   
Benefit Plans or from ScottishPower or any of its Subsidiaries to the trustees  
of any other benefit plan except for such debts which would not reasonably be   
expected to have a material adverse effect on HoldCo, ScottishPower and their   
respective Subsidiaries taken as a whole. The ScottishPower Employee Benefit    
Plans have not ceased to admit new members.                                     

 (e) Except as set forth in Section 4.13 of the ScottishPower Disclosure
Letter and except for disputes which would not reasonably be expected to have a 
material adverse effect on HoldCo, ScottishPower and their respective           
Subsidiaries taken as a whole, there is no dispute about the benefits payable   
under the ScottishPower                                                         

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Employee Benefit Plans and, to the knowledge of HoldCo or ScottishPower, there  
are no circumstances which might give rise to any such dispute.                 

  (f) To the knowledge of HoldCo or ScottishPower, the actuary's report on
the latest actuarial valuation accurately describes the financial position of   
each ScottishPower Employee Benefit Plan for which an actuarial valuation is    
required by law at its effective date and in accordance with the assumptions    
employed for that valuation. Except as set forth in Section 4.13 of the         
ScottishPower Disclosure Letter, nothing has happened since that date which     
would, to a material extent, affect the level of funding of any ScottishPower   
Employee Benefit Plan and, since that date, contributions have been paid to     
each ScottishPower Employee Benefit Plan at the rate recommended by the         
actuary. Except as set forth in Section 4.13 of the ScottishPower Disclosure    
Letter, no assets have been withdrawn by HoldCo, ScottishPower or any of their  
respective Subsidiaries from any ScottishPower Employee Benefit Plan (except to 
pay benefits or by way of reimbursement of expenses) since the effective date   
of the latest actuarial valuation of that plan.                                 

 (g) Except as set forth in Section 4.13 of the ScottishPower Disclosure
Letter or as would not reasonably be expected to have a material adverse effect 
on HoldCo, ScottishPower and their respective Subsidiaries taken as a whole,    
the ScottishPower Employee Benefit Plans comply with and have been administered 
in accordance with all applicable laws, regulations and requirements. All       
amounts due to the ScottishPower Employee Benefit Plans at any time prior to    
the month in which this Agreement is signed have been paid.                     

4.14 Labor Matters. (a) Except as set forth in Section 4.14 of the    
ScottishPower Disclosure Letter, neither HoldCo, ScottishPower nor any of their 
respective Subsidiaries is a party to any collective bargaining agreement,      
recognition agreement, European Works Council or other labor agreement with any 
union, labor organization or other responsible body. Except as disclosed in the 
ScottishPower SEC Reports filed prior to December 6, 1998 or in Section 4.14 of 
the ScottishPower Disclosure Letter, there are no disputes pending or, to the   
knowledge of HoldCo or ScottishPower, threatened between HoldCo, ScottishPower  
or any of their respective Subsidiaries or any of the ScottishPower Joint       
Ventures and any trade union or other representatives of its employees, except  
as would not, individually or in the aggregate, reasonably be expected to have  
a material adverse effect on HoldCo, ScottishPower and their respective         
Subsidiaries taken as a whole, and, to the knowledge of HoldCo or               
ScottishPower, there are no material organization efforts presently being made  
involving any of the now unorganized employees of HoldCo, ScottishPower or any  
of their respective Subsidiaries or any of the ScottishPower Joint Ventures.    
Since December 31, 1995, there has been no work stoppage, strike or other       
concerted action by employees of HoldCo, ScottishPower or any of their          
respective Subsidiaries except as would not, individually or in the aggregate,  
reasonably be expected to have a material adverse effect on HoldCo,             
ScottishPower and their respective Subsidiaries taken as a whole.               

(b) To the knowledge of HoldCo or ScottishPower, neither HoldCo,      
ScottishPower nor any of their respective Subsidiaries nor any of the           
ScottishPower Joint Ventures is in violation of any labor laws in any country   
(or political subdivision thereof) in which they transact business, except for  
such violations as would not, individually or in the aggregate, reasonably be   
expected to have a material adverse effect on HoldCo, ScottishPower and their   
respective Subsidiaries taken as a whole.                                       

  4.15 Environmental Matters. Except as disclosed in the ScottishPower SEC
Reports filed prior to December 6, 1998 or in Section 4.15 of the ScottishPower 
Disclosure Letter and except as would not, individually or in the aggregate,    
reasonably be expected to have a material adverse effect on HoldCo,             
ScottishPower and their respective Subsidiaries taken as a whole:               

(a) (i) Each of HoldCo, ScottishPower and their respective Subsidiaries 
and the ScottishPower Joint Ventures is in compliance with all applicable   
Environmental Laws (as hereinafter defined); and                            

(ii) Neither HoldCo, ScottishPower nor any of their respective          
Subsidiaries nor any of the ScottishPower Joint Ventures has received any   
written communication from any person or Governmental                       

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or Regulatory Authority that alleges that HoldCo, ScottishPower or any of   
their respective Subsidiaries or Joint Ventures is not in such compliance   
with applicable Environmental Laws.                                         

(b) Each of HoldCo, ScottishPower, their respective Subsidiaries and the
ScottishPower Joint Ventures has obtained all environmental, health and     
safety permits and governmental authorizations (collectively, the           
"Environmental Permits") necessary for the construction of its facilities   
and the conduct of its operations, as applicable, and all such              
Environmental Permits are in full force and effect or, where applicable, a  
renewal application has been timely filed and is pending agency approval,   
and HoldCo, ScottishPower, their respective Subsidiaries and the            
ScottishPower Joint Venture are in compliance with all terms and conditions 
of the Environmental Permits.                                               

(c) There is no Environmental Claim (as hereinafter defined) pending    

(i) against HoldCo., ScottishPower or any of their respective       
Subsidiaries or any of the ScottishPower Joint Ventures;                

(ii) against HoldCo, ScottishPower or any of their respective       
Subsidiaries or any of the ScottishPower Joint Ventures;                

(ii) to the knowledge of HoldCo or ScottishPower, against any person
or entity whose liability for any Environmental Claim HoldCo,           
ScottishPower or any of their respective Subsidiaries or any of the     
ScottishPower Joint Ventures has or may have retained or assumed either 
contractually or by operation of law; or                                

(iii) against any real or personal property or operations which     
HoldCo, ScottishPower or any of their respective Subsidiaries or any of 
the ScottishPower Joint Ventures owns, leases or manages in whole or in 
part.                                                                   

(d) To HoldCo's or ScottishPower's knowledge, there have not been any   
Releases (as hereinafter defined) of any Hazardous Material (as hereinafter 
defined) that would be reasonably likely to form the basis of any           
Environmental Claim against HoldCo, ScottishPower or any of their           
respective Subsidiaries or any of the ScottishPower Joint Ventures, or      
against any person or entity whose liability for any Environmental Claim    
HoldCo, ScottishPower or any of their respective Subsidiaries or any of the 
ScottishPower Joint Ventures has or may have retained or assumed either     
contractually or by operation of law.                                       

(e) As used in this Section 4.15:                                       

(i) "Environmental Claims" means any and all administrative,        
regulatory or judicial actions, suits, demands, demand letters,         
directives, claims, liens, investigations, proceedings or notices of    
noncompliance, liability or violation (written or oral) by any person   
or entity (including any Governmental or Regulatory Authority) alleging 
potential liability (including, without limitation, potential           
responsibility or liability for enforcement, investigatory costs,       
cleanup costs, governmental response costs, removal costs, remedial     
costs, natural resources damages, property damages, personal injuries   
or penalties) arising out of, based on or resulting from                

(A)(A) the presence, or Release or threatened Release into the  
environment, of any Hazardous Materials at any location, whether or 
not owned, operated, leased or managed by HoldCo, ScottishPower or  
any of their respective Subsidiaries or any of the ScottishPower    
Joint Ventures; or                                                  

(B) circumstances forming the basis of any violation, or alleged
violation, of any Environmental Law; or                             

(C) any and all claims by any third party seeking damages,      
contribution, indemnification, cost recovery, compensation or       
injunctive relief resulting from the presence or Release of any     
Hazardous Materials;                                                

(ii) "Environmental Laws" means all European Union, national,       
regional, or local laws, rules and regulations relating to pollution,   
the environment (including, without limitation, ambient air,            

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surface water, groundwater, land surface or subsurface strata) or       
protection of human health as its relates to the environmental          
including, without limitation, laws and regulations relating to         
Releases or threatened Releases of Hazardous Materials, or otherwise    
relating to the manufacture, processing, distribution, use, treatment,  
storage, disposal, transport or handling of Hazardous Materials         
including, without limitation, Part II and paragraphs 161 and 162 of    
Schedule 22 of the Environment Act 1995 and the Department of the       
Environment Transport and the Regions Consultation Draft Guidance on    
Contaminated Land dated October 1998 but not to the extent that any     
modification thereof introduced in the final form of this guidance      
imposes materially more onerous or stringent requirements in respect of 
contaminated land or pollution.                                         

(iii) "Hazardous Materials" means (a) any petroleum or petroleum    
products, radioactive materials, asbestos in any form that is or could  
become friable, urea formaldehyde foam insulation, and transformers or  
other equipment that contain dielectric fluid containing                
polychlorinated biphenyls; and (b) any chemicals, materials or          
substances which are now defined as or included in the definition of    
"hazardous substances", "hazardous wastes", "hazardous materials",      
"extremely hazardous wastes", "restricted hazardous wastes", "toxic     
substances", "toxic pollutants", or words of similar import, under any  
Environmental Law; and (c) any other chemical, material, substance or   
waste,                                                                  
exposure to which is now prohibited, limited or regulated under any     
Environmental Law in a jurisdiction in which HoldCo, ScottishPower or   
any of their respective Subsidiaries or any of the ScottishPower Joint  
Ventures operates or any jurisdiction which has received such chemical, 
material, substance or waste from HoldCo, ScottishPower or their        
respective Subsidiaries; and                                            

(iv) "Release" means any release, spill, emission, leaking,         
injection, deposit, disposal, discharge, dispersal, leaching or         
migration into the atmosphere, soil, surface water, groundwater or      
property.                                                               

4.16 Intellectual Property Rights. HoldCo, ScottishPower and their    
respective Subsidiaries have all right, title and interest in, or a valid and   
binding license to use, all Intellectual Property individually or in the        
aggregate material to the conduct of the businesses of HoldCo, ScottishPower    
and their respective Subsidiaries taken as a whole. Neither HoldCo,             
ScottishPower nor any of their respective Subsidiaries is in default (or with   
the giving of notice or lapse of time or both, would be in default) under any   
license to use such Intellectual Property, to the knowledge of HoldCo or        
ScottishPower, such Intellectual Property is not being infringed by any third   
party, and neither HoldCo, ScottishPower nor any of their respective            
Subsidiaries is infringing any Intellectual Property of any third party, except 
for such defaults and infringements which, individually or in the aggregate,    
are not having and would not reasonably be expected to have a material adverse  
effect on HoldCo, ScottishPower and their respective Subsidiaries taken as a    
whole.                                                                          

  4.17 Vote Required. The only votes of the holders of any class of shares
of ScottishPower or, after the Scheme Date, Holdco required to approve the      
Merger and the other transactions contemplated hereby (other than those set     
forth in paragraphs 1 through 3 of Schedule II and any vote which may be        
required in order to give effect to the conversion of the Company Stock Options 
in accordance with Section 6.10 or to give effect to the amendments to HoldCo's 
Articles of Association in accordance with Section 6.03(c)) are the affirmative 
vote of a majority of such ordinary shareholders of ScottishPower as (being     
entitled to do so) are present and vote (or, in the case of a vote taken on a   
poll, the affirmative vote by shareholders or their proxies representing a      
majority of the ScottishPower Ordinary Shares in respect of which votes were    
validly exercised) at the ScottishPower Shareholders Meeting in relation to the 
approval of the Merger and the Scheme of Arrangement.                           

4.18 [Intentionally Omitted]                                          

   4.19 Ownership of Company Common Stock. Neither HoldCo, ScottishPower nor
any of their respective Subsidiaries or other affiliates beneficially owns any  
shares of Company Common Stock.                                                 

  4.20 Insurance. Except as set forth in Section 4.20 of the ScottishPower
Disclosure Letter, each of ScottishPower and its Subsidiaries is, and has been  
continuously since January 1, 1994 (and at all times                            

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following the Scheme Date, HoldCo and its Subsidiaries will be), insured with   
financially responsible insurers in such amounts and against such risks and     
losses as are customary in all material respects for companies conducting the   
business conducted by HoldCo, ScottishPower and their respective Subsidiaries   
during such time period. Except as set forth in Section 4.20 of the             
ScottishPower Disclosure Letter, neither HoldCo, ScottishPower nor any of their 
respective Subsidiaries has received any notice of cancellation or termination  
with respect to any material insurance policy of HoldCo, ScottishPower or any   
of their respective Subsidiaries. The insurance policies of Holdco,             
ScottishPower and each of their respective Subsidiaries are valid and           
enforceable policies.                                                           

   4.21 Year 2000. ScottishPower and its Subsidiaries have (and at all times
following the Scheme Date, to the extent (if at all) then necessary, HoldCo     
will have) put into effect practices and programs which ScottishPower (or       
HoldCo) reasonably believes will enable all material software, hardware and     
equipment (including microprocessors) that are owned or utilized by             
ScottishPower (or HoldCo) or any of their respective Subsidiaries in the        
operations of its or their respective business to be capable, by December 31,   
1999 of accounting for all calculations using a century and date sensitive      
algorithm for the year 2000, and the fact that the year 2000 is a leap year and 
to otherwise continue to function without material interruption caused by the   
occurrence of the year 2000.                                                    

   4.22 Joint Venture Representations. Each representation and warranty made
by HoldCo or ScottishPower in this Article IV relating to a ScottishPower Joint 
Venture that is neither operated nor managed by HoldCo or ScottishPower or a    
Subsidiary thereof shall be deemed to be made only to HoldCo's and              
ScottishPower's knowledge.                                                      

ARTICLE V 

COVENANTS 

5.01 Covenants of the Company. At all times from and after December 6,
1998 until the Effective Time, the Company covenants and agrees as to itself    
and its Subsidiaries that (except as expressly contemplated or permitted by     
this Agreement, or to the extent that HoldCo or ScottishPower shall otherwise   
previously consent in writing, which consent shall not be unreasonably withheld 
or delayed):                                                                    

(a) Ordinary Course. The Company and each of its Subsidiaries shall     
conduct their businesses only in, and the Company and each of its           
Subsidiaries shall not take any action except in, the ordinary course       
substantially consistent with past business practice. Without limiting the  
generality of the foregoing, the Company and its Subsidiaries shall use all 
commercially reasonable efforts to preserve intact in all material respects 
their present business organizations, to maintain in effect all existing    
material permits, to keep available the services of their key officers and  
employees, to maintain their assets and properties in good working order    
and condition, ordinary wear and tear excepted, to maintain insurance on    
their tangible assets and businesses in substantially the same amounts and  
against substantially the same risks and losses as are currently in effect, 
to preserve their relationships with customers and suppliers and others     
having significant business dealings with them and to comply in all         
material respects with all laws and orders of all Governmental or           
Regulatory Authorities applicable to them.                                  

(b) Charter Documents. The Company shall not, nor shall it permit any of
its Subsidiaries to, amend or propose to amend its certificate or articles  
of incorporation or bylaws or its memorandum and articles of association    
(or other comparable corporate charter documents).                          

(c) Dividends. The Company shall not, nor shall it permit any of its    
Subsidiaries to, (i) declare, set aside or pay any dividends on or make     
other distributions in respect of any of its capital stock or share         
capital, except:                                                            

(A) that the Company may continue the declaration and payment of    
regular cash dividends (including increases consistent with past        
practice) on Company Common Stock and the Company                       

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Preferred Stock, with usual record and payment dates for such dividends 
in accordance with past dividend practice; provided, that no such       
dividend on the Company Common Stock shall exceed the amount budgeted   
therefor in the Company Budget (as hereinafter defined), and            

(B) for the declaration and payment of dividends by (x) a wholly-   
owned Subsidiary solely to its parent corporation, (y) Bridger Coal     
Company in accordance with past practice and (z) Subsidiaries of        
regular cash dividends with usual record and payment dates (including   
increases consistent with past practice) in accordance with past        
dividend practice, and                                                  

(ii) split, combine, reclassify or take similar action with respect to  
any of its capital stock or share capital or issue or authorize or propose  
the issuance of any other securities in respect of, in lieu of or in        
substitution for shares of its capital stock or comprised in its share      
capital, (iii) except as disclosed in Section 5.01(c) of the Company        
Disclosure Letter, adopt a plan of complete or partial liquidation or       
resolutions providing for or authorizing such liquidation or a dissolution, 
merger, consolidation, restructuring, recapitalization or other             
reorganization or (iv) except as disclosed in Section 5.01(c) of the        
Company Disclosure Letter, directly or indirectly redeem, repurchase or     
otherwise acquire any shares of its capital stock or comprised in its share 
capital or any Option with respect thereto except:                          

(A) in connection with intercompany purchases of capital stock or   
share capital,                                                          

(B) for the purpose of funding employee stock ownership or dividend 
reinvestment, stock purchase plans and other incentive plans disclosed  
in Section 5.01(d) of the Company Disclosure Letter in accordance with  
past practice, and                                                      

(C) Prior to the Closing Date, the Company shall redeem all         
outstanding shares of its $1.28 Series, $1.18 Series and $1.16 Series   
of no par serial preferred stock.                                       

(d) Share Issuances. The Company shall not, nor shall it permit any of  
its Subsidiaries to, issue, deliver or sell, or authorize or propose the    
issuance, delivery or sale of, any shares of its capital stock or comprised 
in its share capital or any Option with respect thereto (other than (i) the 
issuance of Company Common Stock upon the exercise of Options issued        
pursuant to the Company's Stock Incentive Plan outstanding on December 6,   
1998 and in accordance with their present terms, (ii) except as             
specifically set forth under the heading "Long-Term Incentive Awards" on    
the Schedule of Ongoing Compensation Obligations attached to Section        
5.01(d) of the Company Disclosure Letter, the issuance of options or awards 
pursuant to the Company's Stock Incentive Plan in accordance with its       
present terms and only in connection with the hiring of new employees, and  
the issuance of shares of Company Common Stock upon exercise of such        
options or awards, (iii) the issuance by a wholly-owned Subsidiary of its   
capital stock to its parent corporation, or modify or amend any right of    
any holder of outstanding shares of capital stock or Options with respect   
thereto and (iv) shares of Company Preferred Stock with a stated value of   
up to an aggregate of $250 million).                                        

(e) Acquisitions. Except as set forth in Section 5.01(e) of the Company 
Disclosure Letter and other than as provided in the 1999 operating budget   
of the Company, a copy of which has been disclosed to and discussed with    
ScottishPower, or any other budget of the Company thereafter approved by    
HoldCo or ScottishPower, which approval shall not be unreasonably withheld  
(collectively, the "Company Budget"), the Company shall not, nor shall it   
permit any of its Subsidiaries to, acquire (by merging or consolidating     
with, or by purchasing a substantial equity interest in or a substantial    
portion of the assets of, or by any other manner) any business or any       
corporation, partnership, association or other business organization or     
division thereof or otherwise acquire or agree to acquire any assets in     
excess of $25 million in any one transaction; provided, that this Section   
5.01(e) shall not prohibit any capital expenditures made in accordance with 
Section 5.01(j).                                                            

(f) Dispositions. Other than as set forth in Section 5.01(f) of the     
Company Disclosure Letter, the Company shall not, nor shall it permit any   
of its Subsidiaries to, sell, lease, grant any security interest in or      
otherwise dispose of or encumber any of its assets or properties, other     
than dispositions in the ordinary                                           

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course of its business consistent with past practice or having an aggregate 
net book value of $25 million or less in any one transaction.               

 (g) Indebtedness. Other than as expressly provided in the Company Budget,
the Company shall not, nor shall it permit any of its Subsidiaries to,      
incur or guarantee any indebtedness (including any debt borrowed or         
guaranteed or otherwise assumed, including, without limitation, the         
issuance of debt securities or warrants or rights to acquire debt) or enter 
into any "keep well" or other agreement to maintain any financial condition 
of another person or enter into any arrangement having the economic effect  
of any of the foregoing other than (i) short-term indebtedness in the       
ordinary course of business consistent with past practice (such as the      
issuance of commercial paper or the use of existing credit facilities) in   
an aggregate amount not exceeding $500 million; (ii) long-term indebtedness 
not aggregating more than $200 million and (iii) indebtedness entered into  
in connection with the refinancing of indebtedness outstanding on December  
6, 1998 or incurred in compliance with this Section 5.01(g).                

(h) Employee Benefits. Except as set forth on Section 5.01(h) of the    
Company Disclosure Letter, the Company shall not, nor shall it permit any   
of its Subsidiaries to, enter into, adopt, amend (except as may be required 
by applicable law) or terminate any Company Employee Benefit Plan, or       
increase in any manner the compensation or fringe benefits of any director  
or executive officer, or, except for normal increases in the ordinary       
course of business consistent with past practice that, in the aggregate, do 
not result in a material increase in benefits or compensation expense to    
the Company and its Subsidiaries taken as a whole, increase in any manner   
the compensation or fringe benefits of any employee, or pay any benefit not 
required by any plan or arrangement in effect as of December 6, 1998 and,   
in no event shall the Company or its Subsidiaries be permitted to grant to  
any employee any rights that are not in effect on December 6, 1998 to any   
payment (whether of severance pay or otherwise), acceleration, forgiveness  
of indebtedness, vesting, distribution, increase in benefits or increase in 
obligations to fund benefits with respect to that employee resulting from a 
change in control or change in ownership of the Company or any of its       
Subsidiaries.                                                               

(i) Affiliate Contracts. Except as disclosed in Section 5.01(i) of the  
Company Disclosure Letter, the Company shall not, nor shall it permit any   
of its Subsidiaries or, within the exercise of its reasonable commercial    
efforts, its Joint Ventures to, except as otherwise expressly provided for  
in this Agreement, enter into any Contract or amend or modify any existing  
Contract, or engage in any new transaction outside the ordinary course of   
business consistent with past practice or not on an arm's length basis,     
with any affiliate of such party or any of its Subsidiaries.                

(j) Capital Expenditures. The Company shall not, nor shall it permit any
of its Subsidiaries to, make any capital expenditures or commitments other  
than (i) as required by applicable law, (ii) capital expenditures incurred  
in connection with the repair or replacement of facilities destroyed or     
damaged due to casualty or accident (whether or not covered by insurance),  
and (iii) other capital expenditures in excess of 110% of the aggregate     
amount provided for such purposes in the Company Budget.                    

(k) 1935 Act. The Company shall not, nor shall it permit any of its     
Subsidiaries to, engage in any activities which would cause a change in its 
status, or that of its Subsidiaries, under the 1935 Act, including any      
action or inaction that would cause the prior approval of the SEC under the 
1935 Act to be required for the consummation of the transactions            
contemplated hereby.                                                        

(l) Regulatory Status. The Company shall not, nor shall it permit any of
its Subsidiaries to, agree or consent to any material agreements or         
modifications of material existing agreements with any Government or        
Regulatory Authority in respect of the operations of their businesses       
except where following discussion with the relevant authority such          
agreements or modifications are imposed upon the Company.                   

(m) Transmission, Generation. Except as required pursuant to tariffs on 
file with the FERC as of December 6, 1998, or as set forth in Section       
5.02(m) of the Company Disclosure Letter, the Company shall not, nor shall  
it permit its Subsidiaries to:                                              

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(i) commence construction of any additional generating, transmission
or delivery capacity in excess of 500 megawatts, or                     

(ii) obligate itself to purchase or otherwise acquire, or to sell or
otherwise dispose of, or to share, any additional generating,           
transmission or delivery plants or facilities, in an amount in excess   
of $25 million in any one transaction, except as set forth in the       
Company Budget. Any regulatory order potentially imposing any such      
obligation shall be immediately forwarded to HoldCo or ScottishPower.   

(n) Accounting. The Company shall not, nor shall it permit any of its   
Subsidiaries to, make any material changes in their accounting methods,     
except as required by law, rule, regulation or applicable generally         
accepted accounting principles.                                             

(o) Tax Matters. The Company shall not take any action which (or fail to
take any action if such failure) would cause the Merger to fail to qualify  
as a reorganization described in Code Section 368(a).                       

(p) No Breach. The Company shall not, nor shall it permit any of its    
Subsidiaries to willfully take or fail to take any action that would or is  
reasonably likely to result (i) in a material breach of any provision of    
this Agreement, or (ii) in any of its representations and warranties set    
forth in this Agreement being untrue on and as of the Closing Date.         

 (q) No Litigation. The Company shall not, nor shall it permits any of its
Subsidiaries to, initiate any material actions, suits, arbitrations or      
proceedings.                                                                

(r) Tax-Exempt Status. The Company shall not, nor shall it permit any of
its Subsidiaries to, except as otherwise expressly provided for in this     
Agreement, take any action that would be reasonably likely to jeopardize    
the qualification of any material amount of outstanding revenue bonds which 
qualify on December 6, 1998 under Section 142(a) of the Code as "exempt     
facility bonds" or as tax-exempt industrial development bonds under Section 
103(b)(4) of the Internal Revenue Code of 1954, as amended, prior to the    
enactment of the Tax Reform Act of 1986.                                    

(s) Advice of Changes. The Company shall confer with HoldCo or          
ScottishPower on a regular and frequent basis with respect to the Company's 
business and operations and other matters relevant to the Merger, and shall 
promptly advise HoldCo or ScottishPower, orally and in writing, of any      
material change or event, including, without limitation, any complaint,     
investigation or hearing by any Governmental or Regulatory Authority (or    
communication indicating the same may be contemplated) or the institution   
or threat of material litigation; provided that the Company shall not be    
required to make any disclosure to the extent such disclosure would         
constitute a violation of any applicable law or regulation.                 

(t) Notice and Cure. The Company will notify HoldCo or ScottishPower in 
writing of, and will use all commercially reasonable efforts to cure before 
the Closing, any event, transaction or circumstance, as soon as practical   
after it becomes known to the Company, that causes or will cause any        
covenant or agreement of the Company under this Agreement to be breached or 
that renders or will render untrue in any material respect any              
representation or warranty of the Company contained in this Agreement. The  
Company also will notify HoldCo or ScottishPower in writing of, and will    
use all commercially reasonable efforts to cure, before the Closing, any    
violation or breach, as soon as practical after it becomes known to the     
Company, of any representation, warranty, covenant or agreement made by the 
Company. No notice given pursuant to this paragraph shall have any effect   
on the representations, warranties, covenants or agreements contained in    
this Agreement for purposes of determining satisfaction of any condition    
contained herein.                                                           

(u) Fulfillment of Conditions. Subject to the terms and conditions of   
this Agreement, the Company will take or cause to be taken all commercially 
reasonable steps necessary or desirable and will proceed diligently and in  
good faith to satisfy each condition to its obligations contained in this   
Agreement and to consummate and make effective the transactions             
contemplated by this Agreement, and the Company will                        

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not, nor will it permit any of its Subsidiaries to, take or fail to take    
any action that would reasonably be expected to result in the               
nonfulfillment of any such condition.                                       

  5.02 Covenants of HoldCo and ScottishPower. Each of HoldCo, at all times
from and after the date hereof until the Effective Time, and ScottishPower, at  
all times from December 6, 1998 until the Effective Time, covenants and agrees  
as to itself and its Subsidiaries that (except for the transactions             
contemplated or permitted by this Agreement or to the extent that the Company   
shall otherwise previously consent in writing, which consent shall not be       
unreasonably withheld or delayed):                                              

 (a) Ordinary Course. Except pursuant to the Scheme of Arrangement and the
establishment of HoldCo Share Schemes and HoldCo Employee Benefit Plans,    
HoldCo, ScottishPower and each of their respective Subsidiaries shall       
conduct their businesses only in, and HoldCo, ScottishPower and each of     
their respective Subsidiaries shall not take any action except in, the      
ordinary course consistent with past practice. Without limiting the         
generality of the foregoing, HoldCo, ScottishPower and their respective     
Subsidiaries shall use all commercially reasonable efforts to preserve      
intact in all material respects their present business organizations and    
reputation, to maintain in effect all existing permits, to keep available   
the services of their key officers and employees, to maintain their assets  
and properties in good working order and condition, ordinary wear and tear  
excepted, to maintain insurance on their tangible assets and businesses in  
such amounts and against such risks and losses as are currently in effect,  
to preserve their relationships with customers and suppliers and others     
having significant business dealings with them and to comply in all         
material respects with all laws and orders of all Governmental or           
Regulatory Authorities applicable to them.                                  

(b) Charter Documents. Other than as contemplated by Section 6.03(c) and
except to the extent required to comply with applicable law or the rules of 
the LSE, HoldCo (after the Scheme Date) and ScottishPower shall not, nor    
shall they permit any of their respective Subsidiaries to, amend or propose 
to amend their respective certificates or articles of incorporation or      
bylaws or their respective memoranda and articles of association (or other  
comparable corporate charter documents).                                    

(c) Dividends. Other than as set forth in the ScottishPower Budget (as  
defined in Section 5.02(e)), HoldCo and, prior to the Scheme Date,          
ScottishPower shall not, nor shall they permit any of their respective      
Subsidiaries to,                                                            

(i) declare, set aside or pay any dividends on or make other        
distributions in respect of any of its capital stock or share capital,  
except:                                                                 

(A) that, ScottishPower may, (I) as regards record dates for the
payment of dividends occurring prior to the Scheme Date, continue   
the declaration and payment of regular cash dividends (including    
increases consistent with past practice) on ScottishPower Ordinary  
Shares, with usual record and payment dates for such dividends in   
accordance with past dividend practice; provided, that no such      
dividend shall exceed by more than 12% the dividend payable during  
the prior fiscal year in respect of the comparable time period and  
(II) before, on or after the Scheme Date, effect the Share Transfer,
and                                                                 

(B) that, as regards record dates for the payment of dividends  
occurring after the Scheme Date, HoldCo may declare and pay regular 
cash dividends (including increases consistent with ScottishPower's 
past practice) on HoldCo Ordinary Shares, with usual record and     
payment dates for such dividends in accordance with ScottishPower's 
past dividend practice; provided, that no such dividend shall, when 
taken together with any dividend paid pursuant to clause (A)(I) of  
this paragraph (c), exceed more than 12% of the dividend payable by 
ScottishPower during the prior fiscal year in respect of the        
comparable time period, and                                         

  (C) for the declaration and payment of dividends by a wholly-owned
Subsidiary solely to its parent corporation (including for the      
avoidance of doubt dividends by ScottishPower to HoldCo following   
the Scheme Date), and                                               

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(ii) other than pursuant to the Scheme of Arrangement or in         
connection with the restructuring of the transactions contemplated      
hereby pursuant to Section 6.07, split, combine, reclassify or take     
similar action with respect to any of its capital stock or share        
capital or issue or authorize or propose the issuance of any other      
securities in respect of, in lieu of or in substitution for shares of   
its capital stock or comprised in its share capital (except that HoldCo 
may subdivide its ordinary shares as referred to in Section 4.02(a)),   
(iii) other than pursuant to the Scheme of Arrangement, adopt a plan of 
complete or partial liquidation or resolutions providing for or         
authorizing such liquidation or a dissolution, merger, consolidation,   
restructuring, recapitalization or other reorganization or (iv) other   
than pursuant to the Scheme of Arrangement or as described in Section   
5.02(c) of the ScottishPower Disclosure Letter, directly or indirectly  
redeem, repurchase or otherwise acquire any shares of its capital stock 
or comprised in its share capital or any Option with respect thereto    
except:                                                                 

 (A) in connection with intercompany purchases of capital stock or
share capital,                                                      

 (B) for the purpose of funding employee share ownership, dividend
reinvestment, stock purchase and other incentive plans disclosed in 
Section 5.02 (c) of the ScottishPower Disclosure Letter in          
accordance with past practice,                                      

(C) the redemption of the ScottishPower Special Share or the    
HoldCo Special Share in accordance with its terms or                

(D) the redemption of the 49,998 HoldCo non-voting redeemable   
shares referred to in Section 4.02.                                 

(d) Share Issuances. Other than pursuant to the Scheme of Arrangement,  
(i) ScottishPower shall not, nor shall it permit any of its Subsidiaries    
to, issue, deliver or sell, or authorize or propose the issuance, delivery  
or sale of, any shares of its capital stock or comprised in its share       
capital or any Option with respect thereto (other than (A) up to 125        
million shares of ScottishPower Ordinary Shares for general corporate       
purposes, (B) the issuance of ScottishPower Ordinary Shares or stock        
appreciation, share awards or similar rights, as the case may be, pursuant  
to the ScottishPower Share Schemes, in each case outstanding on December 6, 
1998 and in accordance with their present terms, subject to any amendments  
made in the ordinary course consistent with past practice or pursuant to    
any share scheme of ScottishPower to be adopted in the ordinary course      
consistent with past practice, (C) the issuance of options or awards        
pursuant to ScottishPower Share Schemes in accordance with their present    
terms, subject to any amendments made in the ordinary course of business    
consistent with past practice or as reasonably necessary to reflect the     
Scheme of Arrangement and, except as set forth in Section 5.02(d) of the    
ScottishPower Disclosure Letter, only in connection with the hiring of new  
employees and the issuance of shares of ScottishPower Ordinary Shares upon  
exercise of such options or awards, and (D) the issuance by a wholly-owned  
Subsidiary of its capital stock to its parent corporation, or modify or     
amend any right of any holder of outstanding shares of capital stock or     
Options with respect thereto).                                              

(ii) HoldCo shall not, nor shall it permit any of its Subsidiaries to,  
issue, deliver or sell, or authorize or propose the issuance, delivery or   
sale of, any shares of its capital stock other than in the amounts and for  
the purposes set forth in clause (i) of this paragraph (d) and other than   
pursuant to the HoldCo Share Schemes or pursuant to the arrangement         
referred to in Section 4.02(c)(iv) or pursuant to the ScottishPower Share   
Schemes as amended as reasonably necessary to reflect the Scheme of         
Arrangement.                                                                

(e) Acquisitions. Other than as provided in the 1999 operating budget of
ScottishPower, a copy of which has been disclosed to and discussed with the 
Company, or any subsequently-adopted budget of ScottishPower disclosed to   
the Company (collectively, the "ScottishPower Budget") or pursuant to the   
Scheme of Arrangement, neither HoldCo nor ScottishPower shall, nor shall    
they permit any of their respective Subsidiaries to, acquire (by merging or 
consolidating with, or by purchasing a substantial equity interest in or a  
substantial portion of the assets of, or by any other manner) any business  
or any corporation, partnership, association or other business organization 
or division thereof (i) in excess of (Pounds)750 million or (ii) if such    
acquisition would have a material adverse affect on HoldCo, ScottishPower   
and their respective Subsidiaries taken as a whole, without the prior       
written consent of the Company.                                             

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 (f) Dispositions. Other than as provided in the ScottishPower Budget, and
other than the transfer of all of the outstanding shares of UKSub 1 and     
UKSub 2 from ScottishPower to HoldCo, neither HoldCo nor ScottishPower      
shall, nor shall they permit any of their respective Subsidiaries to, sell, 
lease, grant any security interest in or otherwise dispose of or encumber   
any of its assets or properties, other than dispositions in the ordinary    
course of its business consistent with past practice and having an          
aggregate value of less than (Pounds)750 million.                           

(g) Indebtedness. Neither HoldCo nor ScottishPower shall, nor shall they
permit any of their respective Subsidiaries to, incur or guarantee any      
indebtedness (including any debt borrowed or guaranteed or otherwise        
assumed, including, without limitation, the issuance of debt securities or  
warrants or rights to acquire debt) or enter into any "keep well" or other  
agreement to maintain any financial condition of another Person or enter    
into any arrangement having the economic effect of any of the foregoing,    
other than indebtedness in an aggregate amount not exceeding 110% of the    
amount of indebtedness provided for in the ScottishPower Budget. For        
purposes of this paragraph (g), any indebtedness up to (Pounds)500 million  
incurred in connection with the planned buyback of ScottishPower Ordinary   
Shares and/or HoldCo Ordinary Shares shall be disregarded.                  

(h) Affiliate Contracts. Neither HoldCo nor ScottishPower shall, nor    
shall they permit any of their respective Subsidiaries or, within the       
exercise of its reasonable commercial efforts, the ScottishPower Joint      
Ventures to, enter into any Contract or amend or modify any existing        
Contract, or engage in any new transaction (other than pursuant to the      
Scheme of Arrangement) outside the ordinary course of business consistent   
with past practice or not on an arm's length basis, with any affiliate of   
such party or any of its Subsidiaries.                                      

(i) Capital Expenditures. Except for any payments by HoldCo to          
ScottishPower in connection with the acquisition by HoldCo of UKSub 1 and   
UKSub 2 or any investment by HoldCo in UKSub 1 and UKSub 2, neither HoldCo  
nor ScottishPower shall, nor shall they permit any of their respective      
Subsidiaries to, make any capital expenditures or commitments (except as    
required by law or regulation) in excess of 110% of the aggregate amount    
provided for such purposes in the ScottishPower Budget.                     

(j) 1935 Act. Except for the acquisition of ScottishPower by HoldCo and 
the filing of Forms U-57 by ScottishPower and HoldCo's other utility        
subsidiaries after the acquisition of ScottishPower by HoldCo, neither      
HoldCo nor ScottishPower shall, nor shall they permit any of their          
respective Subsidiaries to, engage in any activities which would cause a    
change in its status, or that of its Subsidiaries, under the 1935 Act,      
including any action or inaction that would cause the prior approval of the 
SEC under the 1935 Act to be required for the consummation of the           
transactions contemplated hereby.                                           

(k) UK Licensing Regime. Except pursuant to the Scheme of Arrangement,  
neither HoldCo nor ScottishPower shall, nor shall they permit any of their  
respective Subsidiaries to, engage in any activities or omit to do anything 
which would entitle any Governmental or Regulatory Authority to revoke in   
whole or in material part any material license, authorization or            
appointment or which would otherwise materially change the status of        
HoldCo, ScottishPower or any of their respective Subsidiaries (HoldCo,      
ScottishPower and their respective Subsidiaries being referred to as the    
"HoldCo Group") thereunder.                                                 

(l) Transmission, Generation. Except as set forth in Section 5.02(l) of 
the ScottishPower Disclosure Letter, neither HoldCo nor ScottishPower       
shall, nor shall they permit any of their respective Subsidiaries to:       

(i) commence construction of any additional generating, transmission
or delivery capacity in excess of 500 megawatts, or                     

(ii) obligate itself to purchase or otherwise acquire, or to sell or
otherwise dispose of, or to share, any additional generating,           
transmission or delivery plants or facilities, in an amount in excess   
of $200 million in any one transaction.                                 

(m) Accounting. Neither HoldCo nor ScottishPower shall nor shall they   
permit any of their respective Subsidiaries to, make any changes in their   
accounting methods, except as required by law, rule,                        

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regulation or applicable generally accepted accounting principles or, in    
the case of HoldCo, adopting accounting methods substantially the same as   
those of ScottishPower.                                                     

(n) Tax Matters. Neither HoldCo nor ScottishPower shall, nor shall they 
permit any of their respective Subsidiaries to, take any action which (or   
fail to take any action if such failure) would cause the Merger to fail to  
qualify as a reorganization described in Section 368(a) of the Code.        

(o) No Breach. Neither HoldCo nor ScottishPower shall, nor shall they   
permit any of their respective Subsidiaries to, willfully take or fail to   
take any action that would or is reasonably likely to result (i) in a       
material breach of any provision of this Agreement, or (ii) in any of its   
representations and warranties set forth in this Agreement being untrue on  
and as of the Closing Date.                                                 

(p) Advice of Changes. HoldCo and ScottishPower shall confer with the   
Company on a regular and frequent basis with respect to HoldCo's and        
ScottishPower's business and operations and other matters relevant to the   
Merger, and shall promptly advise the Company, orally and in writing, of    
any material change or event, including, without limitation, any complaint, 
investigation or hearing by any Governmental or Regulatory Authority (or    
communication indicating the same may be contemplated) or the institution   
or threat of litigation, having, or which, insofar as can be reasonably     
foreseen, could have, a material adverse effect on HoldCo, ScottishPower    
and their respective Subsidiaries taken as a whole or on the ability of     
HoldCo and ScottishPower to consummate the transactions contemplated        
hereby; provided that HoldCo and ScottishPower shall not be required to     
make any disclosure to the extent such disclosure would constitute a        
violation of any applicable law or regulation.                              

(q) Notice and Cure. HoldCo or ScottishPower will notify the Company in 
writing of, and will use all commercially reasonable efforts to cure before 
the Closing, any event, transaction or circumstance, as soon as practical   
after it becomes known to HoldCo or ScottishPower, that causes or will      
cause any covenant or agreement of HoldCo or ScottishPower under this       
Agreement to be breached or that renders or will render untrue any          
representation or warranty of HoldCo or ScottishPower contained in this     
Agreement. HoldCo or ScottishPower will also notify the Company in writing  
of, and will use all commercially reasonable efforts to cure, before the    
Closing, any violation or breach, as soon as practical after it becomes     
known to HoldCo or ScottishPower, of any representation, warranty, covenant 
or agreement made by HoldCo or ScottishPower. No notice given pursuant to   
this paragraph shall have any effect on the representations, warranties,    
covenants or agreements contained in this Agreement for purposes of         
determining the satisfaction of any condition contained herein.             

(r) Fulfillment of Conditions. Subject to the terms and conditions of   
this Agreement, HoldCo and ScottishPower will take or cause to be taken all 
commercially reasonable steps necessary or desirable and proceed diligently 
and in good faith to satisfy each condition to the Company's obligations    
contained in this Agreement and to consummate and make effective the        
transactions contemplated by this Agreement, and neither HoldCo nor         
ScottishPower will, nor will they permit any of their respective            
Subsidiaries to, take or fail to take any action that would reasonably be   
expected to result in the nonfulfillment of any such condition.             

5.03 Joint Executive Committee. As soon as practicable after the date 
hereof, ScottishPower and the Company shall establish a joint executive         
committee (the "Joint Executive Committee") which shall be comprised of three   
nominees of ScottishPower (one of whom, in the first instance, shall be Ian     
Robinson) and three nominees of the Company (one of whom, in the first          
instance, shall be Keith McKennon). The Joint Executive Committee shall be      
jointly chaired by Ian Robinson and Keith McKennon and shall have the objective 
of facilitating and achieving the Merger contemplated in this Agreement,        
integration planning, strategic development, developing recommendations         
concerning the future structure and the general operation of the Company after  
the Effective Time subject to applicable law. The Joint Executive Committee     
shall meet monthly in the United States or upon such other date or dates, and   
in such other places, as ScottishPower and the Company may agree from time to   
time and may be convened by telephone, video conference or similar means.       

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5.04 Tax Matters. Except as set forth in their respective Disclosure  
Letters, neither HoldCo, ScottishPower nor the Company shall, nor shall any     
party permit its Subsidiaries to, make or rescind any material express or       
deemed election relating to taxes, or change any of its methods of reporting    
income or deductions for tax purposes from those employed in the preparation of 
its tax return(s) for the prior taxable year, except as may be required by      
applicable law, as agreed to by the other party or, subject to Section 6.18, to 
the extent reasonably necessary to comply with or implement the Scheme of       
Arrangement. The Company shall inform ScottishPower regarding the progress of   
any material claim, action, suit, litigation, proceeding, arbitration,          
investigation, audit or controversy relating to taxes and shall consult with    
ScottishPower before entering into any settlements or compromises with regard   
to such matters.                                                                

5.05 Discharge of Liabilities. Neither HoldCo, ScottishPower nor the  
Company shall, nor shall any party permit its Subsidiaries to, pay, discharge   
or satisfy any material claims, liabilities or obligations (absolute accrued,   
asserted or unasserted, contingent or otherwise), other than the entry into of  
the New Facilities in place of, and/or amending, the RCF, or other than as      
contemplated by paragraph 11 of Schedule I or other than the payment, discharge 
or satisfaction, in the ordinary course of business consistent with past        
practice (which includes the payment of final and unappealable judgments) or in 
accordance with their terms, of liabilities reflected or reserved against in,   
or contemplated by, the most recent consolidated financial statements (or the   
notes thereto) of such party included in such party's reports filed with the    
SEC or the Registrar of Companies in Edinburgh, or incurred in the ordinary     
course of business consistent with past practice.                               

  5.06 Contracts. Neither HoldCo, ScottishPower nor the Company shall, nor
shall any party permit its Subsidiaries or, within the exercise of its          
reasonable business efforts, its Joint Ventures to, except the entry into of    
the New Facilities in place of, and/or amending, the RCF, or other than as      
contemplated by paragraph 11 of Schedule I or as contemplated by this Agreement 
or in the ordinary course of business consistent with past practice, modify,    
amend, terminate, renew or fail to use reasonable business efforts to renew any 
material contract or agreement to which such party or any Subsidiary of such    
party is a party or waive, release or assign any material rights or claims.     

5.07 No Solicitations. (a) Except as disclosed in Section 5.07 of the 
Company Disclosure Letter, prior to the Effective Time, the Company agrees (i)  
that neither it nor any of its Subsidiaries or other affiliates shall, and it   
shall use its best efforts to cause their respective Representatives (as        
defined in Section 9.12) not to, initiate, solicit or encourage, directly or    
indirectly, any inquiries or the making or implementation of any proposal or    
offer (including, without limitation, any proposal or offer to its              
stockholders) with respect to a merger, consolidation or other business         
combination including the Company or any of its Subsidiaries or any acquisition 
or similar transaction (including, without limitation, a tender or exchange     
offer) involving the purchase of (A) all or any significant portion of the      
assets of the Company and its Subsidiaries taken as a whole, (B) 5% or more of  
the outstanding shares of Company Common Stock or (C) 5% of the outstanding     
shares of the capital stock of any Subsidiary of the Company (any such proposal 
or offer being hereinafter referred to as an "Alternative Proposal"), or engage 
in any negotiations concerning, or provide any confidential information or data 
to, or have any discussions with, any person or group relating to an            
Alternative Proposal (excluding the transactions contemplated by this           
Agreement), or otherwise facilitate any effort or attempt to make or implement  
an Alternative Proposal; (ii) that it will immediately cease and cause to be    
terminated any existing activities, discussions or negotiations with any        
parties with respect to any of the foregoing, and it will take the necessary    
steps to inform such parties of its obligations under this Section; and (iii)   
that it will notify ScottishPower or HoldCo promptly if any such inquiries,     
proposals or offers are received by, any such information is requested from, or 
any such negotiations or discussions are sought to be initiated or continued    
with, it or any of such persons; provided, however, that nothing contained in   
this Section 5.07(a) shall prohibit the Board of Directors of the Company from  
(i) furnishing information to (but only pursuant to a confidentiality agreement 
in customary form and having terms and conditions no less favorable to the      
Company than the Confidentiality Agreement (as defined in Section 6.01)) or     
entering into discussions or negotiations with any person or group that makes   
an unsolicited bona fide Alternative Proposal, if, and only to the extent that, 
prior to receipt of the Company Stockholders' Approval, (A) the Board of        
Directors of the Company,                                                       

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based upon the advice of outside counsel, determines in good faith that a       
failure to perform such action could reasonably be expected to result in a      
breach of its fiduciary duties to stockholders imposed by law, (B) the Board of 
Directors has reasonably concluded in good faith (after consultation with its   
financial advisors) that the person or group making such Alternative Proposal   
will have adequate sources of financing to consummate such Alternative          
Proposal, (C) the Board of Directors has reasonably concluded in good faith     
that such Alternative Proposal is more favorable to the Company's stockholders  
than the Merger, (D) prior to furnishing such information to, or entering into  
discussions or negotiations with, such person or group, the Company provides    
written notice to ScottishPower or HoldCo to the effect that it is furnishing   
information to, or entering into discussions or negotiations with, such person  
or group, which notice shall identify such person or group in reasonable        
detail, and (E) the Company keeps ScottishPower or HoldCo appropriately         
informed of the status of any such discussions or negotiations; and (ii) to the 
extent required, complying with Rule 14e-2 promulgated under the Exchange Act   
with regard to an Alternative Proposal. Nothing in this Section 5.07 shall (x)  
permit the Company to terminate this Agreement (except as specifically provided 
in Article VIII), (y) permit the Company to enter into any agreement with       
respect to an Alternative Proposal for so long as this Agreement remains in     
effect (it being agreed that for so long as this Agreement remains in effect,   
the Company shall not enter into any agreement with any person or group that    
provides for, or in any way facilitates, an Alternative Proposal (other than a  
confidentiality agreement under the circumstances described above)), or (z)     
affect any other obligation of the Company under this Agreement.                

    (b) Each of HoldCo and ScottishPower agrees that (i) neither it nor any of
its Subsidiaries or other affiliates shall, and it shall use its best efforts   
to cause their respective Representatives (as defined in Section 9.12) not to,  
initiate, solicit or encourage, directly or indirectly, any inquiries or the    
making of any proposal or offer (including, without limitation, any proposal or 
offer to its shareholders) with respect to any transaction that would           
constitute a Change of Control (as defined in Section 8.01(e)), (ii) it will    
notify the Company promptly if any such inquiries, proposals or offers are      
received by HoldCo or ScottishPower and (iii) will keep the Company             
appropriately informed of the status of any such inquiries, proposals or        
offers.                                                                         

    5.08 Conduct of Business of Merger Sub. (a) Merger Sub shall not be formed
until immediately prior to the Closing Date.                                    

(b) Prior to the Effective Time, HoldCo shall cause Merger Sub to (i) 
perform its obligations under this Agreement in accordance with its terms, (ii) 
not incur directly or indirectly any liabilities or obligations other than      
those incurred in connection with the Merger, (iii) not engage directly or      
indirectly in any business or activities of any type or kind and not enter into 
any agreements or arrangements with any person, or be subject to or bound by    
any obligation or undertaking, which is not contemplated by this Agreement and  
(iv) not create, grant or suffer to exist any Lien upon its properties or       
assets which would attach to any properties or assets of the Surviving          
Corporation after the Effective Time.                                           

    5.09 Third Party Standstill Agreements. During the period from December 6,
1998 through the Effective Time, neither the Company nor any of its             
Subsidiaries shall terminate, amend, modify or waive any provision of any       
confidentiality or standstill agreement to which it is a party. During such     
period, the Company shall enforce, to the fullest extent permitted under        
applicable law, the provisions of any such agreement, including, but not        
limited to, by obtaining injunctions to prevent any breaches of such agreements 
and to enforce specifically the terms and provisions thereof in any court       
having jurisdiction.                                                            

5.10 Control of Other Party's Business. Nothing contained in this     
Agreement shall give the Company, directly or indirectly, the right to control  
or direct HoldCo's or ScottishPower's operations prior to the Effective Time.   
Nothing contained in this Agreement shall give HoldCo or ScottishPower,         
directly or indirectly, the right to control or direct the Company's operations 
prior to the Effective Time. Prior to the Effective Time, each of the Company,  
HoldCo and ScottishPower shall exercise, consistent with the terms and          
conditions of this Agreement, complete control and supervision over its         
respective operations.                                                          

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ARTICLE VI

ADDITIONAL AGREEMENTS 

   6.01 Access to Information. Each of the Company, HoldCo and ScottishPower
shall, and shall cause each of its Subsidiaries and, so long as consistent with 
its confidentiality obligations under its Joint Venture agreements, shall use   
commercially reasonable efforts to cause its Joint Ventures to, throughout the  
period from the date hereof to the Effective Time, (i) provide the other        
parties and their respective Representatives with full access, upon reasonable  
prior notice and during normal business hours, to all officers, employees,      
agents and accountants of the Company, HoldCo and ScottishPower, as the case    
may be, and their respective Subsidiaries and Joint Ventures and their          
respective assets, properties, books and records, but only to the extent that   
such access does not unreasonably interfere with the business and operations of 
the Company, HoldCo and ScottishPower, as the case may be, and its Subsidiaries 
and Joint Ventures, and (ii) furnish promptly to such persons (x) a copy of     
each report, statement, schedule and other document filed or received by the    
Company, HoldCo and ScottishPower, as the case may be, or any of their          
respective Subsidiaries and Joint Ventures pursuant to the requirements of      
federal or state securities laws and each material report, statement, schedule  
and other document filed with any other Governmental or Regulatory Authority,   
and (y) all other information and data (including, without limitation, copies   
of Contracts, Company Employee Benefit Plans, and other books and records)      
concerning the business and operations of the Company, HoldCo and               
ScottishPower, as the case may be, and its Subsidiaries and Joint Ventures as   
any such party or any of such other persons reasonably may request. No          
investigation pursuant to this paragraph or otherwise shall affect any          
representation or warranty contained in this Agreement or any condition to the  
obligations of the parties hereto. Any such information or material obtained    
pursuant to this Section 6.01 that constitutes "Review Material" (as such term  
is defined in the letter agreement dated as of October 12, 1998 between the     
Company and ScottishPower (the "Confidentiality Agreement")) shall be governed  
by the terms of the Confidentiality Agreement.                                  

    6.02 Preparation of Registration Statement and Proxy Statement. As soon as
practicable after the date of this Agreement, the Company shall, in cooperation 
with HoldCo and ScottishPower, prepare the Proxy Statement and HoldCo and       
ScottishPower shall, in cooperation with the Company, prepare the Registration  
Statement, in which the Proxy Statement will be included as the prospectus. The 
Company shall, in cooperation with ScottishPower, file the Proxy Statement with 
the SEC as its preliminary Proxy Statement and HoldCo shall, in cooperation     
with the Company, prepare and file with the SEC the Registration Statement in   
which the Proxy Statement will be included as the prospectus. HoldCo and the    
Company shall use commercially reasonable efforts to have the Registration      
Statement declared effective by the SEC as promptly as practicable after such   
filing. HoldCo and the Company shall also take any action (other than           
qualifying as a foreign corporation or taking any action which would subject it 
to service of process in any jurisdiction where ScottishPower is not now so     
qualified or subject) required to be taken under applicable state blue sky or   
securities laws in connection with the issuance of HoldCo ADRs or Merger        
Ordinary Shares in connection with the Merger. If at any time prior to the      
Effective Time any event shall occur that should be set forth in an amendment   
of or a supplement to the Registration Statement, HoldCo shall prepare and file 
with the SEC such amendment or supplement as soon thereafter as is reasonably   
practicable. HoldCo, ScottishPower and the Company shall cooperate with the     
other parties in the preparation of the Registration Statement and the Proxy    
Statement and any amendment or supplement thereto, and each shall notify the    
other parties of the receipt of any comments of the SEC with respect to the     
Registration Statement or the Proxy Statement and of any requests by the SEC    
for any amendment or supplement thereto or for additional information, and      
shall provide to the other parties promptly copies of all correspondence        
between HoldCo, ScottishPower or the Company, as the case may be, or any of     
their respective Representatives with respect to the Registration Statement or  
the Proxy Statement. HoldCo, ScottishPower and the Company shall give the other 
parties and their respective counsel the opportunity to review the Registration 
Statement and the Proxy Statement and all responses to requests for additional  
information by and replies to comments of the SEC before their being filed      
with, or sent to, the SEC. Each of the Company and HoldCo agrees to use         
commercially reasonable efforts, after consultation with each other, to respond 
promptly to all such comments of and requests by the SEC and to cause (x) the   
Registration Statement to be declared effective by the SEC at the earliest      
practicable time and to                                                         

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be kept effective as long as is necessary to consummate the Merger, and (y) the 
Proxy Statement to be mailed to the holders of Company Common Stock and Company 
Preferred Stock entitled to vote at the meeting of the stockholders of the      
Company at the earliest practicable time.                                       

   6.03 Approval of Shareholders. (a) ScottishPower shall, through its Board
of Directors, duly call, give notice of, convene and hold a general meeting of  
its shareholders (the "ScottishPower Shareholders' Meeting"), for the purpose   
of voting on the Merger in accordance with this Agreement (the "ScottishPower   
Shareholders' Approval"). Unless the Board of Directors of ScottishPower, based 
upon the advice of outside counsel, determines in good faith that making such   
recommendation, or failing to amend, modify or withdraw any previously made     
recommendation, could reasonably be expected to result in a breach of its       
fiduciary duties to shareholders imposed by law, ScottishPower shall, through   
its Board of Directors, include in the Circular the recommendation of the Board 
of Directors of ScottishPower that the shareholders of ScottishPower approve    
such matters, and shall use its reasonable best efforts to obtain such          
approval. In connection with the ScottishPower Shareholders' Meeting, subject   
to applicable law, (i) ScottishPower shall, as soon as practicable after the    
date of this Agreement and in accordance with the listing rules of the LSE,     
prepare and submit to the LSE for approval the Circular and the Listing         
Particulars, and shall use all reasonable efforts to have such documents        
formally approved by the LSE and shall thereafter publish the Circular and the  
Listing Particulars and dispatch the Circular to its shareholders in compliance 
with all legal requirements applicable to the ScottishPower Shareholders'       
Meeting and the listing rules of the LSE and (ii) if necessary, after the       
Circular has been so dispatched, promptly publish or circulate amended,         
supplemental or supplemented materials and, if required in connection           
therewith, resolicit votes. In the event that the ScottishPower Shareholders'   
Approval is not obtained without the vote having been taken on the date on      
which the ScottishPower Shareholders' Meeting is initially convened, the Board  
of Directors of ScottishPower agrees to use its reasonable best efforts to      
adjourn such ScottishPower Shareholders' Meeting for the purpose of obtaining   
the ScottishPower Shareholders' Approval and to use commercially reasonable     
efforts during any such adjournments to obtain the ScottishPower Shareholders'  
Approval.                                                                       

(b) The Company shall, through its Board of Directors, duly call, give
notice of, convene and hold a meeting of its stockholders (the "Company         
Stockholders' Meeting") for the purpose of voting on the approval of this       
Agreement (the "Company Stockholders' Approval") as soon as reasonably          
practicable after the date hereof. Unless the Board of Directors of the         
Company, based on the advice of outside counsel, determines in good faith that  
making such recommendation, or failing to amend, modify or withdraw any         
previously made recommendation, could reasonably be expected to result in a     
breach of its fiduciary duties to stockholders imposed by law, the Company      
shall, through its Board of Directors, include in the Proxy Statement the       
recommendation of the Board of Directors of the Company that the stockholders   
of the Company approve this Agreement, and shall use its reasonable best        
efforts to obtain such approval. The Company shall consult and discuss in good  
faith with ScottishPower regarding the alternatives available for obtaining the 
Company Stockholders' Approval. In the event that the Company Stockholders'     
Approval is not obtained without the vote having been taken on the date on      
which the Company Stockholders' Meeting is initially convened, the Board of     
Directors of the Company will use its reasonable best efforts to adjourn such   
Company Stockholders' Meeting for the purpose of obtaining the Company          
Stockholders' Approval and to use commercially reasonable efforts during any    
such adjournments to obtain the Company Stockholders' Approval.                 

 (c) HoldCo shall, through its Board of Directors, at the Annual General
Meeting of HoldCo next following the Scheme Date (or earlier, if agreed),       
include for consideration by its shareholders and, subject to its fiduciary     
duties, recommend the approval of a resolution to approve amendments to the     
HoldCo Articles of Association in order to provide, to the extent reasonably    
possible, for the holders of HoldCo ADRs substantially the same rights as       
holders of HoldCo Ordinary Shares to receive notice of, attend, speak and vote  
at general meetings of holders of HoldCo Ordinary Shares (the "ADR Holder       
Proposal"). In the event the ADR Holder Proposal is not adopted by HoldCo's     
shareholders at such Annual General Meeting, HoldCo shall, through its Board of 
Directors, include for consideration by its shareholders and, subject to its    
fiduciary duties, recommend approval of the ADR Holder Proposal at HoldCo's     
next Annual General Meeting. With effect from                                   

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and/or following the Scheme Date, ScottishPower's Articles of Association shall 
be amended to reflect its status as a subsidiary, provided, however, that if    
the effect of such amendments would have a material adverse effect on the       
benefits of the Merger for the holders of Company Common Stock, such amendments 
may only be effected with the prior written consent of the Company.             

 6.04 Company Affiliates. At least thirty (30) days prior to the Closing
Date the Company shall deliver a letter to HoldCo identifying all persons who,  
at the time of the Company Stockholders' Meeting, may, in the Company's         
reasonable judgment, be deemed to be "affiliates" (as such term is used in Rule 
145 under the Securities Act) of the Company ("Company Affiliates"). The        
Company shall use its best efforts to cause each Company Affiliate to deliver   
to HoldCo on or prior to the Closing Date a written agreement substantially in  
the form and to the effect of Exhibit C hereto (an "Affiliate Agreement").      
HoldCo shall be entitled to place legends as specified in such Affiliate        
Agreements on the certificates evidencing any HoldCo ADSs to be received by     
such Company Affiliates pursuant to the terms of this Agreement, and to issue   
appropriate stop transfer instructions to the transfer agent for the HoldCo     
ADSs, consistent with the terms of such Affiliate Agreements.                   

6.05 Auditors' Letters. Each of the Company, HoldCo and ScottishPower 
shall use all reasonable efforts to cause to be delivered to the other parties  
and such other parties' Boards of Directors a letter of its independent         
auditors, dated the date on which the Registration Statement shall become       
effective, and addressed to the other parties and such other parties' Boards of 
Directors, in form and substance customary for "comfort" letters delivered by   
independent public accountants in connection with registration statements on    
Form F-4 and Form S-4.                                                          

  6.06 Stock Exchange Listing; Deposit Agreement. (a) HoldCo shall use its
commercially reasonable efforts, and the Company shall cooperate in respect     
thereto, to cause (a) the HoldCo ADSs to be issued in the Merger and under the  
Company Stock Plans after the Merger in accordance with this Agreement to be    
approved for listing on the NYSE, subject to official notice of issuance, prior 
to the Closing Date; and (b) each of (i) the HoldCo Ordinary Shares to be       
represented by the HoldCo ADSs to be issued in the Merger to be admitted to the 
Official List of the London Stock Exchange and (ii) the Merger Ordinary Shares  
to be issued in the Merger to be admitted to the Official List of the London    
Stock Exchange.                                                                 

(b) Following the execution of this Agreement, HoldCo shall promptly  
prepare and shall use its commercially reasonable efforts to have executed a    
deposit agreement, all on terms and conditions reasonably satisfactory to the   
Company, that will provide holders of HoldCo ADRs with the right to (i)         
participate in rights offerings, (ii) attend HoldCo shareholder meetings, (iii) 
speak at HoldCo shareholder meetings, (iv) call for a poll at HoldCo            
shareholder meetings, (v) examine documents made available at HoldCo            
shareholder meetings, (vi) instruct the Depository to vote its HoldCo ADSs in a 
particular fashion, (vii) generally be counted individually as present and/or   
voting with respect to resolutions adopted at HoldCo shareholder meetings, and  
(viii) decide at HoldCo shareholder meetings how to vote on particular          
resolutions, in each case on the same basis as the holders of HoldCo Ordinary   
Shares.                                                                         

   6.07 Restructuring of Merger. The parties expressly acknowledge and agree
that, although it is their current intention to effect a business combination   
among themselves in the form contemplated by this Agreement, it may be          
preferable to effectuate such a business combination by means of an alternative 
structure in light of the conditions set forth in Sections 7.01(i), 7.02(d) and 
7.03(d). Accordingly, if the only conditions to the parties' obligations to     
consummate the Merger which are not satisfied or waived are receipt of any one  
or more of those set forth in Sections 7.01(i), 7.02(d) and 7.03(d), and the    
adoption of an alternative structure (that otherwise substantially preserves    
for the parties the economic and other material benefits of the Merger) would   
result in such conditions being satisfied or waived, then the parties shall use 
their respective reasonable best efforts to effect a business combination among 
themselves by means of a mutually agreed upon structure other than the Merger   
that so preserves such benefits; provided that, prior to closing any such       
restructured transaction, all material third party and Governmental and         
Regulatory Authority declarations, filings, registrations, notices,             
authorizations, consents or approvals necessary to effect such alternative      
business                                                                        

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combination shall have been obtained and all other conditions to the parties'   
obligations to consummate the Merger, as applied to such alternative business   
combination, shall have been satisfied or waived.                               

  6.08 Regulatory and Other Approvals. Subject to the terms and conditions
of this Agreement and without limiting the provisions of Sections 6.02, 6.03    
and 6.06, each of the Company, HoldCo and ScottishPower shall jointly develop a 
regulatory approval plan and proceed cooperatively and in good faith to, as     
promptly as practicable, (i) obtain all consents, approvals or actions of, make 
all filings with and give all notices to Governmental or Regulatory Authorities 
or any other public or private third parties required of HoldCo, ScottishPower, 
the Company or any of their Subsidiaries or Joint Ventures to consummate the    
Merger and the other matters contemplated hereby (including without limitation  
those set forth on Section 3.04 of the Company Disclosure Letter and Section    
4.04 of the ScottishPower Disclosure Letter), and (ii) provide such other       
information and communications to such Governmental or Regulatory Authorities   
or other public or private third parties as the other parties or such           
Governmental or Regulatory Authorities or other public or private third parties 
may reasonably request in connection therewith. In addition to and not in       
limitation of the foregoing, each of the parties will (w) take promptly all     
actions necessary to make the filings required of HoldCo, ScottishPower and the 
Company or their affiliates under the HSR Act and to comply with filing and     
approval requirements of the FERC and each state Governmental or Regulatory     
Authority, (x) comply at the earliest practicable date with any request for     
additional information received by any such party or its affiliates from the    
Federal Trade Commission (the "FTC") or the Antitrust Division of the           
Department of Justice (the "Antitrust Division") pursuant to the HSR Act, (y)   
cooperate with the other parties in connection with any such party's filings    
under the HSR Act and in connection with resolving any investigation or other   
inquiry concerning the Merger or the other matters contemplated by this         
Agreement commenced by either the FTC or the Antitrust Division or state        
attorneys general or by the FERC or any State Governmental or Regulatory        
Authority having jurisdiction with respect to the Merger or another transaction 
contemplated by this Agreement, and (z) provide to the other parties promptly   
copies of all correspondence between any such party and the applicable          
Governmental or Regulatory Authority with respect to any filings referred to in 
this Section 6.08, and shall give the other parties the opportunity to review   
such filings and all responses to requests for additional information by such   
Governmental or Regulatory Authority prior to their being filed therewith.      

   6.09 Employee Benefit Plans. HoldCo shall use its reasonable best efforts
to cause the Company Employee Benefit Plans in effect at December 6, 1998 that  
had been disclosed to ScottishPower prior to such date to remain in effect      
until the second anniversary of the Effective Time or, to the extent such       
Company Employee Benefit Plans are not continued, HoldCo will maintain until    
such date benefit plans which are no less favorable, in the aggregate, to the   
employees covered by such Company Employee Benefit Plans provided, however,     
that nothing contained herein shall be construed as requiring HoldCo or the     
Surviving Corporation to continue any specific plan or as preventing HoldCo or  
the Surviving Corporation from (a) establishing and, if necessary, seeking      
shareholder approval to establish, any other benefit plans in respect of all or 
any of the employees covered by such Company Employee Benefit Plans or any      
other employees, or (b) amending such Company Employee Benefit Plans (or any    
replacement benefit plans therefor) where required by applicable law or where   
such amendment is with the consent of the affected employees. From and after    
the Effective Time, HoldCo shall honor, and shall cause its Subsidiaries to     
honor, in accordance with its express terms, each existing employment, change   
of control, severance and termination agreement between the Company or any of   
its Subsidiaries, and any officer, director or employee of such company,        
including without limitation all legal and contractual obligations pursuant to  
outstanding restoration plans, severance plans, bonus deferral plans, vested    
and accrued benefits and similar employment and benefit arrangements, policies  
and agreements that had been disclosed to ScottishPower prior to December 6,    
1998 and other obligations entered into in accordance with Sections 5.01(d) and 
(h).                                                                            

6.10 Company Stock Plan. (a) At the Effective Time, each outstanding  
option to purchase shares of Company Common Stock (a "Company Stock Option")    
under the Company Option Plan, whether vested or unvested, shall be converted   
into an option to acquire, on the same terms and conditions as were applicable  
under such Company Stock Option, except as amended by this Section 6.10, a      
number of HoldCo ADSs equal                                                     

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to the product (rounded down to the nearest whole number) of (i) the number of  
shares of Company Common Stock subject to the option immediately prior to the   
Effective Time and (ii) the ADS Consideration and the option exercise price per 
HoldCo ADS at which such option is exercisable shall be the amount (rounded up  
to the nearest whole cent) obtained by dividing (iii) the option exercise price 
per share of Company Common Stock at which such option is exercisable           
immediately prior to the Effective Time by (iv) the ADS Consideration;          
provided, however, that, in the case of any Company Stock Option to which       
Section 421 of the Code applies by reason of its qualification under any of     
Sections 422-424 of the Code ("qualified stock options"), the option exercise   
price, the number of shares which may be acquired pursuant to such option and   
the terms and conditions of exercise of such option shall be determined in      
order to comply with Section 424(a) of the Code; provided, further, that, under 
no circumstances shall the option exercise price per HoldCo ADS be less than    
the aggregate par value of the HoldCo Ordinary Shares represented by a HoldCo   
ADS.                                                                            

   (b) As soon as practicable after the Effective Time, HoldCo shall deliver
to the participants in the Company Option Plan appropriate notices setting      
forth such participants' rights pursuant thereto and the grants pursuant to the 
Company Option Plan shall continue in effect on the same terms and conditions   
(subject to the adjustments required by this Section after giving effect to the 
Merger).                                                                        

   (c) HoldCo shall take all corporate action necessary to have a sufficient
number of shares of HoldCo ADSs available for delivery under the Company Option 
Plan as adjusted in accordance with this Section. As soon as practicable after  
the Effective Time, HoldCo shall file a registration statement on Form F-8      
promulgated by the SEC under the Securities Act (or any successor or other      
appropriate form) with respect to the HoldCo ADSs subject to such options and   
shall use its reasonable best efforts to maintain the effectiveness of such     
registration statement or registration statements (and maintain the current     
status of the prospectus or prospectuses contained therein) for so long as such 
options remain outstanding.                                                     

 (d) For purposes of Section 2.01(c), Company Common Stock shall include
shares of restricted Company Common Stock issued under the Company's Non-       
Employee Director's Stock Compensation Plan, Stock Incentive Plan and Long Term 
Incentive Plan (collectively, the "Company Restricted Stock Plans"). The        
Company shall take all corporate action necessary and obtain all relevant       
consents to ensure that the consideration received under such Section 2.01(c)   
upon the conversion of each outstanding share of restricted Company Common      
Stock will continue to be subject to the same restrictions that such shares     
were subject to under the Company Restricted Stock Plans and the applicable     
award agreements thereunder, including, without limitation, any forfeiture      
restrictions, subject to amendment or modification of such plans or award       
agreements to reflect action of the Board of Directors of the Company taken     
prior to December 6, 1998 and disclosed to ScottishPower prior to such date.    

    6.11 Directors' and Officers' Indemnification and Insurance. (a) Except to
the extent required by law, until the sixth anniversary of the Effective Time,  
HoldCo will not take any action so as to amend, modify or repeal the provisions 
for indemnification of directors or officers contained in the certificate or    
articles of incorporation or bylaws (or other comparable charter documents) of  
the Surviving Corporation and its Subsidiaries (which after the Effective Time  
shall be substantially identical to those of the Company in effect on December  
6, 1998) in such a manner as would adversely affect the rights of any           
individual who shall have served as a director or officer of the Company or any 
of its Subsidiaries prior to the Effective Time to be indemnified by such       
corporations in respect of their serving in such capacities prior to the        
Effective Time.                                                                 

(b) HoldCo and the Surviving Corporation shall, until the sixth       
anniversary of the Effective Time, cause to be maintained in effect, to the     
extent available, the policies of directors' and officers' liability insurance  
maintained by the Company and its Subsidiaries as of December 6, 1998 (or       
policies of at least the same coverage and amounts containing terms that are no 
less advantageous to the insured parties) with respect                          

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to claims arising from facts or events that occurred on or prior to the         
Effective Time; provided that in no event shall HoldCo or the Surviving         
Corporation be obligated to expend in order to maintain or procure insurance    
coverage pursuant to this paragraph any amount per annum in excess of two       
hundred percent (200%) of the aggregate premiums payable by the Company and its 
Subsidiaries in 1998 (on an annualized basis) for such purpose.                 

    6.12 HoldCo Governance; Additional Matters. (a) Subject to the exercise of
fiduciary duties and to the extent permitted by applicable law, HoldCo's Board  
of Directors shall take action to cause the full Board of Directors of HoldCo   
at the Effective Time to include Keith McKennon, as Deputy Chairman of HoldCo,  
and two additional non-executive members of the Company's current Board of      
Directors to be designated by the Company at least thirty (30) days prior to    
the Effective Time.                                                             

   (b) HoldCo shall, promptly following the Effective Time, cause certain of
the non-executive members of the Company's Board of Directors immediately prior 
to the Effective Time who do not become directors of HoldCo pursuant to Section 
6.12(a) hereof, and who are willing to so serve, to be elected or appointed as  
members of an advisory board (the "Advisory Board") established by the Company, 
the function of which shall be to meet no less frequently than semi-annually in 
order to advise the Company's Board of Directors with respect to general        
business as well as opportunities and activities in the Company's market area   
and to maintain and develop customer relationships. The Advisory Board shall be 
chaired by Ian Robinson, and shall also include Duncan Whyte, Richard O'Brien,  
and such other representatives from the communities served by the Company       
(including but not limited to non-executive members of the Company's Board of   
Directors immediately prior to the Effective Time) as shall be mutually agreed  
by Ian Robinson and Keith McKennon. The members of the Advisory Board who are   
willing to so serve initially shall be elected or appointed for a term of two   
years. HoldCo agrees to cause the Company to re-elect or re-appoint each of the 
initial members of the Advisory Board to one successive one-year term following 
the initial term; provided, however, that HoldCo shall have no obligation to    
cause the Company to elect or appoint, or re-elect or re-appoint, and may cause 
the Company to remove, any member if HoldCo reasonably determines that such     
member has a conflict of interest that compromises such member's ability to     
serve effectively as a member of the Advisory Board or any cause exists that    
otherwise would allow for removal of such person as a director of the Company   
if such person were a member of the Company's Board of Directors.               

   (c) Immediately following the Effective Time, the Company's United States
headquarters shall continue to be in Portland, Oregon. In recognition of        
HoldCo's and ScottishPower's commitment to the communities served by the        
Company, following the Effective Time HoldCo or ScottishPower will contribute   
to The PacifiCorp Foundation the sum of $5 million.                             

6.13 Expenses. Except as set forth in Section 8.02, whether or not the
Merger is consummated, all costs and expenses incurred in connection with this  
Agreement and the transactions contemplated hereby shall be paid by the party   
incurring such cost or expense. The Company shall not be obligated for any fees 
or expenses relating to HoldCo's obligation to demonstrate the existence of     
adequate working capital in connection with the filing of the Listing           
Particulars. Notwithstanding any provision of this Agreement, in no event shall 
HoldCo, ScottishPower or any affiliate of HoldCo or ScottishPower pay any       
expenses of the Company, any Company affiliate or any Company stockholder in    
connection with the transactions contemplated by this Agreement.                

6.14 Brokers or Finders. Each of HoldCo, ScottishPower and the Company
represents, as to itself and its affiliates, that, except as set forth on       
Section 6.14 of the Company Disclosure Letter and except for any reasonable     
fees and expenses that may be paid by HoldCo or ScottishPower to Morgan Stanley 
Dean Witter Discover, Inc. in connection with the Scheme of Arrangement, no     
agent, broker, investment banker, financial advisor or other firm or person is  
or will be entitled to any broker's or finder's fee or any other commission or  
similar fee in connection with any of the transactions contemplated by this     
Agreement except Salomon Smith Barney, whose fees and expenses will be paid by  
the Company in accordance with the Company's agreement with such firm (a true   
and complete copy of which has been delivered by the Company to ScottishPower   
prior                                                                           

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to December 6, 1998), and Morgan Stanley Dean Witter Discover Inc. whose fees   
and expenses will be paid by ScottishPower in accordance with ScottishPower's   
agreement with such firm (a true and complete copy of which has been delivered  
by ScottishPower to the Company prior to December 6, 1998), and each of HoldCo  
and ScottishPower, on the one hand, and the Company, on the other, shall        
indemnify and hold the other harmless from and against any and all claims,      
liabilities or obligations with respect to any other such fee or commission or  
expenses related thereto asserted by any person on the basis of any act or      
statement alleged to have been made by such party or its affiliate.             

   6.15 Takeover Statutes. If any "fair price", "moratorium", "control share
acquisition" or other form of antitakeover statute or regulation shall become   
applicable to the transactions contemplated hereby, the Company and the members 
of the Board of Directors of the Company shall grant such approvals and take    
such actions as are reasonably necessary so that the transactions contemplated  
hereby may be consummated as promptly as practicable on the terms contemplated  
hereby and thereby and otherwise act to eliminate or minimize the effects of    
such statute or regulation on the transactions contemplated hereby and thereby. 

6.16 Conveyance Taxes. The Company, HoldCo and ScottishPower shall    
cooperate in the preparation, execution and filing of all returns,              
questionnaires, applications or other documents regarding any real property     
transfer or gains, sales, use, transfer, value added, stock transfer and stamp  
taxes and duties, any transfer, recording, registration and other fees, and any 
similar taxes which become payable in connection with the transactions          
contemplated by this Agreement that are required or permitted to be filed on or 
before the Effective Time. The Company shall pay, without deduction or          
withholding (except where such deduction or withholding is required by          
applicable law) from any amount payable to the holders of Company Common Stock, 
any such taxes which become payable in connection with the transfer of Company  
Common Stock in exchange for the Ordinary Share Consideration and the ADS       
Consideration. The Company shall also pay any stamp duty or stamp duty reserve  
tax arising in connection with the issue of the HoldCo ADSs and HoldCo ADRs.    

 6.17 Rate Matters. During the period commencing on December 6, 1998 and
ending on the Effective Date, the Company shall, and shall cause its            
Subsidiaries to, obtain HoldCo's and ScottishPower's approval, not to be        
unreasonably withheld or delayed, prior to initiating any general rate case and 
shall consult with HoldCo and ScottishPower prior to making any material        
changes in its or its Subsidiaries' rates or charges, standards of service or   
accounting from those in effect on December 6, 1998 and shall further consult   
with HoldCo and ScottishPower prior to making any filing (or any amendment      
thereto), or effecting any agreement, commitment, arrangement or consent,       
whether written or oral, formal or informal, with respect thereto.              

6.18 Tax Matters. Each of HoldCo and ScottishPower agrees that:       

 (a) Prior to the Closing Date, ScottishPower and HoldCo (i) will make the
elections necessary pursuant to Section 301.7701-3 of the U.S. Treasury     
regulations promulgated under the Code to treat UKSub 1 and UKSub 2 as      
entities disregarded as separate from ScottishPower and HoldCo and (ii)     
will not change such election during the period beginning on the date such  
election is effective for U.S. federal income tax purposes and ending on    
the date that is three years after the Closing Date.                        

 (b) Throughout the period beginning on the date the election described in
Section 6.18(a) of this Agreement is effective for U.S. federal income tax  
purposes and ending on the date that is three years after the Closing Date: 
(i) ScottishPower and HoldCo will not make an election under Section        
301.7701-3 of the U.S. Treasury regulations to treat UKSub 1 or UKSub 2 as  
an association taxable as a corporation; (ii) ScottishPower, before the     
Share Transfer, will directly own the whole of the share capital of UKSub 1 
and UKSub 2, and HoldCo, after the Share Transfer, will directly own the    
whole of the share capital of UKSub 1 and UKSub 2; and (iii) ScottishPower  
and HoldCo will cause UKSub 1 and UKSub 2 to directly own all of the equity 
interests in the Partnership. Prior to the Closing Date, ScottishPower and  
HoldCo shall cause the Share Transfer to occur.                             

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(c) Throughout the period beginning at the Effective Time and ending on 
the date that is three years after the Closing Date, the Partnership will   
directly own all of the Common Stock of the Surviving Corporation, except   
for contribution to a controlled subsidiary described in Code Section       
368(a)(2)(C) and the regulations promulgated thereunder.                    

(d) Throughout the period beginning at the Effective Time and ending on 
the date that is three years after the Closing Date, none of HoldCo,        
ScottishPower, UKSub 1, UKSub 2, the Partnership, nor any other affiliate   
of HoldCo or ScottishPower will redeem, acquire, convert, exchange, or      
cause the Company or any affiliate of the Company to acquire, convert or    
exchange or arrange for another person to acquire, convert or exchange any  
of the ADS Consideration or the Ordinary Share Consideration, unless HoldCo 
has received a written opinion of counsel that such action will not cause   
those persons who were stockholders of the Company at the time of the       
Merger to recognize gain or loss for US federal income tax purposes either  
with respect to the Merger or with respect to a subsequent exchange or      
conversion;                                                                 

(e) Neither HoldCo, ScottishPower nor any affiliate of HoldCo or        
ScottishPower will, directly or indirectly, pay any expense incurred by (i) 
the Company, (ii) any affiliate of the Company or (iii) any Company         
stockholder, in each case, in connection with the transactions contemplated 
by this Agreement.                                                          

(f) For a period of three years following the Closing Date, without the 
receipt of a written opinion of counsel that such action will not affect    
the tax-free status of the transactions contemplated by this Agreement,     
neither HoldCo nor any affiliate of HoldCo, will, directly or indirectly,   
(i) make contributions (whether or not in exchange for shares) or loan      
additional funds to (x) the Company, (y) any affiliate of the Company or    
(z) any escrow account, trust or other fund established to pay any expenses 
incurred by the Company, any affiliate of the Company or any Company        
stockholder in connection with the transactions contemplated by this        
Agreement or (ii) permit the Company or any Company affiliate to incur      
additional indebtedness guaranteed by HoldCo or any HoldCo affiliate;       

(g) Neither HoldCo nor any affiliate of HoldCo will, directly or        
indirectly reimburse (or otherwise pay) any amounts paid to the holders of  
$1.28 Series, $1.18 Series or $1.16 Series no par serial preferred stock of 
the Company in connection with the redemption of their preferred stock      
prior to the Closing Date.                                                  

(h) Neither HoldCo, ScottishPower nor any affiliate of HoldCo or        
ScottishPower will, directly or indirectly, acquire any Company stock       
except for the Company stock acquired solely in exchange for the ADS        
Consideration or the Ordinary Share Consideration unless acquired directly  
from the Company.                                                           

 6.19 Dividends. HoldCo hereby acknowledges its intention, following the
Effective Time, to adopt a practice of paying, with respect to HoldCo Ordinary  
Shares and HoldCo ADSs, quarterly dividends on regular quarterly dividend dates 
in roughly equal amounts. After the date hereof, each of HoldCo, ScottishPower  
and the Company shall coordinate with the other with respect to the declaration 
of dividends in respect of HoldCo Ordinary Shares and Company Common Stock and  
the record dates and payment dates with respect thereto prior to the Effective  
Time, with the intention that the holders of Company Common Stock receive       
dividends in respect of the Company Common Stock for all periods prior to the   
Effective Time but do not receive dividends on the ADS Consideration and the    
Ordinary Share Consideration after the Effective Time in respect of periods     
prior to the Effective Time.                                                    

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ARTICLE VII 

CONDITIONS

7.01 Conditions to Each Party's Obligation to Effect the Merger. The  
respective obligation of each party to effect the Merger is subject to the      
fulfillment, at or prior to the Closing, of each of the following conditions:   

(a) Stockholder Approval. This Agreement shall have been approved by the
requisite vote of the stockholders of the Company under the BCA and the     
shareholders of ScottishPower shall have approved the Merger.               

(b) Registration Statement; State Securities Laws. The Registration     
Statement shall have become effective in accordance with the provisions of  
the Securities Act, and no stop order suspending such effectiveness shall   
have been issued and remain in effect and no proceeding seeking such an     
order shall be pending or threatened. HoldCo shall have received all state  
securities or "Blue Sky" permits and other authorizations necessary to      
issue the HoldCo ADSs pursuant to this Agreement and under the Company      
Stock Plans after the Merger.                                               

(c) Exchange Listing. The LSE shall have agreed to admit to the Official
List (subject to allotment) the new HoldCo Ordinary Shares to be issued in  
connection with the Merger and such agreement shall not have been withdrawn 
and the HoldCo ADSs issuable to the Company stockholders in the Merger and  
under the Company Stock Plans after the Merger in accordance with this      
Agreement shall have been authorized for listing on the NYSE, upon official 
notice of issuance.                                                         

 (d) HSR Act. Any waiting period (and any extension thereof) applicable to
the consummation of the Merger under the HSR Act shall have expired or been 
terminated.                                                                 

(e) Injunctions or Restraints.  No court of competent jurisdiction or   
other competent Governmental or Regulatory Authority shall have enacted,    
issued, promulgated, enforced or entered any law or order (whether          
temporary, preliminary or permanent) which is then in effect and has the    
effect of making illegal or otherwise restricting, preventing or            
prohibiting consummation of the Merger or the other transactions            
contemplated by this Agreement.                                             

(f) Exon-Florio. The review and investigation under Exon-Florio shall   
have been terminated and the President shall have taken no action           
authorized thereunder.                                                      

(g) Power Act; Atomic Energy Act. The final approval of (i) the FERC and
(ii) the Nuclear Regulatory Commission under the Atomic Energy Act, with    
respect to the Merger and the transactions contemplated by this Agreement   
shall have been obtained.                                                   

(h) H.M. Treasury Consent. HoldCo or ScottishPower (as required) shall  
have received consent from H.M. Treasury pursuant to Section 765 of the     
U.K. Income and Corporation Taxes Act 1988 in respect of the Merger and any 
other matter contemplated hereby, or confirmation that no consent is        
required.                                                                   

(i) Governmental and Regulatory Consents and Approvals. Other than the  
filings provided for by Section 1.03 and any filing required in connection  
with the registration or exemption of HoldCo under the 1935 Act, all        
consents, approvals and actions of, filings with and notices to any         
Governmental or Regulatory Authority (including under the HSR Act and Exon- 
Florio Act and the approvals by FERC pursuant to the Power Act) required of 
HoldCo, ScottishPower, the Company or any of their Subsidiaries to          
consummate the Merger and the other matters contemplated hereby shall have  
been made or obtained (as the case may be) and become Final Orders (as      
defined in this Section below), and such Final Orders shall not,            
individually or in the aggregate, contain terms or conditions that would    
have, or would reasonably be expected to have, a material adverse effect on 
the Surviving Corporation and its Subsidiaries, taken as a whole. A "Final  
Order" means an action by the relevant Governmental or Regulatory Authority 
that has not been reversed, stayed, enjoined, set aside, annulled or        
suspended, with                                                             

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respect to which any waiting period prescribed by applicable law before the 
transactions contemplated hereby may be consummated has expired, and as to  
which all conditions to the consummation of such transactions prescribed by 
applicable law, regulation or order have been satisfied.                    

(j) Other Consents and Approvals. The consent or approval of each person
(other than a Governmental or Regulatory Authority) whose consent or        
approval is required of HoldCo, ScottishPower, the Company or any of their  
Subsidiaries under any Contract in order to consummate the Merger and the   
other transactions contemplated hereby shall have been obtained, except for 
those consents and approvals which, if not obtained, would not have, or     
would not reasonably be expected to have, a material adverse effect on the  
Company and its Subsidiaries taken as a whole or on the ability of HoldCo,  
ScottishPower or the Company to consummate the transactions contemplated    
hereby.                                                                     

(k) UK Fair Trading Act. Any of:                                        

(i) the Office of Fair Trading (the "OFT") shall have indicated in  
writing that the Secretary of State for Trade and Industry (the "SOS")  
in the exercise of his powers under the Fair Trading Act 1973 (the      
"FTA") does not intend to refer the Merger or any matter relating       
thereto to the Monopolies and Mergers Commission ("MMC"); or            

(ii) in the event of an MMC reference, the MMC shall have concluded 
that the Merger does not or may not be expected to operate against the  
public interest; or                                                     

(iii) if on a reference the MMC shall have concluded that the Merger
does or may be expected to operate against the public interest, the SOS 
shall have indicated in writing that it is his intention to approve the 
Merger,                                                                 

provided that if any indication by the SOS referred to in (i) or (iii)  
above is subject to undertakings, assurances or any other terms or      
conditions, such undertakings, assurances, terms or conditions would    
not have, or would reasonably be expected not to have, individually or  
in the aggregate, a material adverse effect on the HoldCo Group taken   
as a whole.                                                             

(l) K Regulators. Each of the Office of Electricity Regulation ("OFFER")
and the Office of Water Services ("OFWAT") shall have indicated:            

(i) that it is not its intention to seek any modifications to any   
conditions of the licenses or appointments held by any member of the    
HoldCo Group under any applicable statute, law, regulation, order or    
determination which would have, or would reasonably be expected to      
have, individually or in the aggregate, a material adverse effect on    
the HoldCo Group taken as a whole; and                                  

(ii) that it will give such consents and/or directions (if any) as  
are necessary or appropriate with respect to such licenses or           
appointments in connection with the Merger on terms which would not     
have, or would reasonably be expected not to have, individually or in   
the aggregate, a material adverse effect on the HoldCo Group taken as a 
whole.                                                                  

 (m) UK Undertakings/Assurances. Neither OFFER nor OFWAT shall have sought
undertakings or assurances from any member of the HoldCo Group which would  
have, or would reasonably be expected to have, individually or in the       
aggregate, a material adverse effect on the HoldCo Group taken as a whole.  

  7.02 Conditions to Obligation of HoldCo, ScottishPower and Merger Sub to
Effect the Merger. The obligation of HoldCo, ScottishPower and Merger Sub to    
effect the Merger is further subject to the fulfillment, at or prior to the     
Closing, of each of the following additional conditions (all or any of which    
may be waived in whole or in part by HoldCo, ScottishPower and Merger Sub in    
their sole discretion):                                                         

(a) Representations and Warranties. The representations and warranties  
made by the Company in this Agreement shall be true and correct, in all     
material respects, taken as a whole, as of the Closing Date as though made  
on and as of the Closing Date or, in the case of representations and        
warranties made as of a specified date earlier than the Closing Date on and 
as of such earlier date (provided, however, that for purposes of this       
paragraph (a), no effect shall be given to the reference to the date        
December 6, 1998 in                                                         

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the first paragraph of Article III), except as affected by the transactions 
contemplated by this Agreement, and the Company shall have delivered to     
HoldCo a certificate, dated the Closing Date and executed in the name and   
on behalf of the Company by its Chairman of the Board, President or any     
Executive or Senior Vice President, to such effect.                         

(b) Performance of Obligations. The Company shall have performed and    
complied with, in all material respects, the agreements, covenants and      
obligations, taken as a whole, which are required by this Agreement to be   
so performed or complied with by the Company at or prior to the Closing,    
and the Company shall have delivered to HoldCo a certificate, dated the     
Closing Date and executed in the name and on behalf of the Company by its   
Chairman of the Board, President or any Executive or Senior Vice President, 
to such effect.                                                             

(c) Material Adverse Effect. Since December 6, 1998, no material adverse
effect shall have occurred with respect to the Company and its Subsidiaries 
taken as a whole and there shall exist no facts or circumstances arising    
after December 6, 1998, which in the aggregate would, or insofar as         
reasonably can be foreseen, could, when taken together with any breaches or 
violations of any representations, warranties, covenants and agreements of  
the Company contained herein, have a material adverse effect on the Company 
and its Subsidiaries taken as a whole. For purposes of this Section         
7.02(c), (i) any tax benefits relating directly to the structure of the     
transactions contemplated by this Agreement as of the date hereof which are 
not realized by HoldCo or ScottishPower, and (ii) any adverse effects on    
the Company and its Subsidiaries resulting from general economic or         
financial conditions, shall not be taken into account in determining        
whether a material adverse effect has occurred under this Section 7.02(c).  

(d) Tax Opinion. HoldCo, ScottishPower and the Partnership shall have   
received the opinion, based on appropriate representations of the Company,  
HoldCo and ScottishPower, of Milbank, Tweed, Hadley & McCloy LLP, special   
counsel to HoldCo and ScottishPower, dated on or about the date on which    
the Registration Statement (or the last amendment thereto) shall have       
become effective, which opinion shall have been confirmed in writing on and 
as of the Closing Date, to the effect that the Merger will constitute a     
"reorganization" within the meaning of Code Section 368(a) and that no gain 
or loss will be recognized for US federal income tax purposes by the        
stockholders of the Company who exchange Company Common Stock for HoldCo    
ADSs or Merger Ordinary Shares pursuant to the Merger (except with respect  
to cash received in lieu of fractional HoldCo ADSs or Merger Ordinary       
Shares).                                                                    

(e) Proceedings. All proceedings to be taken on the part of the Company 
in connection with the transactions contemplated by this Agreement and all  
documents incident thereto shall be reasonably satisfactory in form and     
substance to HoldCo, and HoldCo shall have received copies of all such      
documents and other evidences as HoldCo may reasonably request in order to  
establish the consummation of such transactions and the taking of all       
proceedings in connection therewith.                                        

7.03 Conditions to Obligation of the Company to Effect the Merger. The
obligation of the Company to effect the Merger is further subject to the        
fulfillment, at or prior to the Closing, of each of the following additional    
conditions (all or any of which may be waived in whole or in part by the        
Company in its sole discretion):                                                

(a) Representations and Warranties. The representations and warranties  
made by HoldCo, ScottishPower and the Partnership in this Agreement shall   
be true and correct, in all material respects, taken as a whole, as of the  
Closing Date as though made on and as of the Closing Date or, in the case   
of representations and warranties made as of a specified date earlier than  
the Closing Date, on and as of such earlier date (provided, however, that   
for purposes of this paragraph (a), no effect shall be given to the         
reference to the date December 6, 1998 and the date of this Agreement in    
the first paragraph of Article IV hereof), except as affected by the        
transactions contemplated by this Agreement, and HoldCo, ScottishPower and  
Merger Sub shall each have delivered to the Company a certificate, dated    
the Closing Date and executed in the name and on behalf of HoldCo by its    
Chairman of the Board, President or any Executive or Senior Vice President  
or any Executive Director, in the name and on behalf of ScottishPower       

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by its Chairman of the Board, President or any Executive or Senior Vice     
President and in the name and on behalf of Merger Sub by its Chairman of    
the Board, President or any Vice President, to such effect.                 

(b) Performance of Obligations. HoldCo, ScottishPower and Merger Sub    
shall have performed and complied with, in all material respects, each      
agreement, covenant and obligation required by this Agreement to be so      
performed or complied with by HoldCo, ScottishPower or Merger Sub at or     
prior to the Closing, and HoldCo, ScottishPower and Merger Sub shall each   
have delivered to the Company a certificate, dated the Closing Date and     
executed in the name and on behalf of HoldCo by its Chairman of the Board,  
President or any Executive or Senior Vice President or any Executive        
Director, in the name and on behalf of ScottishPower by its Chairman of the 
Board, President or any Executive or Senior Vice President and in the name  
and on behalf of Merger Sub by its Chairman of the Board, President or any  
Vice President, to such effect.                                             

(c) Material Adverse Effect. Since December 6, 1998, no material adverse
effect shall have occurred with respect to HoldCo, ScottishPower and their  
respective Subsidiaries taken as a whole and there shall exist no facts or  
circumstances arising after December 6, 1998 which in the aggregate would,  
or insofar as reasonably can be foreseen, could, when taken together with   
any breaches or violations of any representations, warranties, covenants    
and agreements of HoldCo and ScottishPower contained herein, have a         
material adverse effect on HoldCo, ScottishPower and their respective       
Subsidiaries taken as a whole. For purposes of this Section 7.03(c), any    
adverse effects on HoldCo, ScottishPower and their respective Subsidiaries  
resulting from general economic or financial conditions shall not be taken  
into account in determining whether a material adverse effect has occurred  
under this Section 7.03(c).                                                 

(d) Tax Opinion. The Company shall have received the opinion, based on  
appropriate representations of the Company, HoldCo and ScottishPower, of    
Stoel Rives LLP, counsel to the Company, and LeBoeuf, Lamb, Greene &        
MacRae, LLP, special counsel to the Company, dated on or about the date on  
which the Registration Statement (or the last amendment thereto) shall have 
become effective, which opinion shall have been confirmed in writing on and 
as of the Closing Date to the effect that the Merger will constitute a      
"reorganization" within the meaning of Code Section 368(a) and that no gain 
or loss will be recognized for US federal income tax purposes by the        
stockholders of the Company who exchange Company Common Stock for HoldCo    
ADSs or Merger Ordinary Shares pursuant to the Merger (except with respect  
to cash received in lieu of fractional HoldCo ADSs or Merger Ordinary       
Shares).                                                                    

(e) Proceedings. All proceedings to be taken on the part of HoldCo,     
ScottishPower and Merger Sub in connection with the transactions            
contemplated by this Agreement and all documents incident thereto (other    
than documentation relating to the Scheme of Arrangement) shall be          
reasonably satisfactory in form and substance to the Company, and the       
Company shall have received copies of all such documents and the            
documentation relating to the Scheme of Arrangement and other evidences as  
the Company may reasonably request in order to establish the consummation   
of such transactions and the taking of all proceedings in connection        
therewith.                                                                  

ARTICLE VIII

TERMINATION, AMENDMENT AND WAIVER 

  8.01 Termination. This Agreement may be terminated, and the transactions
contemplated hereby may be abandoned, at any time prior to the Effective Time,  
whether prior to or after the Company Stockholders' Approval or the             
ScottishPower Shareholders' Approval:                                           

(a) By mutual written agreement of the parties hereto duly authorized by
action taken by or on behalf of their respective Boards of Directors;       

(b) By either the Company or HoldCo upon notification to the non-       
terminating party by the terminating party:                                 

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(i) at any time after the date which is nine (9) months following   
December 6, 1998 if the Merger shall not have been consummated on or    
prior to such date and such failure to consummate the Merger is not     
caused by a breach of this Agreement by the terminating party;          
provided, however, that if on such date HoldCo, ScottishPower and the   
Company and their respective Subsidiaries have not received all of the  
approvals required in order to satisfy the conditions set forth in      
Section 7.01(i) but all other conditions to effect the Merger shall be  
fulfilled or shall be capable of being fulfilled, then, at the option   
of either HoldCo or the Company (which shall be exercised by written    
notice), the term of this Agreement shall be extended until the         
expiration of such date which is eighteen (18) months after December 6, 
1998;                                                                   

(ii) if the Company Stockholders' Approval or the ScottishPower     
Shareholders' Approval shall not be obtained by reason of the failure   
to obtain the requisite vote upon a vote actually held at a meeting of  
such stockholders or shareholders, or any adjournment thereof, called   
therefor;                                                               

(iii) if there has been a material breach of any representation,    
warranty, covenant or agreement on the part of the non-terminating      
party set forth in this Agreement (determined in all cases as if the    
terms "material" or "materially" were not included in any such          
representation or warranty), which breach is not curable or, if         
curable, has not been cured within thirty (30) days following receipt   
by the non-terminating party of notice of such breach from the          
terminating party which breach, when taken together with any other      
breaches of representations, warranties, covenants and agreements of    
the non-terminating party contained in this Agreement, has or would     
reasonably be expected to have a material adverse effect on the Company 
and its Subsidiaries taken as a whole; or                               

(iv) if any court of competent jurisdiction or other competent      
Governmental or Regulatory Authority shall have issued an order making  
illegal or otherwise preventing or prohibiting the Merger and such      
order shall have become final and nonappealable;                        

(c) By the Company upon five (5) days' prior notice to HoldCo if (i) the
Board of Directors of the Company determines in good faith, that a failure  
to terminate this Agreement could reasonably be expected to result in a     
breach of its fiduciary duties to stockholders imposed by law by reason of  
an unsolicited bona fide Alternative Proposal meeting the requirements of   
clauses (B) and (C) of Section 5.07 having been made; provided that         

(A) The Board of Directors of the Company shall have been advised by
outside counsel, that notwithstanding a binding commitment to           
consummate an agreement of the nature of this Agreement entered into in 
the proper exercise of its applicable fiduciary duties, and             
notwithstanding all concessions which may be offered by HoldCo in       
negotiations entered into pursuant to clause (B) below, a failure to    
reconsider such commitment as a result of such Alternative Proposal     
could reasonably be expected to result in a breach of its fiduciary     
duties to stockholders imposed by law, and                              

 (B) prior to any such termination, the Company shall, and shall cause
its respective financial and legal advisors to, negotiate with HoldCo   
to make such adjustments in the terms and conditions of this Agreement  
as would enable the Company to proceed with the transactions            
contemplated herein on such adjusted terms;                             

and provided further that the Company's ability to terminate this Agreement     
pursuant to this clause (i) is conditioned upon the prior payment by the        
Company to HoldCo of any amounts owed by it pursuant to Section 8.02(b);        

or (ii) the Board of Directors of HoldCo (or any committee thereof) shall have  
withdrawn or modified in a manner materially adverse to the Company its         
approval or recommendation of this Agreement or the Merger; or                  

(d) By HoldCo if the Board of Directors of the Company (or any committee
thereof) (i) shall have withdrawn or modified in a manner materially        
adverse to HoldCo its approval or recommendation of this                    

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Agreement or the Merger, (ii) shall fail to reaffirm such approval or       
recommendation upon HoldCo's request, (iii) shall have approved,            
recommended or taken no position with respect to an Alternative Proposal to 
the stockholders of the Company or (iv) shall resolve to take any of the    
foregoing actions; or                                                       

 (e) By the Company if there has been a Change of Control after the Scheme
Date and prior to the Effective Time. A "Change of Control" shall occur if  
any of the following applies: (A) Any "Person", as such term is used in     
Sections 13(d) and 14(d) of the Exchange Act is or becomes the "beneficial  
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or       
indirectly, of securities of HoldCo representing 30 percent or more of the  
combined voting power of HoldCo's outstanding capital stock; (B) the        
shareholders of HoldCo approve a merger or other consolidation of HoldCo    
with any other company, other than a merger or consolidation effected to    
implement a recapitalization of HoldCo (or similar transaction) in which no 
Person acquires more than 30 percent of the combined voting power of        
HoldCo's then outstanding securities; (C) a tender or exchange offer is     
made for the ordinary shares of HoldCo (or securities convertible into      
ordinary shares of HoldCo) and such offer results in a portion of those     
securities being purchased and the offeror after the consummation of the    
offer is the beneficial owner (as determined pursuant to Section 13(d) of   
the Exchange Act), directly or indirectly, of securities representing at    
least 30 percent of the voting power of outstanding securities of HoldCo;   
or (D) HoldCo sells 30 percent or more of its shares of ScottishPower to a  
buyer that is not a member of HoldCo controlled group of corporations.      

    8.02 Effect of Termination. (a) If this Agreement is validly terminated by
either the Company or HoldCo pursuant to Section 8.01, this Agreement will      
forthwith become null and void and there will be no liability or obligation on  
the part of either the Company, HoldCo or ScottishPower (or any of their        
respective Representatives or affiliates), except (i) that the provisions of    
Sections 6.13, 6.14 and 6.16, this Section 8.02, and Sections 9.10 and 9.11     
will continue to apply following any such termination, (ii) that nothing        
contained herein shall relieve any party hereto from liability for willful      
breach of its representations, warranties, covenants or agreements contained in 
this Agreement and (iii) as provided in paragraphs (b) and (c) below.           

  (b) In the event that any person or group shall have made an Alternative
Proposal and thereafter (i) this Agreement is terminated (x) by the Company     
pursuant to Section 8.01(c)(i), (y) by HoldCo pursuant to Section 8.01(b)(iii)  
or Section 8.01(d) or (z) by either party pursuant to Section 8.01(b)(ii) as a  
result of the Company Stockholders' Approval not being obtained or (ii) this    
Agreement is terminated for any other reason (other than by reason of the       
breach of this Agreement by HoldCo or pursuant to Section 8.01(b)(ii) as a      
result of the ScottishPower Shareholders' Approval not being obtained or        
Section 8.01(c)(ii)) or 8.01(e) and, in the case of this clause (ii) only, a    
definitive agreement with respect to such Alternative Proposal is executed      
within one year after such termination, then the Company shall pay to HoldCo by 
wire transfer of same day funds, either on the date contemplated in Section     
8.01(c) if applicable, or otherwise, within two (2) business days after such    
amount becomes due, a termination fee of $250,000,000.                          

(c) In the event that this Agreement is terminated by the Company     
following a Change of Control, then HoldCo shall pay to the Company, by wire    
transfer of same day funds, within two (2) business days following such         
termination, a termination fee of $250,000,000.                                 

(d) In the event that this Agreement is terminated by either party    
pursuant to Section 8.01(b)(ii) in circumstances in which the termination fee   
set forth in clause (b) above is not payable, (i) in the case of the Company    
Stockholders' Approval not being obtained and the ScottishPower Shareholders'   
Approval having been obtained, the Company shall pay to HoldCo (ii) in the case 
of the ScottishPower Shareholders' Approval not being obtained and the Company  
Stockholders' Approval having been obtained, HoldCo shall pay to the Company,   
in each case an amount equal to $10,000,000.                                    

 (e) If the Company fails promptly to pay the amount due pursuant to the
preceding paragraphs, and in order to obtain such payment, HoldCo or Merger Sub 
commences a suit which results in a judgment against the Company for the fee    
set forth in such paragraph, the Company shall pay to HoldCo or Merger Sub, as  
the case may be, its cost and expenses (including reasonable attorneys' fees    
and expenses) in connection with such suit,                                     

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together with interest on the amount of the fee at the prime rate of The Chase  
Manhattan Bank in effect on the date such payment was required to be made.      

    8.03 Amendment. This Agreement may be amended, supplemented or modified by
action taken by or on behalf of the respective Boards of Directors of the       
parties hereto at any time prior to the Effective Time, whether prior to or     
after the Company Stockholders' Approval or the ScottishPower Shareholders'     
Approval shall have been obtained, but after such adoption and approval only to 
the extent permitted by applicable law. No such amendment, supplement or        
modification shall be effective unless set forth in a written instrument duly   
executed by or on behalf of each party hereto.                                  

   8.04 Waiver. At any time prior to the Effective Time any party hereto, by
action taken by or on behalf of its Board of Directors, may to the extent       
permitted by applicable law (i) extend the time for the performance of any of   
the obligations or other acts of the other parties hereto, (ii) waive any       
inaccuracies in the representations and warranties of the other parties hereto  
contained herein or in any document delivered pursuant hereto or (iii) waive    
compliance with any of the covenants, agreements or conditions of the other     
parties hereto contained herein. No such extension or waiver shall be effective 
unless set forth in a written instrument duly executed by or on behalf of the   
party extending the time of performance or waiving any such inaccuracy or non-  
compliance. No waiver by any party of any term or condition of this Agreement,  
in any one or more instances, shall be deemed to be or construed as a waiver of 
the same or any other term or condition of this Agreement on any future         
occasion.                                                                       

ARTICLE IX

GENERAL PROVISIONS

9.01 Non-Survival of Representations, Warranties, Covenants and       
Agreements. The representations, warranties, covenants and agreements contained 
in this Agreement or in any instrument delivered pursuant to this Agreement     
shall not survive the Merger but shall terminate at the Effective Time, except  
for the agreements contained in Article I and Article II, in Sections 5.01(o),  
5.02(k), 6.09, 6.10, 6.11, 6.12, 6.14, 6.16 and 6.18, this Article IX and the   
agreements of the "affiliates" of the Company delivered pursuant to Section     
6.04, which shall survive the Effective Time.                                   

9.02 Notices. All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given only if delivered 
personally or by facsimile transmission or mailed (first class postage prepaid) 
to the parties at the following addresses or facsimile numbers:                 

If to HoldCo, ScottishPower, the Partnership or Merger Sub, to:         

Scottish Power plc                                                      
1 Atlantic Quay                                                         
Glasgow G2 8FP                                                          
Facsimile No.: 011-44-141-248-8300                                      
Attn: Company Secretary                                                 

with a copy to:                                                         

Milbank, Tweed, Hadley & McCloy LLP                                     
1 Chase Manhattan Plaza                                                 
New York, N.Y. 10005                                                    
Facsimile No.: (212) 530-5219                                           
Attn: M. Douglas Dunn                                                   

and to:                                                                 

Freshfields                                                             
65 Fleet Street                                                         
London EC4Y 1HS                                                         
Facsimile No.: 0011-44-171-832-7001                                     
Attn: Simon Marchant                                                    

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If to the Company, to:                                                  

PacifiCorp                                                              
700 N.E. Multnomah                                                      
Portland, Oregon 97232-4116                                             
Facsimile No.: (503) 813-7250                                           
Attn: Executive Vice President and Chief Operating Officer              

with a copy to:                                                         

Stoel Rives LLP                                                         
900 S.W. Fifth Avenue                                                   
Suite 2300                                                              
Portland, Oregon 97232                                                  
Facsimile No.: (503) 220-2480                                           
Attn: Dexter E. Martin                                                  

and to:                                                                 

LeBoeuf, Lamb, Greene & MacRae, LLP                                     
125 West 55th Street                                                    
New York, NY 10019                                                      
Facsimile No.: (212) 424-8500                                           
Attn: William S. Lamb                                                   

   All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon     
delivery, (ii) if delivered by facsimile transmission to the facsimile number   
as provided in this Section, be deemed given upon receipt, and (iii) if         
delivered by mail in the manner described above to the address as provided in   
this Section, be deemed given upon receipt (in each case regardless of whether  
such notice, request or other communication is received by any other person to  
whom a copy of such notice, request or other communication is to be delivered   
pursuant to this Section). Any party from time to time may change its address,  
facsimile number or other information for the purpose of notices to that party  
by giving notice specifying such change to the other parties hereto.            

    9.03 Entire Agreement; Incorporation of Exhibits. (a) Subject to paragraph
(c) below, this Agreement supersedes all prior discussions and agreements among 
the parties hereto with respect to the subject matter hereof, other than the    
Confidentiality Agreement, which shall survive the execution and delivery of    
this Agreement in accordance with its terms, and contains, together with the    
Confidentiality Agreement, the sole and entire agreement among the parties      
hereto with respect to the subject matter hereof.                               

    (b) The Company Disclosure Letter, the ScottishPower Disclosure Letter and
any Exhibit or Schedule attached to this Agreement and referred to herein are   
hereby incorporated herein and made a part hereof for all purposes as if fully  
set forth herein.                                                               

   (c) Notwithstanding the execution of this Agreement by the parties hereto
on the date hereof, this Agreement (other than this Section 9.03(c) which shall 
have immediate effect) shall not take effect until the Scheme Date; provided,   
however, that upon the Scheme of Arrangement becoming effective, this Agreement 
shall be deemed to have been in full force and effect since the date hereof.    
Prior to the Scheme Date, the Original Agreement shall continue in full force   
and effect. If ScottishPower gives written notice to PacifiCorp that the Scheme 
of Arrangement will not become effective, the transactions contemplated by the  
Original Agreement will proceed as if no notice under Schedule II of the        
Original Agreement had been received and this Agreement had not been entered    
into.                                                                           

9.04 [Intentionally Omitted.]                                         

9.05 Public Announcements. Except as otherwise required by law or the 
rules of any applicable securities exchange or national market system or any    
other Regulatory Authority (including the U.K. Takeover                         

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Panel) , so long as this Agreement is in effect, HoldCo, ScottishPower and the  
Company will not, and will not permit any of their respective Subsidiaries or   
Representatives to, issue or cause the publication of any press release or make 
any other public announcement with respect to the transactions contemplated by  
this Agreement without the consent of the other party, which consent shall not  
be unreasonably withheld. HoldCo, ScottishPower and the Company will cooperate  
with each other in the development and distribution of all press releases and   
other public announcements with respect to this Agreement and the transactions  
contemplated hereby, and will furnish the other with drafts of any such         
releases and announcements as far in advance as practicable.                    

9.06 No Third Party Beneficiary. The terms and provisions of this     
Agreement are intended solely for the benefit of each party hereto and their    
respective successors or permitted assigns, and except as provided in Sections  
6.09, 6.10, 6.11 and 6.12 (which are intended to be for the benefit of the      
persons entitled to therein, and may be enforced by any of such persons), it is 
not the intention of the parties to confer third-party beneficiary rights upon  
any other person.                                                               

   9.07 No Assignment; Binding Effect. Neither this Agreement nor any right,
interest or obligation hereunder may be assigned by any party hereto without    
the prior written consent of the other parties hereto and any attempt to do so  
will be void, except that HoldCo may cause Merger Sub to assign any or all of   
its rights, interests and obligations hereunder to another direct or indirect   
wholly-owned Subsidiary of HoldCo, provided that any such Subsidiary agrees in  
writing to be bound by all of the terms, conditions and provisions contained    
herein. This Agreement is binding upon, inures to the benefit of and is         
enforceable by the parties hereto and their respective successors and assigns.  

   9.08 Headings. The headings used in this Agreement have been inserted for
convenience of reference only and do not define, modify or limit the provisions 
hereof.                                                                         

   9.09 Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law or order, and 
if the rights or obligations of any party hereto under this Agreement will not  
be materially and adversely affected thereby, (i) such provision will be fully  
severable, (ii) this Agreement will be construed and enforced as if such        
illegal, invalid or unenforceable provision had never comprised a part hereof,  
and (iii) the remaining provisions of this Agreement will remain in full force  
and effect and will not be affected by the illegal, invalid or unenforceable    
provision or by its severance herefrom.                                         

9.10 Governing Law. Except to the extent that the BCA is mandatorily  
applicable to the Merger and the rights of the stockholders of the Constituent  
Corporations, this Agreement shall be governed by and construed in accordance   
with the laws of the State of New York applicable to a contract executed and    
performed in such State, without giving effect to the conflicts of laws         
principles thereof.                                                             

 9.11 Submission to Jurisdiction; Waivers. Each of ScottishPower, HoldCo
(on behalf of itself and Merger Sub), the Partnership, UKSub 1, UKSub 2 and the 
Company irrevocably agree that any legal action or proceeding with respect to   
this Agreement or for recognition and enforcement of any judgment in respect    
hereof brought by another party hereto or its successors or assigns may be      
brought and determined in the Supreme Court of the State of New York in New     
York County or in the United States District Court for the Southern District of 
New York, and each of ScottishPower, HoldCo (on behalf of itself and Merger     
Sub), the Partnership, and the Company hereby irrevocably submits with regard   
to any such action or proceeding for itself and in respect to its property,     
generally and unconditionally, to the nonexclusive jurisdiction of the          
aforesaid courts. Any service of process to be made in such action or           
proceeding may be made by delivery of process in accordance with the notice     
provisions contained in Section 9.02. Each of ScottishPower, HoldCo, the        
Partnership, Merger Sub, and the Company hereby irrevocably waives, and agrees  
not to assert, by way of motion, as a defense, counterclaim or otherwise, in    
any action or proceeding with respect to this Agreement, (a) the defense of     
sovereign immunity, (b) any claim that it is not personally subject to the      
jurisdiction of the above-named courts for any reason other than the failure to 
serve process in accordance with this Section 9.10,                             

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(c) that it or its property is exempt or immune from jurisdiction of any such   
court or from any legal process commenced in such courts (whether through       
service of notice, attachment prior to judgment, attachment in aid of execution 
of judgment, execution of judgment or otherwise), and (d) to the fullest extent 
permitted by applicable law that (i) the suit, action or proceeding in any such 
court is brought in an inconvenient forum, (ii) the venue of such suit, action  
or proceeding is improper and (iii) this Agreement, or the subject matter       
hereof, may not be enforced in or by such courts.                               

  9.12 Enforcement of Agreement. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement    
was not performed in accordance with its specified terms or was otherwise       
breached. It is accordingly agreed that the parties shall be entitled to an     
injunction or injunctions to prevent breaches of this Agreement and to enforce  
specifically the terms and provisions hereof in any court of competent          
jurisdiction, this being in addition to any other remedy to which they are      
entitled at law or in equity.                                                   

9.13 Certain Definitions. As used in this Agreement:                  

(a) except as used in Sections 2.03(b), 3.02(c), 3.17 and 6.04, the term
"affiliate," as applied to any person, shall mean any other person directly 
or indirectly controlling, controlled by, or under common control with,     
that person; for purposes of this definition, "control" (including, with    
correlative meanings, the terms "controlling," "controlled by" and "under   
common control with"), as applied to any person, means the possession,      
directly or indirectly, of the power to direct or cause the direction of    
the management and policies of that person, whether through the ownership   
of voting securities, by contract or otherwise;                             

(b) a person will be deemed to "beneficially" own securities if such    
person would be the beneficial owner of such securities under Rule 13d-3    
under the Exchange Act, including securities which such person has the      
right to acquire (whether such right is exercisable immediately or only     
after the passage of time);                                                 

(c) the term "business day" means a day other than Saturday, Sunday or  
any day on which banks located in the State of Oregon or London, England    
are authorized or obligated to close;                                       

(d) the term "knowledge" or any similar formulation of "knowledge" shall
mean, with respect to ScottishPower or the Company, the actual knowledge    
after due inquiry of the executive officers of ScottishPower or the Company 
and their Subsidiaries, set forth in Section 9.12(d) of the ScottishPower   
Disclosure Letter or Section 9.12(d) of the Company Disclosure Letter and,  
with respect to HoldCo, the actual knowledge after due inquiry of the       
Executive Directors of HoldCo immediately prior to the Effective Date;      

(e) any reference to any event, change or effect having a "material     
adverse effect" on or with respect to an entity (or group of entities taken 
as a whole) means such event, change or effect is materially adverse to the 
business, properties, assets, liabilities, financial condition or results   
of operations of such entity (or of such group of entities taken as a       
whole);                                                                     

(f) the term "New Facilities" means new revolving credit facilities     
and/or amendments to existing revolving credit facilities of not more than  
(Pounds)2.6 billion in the aggregate on terms which are not significantly   
less favorable taken as a whole than the RCF;                               

(g) the term "person" shall include individuals, corporations,          
partnerships, trusts, other entities and groups (which term shall include a 
"group" as such term is defined in Section 13(d)(3) of the Exchange Act);   

(h) the term "RCF" means the Revolving Credit Facility dated June 24,   
1996 between, inter alia, ScottishPower, the Royal Bank of Scotland plc and 
Union Bank of Switzerland (the "RCF");                                      

(i) the "Representatives" of any entity means such entity's directors,  
officers, employees, legal, investment banking and financial advisors,      
accountants and any other agents and representatives;                       

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(j) except as used in Sections 3.02(d) and 3.17, the term "Subsidiary"  
means, with respect to any party, any corporation or other organization,    
whether incorporated or unincorporated, of which more than fifty percent    
(50%) of either the equity interests in, or the voting control of, such     
corporation or other organization is, directly or indirectly through        
Subsidiaries or otherwise, beneficially owned by such party.                

(k) "Scheme Consents" means the consents, clearances and approvals      
referred to in Schedule I;                                                  

(l) "Scheme Document" means the document, including an explanatory      
statement, to be sent to the shareholders of ScottishPower in connection    
with the Scheme of Arrangement.                                             

(m) any reference to "transactions contemplated hereby," "transactions  
contemplated hereunder," "transactions contemplated by this Agreement,"     
"transactions contemplated under this Agreement" or any similar formulation 
shall include the transaction contemplated by the Scheme of Arrangement;    
provided, however, that the reference to such phrase appearing in the       
parenthetical clause in the introductory paragraph of Section 5.02 shall    
not include the transaction contemplated by the Scheme of Arrangement.      

9.14 Counterparts. This Agreement may be executed in any number of    
counterparts, each of which will be deemed an original, but all of which        
together will constitute one and the same instrument.                           

    9.15 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN 
ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS  
AGREEMENT OR THE TRANSACTION CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT,    
TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO              
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY 
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK 
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER      
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER   
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.                  

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IN WITNESS WHEREOF, each party hereto has caused this Agreement to be 
signed by its officer thereunto duly authorized as of the date first above      
written.                                                                        

                          New Scottish Power PLC

                                       By: /s/ Ian Simon MacGregor Russell
                                           -----------------------------------
                                         Name: Ian Simon MacGregor Russell
                       Title: Director

                      Scottish Power PLC

                                       By: /s/ Ian Simon MacGregor Russell
                                           -----------------------------------
                                         Name: Ian Simon MacGregor Russell
                       Title: Director

                          NA General Partnership

                                    By: Scottish Power NA 2 Limited,
                             a General Partner

                                       By: /s/ Ian Simon MacGregor Russell
                                           -----------------------------------
                                         Name: Ian Simon MacGregor Russell
                       Title: Director

              Pacificorp

                              By: /s/ Richard T. O'Brien
                                           -----------------------------------
                                Name: Richard T. O'Brien
                                         Title: Executive Vice President &
                                   Chief   Executive Officer

                                      For purposes of Section 2.01 only:

                               Scottish Power NA 1 Limited

                                       By: /s/ Ian Simon MacGregor Russell
                                           -----------------------------------
                                         Name: Ian Simon MacGregor Russell
                       Title: Director

                                      For purposes of Section 2.01 only:

                               Scottish Power NA 2 Limited

                                       By: /s/ Ian Simon MacGregor Russell
                                           -----------------------------------
                                         Name: Ian Simon MacGregor Russell
                       Title: Director

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EXHIBIT A                                                                       

Scheme of Arrangement                                                           
(under section 425 of the Companies Act 1985)                                   

between Scottish Power plc and the Scheme Shareholders (as hereinafter defined) 
and the Special Shareholder (as hereinafter defined)                            

l.      Preliminary                                                             

(A)     In this Scheme of Arrangement, unless inconsistent with the subject or  
context, the following expressions shall bear the following meanings:           

business day means any day other than a Saturday or Sunday on which banks are   
generally open for business in England and Wales;                               

Court means the Court of Session in Edinburgh;                                  

Court Meeting means the meeting of holders of Scottish Power Shares convened by 
interlocutor of the Court pursuant to section 425 of the Companies Act 1985 for 
__________, 1999 to consider and, if thought fit, approve this Scheme;          

CREST means a relevant system (as defined in the CREST Regulations) in respect  
of which CRESTCo is the operator (as defined in the CREST Regulations);         

CRESTCo means CRESTCo Limited;                                                  

CREST Regulations means the Uncertificated Securities Regulations 1995 (SI 1995 
No. 3272) as from time to time amended;                                         

holder includes any person entitled by transmission;                            

new Scottish Power Shares means new ordinary shares of 50 pence each in the     
capital of ScottishPower;                                                       

New ScottishPower means New Scottish Power plc;                                 

New ScottishPower Special Share means the special rights non-voting redeemable  
preference share of (Pounds)1 in the capital of New ScottishPower;              

New Shares means ordinary shares of [50 pence] each in the capital of New       
ScottishPower;                                                                  

Record Date means the business day immediately preceding the Scheme Date;       

Scheme Date means the date on which this Scheme becomes effective in accordance 
with clause 6 of this Scheme;                                                   

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Scheme Record Date means the business day immediately preceding the date of the 
hearing of the Court at which the Scheme is sanctioned;                         

Scheme Shareholder means a holder of Scheme Shares as at 5:30 p.m. on the Record
Date;                                                                           

Scheme Shares means:                                                            

 (a) all ScottishPower Shares in issue at the date of this Scheme;

      (b) all (if any) other ScottishPower Shares in issue immediately prior
to the Court Meeting; and                               

      (c) all (if any) further ScottishPower Shares which may be in issue at
5:30 p.m. on the Scheme Record Date;                    

ScottishPower means Scottish Power plc;                                         

ScottishPower Shares means ordinary shares of 50 pence each in the capital of   
ScottishPower;                                                                  

ScottishPower Special Share means the special rights non-voting redeemable      
preference share of (Pound)1 in the capital of ScottishPower;                   

Special Shareholder means the Secretary of State for Scotland, the holder of the
ScottishPower Special Share;                                                    

this Scheme means this Scheme of Arrangement in its present form or with any    
modification thereof or addition thereto or condition approved or imposed by the
Court; and                                                                      

uncertificated or in uncertificated form means recorded on the relevant register
as in uncertificated form, being held in uncertificated form in CREST and title 
to the object of which by virtue of the CREST Regulations may be transferred by 
means of CREST.                                                                 

(B)     The authorised share capital of ScottishPower as at the date of this    
Scheme is (Pounds) __________ divided into __________ ScottishPower Shares, of  
which __________ have been issued and are fully paid up (and the remainder are  
unissued), and one ScottishPower Special Share which has been issued and is     
fully paid up.                                                                  

(C)     New ScottishPower was incorporated as a public limited company on       
__________, 1999 under the name New ScottishPower. The authorised share capital 
of New ScottishPower at the date of this Scheme is (Pounds) __________ divided  
into _________ New Shares, of which __________ have been issued and are fully   
paid up (and the remainder are unissued) and the New ScottishPower Special Share
which has not been issued.                                                      

(D)     The purpose of this Scheme is to provide for the cancellation of the    
Scheme Shares and the ScottishPower Special Share and the issue of new          
ScottishPower Shares with an aggregate nominal value equal to that of the shares
so cancelled to New ScottishPower in consideration of the allotment by New      
ScottishPower of New Shares to the Scheme Shareholders and the                  

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allotment by New ScottishPower of the New ScottishPower Power Special Share to  
the Special Shareholder.                                                        

(E)     New ScottishPower has agreed, and it is proposed that the Special       
Shareholder will agree, to appear by Counsel on the hearing of the Petition for 
the sanction by the Court of this Scheme, to consent thereto and to undertake to
be bound thereby and to execute or procure to be executed all such documents,   
and to do or procure to be done all such acts and things, as may be necessary or
desirable to be executed or done by them respectively for the purpose of giving 
effect to this Scheme.                                                          

2.      The Scheme                                                              
ScottishPower Cancellation                                                      

1.      (a) The share capital of ScottishPower shall be reduced by cancelling   
the Scheme Shares and the ScottishPower Special Share.  

        (b) Forthwith and contingently upon the said reduction of capital taking
effect:                                                 

            (i)     the share capital of ScottishPower shall be increased to its
           former amount by the creation of such number of new
                ScottishPower Shares as shall be of an aggregate nominal
                  amount equal to the aggregate nominal amount of the shares
              cancelled pursuant to sub-clause (a) of this clause 1;

            (ii)    ScottishPower shall apply the credit arising in its books of
                  account on the reduction of capital pursuant to sub-clause
                  (a) of this clause 1 in paying up, in full at par, the new
                  ScottishPower Shares created pursuant to sub-clause (b)(i)
            of this clause 1 and shall allot and issue the same,
               credited as fully paid, to New ScottishPower and/or its
nominee(s); and                         

          (iii)   ScottishPower will become a wholly owned subsidiary of New
ScottishPower.                          

New Shares                                                                      

2.      (a) In consideration of the cancellation of the Scheme Shares and the   
          ScottishPower Special Share and the issue of the new ScottishPower
            Shares to New ScottishPower and/or its nominee(s) pursuant to clause
            1 of this Scheme, New ScottishPower shall (subject to the provisions
of subclause (c) of this clause 2):                     

          (i)     allot and issue (credited as fully paid) New Shares to the
   Scheme Shareholders on the following basis:

                   For each Scheme Share held at 5:30 p.m. on the Record Date,
one New Share                           

                   save that for any person holding New Shares as at 5:30 p.m.
                on the Record Date his entitlement to receive New Shares
                   pursuant to this clause 2 shall be reduced by the number of
New Shares he holds at that time; and   

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(ii)    allot and issue (credited as fully paid) the New
               ScottishPower Special Share to the Special Shareholder.

     (b) The New Shares to be issued pursuant to sub-clause (a)(i) of this
           clause 2 shall rank pari passu as a single class of shares inter se
            and shall rank in full for all dividends or distributions made, paid
          or declared after the Scheme Date on the ordinary share capital of
New ScottishPower.                                      

      (c) The provisions of sub-clause (a) of this clause 2 shall be subject
            to any prohibition or condition imposed by law. Without prejudice to
     the generality of the foregoing, if, in respect of any Scheme
 Shareholder who is a citizen, resident or national of any
         jurisdiction outside the United Kingdom ("overseas shareholder"),
        New ScottishPower is advised that the allotment and issue of New
       Shares pursuant to this clause 2 would infringe the laws of any
        jurisdiction outside the United Kingdom [(other than the US)] or
            would require New ScottishPower to observe any governmental or other
           consent or any registration, filing or other formality [(other than
         the US)], then New ScottishPower may determine that no New Shares
           shall be allotted or issued to such overseas shareholder under this
         clause 2, but shall instead be allotted to a nominee appointed by
         New ScottishPower, as a trustee for such overseas shareholder, on
          terms that the nominee shall, as soon as practicable following the
            Scheme Date, sell the New Shares so allotted at the best price which
            can reasonably be obtained and shall account for the net proceeds of
       such sale (after the deduction of all expenses and commissions,
         including value added tax payable thereon) by sending a cheque or
   warrant to such overseas shareholder in accordance with the
provisions of clause 3 below. None of ScottishPower, New
           ScottishPower, any nominee referred to in this subclause (c) or any
            broker or agent of any of them shall have any liability for any loss
    arising as a result of the timing or terms of any such sale.

Certificates and payment                                                        

3.      (a) Not later than five (5) business days after the Scheme Date, New    
           ScottishPower shall send by post to the allottees of the New Shares
           and to the allottee of the New ScottishPower Special Share allotted
      and issued pursuant to clause 2 of this Scheme certificates in
         respect of such shares, save that where Scheme Shares are held in
           uncertificated form, New ScottishPower will procure that CRESTCo is
         instructed to credit to the appropriate stock account in CREST of
          the Scheme Shareholder concerned such shareholder's entitlement to
New Shares.                                             

   (b) Not later than five (5) business days following the sale of any
      relevant New Shares pursuant to clause 2(c), New ScottishPower
          and/or the nominee shall satisfy the cash consideration payable by
      it by despatching to the persons respectively entitled thereto
cheques and/or warrants by post.                        

     (c) All certificates required to be sent by ScottishPower pursuant to
            sub-clause (a) of this clause 3 and all cheques or warrants required
         to be sent by New ScottishPower and/or any nominee referred to in
clause 2(c) of this Scheme shall                        

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   be sent through the post in pre-paid envelopes addressed to the
       persons respectively entitled thereto at their respective addresses
         appearing in the register of members of ScottishPower at the close of
         business on the Record Date (or, in the case of joint holders, to the
       address of that one of the joint holders whose name stands first in
       the register in respect of the joint holding) or in accordance with
     any special instructions regarding communications received at the
registered office of ScottishPower prior to the Record Date.

    (d) None of ScottishPower, New ScottishPower, any nominee referred to in
        clause 2(c) or any agent of any of them shall be responsible for any
      loss or delay in transmission of certificates, cheques or warrants
sent in accordance with this clause 3.                      

    (e) The preceding sub-clauses of this clause 3 shall take effect subject
to any prohibition or condition imposed by law.             

Certificates representing Scheme Shares and the ScottishPower Special Share     

4.      With effect from and including the Scheme Date, all certificates        
representing holdings of Scheme Shares and the ScottishPower Special Share shall
cease to be valid in respect of such holdings and the holders of such shares    
shall be bound at the request of ScottishPower to deliver such certificates for 
cancellation to ScottishPower or to any person appointed by ScottishPower to    
receive the same.                                                               

Mandates                                                                        

5.      Each mandate in force at 5:30 p.m. on the Record Date relating to the   
payment of dividends on Scheme Shares and each instruction then in force as to  
notices and other communications from ScottishPower shall, unless and until     
varied or revoked, be deemed as from the Scheme Date to be a valid and effective
mandate or instruction to New ScottishPower in relation to the corresponding New
Shares to be allotted and issued pursuant to this Scheme.                       

Scheme Date                                                                     

6.      This Scheme shall become effective as soon as an office copy of the     
interlocutor of the Court sanctioning this Scheme under section 425 of the Act  
and confirming under section 137 of the Act the reduction of capital proposed   
under this Scheme shall have been duly delivered to the Registrar of Companies  
for registration and the interlocutor and relative minute have been registered  
by him.                                                                         

7.      Unless this Scheme shall have become effective on or before, 1999 or    
such later date, if any, as the Court may allow, it shall lapse.                

Modification                                                                    

8.      ScottishPower and New ScottishPower may jointly consent on behalf of all
persons concerned to any modification of or addition to this Scheme or to any   
condition which the Court may think fit to approve or impose.                   

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Dated the   day of   , 1999 

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                                                                       EXHIBIT B

                                            Column A              Column B
                                            --------              --------

Proportion of HoldCo Ordinary Shares                                            
represented by HoldCo ADSs              not more than 75%    not less than 25%  

Proportion of Merger Ordinary Shares    not more than 75%    not less than 25%  

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                                                                       EXHIBIT C

[Form of Affiliate's Agreement]     

[Date]                                                                          
[name]                                                                          
[address]                                                                       

Ladies and Gentlemen:                                                           

       I have been advised that as of the date hereof I may be deemed to be an
"affiliate" of PacifiCorp, an Oregon corporation (the "Company"), as that term  
---------                                             -------                 
is defined for purposes of paragraphs (c) and (d) of Rule 145 ofthe rules and   
regulations (the "Rules and Regulations") of the Securities and Exchange        
---------------------                       
Commission (the "Commission") under the Securities Act of 1933, as amended (the 
----------                                    
"Act"). Neither my entering into this agreement, nor anything contained herein, 
---                                                                           
shall be deemed an admission on my part that I am such an "affiliate".          
                                               ---------

       Pursuant to the terms of the Amended and Restated Agreement and Plan of
Merger dated as of December 6, 1998, as amended as of January 29, 1999 and      
February 9, 1999 and amended and restated as of January 23, 1999 (the "Merger   
                                                                    ------
Agreement"), by and among New Scottish Power plc, a public limited company      
---------                                                                       
incorporated under the laws of Scotland ("HoldCo"), Scottish Power plc, a public
          ------
limited company incorporated under the laws of Scotland, NA General Partnership,
a Nevada general partnership (the "Partnership"), and the Company providing for 
 -----------
the merger of a wholly-owned subsidiary of the Partnership with and into the    
Company (the "Merger"), and as a result of the Merger, I may receive shares of  
------                                              
HoldCo's American Depositary Shares, each representing four HoldCo Ordinary     
Shares (the "HoldCo Securities"), in exchange for the shares of common stock,   
-----------------                                     
without par value, of the Company owned by me at the Effective Time (as defined 
in the Merger Agreement) of the Merger.                                         

I represent and warrant to HoldCo that in such event:           

  A. I shall not make any sale, transfer or other disposition of the
HoldCo Securities in violation of the Act or the Rules and Regulations          

 B. I have carefully read this letter and the Merger Agreement and
discussed its requirements and other applicable limitations upon my ability to  
sell, transfer or otherwise dispose of HoldCo Securities, to the extent I felt  
necessary, with my counsel or counsel for the Company.                          

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                                                                               2

   C. I have been advised that the issuance of HoldCo Securities to me
pursuant to the Merger has been registered with the Commission under the Act on 
a Registration Statement on Form F-4. However, I have also been advised that,   
since at the time the Merger was submitted for a vote of the stockholders of the
Company I may have been deemed to have been an affiliate of the Company and a   
distribution by me of HoldCo Securities has not been registered under the Act,  
the HoldCo Securities must be held by me indefinitely unless (i) a distribution 
of HoldCo Securities by me has been registered under the Act, (ii) a sale of    
HoldCo Securities by me is made in conformity with the volume and other         
limitations of Rule 145 promulgated by the Commission under the Act or (iii) in 
the opinion of counsel reasonably acceptable to HoldCo, some other exemption    
from registration is available with respect to a proposed sale, transfer or     
other disposition of the HoldCo Securities by me.                               

        D. I understand that HoldCo is under no obligation to register the sale,
transfer or other disposition of HoldCo Securities by me or on my behalf or to  
take any other action necessary in order to make compliance with an exemption   
from registration available.                                                    

     E. I also understand that stop transfer instructions will be given to
HoldCo's transfer agents with respect to the HoldCo Securities and that there   
will be placed on the certificates for the HoldCo Securities, or any            
substitutions therefor, a legend stating in substance:                          

        "The shares represented by this certificate were issued in a transaction
to which Rule 145 promulgated under the Securities Act of 1933, as amended,     
applies. The shares represented by this certificate may only be transferred in  
accordance with the terms of an agreement dated __________, _____, between the  
registered holder hereof and _________(the "Corporation"), a copy of which      
agreement is on file at the principal offices of the Corporation."              

F. I also understand that unless the transfer by me of my HoldCo
Securities has been registered under the Act or is a sale made in conformity    
with the provisions of Rule 145, HoldCo reserves the right to put the following 
legend on the certificates issued to my transferee:                             

    "The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and were acquired from a person   
who received such shares in a transaction to which Rule 145 promulgated under   
such Act applies. The shares have been acquired by the holder not with a view   
to, or for resale in connection with, any distribution thereof within the       
meaning of such Act and may not be sold, pledged or otherwise transferred except
in accordance with an exemption from the registration requirements of such Act."

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                                                                               3

     It is understood and agreed that the legends set forth in paragraph E
and F above shall be removed by delivery of substitute certificates without such
legend if the undersigned shall have delivered to HoldCo a copy of a letter from
the staff of the Commission, or an opinion of counsel reasonably acceptable to  
HoldCo to the effect that such legend is not required for purposes of the Act.  

                 Very truly yours,

                            ----------------------------
     Name:

Accepted this ____ day of                                                       

___________, ________, by:                                                      

NEW SCOTTISH POWER plc                                                          

By:                                                                             
---------------------------                                               
Name:                                                                     
Title:                                                                    

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SCHEDULE I

SCHEME CONSENTS 

1.  The approval of the Scheme of Arrangement by a majority in number           
representing three fourths in value of the ScottishPower Shareholders   
    present and voting (either in person or by proxy) at the meeting convened by
the Court.                                                              

2.  The approval of the Scheme of Arrangement and the reduction in the capital  
  of ScottishPower, the increase in share capital, the capitalisation of new
ScottishPower Shares and the granting of authority to the directors of  
ScottishPower to allot such Shares, in each case for the purposes of the
Scheme of Arrangement by a special resolution of ScottishPower.         

3.  The consent in writing of the ScottishPower Special Shareholder to the      
Scheme of Arrangement and the proposed amendments to ScottishPower's    
 Articles of Association, and the approval of such amendments by a special
resolution of ScottishPower.                                            

4.  The sanction by the Court of the Scheme of Arrangement (with or without     
   modification) and the confirmation by the Court of the reduction in capital
  by the cancellation of ScottishPower shares required as part of the Scheme
of Arrangement.                                                         

5.  The approval in writing of the transaction to be effected by the Scheme of  
   Arrangement by the Secretary of State for Scotland and by each UK Regulator
  whose consent is required, or considered by ScottishPower to be necessary,
   under the terms of each licence, appointment or other authorisation held by
any member of the ScottishPower Group.                                  

6.  An indication on satisfactory terms by the Secretary of State for Trade and 
Industry and by each UK Regulator, as appropriate, that it is not his   
intention to seek, as a result of the transaction to be effected by the 
Scheme of Arrangement, any revocation of or modification to any licence,
  appointment or other authorisation held by any member of the ScottishPower
Group, except on satisfactory terms.                                    

7.  Neither the Secretary of State for Scotland nor any UK Regulator having     
    sought, as a result of the Scheme of Arrangement, undertakings or assurances
 from any member of the ScottishPower Group, except on satisfactory terms.

8.  The agreement of the LSE to admit the ordinary shares of HoldCo issued and  
   to be issued pursuant to the Scheme of Arrangement to the Of ficial List of
  the LSE (subject only to allotment) and such agreement not being withdrawn
prior to the Scheme Date.                                               

9.  The receipt, in each case on satisfactory terms, by HoldCo of:              

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                                                                               2

   (i)     clearances from the Inland Revenue under section 138 of the
              Taxation of Chargeable Gains Act 1992 and under section 707 of
           the Income and Corporation Taxes Act 1988 in respect of the
Scheme of Arrangement; and                      

(ii)    confirmation as to the application of section 136 of the
              Taxation of Chargeable Gains Act 1992 in respect of the Scheme
of Arrangement,                                 

10.     The consent under the RCF of the Majority Banks (as defined therein) to 
      the Scheme of Arrangement, and/or the replacement of the RCF (in whole
  or in part) with the New Facilities under which no such consent is
required (or consent has been given).                           

11.     Confirmation from the European Investment Bank that it will not require 
       prepayment of any loan to ScottishPower or its subsidiaries as a result
of the change of control of ScottishPower which the Scheme of   
Arrangement will result in. In the absence of such confirmation,
ScottishPower may decide to prepay such loan.                   

12.     The HoldCo ADRs to be issued pursuant to the Scheme of Arrangement shall
     have been authorised for listing on the NYSE, upon official notice of
issuance.                                                       

13.     The execution of the replacement deposit agreement in respect of the    
HoldCo ADRs pursuant to Section 6.06(b).                        

14.     A registration statement to be filed under the Securities Exchange Act  
     of 1934 shall have been filed by HoldCo and declared effective by the
SEC.                                                            

15.     The approval of HoldCo's ordinary shareholders (where required, by a    
special resolution) (i) to the adoption or amendment of HoldCo's
      Articles of Association in accordance with Section 4.01(a) (and to the
   proposed changes to HoldCo's Articles of Association referred to in
  Section 6.03(c) if the same are to be effective on or prior to the
      Scheme Date), (ii) to increase the authorised share capital of HoldCo,
   and to give the directors of HoldCo authority to allot shares under
       Section 80 of the Companies Act 1985, in respect of the ordinary shares
    of HoldCo to be issued pursuant to the Scheme of Arrangement and the
      Merger and otherwise for general purposes, (iii) to disapply statutory
  pre-emption rights, (iv) to authorise HoldCo to repurchase its own
  shares, (v) to change HoldCo's name conditional upon the Scheme of
Arrangement becoming effective and (vi) to appoint directors.   

16.     Such other approvals, prior to the Scheme Date, of the Shareholders of  
    HoldCo, the board of HoldCo and the board of ScottishPower as may be
      required to implement and give effect to the Scheme of Arrangement and
the terms of this Agreement.                                    

17.     The filing of orders, returns and other documents with the Registrar of 
       Companies in Scotland or with the Court in order to obtain the sanction
   of the Court for, and to give effect to, the Scheme of Arrangement.

18.     Such filings and consents as ScottishPower may reasonably consider      
   necessary or desirable in connection with the Scheme of Arrangement
and/or the Merger with stock                                    

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                                                                               3

       exchanges or other Governmental or Regulatory Authorities in Australia,
        Canada, Ireland, Japan and any other applicable jurisdiction (other than
the US and the UK).                                             

Definitions                                                                     

In this Schedule I, the following definitions apply:                            

Court means the Court of session, Edinburgh;                                    

ScottishPower Shares means ordinary shares of (Pounds)0.50p in the capital of   
ScottishPower; and                                                              

UK Regulator means each of the Director General of Electricity Supply, the      
Director General of Water Services, the Director General of Gas Supply, and the 
Director General of Telecommunications; and                                     

on satisfactory terms means on terms which are satisfactory to HoldCo and which 
would not, or would not reasonably be expected to, have, individually or in the 
aggregate, a material adverse effect on the HoldCo Group taken as a whole.      

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SCHEDULE II 

THE ARTICLES OF ASSOCIATION OF HOLDCO 

HoldCo's Articles of Association will have the principal differences from the   
current Articles of Association of ScottishPower referred to below. There will  
also be some differences of a minor or technical nature which have not been     
included below. Holdco's Articles of Association will also include any changes  
requested by the ScottishPower Special Shareholder or by the LSE and agreed to  
by ScottishPower.                                                               

The number identifying each provision of HoldCo's proposed Articles of          
Association corresponds (except where otherwise stated) to the numbering of the 
current ScottishPower Articles of Association.                                  

(a) Article 6(E) (The Redeemable Shares)                                        

There is no equivalent of this proposed article in ScottishPower's current      
Articles of Association. It will set out the rights attaching to non-voting     
redeemable shares which it is intended that HoldCo will issue in order to have  
the minimum issued capital required to obtain a trading certificate under       
section 117 of the Companies Act 1985.                                          

(b) Article 7 (The HoldCo Special Share)                                        

This article, which will set out the rights attaching to the one share of       
(Pounds)1 in the capital of HoldCo to be issued to the ScottishPower Special    
Shareholder pursuant to the Scheme of Arrangement (the "HoldCo Special Share"), 
will be amended from the comparable ScottishPower article so that each of the   
following matters will also be deemed to be a variation requiring prior consent 
in writing of the holder of the HoldCo Special Share:                           

(i)     the giving by HoldCo of any consent or agreement to any amendment to,   
        deletion of or alteration to the effect of, article 7 of the Articles of
Association of ScottishPower (save as referred to below):       

(ii)    the giving by HoldCo of any consent or agreement to the creation or     
       issue of any shares in the capital of ScottishPower other than an issue
    of shares upon the issue of which HoldCo will own the full legal and
beneficial interest in, and control, shares in the capital of   
 ScottishPower carrying at least 85 per cent. of the voting rights
exercisable on a poll at general meetings of ScottishPower;     

(iii)   the disposal by HoldCo of any of the shares in ScottishPower or of any  
 rights or interest therein, or the entering into by HoldCo of any
        agreement or arrangement with respect to such shares, or the exercise of
     any voting or other rights attaching to such shares, such that HoldCo
 would cease to own the full legal and beneficial interest in, and
        control, shares in the capital of ScottishPower carrying at least 85 per
    cent. of the voting rights exercisable on a poll at general meetings
of ScottishPower;                                               

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                                                                               2

(iv)    the giving by HoldCo of any consent or agreement to any abrogation,     
    variation, waiver or modification of any of the rights or privileges
        attaching to any shares in ScottishPower such that HoldCo would cease to
     own the full legal and beneficial interest in, and control, shares in
  the capital of ScottishPower carrying at least 85 per cent. of the
   voting rights exercisable on a poll at general meetings of Scottish
Power; and                                                      

(v)     any other act or omission to act by HoldCo or the Directors of New      
       ScottishPower which results in HoldCo ceasing to own the full legal and
beneficial interest in, and control, shares in the capital of   
 ScottishPower carrying at least 85 per cent. of the voting rights
exercisable on a poll at general meetings of ScottishPower.     

The existing article 7 of ScottishPower's Articles is to be deleted and replaced
by an article which ensures that the events set out in paragraphs (i), (ii) and 
(iv) above do not occur without the prior written consent of HoldCo.            
ScottishPower's Articles of Association will also include any changes requested 
by the ScottishPower Special Shareholder and agreed to by ScottishPower.        

(c)     Article 50 (Disclosure of Interests in Shares)                          

This article, which will relate to the disclosure of interests in shares, will  
be amended from the comparable ScottishPower article to remove references to    
certain interim arrangements included in ScottishPower's Articles in connection 
with the initial flotation of ScottishPower.                                    

(d)     Article 51 (Limitations on Shareholdings)                               

This article, which will set out restrictions on persons holding or controlling 
the right to cast 15 per cent. or more of the votes at general meetings, will be
amended from the comparable ScottishPower article to remove references to       
certain interim arrangements included in ScottishPower's Articles of Association
in connection with the initial flotation of ScottishPower.                      

(e)     Article 98 (Number of Directors to Retire)                              

This article, which will relate to the number of directors to retire from office
by rotation, will be amended from the comparable ScottishPower article in       
accordance with the new London Stock Exchange requirement that all directors    
shall retire by rotation at least every three years.                            

(f)     Article 123 (Borrowing Powers)                                          

This article will, if considered necessary by ScottishPower, be amended from the
comparable ScottishPower article to reflect the new UEC Financial Reporting     
Standard FRS 10. Any such amendment may include provisions to the effect that,  
in calculating the borrowing limit, no goodwill or intangible assets will be    
deducted except the amount that has been amortised in accordance with FRS 10.   

(g)     Article 130 (Interim Dividends)                                         

The article, which will relate to the ability of the Directors to pay interim   
dividends, may, if considered necessary or desirable by ScottishPower, be       
amended from the comparable                                                     

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                                                                               3

ScottishPower article to clarify that the Directors may declare and pay any     
dividends, including final dividends, and not just interim dividends. This      
relates to the proposed move to quarterly dividend payments.                    

(h)     Article 160 (ADR Depositories)                                          

Amendments will be made in accordance with Section 6.03(c) of this Agreement,   
although these amendments may not be made prior to the Scheme Date.             

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                                                                         ANNEX C

SALOMONSMITHBARNEY                                            
---------------------------                                                     
A member of citigroup[LOGO]                                                     

December 6, 1998                                                                

Board of Directors                                                              
PacifiCorp                                                                      
700 NE Multnomah                                                                
Portland, Oregon 97232                                                          

Members of the Board:                                                           

You have requested our opinion as to the fairness, from a financial point of    
view, to the holders of common stock ("Company Common Stock") of PacificCorp    
(the "Company"), of the consideration to be received by such holders in         
connection with the proposed merger (the "Merger") of the Company with a wholly-
owned subsidiary ("Merger Sub") of NA General Partnership (the "Partnership"), a
general partnership indirectly wholly-owned by Scottish Power PLC (the          
"Parent"), pursuant to an Agreement and Plan of Merger (the "Agreement") dated  
as of December 6, 1998, by and among the Company, Parent, Partnership, and      
Merger Sub. As more specifically set forth in the Agreement and subject to the  
terms and conditions thereof, upon the effectiveness of the Merger, each issued 
and outstanding share of Company Common Stock (other than shares owned directly 
or indirectly by Parent, the Partnership, Merger Sub, or the Company), will be  
converted into and represent the right to receive either (the "Merger           
Consideration") (i) .58 American Depositary Shares of Parent, each representing 
four ordinary shares of 50 pence each of Parent ("Parent Ordinary Shares") and  
evidenced by American Depositary Receipts, or (ii) upon proper election, 2.32   
Parent Ordinary Shares (the "Merger Ordinary Shares"), and the surviving        
corporation will be an indirect wholly-owned subsidiary of Parent.              

In connection with rendering our opinion, we have reviewed certain publicly     
available information concerning the Company and Parent and certain other       
financial information concerning the Company and Parent, including financial    
forecasts, that were provided to us by the Company or Parent. We have discussed 
the past and current business operations, financial condition and prospects of  
the Company and Parent with certain officers and employees of the Company or    
Parent. We have also considered such other information, financial studies,      
analyses, investigations and financial, economic and market criteria that we    
deemed relevant.                                                                

In our review and analysis and in arriving at our opinion, we have assumed and  
relied upon the accuracy and completeness of the information reviewed by us for 
the purpose of this opinion and we have not assumed any responsibility for      
independent verification of such information. With respect to the financial     
forecasts, we have been advised by the managements of the Company and Parent    
that such forecasts have been reasonably prepared on bases reflecting the best  
currently available estimates and judgments of the managements of the Company or
Parent, as the case may be, and we express no opinion with respect to such      
forecasts or the assumptions on which they are based. We have not assumed any   
responsibility for any independent evaluation or appraisal of any of the assets 
(including properties and facilities) or liabilities of the Company.            

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SALOMONSMITHBARNEY                                            
---------------------------                                                     
A member of citigroup[LOGO]                                                     

Our opinion is necessarily based upon conditions as they exist and can be       
evaluated on the date hereof and we assume no responsibility to update or revise
our opinion based upon circumstances or events occurring after the date hereof. 
Our opinion is, in any event, directed only to the fairness, from a financial   
point of view, of the Merger Consideration to be received by the holders of     
Company Common Stock in connection with the Merger and does not address the     
Company's underlying business decision to effect the Merger or constitute a     
recommendation concerning how holders of Company Common Stock should vote with  
respect to the Agreement or the Merger.                                         

We have acted as financial advisor to the Board of Directors of the Company in  
connection with the Merger and will receive a fee for our services, a portion of
which is payable upon initial delivery of this fairness opinion and the         
remainder of which is contingent upon shareholder approval of, and consummation 
of the Merger. In the ordinary course of business, we and our affiliates may    
hold or actively trade the securities of the Company and Parent for our own     
account and for the accounts of customers and, accordingly, may at any time hold
a long or short position in such securities. In addition, we and our affiliates 
have previously rendered certain investment banking and financial advisory      
services to the Company and Parent for which we have received customary         
compensation. We and our affiliates (including Citigroup Inc.) may have other   
business relationships with the Company or Parent in the ordinary course of     
their businesses.                                                               

This opinion is intended solely for the benefit and use of the Board of         
Directors of the Company in considering the transaction to which it relates and 
may not be used for any other purpose or reproduced, disseminated, quoted or    
referred to (other than in the Agreement) at any time, in any manner or for any 
purpose, nor shall any reference to Salomon Smith Barney be made, in each case  
without the prior written consent of Salomon Smith Barney.                      

Based upon and subject to the foregoing, it is our opinion that, as of the date 
hereof, the Merger Consideration is fair, from a financial point of view, to the
holders of Company Common Stock.                                                

Very truly yours,                                                               

/s/ SALOMON SMITH BARNEY, INC.                                                  

SALOMON SMITH BARNEY INC.                                                       

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                                                                         ANNEX D

MORGAN STANLEY                                                                  

                                          MORGAN STANLEY & CO.
                             LIMITED
                                     25 CABOT SQUARE
                                  CANARY WHARF
                                    LONDON E14 4QA

Board of Directors                                                              
Scottish Power plc                                                              
1 Atlantic Quay                                                                 
Glasgow G2 9FP                                                                  

                                                              6th December, 1998

Members of the Board:                                                           

We understand that Scottish Power plc ("ScottishPower") and PacifiCorp    
("PacifiCorp") have resolved to enter into a Merger Agreement dated 6th         
December, 1998 (the "Merger Agreement"), which provides for the merger (the     
"Merger") of PacifiCorp with and into a wholly-owned subsidiary of              
ScottishPower. The Merger is to be implemented through an exchange of shares as 
a result of which PacifiCorp shareholders will receive for each PacifiCorp      
share of common stock 2.32 ScottishPower ordinary shares (or 0.58 ScottishPower 
ADRs) (the "Exchange Ratio"). The terms of the proposed Merger are more fully   
set out in the Merger Agreement.                                                

  You have asked for our opinion as to whether the Exchange Ratio is fair from
a financial point of view to ScottishPower.                                     

For the purpose of the opinion set forth herein, we have:                 

(i) reviewed certain publicly available financial statements and other  
information of ScottishPower and PacifiCorp, respectively;                  

(ii) reviewed certain internal financial statements and other financial 
and operating information concerning ScottishPower and PacifiCorp prepared  
by the managements of the respective companies;                             

(iii) reviewed certain financial projections for ScottishPower and      
PacifiCorp prepared by the managements of the respective companies;         

(iv) reviewed and discussed with the senior management of ScottishPower 
the strategic rationale for the Merger and the perceived benefits of the    
Merger to the shareholders of ScottishPower;                                

(v) reviewed the estimates by senior management of ScottishPower of the 
potential cost savings anticipated to be achieved if the Merger is          
consummated;                                                                

 (vi) discussed with senior executives of ScottishPower and PacifiCorp the
past and current operations and the financial conditions and prospects for  
each of their respective companies;                                         

(vii) discussed with the management of ScottishPower the results of the 
due diligence exercise in relation to PacifiCorp conducted by               
ScottishPower;                                                              

(viii) reviewed certain adjustments to the financial statements and     
projections of PacifiCorp proposed by the management of ScottishPower, in   
relation to the reconciliation from US to UK GAAP;                          

(ix) compared the financial performance of ScottishPower and recent     
reported prices for ScottishPower ordinary shares and PacifiCorp common     
stock with that of certain other comparable publicly traded companies and   
their securities;                                                           

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(x) reviewed the financial terms, to the extent publicly available, of  
certain comparable transactions;                                            

(xi) reviewed the likely impact of the Merger on the future earnings per
share for ScottishPower shareholders based on the summary financial         
projections for ScottishPower and PacifiCorp;                               

(xii) participated in certain discussions and negotiations among        
representatives of ScottishPower and PacifiCorp and their advisers;         

 (xiii) reviewed the draft Merger Agreement and certain related documents;
and                                                                         

(xiv) performed such other analyses and considered such other factors as
we have deemed appropriate.                                                 

We have assumed and relied upon without independent verification the      
accuracy and completeness of the information reviewed by us for the purposes of 
this opinion. With respect to the financial projections and other estimates     
supplied to us, we have assumed that they have been reasonably prepared on      
bases reflecting the best currently available estimates and judgments of the    
future financial performance of ScottishPower and PacifiCorp.                   

In reaching our opinion, we have relied upon, without independent         
verification, the assessment by the management of the future competitive and    
regulatory environment, the cost synergies opportunities management have        
estimated to be achievable and the ScottishPower Board of Directors' commercial 
assessment of the Merger. We have not made any independent valuation or         
appraisal of assets or liabilities, nor have we been furnished with any such    
appraisals. With respect to tax matters and tax structures associated with the  
transaction, we have relied upon the evaluation of ScottishPower and its legal  
and accounting advisors. We have assumed (i) that the Merger will be completed  
on the bases contemplated by the Merger Agreement; and (ii) that the Merger     
will be accounted for under the acquisition accounting rules under UK GAAP. Our 
opinion is based on economic, market and other conditions as in effect on, and  
the information made available to us as of, the date hereof.                    

We have acted as financial adviser to the Board of Directors of           
ScottishPower in connection with this transaction and will receive a fee for    
our services. In the past, Morgan Stanley & Co. Limited and its affiliates have 
provided financial advisory and financing services to ScottishPower and to      
PacifiCorp and/or their respective affiliates and have received fees for the    
rendering of these services.                                                    

It is understood that this letter is for the information of the Board of  
Directors of ScottishPower only and, except for the inclusion of this letter in 
its entirety in any circular sent by ScottishPower to its shareholders in       
connection with the Merger, shall not be referred to or disclosed to any third  
party or used for any other purpose without our prior written consent. In       
addition, we express no opinion or recommendation to any shareholder of         
ScottishPower as to how such shareholder should vote at any shareholder meeting 
held in connection with the Merger.                                             

Based on the foregoing, we are of the opinion on the date hereof that the 
Exchange Ratio is fair from a financial point of view to ScottishPower.         

Very truly yours,                     

Morgan Stanley & Co. Limited          

/s/ John J. Studzinski                      /s/ Daniel B. More    
By: _________________________________     By: _________________________________ 
John J. Studzinski                          Daniel B. More    
Managing Director                         Managing Director 

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                                                                         ANNEX E

DISSENTERS' RIGHTS

(Right to Dissent and Obtain Payment for Shares)

60.551 Definitions for 60.551 to 60.594. As used in OBCA 60.551 to 60.594:  

(1) "Beneficial shareholder" means the person who is a beneficial owner 
of shares held in a voting trust or by a nominee as the record shareholder. 

(2) "Corporation" means the issuer of the shares held by a dissenter    
before the corporate action, or the surviving or acquiring corporation by   
merger or share exchange of that issuer.                                    

(3) "Dissenter" means a shareholder who is entitled to dissent from     
corporate action under ORS 60.554 and who exercises that right when and in  
the manner required by ORS 60.561 to 60.587.                                

(4) "Fair value," with respect to a dissenter's shares, means the value 
of the shares immediately before the effectuation of the corporate action   
to which the dissenter objects, excluding any appreciation or depreciation  
in anticipation of the corporate action unless exclusion would be           
inequitable.                                                                

(5) "Interest" means interest from the effective date of the corporate  
action until the date of payment, at the average rate currently paid by the 
corporation on its principal bank loans or, if none, at a rate that is fair 
and equitable under all the circumstances.                                  

(6) "Record shareholder" means the person in whose name shares are      
registered in the records of a corporation or the beneficial owner of       
shares to the extent of the rights granted by a nominee certificate on file 
with a corporation.                                                         

(7) "Shareholder" means the record shareholder or the beneficial        
shareholder.                                                                

60.554 Right to dissent. (1) Subject to subsection (2) of this section, a 
shareholder is entitled to dissent from, and obtain payment of the fair value   
of the shareholder's shares in the event of, any of the following corporate     
acts:                                                                           

(a) Consummation of a plan of merger to which the corporation is a party
if shareholder approval is required for the merger by ORS 60.487 or the     
articles of incorporation and the shareholder is entitled to vote on the    
merger or if the corporation is a subsidiary that is merged with its parent 
under OBCA 60.491;                                                          

(b) Consummation of a plan of share exchange to which the corporation is
a party as the corporation whose shares will be acquired, if the            
shareholder is entitled to vote on the plan;                                

 (c) Consummation of a sale or exchange of all or substantially all of the
property of the corporation other than in the usual and regular course of   
business, if the shareholder is entitled to vote on the sale or exchange,   
including a sale in dissolution, but not including a sale pursuant to court 
order or a sale for cash pursuant to a plan by which all or substantially   
all of the net proceeds of the sale will be distributed to the shareholders 
within one year after the date of sale;                                     

(d) An amendment of the articles of incorporation that materially and   
adversely affect rights in respect of a dissenter's shares because it:      

(A) Alters or abolishes a preemptive right of the holder of the     
shares to acquire shares or other securities; or                        

(B) Reduces the number of shares owned by the shareholder to a      
fraction of a share if the fractional share so created is to be         
acquired for cash under OBCA 60.141; or                                 

(e) Any corporate action taken pursuant to a shareholder vote to the    
extent the articles of incorporation, bylaws or a resolution of the board   
of directors provides that voting or nonvoting shareholders are entitled to 
dissent and obtain payment for their shares.                                

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(2) A shareholder entitled to dissent and obtain payment for the            
shareholder's shares under OBCA 60.551 to 60.594 may not challenge the          
corporate action creating the shareholder's entitlement unless the action is    
unlawful or fraudulent with respect to the shareholder or the corporation.      

(3) Dissenters' rights shall not apply to the holders of shares of any class
or series if the shares of the class or series were registered on a national    
securities exchange or prices were quoted on the National Association of        
Securities Dealers, Inc. Automated Quotation System as a National Market System 
issue on the date fixed to determine the shareholders entitled to vote at the   
meeting of shareholders at which the amendment to the articles of               
incorporation, plan of merger, exchange or proposed sale or exchange of         
property and assets is to be acted upon unless the articles of incorporation of 
the corporation shall otherwise provide.                                        

60.557 Dissent by nominees and beneficial owners. (1) A record shareholder  
may assert dissenters' rights as to fewer than all the shares registered in the 
shareholder's name only if the shareholder dissents with respect to all shares  
beneficially owned by any one person and notifies the corporation in writing of 
the name and address of each person on whose behalf the shareholder asserts     
dissenters' rights. The rights of a partial dissenter under this subsection are 
determined as if the shares regarding which the shareholder dissents and the    
shareholder's other shares were registered in the names of different            
shareholders.                                                                   

(2) A beneficial shareholder may assert dissenters' rights as to shares held
on the beneficial shareholder's behalf only if:                                 

(a) The beneficial shareholder submits to the corporation the record    
shareholder's written consent to the dissent not later than the time the    
beneficial shareholder asserts dissenters' rights; and                      

(b) The beneficial shareholder does so with respect to all shares of    
which such shareholder is the beneficial shareholder or over which such     
shareholder has power to direct the vote.                                   

(Procedure for Exercise of Rights)

60.561 Notice of dissenters' rights. (1) If proposed corporate action       
creating dissenters' rights under OBCA 60.554 is submitted to a vote at a       
shareholders' meeting, the meeting notice must state that shareholders are or   
may be entitled to assert dissenters' rights under OBCA 60.551 to 60.594 and be 
accompanied by a copy of OBCA 60.551 to 60.594.                                 

(2) If corporate action creating dissenters' rights under OBCA 60.554 is    
taken without a vote of shareholders, the corporation shall notify in writing   
all shareholders entitled to assert dissenters' rights that the action was      
taken and send the shareholders entitled to assert dissenters' rights the       
dissenters' notice described in OBCA 60.567.                                    

60.564 Notice of intent to demand payment. (1) If proposed corporate action 
creating dissenters' rights under OBCA 60.554 is submitted to a vote at a       
shareholders' meeting, a shareholder who wishes to assert dissenters' rights    
shall deliver to the corporation before the vote is taken written notice of the 
shareholder's intent to demand payment for the shareholder's shares if the      
proposed action is effectuated and shall not vote such shares in favor of the   
proposed action.                                                                

(2) A shareholder who does not satisfy the requirements of subsection (1) of
this section is not entitled to payment for the shareholder's shares under this 
chapter.                                                                        

60.567 Dissenters' notice. (1) If proposed corporate action creating        
dissenters' rights under OBCA 60.554 is authorized at a shareholders' meeting,  
the corporation shall deliver a written dissenters' notice to all shareholders  
who satisfied the requirements of OBCA 60.564.                                  

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(2) The dissenters' notice shall be sent no later than 10 days after the    
corporate action was taken, and shall:                                          

(a) State where the payment demand shall be sent and where and when     
certificates for certificated shares shall be deposited;                    

(b) Inform holders of uncertificated shares to what extent transfer of  
the shares will be restricted after the payment demand is received;         

(c) Supply a form for demanding payment that includes the date of the   
first announcement of the terms of the proposed corporate action to news    
media or to shareholders and requires that the person asserting dissenters' 
rights certify whether or not the person acquired beneficial ownership of   
the shares before that date;                                                

(d) Set a date by which the corporation must receive the payment demand.
This date may not be fewer than 30 nor more than 60 days after the date the 
subsection (1) of this section notice is delivered; and                     

(e) Be accompanied by a copy of OBCA 60.551 to 60.594.                

60.571 Duty to demand payment. (1) A shareholder sent a dissenters' notice  
described in OBCA 60.567 must demand payment, certify whether the shareholder   
acquired beneficial ownership of the shares before the date required to be set  
forth in the dissenters' notice pursuant to OBCA 60.567(2)(c), and deposit the  
shareholder's certificates in accordance with the terms of the notice.          

 (2) The shareholder who demands payment and deposits the shareholder's shares
under subsection (1) of this section retains all other rights of a shareholder  
until these rights are canceled or modified by the taking of the proposed       
corporate action.                                                               

(3) A shareholder who does not demand payment or deposit the shareholder's  
share certificates where required, each by the date set in the dissenters'      
notice, is not entitled to payment for the shareholder's shares under this      
chapter.                                                                        

60.574 Share restrictions. (1) The corporation may restrict the transfer of 
uncertificated shares from the date the demand for their payment is received    
until the proposed corporate action is taken or the restrictions released under 
OBCA 60.581.                                                                    

(2) The person for whom dissenters' rights are asserted as to uncertificated
shares retains all other rights of a shareholder until these rights are         
canceled or modified by the taking of the proposed corporate action.            

60.577 Payment. (1) Except as provided in OBCA 60.584, as soon as the       
proposed corporate action is taken, or upon receipt of a payment demand, the    
corporation shall pay each dissenter who complied with OBCA 60.571, the amount  
the corporation estimates to be the fair value of the shareholder's shares,     
plus accrued interest.                                                          

(2) The payment must be accompanied by:                                     

 (a) The corporation's balance sheet as of the end of a fiscal year ending
not more than 16 months before the date of payment, an income statement for 
that year and the latest available interim financial statements, if any;    

(b) A statement of the corporation's estimate of the fair value of the  
shares;                                                                     

(c) An explanation of how the interest was calculated;                  

(d) A statement of the dissenter's right to demand payment under OBCA   
60.587; and                                                                 

(e) A copy of OBCA 60.551 to 60.594.                                    

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60.581 Failure to take action. (1) If the corporation does not take the     
proposed action within 60 days after the date set for demanding payment and     
depositing share certificates, the corporation shall return the deposited       
certificates and release the transfer restrictions imposed on uncertificated    
shares.                                                                         

(2) If after returning deposited certificates and releasing transfer        
restrictions, the corporation takes the proposed action, it must send a new     
dissenters' notice under OBCA 60.567 and repeat the payment demand procedure.   

 60.584 After-acquired shares. (1) A corporation may elect to withhold payment
required by OBCA 60.577 from a dissenter unless the dissenter was the           
beneficial owner of the shares before the date set forth in the dissenters'     
notice as the date of the first announcement to news media or to shareholders   
of the terms of the proposed corporate action.                                  

 (2) To the extent the corporation elects to withhold payment under subsection
(1) of this section, after taking the proposed corporate action, it shall       
estimate the fair value of the shares plus accrued interest and shall pay this  
amount to each dissenter who agrees to accept it in full satisfaction of such   
demand. The corporation shall send with its offer a statement of its estimate   
of the fair value of the shares an explanation of how the interest was          
calculated and a statement of the dissenter's right to demand payment under     
OBCA 60.587.                                                                    

60.587 Procedure if shareholder dissatisfied with payment or offer. (1) A   
dissenter may notify the corporation in writing of the dissenter's own estimate 
of the fair value of the dissenter's shares and amount of interest due, and     
demand payment of the dissenter's estimate, less any payment under OBCA 60.577  
or reject the corporation's offer under OBCA 60.584 and demand payment of the   
dissenter's estimate of the fair value of the dissenter's shares and interest   
due, if:                                                                        

(a) The dissenter believes that the amount paid under OBCA 60.577 or    
offered under OBCA 60.584 is less than the fair value of the dissenter's    
shares or that the interest due is incorrectly calculated;                  

(b) The corporation fails to make payment under OBCA 60.577 within 60   
days after the date set for demanding payment; or                           

(c) The corporation, having failed to take the proposed action, does not
return the deposited certificates or release the transfer restrictions      
imposed on uncertificated shares within 60 days after the date set for      
demanding payment.                                                          

(2) A dissenter waives the right to demand payment under this section unless
the dissenter notifies the corporation of the dissenter's demand in writing     
under subsection (1) of this section within 30 days after the corporation made  
or offered payment for the dissenter's shares.                                  

(Judicial Appraisal of Shares)

60.591 Court action. (1) If a demand for payment under OBCA 60.587 remains  
unsettled, the corporation shall commence a proceeding within 60 days after     
receiving the payment demand under OBCA 60.587 and petition the court under     
subsection (2) of this section to determine the fair value of the shares and    
accrued interest. If the corporation does not commence the proceeding within    
the 60-day period it shall pay each dissenter whose demand remains unsettled    
the amount demanded.                                                            

 (2) The corporation shall commence the proceeding in the circuit court of the
county where a corporation's principal office is located, or if the principal   
office is not in this state, where the corporation's registered office is       
located. If the corporation is a foreign corporation without a registered       
office in this state, it shall commence the proceeding in the county in this    
state where the registered office of the domestic corporation merged with or    
whose shares were acquired by the foreign corporation was located.              

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(3) The corporation shall make all dissenters, whether or not residents of  
this state, whose demands remain unsettled parties to the proceeding as in an   
action against their shares. All parties must be served with a copy of the      
petition. Nonresidents may be served by registered or certified mail or by      
publication as provided by law.                                                 

(4) The jurisdiction of the circuit court in which the proceeding is        
commenced under subsection (2) of this section is plenary and exclusive. The    
court may appoint one or more persons as appraisers to receive evidence and     
recommend decision on the question of fair value. The appraisers have the       
powers described in the court order appointing them, or in any amendment to the 
order. The dissenters are entitled to the same discovery rights as parties in   
other civil proceedings.                                                        

(5) Each dissenter made a party to the proceeding is entitled to judgment   
for:                                                                            

(a) The amount, if any, by which the court finds the fair value of the  
dissenter's shares, plus interest, exceeds the amount paid by the           
corporation; or                                                             

(b) The fair value, plus accrued interest, of the dissenter's after-  
acquired shares for which the corporation elected to withhold payment under     
OBCA 60.584.                                                                    

 60.594 Court costs and counsel fees. (1) The court in an appraisal proceeding
commenced under OBCA 60.591 shall determine all costs of the proceeding,        
including the reasonable compensation and expenses of appraisers appointed by   
the court. The court shall assess the costs against the corporation, except     
that the court may assess costs against all or some of the dissenters, in       
amounts the court finds equitable, to the extent the court finds the dissenters 
acted arbitrarily, vexatiously, or not in good faith in demanding payment under 
OBCA 60.587.                                                                    

 (2) The court may also assess the fees and expenses of counsel and experts of
the respective parties in amounts the court finds equitable:                    

(a) Against the corporation and in favor or any or all dissenters if the
court finds the corporation did not substantially comply with the           
requirements of OBCA 60.561 to 60.587; or                                   

(b) Against either the corporation or a dissenter, in favor of any other
party, if the court finds that the party against whom the fees and expenses 
are assessed acted arbitrarily, vexatiously or not in good faith with       
respect to the rights provided by this chapter.                             

 (3) If the court finds that the services of counsel for any dissenter were of
substantial benefit to other dissenters similarly situated, and that the fees   
for those services should not be assessed against the corporation, the court    
may award to counsel reasonable fees to be paid out of the amount awarded the   
dissenters who were benefited.                                                  

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                                                                         ANNEX F

This document comprises summary listing particulars. These summary listing      
particulars have been extracted from the full listing particulars relating to   
New ScottishPower which have been prepared in accordance with the Listing       
Rules made under section 142 of the Financial Services Act 1986.                

A copy of the full listing particulars dated and published on 6 May 1999, from  
which these summary listing particulars have been extracted, has been           
delivered for registration to the Registrar of Companies in Scotland in         
accordance with section 149 of that Act. The full listing particulars alone     
contain full details relating to New ScottishPower and the New Shares to be     
issued in connection with the Merger and the Scheme. Copies of the full         
listing particulars are available for collection during business hours from     
the Company Secretary, New Scottish Power plc, 1 Atlantic Quay, Glasgow G2      
8SP, Scotland during normal business hours on any weekday (Saturdays, Sundays   
and public holidays excepted) from 6 May 1999 to the Merger Date free of        
charge. The full listing particulars may be inspected at the offices of         
Freshfields at 65 Fleet Street, London EC4Y 1HS, England and at the Company     
Announcement Office.                                                            

The Directors are satisfied that these Summary Listing Particulars contain a    
fair summary of the key information set out in the full listing particulars.    

Application has been made to the London Stock Exchange for the New Shares to    
be admitted to the Official List. It is expected that admission will become     
effective and dealings will commence in respect of the New Shares to be issued  
pursuant to the Scheme at 9.00 a.m. on the Scheme Date and that admission will  
become effective and dealings will commence in the New Shares to be issued      
pursuant to the Merger at 9.00 a.m. on the Merger Date. Application has been    
made to list the New ADSs to be issued pursuant to the Scheme and the Merger    
on the NYSE under the symbol "SPI", the symbol currently used for the           
ScottishPower ADSs.                                                             

All statements relating to the business, financial position and prospects of    
New ScottishPower, ScottishPower and PacifiCorp should be viewed in light of    
the Year 2000 compliance issues which are set out in Parts II and III of this   
document.                                                                       

------------------------------------------------------------------------------- 

[LOGO]      New Scottish Power plc                                              
to be renamed Scottish Power plc                        
    (incorporated and registered in Scotland with registered no.
SC193794)                                               

Summary Listing Particulars                                                     
relating to the admission to the Official List                                  
of up to 2,156,000,000 New Shares in New Scottish Power plc                     
and the proposed Merger with PacifiCorp                                         

Sponsored by Morgan Stanley & Co. Limited                                       

------------------------------------------------------------------------------- 

New Scottish Power plc and Scottish Power plc have been advised that the New    
Shares to be issued under the Scheme are exempt from the registration           
requirements of the US Securities Act of 1933, as amended, by virtue of         
section 3(a)(10) thereof and, as a consequence, the New Shares to be issued     
pursuant to the Scheme have not been registered under that Act.                 

The issue of these summary listing particulars has been authorised by the       
London Stock Exchange without approval of their contents.                       

Morgan Stanley & Co. Limited, which is regulated by The Securities and Futures  
Authority Limited, is acting for New Scottish Power plc and Scottish Power plc  
and no one else in connection with the Scheme and the Merger and the proposed   
listing of the New Shares on the London Stock Exchange and will not be          
responsible to anyone other than New Scottish Power plc and Scottish Power plc  
for providing the protections afforded to customers of Morgan Stanley & Co.     
Limited or for giving advice in relation to the Scheme, the Merger or the       
proposed listing.                                                               

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New ScottishPower Summary Listing Particulars                                   

Contents                                                                        
Clause                                                                  Page    

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                                                                [Download Table]
                                                                            
Part I  Scheme of arrangement and recommended Merger of ScottishPower and   
 PacifiCorp                                                                4

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                                                                [Download Table]
                                                               
1.Introduction                                                4
2.Principal features of the Scheme                            4
3.Reasons for the Scheme                                      5
4.Principal features of the Merger                            5
5.Reasons for and benefits of the Merger                      7
6.PacifiCorp's business and revised strategy                  8
7.The Combined Group board and headquarters                   8
8.Forthcoming dividends and future policy                     8
9.Share buy-back                                              9
10.Current trading                                            9
11.UK regulatory reviews                                      9
12.Accounting treatment and reporting                         9
13.Stamp duty reserve tax                                     9
14.Merger EGM, Court Meeting, Scheme EGM and Class Meeting    9
15.Forward looking statements and general                    10
Part II  Information relating to ScottishPower               11

--------------------------------------------------------------------------------

                                                                [Download Table]
                                                                
A.ScottishPower and its activities                            11
1.Energy businesses                                           11
2.Energy supply                                               13
3.Southern Water                                              14
4.Telecommunications                                          15
5.Specialist businesses                                       16
6.Customer services                                           16
7.Certain statements relating to ScottishPower's earnings     17
8.Year 2000 compliance                                        17
9.EMU preparation                                             18
B.Summary financial information for New ScottishPower         19
C.Summary financial information for the ScottishPower Group   19
1.Nature of financial information                             19
2.Summary financial information for ScottishPower             20
Part III  Information relating to PacifiCorp                  24

--------------------------------------------------------------------------------

                                                                [Download Table]
                                                                               
A.PacifiCorp and its activities                                              24
1.Background                                                                 24
2.Revised strategy                                                           24
3.US electricity operations                                                  26
4.Powercor                                                                   28
5.Other operations                                                           29
6.Certain statements made by PacifiCorp                                      29
7.Year 2000 compliance                                                       29
B.Summary financial information for PacifiCorp                               31
1.Nature of financial information                                            31
2.Summary financial information for PacifiCorp                               31
3.Summary of differences between US GAAP and UK GAAP and unaudited summary     
 statement of PacifiCorp's financial information under UK GAAP               36
Part IV  Pro forma statement of net assets, indebtedness and working capital 38

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A.Pro forma statement of net assets       38
B.Indebtedness of the Combined Group      39
C.Working capital of the Combined Group   39

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Clause                                                                                    Page
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Part VFurther details of the Merger                                                         40
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A.Summary terms of the Merger                                                               40
1.Introduction                                                                              40
2.Terms                                                                                     40
3.Shareholder approval and other conditions                                                 40
4.Certain representations, warranties and covenants                                         41
5.Directors and management of the Combined Group                                            42
6.Termination of the Merger Agreement                                                       42
7.Termination payments                                                                      43
B.Factors considered by ScottishPower in assessing the Merger                               44
Part VIRegulatory aspects of the Merger, certain regulatory reviews                         46
 and environmental matters                                                                    
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A.Regulatory aspects of the Merger                                                          46
1.UK approvals                                                                              46
2.US and Australian approvals                                                               46
3.General                                                                                   48
B.Certain regulatory reviews                                                                49
1.    ScottishPower                                                                         49
2.    PacifiCorp                                                                            51
C.Environmental matters                                                                     52
1.    ScottishPower                                                                         52
2.    PacifiCorp                                                                            52
Part VIIAdditional information                                                              53
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1.Responsibility                                                                            53
2.Incorporation and activity                                                                53
3.Share capital of New ScottishPower                                                        53
4.    Limitations on shareholdings, summary of principal differences between                55
      the New ScottishPower Articles and the ScottishPower Articles and future proposals      
5.PacifiCorp share capital                                                                  57
6.Directors of New ScottishPower                                                            60
7.Directors' and other interests in ScottishPower and New ScottishPower                     60
8.ScottishPower employee share schemes                                                      64
9.Effect of the Scheme on the ScottishPower Share Schemes                                   65
10.New ScottishPower Employee Share Schemes                                                 65
11.Certain interests of directors and Executives of PacifiCorp relating to the Merger       65
12.Principal investments                                                                    69
13.Material contracts                                                                       70
14.Litigation                                                                               72
15.Significant change                                                                       73
16.General                                                                                  73
17.Documents available for inspection                                                       74
Definitions                                                                                 75

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Part I                                                                          
Scheme of arrangement and recommended Merger of ScottishPower and PacifiCorp    
1. Introduction                                                                 
On 7 December 1998, the boards of ScottishPower and PacifiCorp announced that   
they had reached agreement on the proposed merger of their two companies.       

The Merger is subject to a number of conditions, including its approval by      
both the ScottishPower Shareholders and the PacifiCorp Shareholders. The        
Merger is also conditional on a number of regulatory, tax and other consents    
and confirmations in the US and the UK. The boards of ScottishPower and         
PacifiCorp have each recommended their respective shareholders to vote in       
favour of the Merger. The Merger is expected to be completed later this year.   

ScottishPower also announced on 25 February 1999 its intention to recommend to  
ScottishPower Shareholders a proposal to introduce a new holding company for    
the ScottishPower Group, New ScottishPower (to be renamed Scottish Power plc    
upon the Scheme becoming effective), by way of a court sanctioned scheme of     
arrangement. The Scheme will result in holders of ScottishPower Shares holding  
the same number of shares having the same economic and voting rights in New     
ScottishPower as they hold in ScottishPower. These proposals are contained in   
the Scheme Circular. The Merger is not conditional upon the Scheme becoming     
effective nor is the Scheme conditional upon the Merger becoming effective.     

2. Principal features of the Scheme                                             

Structure                                                                       
Under the Scheme, all the ScottishPower Shares in issue as at 5:30 p.m. on the  
Scheme Record Date (the "Scheme Shares") and the ScottishPower Special Share    
will be cancelled on the Scheme Date (which is expected to be on 30 July        
1999). In consideration of the cancellation, Scheme Shareholders will receive   
in respect of any Scheme Shares held as at 5.30 p.m. on the Record Date:        

For each Scheme Share cancelled          One New Share                  

The rights attaching to the New Shares are substantially the same as those      
attaching to the existing ScottishPower Shares. A summary of the principal      
differences from the rights of the existing ScottishPower Shares are set out    
in paragraph 4 of Part VII of this document.                                    

Following the Scheme becoming effective, holders of ScottishPower ADSs will,    
in respect of any ScottishPower ADSs held as at 5.30 p.m. (New York time) on    
the Record Date, instead hold:                                                  

For each ScottishPower ADS               One New ADS (representing      
cancelled (representing                  the right to receive four      
the right to receive four                New Shares)                    
ScottishPower Shares)                                                   

The Special Shareholder will have issued to him the New ScottishPower Special   
Share which will confer the same rights in relation to New ScottishPower as     
the existing ScottishPower Special Share confers in relation to ScottishPower   
together with additional consent rights.                                        

Following the cancellation of the Scheme Shares and the ScottishPower Special   
Share, new ScottishPower Shares will be issued to New ScottishPower which       
will, as a result, become the holding company of ScottishPower and the Group.   

Effect of the Scheme                                                            
The effect of the Scheme will be that Scheme Shareholders will have their       
respective interests in ScottishPower replaced by equivalent proportionate      
interests in New ScottishPower (of which ScottishPower will be a direct         
subsidiary) and, subject to the effect of the exercise of options to subscribe  
ScottishPower Shares granted under the ScottishPower Share Option Schemes and   
the Southern Water Sharesave Scheme, their proportionate interests in the       
profits, net assets and dividends of the Group will not be affected.            

Conditions to the Scheme becoming effective                                     
A Scheme Circular has been sent to ScottishPower Shareholders which gives full  
details of the Scheme and the action to be taken by them. The Scheme Circular   
also contains Notices of the Court Meeting, the Scheme EGM and the Class        
Meeting which are being held to obtain the necessary shareholder approvals to   
implement the Scheme.                                                           

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The Scheme will not become effective and binding unless:                        

.  it is approved by a simple majority in number of those ScottishPower     
Shareholders present and voting (either in person or by proxy) at the 
Court Meeting representing not less than 75% of the number of the     
ScottishPower Shares held by such ScottishPower Shareholders;         

.  the resolution numbered 1 set out in the Notice of Scheme EGM to approve 
the Scheme, the cancellation of the ScottishPower Shares and issue of 
new ScottishPower Shares and certain amendments to the ScottishPower  
Articles is passed as a special resolution;                           

.  the resolution set out in the Notice of Class Meeting to approve the     
reduction of capital of ScottishPower pursuant to the Scheme and any  
variation to the rights of the ScottishPower Shareholders which may   
occur (or be deemed to occur) as a result of such reduction of capital
or otherwise as a result of the Scheme is passed as an extraordinary  
resolution;                                                           

.  the consent in writing of the Special Shareholder is obtained;           

.  it is sanctioned by the Court and the Court confirms the reduction of    
capital which occurs as a result of the cancellation of ScottishPower 
Shares and the ScottishPower Special Share as part of the Scheme; and 

.  a copy of the order of the Court sanctioning the Scheme and confirming   
the reduction of ScottishPower's capital has been delivered to the    
registrar of companies in Scotland.                                   

In addition, the Directors will not take the necessary steps to enable the      
Scheme to become effective unless, at the relevant time, they consider that it  
continues to be in ScottishPower's best interests and the following conditions  
have been satisfied or waived:                                                  

.  various regulatory approvals or confirmations being given;               

.  various tax clearances and confirmations being obtained from the Inland  
Revenue;                                                              

.  the London Stock Exchange agreeing to admit the New Shares issued and to 
be issued in connection with the Scheme to the Official List (subject 
only to allotment) and its agreement not being withdrawn prior to the 
Scheme Date; and                                                      

.  the NYSE indicating on satisfactory terms that it intends to authorise   
the listing of the New ADSs.                                          

If the Scheme is sanctioned by the Court and the conditions to the Scheme are   
satisfied or waived, it is expected to become effective and dealings in the     
New Shares to be issued pursuant to the Scheme are expected to commence on 30   
July 1999. If the Scheme has not become effective by 30 June 2000 (or such      
later date as the Court may allow), it will lapse, in which event the Special   
Shareholder will remain the holder of the ScottishPower Special Share,          
ScottishPower Shareholders will remain holders of ScottishPower Shares,         
ScottishPower Shares will continue to be listed on the London Stock Exchange    
and the ScottishPower ADSs will continue to be listed on the NYSE.              

3. Reasons for the Scheme                                                       
The Directors have decided that the Group would be more effective if it were    
structured with a holding company which does not have any operating             
activities. In particular, this will facilitate:                                

.  a clearer demarcation between certain of the Group's activities; and     

.  the financial independence of different operating areas of the Group.    

It is also anticipated that the creation of a new holding company for the       
Group will assist the regulatory review process of the Merger in the UK and in  
the US.                                                                         

4. Principal features of the Merger                                             

Structure                                                                       
The Merger is to be effected by a statutory merger under Oregon law whereby     
MergerSub, which will be a new wholly owned indirect US subsidiary of New       
ScottishPower, will be merged with and into PacifiCorp and PacifiCorp will      
become a wholly owned indirect subsidiary of New ScottishPower in accordance    
with the terms of the Merger Agreement.                                         

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Merger terms                                                                    
Under the terms of the Merger, PacifiCorp Common Shareholders (other than New   
ScottishPower or any subsidiary of New ScottishPower or PacifiCorp) will be     
entitled to receive New ADSs or New Shares on the following basis.              

For each share of                        0.58 New ADSs (each New ADS    
PacifiCorp Common Stock                  represents four New Shares) or 
                         2.32 New Shares

The New ADSs will be listed on the NYSE and the New Shares will be listed on    
the London Stock Exchange.                                                      

PacifiCorp Common Shareholders who would otherwise have been entitled to        
receive a fraction of a New ADS or a New Share will receive a cash payment      
instead, determined by reference to the price of a ScottishPower ADS or a       
ScottishPower Share (as the case may be) on the last day of trading             
immediately preceding the Merger Date.                                          

Upon the Merger becoming effective, all options to acquire PacifiCorp Common    
Stock (other than options granted on 9 February 1999) under the PacifiCorp      
Stock Incentive Plan which are not yet exercisable will become exercisable and  
all unexercised options (including those granted on 9 February 1999) will       
convert into options to acquire New ADSs or New Shares (as the case may be)     
after adjustment to take account of the Exchange Ratio. Based on PacifiCorp     
options granted as at 27 April 1999 (being the latest practicable date prior    
to the publication of this document), this will result in a maximum of          
approximately 14 million New Shares being placed under option. All unvested     
awards of restricted PacifiCorp Common Stock granted under the PacifiCorp       
Stock Plans will be converted into awards of New ADSs or New Shares, as the     
case may be, and all such unvested awards (other than awards granted on 9       
February 1999 and all awards granted under the PacifiCorp Non-Employee          
Directors Stock Compensation Plan) will become fully vested and free of         
restrictions. As at 27 April 1999 (being the latest practicable date prior to   
the publication of this document) not more than 6,080,085 unissued shares of    
PacifiCorp Common Stock are the subject of such vested and unvested options     
and there were not more than 233,918 existing shares of restricted PacifiCorp   
Common Stock. PacifiCorp may grant further options to acquire shares of         
PacifiCorp Common Stock or restricted shares of PacifiCorp Common Stock in the  
ordinary course in the period prior to the Merger Date. Further details of      
these arrangements are set out in paragraph 11 of Part VII.                     

The PacifiCorp Preferred Stock will remain outstanding following the Merger     
Date and will not be acquired or cancelled as part of the Merger. However, the  
Merger Agreement requires PacifiCorp to redeem three series of its No Par       
Serial Preferred Stock prior to the Merger Date. Further details of the         
PacifiCorp Preferred Stock are set out in paragraph 5 of Part VII.              

The Merger values the PacifiCorp Common Stock at approximately (Pounds)3.64     
billion and each PacifiCorp Share at $19.37 ((Pounds)12.01) based on the        
middle market quotation for a ScottishPower Share as quoted in the Daily        
Official List, and on the fully diluted issued share capital of PacifiCorp, on  
27 April 1999 (being the latest practicable date prior to the publication of    
this document).                                                                 

A description of the principal terms of the Merger is set out in Section A of   
Part V.                                                                         

Shareholder approval and other conditions                                       
The Merger is subject to shareholder approvals and a number of regulatory and   
other conditions. Subject to obtaining these consents and clearances and        
shareholder approvals, the Merger is expected to be completed later this year.  
The Merger is not conditional on the Scheme becoming effective. If              
ScottishPower gives notice to PacifiCorp that the Scheme will not proceed, the  
Merger will proceed on the basis described above but with ScottishPower         
substituted for New ScottishPower.                                              

Termination rights                                                              
Either ScottishPower (or, following the Scheme Date, New ScottishPower) or      
PacifiCorp can terminate the Merger Agreement in the circumstances set out in   
paragraph 6 of Section A of Part V.                                             

The Merger Agreement requires that PacifiCorp pay a termination fee of US$250   
million to ScottishPower (or, following the Scheme Date, to New ScottishPower)  
if the Merger Agreement is terminated under certain circumstances following a   
bona fide proposal or attempt by a third party to acquire PacifiCorp. The       
Merger Agreement requires ScottishPower (or, following the Scheme Date, New     
ScottishPower) to pay a termination fee of US$250 million to PacifiCorp if      
PacifiCorp terminates the                                                       

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Merger Agreement following a change in control (other than pursuant to the      
Scheme) of ScottishPower (or, following the Scheme Date, of New                 
ScottishPower). In addition, the Merger Agreement requires a party to pay a     
termination fee of US$10 million if, under certain circumstances, its           
shareholder approval is not obtained and the other party's shareholder          
approval is obtained. Further details of these termination payments are set     
out in paragraph 7 of Section A of Part V.                                      

5. Reasons for and benefits of the Merger                                       
The Merger will create an international utility company with significant        
energy businesses in the UK and the US and approximately seven million          
customers. The Directors believe that significant benefits will be derived      
from the Merger and that the Combined Group will be more operationally          
efficient and stronger financially than either ScottishPower or PacifiCorp      
would be on its own. The Merger is expected to enhance New ScottishPower's      
earnings per share, before goodwill amortisation, from the first full year      
after completion of the Merger compared to the Directors' present expectations  
for the existing ScottishPower Group. The Merger represents a major step in     
ScottishPower's stated strategy of achieving growth and creating value for      
shareholders by utilising its core skills in the US.                            

ScottishPower has carried out detailed analyses of the US market and possible   
combination partners. The Directors believe that PacifiCorp is an excellent     
partner, in that it combines:                                                   

.  a sound business, good quality assets and an extensive customer base in  
a region of the US benefiting from good economic growth;              

.  substantial scope for improved performance and efficiency;               

.  experienced operational management; and                                  

.  low cost coal resources and generation plant.                            

ScottishPower has a proven track record of delivering value to shareholders     
through improving operating efficiencies and integrating acquisitions. Since    
privatisation in 1991, ScottishPower has demonstrated its ability to reduce     
operating costs within its core operations whilst improving standards of        
customer service. ScottishPower has successfully completed and integrated two   
substantial acquisitions in the UK, Manweb and Southern Water. ScottishPower    
achieved benefits for shareholders beyond its initial expectations, by          
implementing cost savings and disposing of non-core operations, while           
simultaneously improving customer service.                                      

The Combined Group will focus on accelerating PacifiCorp's strategy to improve  
the performance of its western US electricity business. ScottishPower and       
PacifiCorp believe that the application of best practices of the two companies  
will reduce costs and increase operating efficiencies with the goal of          
enhancing shareholder value. Although it is difficult to predict the source of  
cost savings, the Directors expect most, if not all, of the anticipated cost    
savings to come from the application of best practices in operational and       
overhead areas rather than through elimination of costs duplicated between      
ScottishPower and PacifiCorp. The Board believes that this will enable          
PacifiCorp, which has recently suffered from a period of financial under-       
performance, to achieve more quickly its stated aim of earning the authorised   
regulatory rate of return in each US state in which it conducts business and    
will bring PacifiCorp's non-generation costs per customer in the US in line     
with some of the most efficient comparable utilities, based on comparisons      
drawn from information filed with FERC.                                         

To assist the delivery of these improvements, the Directors intend to transfer  
a number of senior managers with integration experience into PacifiCorp. Some   
PacifiCorp managers will also be transferred into ScottishPower's UK            
operations to gain experience of ScottishPower's working practices.             

The Merger should enable ScottishPower to apply its proven utility management   
skills to PacifiCorp. The Directors believe that these skills, developed in     
the competitive UK market, will assist PacifiCorp as competition is introduced  
into the US generation and supply businesses.                                   

The Directors also intend to enhance significantly the performance and service  
standards of PacifiCorp, and to increase the range of energy services offered   
to PacifiCorp customers, by investing in PacifiCorp's existing US businesses    
and by applying the best practices drawn from both ScottishPower and            
PacifiCorp. ScottishPower and PacifiCorp share a common commitment to high      
standards of customer service, to the environment and to the communities they   
serve.                                                                          

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Further information on the Merger is set out in Parts V and VI. A description   
of the principal terms of the Merger Agreement and of the conditions of the     
Merger is set out in Section A of Part V. Details of the regulatory approvals   
required for the Merger are set out in Section A of Part VI.                    

6. PacifiCorp's business and revised strategy                                   
PacifiCorp is one of the largest publicly held electricity utilities in the     
United States. PacifiCorp's principal activities are electricity generation     
and sales to domestic, industrial, agricultural and commercial end-users (the   
"retail" business) and to distribution companies, other generators and power    
marketers for on-sale (the "wholesale" business) in the United States.          
PacifiCorp also has significant electricity operations in Victoria, Australia.  
Further information on PacifiCorp is set out in Part III and also in Parts IV,  
VI and VII. PacifiCorp adopted a revised strategy in 1998, which the Board      
supports.                                                                       

7. The Combined Group board and headquarters                                    
ScottishPower's senior management will remain in place in the Combined Group    
following the Merger. The ScottishPower Group will continue to be               
headquartered in Glasgow, with its principal US office in Portland, Oregon.     
The boards of ScottishPower and New ScottishPower are the same and will not be  
changed as a result of the Scheme becoming effective.                           

It was announced on 27 January 1999 that Murray Stuart has postponed his        
retirement and will continue as Chairman of ScottishPower while the Merger      
with PacifiCorp is being completed. Ian Robinson will continue as Chief         
Executive and Ian Russell as Deputy Chief Executive and Finance Director. The   
appointment of Alan Richardson as Executive Director with responsibility for    
managing all US aspects of the Merger was also announced with effect from 1     
April 1999. He will take up the role of Chief Executive Officer of PacifiCorp   
on completion of the Merger. Also with effect from 1 April 1999, Charles Berry  
was appointed as Executive Director with responsibility for the Group's energy  
supply and retail businesses. On 27 January 1999 Ken Vowles was given           
additional executive responsibility and was appointed Executive Director UK     
Power Operations. Sir Ronald Garrick's resignation as a non-executive Director  
was announced on 26 April 1999 and took effect on 30 April 1999. Duncan Whyte   
will leave the ScottishPower Group on 31 May 1999 to become the Chief           
Executive of The Weir Group plc.                                                

It is proposed that Keith McKennon, currently Chairman, Chief Executive         
Officer and President of PacifiCorp, will join the New ScottishPower board as   
Deputy Chairman, together with Nolan Karras and Robert Miller, two non-         
executive directors from PacifiCorp, in each case with effect from the Merger   
Date.                                                                           

In his role as the new Chief Executive Officer of PacifiCorp, Alan Richardson   
will work closely with Richard O'Brien, the Chief Operating Officer of          
PacifiCorp, who will continue in that role and also become President of         
PacifiCorp. The PacifiCorp board of directors will be reconstituted as an       
executive-only board, chaired by Ian Robinson, with executives from New         
ScottishPower having the majority of seats. A PacifiCorp advisory board will    
be established, the function of which will be to advise the PacifiCorp board    
with respect to general business strategy, opportunities and activities in      
PacifiCorp's market area and customer relationships.                            

An Interim Joint Executive Committee, jointly chaired by Ian Robinson and       
Keith McKennon, has been established to coordinate the transition in the        
period up to the Merger Date.                                                   

8. Forthcoming dividends and future policy                                      
Following completion of the Merger, New ScottishPower intends to move to        
quarterly reporting and payment of quarterly dividends. It is expected that a   
dividend will be paid in February, May, August and November of each year,       
which is consistent with the current timing of PacifiCorp's dividend payments.  
To facilitate this change, the New ScottishPower Articles permit the Board to   
declare interim dividends and final dividends (see paragraph 4 of Part VII).    

New ScottishPower is committed to ScottishPower's stated aim of achieving 7%    
to 8% real dividend growth per annum until at least the UK regulatory reviews   
which take effect in the year 2000, whilst maintaining a prudent level of       
dividend cover. It is New ScottishPower's current aim to deliver real dividend  
growth thereafter and this will be re-examined once the outcome of these        
regulatory reviews is known.                                                    

PacifiCorp Common Shareholders will receive PacifiCorp dividends in respect of  
the period of time up to the Merger Date, and will not receive dividends from   
New ScottishPower in respect of such period of time even if such dividends are  
payable after the Merger Date.                                                  

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9. Share buy-back                                                               
The Directors intend to implement a share buy-back programme of up to           
(Pounds)500 million following approval of the Merger by both ScottishPower      
Shareholders and PacifiCorp Shareholders but prior to the Merger Date. This is  
intended to achieve further financial efficiency, with an expected net          
interest cover of approximately three times, whilst targeting an "A" credit     
rating. It is anticipated that the buy-back will be undertaken through on-      
market purchases.                                                               

10. Current trading                                                             
On 6 May 1999, ScottishPower announced its preliminary results for the year     
ended 31 March 1999. These results represented a satisfactory financial         
performance from the Group and reflected ScottishPower's focus on investing to  
grow the business. On 30 March 1999, PacifiCorp announced its results for the   
year to 31 December 1998, which were in line with ScottishPower's               
expectations.                                                                   

Trading for the first month of ScottishPower's 1999/2000 financial year has     
also been satisfactory. The Directors intend to continue to invest to develop   
the UK business, through winning further gas and electricity customers,         
investing in new generation and infrastructure assets and building              
ScottishTelecom, thereby delivering long term value to shareholders.            

Looking ahead into the new millennium, regulation will continue to have a       
significant bearing on the profitability and investment capability of the       
ScottishPower Group. Notwithstanding the Group's success to date in reducing    
costs and improving efficiency, regulatory factors may have a greater           
influence than previously.                                                      

The Merger should, when completed, create one of the largest international      
utility companies and open up more growth opportunities for the Combined        
Group. The Merger is expected to be earnings enhancing from the first full      
year, before goodwill amortisation, compared to the Director's present          
expectations for the existing ScottishPower Group.                              

11. UK regulatory reviews                                                       
Looking ahead it is expected that regulation will continue to have a material   
bearing on the profitability and investment capability of the Group. The        
Group's regulated monopoly businesses comprise electricity transmission and     
distribution in ScottishPower and electricity distribution in Manweb (together  
representing 44% of the Group's 1999 operating profits) and the water supply    
and wastewater business in Southern Water (representing 33% of the Group's      
1999 operating profits). The regulatory price controls relating to these areas  
of the Group's business for the five year period commencing 1 April 2000 are    
currently being reviewed, and reviews are also taking place in relation to      
supply and generation. The Board believes that the Group has high standards of  
operation and customer service. Nevertheless, the Board is unable to judge      
accurately the outcome of these reviews and there can be no assurance that      
they will not materially affect Group profits. It is expected that final        
proposals resulting from these reviews will be known by November 1999. Further  
discussion of regulatory matters is set out in Part VI.                         

12. Accounting treatment and reporting                                          
The Scheme will be accounted for using the merger method of accounting in the   
UK. The Merger will be accounted for using the acquisition method of            
accounting in the UK and the purchase method of accounting in the US.           

13. Stamp duty reserve tax                                                      
Stamp duty reserve tax of an amount equal to 1.5% of the issue price of New     
Shares issued in the Merger in the form of New ADSs will be payable. Based on   
the market price for the ScottishPower Shares on 27 April 1999 (being the       
latest practicable date prior to the publication of this document), and on the  
assumption that all New Shares issued in the Merger are issued in the form of   
New ADSs, stamp duty reserve tax of approximately (Pounds)54.64 million would   
be payable. Any such tax will be paid by PacifiCorp. No stamp duty or stamp     
duty reserve tax is expected to be payable in connection with the               
implementation of the Scheme.                                                   

14.  Merger EGM, Court Meeting, Scheme EGM and Class Meeting                    
The Merger EGM, Court Meeting, Scheme EGM and Class Meeting have been convened  
for 15 June 1999, starting at 10.00 a.m.                                        

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15. Forward looking statements and general                                      
Certain statements contained in this document, particularly those regarding     
the possible or assumed future performance, costs, dividends, results of        
operations, reserves and growth of ScottishPower, New ScottishPower and         
PacifiCorp, as well as statements preceded by, followed by or that include the  
words "believes", "expects", "estimates", "anticipates" or similar              
expressions, are or may be considered to be forward-looking statements that     
involve risks and uncertainties. It should be understood that a variety of      
factors, including the specific factors identified in the discussions           
accompanying such forward-looking statements, future levels of industry         
generation and supply, demand and pricing, political stability and economic     
growth in the relevant areas in which the Group has operations, the ability of  
ScottishPower and PacifiCorp to integrate their businesses successfully         
following the Merger, development and use of technology, the actions of         
competitors, natural disasters and other changes to business conditions and     
other factors discussed elsewhere in this document, could affect the future     
results of ScottishPower, New ScottishPower and PacifiCorp and could cause      
those results to differ materially from those expressed in any forward-looking  
statements.                                                                     

ScottishPower Shareholders should read the whole document and not just rely on  
key or summarised information.                                                  

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Part II                                                                         
Information relating to ScottishPower                                           
A. ScottishPower and its activities                                             
The ScottishPower Group is a leading multi-utility business in the UK serving   
approximately five and a half million homes across Scotland, England and        
Wales. The Group's activities span the generation, transmission, distribution   
and supply of electricity, gas supply, water supply and wastewater services,    
telecommunications, retailing of electrical appliances, technology and          
contracting services. The ScottishPower Group, which has its headquarters in    
Glasgow, is one of the largest industrial groups in the UK.                     

In the audited financial statements for the year ended 31 March 1999,           
ScottishPower reported a consolidated profit before tax of (Pounds)644 million  
(1998: (Pounds)640 million; 1997: (Pounds)558 million) on turnover of           
(Pounds)3,242 million (1998: (Pounds)3,128 million; 1997: (Pounds)2,941         
million). Earnings per share were 42.52p (1998: 41.28p; 1997: 38.11p) before    
windfall tax and goodwill amortisation, and 42.42p (1998: 14.41p; 1997:         
38.11p) after windfall tax and goodwill amortisation. The net dividends per     
share amounted to 22.50p (1998: 20.40p; 1997: 18.50p) for the year.             

ScottishPower employed an average of 15,196 personnel (stated on a full-time    
equivalent basis) in the year ended 31 March 1999 compared with an average of   
14,657 in the year ended 31 March 1997 and an average of 14,356 in the year     
ended 31 March 1998. As at 31 March 1999, 3,588 were employed in the energy     
businesses, 1,388 in energy supply, 2,201 in Manweb, 2,383 in                   
telecommunications, 2,262 in Southern Water and 4,210 in the specialist         
businesses (including corporate functions).                                     

Tighter regulation and increased competition has driven change across each of   
the sectors in which ScottishPower operates. ScottishPower has responded by     
continuing to improve the cost performance and efficiency of its businesses.    

ScottishPower's major businesses are described in paragraphs 1 to 4 below:      

1. Energy businesses                                                            

Generation                                                                      
The generation business involves the generation of electricity in               
ScottishPower's own plants and the purchase of external supplies of energy for  
sale to the electricity supply businesses of ScottishPower, other supply        
businesses in Scotland and to the wholesale market in England and Wales via     
the Anglo-Scottish Interconnector described below. ScottishPower's owned        
generation capacity comprises coal, gas, hydro and wind power. ScottishPower    
owns and operates power stations with a net output capacity of more than 4,000  
MW. Further capacity of over 2,800 MW is available to ScottishPower under       
contract from nuclear, gas and hydro-electric stations operated by other        
companies. As ScottishPower produces electricity at a cost that is below the    
price at which the wholesale electricity trading market in England and Wales    
(the "Pool") purchases electricity, ScottishPower is currently able to take     
advantage of the prices at which electricity is purchased and sold through the  
Pool.                                                                           

ScottishPower's three largest power stations are Longannet (2,304 MW coal-      
fired), Cockenzie (1,152 MW coal-fired) and Cruachan (400 MW pumped storage).   
Construction of a 400 MW Combined Cycle Gas Turbine station near Brighton has   
commenced, and commercial operation is planned for winter 2000. The project is  
a joint venture, in which ScottishPower has a 50% economic and voting           
interest, with CSW International Inc., the US parent company of SEEBOARD.       

ScottishPower is contracted to take 74.9% of the output from two power          
stations, Hunterston "B" and Torness, which are owned by British Energy (UK)    
Limited, a subsidiary of British Energy plc. This contract terminates in 2005.  
There are also agreements in place with Scottish and Southern Energy plc        
("Scottish and Southern") whereby ScottishPower has a right to 50% of the       
capacity of Scottish of Southern's Peterhead power station and up to 200MW of   
Scottish and Southern's conventional hydro generating capacity. Scottish and    
Southern has access to up to 576 MW of ScottishPower's coal-fired generating    
capacity. These contracts account for half of ScottishPower's overall           
generation requirements.                                                        

In light of the new competitive environment, the generation business has been   
restructured in order to focus effectively on its key activities in fossil-     
fuel fired, gas and renewable energy sources.                                   

The focus of the generation business continues to be to reduce costs, improve   
efficiency and enhance environmental performance. Investment is being made in   
ScottishPower's Longannet and Cockenzie                                         

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power stations and a major new cost savings initiative has been launched.       
Acquisition of additional generation capacity is kept under consideration.      

Progress on developing Hatfield Moors as a gas storage site continues with all  
necessary planning and consents for construction obtained. The (Pounds)17.6     
million project remains on target to meet the winter 1999 peak demands of some  
450,000 customers.                                                              

ScottishPower's fuel purchasing strategy aims to achieve competitive fuel       
prices while balancing the need for security and flexibility of supply. The     
major components of the Group's fuel portfolio are coal, gas and oil. The       
majority of the Group's coal requirements are sourced in Scotland under long-   
term contracts. Under a 6 year contract with Scottish Coal (Deep Mine)          
Limited, which commenced on 1 April 1998, ScottishPower will take 1.67 million  
tonnes per annum of low sulphur coal. Up to a further 1.7 million tonnes of     
coal will be supplied yearly by other Scottish suppliers under long-term        
contracts of between three and five years, also commencing on 1 April 1998.     
The balance of the Group's coal requirements will be sourced through the        
exercise of options under these long-term contracts and/or short-term           
competitive tenders. The Group's gas purchasing strategy is based on a          
combination of long, medium and short-term contracts. In accordance with this   
strategy, the Group has agreed contracts direct with gas producers on a non-    
interruptible supply basis. The Group has two long-term contracts (with terms   
of, respectively, 10 and 15 years, from 1994) for supply from major gas         
fields. From time to time, ScottishPower purchases heavy fuel oil in the        
international spot market when favourable prices are available.                 

Generation sales in the year ended 31 March 1999 were 29,679 GWh.               
Approximately 22,246 GWh were attributable to ScottishPower's energy supply     
business, with the remaining 7,433 GWh either being sold to other suppliers or  
exported through the Anglo-Scottish Interconnector to the Pool in England and   
Wales.                                                                          

Power systems                                                                   
ScottishPower owns and manages a substantial electricity network comprising     
both the distribution system to customers in its two authorised areas and, in   
Scotland, the high voltage transmission system (132 kilovolts and above). The   
latter includes all the assets of the Anglo-Scottish Interconnector which are   
in its Scottish authorised area. The main function of the power systems         
business is to develop and maintain an efficient, co-ordinated and economical   
network, including high voltage connections to England, and to operate and      
develop the distribution system to approved standards of safety and             
reliability. Within the power systems business the focus continues to be on     
reducing costs and improving service. Its principal business activities         
involve the provision of new connections, construction and refurbishment of     
the system, maintenance and fault repair, setting tariffs and collecting        
revenues for the use of its authorised networks, and all metering activities,   
from provision and repair to meter reading. The power systems business          
continues to focus strongly on the efficient delivery of electricity to         
customers in its franchise areas via its overhead and underground network.      
Investment in the business has included significant upgrades and                
refurbishments to the transmission and distribution system.                     

ScottishPower's power systems business is divided into three regions in         
Scotland, three regions in the Manweb authorised area and a metering business   
which covers both areas. It has a distribution/transmission network which       
extends to approximately 113,000 kilometres, with 63,000 kilometres of          
underground cables and some 50,000 kilometres of overhead lines.                

The power systems network is connected to the transmission system of the        
National Grid Company plc by the Anglo-Scottish Interconnector, which has an    
upper limit of transfer capability agreed currently as 1,850 MW. The            
ScottishPower network is also connected at several points to the transmission   
network of Scottish and Southern. An agreement has been made with the National  
Grid Company plc and Scottish and Southern to upgrade the maximum capacity of   
the Anglo-Scottish Interconnector to 2,200 MW. Planning approval has now been   
granted by HM Government for the reinforcement necessary in England and Wales   
to give full effect to the upgrade. The current completion date for this        
project is September 2001. ScottishPower's generation business will provide     
75% of the capital cost of the upgrade. Pursuant to an agreement with Scottish  
and Southern, ScottishPower has the contractual right to 54% of the pre-        
upgrade capacity and up to 75% of the additional upgrade capacity of the        
Anglo-Scottish Interconnector. ScottishPower's Composite Licence only entitles  
it to reserve capacity to itself                                                

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with the consent of the DGES, and obliges it to offer to enter into an          
agreement with a third party applicant for use of the Anglo-Scottish            
Interconnector, except when the DGES determines that the capacity of the        
Anglo-Scottish Interconnector is insufficient to accommodate the requirements   
of the applicant having regard to such amount of capacity as has already been   
reserved to ScottishPower (with the DGES's consent) or a third party. The DGES  
determined, in December 1998, that ScottishPower may not reserve all of its     
allocated capacity on the Anglo-Scottish Interconnector to its own generation   
business. The DGES also determined that capacity was not insufficient to        
accommodate the requirements of British Nuclear Fuels Limited ("BNFL"), and     
specified that ScottishPower should make available to BNFL 196 MW of capacity   
for the period 1 January 1999 to 31 March 2002. In the case of National Power   
plc, the DGES declined to make a determination on the grounds that National     
Power plc had not provided sufficient information in support of its             
application. Following these determinations, ScottishPower has made             
applications to the DGES to reserve capacity of 75% of the additional upgrade   
capacity to itself and, with respect to the existing capacity is in             
negotiation with the DGES with respect to amendments to the rules governing     
the allocation of capacity.                                                     

The determinations referred to above resulted from requests to ScottishPower    
from BNFL and National Power plc for access to the Anglo-Scottish               
Interconnector, and a request by ScottishPower that the whole of the capacity   
on the Anglo-Scottish Interconnector to which ScottishPower is contractually    
entitled be reserved to ScottishPower's generation business. On 31 March 1999,  
ScottishPower extended on an interim basis its existing Use of Interconnector   
Agreement with BNFL, and negotiations are ongoing to enter into a new           
agreement to provide BNFL with access up to 196 MW per year until 31 March      
2002 and potentially beyond to accommodate the remaining life of the            
Chapelcross power station. ScottishPower is currently disputing with Scottish   
and Southern the implications of ScottishPower being obliged to permit BNFL     
continued access to the Anglo-Scottish Interconnector. ScottishPower contends   
that under the existing contractual arrangements between ScottishPower and      
Scottish and Southern only 54% of BNFL's required access of 196 MW should be    
deducted from ScottishPower's share of access. Scottish and Southern contends   
that all of BNFL's required access should be deducted from ScottishPower's      
share of access. The Directors believe it is likely that a compromise will be   
reached with Scottish and Southern although, at the latest practicable date     
before publication of this document, negotiations were still ongoing.           

ScottishPower has entered into an agreement with Northern Ireland Electricity,  
a subsidiary of Viridian Group PLC, for the construction of a Scottish-         
Northern Irish Interconnector with a transfer capability of 250 MW and an       
agreement for the supply by ScottishPower of around 1,095 GWh of electricity    
per year over a period of 70 months from the date of commissioning. These       
agreements amend and restate agreements originally entered into in 1994. Once   
completed, the Northern Irish and marine sections of the Scottish-Northern-     
Irish Interconnector will be owned by Northern Ireland Electricity, and the     
Scottish section from the converter station will be owned by ScottishPower.     
Northern Ireland Electricity will provide the full capital cost of this         
Interconnector. Approval has been obtained from the Northern Ireland Office     
for the Regulation of Electricity and Gas for this agreement although European  
Commission approval and UK competition clearance are still being sought. It is  
anticipated that the Scottish-Northern Irish Interconnector will commence       
commercial operation in December 2001.                                          

In late December 1998 and early January 1999, the Group's network in Scotland   
sustained damage due to very severe weather conditions, causing interruptions   
to supply. ScottishPower is implementing measures to further improve its        
ability to deal with such incidents and is contributing to a review by OFFER    
of electricity companies' responses to the bad weather.                         

2. Energy supply                                                                

Electricity                                                                     
The energy supply business is responsible for the sales and marketing of        
electricity, gas and related products to customers within ScottishPower's and   
Manweb's respective home areas and to the competitive market throughout the     
rest of Great Britain. The energy supply business supplies electricity to 3.2   
million customers in Great Britain and has an overall market share of 12%.      

ScottishPower's home area covers approximately 23,000 square kilometres and     
comprises southern Scotland, most of central Scotland and a small part of       
Northumberland. ScottishPower supplies electricity to 1.8 million customers     
within its home area, which includes Glasgow and Edinburgh.                     

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Manweb is one of twelve Regional Electricity Companies ("RECs") which came      
into existence as a result of the restructuring and subsequent privatisation    
of the electricity industry in England and Wales in 1990. It was acquired by    
ScottishPower in 1995. Manweb supplies electricity to some 1.3 million          
customers in its home area in Merseyside and North Wales, including parts of    
Cheshire, greater Manchester, Lancashire, Shropshire and Staffordshire. The     
area covers approximately 12,200 square kilometres.                             

The energy supply business purchases electricity from a range of sources,       
including the Group's generation business, for sale to customers both within    
its home areas and outside them. Until September 1998, only public electricity  
suppliers were entitled to supply customers in their franchise areas (now home  
areas) with demand less than 100 KW (or "franchise" customers). From September  
1998 to May 1999, the franchise areas of all public electricity suppliers are   
being opened to competition on a phased basis, with the result that             
electricity suppliers holding second tier licences, including ScottishPower     
and Manweb, are able to supply electricity to all customers in the franchise    
area of a public electricity supplier. Large industrial or commercial           
customers with demand above that threshold have been and continue to be able    
to seek supply from other electricity suppliers holding a "second tier"         
licence. ScottishPower's and Manweb's respective franchises were opened to      
competion in three phases, commencing in September 1998 and running through to  
February 1999. Since September 1998, the strategic focus of the energy supply   
business has been defence of its existing markets, particularly domestic and    
small business customers in the ScottishPower and Manweb areas, while           
exploiting the opportunity to expand its customer base outside these regional   
boundaries. As at 31 March 1999, the energy supply business had retained 96%    
of domestic customers in the ScottishPower area and 94% in Manweb. The          
business had also signed-up 190,000 electricity contracts outside those home    
areas.                                                                          

In the highly competitive industrial and commercial energy market the Group     
has sought to defend market share and has retained 76% of these volumes in the  
ScottishPower area. In Manweb, which comprises some of the largest industrial   
electricity users in the country, the Group has retained a 27% share of these   
volumes. Outside the Group's home areas, the Group currently supplies around    
1,750 GWh of electricity. The Group has also been developing a new range of     
added value energy services for the market beyond the energy supply commodity.  

Details of the principal terms and conditions of the licences held by the       
energy businesses of ScottishPower under the Electricity Act 1989 are set out   
in Section B of Part VI.                                                        

Gas markets                                                                     
The domestic gas supply market has been open to full competition (i.e.          
extended to premises with consumption under 2,500 therms per annum) since late  
May 1998. The ScottishPower Group has now established itself as one of the      
leading challengers to Centrica plc in this market, having already acquired a   
total of 760,000 domestic contracts by the end of March 1999. In the business   
market, the Group has continued to grow, supplying gas representing             
approximately 220 million therms per annum to 23,215 sites across the UK.       

The gas business of ScottishPower holds appropriate licences under the Gas      
Acts 1986 and 1995.                                                             

Domestic energy accounts                                                        
The year ended 31 March 1999 was a very challenging one for the Group's energy  
businesses as the residential electricity supply market has opened to           
competition. At 31 March 1999, new domestic energy accounts secured since, in   
the case of gas, the second phase of competition in April 1997 and, in the      
case of electricity, the introduction of competition in September 1998,         
totalled 950,000 (760,000 gas accounts and 190,000 new electricity contracts).  
The Group's focus is on securing "dual fuel" electricity and gas customers and  
to date the Group has more than 317,000 dual fuel energy contracts signed. The  
Group's progress has been achieved in spite of intense competition.             
Electricity customers registered to leave the Group at 31 March 1999 were       
147,000, representing 5% of customers in ScottishPower's and Manweb's home      
areas. The Group will continue to seek to win further new customers.            
Attracting new customers leads to initial costs in sales and marketing,         
information systems and new procedures. However, ScottishPower believes that    
this investment should contribute to growing earnings in the medium to longer   
term.                                                                           

3. Southern Water                                                               
Southern Water is one of the ten water and sewerage companies which came into   
existence as a result of the privatisation of the water industry in England     
and Wales in 1989. Acquired by ScottishPower in                                 

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August 1996, its principal business is the provision of water supply for a      
population of approximately 2.2 million and wastewater services for a           
population of approximately 4.0 million. Southern Water operates in a region    
of approximately 10,450 square kilometres in the counties of Kent, East and     
West Sussex, Hampshire and the Isle of Wight and small parts of Wiltshire,      
Berkshire and Surrey. The region's coastline stretches from the Thames Estuary  
north of Rochester to beyond the Solent, including the Isle of Wight.           

Southern Water has an ongoing (Pounds)1 billion capital investment programme    
over the five years to the year 2000. A major sludge treatment centre was       
commissioned at Millbrook, in the Southampton Docks area. Approval was          
received for the construction of a new (Pounds)115 million wastewater works at  
Portsmouth and work is proceeding on the (Pounds)111 million Isle of Wight      
wastewater treatment scheme and the (Pounds)53 million Hastings bathing water   
project.                                                                        

Southern Water Services is subject to the licensing regime contained in the     
Water Industry Act. Details of the principal terms and conditions of the        
appointment of Southern Water Services under the Water Industry Act are set     
out in Section B of Part VI.                                                    

Water supply business                                                           
Southern Water supplies on average 600 million litres of water per day which    
is distributed through 13,200 kilometres of water main. Southern Water's 104    
water treatment works treat water from 132 water sources in the region with     
approximately 70% of water supplied coming from underground sources. Water is   
pumped through the water mains by 413 pumping stations. Southern Water is also  
responsible for the operation and maintenance of four impounding reservoirs,    
which have a total storage capacity of 42,390 million litres.                   

Southern Water has 13,200 kilometres of water main. In order to minimise the    
loss of water through leakage, a leakage control initiative was enhanced        
following privatisation in 1989 and has reduced water loss by 140 million       
litres per day to date. Since privatisation, Southern Water has one of the      
best records with respect to water supply leakage among the water and sewerage  
companies. Losses through leaks in its distribution system stood at 11.5% in    
1997/98 compared to 26% just before the time of privatisation, with a target    
to achieve 10.8% by the year 2000.                                              

Southern Water monitors water quality through a programme in which samples are  
analysed regularly for both microbiological and chemical parameters. 99.8% of   
water sampled passed the EU performance criteria in 1997 (the most recent       
published figures) and the Group believes that this level was maintained in     
1998.                                                                           

Wastewater business                                                             
Southern Water has 392 wastewater treatment works which treat effluent pumped   
through 20,600 kilometres of sewer by over 1,850 pumping stations. These works  
provide various treatment types as follows: primary, enhanced primary,          
secondary activated sludge, secondary biological, tertiary activated and        
tertiary biological. In addition, as part of the treatment process to meet      
current bathing water standards, Southern Water has 21 long sea outfalls        
around the coastline of its region.                                             

Under the Water Resources Act 1991, these works are granted consent by the      
Environment Agency to discharge sewage effluent to controlled waters. The       
conditions attached to each consent can cover quality, quantity and             
operational parameters as laid down in the "Standard Clauses" of the Discharge  
Consents Manual issued by the Environment Agency. The basis of the policy is    
to maintain and improve water quality and the aquatic environment.              

4. Telecommunications                                                           
ScottishTelecom's strategy has been to achieve growth through a combination of  
organic growth and selective acquisitions. This has provided ScottishTelecom    
with operations in key markets across the communications sector since its       
launch in 1994.                                                                 

ScottishTelecom now provides, under innovative tariff packages, a wide          
portfolio of communication services ranging from voice, data and mobile         
telephony services to call centre, on-line information and Internet access      
services.                                                                       

In September 1997, ScottishPower entered into a joint venture arrangement with  
Martin Dawes Telecommunications Limited by contributing the net assets of its   
mobile telephony business, Woodend Group Limited, and (Pounds)2.6 million of    
additional capital, to form ScottishPower Telecommunications                    

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(Services) Limited, in which ScottishPower has a 50% economic and voting        
interest. The joint venture has subsequently promoted mobile telephony          
services.                                                                       

In February 1998 ScottishTelecom acquired Pinnacle Cellular and it acquired     
Demon Internet for (Pounds)66 million on 1 May 1998. ScottishPower's "Scotland  
On-Line" and "Prestel" operations combined with Demon Internet now have in      
excess of 275,000 customers.                                                    

The business moved into operating profit during the year ended 31 March 1998    
and contributed (Pounds)10.3 million to the Group's audited consolidated        
operating profits for the year ended 31 March 1999. ScottishTelecom's current   
share of the overall Scottish telecommunications market in which it operates    
is still relatively small, but is increasing. The ScottishPower Board believes  
that revenue growth will come from carrying Demon Internet telecoms traffic     
following the installation of a network switch and supporting infrastructure    
which was completed at the beginning of February 1999.                          

On 16 February 1999, ScottishTelecom announced that Bill Allan had been         
appointed to succeed Rod Matthews as Managing Director of ScottishTelecom.      

The development of the ScottishPower Group has caused the Directors to review   
the future of ScottishTelecom. ScottishPower is currently evaluating the        
strategy of ScottishTelecom and the options available to maximise shareholder   
value from its investment in this business, in what is a rapidly changing and   
developing sector. This assessment includes a review of the services provided   
by ScottishTelecom, its funding needs and any consequential restructuring. The  
Directors expect to reach a decision during the year.                           

ScottishTelecom holds appropriate licences under the Telecommunications Act     
1984.                                                                           

5. Specialist businesses                                                        

Electrical retailing                                                            
ScottishPower's electrical retailing business sells electrical products         
through a chain of 183 outlets throughout the UK. In addition to retail sales,  
the Group's electrical retailing business provides servicing and repair         
facilities and delivery and connection facilities.                              

Contracting services                                                            
The Group's contracting services business specialises in niche markets,         
including the installation and maintenance of high voltage equipment,           
residential heating (electrical and gas installations), street lighting,        
security and fire alarms, residential telephone connections, appliance          
installation inspection and pre-planned maintenance, as well as                 
instrumentation, mechanical and project management along with property and      
facilities management.                                                          

Technology                                                                      
The Group's technology business combines a number of groups which specialise    
in different areas of engineering consultancy and science, including            
mechanical, electrical, civil engineering and environmental sciences. These     
services are provided to both internal and external customers.                  

6. Customer services                                                            

Electricity                                                                     
ScottishPower has taken steps to improve all aspects of its customer service    
within the energy businesses in preparation for full competition in the         
domestic electricity supply market, and intends to continue to treat improving  
customer service as a priority over the next year. The businesses' customer     
service guaranteed standards were maintained in the year ended 31 March 1999    
at the high level set in the previous year, with over 99.99% of all             
electricity services provided currently matching or exceeding regulatory        
standards.                                                                      

All service requirements in Scotland are met by a customer service call         
centre, employing modern communications and information technology, offering a  
single telephone contact point and 24 hour support. In Manweb's home area the   
Group has focused its activities on improving customer service through the      
provision of two regional call centres, a business call centre and a single     
telephone contact point.                                                        

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Water                                                                           
Southern Water continues to improve customer service standards. Regular         
reviews by the regulator, OFWAT, have recorded continuing improvements.         
Southern Water emerged as the top overall performer of the large water          
companies for water supply and customer service and was also top for            
efficiency in water supply in the latest published OFWAT report which covers    
the period from April 1997 to March 1998.                                       

Gas                                                                             
Domestic gas suppliers faced increases in complaints during the period of       
market liberalisation. The most common complaints to the Gas Consumers'         
Council have concerned the change of supplier process and sales and marketing   
activity. ScottishPower received 2,285 Ofgas and Gas Consumer Council           
complaints during the year ended 31 March 1999, which equates to less than 1%   
of the customer accounts won during the year. ScottishPower's performance in    
terms of user complaints was considerably better than that experienced by some  
other market entrants. The Group has established a gas call centre in           
Warrington servicing domestic and small business customers.                     

Telecommunications                                                              
ScottishTelecom has continued to develop systems and processes to further       
improve customer service delivery. These efforts have resulted in a number of   
successful BABT external audits on behalf of OFTEL and ISO9002 approval,        
specifically for the handling of residential services. ScottishTelecom is       
continuing to invest and develop this area by implementing a new customer care  
system.                                                                         

7. Certain statements relating to ScottishPower's earnings                      
The US Prospectus includes a description of certain work performed by Morgan    
Stanley and Salomon Smith Barney in relation to their respective fairness       
opinions delivered to ScottishPower and PacifiCorp in December 1998 including   
certain valuation exercises performed in relation to ScottishPower and          
PacifiCorp based upon information publicly available, information provided by   
the management of the two companies and a variety of assumptions. In            
particular, pro forma analyses were performed of the effect of the Merger on    
ScottishPower's earnings for the financial years ending 31 March 2001, 2002     
and 2003.                                                                       

At the time these analyses were made, none of ScottishPower, PacifiCorp,        
Salomon Smith Barney or Morgan Stanley sought, nor were they under any          
obligation to seek, any independent verification of the analyses performed or   
of the information and assumptions upon which they were based. In addition      
such analyses, information and assumptions were not expected or intended to be  
made public and have not been updated. Accordingly, and given the uncertainty   
inherent in relation to any estimates of future financial performance,          
especially in the context of a merger and in relation to financial periods      
which have not yet commenced, there can be no assurance that the effect of the  
Merger on ScottishPower's earnings per share or otherwise will be in            
accordance with, or in line with the trend indicated by, these analyses.        
Therefore, no reliance whatsoever should be placed on these analyses. Your      
attention is also drawn to the section in relation to forward looking           
statements in paragraph 15 of Part I of this document.                          

8. Year 2000 compliance                                                         
Potential computer problems associated with the Year 2000 date change are an    
issue for users of computer systems throughout the world including systems      
with embedded chips. ScottishPower is dependent on its own systems and on       
those of its key suppliers and customers. The Directors do not believe that     
ScottishPower faces greater risks from Year 2000 issues than other comparable   
utility companies in the UK.                                                    

ScottishPower established its group-wide Year 2000 programme in 1997 to seek    
to manage the effects that Year 2000 issues may have on the Group's             
operations. The methodology used builds on practices developed in conjunction   
with several user groups, including the Electricity Association (the trade      
association for electricity), UK Y2K Interest Group (the largest Year 2000      
self-help group in the UK) and IMPACT (a confederation of many of the Top 100   
companies in the UK). The scope of ScottishPower's programme covers all         
aspects of the Group's business.                                                

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ScottishPower's approach concentrates on three main areas which are as          
follows:                                                                        

.  working on and testing its own internal systems through gathering        
inventory, assessing criticality, prioritisation and planning, testing
and remediation;                                                      

.  understanding the Year 2000 readiness of its suppliers and major         
customers; and                                                        

.  modifying and developing contingency processes to reduce residual risk.  

The programme focuses on IT systems, both corporate and desktop, non-IT         
systems (embedded chip systems) including process monitoring and control,       
business processes and business partners. ScottishPower is currently reviewing  
contingency plans, operational procedures, staffing issues and "worst case"     
scenarios. A Millenium Operating Regime is being implemented, and is            
particularly aimed at enhancing the Group's state of readiness for the          
rollover period.                                                                

Within each of ScottishPower's businesses, the Directors believe that           
scheduled remediation projects on the Group's systems are well advanced with    
89% of all critical projects substantially complete. The Group is finalising    
compliance work on its systems, and this work is planned to be completed well   
in advance of the end of 1999.                                                  

ScottishPower's systems and operations are also dependent on products and       
services provided by others. Since autumn 1997, all orders and contracts        
placed by ScottishPower have included a Year 2000 clause requiring compliance   
to the BSI standard PD2000-1. As part of the supply chain management work       
undertaken, ScottishPower is assessing critical suppliers and customers for     
their Year 2000 compliance. The Group has made an initial assessment of all     
its critical suppliers and will continue to monitor all of them during 1999.    
Interdependencies with other utilities are being reviewed through the UK y2K    
Utilities Forum and other forums and one-to-one meetings. All other suppliers   
are being treated in accordance to the Group's reliance on them. Where          
appropriate, alternative suppliers may be appointed.                            

ScottishPower's Year 2000 programme has been carried out using internal         
resources where possible, supplier resources where appropriate and specialist   
contractors where considered necessary. As at 31 March 1999, the Group has      
already spent approximately (Pounds)22 million on its Year 2000 programme. The  
Directors estimate, based on the Group's best estimates and, where              
appropriate, advice from specialist contractors, that the total cost to         
ScottishPower of the Year 2000 programme will be approximately (Pounds)30       
million. This does not include the cost of certain capital investment           
programmes which are being accelerated in order to seek to resolve the Year     
2000 issues.                                                                    

The Directors believe that the Group's work on its own systems and equipment    
and review of critical suppliers means that the Group is taking all reasonable  
steps to minimise the risks associated with Year 2000 issues. Based on the      
current state of knowledge on managing Year 2000 issues and the management's    
best estimates, the Directors believe that, because of the anticipated short-   
term nature of any potential interruptions, it is unlikely that Year 2000       
issues will have a material impact on the Group's financial condition or        
operations. However, there can be no assurance that the steps taken by the      
Group will successfully minimise vulnerabilities of its software and systems,   
or those of its suppliers, to the problems associated with the transition to    
the Year 2000, that disruptions to the Group's business will not occur or that  
the costs associated with the advent of the Year 2000 will not be greater than  
anticipated.                                                                    

The Directors do not believe that any integration problems relating to Year     
2000 issues will arise as a result of the Merger.                               

9. EMU preparation                                                              
European Economic and Monetary Union ("EMU") commenced on 1 January 1999 with   
the introduction of a new currency, the euro.                                   

The Group's businesses are almost totally domestic in nature with very few      
sales and relatively few purchases denominated in currencies other than         
sterling. As a result, while the UK remains outside EMU, the Directors believe  
that the Group will not be significantly affected by the introduction of the    
euro. A project team has been established to review the impact of the first     
wave of EMU on customers and suppliers and to formulate the Group's response.   
The project group is also considering the implications of potential UK          
membership of EMU.                                                              

The Group has already issued commercial paper denominated in euros and will     
consider issuing bonds in euros in due course.                                  

18                                                                              

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B. Summary financial information for New ScottishPower                          
Extract from New ScottishPower accountants' report                              
This financial information has been prepared for inclusion in the listing       
particulars dated 6 May 1999 ("the listing particulars") of New ScottishPower.  

New ScottishPower was incorporated and registered in Scotland on 19 February    
1999. Save for entering into the Amended and Restated Merger Agreement          
referred to in Part V of the listing particulars, New ScottishPower has not     
yet commenced to trade, has not presented to its members or filed any           
financial statements and has not declared or paid a dividend.                   

Financial information                                                           
The balance sheet of New ScottishPower at 31 March 1999 was as follows:         

------------------------------------------------------------------------------- 

                                                                [Download Table]

                         Notes (Pounds)
---------------------------------------
                                       
Current assets                         
Debtors                         37,500 
Cash                            12,500 
----------------------------    ------ 
Net assets                      50,000 
----------------------------    ------ 
Called up share capital     2   50,000 
----------------------------    ------ 
Capital employed                50,000 
----------------------------    ------ 

Notes to the financial information                                              

1. Accounting policies                                                          
The balance sheet has been prepared in accordance with the historical cost      
convention.                                                                     

2. Share capital                                                                
As at 31 March 1999, New ScottishPower's authorised share capital was           
(Pounds)99,998 comprising 50,000 ordinary shares of (Pounds)1 each and 49,998   
Redeemable Shares of (Pounds)1 each. As at 31 March 1999, the issued share      
capital comprised 2 ordinary shares of (Pounds)1 each and 49,998 Redeemable     
Shares of (Pounds)1 each.                                                       

3. Costs                                                                        
No costs were incurred by New ScottishPower in respect of the issue of          
subscriber and Redeemable Shares. The costs to be incurred by New               
ScottishPower in respect of the issue of the ordinary shares of 50p each in     
New ScottishPower to which the listing particulars relate and their admission   
to the Official List of the London Stock Exchange will be charged to the share  
premium account arising on the proposed issue of those shares. Accordingly,     
such costs have been treated as a prepayment. If the proposed issue is not      
completed, the costs will be charged to the profit and loss account.            

C. Summary financial information on the ScottishPower Group                     
For the three years ended 31 March 1999                                     

1. Nature of financial information                                              
The financial information set out in this Section C has been extracted without  
material adjustment from the audited consolidated accounts of ScottishPower     
for the three years ended 31 March 1999.                                        

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2. Summary financial information for ScottishPower                              

Group Profit and Loss Account                                                   

                                                                [Download Table]
-------------------------------------------------------------------------------

                                                        Year ended 31 March    
                                                1997       1998       1999     
                                           (Pounds)m  (Pounds)m  (Pounds)m     
-------------------------------------------------------------------------------
                                                                               
Turnover: group and share of joint                                             
 ventures and associates                    2,947.4    3,134.1    3,251.5      
Less: share of turnover in joint ventures      (4.6)      (3.8)      (7.3)     
Less: share of turnover in associates          (2.1)      (2.1)      (1.9)     
-----------------------------------------  --------   --------   --------      
Group turnover from continuing operations   2,940.7    3,128.2    3,242.3      
Cost of sales                              (1,743.5)  (1,850.7)  (1,860.5)     
-----------------------------------------  --------   --------   --------      
Gross profit from continuing operations     1,197.2    1,277.5    1,381.8      
Transmission and distribution costs          (222.8)    (219.1)    (258.1)     
Administrative expenses                      (331.1)    (303.0)    (348.8)     
Other operating income                         20.6       29.7       27.9      
-----------------------------------------  --------   --------   --------      
Operating profit from continuing                                               
 operations                                   663.9      785.1      802.8      
Share of operating profit in joint                                             
 ventures                                       1.8        1.6        2.1      
Share of operating profit in associates         0.9        0.3        0.2      
-----------------------------------------  --------   --------   --------      
Profit on ordinary activities before                                           
 interest                                     666.6      787.0      805.1      
Net interest charge                                                            
 - Group                                     (107.5)    (147.1)    (160.8)     
 - Joint ventures                              (0.5)      (0.2)      (0.5)     
 - Associates                                  (0.2)      (0.1)         -      
                                             (108.2)    (147.4)    (161.3)     
-----------------------------------------  --------   --------   --------      
Profit on ordinary activities before                                           
 taxation                                     558.4      639.6      643.8      
Ordinary taxation                                                              
 - Group                                     (135.7)    (151.5)    (141.0)     
 - Joint ventures                              (0.7)      (0.4)      (0.5)     
 - Associates                                  (0.4)       0.3       (0.1)     
                                             (136.8)    (151.6)    (141.6)     
-----------------------------------------  --------   --------   --------      
Profit after ordinary taxation                421.6      488.0      502.2      
Exceptional taxation - windfall tax               -     (317.0)         -      
-----------------------------------------  --------   --------   --------      
Profit after taxation                         421.6      171.0      502.2      
Minority interests                             (0.5)      (0.9)       0.6      
-----------------------------------------  --------   --------   --------      
Profit for the financial year                 421.1      170.1      502.8      
Dividends                                    (218.1)    (243.3)    (267.9)     
-----------------------------------------  --------   --------   --------      
Profit/(loss) retained                        203.0      (73.2)     234.9      
-----------------------------------------  --------   --------   --------      
Earnings per ordinary share                  38.11p     14.41p      42.42p     
Adjusting items - goodwill amortisation           -          -       0.10p     
          - windfall tax                          -     26.87p          -      
-----------------------------------------  --------   --------   --------      
Earnings per ordinary share before                                             
 goodwill amortisation and windfall tax      38.11p     41.28p      42.52p     
-----------------------------------------  --------   --------   --------      
Diluted earnings per ordinary share          37.73p     14.27p      42.00p     
Adjusting items - goodwill amortisation           -          -       0.10p     
          - windfall tax                          -     26.60p          -      
-----------------------------------------  --------   --------   --------      
Diluted earnings per ordinary share                                            
 before goodwill amortisation and                                              
 windfall tax                                37.73p     40.87p      42.10p     
-----------------------------------------  --------   --------   --------      
Dividend per ordinary share                  18.50p     20.40p      22.50p     
-----------------------------------------  --------   --------   --------      

20                                                                              

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Statement of Total Recognised Gains and Losses                                  

                                                                [Download Table]
-------------------------------------------------------------------------------

                                                     Year ended 31 March       
                                                  1997-      1998      1999    
                                              (Pounds)m (Pounds)m (Pounds)m    
-------------------------------------------------------------------------------
                                                                               
Profit for the financial year                    421.1     170.1     502.8     
Surplus on revaluation of assets                     -     229.0         -     
--------------------------------------------  -------   -------   -------      
Total recognised gains and losses for the                                      
 financial year                                  421.1     399.1     502.8     
--------------------------------------------  -------   -------   -------      

Note of Historical Cost Profits and Losses                                     

-------------------------------------------------------------------------------

                                                     Year ended 31 March       
                                                  1997-      1998      1999    
                                              (Pounds)m (Pounds)m (Pounds)m    
-------------------------------------------------------------------------------
                                                                               
Profit on ordinary activities before                                           
 taxation                                        558.4     639.6     643.8     
Difference between historical cost                                             
 depreciation charge and actual depreciation                                   
 charge for the year calculated on the                                         
 revalued amount of fixed assets                     -       1.7       3.4     
--------------------------------------------  -------   -------   -------      
Historical cost profit on ordinary                                             
 activities before taxation                      558.4     641.3     647.2     
--------------------------------------------  -------   -------   -------      
Historical cost profit/(loss) retained for                                     
 the financial year after taxation, minority                                   
 interests and dividends                         203.0     (71.5)    238.3     
--------------------------------------------  -------   -------   -------      

Reconciliation of Movements in Shareholders' Funds                              

                                                                [Download Table]
------------------------------------------------------------------

                                          Year ended 31 March     
                                          1997      1998      1999
                                     (Pounds)m (Pounds)m (Pounds)m
------------------------------------------------------------------
                                                                  
Profit for the financial year           421.1     170.1     502.8 
Dividends                              (218.1)   (243.3)   (267.9)
-----------------------------------  -------   -------   -------  
Profit/(loss) retained                  203.0     (73.2)    234.9 
Share capital issued (net of costs)     633.2      45.5       3.2 
Shares to be issued                      13.4         -         - 
Revaluation of fixed assets                 -     229.0         - 
Goodwill written off                   (534.6)    (16.2)        - 
-----------------------------------  -------   -------   -------  
Net movement in shareholders' funds     315.0     185.1     238.1 
Opening shareholders' funds           1,207.7   1,522.7   1,707.8 
-----------------------------------  -------   -------   -------  
Closing shareholders' funds           1,522.7   1,707.8   1,945.9 
-----------------------------------  -------   -------   -------  

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Group Cash Flow Statement                                                       

                                                                [Download Table]
-------------------------------------------------------------------------------

                                                      Year ended 31 March      
                                                      1997       1998      1999
                                                 (Pounds)m  (Pounds)m (Pounds)m
-------------------------------------------------------------------------------
                                                                               
Cash inflow from continuing operating                                          
 activities                                         801.9    1,014.1     944.9 
Dividends received from associates and joint                                   
 ventures                                               -        0.9       0.9 
Returns on investments and servicing of finance    (101.1)    (146.7)   (149.9)
Ordinary taxation                                  (117.4)    (134.5)    (93.7)
-----------------------------------------------  --------   -------   -------  
Free cash flow before windfall tax                  583.4      733.8     702.2 
Exceptional taxation - windfall tax                     -     (157.8)   (157.8)
-----------------------------------------------  --------   -------   -------  
Free cash flow                                      583.4      576.0     544.4 
Capital expenditure and financial investment       (392.1)    (592.7)   (683.0)
-----------------------------------------------  --------   -------   -------  
Cash flow before acquisitions and disposals         191.3      (16.7)   (138.6)
Acquisitions and disposals                       (1,234.6)      67.9     (77.4)
Equity dividends paid                              (170.0)    (226.0)   (252.8)
-----------------------------------------------  --------   -------   -------  
Cash outflow before use of liquid resources and                                
 financing                                       (1,213.3)    (174.8)   (468.8)
Management of liquid resources                      (21.0)     (17.5)    (12.1)
Financing                                                                      
 Issue of ordinary share capital (net of                                       
  expenses)                                         238.0        8.9       3.2 
Increase in debt                                  1,048.6      252.6     451.0 
                                                                [Download Table]
                                                             
                                     1,286.6   261.5   454.2 
-----------------------------------  ------- ------- ------- 
Increase/(Decrease) in cash in year     52.3    69.2   (26.7)
-----------------------------------  ------- ------- ------- 

Free cash flow represents cash flow from continuing operating activities after  
adjusting for dividends received from associates and joint ventures, returns    
on investments and servicing of finance and taxation.                           

Reconciliation of Net Cash Flow to Movement in Net Debt                         

                                                                [Download Table]
-------------------------------------------------------------------------------

                                                     1997       1998       1999
                                                (Pounds)m  (Pounds)m  (Pounds)m
-------------------------------------------------------------------------------
                                                                               
Increase/(Decrease) in cash in year                 52.3       69.2      (26.7)
Cash inflow from increase in debt               (1,048.6)    (252.6)    (451.0)
Cash outflow from movement in liquid resources      21.0       17.5       12.1 
----------------------------------------------  --------   --------   -------- 
Change in net debt resulting from cash flows      (975.3)    (165.9)    (465.6)
Net debt acquired                                 (168.6)      (0.1)      (2.7)
Net debt disposed                                      -        6.7          - 
Loan notes issued                                  (14.3)      (3.0)         - 
Other non-cash movements                               -          -       (0.3)
----------------------------------------------  --------   --------   -------- 
Movement in net debt in year                    (1,158.2)    (162.3)    (468.6)
Net debt at end of previous year                  (632.1)  (1,790.3)  (1,952.6)
----------------------------------------------  --------   --------   -------- 
Net debt at end of year                         (1,790.3)  (1,952.6)  (2,421.2)
----------------------------------------------  --------   --------   -------- 

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Group Balance Sheet                                                             

                                                                [Download Table]
------------------------------------------------------------------------------

                                                      As at 31 March          
                                               -------------------------------
                                                    1997       1998       1999
                                               (Pounds)m  (Pounds)m  (Pounds)m
------------------------------------------------------------------------------
                                                                              
Fixed assets                                                                  
Intangible assets                                     -          -       71.3 
Tangible assets                                 4,049.7    4,723.9    5,295.1 
Investments                                                                   
 - Investments in joint ventures:                                             
   Share of gross assets                           13.4       23.8       54.2 
   Share of gross liabilities                      (7.4)      (8.0)     (29.8)
                                               --------   --------   -------- 
                                                    6.0       15.8       24.4 
 - Investments in associates                        7.9        7.4        5.9 
 - Other investments                                3.8       44.1       43.4 

                                                   17.7       67.3       73.7 
---------------------------------------------- --------   --------   -------- 
                                                4,067.4    4,791.2    5,440.1 
---------------------------------------------- --------   --------   -------- 
Current assets                                                                
Stocks                                            113.7      144.2      125.8 
Debtors                                           622.8      525.9      559.3 
Short term bank and other deposits                 41.7      115.5      106.9 
---------------------------------------------- --------   --------   -------- 
                                                  778.2      785.6      792.0 
---------------------------------------------- --------   --------   -------- 
Creditors: amounts falling due within                                         
 one year                                                                     
Loans and other borrowings                     (1,137.1)  (1,035.7)    (843.6)
Other creditors                                (1,112.0)  (1,396.3)  (1,332.8)
---------------------------------------------- --------   --------   -------- 
                                               (2,249.1)  (2,432.0)  (2,176.4)
---------------------------------------------- --------   --------   -------- 
Net current liabilities                        (1,470.9)  (1,646.4)  (1,384.4)
---------------------------------------------- --------   --------   -------- 
Total assets less current liabilities           2,596.5    3,144.8    4,055.7 
Creditors: amounts falling due after                                          
 more than one year                                                           
Loans and other borrowings                       (694.9)  (1,032.4)  (1,684.5)
Provisions for liabilities and                                                
 charges                                          (43.2)     (38.1)     (30.8)
Deferred income                                  (335.3)    (364.6)    (393.2)
---------------------------------------------- --------   --------   -------- 
Net assets                                      1,523.1    1,709.7    1,947.2 
---------------------------------------------- --------   --------   -------- 
Called up share capital                           588.7      598.4      599.4 
Share premium                                     305.7      388.7      394.0 
Revaluation reserve                                   -      227.3      223.9 
Profit and loss account                           628.3      493.4      728.6 
---------------------------------------------- --------   --------   -------- 
Equity shareholders' funds                      1,522.7    1,707.8    1,945.9 
Minority interests                                  0.4        1.9        1.3 
---------------------------------------------- --------   --------   -------- 
Capital employed                                1,523.1    1,709.7    1,947.2 
---------------------------------------------- --------   --------   -------- 

                                                                              23

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Part III                                                                        
Information relating to PacifiCorp                                              
A. PacifiCorp and its activities                                                

1. Background                                                                   
PacifiCorp is one of the largest publicly held electricity utilities in the     
United States. PacifiCorp's principal activities are electricity generation,    
and retail and wholesale sales of electricity in the United States. PacifiCorp  
has 1.5 million retail customers in service territories aggregating about       
135,800 square miles in portions of six western states of the United States.    
PacifiCorp owns or has joint ownership interests in generating plants in the    
United States with an aggregate plant net generating capability of 8,445 MW.    

Powercor, PacifiCorp's Australian electricity distribution and marketing        
subsidiary, distributes electricity to approximately 560,000 customers within   
its distribution service area in Victoria. In addition, Powercor sells          
electricity to customers in its distribution service area and other parts of    
Victoria, New South Wales and the Australian Capital Territory.                 

As reported in the financial statements for the year ended 31 December 1998,    
PacifiCorp reported a net loss of $36.1 million. 86.8% of PacifiCorp's          
revenues from operations were derived from US electric operations. Powercor     
contributed 11.0%, and other operations contributed 2.2%.                       

2. Revised strategy                                                             
On 23 October 1998, following a review of its future strategy, PacifiCorp       
announced that it intended to focus on its core electricity business in the     
western US and sell its other US businesses. This announcement followed a       
period of financial under-performance and the statement made earlier in the     
year that PacifiCorp intended to seek buyers for its California and Montana     
electricity distribution assets. PacifiCorp also stated that it would           
terminate its business development activities outside the US and Australia,     
and seek to continue to cut overhead costs. Further, PacifiCorp announced a     
plan to repurchase up to $750 million of shares of PacifiCorp Common Stock,     
but this has been postponed.                                                    

PacifiCorp has decided to discontinue the eastern US electricity trading        
business of PacifiCorp Power Marketing, Inc. ("PPM") and has disposed of the    
natural gas marketing and storage operations of TPC Corporation ("TPC"). These  
businesses have been treated as discontinued operations of PacifiCorp since 30  
September 1998 and, accordingly, as required by US Accounting Standards         
financial statements for previous years have been restated to reflect them as   
discontinued operations. PacifiCorp has also decided to exit the majority of    
its other wholesale energy development businesses. The most significant of      
these businesses were EnergyWorks, PacifiCorp's joint venture with Bechtel      
Enterprises, and PacifiCorp's development activities in Turkey and the          
Philippines. PacifiCorp also intends to sell its interest in the Hazelwood      
power station and coal mine in Victoria, Australia.                             

PacifiCorp recorded a total loss from discontinued operations of $146.7         
million (after tax) in the year ended 31 December 1998, which included the      
cost of exiting its eastern US energy trading business. A further $49 million   
(after tax) was charged in the year ended 31 December 1998 in respect of the    
write down of other energy businesses not classified as discontinued            
operations including a write down of $17 million (after tax) in the carrying    
value of Hazelwood Power Station.                                               

In the year ended 31 December 1998, PacifiCorp recorded a $76 million (after    
tax) special charge associated with workforce reductions in the US, a $13       
million (after tax) cost attributable to the Merger, and a $38 million charge   
($23.4 million after tax) in relation to the Utah Rate Case. The Utah Rate      
Case is discussed further in paragraph 2 of Section B of Part VI.               

PacifiCorp recorded a charge of $54.0 million (after tax) associated with       
PacifiCorp's terminated bid for The Energy Group plc ("TEG"), the TEG bid       
having been launched in June 1997 as part of PacifiCorp's previously stated     
aim to become a premier global energy company. Additionally, in connection      
with the attempt to acquire TEG, a subsidiary of PacifiCorp purchased           
approximately 46 million shares of TEG at a price of 820 pence per share, or    
$625 million. PacifiCorp recorded a pre tax gain on the TEG shares of $16       
million ($10 million after tax, or $0.03 per share) when they were sold on 2    
June 1998. Costs of $2 million (after tax) relating to foreign currency         
exchange contracts associated with the TEG bid were incurred.                   

In December 1997, PacifiCorp completed the sale of Pacific Telecom Inc.         
("PTI"). This gave rise to a gain of $365.1 million (after tax). This gain      
plus the net income from PTI and the businesses discontinued during 1998 are    
reported as discontinued operations, giving total net income from discontinued  
operations of $446.8 million in 11 months ended 30 November 1997.               

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A gain of $30 million (after tax) was included in income from continuing        
operations for the year ended 31 December 1997 arising from the sale of         
PacifiCorp's independent power subsidiary, Pacific Generation Company ("PGC").  

Special and exceptional charges totalling $106 million (after tax) were also    
incurred in the year ended 31 December 1997 relating to:                        

.an accrual for the closure of the Glenrock coal mine;                      

.the write off of deferred regulatory pension assets; and                   

.  the write off of certain information systems capital costs associated    
with PacifiCorp's decision to proceed with an installation of SAP     
enterprise wide software.                                             

Shown below are earnings on common stock and earnings per common share of       
PacifiCorp for each of the three years ended 31 December 1998, adjusted to      
exclude the effect of discontinued operations and the significant, non-         
recurring charges discussed above. The figures in the following table are       
directly extracted from or derived from Section B of Part III.                  

------------------------------------------------------------------------------- 

                                                                [Download Table]

                                                    Year ended 31 December    
                                                    ------------------------- 
                                                       1996     1997     1998 
                                                         $m       $m       $m 
------------------------------------------------------------------------------
                                                                              
Earnings/(loss) on common stock for the year under                            
 US GAAP                                              475.1    640.9    (55.4)
Discontinued operations                                                       
- Provision for losses of discontinued operations         -        -    105.0 
- Gain on sale of PTI                                     -   (365.1)       - 
- Net loss/(income) from discontinued operations      (74.6)   (81.7)    41.7 
Extraordinary item                                        -     16.0        - 
Special and exceptional charges                           -    106.0     76.0 
Other items                                                                   
- Utah Rate Case adjustment                               -        -     23.4 
- Write down of other energy businesses                   -        -     32.0 
- Write down of Hazelwood                                 -        -     17.0 
- Merger costs                                            -        -     13.0 
- Gain on sale of PGC                                     -    (30.0)       - 
- Gain on sale of TEG shares                              -        -    (10.0)
- TEG bid costs                                           -     65.0     56.0 
--------------------------------------------------  -------  -------  ------- 
Earnings on common stock for the year as adjusted     400.5    351.1    298.7 
--------------------------------------------------  -------  -------  ------- 
Earnings/(loss) per common share                    $  1.62  $  2.16  $ (0.19)
--------------------------------------------------  -------  -------  ------- 
Average number of common shares outstanding                                   
- basic and diluted (thousand)                      292,424  296,094  297,229 
--------------------------------------------------  -------  -------  ------- 
Earnings per common share as adjusted               $  1.37  $  1.19  $  1.01 
--------------------------------------------------  -------  -------  ------- 

Shown below are cash dividends declared on common stock and resulting           
dividends per shares for each of the three years ended 31 December 1998.        
------------------------------------------------------------------------------- 

                                                                [Download Table]

                                                    Year ended 31 December 
                                                    -----------------------
                                                       1996    1997    1998
                                                         $m      $m      $m
---------------------------------------------------------------------------
                                                                           
Cash dividends declared on common stock ($m)          317.9   320.0   321.0
Year end number of common stock shares outstanding                         
 (thousand)                                         295,140 296,908 297,343
Cash dividends declared per share ($)               $  1.08 $  1.08 $  1.08

A summary of the differences between US GAAP and UK GAAP is set out in          
paragraph 3 of section B of this Part III.                                      

PacifiCorp's major businesses are described in paragraphs 3 and 4 below.        

                                                                            25

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3. US electricity operations                                                    

Generation                                                                      
PacifiCorp owns or has joint ownership interests in generating plants with an   
aggregate plant net generating capability of 8,445 MW. These include 15         
thermal electric generating plants with an aggregate plant net generating       
capability of 7,039 MW, ownership of, or joint ownership interests in, 53       
hydro-electric generating plants with an aggregate plant net generating         
capability of 1,125 MW, and three other plants, including ownership of one gas  
turbine generating plant, 50% ownership in a combined cycle turbine generating  
plant and a 78.79% ownership interest in one wind power generating plant, with  
an aggregate plant net generating capability of 281 MW. PacifiCorp, together    
with the other co-owners, is pursuing a possible sale of the Centralia Power    
Project, a 1,340 MW coal-fired electric generating plant, in which PacifiCorp   
owns a 47.5% share. PacifiCorp is also pursuing a possible sale of the 4.15 MW  
Big Fork hydro-electric project which is PacifiCorp's only hydro-electric       
project in Montana. With its present generating facilities, under average       
water conditions, PacifiCorp expects that approximately 5% of its energy        
requirements for 1999 will be supplied by its hydro-electric plants and 59% by  
its thermal plants. The balance of 36% is expected to be obtained under long-   
term purchase contracts, interchange and other purchase arrangements. During    
1998, approximately 6% and 53% of PacifiCorp's energy requirements were         
supplied by its hydro-electric and thermal generating plants, respectively,     
and the remaining 41% by purchased power.                                       

PacifiCorp owns and mines much of the coal it uses for power generation. It     
has ownership interests in five coal mines that produced approximately 23.5     
million tons of coal in 1998. Of this amount, approximately 18.3 million tons   
were used directly by PacifiCorp, and the balance of the coal production was    
used by the other owners of coal-fired generating plants in which PacifiCorp    
has an interest. Most of the coal reserves associated with these mines are      
held pursuant to leases from the federal government and all such reserves are   
dedicated to nearby generating plants which PacifiCorp owns or in which it has  
a joint ownership interest. Three of these mines are owned and operated by      
PacifiCorp. Substantially all mining operations at one of the three mines       
owned by PacifiCorp will cease in 1999. Replacement coal is expected to be      
readily available from third party suppliers. Of the remaining two mines, one   
is a co-operative in which PacifiCorp has a 20% membership interest and the     
other is a joint venture in which PacifiCorp has a 66 2/3% interest.            
PacifiCorp is pursuing a possible sale of the wholly owned mining company       
associated with the Centralia Power Project.                                    

Retail                                                                          
PacifiCorp distributes electricity to 1.5 million supply customers in service   
areas aggregating about 135,800 square miles in portions of six western         
states: Utah, Oregon, Wyoming, Washington, Idaho and California. Prior to the   
sale of its Montana distribution assets in November 1998, PacifiCorp served     
35,000 retail electric customers in Montana. The retail sales business of       
PacifiCorp consists of the sale of electricity to domestic, industrial,         
agricultural and commercial end-users. It is regulated at the state level       
rather than the federal level, based on cost of service pricing and authorised  
rates of return. PacifiCorp service areas contain diversified industrial and    
agricultural economies. Principal industrial customers are active in oil and    
gas extraction, lumber and wood products, paper and allied products,            
chemicals, primary metals, mining, technology and agribusiness.                 

The geographical distribution of PacifiCorp's US retail electric operating      
revenues for the year ended 31 December 1998 was Utah 38%, Oregon 33%, Wyoming  
12%, Washington 8%, Idaho 6%, California 2% and Montana 1%.                     

PacifiCorp's service areas have complementary seasonal load patterns. In the    
western states (Washington, Oregon and California), customer demand generally   
peaks in the winter months due to space heating requirements. In the eastern    
states (Utah, Wyoming and Idaho), customer demand generally peaks in the        
summer when irrigation and cooling systems are heavily used.                    

During 1998, no single retail customer accounted for more than 2% of            
PacifiCorp's retail electricity revenues and the 20 largest retail customers    
accounted for 13.9% of total retail electricity revenues. PacifiCorp continues  
to operate its electricity distribution and retail sales business as a          
regulated monopoly throughout most of its franchise service areas. However,     
PacifiCorp's electricity distribution and retail sales business is facing       
increasing competition, principally as a result of industry restructuring,      
deregulation and increased marketing by alternative energy suppliers. In        
addition, many large industrial                                                 

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customers have the option to build their own generation or cogeneration         
facilities or to use alternative energy sources, such as natural gas. These     
competitive pressures enable these customers to negotiate lower prices through  
special tariffs or contracts.                                                   

Since April 1998, retail electric energy sales in California have been subject  
to open market competition. The provision by PacifiCorp of tariffed services    
in California will continue to be regulated. In addition to California, the     
other states in PacifiCorp's service areas have enacted legislation or          
initiated studies of retail competition or are considering retail competition   
as part of industry restructuring.                                              

PacifiCorp has formulated strategies to meet these new challenges. PacifiCorp   
is marketing power supply services to other utilities in the western United     
States, including dispatch assistance, daily system load monitoring, backup     
power, power storage and power marketing, and services to retail customers      
that encourage efficient use of energy. From 1 January 1998, the California     
Public Utilities Commission adopted rules regulating the non-tariffed sale of   
energy and energy products and services by utilities and                        
their affiliates. PacifiCorp has decided to refrain from marketing products     
and services to retail customers in California but intends to remain active in  
the wholesale business selling to utilities in California and power marketers   
elsewhere in the western United States.                                         

In July 1998, PacifiCorp announced its intention to seek buyers for its         
electric distribution assets in California and Montana. In November 1998,       
PacifiCorp sold its Montana electric distribution assets and received proceeds  
of $89 million, net of taxes and customer refunds. PacifiCorp returned $4       
million of the $8 million gain on the sale to its Montana customers. On 9       
April 1999, PacifiCorp announced that it had executed a non-binding letter of   
intent to sell PacifiCorp's electric service area in California to Nor-Cal      
Electric Authority for approximately $178 million, pre-tax, subject to          
adjustment. PacifiCorp expects to enter into a binding sale agreement by late   
July 1999. Subject to regulatory approvals, PacifiCorp anticipates completion   
of the sale early in the year 2000.                                             

Wholesale marketing and purchased power                                         
PacifiCorp's wholesale sales of power contribute significantly to total         
revenues. PacifiCorp's wholesale sales complement its retail business and       
enhance the efficient use of its generating capacity. The wholesale sales       
business consists of the sale of electricity to distribution companies for      
resale to their retail customers, or to other generators or power marketers     
for resale in the wholesale market. The wholesale business is regulated at the  
federal rather than the state level, allowing companies under some              
circumstances to operate at competitive rates and prices. In 1998,              
PacifiCorp's wholesale trading revenues increased and its energy volume sold    
increased over the prior year, accounting for a substantial portion of its      
total energy sales and energy revenues. This business is expected to decline    
in 1999 due to a reduced focus on short term wholesale sales.                   

In addition to its base of thermal and hydro-electric generation resources,     
PacifiCorp utilises a mix of long-term and short-term firm power purchases      
(being purchases that are contractually binding and cannot be interrupted or    
curtailed by the supplier for any reason other than defined events of force     
majeure), and non-firm power purchases (which provide for delivery of power as  
and when it is available and which can be interrupted or curtailed by the       
supplier), to meet its load obligations and to make sales to other utilities,   
governmental bodies and power marketers. These purchases are made in the        
wholesale market from other generators in the western United States and         
Canada. Long-term firm power purchases supplied 9% of PacifiCorp's total        
energy requirements in 1998. Short-term firm and non-firm purchases supplied    
32% of PacifiCorp's total energy requirements in 1998.                          

PacifiCorp currently purchases 1,100 MW of firm capacity annually from the      
Bonneville Power Administration ("BPA"), a power marketing agency of the        
United States government, pursuant to a long-term agreement. The purchase       
amount declines to 925 MW annually from 1 July 2000 and to 750 MW annually      
from 1 July 2003 to August 2011. Amounts required to be purchased and sold may  
be reduced by BPA under certain specified conditions on five years' notice and  
by PacifiCorp under specified conditions on either one year's notice or five    
years' notice depending on such conditions. PacifiCorp's current annual         
payment under this agreement (based on the 1,100 MW purchase amount) is         
approximately $74 million. The agreement provides for the amount of the         
payment to decline proportionately as the amount purchased declines and also    
to change at the rate of change of BPA's average system cost. The next change   
to BPA's average system cost is expected to occur as of 1 October 2001. The     
new average system cost for 2001 will be determined by BPA in future rate       
proceedings.                                                                    

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Competition has transformed the electric utility industry at the wholesale      
level. The US Energy Policy Act 1992 opened wholesale competition to energy     
brokers, independent power producers and power marketers. In 1996, the FERC     
ordered all investor-owned utilities, which includes PacifiCorp, to allow       
others access to their transmission systems for wholesale power sales. This     
access must be provided at the same price and terms that the utilities would    
use for their own wholesale customers. Competition is also influenced by        
availability and price of alternate energy sources and the general demand for   
electrical power.                                                               

On 1 April 1999, PacifiCorp Holdings sold all the outstanding stock of TPC to   
NI Energy Services Inc. for approximately $150 million (including $17 million   
working capital).                                                               

Nuclear                                                                         
PacifiCorp has a 2.5% ownership interest in the Trojan nuclear plant in         
Oregon. The plant is in the process of being decommissioned. Removal of         
equipment (such as pumps, valves, piping, steam generators and other large      
components) has begun. The radioactive components of the plant are to be        
2removed and the site decontaminated by 2002-2003. Spent fuel is expected to    
remain on site in a dry storage facility until 2018-2023. PacifiCorp's          
estimated share of remaining decommissioning costs as at 31 December 1998 is    
approximately $9.5 million. About half of these costs will be incurred before   
2002.                                                                           

Projected demand                                                                
Retail kilowatt-hour sales for PacifiCorp have experienced compound annual      
growth of 2% since 1993. However, the downturn in international economic        
conditions, particularly in the Far East and Japan, have had a negative impact  
on PacifiCorp's service territories in the Pacific Northwest and many of the    
industries PacifiCorp serves. For the period 1999 to 2002, PacifiCorp           
estimates that the average annual growth in retail kilowatt-hour sales in its   
franchise service territories will be about 2.1%. During this period,           
PacifiCorp may lose energy sales to other suppliers in connection with          
deregulation of the US electricity industry. However, as the US electricity     
industry becomes deregulated, PacifiCorp expects to have opportunities to gain  
market share in areas outside its franchise service territories. PacifiCorp's   
actual results will be determined by a variety of factors, including the        
outcome of deregulation in the electricity industry, economic and demographic   
growth, profitability, competition and the effectiveness of energy efficiency   
programmes.                                                                     

PacifiCorp's base of existing resources, in combination with actions outlined   
in its integrated resources plan, and its anticipated purchases for             
residential and small farm load from BPA is expected to be sufficient to meet   
its load growth expectations through 2012. Actions outlined in PacifiCorp's     
integrated resource plan include promoting efficiency improvements by           
customers, improved efficiency for existing generation, transmission and        
distribution systems and other cost effective resource acquisition              
opportunities that meet the future needs of PacifiCorp, including renewable     
resources.                                                                      

4. Powercor                                                                     
Powercor, an indirect, wholly owned Australian subsidiary of PacifiCorp,        
acquired in December 1995 for approximately US$1.6 billion, is the largest      
electricity distribution company in Victoria based on sales volume, revenues,   
geographic scope and number of customers. Powercor's principal businesses are   
its distribution and supply businesses.                                         

Distribution business                                                           
Powercor's distribution business consists of the ownership, management and      
operation of the electricity distribution and subtransmission network in its    
distribution service area, covering the western suburbs of Melbourne to         
central and western Victoria. Substantially all of the distribution business    
is a regulated monopoly. In 1998, the distribution business generated all of    
Powercor's operating income.                                                    

Supply business                                                                 
Powercor's supply business consists of the purchase of electricity from         
generators and the resale of such electricity to customers in Powercor's        
distribution service area and the other parts of Victoria, New South Wales and  
the Australian Capital Territory. Powercor has an exclusive licence to sell     
electricity to customers with a demand of 160 MWh per year or less ("franchise  
customers") in its distribution service area, and non-exclusive licences to     
sell electricity to customers with usage in excess of 160 MWh per year          
("contestable customers") in its distribution service area and elsewhere in     
Victoria and New South Wales and to customers in Queensland with annual usage   
in excess of 4 GWh per year. Customers with usage of 160 MWh per year or less   
will incrementally become contestable over the period ending                    

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31 December 2000 in Victoria and over the period ending 30 June 1999 in New     
South Wales depending on their energy usage.                                    

Powercor purchases substantially all of its power for sale to customers         
through the Australian competitive wholesale market for electricity. The        
principal function of the Australian wholesale market is to allow market        
forces, rather than monopolised central planning, to determine the amount, mix  
and cost characteristics of generating plants and the level and shape of        
demand of suppliers.                                                            

5. Other operations                                                             

PacifiCorp financial services                                                   
PacifiCorp Financial Services, Inc. ("PFS"), which previously operated as a     
financial services holding company, made its last investment in aircraft or     
loans relating to aircraft in 1992. It has liquidated most of its loan,         
leasing, real estate and affordable housing investment portfolio and is         
principally engaged in managing its existing investments in leveraged lease     
(primarily aircraft) and tax-advantaged assets.                                 

As at 31 December 1998, PFS had net finance assets of $313.7 million. The       
majority of this related to an aviation finance portfolio of leveraged lease    
and other financial assets.                                                     

International operations                                                        
Through its subsidiaries, PacifiCorp Holdings has been engaged in the           
acquisition or development of electrical power projects or systems              
internationally. The most significant of these projects was the acquisition of  
a 33% interest in the 75 MW Bakun hydro-electric project in the Philippines.    
The process of exiting the international businesses, other than Powercor, is    
underway.                                                                       

In September 1996, the Hazelwood Power Partnership purchased a 1,600 MW, brown  
coal-fired thermal power station and the adjacent brown coal mine in Victoria,  
Australia. PacifiCorp Holdings has an indirect 19.9% interest in the Hazelwood  
Power Partnership. PacifiCorp has also announced its intention to sell its      
interest in the Hazelwood Power Partnership.                                    

Details of the US utility regulatory regime applicable to PacifiCorp are set    
out in Part VI.                                                                 

6. Certain statements made by PacifiCorp                                        
On 23 October 1998, PacifiCorp made certain statements regarding its prospects  
for the year ending 31 December 1999. These statements were made in the US      
within the "safe harbor" provisions of the US Private Litigation Reform Act     
1995. At the time they were made, PacifiCorp had not sought, nor was it under   
any obligation to seek, any independent verification of these statements by     
its advisers. Given the uncertainty inherent in seeking to make a statement     
regarding its prospects for an unexpired period as long as the year ending 31   
December 1999, it is not possible for independent accountants and PacifiCorp's  
financial advisers to obtain sufficient comfort on the assumptions underlying   
the statement to enable them to report thereon in accordance with the           
requirements of the London Stock Exchange. Accordingly, there can be no         
assurance that the financial position set forth in the statement regarding      
PacifiCorp's prospects for the year ending 31 December 1999 will be realised.   
Therefore, ScottishPower Shareholders and potential investors should place no   
reliance whatsoever on the statement in determining the action that they        
should take.                                                                    

7. Year 2000 compliance                                                         
PacifiCorp's Year 2000 project has been underway since mid-1996. A methodology  
of inventory, assessment, remediation and testing of hardware, software and     
equipment based on industry standards has been implemented. PacifiCorp plans    
to have successfully identified, corrected and tested its existing critical     
systems by 1 July 1999. The main areas of risk are in power supply (generating  
plant and system controls), information technology (computer hardware and       
software), business disruption and supply chain disruption. From 1 January      
1998, all new hardware or software acquired or developed by PacifiCorp has had  
to be certified Year 2000 compliant before it is installed. The directors of    
PacifiCorp believe that PacifiCorp's Year 2000 project is well advanced. As at  
31 December 1998, all PacifiCorp electric systems were inventoried, were 89%    
assessed and were 49% tested. Of PacifiCorp's computer systems, all central     
applications and desktop computers have been inventoried and assessed. The      
extent (in percentage terms) of completion of remediation and testing was as    
follows: central applications to correct (100%), central applications to        
replace (75%), and desktops (30%).                                              

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PacifiCorp is working closely with the North American Electric Reliability      
Council ("NERC") and the Western Systems Coordinating Council ("WSCC") with     
the aim of ensuring the integrity of the interconnected electrical              
distribution and transmission system in PacifiCorp's service area and the       
western US. NERC coordinates the efforts of the ten regional electric           
reliability councils throughout the US while WSCC is focused on reliable        
electric service in the western US. These agencies require Year 2000 readiness  
for all interconnected electric utilities by 1 July 1999. PacifiCorp has        
submitted its draft contingency plans to the WSCC as required by NERC.          
PacifiCorp participated in the successful NERC sponsored industry preparedness  
drill in respect of interruptions to necessary voice and data communications    
on 9 April 1999. PacifiCorp has drawn up worst case scenarios and plans to      
establish a precautionary posture for its systems at the end of 1999.           

PacifiCorp has drawn up various contingency plans including a mining            
operations contingency plan with a view to ensuring that increased stockpiles   
of fuel are ready to supply the generating plants.                              

PacifiCorp's ability to maintain normal operations into the year 2000 will      
also be affected by the extent of Year 2000 compliance of third parties from    
whom PacifiCorp purchases products and services or with whom PacifiCorp         
exchanges information. PacifiCorp believes it has identified all of its         
critical third-party relationships and has assessed the extent of Year 2000     
compliance of 98% of these parties. As at 27 April 1999, 98% of the critical    
third parties had reported they would be Year 2000 ready by 31 December 1999.   
PacifiCorp is in frequent contact with these third parties and the Year 2000    
compliance information is updated as required.                                  

PacifiCorp is also in the process of identifying third parties that are "super  
critical". An elevated Year 2000 readiness assessment, which includes a site    
visit, will be performed for each of them. To date, two super critical vendors  
have been identified. The first vendor supplies chemical reagents used in air   
emission control equipment at some generating plants. One week's supply can be  
maintained. The plants would be able to generate power, but after a week may    
not be able to meet air quality regulations. This vendor has advised            
PacifiCorp that it will be Year 2000 ready by 30 September 1999. An on-site     
assessment has been completed. PacifiCorp recently identified the second super  
critical vendor, which provides investor services to the company. A review of   
this vendor's Year 2000 project is scheduled for May 1999.                      

As at 31 December 1998, PacifiCorp has incurred $12.7 million of costs in       
connection with the Year 2000 project. Year 2000 remediation costs amount to    
approximately 5% of PacifiCorp's annual information technology budget.          
Estimates of the total cost to PacifiCorp of the Year 2000 project are          
approximately $30 million, which will be principally funded from operating      
cash flows. This estimate does not include the cost of system replacements      
that will be Year 2000 compliant but are not being installed primarily to       
resolve Year 2000 problems. PacifiCorp has not delayed any information          
technology projects that are critical to its operations as a result of Year     
2000 remediation work. No independent verification of risk and cost estimates   
has been undertaken.                                                            

PacifiCorp believes that its critical systems will be Year 2000 ready by 1      
July 1999. This belief, and the expected costs and other impacts of the Year    
2000 issues, are based on management's best estimates, which are based on       
numerous assumptions concerning future events, including the availability of    
certain resources, the completion of third-party modification plans and other   
factors. There can be no assurance that these estimates will be achieved or     
that there will not be a delay in PacifiCorp's implementation of its Year 2000  
project or that it will not incur increased costs associated with Year 2000     
issues.                                                                         

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B. Summary financial information for PacifiCorp                                 
for the three years ended 31 December 1998                                      

1. Nature of financial information                                              
The financial information set out below has been extracted without material     
adjustment from the audited consolidated financial statements of PacifiCorp     
for the three years ended 31 December 1998 contained in its annual reports      
filed on Form 10-K with the SEC. Deloitte & Touche LLP have issued independent  
accountants' reports on PacifiCorp's consolidated financial statements for the  
three years ended 31 December 1996, 1997 and 1998 that are required to be       
included in the annual report on Form 10-K pursuant to Section 13 or 15(d) of   
the US Securities Exchange Act of 1934. Each report was unqualified.            
The financial information has been prepared in accordance with US GAAP and      
under PacifiCorp's accounting policies. US GAAP differs from UK GAAP in         
certain material respects. A summary of the main differences between the        
accounting policies adopted by PacifiCorp under US GAAP to those adopted by     
ScottishPower under UK GAAP at 31 December 1998 and for the three years then    
ended is set out at the end of this Part III.                                   

2. Summary financial information for PacifiCorp                                 

Statements of Consolidated Income and Retained Earnings                         
------------------------------------------------------------------------------- 

                                                                [Download Table]

                                                   Year ended 31 December     
                                                 ---------------------------- 
                                                     1996      1997      1998 
                                                       $m        $m        $m 
------------------------------------------------------------------------------
                                                                              
Revenues                                          3,792.0   4,548.9   5,580.4 
------------------------------------------------ --------  --------  -------- 
Expenses                                                                      
 Purchased power                                    923.9   1,605.0   2,821.5 
 Other operations and maintenance                 1,017.4   1,078.8   1,081.9 
 Administrative and general                         241.3     319.0     322.9 
 Depreciation and amortisation                      423.8     466.1     451.2 
 Taxes, other than income taxes                      99.3      98.9      98.7 
 Special charges                                        -     170.4     123.4 
------------------------------------------------ --------  --------  -------- 
Total                                             2,705.7   3,738.2   4,899.6 
------------------------------------------------ --------  --------  -------- 
Income from Operations                            1,086.3     810.7     680.8 
------------------------------------------------ --------  --------  -------- 
Interest Expense and Other                                                    
 Interest expense                                   415.0     437.8     371.6 
 Interest capitalised                               (11.4)    (12.2)    (14.5)
 Losses from equity investments                       4.1      12.8      13.9 
 TEG costs and option losses                            -     105.6      73.0 
 Write down of investments in energy development                              
  companies                                             -         -      79.5 
 Gain on sale of PGC                                    -     (56.5)        - 
 Minority interest and other                         11.8     (21.5)    (12.4)
------------------------------------------------ --------  --------  -------- 
Total                                               419.5     466.0     511.1 
------------------------------------------------ --------  --------  -------- 
Income from continuing operations before income                               
 taxes                                              666.8     344.7     169.7 
Income tax expense                                  236.5     111.8      59.1 
------------------------------------------------ --------  --------  -------- 
Income from continuing operations before                                      
 extraordinary items                                430.3     232.9     110.6 
Discontinued operations (less applicable income                               
 tax expense/(benefit): 1998: $(74.3m); 1997:                                 
 $361.1m and 1996: $47.4m)                           74.6     446.8    (146.7)
Extraordinary loss from regulatory asset                                      
 impairment (less applicable income tax benefit                               
 of $9.6m)                                              -     (16.0)        - 
------------------------------------------------ --------  --------  -------- 
Net Income/(Loss)                                   504.9     663.7     (36.1)
------------------------------------------------ --------  --------  -------- 
Earnings/(Loss) on Common Stock                     475.1     640.9     (55.4)
------------------------------------------------ --------  --------  -------- 
Average number of common shares outstanding--                                 
 basic and diluted (Thousands)                    292,424   296,094   297,229 
Earnings/(Loss) per Common Share--Basic and                                   
 Diluted                                                                      
 Continuing operations                           $   1.37  $   0.71  $   0.30 
 Discontinued operation                          $   0.25  $   1.50  $  (0.49)
 Extraordinary item                              $      -  $  (0.05) $      - 
------------------------------------------------ --------  --------  -------- 
Total                                            $   1.62  $   2.16  $  (0.19)
------------------------------------------------ --------  --------  -------- 

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32                                                                              
Consolidated Balance Sheets                                                     
--------------------------------------------------------------------------------
Assets                                                                          

                                                                [Download Table]

                                                         31 December           
                                                  ---------------------------- 
                                                      1996      1997      1998 
                                                        $m        $m        $m 
-------------------------------------------------------------------------------
                                                                               
Current Assets                                                                 
 Cash and cash equivalents                             8.4     740.8     583.1 
 Accounts receivable less allowance for doubtful                               
  accounts: 1998: $18.0m;                                                      
  1997: $17.7m and 1996: $8.5m                       620.9     723.9     703.2 
 Materials, supplies and fuel stock at average                                 
  cost                                               181.3     181.9     175.8 
 Net assets of discontinued operations and assets                              
  held for sale                                      779.5     223.4     192.4 
 Real estate investments held for sale                   -     272.2         - 
 Other                                                71.8      55.1      87.9 
------------------------------------------------- --------  --------  -------- 
Total Current Assets                               1,661.9   2,197.3   1,742.4 
------------------------------------------------- --------  --------  -------- 
Property, Plant and Equipment                                                  
 Domestic Electric Operations                                                  
  Production                                       4,659.2   4,720.6   4,844.2 
  Transmission                                     2,069.2   2,087.8   2,102.3 
  Distribution                                     3,029.7   3,244.0   3,319.7 
  Other                                            1,687.9   1,784.8   1,947.0 
  Construction work in progress                      252.8     257.4     246.8 
------------------------------------------------- --------  --------  -------- 
  Total Domestic Electric Operations              11,698.8  12,094.6  12,460.0 
 Australian Electric Operations                    1,361.9   1,161.2   1,140.4 
 Other Operations                                     68.8      31.0      22.2 
 Accumulated depreciation and amortisation        (3,862.4) (4,240.0) (4,553.2)
------------------------------------------------- --------  --------  -------- 
 Total Property, Plant and Equipment - Net         9,267.1   9,046.8   9,069.4 
Other Assets                                                                   
 Investments in and advances to affiliated compa-                              
  nies                                               253.9     166.1     114.9 
 Intangible assets - net                             480.7     399.0     369.4 
 Regulatory assets - net                           1,022.8     871.1     795.5 
 Finance note receivable                             214.6     211.2     204.9 
 Finance assets - net                                425.6     349.8     313.7 
 Real estate investment                              217.0         -         - 
 Deferred charges and other                          268.7     385.7     378.3 
------------------------------------------------- --------  --------  -------- 
 Total Other Assets                                2,883.3   2,382.9   2,176.7 
------------------------------------------------- --------  --------  -------- 
Total Assets                                      13,812.3  13,627.0  12,988.5 
------------------------------------------------- --------  --------  -------- 

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Liabilities and Shareholders' Equity                                            
--------------------------------------------------------------------------------

                                                                [Download Table]

                                                   31 December                  
                                            ---------------------------         
                                                1996     1997      1998         
                                                  $m       $m        $m         
--------------------------------------------------------------------------------
                                                                                
Current Liabilities                                                             
 Long-term debt currently maturing             219.8    365.4     299.5         
 Notes payable and commercial paper            683.5    189.2     260.6         
 Accounts payable                              477.5    546.7     566.2         
 Taxes, interest and dividends payable         290.8    677.4     282.7         
 Customer deposits and other                    83.7     84.9     168.0         
------------------------------------------  -------- --------  --------         
 Total Current Liabilities                   1,755.3  1,863.6   1,577.0         
Deferred Credits                                                                
 Income taxes                                1,801.0  1,666.2   1,542.6         
 Investment tax credits                        143.2    135.2     125.3         
 Other                                         727.9    646.3     646.1         
------------------------------------------  -------- --------  --------         
 Total Deferred Credits                      2,672.1  2,447.7   2,314.0         
Long-Term Debt                               4,892.4  4,413.0   4,559.3         
Commitments and Contingencies                      -        -         -         
Guaranteed Preferred Beneficial Interests                                       
 in Company's Junior Subordinated                                               
 Debentures                                    209.7    340.4     340.5         
Preferred Stock Subject to Mandatory                                            
 Redemption                                    178.0    175.0     175.0         
Preferred Stock                                135.5     66.4      66.4         
Common Equity                                                                   
 Common shareholders' capital: shares                                           
  authorised 750,000,000; shares outstand-                                      
  ing: 1998: 297,343,422; 1997:                                                 
  296,908,110 and 1996: 295,139,753          3,236.8  3,274.2   3,285.0         
 Retained earnings                             782.8  1,106.3     732.0         
 Accumulated other comprehensive income         12.7    (59.6)    (60.7)        
------------------------------------------  -------- --------  --------         
 Total Common Equity                         4,032.3  4,320.9   3,956.3         
------------------------------------------  -------- --------  --------         
Total Liabilities and Shareholders' Equity  13,812.3 13,627.0  12,988.5         
------------------------------------------  -------- --------  --------         

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Statements of Consolidated Changes in Common Shareholders' Equity               

                                                                [Download Table]
------------------------------------------------------------------------------

                             Common                 Accumulated               
                          Shareholders'                Other         Total    
                             Capital     Retained  Comprehensive Comprehensive
                         Shares  Amount  Earnings     Income     Income/(Loss)
                          '000     $m       $m          $m            $m      
------------------------------------------------------------------------------
                                                                              
Balance at 1 January                                                          
 1996                    284,277 3,012.9   632.4            -             -   
Comprehensive income                                                          
 Net income                    -       -   504.9            -         504.9   
 Other comprehensive                                                          
  income                                                                      
  Foreign currency                                                            
   translation                                                                
   adjustment, net of                                                         
   tax of $8.0m                -       -       -         12.7          12.7   
Cash dividends declared                                                       
 Preferred stock               -       -   (29.1)           -             -   
 Common stock                  -       -  (317.9)           -             -   
Preferred stock retired        -       -    (7.5)           -             -   
Sales to public            8,790   177.8       -            -             -   
Sales through Dividend                                                        
 Reinvestment and Stock                                                       
 Purchase Plan             2,073    43.2       -            -             -   
Redemptions and                                                               
 repurchases                   -     2.9       -            -             -   
------------------------ ------- ------- -------     -------       -------    
Balance at 31 December                                                        
 1996                    295,140 3,236.8   782.8         12.7         517.6   
------------------------                                           -------    
Comprehensive income                                                          
 Net income                    -       -   663.7            -         663.7   
 Other comprehensive                                                          
  income                                                                      
  Foreign currency                                                            
   translation                                                                
   adjustment, net of                                                         
   tax of $46.9m               -       -       -        (72.3)        (72.3)  
Cash dividends declared                                                       
 Preferred stock               -       -   (20.0)           -             -   
 Common stock                  -       -  (320.0)           -             -   
Preferred stock retired        -       -    (0.2)           -             -   
Sales through Dividend                                                        
 Reinvestment and Stock                                                       
 Purchase Plan             1,768    37.4       -            -             -   
------------------------ ------- ------- -------     -------       -------    
Balance at 31 December                                                        
 1997                    296,908 3,274.2 1,106.3        (59.6)        591.4   
------------------------                                           -------    
Comprehensive                                                                 
 income/(loss)                                                                
 Net loss                      -       -   (36.1)           -         (36.1)  
 Other comprehensive                                                          
  income/(loss)                                                               
  Unrealised gain on                                                          
   available-for-sale                                                         
   securities, net of                                                         
   tax of $3.8m                -       -       -          6.2           6.2   
  Foreign currency                                                            
   translation                                                                
   adjustment, net of                                                         
   tax of $4.0m                -       -       -         (7.3)         (7.3)  
Cash dividends declared                                                       
 Preferred stock               -       -   (17.2)           -             -   
 Common stock                  -       -  (321.0)           -             -   
Sales through Dividend                                                        
 Reinvestment and Stock                                                       
 Purchase Plan               346     9.1       -            -             -   
Stock options exercised       89     1.7       -            -             -   
------------------------ ------- ------- -------     -------       -------    
Balance at 31 December                                                        
 1998                    297,343 3,285.0   732.0        (60.7)        (37.2)  
------------------------ ------- ------- -------     -------       -------    

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Statements Of Consolidated Cash Flows                                           

                                                                [Download Table]
------------------------------------------------------------------------------

                                                          Year ended 31       
                                                           December           
                                                      1996     1997      1998 
                                                        $m       $m        $m 
------------------------------------------------------------------------------
                                                                              
Cash Flows from Operating Activities                                          
 Net Income/(Loss)                                   504.9    663.7     (36.1)
 Adjustments to reconcile net income/(loss) to net                            
  cash provided by continuing operations                                      
  Losses/(income) from discontinued operations       (74.6)   (81.7)    146.7 
  Gain on disposal of discontinued operations            -   (365.1)        - 
  Extraordinary loss from regulatory asset                                    
   impairment                                            -     16.0         - 
  Write down of investments in energy development                             
   companies                                             -        -      79.5 
  Depreciation and amortisation                      440.5    481.5     460.1 
  Deferred income taxes and investment tax                                    
   credits--net                                       26.1    (55.5)    (47.9)
  Special charges                                        -    170.4     123.4 
  Gain on sale of subsidiary and assets                  -    (56.5)    (11.0)
  Other                                              (25.6)    46.0      23.0 
  Accounts receivable and prepayments               (154.1)  (135.5)    (34.2)
  Materials, supplies, fuel stock and inventory       26.8     (6.5)      6.2 
  Accounts payable and accrued liabilities           144.4    159.1     (24.8)
-------------------------------------------------- -------  -------  -------- 
 Net cash provided by continuing operations          888.4    835.9     684.9 
 Net cash provided by/(used in) discontinued                                  
  operations                                          37.0   (217.3)   (433.7)
-------------------------------------------------- -------  -------  -------- 
Net Cash Provided by Operating Activities            925.4    618.6     251.2 
-------------------------------------------------- -------  -------  -------- 
Cash Flows from Investing Activities                                          
 Construction                                       (528.1)  (577.7)   (609.9)
 Operating companies and assets acquired            (199.4)   (65.6)    (44.8)
 Investments in and advances to affiliated                                    
  companies--net                                    (148.4)   (70.9)    (11.9)
 Proceeds from sales of assets                        49.3  1,666.3     111.0 
 Proceeds from sales of finance assets and                                    
  principal payments                                  55.8    103.2     311.7 
 Other                                               (10.5)   (58.5)    (31.8)
-------------------------------------------------- -------  -------  -------- 
Net Cash Provided by/(used in) Investing                                      
 Activities                                         (781.3)   996.8    (275.7)
-------------------------------------------------- -------  -------  -------- 
Cash Flows from Financing Activities                                          
 Changes in short-term debt                         (247.6)  (494.4)     71.5 
 Proceeds from long-term debt                        567.6    726.4   1,829.0 
 Proceeds from issuance of common stock              223.9     37.4      10.8 
 Proceeds from issuance of preferred securities of                            
  Trust holding solely PacifiCorp debentures         209.6    130.6         - 
 Dividends paid                                     (346.4)  (341.2)   (337.3)
 Repayments of long-term debt                       (284.5)  (779.6) (1,731.6)
 Redemptions of capital stock                       (221.6)   (72.2)        - 
 Other                                               (52.5)   (90.0)     24.4 
-------------------------------------------------- -------  -------  -------- 
Net Cash Used in Financing Activities               (151.5)  (883.0)   (133.2)
-------------------------------------------------- -------  -------  -------- 
Increase/(Decrease) in Cash and Cash Equivalents      (7.4)   732.4    (157.7)
Cash and Cash Equivalents at Beginning of Year        15.8      8.4     740.8 
-------------------------------------------------- -------  -------  -------- 
Cash and Cash Equivalents at End of Year               8.4    740.8     583.1 
-------------------------------------------------- -------  -------  -------- 

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3. Summary of differences between US GAAP and UK GAAP and unaudited summary     
statement of PacifiCorp's financial information under UK GAAP             

PacifiCorp prepares its financial statements in accordance with US GAAP. The    
main differences between the accounting policies adopted by PacifiCorp under    
US GAAP and those adopted by ScottishPower under UK GAAP are described below.   

(a) Goodwill                                                                    
Under US GAAP, goodwill and intangible assets arising from the purchase of      
operating entities are held as intangible assets in the balance sheet and are   
amortised over their expected useful lives.                                     

Under UK GAAP, goodwill arising from the purchase of operating entities prior   
to 31 March 1998 has been written off directly to reserves. Goodwill arising    
on acquisitions subsequent to 31 March 1998 is capitalised and amortised        
through the profit and loss account over its useful economic life. Under UK     
GAAP intangible assets other than goodwill are recognised only where they are   
separately identifiable, capable of reliable measurement and disposal           
independent of the business of the entity to which they relate. Otherwise such  
amounts are included as part of the purchased goodwill.                         

(b) Deferred taxation                                                           
Under US GAAP full provision for deferred tax is required to the extent that    
accounting profit differs from taxable profit due to temporary timing           
differences. Provision is made at future enacted rates.                         

Under UK GAAP provision for deferred tax is only required to the extent that    
it is probable that a taxation liability or asset will crystallise, in the      
foreseeable future, as a result of timing differences between taxable profit    
and accounting profit. Provision is made at known rates of tax.                 

(c) Pension costs                                                               
The fundamental differences between US GAAP and UK GAAP are as follows:         

(i)Under US GAAP, the aim is to accrue the cost of providing pension benefits   
in the year in which the employee provides the related service. Under UK GAAP,  
the annual pension charge is determined so that it is a substantially level     
percentage of the current and expected future payroll.                          

(ii)Under US GAAP, pension liabilities are discounted using the current rates   
at which the pension liability could be settled. Under UK GAAP, pension         
liabilities are usually discounted using an interest rate that represents the   
expected long term return on plan assets.                                       

(iii)Under US GAAP, variations from plan must be amortised separately over      
remaining service lives. Under UK GAAP, variations can be aggregated and        
amortised over the remaining employee service lives.                            

(iv)Under US GAAP, plan assets should be valued at market or at market related  
values. Under UK GAAP, alternative bases can be used.                           

(d) Other post retirement benefits                                              
SFAS 106 "Employers" Accounting for Post-retirement Benefits other than         
Pensions" requires the use of a discount rate which reflects current market     
rates in determining the provision for post retirement benefits. UK GAAP        
permits the use of longer term discount rates.                                  

(e) Debt and equity finance costs                                               
Under US GAAP, as applied by regulated electricity utilities, both the cost of  
debt and the cost of equity applicable to domestic utility properties are       
capitalised during construction. Under UK GAAP, only interest on the debt       
funding attributable to capital projects may be capitalised during the period   
of construction.                                                                

(f) Leveraged leases                                                            
Under US GAAP, lessors can offset borrowings used to acquire leased assets      
against amounts receivable from lessees. It is also permissible to offset       
finance charges receivable from lessees against the finance charges arising on  
the borrowings used to fund the leased asset. This is referred to as "linked    
presentation".                                                                  

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Under UK GAAP, linked presentation is allowed only in specific circumstances    
that are not met in respect of the assets of PacifiCorp that are the subject    
of such leases. Accordingly the amounts due from lessees and related            
indebtedness are disclosed separately in the balance sheet and the finance      
charges receivable from lessees and finance charges payable are disclosed       
separately in the profit and loss account. This treatment has no impact on net  
profit.                                                                         

(g) Regulatory assets                                                           
SFAS 71 establishes US GAAP for utilities whose regulators have the power to    
approve and/or regulate rates that may be charged to customers. Provided that,  
through the regulatory process, the utility is substantially assured of         
recovering its allowable costs by the collection of revenue from its            
customers, such costs not yet recovered are deferred as regulatory assets. Due  
to the different regulatory environment, no equivalent GAAP applies in the UK.  

Under UK GAAP regulatory assets established in accordance with SFAS 71 are      
recognised where they comprise rights or other access to future economic        
benefits which arise as a result of past transactions or events which have      
created an obligation to transfer economic benefit to a third party.            
Measurement of the past transaction or event and hence of the regulatory asset  
is determined in accordance with UK GAAP. Where the application of UK GAAP      
results in the non or partial recognition of an obligation compared to US       
GAAP, any related regulatory asset is either not or partially recognised.       

Increases/(decreases) in net income/profit for the financial year and total     
stockholders' equity/shareholders' funds of PacifiCorp as a result of these     
adjustments can be summarised as follows:                                       

                                                                [Download Table]
---------------------------------------------------------------------------

                                                   PacifiCorp              
                                             Year ended 31 December        
                                             -------------------------     
                                                1996     1997     1998     
                                                  $m       $m       $m     
---------------------------------------------------------------------------
                                                                           
Net income/(loss) under US GAAP                504.9    663.7     36.1     
UK GAAP adjustments:                                                       
 Goodwill                                       20.4    (39.4)    10.6     
 Deferred taxation                              33.1     18.7      4.0     
 Pension costs                                   9.0     (2.8)    (5.8)    
 Other post retirement benefits                  6.8      5.1      2.7     
 Debt and equity finance costs                   7.3      7.1      5.8     
----------------------------------------------------  -------  -------  ---
Profit for the financial year under UK GAAP    581.5    652.4   (18.8)     
----------------------------------------------------  -------  -------  ---
---------------------------------------------------------------------------

                                                   PacifiCorp              
                                                 At 31 December            
                                             -------------------------     
                                                1996     1997     1998     
                                                  $m       $m       $m     
---------------------------------------------------------------------------
                                                                           
Total shareholders' equity under US GAAP     4,345.8  4,562.3  4,197.7     
UK GAAP adjustments:                                                       
 Goodwill                                     (450.6)  (501.3)  (471.2)    
 Deferred taxation                           1,507.1  1,435.2  1,415.8     
 Pension costs                                    --      0.9     (4.9)    
 Other post retirement benefits                  5.6     10.1     12.9     
 Debt and equity finance costs                 (51.5)   (44.4)   (38.6)    
 Regulatory assets                            (676.0)  (650.1)  (602.9)    
----------------------------------------------------  -------  -------     
Shareholders' funds under UK GAAP            4,680.4  4,812.7  4,508.8     
----------------------------------------------------  -------  -------     

(i) Total shareholders' equity comprises common shareholders' capital,          
  retained earnings, accumulated other comprehensive income, preferred stock
subject to mandatory redemption and preferred stock.                    

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Part IV                                                                         
Pro forma statement of net assets, indebtedness and working capital             
A.Pro forma statement of net assets                                             
The following Unaudited Pro Forma Statement of Net Assets of the Combined       
Group has been prepared for illustrative purposes only to show the effects of   
the Merger and the Scheme as if they had occurred on 31 March 1999. Because of  
its nature the Unaudited Pro Forma Statement of Net Assets may not give a true  
picture of the financial position of the Combined Group. It has been prepared   
and reported upon in accordance with the Listing Rules.                         

The financial information for New ScottishPower has been extracted from the     
extract from the Accountants' Report in Section B of Part II of this document.  
The net assets of New ScottishPower at 31 March 1999 were (Pounds)50,000.       

The financial information for ScottishPower at 31 March 1999 is based on the    
audited consolidated balance sheet of ScottishPower and has been extracted      
from paragraph 2 of Section C of Part II of this document.                      

The financial information for PacifiCorp at 31 December 1998 is based on the    
audited consolidated balance sheet of PacifiCorp and has been extracted from    
paragraph 2 of Section B of Part III of this document.                          

Unaudited Pro Forma Statement of Net Assets                                     

                                                        [Enlarge/Download Table]
--------------------------------------------------------------------------------------------------------------

                                    New                                                                       
                          ScottishPower ScottishPower           PacifiCorp               Acquisition          
                            At 31 March   At 31 March       At 31 December 1998           Accounting  Combined
                                   1999          1999 ---------------------------------  Adjustments     Group
                                UK GAAP       UK GAAP   US GAAP  Adjustments    UK GAAP      UK GAAP   UK GAAP
                              (Pounds)m     (Pounds)m (Pounds)m    (Pounds)m  (Pounds)m    (Pounds)m (Pounds)m
--------------------------------------------------------------------------------------------------------------
                                                       (Note 1)     (Note 2)                (Note 3)          
                                                                                                              
Fixed assets                                                                                                  
Intangible assets                  -          71.3       283.8      (283.8)          -     1,124.7    1,196.0 
Tangible assets                    -       5,295.1     5,606.7       (26.7)    5,580.0           -   10,875.1 
Investments                        -          73.7       161.6           -       161.6           -      235.3 
------------------------    -------       --------    --------    -------     --------    -------    -------- 
                                   -       5,440.1     6,052.1      (310.5)    5,741.6     1,124.7   12,306.4 
------------------------    -------       --------    --------    -------     --------    -------    -------- 
Current assets                                                                                                
Stocks                             -         125.8       150.2           -       150.2           -      276.0 
Debtors: amounts falling                                                                                      
 due after one year                -           6.5       970.8       (89.0)      881.8        55.5      943.8 
Debtors: amounts falling                                                                                      
 due within one year               -         552.8       529.8          17.7     547.5           -    1,100.3 
Investments                        -             -       348.9             -     348.9           -      348.9 
Short term bank and                                                                                           
 other deposits                    -         106.9         2.5             -       2.5           -      109.4 
------------------------    -------       --------    --------    -------     --------    -------    -------- 
                                   -         792.0     2,002.2         (71.3)  1,930.9        55.5    2,778.4 
------------------------    -------       --------    --------    -------     --------    -------    -------- 
Creditors: amounts                                                                                            
 falling due within one                                                                                       
 year                                                                                                         
Loans and other                                                                                               
 borrowings                        -        (843.6)     (335.3)        (17.7)   (353.0)     (147.0)  (1,343.6)
Other creditors                    -      (1,332.8)     (797.3)         11.2    (786.1)          -   (2,118.9)
------------------------    -------       --------    --------    -------     --------    -------    -------- 
                                   -      (2,176.4)   (1,132.6)         (6.5) (1,139.1)     (147.0)  (3,462.5)
------------------------    -------       --------    --------    -------     --------    -------    -------- 
Net current                                                                                                   
 assets/(liabilities)              -      (1,384.4)      869.6         (77.8)    791.8       (91.5)    (684.1)
------------------------    -------       --------    --------    -------     --------    -------    -------- 
Total assets less                                                                                             
 current liabilities               -       4,055.7     6,921.7        (388.3)  6,533.4     1,033.2   11,622.3 
Creditors: amounts                                                                                            
 falling due after one                                                                                        
 year                                                                                                         
Loans and other                                                                                               
 borrowings                        -      (1,684.5)   (2,922.4)       (274.2) (3,196.6)          -   (4,881.1)
Other creditors                    -             -       (34.5)            -     (34.5)          -      (34.5)
Provisions for                                                                                                
 liabilities and charges           -         (30.8)   (1,140.3)        849.9    (290.4)          -     (321.2)
Deferred income                    -        (393.2)     (296.5)            -    (296.5)          -     (689.7)
------------------------    -------       --------    --------    -------     --------    -------    -------- 
Net assets                         -       1,947.4     2,528.0         187.4   2,715.4     1,033.2    5,695.8 
------------------------    -------       --------    --------    -------     --------    -------    -------- 

Notes to the Unaudited Pro Forma Statement of Net Assets                        

Note 1. Reclassifications and translation of the PacifiCorp Statement of Net    
Assets                                                                          
Reclassifications have been made to the PacifiCorp historical financial         
information presented under US GAAP to conform to ScottishPower's presentation  
under UK GAAP. The information has been translated into pounds sterling at      
$1.66: (Pounds)1.00, the effective Noon Buying Rate of the Federal Reserve      
Bank of New York at 31 December 1998.                                           

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Note 2. UK GAAP adjustments to historical PacifiCorp Net Assets                 
PacifiCorp prepares its financial statements in accordance with US GAAP. For    
the purposes of preparing the Unaudited Pro Forma Statement of Net Assets,      
PacifiCorp's Net Assets have been restated to conform with ScottishPower's      
accounting policies under UK GAAP (which are those that will be adopted by the  
Company).                                                                       

Note 3. Acquisition accounting adjustments to the Unaudited Pro Forma           
Statement of Net Assets                                                         
The actual acquisition accounting adjustments that will be made will reflect,   
inter alia, the fair values of the consideration and the net assets of          
PacifiCorp at completion. For the purposes of the Unaudited Pro Forma           
Statement of Net Assets, no account has been taken of the possible financial    
effect of the proposed buyback, prior to the Merger Date, of up to (Pounds)500  
million of ScottishPower Shares and/or New Shares.                              

B.Indebtedness of the Combined Group                                            
At the close of business on 31 March 1999, the total indebtedness of the        
Combined Group (on the basis that the Merger and the Scheme had taken place)    
was as follows:                                                                 

                                                                [Download Table]
-------------------------------------------------------------------------

                                                                 Combined
                                       ScottishPower PacifiCorp     Group
                                           (Pounds)m  (Pounds)m (Pounds)m
-------------------------------------------------------------------------
                                                                         
Secured loans                                      -      2,132     2,132
Unsecured loans                                1,770        534     2,304
Unsecured bank overdrafts                         15         15        30
Other unsecured short-term borrowings            743        300     1,043
Finance lease obligations                          -        284       289
-------------------------------------          -----   -----      -----  
Total debt                                     2,528      3,265     5,798
-------------------------------------          -----   -----      -----  

For the purpose of the preparation of the above table, amounts have been        
translated into pounds sterling at AUS$2.5563: (Pounds)1.00 and US$1.6143:      
(Pounds)1.00, being the mid market closing prices as at 31 March 1999.          

At the close of business on 31 March 1999, The Combined Group had the           
following contingent liabilities:                                               

(a)ScottishPower had contingent liabilities under performance bonds and in  
respect of actual and potential claims, the total amount of which cannot be 
quantified but which, in the opinion of the Directors, are not likely to    
have a material effect on the ScottishPower Group.                          

(b)ScottishPower has guaranteed that overdrafts of three subsidiary         
undertakings up to an amount of (Pounds)0.7 million (1998: one subsidiary   
undertaking for (Pounds)0.5 million).                                       

(c)ScottishPower has guaranteed Manweb's liabilities to the Pool in England 
and Wales. At 31 March 1999 these liabilities were (Pounds)30.9 million     
(1998: (Pounds)37.4 million).                                               

(d)PacifiCorp had contingent liabilities amounting to (Pounds)206 million,  
principally guarantees relating to energy trading activities. In addition,  
PacifiCorp had contingent liabilities in respect of environmental matters   
and in respect of various legal claims, actions and complaints (including   
those described in paragraph 14(b) of Part VII of this document), the total 
amount of which cannot be quantified but which, in the opinion of           
PacifiCorp, are not likely to have a material effect on the PacifiCorp      
Group.                                                                      

Save as disclosed above and, in respect of the Combined Group, apart from       
intra-group indebtedness and guarantees at 31 March 1999 neither New            
ScottishPower nor any member of the ScottishPower Group or of the PacifiCorp    
Group had any outstanding loan capital (whether issued or created but           
unissued), term loans, other borrowings or indebtedness in the nature of        
borrowing (including bank overdrafts and liabilities under acceptances (other   
than normal trade bills) or acceptance credits, mortgages, charges, hire        
purchase commitments and obligations under finance leases), contingent          
liabilities or material guarantees.                                             

C.Working capital of the Combined Group                                         
New ScottishPower is of the opinion that, taking into account bonds in issue    
and available bank facilities, the Combined Group has sufficient working        
capital for its present requirements, that is for at least 12 months from the   
date of publication of this document.                                           

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Part V                                                                          
Further details of the Merger                                                   
A. Summary terms of the Merger                                                  

1. Introduction                                                                 
1.1 On 23 February 1999, in accordance with the terms of the Merger Agreement   
as a result of ScottishPower having determined to pursue the Scheme,            
ScottishPower, New ScottishPower, NA General Partnership and PacifiCorp         
entered into the Amended and Restated Merger Agreement to the effect that,      
following the Scheme Date, New ScottishPower will become the party to the       
Merger in place of ScottishPower.                                               

1.2 The remainder of this Section A assumes that this will occur. However, if   
ScottishPower gives written notice to PacifiCorp that the Scheme will not       
become effective, the Merger will nonetheless proceed in accordance with the    
terms and subject to the conditions of the Merger Agreement as if the Amended   
and Restated Merger Agreement had not been entered into. In that event,         
references in the remainder of this Section A to New ScottishPower, New Shares  
and New ADSs should be read as references to, respectively, ScottishPower,      
ScottishPower Shares and ScottishPower ADSs.                                    

2. Terms                                                                        
2.1 The Merger will be effected by a statutory merger under Oregon law whereby  
MergerSub will be merged with and into PacifiCorp, which will survive the       
Merger as a subsidiary of New ScottishPower. Subject to the terms, conditions   
and procedures set out in the Merger Agreement, each issued and outstanding     
share of PacifiCorp Common Stock (other than shares owned directly or           
indirectly by New ScottishPower or PacifiCorp) will be converted into the       
right to receive either (i) 0.58 fully paid New ADSs or, if the holder so       
elects, (ii) 2.32 fully paid New Shares for each share so cancelled.            

2.2 New ScottishPower will not issue fractional shares of New ADSs or           
fractions of New Shares. Holders of PacifiCorp Common Stock will instead be     
paid the cash equivalent of the market value (based on the market value of a    
ScottishPower ADS or a ScottishPower Share on the last trading day immediately  
preceding the Merger Date) of any fractional New ADSs or fractions of New       
Shares such holders would otherwise have received.                              

2.3 Upon the Merger becoming effective, all employee options to acquire         
PacifiCorp Common Stock will convert into options to acquire New Shares after   
adjustment to take account of the conversion ratio referred to in paragraph     
2.1 above.                                                                      

2.4 New ScottishPower, ScottishPower and PacifiCorp have agreed to coordinate   
with each other as regards the declaration of dividends in respect of New       
Shares, ScottishPower Shares and PacifiCorp Common Stock, with the intention    
that the holders of PacifiCorp Common Stock receive dividends in respect of     
the PacifiCorp Common Stock for all periods prior to the Merger Date but do     
not receive New ScottishPower dividends after the Merger Date in respect of     
periods prior to the Merger Date.                                               

3. Shareholder approval and other conditions                                    
3.1 The obligations of New ScottishPower and PacifiCorp to effect the Merger    
are subject to the fulfilment or waiver of certain conditions specified in the  
Merger Agreement, including:                                                    

(a)the approval of the Merger by an ordinary resolution of the              
ScottishPower Shareholders;                                                 

(b)the approval of the Merger by the holders of a majority of the           
outstanding PacifiCorp Common Stock voting separately as a single class, by 
the holders of a majority of the aggregate voting power of the outstanding  
PacifiCorp Preferred Stock voting together as a single class and by a       
majority of the aggregate voting power of all outstanding PacifiCorp stock  
entitled to vote at a meeting of the PacifiCorp Shareholders;               

(c)the London Stock Exchange having agreed to Admission (subject to         
allotment) and the NYSE having authorised the New ADSs for listing on the   
NYSE;                                                                       

(d)the representations and warranties made by the respective parties in the 
Merger Agreement being true and correct, in all material respects, taken as 
a whole, as of the Merger Date or, in the case of representations and       
warranties given as of an earlier date, as of such date;                    

(e)each of the respective parties having performed and complied with, in    
all material respects, the agreements, covenants and obligations, taken as  
a whole, which are required by the Merger Agreement to be so performed or   
complied with by such party at or prior to the Merger Date;                 

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(f)since 6 December 1998, no material adverse effect having occurred with   
respect to either New ScottishPower, ScottishPower and their respective     
subsidiaries taken as a whole or PacifiCorp and its subsidiaries taken as a 
whole and there existing no facts or circumstances arising after 6 December 
1998, which in the aggregate would, or insofar as reasonably can be         
foreseen, could, when taken together with any breaches or violations of any 
representations, warranties, covenants and agreements of New ScottishPower  
or PacifiCorp, as the case may be, contained in the Merger Agreement, have  
a material adverse effect on either New ScottishPower, ScottishPower and    
their respective subsidiaries taken as a whole or PacifiCorp and its        
subsidiaries taken as a whole;                                              

(g)except as provided in the Merger Agreement, all consents, approvals and  
actions, filings with and notices to any governmental or regulatory         
authority required of New ScottishPower, PacifiCorp and any of their        
respective subsidiaries to consummate the Merger and the other matters      
contemplated by the Merger Agreement having been made or obtained and       
become final orders, and such final orders not, individually or in the      
aggregate, containing any terms or conditions that would have, or would     
reasonably be expected to have, a material adverse effect on PacifiCorp and 
its subsidiaries after the Merger, taken as a whole;                        

(h)the consent or approval of each person (other than a governmental or     
regulatory authority) whose consent or approval is required by New          
ScottishPower, PacifiCorp and any of their respective subsidiaries under    
any material contract in order to consummate the Merger and the other       
transactions contemplated by the Merger Agreement having been obtained,     
except for those consents and approvals which, if not obtained, would not   
have, or would not reasonably be expected to have, a material adverse       
effect on PacifiCorp and its subsidiaries taken as a whole or on the        
ability of New ScottishPower or PacifiCorp to consummate the transactions   
contemplated by the Merger Agreement and the Scheme;                        

(i) the absence of any law or order (whether temporary, preliminary or      
permanent) being enacted, issued, promulgated or enforced by any            
governmental or regulatory authority and having the effect of making        
illegal or otherwise restricting, preventing or prohibiting consummation of 
the Merger or the other transactions contemplated by the Merger Agreement;  

(j) a clearance decision of the Secretary of State for Trade and Industry   
under the Fair Trading Act 1973 and satisfactory indications from the DGES  
and the DGWS as to the future regulatory treatment of the electricity and   
water businesses of the ScottishPower Group which they regulate;            

(k) the applicable period under the Hart Scott-Rodino Act having expired or 
been terminated; and                                                        

(l) the delivery to New ScottishPower and PacifiCorp of written tax         
opinions from Milbank, Tweed, Hadley & McCloy LLP, Stoel Rives LLP, and Le  
Boeuf, Lamb, Greene & MacRae, LLP.                                          

3.2In the Merger Agreement, any reference to any event, change or effect        
having a "material adverse effect" on or with respect to an entity (or group    
of entities taken as a whole) means such event, change or effect is materially  
adverse to the business, properties, assets, liabilities, financial condition   
or results of operations of such entity (or of such group of entities taken as  
a whole).                                                                       

4. Certain representations, warranties and covenants                            
4.1 The Merger Agreement contains certain customary representations and         
warranties by PacifiCorp, ScottishPower and New ScottishPower.                  

4.2 The Merger Agreement also contains certain customary covenants regarding    
the conduct of the respective businesses of New ScottishPower and PacifiCorp    
and their respective subsidiaries prior to the Merger Date, including           
undertakings from each of ScottishPower, New ScottishPower and PacifiCorp       
that, unless otherwise previously consented to by PacifiCorp, ScottishPower or  
New ScottishPower (as the case may be) in writing, it and its subsidiaries      
will (unless otherwise expressly provided for in the Merger Agreement) conduct  
its business only in the ordinary course substantially consistent with past     
business practice.                                                              

4.3 In recognition of New ScottishPower's and ScottishPower's commitment to     
the communities served by PacifiCorp, following completion of the Merger New    
ScottishPower or ScottishPower will contribute to The PacifiCorp Foundation     
the sum of $5 million.                                                          

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5. Directors and management of the Combined Group                               
5.1 New ScottishPower has agreed, subject to the exercise of fiduciary duties   
and to the extent permitted by applicable law, to cause Keith McKennon (the     
Chairman, Chief Executive Officer and President of PacifiCorp) to be appointed  
as Deputy Chairman and a director of New ScottishPower at the Merger Date. In   
addition to Mr McKennon, two non-executive members of the PacifiCorp board of   
directors, Nolan Karras and Robert Miller, will become members of the Board at  
the Merger Date. The decision as to which members of the PacifiCorp board       
(other than Mr McKennon) would join the Board was made after the signing of     
the original Merger Agreement.                                                  

5.2 New ScottishPower has agreed that, promptly following the Merger Date,      
certain non-executive members of the PacifiCorp board of directors, together    
with Richard O'Brien, will be elected and appointed to a PacifiCorp advisory    
board, the function of which will be to advise the PacifiCorp directors with    
respect to general business strategy, opportunities and activities in           
PacifiCorp's market area and customer relationships. The PacifiCorp advisory    
board will meet at least semi-annually and its members will be appointed for    
two year terms. The decision as to the membership of the PacifiCorp advisory    
board (other than Ian Robinson, Richard O'Brien, and Alan Richardson) will not  
be made until after the completion of the Merger, and Ian Robinson and Keith    
McKennon will jointly designate the other members of the advisory board.        
Richard O'Brien will be appointed a member of the PacifiCorp board of           
directors and President of PacifiCorp, in addition to his current position as   
Chief Operating Officer of PacifiCorp.                                          

5.3 The Merger Agreement includes obligations on New ScottishPower in respect   
of compensation, incentive and employee benefit plans and arrangements of       
PacifiCorp in effect on the date of the Merger Agreement (6 December 1998).     
Further details are set out in paragraph 11(e) of Part VII.                     

5.4 New ScottishPower has agreed that, except to the extent changes may be      
required by law, until the sixth anniversary of the Merger Date, it will not    
take any action to amend, modify or repeal the provisions for indemnification   
of directors and officers of PacifiCorp contained in the articles of            
incorporation or bylaws (or other comparable charter documents) of PacifiCorp   
and its subsidiaries in such a manner as would adversely affect the rights of   
any individual who served as an officer or director of PacifiCorp or its        
subsidiaries prior to the Merger Date. Furthermore, subject to the limitations  
set out in the Merger Agreement, New ScottishPower has agreed that, until the   
sixth anniversary of the Merger Date, it will cause to be maintained in effect  
the policies of directors' and officers' liability insurance maintained by      
PacifiCorp and its subsidiaries as of the date of the Merger Agreement with     
respect to claims arising from facts or events that occurred on or prior to     
the Merger Date.                                                                

6. Termination of the Merger Agreement                                          
6.1 The Merger Agreement may be terminated by mutual written agreement of the   
parties.                                                                        

6.2 The Merger Agreement may be terminated by either PacifiCorp or New          
ScottishPower if:                                                               

(a)the Merger has not been consummated on or before 6 September 1999 and    
such failure is not caused by a breach of the Merger Agreement by the       
terminating party. However, if on 6 September 1999, New ScottishPower and   
PacifiCorp and their respective subsidiaries have not received all of the   
approvals of governmental authorities required in order to satisfy the      
regulatory approval condition set out in the Merger Agreement but all other 
conditions to the Merger have been fulfilled or are capable of being        
fulfilled, then, at the option of either New ScottishPower or PacifiCorp,   
the term of the Merger Agreement will be extended until 6 June 2000;        

(b)the PacifiCorp Shareholders have not approved the Merger Agreement or    
the ScottishPower Shareholders have not approved the Merger by reason of    
the failure to obtain the requisite vote on a vote of the shareholders;     

(c)there has been a material breach of any representation, warranty,        
covenant or agreement on the part of the non-terminating party set forth in 
the Merger Agreement which breach is not curable or, if curable, has not    
been cured within thirty days following the receipt by the non-terminating  
party of notice of such breach from the terminating party and which breach, 
when taken together with any other breaches of representations, warranties, 
covenants and agreements of the non-terminating party contained in the      
Merger Agreement, has or would reasonably be expected to have a material    
adverse effect on PacifiCorp and its subsidiaries taken as a whole; or      

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(d)any court of competent jurisdiction or other competent governmental or   
regulatory authority shall have issued an order making illegal or otherwise 
preventing or prohibiting the Merger and such order shall have become final 
and non-appealable.                                                         

6.3 The Merger Agreement may be terminated by PacifiCorp if:                    

(a)the PacifiCorp board of directors determines in good faith that a        
failure to terminate the Merger Agreement could reasonably be expected to   
result in a breach of its fiduciary duties to shareholders imposed by law   
by reason of an unsolicited bona fide Alternative Proposal (see paragraph   
6.6 below) having been made; or                                             

(b)the Board of ScottishPower withdraws or modifies in a manner materially  
adverse to PacifiCorp its approval or recommendation of the Merger          
Agreement or the Merger; or                                                 

(c)there has been a Change in Control (see paragraph 6.4 below) of New      
ScottishPower.                                                              

6.4 For the purposes of the Merger Agreement, a "Change in Control" of New      
ScottishPower shall occur if any of the following applies:                      

(a)any person, directly, or indirectly, acquires securities of New          
ScottishPower representing 30% or more of the combined voting power of New  
ScottishPower's outstanding capital stock;                                  

(b)the shareholders of New ScottishPower approve a merger or other          
consolidation of New ScottishPower with any other company, other than a     
merger or consolidation effected to implement a recapitalisation of New     
ScottishPower (or similar transaction) in which no person acquires more     
than 30% of the combined voting power of New ScottishPower's outstanding    
securities;                                                                 

(c)a tender or exchange offer is made for the ordinary shares of New        
ScottishPower (or securities convertible into ordinary shares of New        
ScottishPower) and such offer results in a portion of those securities      
being purchased and the offeror after the consummation of the offer is the  
beneficial owner, directly or indirectly, of securities representing at     
least 30% of the voting power of outstanding securities of New              
ScottishPower; or                                                           

(d)New ScottishPower sells 30% or more of the shares of ScottishPower (or   
under the original Merger Agreement, if applicable, ScottishPower sells 30% 
or more of its operating assets) to a buyer that is not a member of New     
ScottishPower's controlled group of corporations.                           

6.5 The Merger Agreement may be terminated by New ScottishPower if the          
PacifiCorp board of directors:                                                  

(a)withdraws or modifies in a manner materially adverse to New              
ScottishPower its approval or recommendation of the Merger Agreement or the 
Merger;                                                                     

(b)fails to reaffirm such approval or recommendation upon New               
ScottishPower's request; or                                                 

(c)approves, recommends or takes no position with respect to an Alternative 
Proposal to the shareholders of PacifiCorp; or                              

(d)resolves to take any of the foregoing actions.                           

6.6 In the Merger Agreement, an "Alternative Proposal" means any proposal or    
offer (including, without limitation, any proposal or offer to the PacifiCorp   
Shareholders) with respect to a merger, consolidation or other business         
combination including PacifiCorp or any of its subsidiaries or any acquisition  
or similar transaction (including, without limitation, a tender or exchange     
offer) involving the purchase of (i) all or any significant portion of the      
assets of PacifiCorp and its subsidiaries taken as a whole, (ii) 5% or more of  
the outstanding shares of PacifiCorp Common Stock or (iii) 5% or more of the    
outstanding shares of the capital stock of any subsidiary of PacifiCorp.        

7. Termination payments                                                         
7.1 PacifiCorp will be obliged to pay to New ScottishPower a termination fee    
of $250 million in the event that any person or group shall have made an        
Alternative Proposal and thereafter:                                            

(a)the Merger Agreement is terminated:                                      

(i)by PacifiCorp pursuant to the PacifiCorp board's determination in    
good faith, based upon the advice of outside counsel, that a failure to 
terminate the Merger Agreement could reasonably be expected to result in
a breach of its fiduciary duties to shareholders imposed by law by      
reason of an unsolicited Alternative Proposal;                          

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(ii)by New ScottishPower because PacifiCorp has materially breached any 
representation, warranty, covenant or agreement (as described in        
paragraph 6.2(c) above) or because the PacifiCorp board of directors (A)
withdraws or modifies in a manner materially adverse to New             
ScottishPower its approval or recommendation of the Merger Agreement or 
Merger, (B) fails to reaffirm such approval or recommendation upon New  
ScottishPower's request, (C) approves, recommends or takes no position  
with respect to an Alternative Proposal to its shareholders, or (D)     
resolves to take any of the foregoing actions; or                       

(iii)by either party as a result of the approval and adoption of the    
Merger Agreement by PacifiCorp Shareholders not being obtained; or      

(b)the Merger Agreement is terminated for any other reason (other than by   
reason of the breach of the Merger Agreement by New ScottishPower, or a     
Change in Control of New ScottishPower, or as a result of ScottishPower     
Shareholder approval of the Merger not being obtained or the Board          
withdrawing or modifying in a manner materially adverse to PacifiCorp its   
approval or recommendation of the Merger Agreement or the Merger) and a     
definitive agreement with respect to such Alternative Proposal is executed  
within one year after such termination.                                     

7.2 New ScottishPower will be obliged to pay to PacifiCorp a termination fee    
of $250 million in the event that the Merger Agreement is terminated by         
PacifiCorp following a Change in Control of New ScottishPower.                  

7.3 In the event that the Merger Agreement is terminated by either PacifiCorp   
or New ScottishPower due to the failure of the other to obtain the approval of  
its shareholders and the termination fee described above is not payable:        

(a)if the Merger Agreement is not approved by the PacifiCorp Shareholders   
and is approved by the ScottishPower Shareholders, PacifiCorp shall pay to  
New ScottishPower $10 million; or                                           

(b)if the Merger is not approved by the ScottishPower Shareholders and is   
approved by the PacifiCorp Shareholders, New ScottishPower shall pay to     
PacifiCorp $10 million.                                                     

B. Factors considered by ScottishPower in assessing the Merger                  
ScottishPower's strategy for delivering shareholder value has two key           
elements--a strong growing UK multi-utility business and the establishment of   
a strong platform for growth in the US electricity sector. The Board believes   
that significant benefits will be derived from the Merger and that the          
Combined Group will be more efficient and stronger financially than either New  
ScottishPower or PacifiCorp would be on its own.                                

In light of the Board's knowledge of the business and operations of             
ScottishPower and its business judgment, the Board considered and evaluated     
each of the factors listed below during the course of its deliberations prior   
to approving the Merger Agreement.                                              

.  The expectation that the transaction would result in earnings accretion, 
  before amortisation of goodwill, for ScottishPower Shareholders from the
first full year after completion of the Merger compared to the        
Directors' present expectations for the existing ScottishPower Group. 

.  Management's belief that the application of best practice across the     
Combined Group has the potential to create substantial cost savings   
following completion of the Merger.                                   

.  The fact that the Merger will further a key strategic objective of       
ScottishPower, namely expansion of its core electricity business into 
the rapidly evolving US market.                                       

.  The strategic fit between ScottishPower and PacifiCorp, including:       

- the fact that both are vertically integrated electric utilities;      

-  the relevance of ScottishPower's UK experience in the emerging       
competitive market in the US;                                     

- the similarity of the companies' generation activities; and           

- the potential for subsequent expansion for the Combined Group.        

.  The opinion of Morgan Stanley that, as at the date of the opinion (6     
 December 1998), the Exchange Ratio pursuant to the Merger Agreement was
fair from a financial point of view to ScottishPower.                 

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.  Management's review of the business, operations and financial condition  
of PacifiCorp as supported by the findings of due diligence.          

.  The terms of the Merger Agreement, including:                            

-  the fixed Exchange Ratio and the absence of any mechanism for        
adjusting the Exchange Ratio;                                     

-  the termination provisions and termination fees; and                 

-  the covenants governing conduct of the businesses between            
announcement and completion of the Merger.                        

.  The merger consideration to be received by PacifiCorp Shareholders, its  
 relationship to market price and earnings, and the fact that it will be
tax-free to PacifiCorp Shareholders.                                  

.  The following potential risks related to the Merger:                     

-  the fact that ScottishPower would have to register with, and be      
 regulated by, the SEC under the provisions of the US Public Utility
Holding Company Act of 1935;                                      

-  the potential for adverse movement in share prices, exchange rates or
interest rates;                                                   

-  the size and international nature of the Merger, and attendant       
potential burdens on ScottishPower management;                    

-  the requirements to gain regulatory approvals from state and federal 
regulators and the length of time this could take;                

-  potential legal and environmental exposures beyond those identified  
in due diligence;                                                 

-  possible impediments to achieving the estimated level of potential   
cost savings; and                                                 

-  potential for adverse regulatory rulings to impair the economic      
rationale for the Merger.                                         

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Part VI                                                                         
Regulatory aspects of the Merger, certain regulatory reviews and environmental  
matters                                                                         
A. Regulatory aspects of the Merger                                             
The Merger is subject to various regulatory approvals, of which those           
outstanding are anticipated to be received later this year. The following is a  
summary of the material regulatory requirements affecting the Merger and        
approvals received.                                                             

1. UK approvals                                                                 
In the UK, the Merger is conditional on clearance by the Secretary of State     
for Trade and Industry under the merger control provisions of the Fair Trading  
Act 1973 and satisfactory indications from the DGES and the DGWS as to the      
future regulatory treatment of the businesses within the ScottishPower Group    
which they regulate. On 13 April 1999, the Secretary of State for Trade and     
Industry announced that it was not his intention to refer the Merger to the     
Competition Commission. In making that decision, the Secretary of State for     
Trade and Industry accepted certain assurances from ScottishPower to address    
the regulatory concerns of the DGES. These include assurances relating to the   
establishment of a holding company for the ScottishPower Group, to the          
financial and management resources of ScottishPower and Manweb, and to          
ensuring that the DGES continues to have access to the information which he     
needs to carry out his duties.                                                  

ScottishPower has given assurances that it will secure that the holding         
company will restructure its business in Great Britain as soon as is            
reasonably practicable, and in any event within three years, so as to place     
generation and any non-electricity activities in separate group companies.      
ScottishPower has assured the Secretary of State for Trade and Industry that,   
following restructuring, a financial ring-fence will be placed around the       
electricity supply and transmission businesses currently carried on by          
ScottishPower, on similar terms to the standard ring-fence terms developed by   
the DGES.                                                                       

To the extent that these assurances require licence modifications to be         
implemented, ScottishPower has assured the Secretary of State for Trade and     
Industry that it will agree to such modifications and will secure that Manweb   
will do likewise.                                                               

ScottishPower has requested confirmation from the DGWS that he has no           
regulatory concerns in relation to the Merger.                                  

2. US and Australian approvals                                                  
PacifiCorp is a public utility and, upon the Merger becoming effective, will    
remain subject to regulation by the FERC and state regulatory commissions in    
California, Idaho, Oregon, Utah, Washington, and Wyoming with respect to rate   
maters, the issue of securities and capital reorganisations. Applications in    
connection with the proposed transaction have been filed with the FERC and      
with the California Public Utilities Commission, the Idaho Public Utilities     
Commission, the Oregon Public Utility Commission, the Utah Public Service       
Commission, the Washington Utilities and Transportation Commission, and the     
Wyoming Public Service Commission (the "Commissions"). The Commissions are      
being requested to either disclaim jurisdiction over the Merger or approve it.  
Generally, approval by the Commissions is subject to a finding that the         
transaction is consistent with the public interest. The Commissions may attach  
conditions to their approval. ScottishPower has proposed packages of            
commitments in its filings with the Commissions (see paragraph 3 below). While  
the outcome of regulatory proceedings can never be predicted with certainty,    
it is currently anticipated that the regulatory process can be completed in     
late 1999.                                                                      

Testimony has been filed in Oregon, Idaho, Washington, Wyoming and Utah, and    
hearings have been scheduled in those states in July and August 1999.           
Testimony has been filed in California but a hearing has not been scheduled as  
the only intervener has now withdrawn its protest and accordingly it currently  
appears that all matters will be resolved in California without the need for    
hearings.                                                                       

Section 203 of the FPA provides that no public utility shall sell or otherwise  
dispose of its jurisdictional facilities or directly or indirectly merge or     
consolidate such facilities with those of any other person without having       
first obtained authorisation from the FERC. Section 203 approval will be        
granted if the FERC considers the transaction to be "consistent with the        
public interest". PacifiCorp has filed an application with the FERC seeking     
approval of the proposed transaction to the extent it constitutes an            

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indirect transfer of control of its jurisdictional facilities and those of its  
subsidiaries to the ScottishPower Group.                                        

In recent proceedings under section 203 of the FPA, the FERC has focused on     
the effect a proposed transaction may have on: (i) competition in domestic      
power markets, (ii) the applicant's wholesale power and transmission rates and  
(iii) state and federal regulation of the applicant. PacifiCorp also has FPA    
hydro-electric licences subject to FERC jurisdiction. However, it does not      
believe FERC approval with respect to its hydro-electric licences is required   
for the Merger to become effective. The Directors do not expect that the        
Merger will give rise to substantial FERC concern in any of these areas. The    
FERC has authority to attach conditions to its approval.                        

SEC approval of the Merger under the US Public Utility Holding Company Act of   
1935 (the "1935 Act") is not required. However, once the Merger becomes         
effective, New ScottishPower will be required to register as a holding company  
in accordance with section 5 of the 1935 Act.                                   

New ScottishPower and ScottishPower plan to reorganise prior to the Merger to   
put New ScottishPower over ScottishPower as a holding company by means of the   
Scheme. If this reorganisation is completed, New ScottishPower would register   
as the holding company under the 1935 Act. Following the Scheme, the US and UK  
utility businesses of New ScottishPower will be in separate subsidiaries and    
each of the UK subsidiaries will qualify for exemption from regulation as a     
foreign utility under the 1935 Act. It is anticipated that registration will    
not affect the conduct of New ScottishPower's non-utility businesses. If the    
Scheme does not become effective, ScottishPower will register as a holding      
company under the 1935 Act and operate its US businesses in separate            
subsidiaries and its UK businesses, including those that are divisions, as if   
they were separate subsidiaries subject to regulation under the 1935 Act.       
ScottishPower will, in any event, implement a future reorganisation to place    
certain divisions in separate group companies pursuant to the assurances given  
to the Secretary of State for Trade and Industry described under "UK            
approvals" above. The Scheme is not subject to SEC approval under the 1935      
Act, but a future reorganisation would be. While New ScottishPower and          
ScottishPower currently believe that the Scheme will become effective, it       
cannot predict the outcome of the approvals or confirmations needed for the     
Scheme or the regulatory proceedings for any future reorganisation.             

Regulation under the 1935 Act will have various consequences, unless specific   
subsidiaries or transactions are otherwise exempt by SEC rules or orders,       
including:                                                                      

.  issues of securities by PacifiCorp and New ScottishPower will be         
  regulated but certain exemptions may be available to PacifiCorp. Foreign
utility companies held as separate subsidiaries of New ScottishPower  
will be exempt;                                                       

.  acquisitions of securities and utility assets by PacifiCorp and New      
ScottishPower will be regulated;                                      

.  any affiliate transactions among members of the Combined Group after the 
Merger would be regulated;                                            

.  later acquisitions of businesses by New ScottishPower and PacifiCorp     
 must be reasonably incidental, economically necessary or appropriate to
the operations of an integrated public utility system; and            

.  in certain cases, the payment of dividends and repurchase of securities  
by PacifiCorp and New ScottishPower would be subject to regulation by 
the SEC.                                                              

If the Scheme does not become effective, references in the preceding paragraph  
to New ScottishPower should be construed as references to ScottishPower (which  
would be the holding company).                                                  

As a non-operating 2.5% owner of the Trojan nuclear power plant, which is       
currently being decommissioned, PacifiCorp must obtain approval from the        
Nuclear Regulatory Commission in the event of a change of control of            
PacifiCorp and must assure this Commission that all safety-related matters      
remain under the control of the operator or under the supervision of United     
States citizens.                                                                

Under the Omnibus Trade and Competitiveness Act of 1988 ("Exon-Florio") the     
President of the United States may prohibit or suspend an acquisition of, or    
investment in, a US company by a foreign person if the President finds, after   
investigation, credible evidence that the foreign person might take action      
that                                                                            

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threatens to impair the national security of the US and that other provisions   
of existing law do not provide adequate and appropriate authority to protect    
the national security. Any determination that an investigation is called for    
must be made within 30 days of notice of the proposed transaction. Any such     
investigation must be completed within 45 days of the determination.            
Thereafter, any decision to take action must be announced within 15 days of     
completion of the investigation. Authority for administering Exon-Florio has    
been delegated to the Committee on Foreign Investment in the United States      
("CFIUS"). Each of PacifiCorp and ScottishPower or New ScottishPower will make  
a voluntary filing with CFIUS seeking a finding that the Merger does not        
impair the national security of the United States.                              

The Hart Scott-Rodino Act provides that the Merger may not become effective     
until certain information has been submitted to the Antitrust Division of the   
Department of Justice (the "Antitrust Division") and the Federal Trade          
Commission and specified Hart Scott-Rodino Act waiting period requirements      
have been satisfied. On 12 February 1999, ScottishPower and PacifiCorp were     
granted early termination of the waiting period requirements of the Hart        
Scott-Rodino Act. However, the early termination of the Hart Scott-Rodino Act   
waiting period does not preclude the Antitrust Division or the Federal Trade    
Commission from challenging the Merger on antitrust grounds. Neither New        
ScottishPower nor PacifiCorp believes that the Merger will violate federal      
antitrust laws. If the Merger is not completed within 12 months after the       
expiration or earlier termination of the initial Hart Scott-Rodino Act waiting  
period, New ScottishPower and PacifiCorp would be required to submit new        
information to the Antitrust Division and the Federal Trade Commission, and a   
new Hart Scott-Rodino Act waiting period would have to expire or be terminated  
before the Merger could be completed.                                           

PacifiCorp has environmental permits and licences with respect to which the     
consent of the issuing authority may be required as a result of the Merger. In  
addition, PacifiCorp and its subsidiaries own aircraft subject to regulation    
by the Federal Aviation Administration and hold various communication licences  
issued by the Federal Communications Commission. Consents or approvals from     
these authorities will also be required as a result of the Merger. PacifiCorp   
does not anticipate any difficulties at the present time in obtaining such      
consents and approvals in connection with the Merger.                           

The Merger is subject to the Foreign Acquisitions and Takeovers Act 1975 in     
Australia. Under that Act, the Treasurer of Australia has broad powers to       
prohibit or place conditions on the acquisition of interests in Australian      
business operations by foreign investors if such acquisitions are found to be   
contrary to the national interest. The parties have notified the Australian     
Foreign Investment Review Board of the proposed Merger as a result of           
PacifiCorp's ownership of Powercor and an interest in the Hazelwood power       
station and adjacent brown coal mine in Victoria. On 25 March 1999, the         
Australian Federal Treasurer confirmed that he had no objection to the Merger.  

3. General                                                                      
Under the Merger Agreement, New ScottishPower and PacifiCorp have agreed to     
proceed co-operatively and in good faith to obtain, as promptly as              
practicable, all necessary material permits, licences, franchises and other     
governmental authorisations necessary or advisable to effect the transactions   
contemplated by the Merger Agreement. In its filings with the Commissions,      
ScottishPower has proposed packages of commitments concerning customer          
service, disclosure to state regulators, commitment to the environment,         
commitment to communities and commitment to employees, in relation to           
PacifiCorp's operations. These proposals are subject to further discussion      
with the Commissions as part of the approval process. Various parties may seek  
intervention in these proceedings to oppose the Merger or to have conditions    
imposed upon the receipt of necessary approvals. While New ScottishPower and    
PacifiCorp believe that they will receive the requisite regulatory approvals    
for the Merger, there can be no assurance as to the timing of such approvals    
or the ability of New ScottishPower and PacifiCorp to obtain such approval on   
satisfactory terms or otherwise. It is a condition to the Merger that final     
orders approving the Merger be obtained from the various regulatory             
authorities and US federal and state commissions described above on terms and   
conditions which would not have, or would not be reasonably likely to have, a   
material adverse effect on the business, properties, assets, financial          
condition or results of operations of PacifiCorp and its subsidiaries taken as  
a whole. There can be no assurance that any such approvals will be              
forthcoming, nor that they will not be subject to onerous terms or conditions.  

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B. Certain regulatory reviews                                                   

1. ScottishPower                                                                

(a) Electricity                                                                 

Price controls                                                                  
All customers in the respective home (formerly called "franchise") areas are    
now subject to competitive supply, although certain smaller customers remain    
protected for a two-year period from April 1998. Tariff increases for these     
smaller customers are subject to a maximum price restraint of RPI-3 in the      
second year of this period. This restraint effectively caps the price           
movements which arise from the individual price controls set out below.         
Following reviews by the DGES, the price regime under which the two companies   
operate has been determined as follows:                                         

(i) Distribution                                                            
The maximum distribution revenue is calculated from a formula that is based 
on customer numbers as well as units distributed. Annual price increases    
for ScottishPower's distribution business will be limited to RPI minus 2%   
per annum until 31 March 2000. From 1 April 1997 until 31 March 2000,       
Manweb is restricted to an annual price increase of RPI minus 3% for the    
provision of distribution services.                                         

OFFER is expected to publish draft proposals on revised price controls for  
all PESs in August 1999, and final proposals in November 1999, to allow     
them to come into effect in April 2000 as part of the overall price review  
exercise currently being carried out by OFFER.                              

(ii) Transmission                                                           
ScottishPower's transmission business was restricted under its existing     
price control to a price increase of RPI minus 1% per annum in the year     
ended 31 March 1999. The same level of total revenue in real terms will be  
allowed in the year ending 31 March 2000. OFFER is currently reviewing the  
scope and duration of the transmission price controls for Scotland          
thereafter and is expected to publish draft proposals for revised price     
controls in August 1999 and final proposals in November 1999, which will    
come into effect in April 2000.                                             

(iii) Supply                                                                
The restriction on supply prices was previously by way of a retail price    
index minus X formula, and a correction factor which has taken into account 
in each year the amount of any over or undercharging in the previous year.  
The value of X for ScottishPower's supply price control from 1 April 1995   
to 31 March 1998 was set at 2. The value of X for Manweb's supply price     
control from 1 April 1994 to 31 March 1998 was also set at 2.               

All customers are now subject to competitive supply, although certain       
smaller customers remain protected: for a two-year period from April 1998,  
the supply price control operates as a maximum price restraint on tariff    
increases for ScottishPower's and Manweb's "designated customers" i.e.      
customers with a maximum demand of less than 12,000 kWh per year.           

The nature and extent of possible restraints from 1 April 2000 are being    
reviewed at the same time as the distribution price controls. By way of     
protection of the consumer, PES licence conditions prohibit discriminatory, 
onerous or predatory pricing in areas in which a PES has been determined    
dominant (currently in the PES's authorised area).                          

(iv) Fossil fuel levy                                                       
As part of the privatisation of the UK electricity industry, a "fossil fuel 
levy" was imposed on PESs. The cost of the levy is passed onto customers to 
meet the higher costs of compliance with the Non Fossil Fuel Obligation     
incurred by the PESs in contracting with renewable energy sources. In       
England and Wales, the levy was 0.9% from 1 April 1998 and was reduced to   
0.7% on 1 January 1999. This levy will be reviewed later in 1999.           

In Scotland, the Scottish Renewables Obligation (the "SRO") requires that   
ScottishPower contract for specific amounts of electricity capacity at      
generating stations powered by renewable sources. A levy is therefore       
required to recover the additional cost to ScottishPower of the SRO. From   
April 1998 until 31 March 1999, the levy had been set at 0.8%. It was       
reduced to 0% from 1 April 1999 to 31 March 2000, and is predicted to stay  
below 2% in subsequent years. The third Scottish Renewables Order ("SRO3")  
came into force in February 1999.                                           

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Future regulation                                                               
In March 1998, the Government published a Green Paper "A Fair Deal for          
Consumers--Modernising the Framework for Utility Regulation". In July 1998 the  
Government published a summary of the response to its consultations and in      
October 1998 it published a further consultation paper which contains specific  
proposals. The main proposals are:                                              

.  separate licensing of supply and distribution activities of the PESs     
with the licences to be held by separate legal entities, though not   
necessarily in separate ownership; and                                

.  a new single, primary duty on utility regulation to protect the          
interests of consumers, wherever possible and appropriate through the 
promotion of effective competition.                                   

Further proposals to revise the regulation of the electricity industry were     
published by the Government and the DGES in 1998, the most important of which   
include the following:                                                          

.  the DGES published proposals in July 1998 to reform the trading          
arrangements in England and Wales along the lines of commodity markets
and other energy markets. The DTI published an Energy White Paper in  
October 1998, supporting the DGES's proposals, and setting out its    
expectation that wholesale price falls of at least 10% in real terms, 
 and possibly more, can be expected in the medium term. In November 1998
a framework document on implementation of the new trading arrangements
was published by the DGES (encompassing the development of a balancing
 market, a short-term bilateral market and a related settlement system).
The proposals set a target date of April 2000 and a Development and   
Implementation Steering Group has been set up to develop other new    
trading arrangements;                                                 

.  revision of Scottish trading arrangements from April 2000. OFFER issued  
  a consultation paper on options for future Scottish trading arrangements
in December 1998, inviting comments on the creation of either a single
trading area in Scotland or unified UK-wide trading arrangements.     
 Further papers are expected to be published in May and August 1999 with
final proposals in November 1999; and                                 

.  separation of the supply, distribution, generation and transmission      
activities of ScottishPower and Scottish Hydro-Electric plc into      
 separate companies. In May 1998 the DGES published a consultation paper
on the separation of the distribution and supply activities of PESs to
facilitate competition. It also considered the interface between      
transmission and generation in Scotland. A further consultation paper 
 was published by OFFER in November 1998 proposing alternative scenarios
 for operational separation. Following examination by consultants of the
 costs of separation OFFER is expected to publish a further paper in May
1999. In addition, the operational separation of transmission from    
 generation in Scotland will be considered as part of the reviews of the
 transmission price controls and Scottish trading arrangements. A likely
outcome will be a requirement for separate licensed businesses within 
the same group to operate as separate legal entities.                 

The outcome of the proposals and reviews referred to in this paragraph and      
their impact on the Group is uncertain.                                         

(b) Water                                                                       
Southern Water Services is allowed to increase its standard charges for the     
provision of water supply and sewerage services by the percentage change in     
the RPI plus an adjustment factor K. The value of K is currently set at 4% for  
the period ending on 31 March 2000. In 1996, as a result of the takeover of     
Southern Water Services by ScottishPower, ScottishPower undertook that the      
average price increases of Southern Water Services in the three charging years  
commencing 1 April 1997, would be lower than the allowed charging limits. This  
undertaking was the subject of a licence condition modification which came      
into effect on 28 September 1996, requiring Southern Water Services' average    
prices to be 1% lower than they would otherwise have been in 1997 and 3% lower  
than they would otherwise have been in the two years from April 1998.           

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Infrastructure charges, being the amount that Southern Water Services can       
charge when new properties are connected for a domestic supply of water or      
sewerage services for each service, are also controlled. The infrastructure     
charge was set at (Pounds)200 for 1995-96 and is permitted to rise in line      
with inflation in subsequent charging years.                                    

The DGWS reviews Southern Water Services' price controls on a 15 yearly basis.  
The DGWS also has the power to make an interim determination to adjust price    
limits between the five yearly periodic reviews. At present, price limits for   
the water and sewage companies are being examined as part of such a periodic    
review to be concluded in November 1999, when the DGWS will set new price       
limits for the period from 1 April 2000 to 31 March 2005. In setting price      
limits, the DGWS proposes to take into account compliance with environmental    
and quality standards in assessing price limits for the period from 2000 to     
2005. The DGWS will also consult each water company individually to discuss     
responses to the review. In July 1999, he will publish his draft determination  
of new price limits to run from 2000 to 2005, and his final decisions will be   
made in November 1999. The outcome of this price review and its impact on the   
Group is uncertain.                                                             

As part of the current review process, on 29 October 1998 the DGWS published a  
consultation paper setting out proposed ranges for bills for the period from    
2000 to 2005. In this paper, the DGWS has confirmed that, on the basis of past  
efficiencies achieved by water companies, he considers there to be scope for    
substantial price reductions in April 2000. However, the UK Government has      
proposed a programme of capital expenditure by the water companies aimed at     
environmental improvements which was included in the consultation paper. This   
programme is estimated to cost some (Pounds)8.5 billion in the aggregate. The   
water companies would be entitled to pass that cost through to customers with   
the effect of increasing bills in the four years after 2000. In the             
consultation paper, the DGWS estimated, in the case of Southern Water           
Services, that expected average household bills could be reduced by more than   
17.5% (in real terms) in 2000-01 on previous year levels. However, the DGWS     
expected there to be an overall increase in the 1999/2000 level of bills in     
the four year period up to 2005.                                                

ScottishPower has responded to the DGWS's proposals by requesting an initial    
price increase of 3.5% and a K factor of + 3% which would result in an average  
regulated rate of return of 6.5%.                                               

Large industrial users can now choose their own water and sewerage suppliers.   
From 1 April 2000 fifteen water companies including Southern Water, will not    
be able to recoup from other customers any amounts lost by offering lower       
tariffs to such industrial users. The regulated charging base to which price    
limits apply will no longer include tariffs to large industrial users.          
Southern Water Services agreed to this change to its Appointment in February    
1999.                                                                           

2. PacifiCorp                                                                   
During 1997, the Utah Public Service Commission ("UPSC") held hearings on the   
proper method to be used in allocating common generation, transmission and      
corporate related costs among PacifiCorp's jurisdictions. Under an order        
issued in April 1998, differences in allocations associated with the merger of  
Pacific Power & Light and Utah Power & Light were to be eliminated over five    
years on a straight-line basis. The phase-out of the differences was to be      
completed by 1 January 2001 and could have reduced Utah customer prices by      
about US$50 to US$60 million annually once fully implemented. The order was to  
be included in a general rate case, thereby combining it with all other cost    
of service items in determining the ultimate impact on customer prices.         

In 1998, the UPSC commenced a general rate case to consider the impact of the   
April 1998 allocation order, other cost-of-service issues and the               
appropriateness of PacifiCorp's authorised rate of return on equity. On 4       
March 1999, an order was issued by the UPSC in the general rate case under      
which PacifiCorp was required to reduce revenues in the state of Utah by $85    
million, or 12% per annum. Additionally the UPSC ordered a refund of $40        
million to be made through a credit on customer bills. The $85 million          
reduction will commence on 1 March 1999. The order also reduced PacifiCorp's    
authorised rate of return on equity from 12.1% to 10.5%. As a result of the     
order, PacifiCorp recorded a $38 million reduction in revenues in 1998 in       
respect of the $40 million refund and will record a further $2 million          
reduction in 1999.                                                              

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C. Environmental matters                                                        

1. ScottishPower                                                                
The Group's activities are subject to numerous environmental laws and           
regulations arising from EU directives and UK legislation relating to, among    
other things, atmospheric pollution, water pollution and water quality. The     
Group believes that it has taken and continues to take measures to comply with  
applicable laws and regulations for the protection of the environment.          

2. PacifiCorp                                                                   
US federal, state and local authorities regulate many of PacifiCorp's           
activities pursuant to laws designed to restore, protect and enhance the        
quality of the environment. All of PacifiCorp's US mining operations are        
subject to reclamation and closure requirements. Powercor is subject to         
various Australian federal and Victorian state environmental regulations. The   
operations of the Hazelwood plant are subject to environmental regulation and   
a licensing regime.                                                             

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Part VII                                                                        
Additional information                                                          
1. Responsibility                                                               
The Directors and the Proposed Directors, whose names are set out in paragraph  
6 below, accept responsibility for the information contained in this document.  
To the best of the knowledge and belief of the Directors and the Proposed       
Directors (who have taken all reasonable care to ensure that such is the        
case), the information contained in this document is in accordance with the     
facts and does not omit anything likely to affect the import of such            
information.                                                                    

2. Incorporation and activity                                                   
New ScottishPower was incorporated and registered in Scotland on 19 February    
1999 under the Act as a public company limited by shares with registered        
number SC193794. The registered and head office of New ScottishPower is at 1    
Atlantic Quay, Glasgow G2 8SP. Apart from entering into the Amended and         
Restated Merger Agreement, New ScottishPower has not traded or presented to     
its members or filed any accounts since its incorporation.                      
PricewaterhouseCoopers, whose address is Kintyre House, 209 West George         
Street, Glasgow G2 2LW, have been the only auditors of New ScottishPower since  
its incorporation.                                                              

3. Share capital of New ScottishPower                                           

(a)The authorised, issued and fully paid share capital of New ScottishPower as  
at 29 April 1999 (being the latest practicable date prior to the publication    
of this document) is as follows:                                                

                                                                [Download Table]
---------------------------------------------------------------------------------

            Authorised                                             Issued        
    Number           Amount                                 Number     Amount    
---------------------------------------------------------------------------------
                                                                                 
 1,699,900,004 (Pounds)849,950,002 New Shares of 50p each        4      (Pounds)2
                                    Redeemable Shares of                         
        49,998      (Pounds)49,998     (Pounds)1 each       49,998 (Pounds)49,998
                                      New ScottishPower                          
             1           (Pounds)1      Special Share            -              -

-------                                                                         
The 49,998 Redeemable Shares have been issued to ScottishPower and are      
fully paid up. New ScottishPower intends to redeem the Redeemable Shares    
prior to the Merger Date.                                                   

(b)Before the Scheme Date, the Directors of New ScottishPower will, among       
other matters, be granted substantially the same authority to issue and allot   
ordinary shares, and to make purchases of its own ordinary shares, as will be   
in existence in respect of ScottishPower following the conclusion of the        
Merger EGM and its next annual general meeting (which is expected to be held    
on 21 July 1999).                                                               

(c)New ScottishPower and its Directors will be granted before the Scheme Date   
authority to issue and allot ordinary shares in connection with the Scheme.     

(d)The proposed authorised, issued and fully paid share capital of New          
ScottishPower as it will be following the Scheme Date will be as follows:       

                                                        [Enlarge/Download Table]
-----------------------------------------------------------------------------------------------

             Authorised                                                    Issued              
    Number            Amount                                     Number           Amount       
-----------------------------------------------------------------------------------------------
                                                                                               
 2,999,900,004 (Pounds)1,499,950,002 New Shares of 50p each   1,199,323,636 (Pounds)599,661,818
                                      Redeemable Shares of                                     
        49,998        (Pounds)49,998     (Pounds)1 each              49,998      (Pounds)49,998
                                        New ScottishPower                                      
             1             (Pounds)1      Special Share                   1           (Pounds)1

-------                                                                         
The table set out above assumes no issues of shares by New ScottishPower    
or ScottishPower after 27 April 1999 (being the latest practicable date     
prior to the publication of this document) whether pursuant to the          
exercise of options or otherwise, other than in connection with the         
Scheme.                                                                     

(e)The authorised, issued and fully paid share capital of New ScottishPower as  
it will be following the Merger Date will be as follows:                        

                                                        [Enlarge/Download Table]
--------------------------------------------------------------------------------------------------

             Authorised                                                      Issued               
    Number            Amount                                     Number             Amount        
--------------------------------------------------------------------------------------------------
                                                                                                  
 3,000,000,000 (Pounds)1,500,000,000 New Shares of 50p each   1,889,133,539 (Pounds)944,566,769.50
                                        New ScottishPower                                         
             1             (Pounds)1      Special Share                   1              (Pounds)1

-------                                                                         
The table set out above assumes no issues of shares by New ScottishPower,   
ScottishPower or PacifiCorp after 27 April 1999 (being the latest           
practicable date prior to the publication of this document) whether         
pursuant to the exercise of options or otherwise, other than in connection  
with the Scheme.                                                            

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(f)The exercise of all options and the vesting of all awards outstanding under  
the PacifiCorp Stock Plans as at 27 April 1999 (being the latest practicable    
date prior to the publication of this document) would following completion of   
the Merger result in the issue of not more than approximately 14.6 million New  
Shares.                                                                         

(g)As at 27 April 1999 (being the latest practicable date prior to the          
publication of this document) the following options granted to certain          
directors and employees of the Group under the ScottishPower Share Option       
Schemes and the Southern Water Sharesave Scheme were outstanding, all of which  
have been granted for no consideration:                                         

                                                        [Enlarge/Download Table]
---------------------------------------------------------------------------------------

                                       Option                               Outstanding
                              Date of   price                              shares under
                                grant (pence)   Normal exercisable periods       option
---------------------------------------------------------------------------------------
                                                                                       
Scottish Power plc                                                                     
 Sharesave Scheme         22 Jun 1994  273.8          Sept 1999-March 2000   1,294,721 
                          20 Jun 1995  262.1          Sept 2000-March 2001   1,171,521 
                          20 Jun 1996  263.1  Sept 1999-March 2000 or 2002   9,871,739 
                          20 Jun 1997  307.0  Sept 2000-March 2001 or 2003   4,671,202 
                          12 Jun 1998  440.0  Sept 2001-March 2002 or 2004   4,180,109 
                                                                            ---------- 
                                                                            21,189,292 
Southern Water Sharesave                                                               
 Scheme                   03 Feb 1992   74.0          March 1999-Sept 1999       3,642 
                          26 Jan 1993  111.0          March 1999-Sept 2000     214,610 
                          25 Jan 1994  154.9  March 1999-Sept 1999 or 2001     109,180 
                          25 Jan 1995  136.1  March 2000-Sept 2000 or 2002     975,555 
                          25 Jan 1996  160.2  March 2001-Sept 2001 or 2003     743,663 
                                                                            ---------- 
                                                                             2,046,650 
Scottish Power plc Exec-                                                               
 utive Share Option                                                                    
 Scheme                   18 Dec 1991  227.4             Dec 1994-Dec 2001     128,303 
                          25 Jun 1992  237.7             Jun 1995-Jun 2002      22,554 
                          01 Jul 1993  310.0             Jun 1996-Jun 2003      59,641 
                          17 Dec 1993  454.8             Dec 1996-Dec 2003      60,766 
                          27 May 1994  354.0             May 1997-May 2004      18,191 
                          18 Nov 1994  352.1             Nov 1997-Nov 2004      22,039 
                          12 May 1995  335.0             May 1998-May 2005      72,026 
                          10 Nov 1995  357.5             Nov 1998-Nov 2005      47,534 
                                                                            ---------- 
                                                                               431,054 
---------------------------------------------------------------------------------------

In accordance with past practice, ScottishPower intends to grant options under  
the Sharesave Scheme (as defined in paragraph 8 below), in June 1999.           

(h) As at 27 April 1999 (being the latest practicable date prior to the         
publication of this document) awards in respect of 1,935,409 shares were        
outstanding under the ScottishPower Long Term Incentive Plan ("the Plan"). In   
accordance with past practice, ScottishPower intends to grant awards under the  
Plan in May 1999.                                                               

(i) As at 27 April 1999 (being the latest practicable date prior to the         
publication of this document), the total number of shares under option or the   
subject of awards under the ScottishPower Share Schemes was therefore           
25,602,405. At the same date 12,777,981 ScottishPower Shares were held by the   
ScottishPower Qualifying Employee Share Trust (the "QUEST") to satisfy the      
exercise of share options under the Sharesave Scheme. At the same date,         
1,877,077 ScottishPower Shares were held by a trustee (Barclays Private Bank &  
Trust (Isle of Man) Limited) for the purpose of awards under the Plan.          

(j) During the three years immediately preceding the date of this document the  
only change in the issued share capital of ScottishPower has been the issue of  
126,386,570 ScottishPower Shares in connection with the offer for Southern      
Water originally made on behalf of ScottishPower on 20 June 1996 and            
95,961,203 ScottishPower Shares at an issue price of 250p each issued in        
connection with a rights issue to assist the offer for Southern Water, and the  
issue of 33,075,627 ScottishPower Shares in total as a result of the exercise   
of share options under the ScottishPower Share Schemes.                         

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(k)Save as disclosed in this paragraph 3, (i) there has been no issue of share  
or loan capital of New ScottishPower since its incorporation (ii) save for      
options which may be granted over New Shares as a result of the release of      
outstanding options under the ScottishPower Share Schemes or the PacifiCorp     
Stock Plans, no share or loan capital of New ScottishPower is under option or   
agreed to be put under option, and (iii) during the three years immediately     
preceding the date of this document there has been no material issue of share   
or loan capital of any member of the ScottishPower Group (otherwise than        
intra-group issues by wholly-owned subsidiary undertakings and pro rata issues  
by partly-owned subsidiary undertakings) for cash or other consideration.       

(l)The New Shares issued in connection with the Scheme and the Merger will      
when issued rank pari passu in all respects with the New Shares currently in    
issue.                                                                          

4.Limitations on shareholdings, summary of principal differences between the    
New ScottishPower Articles and the ScottishPower Articles and future proposals  
Limitations on shareholdings                                                    
The New ScottishPower Articles contain provisions whose purpose is to prevent   
any person, other than a defined category of permitted persons, from owning or  
controlling, directly or indirectly, shares which carry the right to cast on a  
poll 15% or more of the votes at general meetings of New ScottishPower.         

(i)For the purpose of these provisions, the expression "interest" in        
relation to shares is deemed to mean any interest which would be taken into 
account in determining for the purpose of Part VI of the Companies Act 1985 
as in force at 29 May 1991 (the "Original Act") whether a person has a      
notifiable interest (including any interest which he would be taken as      
having for those purposes); and any interest referred to in section         
209(1)(a), (b), (d) or (e) of the Original Act (except that of a simple     
trustee under the law of Scotland and of a bare or custodian trustee under  
the laws of England and Wales); and any interest mentioned in section       
208(4)(b) of the Original Act which could arise under an agreement within   
the meaning of section 204(5) and (6) of the Original Act.                  

(ii)Any person holding an interest of 3% or more in any class of New        
ScottishPower's issued share capital carrying rights to vote in all         
circumstances at general meetings ("relevant share capital") is required to 
notify New ScottishPower of that interest and of any percentage point       
change in the level of that interest.                                       

(iii)If a person has, or appears to the Directors to have, an interest in   
shares which carry 15% or more of the total votes attaching to the relevant 
share capital of all classes (taken as a whole) of New ScottishPower and    
capable of being cast on a poll or is deemed to have such an interest, the  
Directors will give notice to all persons who appear to the Directors to    
have interests in the shares concerned and, if different, to the holders of 
those shares. The notice shall set out the restrictions referred to in (v)  
below and will call for the interest concerned to be reduced to less than   
15% by a disposal of shares within 21 days of the giving of such notice to  
the holder (or such longer period as the Directors consider reasonable).    
Except for the purpose of a disposal as required by the New ScottishPower   
Articles or unless such notice is withdrawn, no transfer of any of the      
shares to which the interest relates may be registered.                     

(iv)If such notice is not complied with in all respects to the satisfaction 
of the Directors and has not been withdrawn, the Directors will, so far as  
they are able, make such disposal through any officer or employee of New    
ScottishPower and will give written notice of the disposal to those persons 
on whom the notice was served. The terms of the sale, including the price,  
are to be determined by the Directors on taking advice from professional    
advisers.                                                                   

Any such transfer will be as effective as if it had been executed by the    
holder of the transferred shares and the title of the transferee will not   
be affected by any irregularity or invalidity in the proceedings relating   
to the transfer. The net proceeds of the disposal (without interest and     
after deduction of the expenses of sale) will be paid to the former holder  
and he will be given, if appropriate, a new certificate for the balance of  
the shareholding, on the surrender of any certificate(s) for the shares     
sold.                                                                       

(v)The registered holder of shares to whom a notice, referred to in (iii)   
above, has been given is not, in respect of any of the shares to which the  
notice relates, entitled to attend or vote at any general or class meeting  
of New ScottishPower or to exercise any other right as a shareholder in     

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relation to any such meeting until such notice has been complied with to    
the satisfaction of the Directors or withdrawn. Those rights vest in the    
Chairman of any such meeting who may exercise or refrain from exercising    
those rights entirely at his discretion. The Directors will inform the      
Chairman of any such meeting of any shares in respect of which such a       
notice as is referred to in (iii) above has been given.                     

(vi)Any resolution or determination of, or decision or exercise of any      
discretion or power by, the Directors or by the Chairman of any meeting     
under the limitations on shareholdings provisions will be final and         
conclusive and any disposal or transfer made pursuant to such provision is  
binding on all persons concerned and is not open to challenge. The          
Directors will not be required to give any reasons for any decision,        
determination or declaration taken or made in accordance with the           
limitations on shareholdings provisions.                                    

(vii)The Secretary of State is not subject to these limitations and there   
are exceptions for a limited category of permitted persons, principally     
recognised clearing houses, recognised investment exchanges, trustees of    
employees' share schemes, ADS depositaries in their capacity as such and    
persons whose holdings are of a fiduciary, contingent or temporary nature.  

Principal differences                                                           
The principal differences between the New ScottishPower Articles and the        
ScottishPower Articles are explained below. The numbering of the New            
ScottishPower Articles (each an "article") referred to below corresponds to     
the numbering of the ScottishPower Articles, other than article 6(E) which is   
a new article and has no equivalent in the ScottishPower Articles. A copy of    
the New ScottishPower Articles and of the ScottishPower Articles will be        
available for inspection as referred to in paragraph 17 below. A copy of the    
ScottishPower Articles (including amendments proposed to be made at the Scheme  
EGM) will be available during, and for at least 15 minutes prior to, the        
Scheme EGM.                                                                     

(a) Article 6(E) (The Redeemable Shares)                                        
This article was inserted to set out the rights attaching to the 49,998         
Redeemable Shares issued to ScottishPower in order for it to obtain a trading   
certificate under section 117 of the Act. By virtue of a special resolution of  
New ScottishPower passed on 29 April 1999, this article will automatically be   
deleted from the New ScottishPower Articles following redemption of all of the  
Redeemable Shares.                                                              

(b) Article 7 (The New ScottishPower Special Share)                             
This article sets out the rights attaching to the New ScottishPower Special     
Share and has been amended so that in addition to those matters which are       
currently deemed in the ScottishPower Articles to be a variation of the rights  
attaching to the ScottishPower Special Share and as such only effective with    
the prior consent in writing of the Special Shareholder, the rights attaching   
to the New ScottishPower Special Share provide that each of the following       
matters is also deemed to be a variation requiring prior consent of the         
Special Shareholder in writing:                                                 

(i)the giving by New ScottishPower of any consent or agreement to any       
amendment, removal or alteration of the effect of article 7 of the          
ScottishPower Articles (as amended in connection with the Scheme);          

(ii)the giving by New ScottishPower of any consent or agreement to the      
creation or issue of any shares in the capital of ScottishPower other than  
an issue of shares following which New ScottishPower will own the full      
legal and beneficial interest in, and control, shares in the capital of     
ScottishPower carrying at least 85% of the voting rights exercisable on a   
poll at general meetings of ScottishPower;                                  

(iii)the disposal by New ScottishPower of any of the shares in              
ScottishPower held by it or of any rights or interest in such shares or the 
entering into by New ScottishPower of any agreement or arrangement with     
respect to such shares or to the exercise of any voting or other rights     
attaching to such shares, such that New ScottishPower would cease to own    
the full legal and beneficial interest in, and control, shares in the       
capital of ScottishPower carrying at least 85% of the voting rights         
exercisable on a poll at general meetings of ScottishPower;                 

(iv)the giving by New ScottishPower of any consent or agreement to any      
abrogation, variation, waiver or modification of any of the rights or       
privileges attaching to any shares in ScottishPower such that New           
ScottishPower would cease to own the full legal and beneficial interest in, 
and                                                                         

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control, shares in the capital of ScottishPower carrying at least 85% of    
the voting rights exercisable on a poll at general meetings of              
ScottishPower; and                                                          

(v)any other act or omission to act by New ScottishPower or the Directors   
of New ScottishPower which results in New ScottishPower ceasing to own the  
full legal and beneficial interest in, and control, shares in the capital   
of ScottishPower carrying at least 85% of the voting rights exercisable on  
a poll at general meetings of ScottishPower.                                

As set out in paragraph (f) of the resolution numbered 1 in the Notice of the   
Scheme EGM, the existing article 7 of the ScottishPower Articles is to be       
deleted and replaced after the Scheme Date by an article to the effect that     
the events set out in paragraphs (i), (ii) and (iv) above may not occur         
without the prior written consent of New ScottishPower.                         

(c) Article 98 (Number of directors to retire)                                  
This article relates to the number of Directors to retire from office by        
rotation and has been amended in accordance with the new London Stock Exchange  
requirement that all directors shall retire by rotation at least every three    
years.                                                                          

(d) Article 123 (Borrowing powers)                                              
This article relates to the borrowing powers of New ScottishPower and has been  
amended to include an interim borrowing limit of (Pounds)8 billion up to the    
date of publication of the audited accounts of New ScottishPower for the year   
ended 31 March 2000, and to delete the provision which required goodwill and    
intangible assets to be deducted from the Adjusted Capital and Reserves (as     
defined in the New ScottishPower Articles). This deletion reflects the new UK   
Financial Reporting Standard FRS10.                                             

(e) Article 130 (Interim dividends)                                             
This article relates to the ability of the Directors to pay interim dividends   
and has been amended to provide that the Directors may declare and pay any      
dividends, including final dividends, and not just interim dividends. This is   
in order to facilitate the proposed move to quarterly dividend payments.        

Future proposals                                                                
The Directors intend pursuant to the Merger Agreement to propose a resolution   
at the 2000 annual general meeting of New ScottishPower to amend the New        
ScottishPower Articles in order to provide (to the extent reasonably possible)  
for the holders of ADSs, including New ADSs, to attend, vote and speak at       
general meetings. It is intended that the amendments to be proposed will        
provide for the appointment of multiple proxies by approved depositories        
(including the Depositary), for such proxies themselves to be able to appoint   
a proxy, for the holding of special and extraordinary resolutions on a poll     
and for certain other minor amendments to the New ScottishPower Articles.       

The Merger is not conditional upon the passing of this resolution although the  
Merger Agreement requires that the resolution, if not passed, would again be    
put forward for consideration at the next annual general meeting.               

New ScottishPower, which will replace ScottishPower as the party to the         
Deposit Agreement upon the Scheme becoming effective, also intends to seek to   
amend the Deposit Agreement to reflect the changes proposed to be made to the   
New ScottishPower Articles and to make certain other amendments.                

5.PacifiCorp share capital                                                      

(a) PacifiCorp Common Stock                                                     
As at 27 April 1999 (being the latest practicable date prior to the             
publication of this document), the number of shares of PacifiCorp Common Stock  
issued and outstanding was 297,331,855. Other than pursuant to the exercise of  
options or the grant of awards of restricted stock under the PacifiCorp Stock   
Incentive Plan, it is not expected that any PacifiCorp Common Stock will be     
issued prior to the Merger Date. Upon the Merger becoming effective, all of     
the PacifiCorp Common Stock (other than any such shares held by ScottishPower,  
New ScottishPower or any of their subsidiaries or by any subsidiary of          
PacifiCorp) will be cancelled and converted into the right to receive New ADSs  
and New Shares in accordance with the terms of the Merger.                      

(b) PacifiCorp Common Stock under option                                        
As at 27 April 1999 (being the latest practicable date prior to the             
publication of this document) not more than 6,080,085 options to acquire        
unissued PacifiCorp Common Stock were outstanding under the                     

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PacifiCorp Stock Incentive Plan. Upon the Merger becoming effective, all such   
options which are not yet exercisable will become exercisable and will convert  
into options to acquire New Shares. These options will be exercisable for up    
to 10 years from the date of the original grant.                                

On 9 February 1999, under the PacifiCorp Stock Incentive Plan, PacifiCorp       
granted options to acquire 1,892,000 shares of PacifiCorp Common Stock at an    
option price of US$19 with a three year vesting period (commencing one year     
after the grant date) and a 10 year exercise period, and 39,275 restricted      
stock awards with a four year vesting period (commencing one year after the     
grant date). Such options and restricted stock awards do not automatically      
vest upon a change in control, such as the Merger, but could vest within the    
24 months following a change in control if the recipient's employment is        
terminated under certain conditions.                                            

In addition, on 9 February 1999, under the PacifiCorp Stock Incentive Plan,     
PacifiCorp granted to Mr McKennon stock options to acquire 250,000 shares of    
PacifiCorp Common Stock at an option price of US$19 with a three year vesting   
period (commencing one year after the grant date) and a 10 year exercise        
period, and 3,500 restricted stock awards with a four year vesting period       
(commencing one year after the grant date). Such awards and options will not    
vest upon a change in control and will not be forfeited upon employment         
termination so long as Mr McKennon provides services to PacifiCorp, New         
ScottishPower, or any subsidiaries or affiliates of either of them, as an       
officer, director, consultant, agent, or otherwise.                             

PacifiCorp may grant further options to acquire shares of PacifiCorp Common     
Stock or restricted shares of PacifiCorp Common Stock in the ordinary course    
in the period prior to the Merger Date.                                         

(c) Restricted PacifiCorp Common Stock                                          
Awards of restricted PacifiCorp Common Stock have been made to PacifiCorp       
employees under the PacifiCorp Stock Plans. Under individual agreements,        
restricted PacifiCorp Common Stock is held in escrow for a specified period     
pending satisfaction of performance conditions and subject to continued         
employment with PacifiCorp. As at 27 April 1999 (being the latest practicable   
date prior to the publication of this document), not more than 233,918          
existing shares of restricted PacifiCorp Common Stock were outstanding under    
unvested restricted stock awards made pursuant to the PacifiCorp Stock Plans.   

Upon the Merger becoming effective, all unvested awards of restricted           
PacifiCorp Common Stock will convert into awards of New ADSs or New Shares, as  
the case may be, and all awards granted (other than awards granted on 9         
February 1999 and all awards granted under the PacifiCorp Non-Employee          
Directors Stock Compensation Plan) will become fully vested and free of         
restrictions. Restricted stock grants to employees made on 9 February 1999      
will not automatically vest upon a change in control but could vest within the  
24 months following a change in control if the recipient's employment is        
terminated under certain conditions.                                            

(d) PacifiCorp Preferred Stock                                                  
PacifiCorp has three classes of preferred stock, 5.00% Preferred Stock, Serial  
Preferred Stock (currently divided into seven series) and No Par Serial         
Preferred Stock (currently divided into five series). The PacifiCorp Preferred  
Stock will remain outstanding following the Merger Date and will not be         
acquired or cancelled as part of the Merger. However, the Merger Agreement      
requires PacifiCorp to redeem the $1.16, $1.18 and $1.28 series of its No Par   
Serial Preferred Stock prior to the Merger Date. It is not expected that any    
PacifiCorp Preferred Stock will be issued prior to the Merger Date.             

(i)Dividends                                                                
Dividends on the Preferred Stock are payable pari passu without regard to   
class or series, are cumulative and are payable quarterly on 15 February,   
15 May, 15 August and 15 November each year, but only when and as declared  
by the PacifiCorp board, out of funds legally available for the payment of  
dividends, in preference to the PacifiCorp Common Stock.                    

(ii)Redemption and conversion                                               
PacifiCorp may redeem all or any part of any one or more series of any      
class of the Preferred Stock, other than the 6.00% Serial Preferred Stock   
and the 7.00% Serial Preferred Stock, by paying the specified redemption    
prices for such series. PacifiCorp must give shareholders of Preferred      
Stock between 30 and 60 days' notice before redeeming Preferred Shares.     

On 15 August 2001, PacifiCorp must redeem all outstanding shares of the     
$7.70 No Par Serial Preferred Stock at a redemption price of $100 per       
share, plus unpaid accumulated dividends, if any, to the date of            
redemption.                                                                 

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PacifiCorp must redeem on 15 June of each year (beginning on 15 June 2002   
and ending on 15 June 2006) not less than 37,500 nor more than 75,000       
shares of the $7.48 No Par Serial Preferred Stock at a redemption price of  
$100 per share, plus unpaid accumulated dividends, if any, to the date of   
redemption. The option to redeem in excess of 37,500 shares of such stock   
is not cumulative. On 15 June 2007, PacifiCorp must redeem all outstanding  
shares of the $7.48 No Par Serial Preferred Stock at a redemption price of  
$100 per share, plus unpaid accumulated dividends, if any, to the date of   
redemption.                                                                 

None of the currently issued Preferred Stock is convertible into PacifiCorp 
Common Stock.                                                               

(iii)Voting rights                                                          
The holders of the 5.00% Preferred Stock and the Serial Preferred Stock,    
together with the PacifiCorp Common Stock, are entitled to one vote for     
each share held on matters presented to shareholders generally. Holders of  
the No Par Serial Preferred Stock have such voting rights as are            
established at the time a series of No Par Serial Preferred Stock is        
created. Each series of No Par Serial Preferred Stock now outstanding has   
one vote per share, except for the $1.16, $1.18 and $1.28 series of No Par  
Serial Preferred Stock which normally are non-voting but have one-quarter   
vote per share on certain extraordinary matters on which all holders of     
PacifiCorp Preferred Stock vote, as described below.                        

(A) If dividends payable on the Preferred Stock are in default in an    
amount equal to four full quarterly payments or more per share, holders 
of the relevant series of Preferred Stock, voting together as one class,
are entitled by majority vote to elect the smallest number of directors 
necessary to constitute a majority of the full PacifiCorp board of      
directors.                                                              

(B) The consent of the holders of at least two-thirds of the total votes
of a class of Preferred Stock is required in order to amend any of the  
terms of that class in a manner substantially prejudicial to the holders
thereof.                                                                

(C) PacifiCorp must obtain the consent of the holders of a majority of  
the total voting power of the outstanding Preferred Stock, voting       
together as one class distinct from the PacifiCorp Common Stock, to:    

(1) merge or consolidate with or into any other corporation;        

(2) issue unsecured securities in amounts in excess of amounts      
permitted by certain issuance tests; or                             

(3) issue, sell or otherwise dispose of any shares of Preferred     
Stock unless PacifiCorp meets certain income levels and capital     
surplus requirements.                                               

(iv)PacifiCorp's repurchase and resale of shares                            
PacifiCorp may, subject to the restrictions noted above, purchase any of    
its stock outstanding at such price as may be fixed by the PacifiCorp board 
and accepted by the holders of the stock purchased, and may resell any      
stock so purchased at a price fixed by its board. However, if the stock so  
purchased is subject to redemption, the price paid may not exceed the price 
at which it is redeemable.                                                  

(v)Other rights                                                             
No holder of any stock or other securities of PacifiCorp has any preemptive 
or other right to subscribe for, purchase or receive any unissued shares,   
treasury shares, or other shares of any class.                              

In general, on a liquidation PacifiCorp Preferred Shareholders have a       
preferential right over PacifiCorp Common Shareholders to receive an amount 
equal to the amounts payable under the optional redemption provisions       
described above together with any unpaid dividends.                         

PacifiCorp Preferred Shareholders are entitled to dissent from, and to      
obtain payment of the fair value of the shares held, in the event of a      
merger, stock exchange, sale or exchange of all or substantially all of the 
property of PacifiCorp other than in the usual and regular course of        
business (with certain exceptions), or certain specified charter amendments 
(only to the extent the holder is entitled to vote thereon). PacifiCorp     
Preferred Shareholders have dissenters' rights in connection with the       
Merger.                                                                     

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(vi)Special Cash Payments                                                   
If the Merger is approved at the PacifiCorp annual meeting and all          
regulatory approvals for the Merger required under the Merger Agreement     
have been obtained, PacifiCorp will make a special cash payment of $1.00    
per share ($0.25 per share for the $1.16, $1.18 and $1.28 series) to each   
PacifiCorp Preferred Shareholder on the PacifiCorp Record Date that voted   
in favour of the Merger. These special cash payments will be paid out of    
PacifiCorp's general funds, promptly after receipt of the last regulatory   
approval for the Merger but prior to the Merger. However, no accrued        
interest will be paid on the special cash payments regardless of any delay  
in making such payments.                                                    

Under the articles of incorporation of PacifiCorp, the amount of unsecured  
debt that PacifiCorp may issue is limited to 30% of the total secured       
indebtedness of PacifiCorp, its capital and surplus. PacifiCorp is seeking  
consent of the PacifiCorp Preferred Shareholders to increase the amount of  
unsecured indebtedness which PacifiCorp may issue from time to time.        
PacifiCorp believes that the unsecured debt consent is key to meeting the   
objectives of flexibility and favourable cost structure and therefore if    
the unsecured debt consent is approved, PacifiCorp will make a special cash 
payment in the amount of $1.00 per share ($0.25 per share for $1.16, $1.18  
and $1.28 series) to each PacifiCorp Preferred Shareholder on the           
PacifiCorp Record Date that voted in favour of the unsecured debt consent.  
If the unsecured debt consent is approved, special cash payments will be    
paid out of PacifiCorp's general funds, promptly after the PacifiCorp       
annual meeting. However, no accrued interest will be paid on the special    
cash payments regardless of any delay in making such payments. These        
special cash payments will be made irrespective of the vote on any other    
matters presented at the PacifiCorp annual meeting.                         

The special cash payments referred to above, in aggregate, would not exceed 
approximately $5 million.                                                   

In addition, certain dealer solicitation fees will be payable by PacifiCorp 
in relation to the resolutions referred to above which, in aggregate, would 
not exceed approximately $4 million.                                        

6. Directors of New ScottishPower                                               
The Directors and their functions are set out below:                            
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                                                        [Enlarge/Download Table]

Name                                                       Function                                       
-------------------------------------------------------------------------------                           
                                                                                                          
Charles Murray Stuart CBE                                  Chairman (non-executive)                       
Ian Robinson                                               Chief Executive                                
Ian Simon MacGregor Russell                                Deputy Chief Executive and Finance Director    
Kenneth Leslie Vowles                                      Executive Director UK Power Operations         
Duncan Whyte                                               Executive Director Multi-Utility               
Charles Berry                                              Executive Director, Customer Sales and Services
Alan Richardson                                            Executive Director, US Responsibility          
Mair Barnes                                                Non-executive director                         
Sir Peter Lewis Gregson GCB                                Non-executive director                         
Ewen Cameron Stewart Macpherson                            Non-executive director                         
John Parnaby CBE                                           Non-executive director                         

The Directors are currently directors of ScottishPower and directors of New     
ScottishPower in the same capacities. ScottishPower announced the resignation   
of Sir Ronald Garrick as a non-executive director on 26 April 1999, which took  
effect on 30 April 1999. Duncan Whyte, who is an executive director of          
ScottishPower with responsibility for Multi-Utility, will resign as a Director  
and will leave the ScottishPower Group on 31 May 1999 to become the Chief       
Executive of The Weir Group plc.                                                

It is proposed that, with effect from the Merger Date, Keith McKennon be        
appointed as a director of New ScottishPower with the role of non-executive     
Deputy Chairman. It is also proposed that from the same date Nolan Karras and   
Robert Miller (currently non-executive directors of PacifiCorp) will be         
appointed as non-executive directors of New ScottishPower.                      

7. Directors' and other interests in ScottishPower and New ScottishPower        
(a) The interests, all of which are beneficial, of the Directors and the        
Proposed Directors, in ScottishPower Shares as at 27 April 1999 (being the      
latest practicable date prior to the publication of this document), in New      
Shares following the Scheme Date (which in aggregate will represent             

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approximately 0.02% of the issued ordinary share capital of New ScottishPower)  
and in New Shares following the Merger Date (which in aggregate will represent  
approximately 0.01% of the issued ordinary share capital of New                 
ScottishPower), are set out in the table below. In each case, the figures are   
based upon the interests in ScottishPower Shares which have been notified by    
each Director and the Proposed Directors to ScottishPower pursuant to section   
324 or section 328 of the Act as at 27 April 1999 (being the latest             
practicable date prior to the publication of this document) or are required     
pursuant to section 325 of the Act to be entered into the register of           
Directors' interests maintained under that section or are interests of a        
connected person (within the meaning of section 346 of the Act) of a Director   
or Proposed Director which would, if the connected person were a Director, be   
required to be disclosed under such sections of the Act, and the existence of   
which is known to or could with reasonable diligence be ascertained by that     
Director or Proposed Director.                                                  

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                                                                [Download Table]

                                           Scottish
                                              Power
Director(1)                      Shares/ New Shares
---------------------------------------------------
                                                   
Charles Murray Stuart CBE                    15,000
Ian Robinson                                 57,412
Ian Simon MacGregor Russell                  15,612
Kenneth Leslie Vowles                       117,327
Duncan Whyte                                 28,612
Charles Berry                                     0
Alan Richardson                                 295
Mair Barnes                                       0
Sir Peter Lewis Gregson GCB                     905
Ewen Cameron Stewart Macpherson               5,000
John Parnaby CBE                              6,692
Keith McKennon(/2/)                          22,200
Nolan Karras(/3/)                               478
Robert Miller(/4/)                            7,953

-------                                                                         
(1) The table set out above assumes no dealings by the Directors or the     
Proposed Directors or such connected persons and that no further shares of  
ScottishPower, New ScottishPower or PacifiCorp are issued, whether          
pursuant to the exercise of options or otherwise, in each case after 27     
April 1999 (being the latest practicable date prior to the publication of   
this document).                                                             
(2) The interests of Keith McKennon arise as a result of his vested         
interests in PacifiCorp Common Stock and represent the New Shares that      
will be received in respect of those interests upon the Merger becoming     
effective. For these purposes no account is taken of (a) the shares of      
PacifiCorp Common Stock held beneficially for Mr McKennon under the         
PacifiCorp Compensation Reduction Plan, which, as at 1 January, 1999 would  
convert, under the Exchange Ratio, to approximately 78,262 New Shares, and  
(b) the 3,500 shares of PacifiCorp Common Stock the subject of awards and   
250,000 shares of PacifiCorp Common Stock the subject of options granted    
to Mr McKennon on 9 February 1999 under the PacifiCorp Stock Incentive      
Plan which, at the Exchange Ratio, would be converted into the right to     
receive 8,120 New Shares subject to continuing restrictions (see paragraph  
5(b), above) and into options to acquire 580,000 New Shares.                
(3) The interests of Nolan Karras arise as a result of his vested           
interests in PacifiCorp Common Stock and represent the New Shares that      
will be received in respect of those interests upon the Merger becoming     
effective. For these purposes no account is taken of the shares of          
PacifiCorp Common Stock held beneficially for Mr Karras under the           
PacifiCorp Compensation Reduction Plan and in a separate revocable trust,   
which, as at 31 December 1998, would convert under the Exchange Ratio to    
approximately 8,345 and 5,000 New Shares, respectively. Any unvested        
shares of restricted PacifiCorp Common Stock previously awarded under the   
Non-Employee Director Stock Compensation Plan which vest in the normal      
course prior to the Merger Date will result in an increased beneficial      
ownership of New Shares up to a maximum of 1,728 (assuming completion of    
the Merger occurs in 1999 as anticipated).                                  
(4) The interests of Robert Miller arise as a result of his vested          
interests in PacifiCorp Common Stock and represent the New Shares that      
will be received in respect of those interests upon the Merger becoming     
effective. Any unvested shares of restricted PacifiCorp Common Stock        
previously awarded under the Non-Employee Director Stock Purchase Plan      
which vest in the normal course prior to the Merger Date will result in an  
increased beneficial ownership of New Shares up to a maximum of 1,990       
(assuming completion of the Merger occurs in 1999 as anticipated).          

The interests of the Directors and the Proposed Directors (including those      
interests referred to in notes (2), (3) and (4) to the table above) together    
represent approximately 0.02% of the issued share capital of ScottishPower as   
at 27 April 1999 (being the latest practicable date prior to the publication    
of this document). Including options outstanding and awards under the           
ScottishPower Share Schemes they represent 0.06%.                               

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(b) The following have options (all of which have been granted for no           
consideration) under the Sharesave Scheme:                                      

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                                                                [Download Table]

                                                                Outstanding
                    Date of Option price       Normal exercise shares under
Name                  grant      (pence)               periods       option
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Ian Robinson     20.06.1995    262.1     01.09.2000-28.02.2001        6,581
Ian Russell      22.06.1994    273.8     01.09.1999-29.02.2000        6,300
Ken Vowles       20.06.1996    263.1     01.09.2001-28.02.2002        3,933
                 12.06.1998      440     01.09.2003-29.02.2004        1,568
Duncan Whyte     20.06.1996    263.1     01.09.1999-29.02.2000        2,223
                 12.06.1998      440     01.09.2001-28.02.2002          886
Charles Berry    22.06.1994    273.8     01.09.1999-29.02.2000        2,520
                 12.06.1998      440     01.09.2001-28.02.2002        1,329
Alan Richardson  22.06.1994    273.8     01.09.1999-29.02.2000        2,520
                 20.06.1995    262.1     01.09.2000-28.02.2001        1,316
                 12.06.1998      440     01.09.2003-29.02.2004        1,568

(c) The following have options (all of which have been granted for no           
consideration) under the ScottishPower Executive Share Option Scheme:           

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                                                                [Download Table]

                                                                Outstanding
                    Date of Option price       Normal exercise shares under
Name                  grant      (pence)               periods       option

---------------------------------------------------------------------------
                                                                           
Charles Berry    17.12.1993    454.8     17.12.1996-16.12.2003          659
                 12.05.1995      335     12.05.1998-11.05.2005        4,475
Alan Richardson  17.12.1993    454.8     17.12.1996-16.12.2003        1,450

(d) The Plan provides for the grant of awards to Directors and senior           
employees. An award consists of the right to receive, from the fourth           
anniversary of the grant, a transfer or issue of ScottishPower Shares at nil    
cost. Each award is subject to certain performance conditions which determines  
whether, and the extent to which, an award may be exercised. No subsisting      
award can be exercised unless certain performance conditions relating to        
customer service and financial performance conditions are satisfied during the  
period from the financial year prior to the grant of the award to the third     
financial year following.                                                       

The following have outstanding awards under the Plan:                           

------------------------------------------------------------------------------- 

                                                                [Download Table]

                    Date of            Number of
Name                  grant ScottishPower Shares

------------------------------------------------
                                                
Ian Robinson     09.08.1996               51,533
                 16.05.1997               53,846
                 07.05.1998               41,916
Ian Russell      09.08.1996               38,650
                 16.05.1997               36,923
                 07.05.1998               31,706
Ken Vowles       09.08.1996               27,607
                 16.05.1997               27,692
                 07.05.1998               22,570
Duncan Whyte     09.08.1996               35,889
                 16.05.1997               32,307
                 07.05.1998               25,257
Charles Berry    09.08.1996               13,458
                 16.05.1997               13,269
                 07.05.1998               11,083
Alan Richardson  09.08.1996               13,803
                 16.05.1997               14,423
                 07.05.1998               11,446

(e) For the purposes of Part VI of the Act (which imposes obligations to        
disclose interests in shares in certain circumstances) the Directors are in     
addition technically treated as having an interest in the total number of       
ScottishPower Shares held in the QUEST and in the employee benefit trust        
linked to the Plan.                                                             

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(f) Save as disclosed above, none of the Directors nor the Proposed Directors   
has any interest in the share or loan capital of ScottishPower.                 

(g) ScottishPower Share Scheme Trustees Limited, trustee of the QUEST and a     
wholly owned subsidiary of ScottishPower, held 12,777,981 ScottishPower Shares  
as at 27 April 1999 (being the latest practicable date prior to the             
publication of this document).                                                  

(h) Details of Directors' service contracts with a period of notice or          
contract period of one year or more are as follows:                             

(i)Ian Robinson has a service agreement (as subsequently varied) with       
ScottishPower dated 1 March 1995 which, after an initial fixed period of    
three years, is terminable by two years' written notice by ScottishPower    
and one year's notice by Mr Robinson (ScottishPower also has power to make  
a payment in lieu of any required period of notice). Mr Robinson's current  
basic salary is (Pounds)420,000 per annum, reviewable annually by the       
Board, save that his salary may not be revised downwards. Mr Robinson is    
entitled to participate in ScottishPower's incentive bonus schemes and      
share option schemes (from time to time in force) and is entitled to        
membership of appropriate ScottishPower pension schemes. Mr Robinson is     
provided with a company car (ScottishPower bears maintenance and running    
costs) and cover under ScottishPower's private health scheme (for himself,  
his wife and dependent children).                                           

(ii)Ian Russell has a service agreement (as subsequently varied) with       
ScottishPower dated 28 January 1994 which, after an initial fixed period of 
three years from 1 September 1994, is terminable by two years' written      
notice by ScottishPower and one year's written notice by Mr Russell         
(ScottishPower also has power to make a payment in lieu of any required     
period of notice). Mr Russell's current basic salary is (Pounds)340,000 per 
annum, reviewable annually by the Board, save that his salary may not be    
revised downwards. Mr Russell is entitled to participate in ScottishPower's 
incentive bonus schemes and share option schemes (from time to time in      
force) and is entitled to membership of appropriate ScottishPower pension   
schemes. Mr Russell is provided with a company car (ScottishPower bears     
maintenance and running costs) and cover under ScottishPower's private      
health scheme (for himself, his wife and dependent children).               

(iii)Ken Vowles has a service agreement (as subsequently varied) with       
ScottishPower dated 1 April 1995 which, after an initial fixed period of    
two years from 1 October 1994, is terminable by two years' notice by        
ScottishPower and one year's written notice by Mr Vowles (ScottishPower     
also has power to make a payment in lieu of any required period of notice). 
Mr Vowles's current basic salary is (Pounds)250,000 per annum, reviewable   
annually by the Board, save that his salary may not be revised downwards.   
Mr Vowles is entitled to participate in ScottishPower's incentive bonus     
schemes and share option schemes (from time to time in force) and is        
entitled to membership of appropriate ScottishPower pension schemes. Mr     
Vowles is provided with a company car (ScottishPower bears maintenance and  
running costs) and cover under ScottishPower's private health scheme (for   
himself, his wife and dependent children).                                  

(iv)Duncan Whyte has a service agreement (as subsequently varied) with      
ScottishPower dated 14 December 1990 which, after an initial fixed period   
of three years from 31 March 1990, is terminable by two years' written      
notice by ScottishPower and one year's written notice by Mr Whyte           
(ScottishPower also has power to make a payment in lieu of any required     
period of notice). Mr Whyte's current basic salary is (Pounds)235,000 per   
annum, reviewable annually by the Board, save that his salary may not be    
revised downwards. Mr Whyte is entitled to participate in ScottishPower's   
incentive bonus schemes and share option schemes (from time to time in      
force) and is entitled to membership of appropriate ScottishPower pension   
schemes. Mr Whyte is provided with a company car (ScottishPower bears       
maintenance and running costs) and cover under ScottishPower's private      
health scheme (for himself, his wife and dependent children).               

(v) Charles Berry will enter into a service agreement with ScottishPower    
terminable by twelve months' written notice by ScottishPower and twelve     
months' written notice by Mr Berry (ScottishPower will also have power to   
make a payment in lieu of any required period of notice). Mr Berry's        
current basic salary is (Pounds)170,000 per annum, reviewable annually by   
the Board, save that his salary may not be revised downwards. Mr Berry is   
entitled to participate in ScottishPower's incentive bonus schemes and      
share option schemes (from time to time in force) and is entitled to        
membership of appropriate ScottishPower pension schemes. Mr Berry is        
provided with a company                                                     

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car (ScottishPower bears maintenance and running costs) and cover under     
ScottishPower's private health scheme (for himself, his wife and dependent  
children.                                                                   

(vi) Alan Richardson will enter into a service agreement with ScottishPower 
terminable by twelve months' written notice by ScottishPower and twelve     
months' written notice by Mr Richardson (ScottishPower will also have power 
to make a payment in lieu of any required period of notice). Mr             
Richardson's current basic salary is (Pounds)170,000 per annum, reviewable  
annually by the Board, save that his salary may not be revised downwards.   
Mr Richardson is entitled to participate in ScottishPower's incentive bonus 
schemes and share option schemes (from time to time in force) and is        
entitled to membership of appropriate ScottishPower pension schemes. Mr     
Richardson is provided with a company car (ScottishPower bears maintenance  
and running costs) and cover under ScottishPower's private health scheme    
(for himself, his wife and dependent children).                             

(i) Murray Stuart, Ian Robinson, Ian Russell, Ken Vowles, Charles Berry and     
Alan Richardson will enter into new service contracts with New ScottishPower,   
to be effective from the Scheme Date. The new service contracts will be on      
substantially the same terms as the existing contracts. Duncan Whyte will not   
enter into a new service contract as he plans to leave the ScottishPower Group  
on 31 May 1999 to become the Chief Executive of The Weir Group plc.             

(j) It is envisaged that each of the Proposed Directors will enter into a non-  
executive letter of appointment with New ScottishPower, the terms of which      
have yet to be resolved, effective from the Merger Date. In the case of Mr      
McKennon, this will replace his existing service contract with PacifiCorp       
(details of which are set out in paragraph 11(f) below).                        

(k) The aggregate remuneration (including salaries, fees, pension               
contributions, bonus payments and benefits in kind) of the Directors for the    
year ended 31 March 1999 amounted to (Pounds)1.9 million. The remuneration      
policy of the ScottishPower Group will be reviewed by the Remuneration          
Committee after the Merger, in the light of the responsibilities to be          
undertaken by the Directors and Proposed Directors within the Combined Group.   
Subject to this, it is estimated that for the year ending 31 March 2000 the     
Directors of New ScottishPower will be paid a total of approximately            
(Pounds)1.7 million by New ScottishPower and its subsidiaries. As stated in     
paragraph 7(j) above, the terms of appointment of the Proposed Directors have   
yet to be resolved. The Remuneration Committee comprises Ewen Macpherson        
(Chairman), Mair Barnes, Sir Peter Gregson and John Parnaby.                    

(l) Save as set out below, as at 27 April 1999 (being the latest practicable    
date prior to the publication of this document), no person, directly or         
indirectly, was interested in 3% or more of the issued share capital of         
ScottishPower. Following implementation of the Scheme and the Merger, New       
ScottishPower is not aware of any person who, directly or indirectly, jointly   
or severally could exercise control over New ScottishPower.                     

------------------------------------------------------------------------------- 

                                                                [Download Table]

                                                     Percentage of Percentage of
                                                     share capital share capital
                                       Percentage of        of New        of New
                            Number of existing share ScottishPower ScottishPower
                        ScottishPower     capital of     after the     after the
                               Shares  ScottishPower        Scheme        Merger

------------------------------------------------------------------------------- 
                                                                                
Prudential Portfolio                                                            
 Fund Managers Limited     78,787,297           6.57          6.57          4.17

The table set out above assumes (i) no dealings in ScottishPower, New           
ScottishPower or PacifiCorp after 27 April 1999 (being the latest practicable   
date prior to the publication of this document); (ii) ScottishPower             
Shareholders have no interests in PacifiCorp Common Stock; and (iii) no issues  
of shares by ScottishPower, New ScottishPower or PacifiCorp after 27 April      
1999 (being the latest practicable date prior to the publication of this        
document).                                                                      

8. ScottishPower employee share schemes                                         
(a) ScottishPower has the following schemes:                                    

(i)a profit sharing scheme constituted by a trust deed made between the     
relevant company and a wholly owned subsidiary as trustee (the "Trust       
Scheme");                                                                   

(ii)a savings-related share option scheme (the "Sharesave Scheme");         

(iii)an executive share option scheme (the "Executive Scheme");             

(iv)the Plan; and                                                           

(v)the QUEST.                                                               

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(b) No further options or awards will be granted under the ScottishPower Share  
Schemes save as disclosed in paragraph 3 of this Part VII above, and save to    
the extent necessary to use any New Shares remaining in the QUEST after the     
Merger Date which are not needed to satisfy options granted under the           
Sharesave Scheme and which have been exchanged for options over New Shares in   
consequence of the Scheme as described in paragraph 11(a) below.                

9. Effect of the Scheme on the ScottishPower Share Schemes                      
Details of the proposals to be made to participants in the ScottishPower Share  
Schemes as a result of the Scheme will be sent to the participants in due       
course. The following is a general summary of those proposals.                  

(a) ScottishPower Share Option Schemes                                          
Holders of options under the ScottishPower Share Option Schemes and the         
Southern Water Sharesave Scheme will be permitted to exchange their options     
over ScottishPower Shares for options of equivalent value over New Shares       
which will continue to be subject to the rules of the ScottishPower Share       
Option Schemes and the Southern Water Sharesave Scheme (as appropriate) and     
will be treated as if they had been granted on the same date as the options     
for which they are exchanged. Alternatively, optionholders will be entitled to  
exercise their options (and acquire ScottishPower Shares) within six months     
from the date on which the Scheme is sanctioned. Options which are not          
exchanged or exercised within six months from the date on which the Scheme is   
sanctioned will lapse. ScottishPower Shares which are issued on exercise of     
options after 5.30 p.m. on the Scheme Record Date will be automatically         
acquired by New ScottishPower in consideration for an issue of New Shares on    
the same terms as the Scheme by virtue of a proposed amendment to the           
ScottishPower Articles.                                                         

(b) The Plan                                                                    
The Remuneration Committee has resolved that any award granted under the Plan   
shall not automatically become exercisable as a result of the Scheme but        
instead shall be converted into an award to acquire New Shares. The             
ScottishPower Shares required to satisfy all outstanding awards are held in an  
employee trust. The Scheme will result in the employee trust holding New        
Shares in place of the ScottishPower Shares.                                    

(c) The QUEST                                                                   
The QUEST holds ScottishPower Shares required to satisfy the majority of        
options granted under the Sharesave Scheme. As a result of the Scheme these     
shares will be replaced by New Shares. It will not, for technical reasons, be   
possible to use the New Shares which will be held in the QUEST following the    
Scheme to satisfy any exercises of options made during the six months           
following the date of the Court's sanction of the Scheme. Accordingly,          
ScottishPower Shares will be allotted and issued to an optionholder who         
exercises an option in these circumstances and such shares will be immediately  
acquired by New ScottishPower in consideration of the issue of New Shares to    
the optionholder on the same terms as the Scheme by virtue of a proposed        
amendment to the ScottishPower Articles. It is intended that any New Shares     
remaining in the QUEST after the Merger Date will be used to satisfy the        
exercise of options granted under the Sharesave Scheme which are exchanged for  
options over New Shares in consequence of the Scheme as described in paragraph  
(a) above and any new options which are granted in respect of New Shares after  
the Merger Date under the Sharesave Scheme.                                     

10. New ScottishPower Employee Share Schemes                                    
From the Scheme Date New ScottishPower will operate two new employee share      
schemes, being the New ScottishPower Sharesave Scheme and the New               
ScottishPower Long Term Incentive Plan. The terms of these schemes closely      
mirror the terms of the Sharesave Scheme and the Plan.                          

11. Certain interests of directors and Executives of PacifiCorp relating to     
the Merger                                                                      

(a) PacifiCorp stock options and awards of restricted PacifiCorp Common Stock   
Upon the Merger becoming effective, all options to acquire PacifiCorp Common    
Stock granted before 9 February 1999 under the PacifiCorp Stock Incentive Plan  
not yet exercisable will become exercisable and all unexercised options will    
convert into options to acquire New ADSs or New Shares, as the case             

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may be, after adjustment to take account of the Exchange Ratio. Based on        
PacifiCorp options granted as at 27 April 1999 (being the latest practicable    
date prior to the publication of this document), this will result in a maximum  
of approximately 14 million New Shares being placed under option. All unvested  
awards of restricted PacifiCorp Common Stock granted under the PacifiCorp       
Stock Plans, will be converted into awards of New ADSs or New Shares, as the    
case may be, and all unvested awards (other than awards granted on 9 February   
1999 and as described in paragraph 5(c) above and all awards granted under the  
PacifiCorp Non-Employee Directors Stock Compensation Plan) will become fully    
vested and free of restrictions. As of 27 April 1999, (being the latest         
practicable date prior to the publication of this document) not more than       
6,080,085 unissued shares of PacifiCorp Common Stock are under such options     
and there are not more than 233,918 existing shares of restricted PacifiCorp    
Common Stock. PacifiCorp may grant further options to acquire shares of         
PacifiCorp Common Stock or shares of restricted PacifiCorp Common Stock in the  
ordinary course in the period prior to the Merger Date.                         

(b) Change of control provisions affecting Executives                           
The PacifiCorp Executive Severance Plan, the Annual Incentive Plans, the        
PacifiCorp Stock Incentive Plan, the PacifiCorp Long Term Incentive Plan, the   
Supplemental Executive Retirement Plan and the Compensation Reduction Plan      
contain "change in control" provisions which may trigger benefits for Messrs    
McKennon, O'Brien, Steinberg, Bohling and Topham (the "Executives"). These are  
described below:                                                                

(i)PacifiCorp Executive Severance Plan (the "Executive Plan").              
The Executive Plan provides for the payment of enhanced severance benefits  
to executives of PacifiCorp, including certain of the Executives, whose     
employment with PacifiCorp is terminated during the 24-month period         
following a "qualifying transaction" which will include the Merger. None of 
the directors of PacifiCorp (other than Mr Topham) is a participant in the  
Executive Plan. Mr McKennon has waived any rights to participate in the     
Executive Plan.                                                             

Participants in the Executive Plan are eligible for enhanced severance      
benefits if, during the 24-month protection period following completion of  
a qualifying transaction, a participant (A) is terminated by PacifiCorp     
without "cause" or (B) resigns within two months after a "material          
alteration in position." In addition, Mr O'Brien is eligible for enhanced   
severance benefits if he resigns for any reason no earlier than 12 months   
and no later than 14 months after a qualifying transaction.                 

During the 24-month protection period under the Executive Plan, "cause"     
means the participant's gross misconduct or gross negligence or conduct     
which indicates a reckless disregard for the consequences and has a         
material adverse effect on PacifiCorp or its affiliates, and "material      
alteration in position" means the occurrence of any of the following: (A) a 
change in reporting relationship to a lower level; (B) a material reduction 
in the scope of duties and responsibilities; (C) a material reduction in    
authority; (D) a "material reduction in compensation"; or (E) relocation of 
participant's work location to an office more than 100 miles from the       
participant's office or more than 60 miles from the participant's home. A   
"material reduction in compensation" occurs when a participant's annualised 
base salary is reduced by any amount or the annualised base salary and      
target bonus opportunity combined is reduced by at least 15% of the         
combined total opportunity before the change in compensation.               

If an Executive qualifies for the payment of enhanced severance benefits    
under the Executive Plan, the Executive will receive:                       

(A)severance pay in an amount equal to two and one-half times (three    
times for Mr O'Brien) the Executive's "annual cash compensation";       

(B)an additional payment to compensate the Executive for the effect of  
any excise tax if change-in-control benefit payments would result in the
imposition of such excise tax under section 4999 of the Internal Revenue
Code;                                                                   

(C)continuation of subsidised health insurance for the Executive, spouse
and qualified dependants from 6 to 24 months depending on length of     
service; and                                                            

(D)a minimum of 12 months of executive officer level outplacement       
services.                                                               

"Annual cash compensation" is defined as annualised base salary, target     
annual incentive opportunity and annualised auto allowance in effect on a   
material alteration or termination,                                         

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whichever is greater. The estimated amount of change in control severance   
benefit for each of the participating Executives (calculated based on       
compensation as of 1 March 1999 and without regard to any additional        
payment to compensate the Executive for the effect of any excise tax        
described above) is as follows: Mr O'Brien--$1,832,400; Mr Steinberg--      
$1,199,500; Mr Bohling--$1,129,500, Mr Topham--$1,129,500 giving a total of 
$5,290,900. Mr McKennon has waived any entitlement to severance pay under   
the Executive Plan.                                                         

(ii)Annual Incentive Plans                                                  
Each of the Executives is entitled to participate in an annual incentive    
plan (a type of bonus scheme) based upon the achievement of specified       
performance goals, including PacifiCorp's earnings per share, and           
individually established performance criteria prescribed by the Personnel   
Committee of the PacifiCorp board of directors. For 1999, the "target       
annual incentive opportunity" set for Executives ranged from 40% to 50% of  
annualised base salary. In the event of a change of control of PacifiCorp,  
the Executives will receive payment of a bonus in an amount no less than    
their target bonus award in the year the Merger is completed. Based on 1    
March 1999 compensation levels, each Executive's target bonus would be as   
follows: Mr McKennon--$312,000; Mr O'Brien--$200,000; Mr Steinberg--        
$134,000; Mr Bohling--$126,000 and Mr Topham--$126,000 giving a total of    
$898,000.                                                                   

(iii)PacifiCorp Stock Plans                                                 
Each of the Executives is entitled to participate in the PacifiCorp Stock   
Incentive Plan, and all the Executives other than Mr McKennon are           
participants in the PacifiCorp Long Term Incentive Plan. Pursuant to the    
terms of the PacifiCorp Stock Incentive Plan and PacifiCorp Long Term       
Incentive Plan, and the agreements related thereto, any unvested restricted 
PacifiCorp Common Stock and unvested options to purchase PacifiCorp Common  
Stock held by the participants therein will vest upon completion of the     
Merger; except that, (i) for the awards and options granted on 9 February   
1999 to Executives other than Mr McKennon, such awards do not automatically 
vest upon a change in control, but could vest within the 24 months          
following a change in control if the recipient's employment is terminated   
under certain conditions, and (ii) for the restricted stock awards granted  
to Mr McKennon on 9 February 1999, such awards will remain subject to the   
restrictions set forth in section (c) of paragraph 5, "PacifiCorp share     
capital," above. As at 27 April 1999 (being the latest practicable date     
prior to publication of this document), the number of shares of unvested    
restricted PacifiCorp Common Stock held by Executives is as follows: Mr     
McKennon--3,500, Mr O'Brien--34,068, Mr Steinberg--27,759, Mr Bohling--     
11,252, and Mr Topham--16,892. The number of unvested options to purchase   
PacifiCorp Common Stock held by Executives as at 27 April 1999 is as        
follows: Mr McKennon--250,000; Mr O'Brien--241,334; Mr Steinberg--134,668;  
Mr Bohling--121,334 and Mr Topham--126,668 giving a total of 874,004.       

(iv)Supplemental Executive Retirement Plan ("SERP")                         
The Executives (other than Mr McKennon) are participants in the SERP. Under 
the SERP, participants receive retirement benefits, payable for life, based 
on the participant's length of service with PacifiCorp or its subsidiaries  
and the participant's average pay in the 60 consecutive months of highest   
pay out of the last 120 months prior to retirement. Benefits are based on   
50% of the final average pay plus up to an additional 15% of final average  
pay depending upon whether PacifiCorp meets certain performance goals set   
for each calendar year by the Personnel Committee of the PacifiCorp board   
of directors. Actuarially equivalent alternative forms of benefits are also 
available at a participant's election. Retirement benefits are reduced to   
reflect Social Security benefits as well as certain prior employer          
retirement benefits. Participants are entitled to receive full benefits     
upon retirement after the age of 60 with at least 15 years of service.      
Participants are also entitled to receive reduced benefits upon early       
retirement after the age of 55 or after the age of 50 and at least 15 years 
of service.                                                                 

The SERP provides change in control benefits for participants               
"involuntarily terminated" during the 24 months following the Merger Date   
in the form of enhanced supplemental retirement benefits. Enhanced          
supplemental retirement benefits are also provided to participants who      
resign for any reason effective no earlier than 12 months and no later than 
14 months after the Merger Date. For the purposes of the SERP, a            
termination of employment is "involuntary" if the participant is            

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discharged or resigns under specified circumstances following a change of   
control. A resignation is treated as an involuntary termination when any of 
the following occurs: (A) the participant's annualised base salary or       
target bonus opportunity is decreased; (B) the participant is reassigned to 
a position in an office located more than 100 miles from the participant's  
then-current office or 60 miles from the participant's residence, whichever 
is greater; (C) the participant's reporting level in PacifiCorp is changed  
and is lower after the change than it was before; (D) there is a material   
reduction in the scope of the participant's duties or responsibilities; or  
(E) there is a material reduction in the participant's authority.           

If a participant qualifies for change-in-control benefits under the SERP,   
then that SERP benefit is calculated with the following enhancements:       

(A)supplemental benefits calculated as if the participant had three more
years of service than the participant's actual service;                 

(B)an additional 3% of final average pay added to the benefit which     
would otherwise have only been provided upon PacifiCorp meeting certain 
performance goals; and                                                  

(C)determination of final average pay under an alternate method if that 
method produces a greater amount.                                       

Based upon the Executives' compensation as of 1 January 1999 , the present  
value of SERP enhancements in the event of a qualifying termination or      
resignation within the 24 months following the Merger Date for each of the  
Executives is as follows: Mr O'Brien--$620,000; Mr Steinberg-- $760,000; Mr 
Bohling--$720,000 and Mr Topham--$470,000. Mr McKennon has waived any       
rights to participate in the SERP.                                          

(v)Compensation Reduction Plan                                              
The Executives are eligible to participate in the Compensation Reduction    
Plan under which participating executives of PacifiCorp may defer certain   
compensation. After a change in control, the plan may not be terminated by  
PacifiCorp without approval by participants with a majority of the          
aggregate balance of the accounts thereunder.                               

(vi)Other Arrangements                                                      
Mr Topham retired as an employee of PacifiCorp (but not as a director) on 1 
May 1999. PacifiCorp has agreed to provide him with the equivalent of       
change in control benefits as set forth above upon the Merger Date. The     
change in control enhancements to the retirement benefits would apply to    
future retirement benefits beginning the month following the Merger Date.   
The other change in control benefits would be offset by any severance       
benefits he has received prior to the Merger Date. It is currently          
anticipated that three other PacifiCorp executives will be offered similar  
arrangements, although PacifiCorp may determine that additional             
arrangements for a limited number of other executives will be appropriate.  
The decision to make such payments was not made until after the Merger      
Agreement was executed.                                                     

(c) Payments to Directors                                                       
Non-employee directors of PacifiCorp have been granted restricted stock under   
the PacifiCorp Non-Employee Directors Stock Compensation Plan. Stock granted    
under this plan vests over the five years of the plan following the grant, or   
shorter period to retirement, and unvested shares are forfeited if the          
recipient ceases to be a director. Because the PacifiCorp board of directors    
will become an executive only board, the Non-Employee Directors Stock           
Compensation Plan will not continue to be operated, and, promptly following     
the Merger Date, each non-executive director will receive a special payment in  
the amount of $50,000 in recognition of his or her years of service and         
contributions to the PacifiCorp board of directors. The decision to make these  
payments was not made until after the Merger Agreement was executed.            

(d) Retention and bonus incentives                                              
PacifiCorp anticipates providing retention incentives where necessary to        
retain employees in key positions during the period prior to the completion of  
the Merger. In addition, the PacifiCorp board of directors has established a    
bonus pool to provide recognition and rewards for employees expected to         

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make, and making, extraordinary efforts to accomplish the goals and objectives  
of PacifiCorp, which may or may not be related to or conditional upon the       
successful completion of the Merger. Therefore, certain executive officers of   
PacifiCorp may receive bonuses or retention incentive awards. To date, several  
officers (but not the Executives) have been offered retention agreements        
establishing retention awards. Such bonuses or retention awards shall be made   
at the discretion of Mr McKennon, as Chief Executive Officer of PacifiCorp;     
provided, however, that any officer bonuses shall be reviewed by the Personnel  
Committee of the PacifiCorp board of directors and any bonus to the Chief       
Executive Officer shall be at the discretion of the PacifiCorp board of         
directors.                                                                      

(e) Ongoing employee compensation and benefits                                  
The Merger Agreement provides that New ScottishPower will use its reasonable    
best efforts to cause the compensation, incentive and employee benefits plans   
and arrangements in effect on the date of the Merger Agreement to remain in     
effect for two years after the Merger Date or to maintain until such date       
plans or arrangements no less favourable in the aggregate to the employees      
covered by such plans and arrangements. Therefore, the Executives and other     
employees who continue employment with PacifiCorp will continue to receive      
compensation, incentives and employee benefits that are at least as favourable  
as those currently provided.                                                    

Any options and awards granted under the PacifiCorp Stock Incentive Plan after  
the Merger Date will be rights to acquire or receive New Shares. PacifiCorp     
will be authorised to operate such a plan subject to the prior approval of the  
New ScottishPower Remuneration Committee and amendments considered necessary    
or desirable to reflect English law and the rules of the London Stock           
Exchange. Any New Shares placed under options or rights granted under the       
PacifiCorp Stock Incentive Plan after the Merger Date (to the extent they are   
subscribed) will be brought into account in calculating the limits on the       
number of shares which may be acquired by subscription under employee share     
schemes of the Group.                                                           

(f) Employment agreement with Keith McKennon                                    
At the Merger Date, Mr McKennon will resign his positions as Chairman, Chief    
Executive Officer and President of PacifiCorp and, as referred to in paragraph  
8 above, is expected to be appointed as Deputy Chairman and a director of New   
ScottishPower. It is anticipated that Mr McKennon's employment with PacifiCorp  
will terminate at the later of the Merger Date or 2 September 1999. Currently,  
Mr McKennon is a party to an employment agreement with PacifiCorp that          
provides for an annual base salary of not less than $780,000 and a target       
annual bonus opportunity equal to a percentage (20% in 1998, 40% in 1999, 50%   
in 2000 and 60% in 2001) of the annual base salary. Mr McKennon has waived      
participation in PacifiCorp's Executive Severance Plan and Supplemental         
Executive Retirement Plan described above. Consequently, he is not eligible     
for severance pay; nor will he qualify for any PacifiCorp retirement benefits   
upon termination of his employment. As referred to in paragraph 7(k) above, it  
is envisaged that Mr. McKennon will enter into a non-executive letter of        
appointment with New ScottishPower.                                             

12. Principal investments                                                       
(a) ScottishPower has invested internal funds in the following in the three     
financial years ended 31 March 1999:                                            

(i)approximately (Pounds)62.8m in a stormwater tunnel in Brighton and Hove  
in England;                                                                 

(ii)approximately (Pounds)41.5m in a waste treatment works in Eastbourne,   
England;                                                                    

(iii)approximately (Pounds)80.0m on the 1998 Change Programme covering the  
mandatory processes and systems required to deliver the Electricity Trading 
Arrangement.                                                                

(iv)approximately (Pounds)35.6m on the Asset Management 2000 programme.     

(b) ScottishPower is currently investing internal funds in the following:       

(i)approximately (Pounds)43.7m in the Hastings/Bexhill, England, Urban      
Waste Water Directive scheme to treat flows, including a sludge treatment   
centre;                                                                     

(ii)approximately (Pounds)115.0m in Portsmouth, England on an Urban Waste   
Water Directive scheme to transfer flows from Eastney to the Budds Farm     
works for treatment. The project includes construction on a new sludge      
treatment centre;                                                           

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(iii)approximately (Pounds)52.0m at Littlehampton and Bognor, in England,   
on an Urban Waste Water Directive scheme to transfer flows to a new waste   
treatment works. The project also includes construction of a new sludge     
treatment centre;                                                           

(iv)approximately (Pounds)53.4m on a stormwater storage tunnel at Hastings  
in England;                                                                 

(v)approximately (Pounds)138.4m at Dover and Folkestone, in England, on a   
bathing water scheme to transfer flows to a new waste treatment works;      

(vi)approximately (Pounds)136.5m at Seaclean Wight, in England, on an Urban 
Waste Water Directive scheme to transfer flows to a new waste treatment     
works. The project also includes construction of a new sludge treatment     
centre;                                                                     

(vii)approximately (Pounds)65m on the systems and processes required to     
deliver customer growth in the UK gas and electricity markets.              

(c) The following principal investments have been authorised but are not yet    
committed:                                                                      

(i)approximately (Pounds)64.2m on an Urban Waste Water Directive scheme at  
Portobello, England to treat flows, includes a sludge treatment centre;     

(ii)approximately (Pounds)46.9m on an Urban Waste Water Directive scheme at 
Margate/Broadstairs, England, to treat wastewater flows.                    

13. Material contracts                                                          
(a) Except for the Merger Agreement (a summary of which is set out in Part V)   
the only contracts, other than contracts entered into in the ordinary course    
of business, which have been entered into by any member of the ScottishPower    
Group within the two years immediately preceding the date of this document      
which are or may be material are as follows:                                    

(i) A 364 day multi-currency revolving credit facility with term-out option 
dated 12 March 1999 made between (1) ScottishPower as borrower (2) The      
Royal Bank of Scotland ("RBS") as arranger (3) RBS as agent and (4) various 
banks for up to (Pounds)600,000,000. Interest under the facility will be    
charged at the London interbank offered rate plus an amount to reflect the  
Bank of England's and the Financial Services Authority's requirements in    
relation to banks' mandatory holdings of liquid assets plus a margin. The   
margin will be set at 0.45% per annum. A commitment fee of 0.175% per annum 
on the undrawn and uncancelled amount of the facility will be payable       
quarterly in arrear from 12 March 1999 to 11 March 2000. A utilisation fee  
of 0.05% per annum on the aggregate of any drawn amounts will be payable    
quarterly in arrear for so long as more than (Pounds)200,000,000 is         
outstanding. The facility is unsecured but a qualified negative pledge is   
imposed upon ScottishPower.                                                 

(ii) A supplemental agreement dated 12 March 1999 made between (1)          
ScottishPower as borrower and (2) RBS as agent which amends the terms of    
the five year revolving credit facility dated 24 June 1996 made between (1) 
ScottishPower as borrower (2) RBS and Union Bank of Switzerland as joint    
arrangers (3) ING Barings as co-arranger (4) various banks and (5) RBS as   
agent. The facility limit has been reduced from (Pounds)2,600,000,000 to    
(Pounds)2,000,000,000. Interest under the facility will be charged at the   
London interbank offered rate plus an amount to reflect the Bank of         
England's and the Financial Services Authority's requirements in relation   
to banks' mandatory holdings of liquid assets plus a margin. From 12 March  
1999 the margin will be set at 0.45% per annum. A commitment fee of 0.20%   
per annum on the undrawn and uncancelled amount of the facility will be     
payable quarterly in arrears on the same dates as the original facility.    
The facility is unsecured but a qualified negative pledge is imposed upon   
ScottishPower.                                                              

(iii) A contract dated 30 April 1998, between (1) ScottishPower             
Telecommunications Limited and (2) Clifford Martin Stanford and Others,     
ScottishPower Telecommunications Limited purchased the entire issued share  
capital of Demon Internet Limited ("Demon") for a total consideration of    
(Pounds)66,000,000, which (save for a retention of (Pounds)100,000) was     
paid in cash at completion. The contract includes warranties by certain of  
the vendors (together the "Warrantors") in relation to the business and     
assets of Demon. Claims under the warranties (other than those dealing with 
tax) will be ineffectual to the extent that they are notified more than 24  
months from the date of the contract                                        

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and such claims would also be subject to financial limits. A tax            
undertaking dated 30 April 1998 was also executed and delivered by the      
Warrantors to ScottishPower Telecommunications Limited. Claims under the    
tax undertaking and the tax warranties will be ineffectual to the extent    
that they are notified more than 7 years from the date of the contract and  
such claims would also be subject to financial limits. No individual        
Warrantor can be required under the contract and/or the tax undertaking to  
repay more than he received through the sale of his shares.                 

(iv) The contracts described as being available for inspection in the       
ScottishPower Offering Circulars dated 4 November 1997 and 18 August 1998,  
being a Trust Deed, a Programme Agreement (in the case of the 4 November    
1997 Offering Circular) and an Agency Agreement each dated 4 November 1997  
in connection with ScottishPower's $2 billion Debt Issuance Programme and   
each pricing supplement and subscription agreement for notes that has been  
issued by ScottishPower under such programme in the two years preceding the 
publication of this document.                                               

(v) The contracts described as being available for inspection in the        
Offering Circular dated 6 November 1998, being a Supplemental Trust Deed, a 
Supplemental Programme Agreement and a Supplemental Agency Agreement in     
connection with the update of ScottishPower's $2 billion Debt Issuance      
Programme and the increase in the programme limit to $4 billion and each    
pricing supplement and subscription agreement for notes that has been       
issued by ScottishPower under such programme in the two years preceding the 
publication of this document.                                               

(vi) An agreement (the "Sponsor's Agreement") dated 6 May 1999 and made     
between New ScottishPower (1) ScottishPower (2) and Morgan Stanley (3),     
whereby New ScottishPower has appointed Morgan Stanley to act as its        
sponsor for the purpose of the application for Admission in respect of the  
New Shares to be issued pursuant to the Scheme and the Merger. The          
Sponsor's Agreement provides for the payment by New ScottishPower (or, if   
the Scheme does not become effective or New ScottishPower fails to pay,     
ScottishPower) of certain expenses incurred by Morgan Stanley in connection 
with the Sponsor's Agreement and Admission, including legal fees and        
printing and advertising expenses. The Sponsors' Agreement contains (i)     
certain warranties by New ScottishPower and ScottishPower as to the         
accuracy of the information contained in the Listing Particulars, and in    
relation to other matters relating to the Group and its business; (ii) an   
indemnity from New ScottishPower and, to the extent lawful, ScottishPower   
in favour of Morgan Stanley; and (iii) certain undertakings from New        
ScottishPower and ScottishPower relating, inter alia, to consultation with, 
and the provision of information to, Morgan Stanley in its capacity as      
sponsor. The Sponsor's Agreement also sets out certain circumstances in     
which it will or may be terminated.                                         

(b) Except for the Merger Agreement the only contracts, other than contracts    
entered into in the ordinary course of business, which have been entered into   
by any member of the PacifiCorp Group within the two years immediately          
preceding the date of this document which are or may be material are as         
follows:                                                                        

(i) Stock Purchase Agreement dated 11 June 1997 between PacifiCorp          
Holdings, PTI, Century Telephone Enterprises, Inc. ("Century"), and Century 
Cellunet, Inc. for the sale and purchase of the stock of PTI, Pacific       
Telecom Cellular, Inc, and Pacific Telecom Cellular of Alaska, Inc., as     
amended. Pursuant to the Stock Purchase Agreement, Century acquired all of  
the outstanding capital stock of PTI for $1.5 billion in cash and assumed   
PTI's debt of approximately $713 million. PTI provided certain              
representations and warranties in the Stock Purchase Agreement.             

(ii) Stock Purchase Agreement between El Paso Field Services Company, a     
Delaware corporation, as buyer, and TPC, as seller, dated 24 October 1997,  
as amended, pursuant to which TPC sold all of the outstanding capital stock 
of three TPC subsidiaries (TPC Gathering & Transmission Company, TPC        
Services, Inc., and TPC Tomcat, Inc.) which collectively held its natural   
gas gathering and processing systems for approximately $195 million in      
cash. TPC provided certain representations and warranties in the Stock      
Purchase Agreement.                                                         

(iii) Sale and Purchase Agreement between LNR Property Corporation, as      
buyer, and Pacific Harbor Capital, Inc. ("PHC"), as seller, dated 18        
February 1998, as amended pursuant to which, PHC agreed to sell its tax-    
credit related investments in affordable housing for cash proceeds of       
approximately $80 million and to assume debt of approximately $161 million. 
PHC provided certain representations and warranties in the Sale and         
Purchase Agreement.                                                         

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(iv) Stock Purchase Agreement dated 9 February 1999 between PacifiCorp      
Holdings and NI Energy Services, Inc. ("NI") for the sale and purchase of   
the stock of TPC. Pursuant to the Stock Purchase Agreement, NI purchased    
all of the outstanding capital stock of TPC for approximately $150 million. 
PacifiCorp Holdings provided certain representations and warranties in the  
Stock Purchase Agreement.                                                   

14. Litigation                                                                  

(a) ScottishPower Group                                                         
Manweb participates in the industry-wide Electricity Supply Pension Scheme.     
Two other members of the scheme, National Power plc and National Grid plc,      
have been the subject of legal proceedings in connection with the use of        
surplus following an actuarial valuation at 31 March 1992 to fund early         
retirement benefits. Manweb also applied surplus following that valuation and   
the subsequent valuation at 31 March 1995 ((Pounds)6 million following the      
1992 valuation and (Pounds)32 million following the 1995 valuation) for the     
same purpose.                                                                   

In a decision on 10 February 1999, the Court of Appeal decided that, without a  
scheme amendment or trustee agreement, employers could not apply surplus        
unilaterally to forgive an accrued liability. This could lead to employers      
being required to make additional contributions to the scheme to meet that      
liability. A further hearing is expected in May 1999 to clarify certain         
aspects of the judgment, but it is expected that leave to appeal to the House   
of Lords will be given and if an appeal is made, it is unlikely to be heard     
before mid-2000.                                                                

There is a range of possible outcomes to the current National Grid litigation,  
any of which could affect Manweb's own potential liability, if any, to          
contribute to the scheme. If amendments can be made to the scheme to perfect    
the past arrangements to use surplus, no employer contributions should be       
required. If the courts in the National Grid case ultimately decide that        
additional payments are due from employers to the scheme in respect of all or   
any part of the surplus used since the 1992 valuation, Manweb may also be       
required to make payments. However in this event two further points must be     
determined before the ultimate cost to Manweb could be assessed: the effective  
date for calculating the amounts due, and whether payments can be spread over   
a number of years. Both these issues may affect significantly the ultimate      
cost to Manweb.                                                                 

No proceedings have been commenced against Manweb as at 27 April 1999 (being    
the latest practicable date prior to the publication of this document) in       
respect of the issues raised by the National Grid decisions.                    

Save as described above, there are no legal or arbitration proceedings          
(including any such proceedings which are pending or threatened of which        
ScottishPower is aware) involving the ScottishPower Group which may have, or    
have had, during the 12 months preceding the date of this document, a           
significant effect on the ScottishPower Group's financial position.             

(b) PacifiCorp Group                                                            
(i) On 9 October 1996, the Sierra Club (a non-profit, member-supported      
public interest organisation that promotes conservation of the natural      
environment) filed an action against PacifiCorp and the other joint owners  
of Units 1 and 2 of the Craig Electric Generating Station in Colorado (the  
"Station") under the citizen's suit provisions of the US Clean Air Act      
alleging, based upon report from emissions monitors at the Station, that    
over 14,000 violations of state and federal capacity standards have         
occurred over a five-year period at Units 1 and 2 of the Station.           
PacifiCorp has a 19.28% interest in Units 1 and 2 of the Station, which is  
operated by Tri-State Generation and Transmission Association.              

The action seeks injunctive relief requiring the defendants to operate the  
Station in compliance with the applicable statutes and regulations, the     
imposition of civil penalties, litigation costs, attorneys' fees and        
mitigation. The US Clean Air Act provides for penalties of up to $27,500    
per day for each violation, but the level of penalties imposed in any       
particular instance is discretionary.                                       

The complaint alleges that PacifiCorp and Public Service Company of         
Colorado are responsible for the alleged violations beginning with the      
second quarter of 1992, when they acquired their interests                  

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in the Station, and that the other owners are responsible for the alleged   
violations during the entire period. The complaint alleges that there were  
approximately 10,000 violations since the second quarter of 1992. On 18     
March 1999, the district court issued its order regarding summary judgment  
motions filed by the parties. The court ruled, among other things, that the 
emission monitors may be used by the plaintiff to establish violations of   
opacity standards, but that the plant owners are entitled to prove that the 
reported information is flawed. A trial date has not yet been set.          
PacifiCorp is unable to predict the level of penalties or other remedies    
that may be imposed upon the joint owners of the Station or what portion of 
such liability may ultimately be borne by PacifiCorp.                       

(ii) The PacifiCorp-operated Centralia plant, in which PacifiCorp owns a    
47.5% interest, has been the subject of a series of lawsuits and regulatory 
agency actions regarding emissions and visibility issues. In February 1998, 
the Southwest Washington Air Pollution Control Authority ("SWAPCA") issued  
a revised order that will require the Centralia plant to significantly      
reduce SO\\2\\ and NOX emissions. Compliance with the new limits will       
require the Centralia plant to install two scrubbers and low NOX burners at 
a projected cost of $240 million. A private citizen has appealed the        
decision asserting that it is not stringent enough. In addition, the        
Northwest Environmental Advocates, an environmental citizen group, filed a  
federal lawsuit against SWAPCA, the State of Washington and the US          
Environmental Protection Agency alleging failure to enforce visibility      
requirements throughout Washington, including requirements relating the     
Centralia plant.                                                            

Save as described above, there are no legal or arbitration proceedings          
(including any such proceedings which are pending or threatened of which        
ScottishPower or PacifiCorp is aware) involving the PacifiCorp Group which may  
have, or have had, during the 12 months preceding the date of this document, a  
significant effect on the PacifiCorp Group's financial position.                

15. Significant change                                                          
There has been no significant change in the financial or trading position of    
New ScottishPower since 31 March 1999, the date to which the Accountants'       
Report extracts from which are set out in Section B of Part II of this          
document was prepared. There has been no significant change in the financial    
or trading position of the ScottishPower Group since 31 March 1999, the date    
to which the latest financial statements of the ScottishPower Group, summary    
information from which is set out in Section C of Part II, were prepared.       
There has been no significant change in the financial or trading position of    
the PacifiCorp Group since 31 December 1998, the date to which the last         
audited consolidated financial statements of PacifiCorp, summary information    
from which is set out in Section B of Part III of this document, were           
prepared.                                                                       

16. General                                                                     
(a) The Merger values the PacifiCorp Common Stock at approximately              
(Pounds)3.64 billion and each PacifiCorp Share at $19.37 ((Pounds)12.01) based  
on the middle market quotation for a ScottishPower Share as quoted in the       
Daily Official List, and on the fully diluted issued share capital of           
PacifiCorp, on 27 April 1999 (being the latest practicable date prior to the    
publication of this document).                                                  

(b) The cost and expenses of, and incidental to, the Merger and the Scheme      
payable by New ScottishPower and ScottishPower are estimated to amount to       
(Pounds)68 million excluding VAT, excluding stamp duty reserve tax payable by   
PacifiCorp and excluding the cost to PacifiCorp of redeemimg Preferred Stock.   

(c) The financial information relating to New ScottishPower and ScottishPower   
set out in this document does not constitute statutory accounts within the      
meaning of section 240 of the Act. No statutory accounts have been prepared     
for New ScottishPower. Statutory accounts of ScottishPower for each of the      
three financial years ended 31 March 1997, 1998 and 1999 have been prepared.    
The auditors of ScottishPower (Coopers & Lybrand for the years ended 31 March   
1997 and 1998 and PricewaterhouseCoopers for the year ended 31 March 1999)      
have audited ScottishPower's consolidated accounts for such years and have      
made reports under section 235 of the Act in respect of each set of statutory   
accounts and each such report was unqualified and did not contain a statement   
under section 237(2) or (3) of the Act. Statutory accounts of ScottishPower     
for the years ended 31 March 1997 and 1998 have been, and those for the year    
ended 31 March 1999 will be, delivered to the Registrar of Companies in         
Scotland.                                                                       

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17. Documents available for inspection                                          
Copies of the following documents are available for inspection during usual     
business hours on any weekday (Saturdays, Sundays and public holidays           
excepted) at the offices of Freshfields, 65 Fleet Street, London EC4Y 1HS and   
at New ScottishPower's registered office at 1 Atlantic Quay, Glasgow G2 8SP     
until the Merger Date:                                                          

(a) the Listing Particulars;                                                    

(b) the Merger Circular;                                                        

(c) the Scheme Circular;                                                        

(d) the memorandum and articles of association of ScottishPower (as currently   
in force, and as they will be following the proposed amendment at the   
Scheme EGM);                                                            

(e) the memorandum and articles of association of New ScottishPower;            

(f) the audited consolidated accounts of ScottishPower for the three financial  
years ended 31 March 1997, 31 March 1998 and 31 March 1999;             

(g) the audited consolidated accounts of PacifiCorp for the three financial     
years ended 31 December 1996, 31 December 1997 and 31 December 1998;    

(h) the US Prospectus;                                                          

(i) the letter from Morgan Stanley to ScottishPower dated 6 December 1998       
 giving its opinion that the Exchange Ratio is fair from a financial point
of view to ScottishPower;                                               

(j) the Directors' service contracts referred to in paragraph 7(h) above and    
the non-executive Directors' letters of appointment;                    

(k) the material contracts (including the Merger Agreement and the Amended and  
Restated Merger Agreement) referred to in paragraph 13 above;           

(l) consent letters from Morgan Stanley, PricewaterhouseCoopers and Deloitte &  
Touche;                                                                 

(m) a letter from PricewaterhouseCoopers regarding the summary of differences   
between US GAAP and UK GAAP;                                            

(n) a letter from PricewaterhouseCoopers regarding the pro forma financial      
information;                                                            

(o) the accountants' report by PricewaterhouseCoopers on New ScottishPower an   
extract from which is set out in Part III above;                        

(p) the Rules of the New ScottishPower Employee Share Schemes, the              
ScottishPower Share Option Schemes, the Southern Water Sharesave Scheme,
  the ScottishPower Long Term Incentive Plan and the Trust Deed and Rules of
the ScottishPower Trust Scheme;                                         

(q) the Rules of the PacifiCorp Stock Plans.                                    

Dated: 6 May 1999                                                               

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Definitions                                                                     
The following definitions apply throughout this document unless the context     
requires otherwise:                                                             

"Act"                          the Companies Act 1985 (as amended)              

"Admission"                    the admission to the Official List of the New    
Shares            

"Amended and Restated Merger   the amended and restated agreement and plan of   
Agreement"                     merger dated 6 December 1998 between New         
                          ScottishPower, ScottishPower, PacifiCorp, NA
                            General Partnership, ScottishPower NA1 Limited
                            and ScottishPower NA2 Limited as amended on 29
                           January 1999 and 9 February 1999, and amended
              and restated on 23 February 1999

"Appointment"                  the instruments appointing the holder or         
                  appointee to be a water and sewerage
                      undertaker for the purposes of the Water
Industry Act      

"Board" or "Directors"         the board of directors of ScottishPower or,      
                         following the Scheme becoming effective, of
                           New ScottishPower, as the context so requires

"business day"                 any day other than a Saturday or Sunday on       
                            which banks are generally open for business in
         Scotland, England and Wales

"Class Meeting"                the separate general meeting of the              
                         ScottishPower Shareholders to be held on 15
                            June 1999, notice of which is contained in the
Scheme Circular   

"Combined Group"               the ScottishPower Group as enlarged by the       
Merger            

"Competition Commission"       the Competition Commission, formerly the         
               Monopolies and Mergers Commission

"Court"                        the Court of Session, Edinburgh                  

"Court Meeting"                the meeting of ScottishPower Shareholders        
                            convened pursuant to an order of the Court for
                           15 June 1999, notice of which is contained in
 the Scheme Circular

"Daily Official List"          the Daily Official List of the London Stock      
Exchange          

"Deposit Agreement"            the agreement dated 18 December 1991 as          
                      amended and restated on 4 September 1997
                         between ScottishPower, The Bank of New York
                  and the holders from time to time of
                  ScottishPower ADSs issued thereunder

"DGES"                                                                          
                        the Director General of Electricity Supply

"DGWS"                                                                          
                    the Director General of Water Services

"EU"                                                                            
the European Union

"Exchange Ratio"                                                                
                       2.32 New Shares or 0.58 New ADSs for each
                         share of PacifiCorp Common Stock held as at
the Merger Date   

"FERC"                                                                          
                         the US Federal Energy Regulatory Commission

"the FPA"                                                                       
              the US Federal Power Act of 1935

"the Hart Scott-Rodino Act"                                                     
                         the Hart Scott-Rodino Antitrust Improvement
                           Act of 1976 and related rules and regulations

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"Listing Particulars"          these listing particulars dated 6 May 1999       
                       relating to New ScottishPower and the New
                            Shares prepared in accordance with the Listing
Rules             

"Listing Rules"                the listing rules of the London Stock            
                     Exchange, made under section 142 of the
         Financial Services Act 1986

"London Stock Exchange"        London Stock Exchange Limited                    

"Manweb"                       Manweb plc                                       

"Merger"                       the proposed merger with PacifiCorp, details     
                   of which are set out in this document

"Merger Agreement"             the agreement and plan of merger dated 6         
                  December 1998 between ScottishPower,
                 PacifiCorp, NA General Partnership,
                         ScottishPower NA1 Limited and ScottishPower
                            NA2 Limited as amended by amendment agreements
                          dated 29 January 1999 and 9 February 1999 or
                           the Amended and Restated Merger Agreement, as
appropriate       

"Merger Circular"              the circular sent to ScottishPower               
                      Shareholders dated 6 May 1999 containing
                         details of the Merger and the Notice of the
Merger EGM        

"Merger Date"                  the date and time upon which the Merger          
becomes effective 

"Merger EGM"                   the extraordinary general meeting of             
                       ScottishPower to be held on 15 June 1999,
                        notice of which is contained in the Merger
Circular          

"MergerSub"                    MergerSub, a corporation to be incorporated      
                           under Oregon law as a wholly owned subsidiary
  of New ScottishPower

"Morgan Stanley "              Morgan Stanley & Co. Limited                     

"New ADS"                                                                       
                 an American Depositary Share of New
                           ScottishPower representing four New Shares or
                            an American Depositary Receipt evidencing such
                       American Depositary Share, as the context
requires          

"New ScottishPower"                                                             
    New Scottish Power plc

"New ScottishPower Articles"                                                    
                the articles of association of New
ScottishPower     

"New ScottishPower Employee                                                     
Share Schemes"                                                                  
                            the New ScottishPower Sharesave Scheme and the
                        New ScottishPower Long Term Incentive Plan

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"new ScottishPower Shares"     new ordinary shares in ScottishPower to be       
                          issued to New ScottishPower under the Scheme

"New ScottishPower Special     the special rights non-voting redeemable         
Share"                         preference share of (Pounds)1 in New             
                       ScottishPower to be issued to the Special
                Shareholder pursuant to the Scheme

"New Shares"                   ordinary shares of 50p each in the capital of    
New ScottishPower 

"NYSE"                         the New York Stock Exchange, Inc.                

"Ofgas"                        The Office of Gas Supply                         

"OFFER"                        the Office of Electricity Regulation             

"Official List"                the Official List of the London Stock Exchange   

"OFTEL"                        the Office of Telecommunications Regulations     

"OFWAT"                        the Office of Water Regulation                   

"PacifiCorp"                   PacifiCorp, an Oregon corporation                

"PacifiCorp Common             holders of PacifiCorp Common Stock               
Shareholders"                                                                   

"PacifiCorp Common Stock"      shares of PacifiCorp common stock                

"PacifiCorp Group"             PacifiCorp and its subsidiaries                  

"PacifiCorp Holdings"          PacifiCorp Group Holdings Company, a wholly      
                          owned subsidiary of PacifiCorp and a holding
                           company for various members of the PacifiCorp
Group             

"PacifiCorp Preferred          holders of PacifiCorp Preferred Stock            
Shareholders"                                                                   

"PacifiCorp Preferred Stock"   the 5.00% Preferred Stock, the Serial            
or "Preferred Stock"           Preferred Stock and the No Par Serial            
           Preferred Stock of PacifiCorp

"PacifiCorp Record Date"       30 April 1999                                    

"PacifiCorp Shareholders"      PacifiCorp Common Shareholders and PacifiCorp    
    Preferred Shareholders

"PacifiCorp Stock Plans"       the PacifiCorp Stock Incentive Plan, the         
                         PacifiCorp Long Term Incentive Plan and the
                     PacifiCorp Non-Employee Directors Stock
Compensation Plan 

"Powercor"                                                                      
                        Powercor Australia Ltd, an indirect wholly
            owned subsidiary of PacifiCorp

"Proposed Directors"                                                            
                            Keith McKennon, Nolan Karras and Robert Miller

"Record Date"                                                                   
                        the business day immediately preceding the
Scheme Date       

"Redeemable Shares"                                                             
                        redeemable shares of (Pounds)1 each in New
ScottishPower     

"Registrar of Companies"                                                        
                     the Registrar of Companies in Edinburgh

"Scheme" or "Scheme of                                                          
Arrangement"                                                                    
                           the scheme of arrangement pursuant to Section
                           425 of the Act set out in the Scheme Circular

                                                                            77

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New ScottishPower Summary Listing Particulars                                   

"Scheme Circular"              the circular sent to ScottishPower               
                          Shareholders dated 6 May 1999 containing the
                         Scheme and Notices of the Court Meeting and
the Scheme EGM    

"Scheme Date"                  the date on which the Scheme becomes             
                    effective, expected to be 30 July 1999

"Scheme EGM"                   the extraordinary general meeting of             
                         ScottishPower Shareholders to be held on 15
                            June 1999, notice of which is contained in the
Scheme Circular   

"Scheme Record Date"           the business day immediately preceding the       
                          date of the hearing of the Court to sanction
                      the Scheme (or, if the hearing continues
                          beyond one day, the business day immediately
                     preceding the final day of the hearing)

"Scheme Shareholder"           a holder of ScottishPower Shares as at 5.30      
     p.m. on the Record Date

"Scheme Shares"                all ScottishPower Shares in issue at 5.30 p.m.   
       on the Scheme Record Date

"ScottishPower"                Scottish Power plc                               

"ScottishPower ADS"            an American Depositary Share representing four   
                  ScottishPower Shares, or an American
                         Depositary Receipt evidencing such American
                       Depositary Share, as the context requires

"ScottishPower Articles"       the articles of association of ScottishPower     

"ScottishPower Group" or       ScottishPower (or following the Scheme           
"Group"                        becoming effective New ScottishPower) and its    
                    subsidiary and associated undertakings

"ScottishPower Share Option    the Scottish Power plc Sharesave Scheme and      
Schemes"                       the Scottish Power plc Executive Share Option    
Scheme            

"ScottishPower Share                                                            
Schemes"                       the ScottishPower Share Option Schemes, the      
                         ScottishPower Long Term Incentive Plan, the
                         ScottishPower Qualifying Employee Trust and
                 the Southern Water Sharesave Scheme

"ScottishPower Shareholders"   holders of ScottishPower Shares                  

"ScottishPower Shares" or      ordinary shares of 50p each in ScottishPower     
"Shares"                                                                        

"ScottishPower Special                                                          
Share"                                                                          
                      the special rights non-voting redeemable
                            preference share of (Pounds)1 in ScottishPower

"ScottishTelecom"                                                               
                      ScottishPower Telecommunications Limited

"SEC"                                                                           
                       the United States Securities and Exchange
Commission        

"Secretary of State"                                                            
                 the Secretary of State for Scotland

"Southern Water"                                                                
Southern Water plc

"Southern Water Services"                                                       
             Southern Water Services Limited

"Special Shareholder"                                                           
                           the holder of the ScottishPower Special Share
                           or the New ScottishPower Special Share as the
                          context so requires (currently the Secretary
of State)         

78                                                                              

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                                 New ScottishPower Summary Listing Particulars

"UK Regulator"                 each of the DGES, the DGWS, the Director         
                            General of Gas Supply and the Director General
   of Telecommunications

"United Kingdom" or "UK"       the United Kingdom of Great Britain and          
Northern Ireland  

"United States" or "US"        the United States of America, its territories    
                      and possessions, any state of the United
                            States of America and the District of Columbia

"US Prospectus"                the proxy statement/prospectus included in the   
                Form F-4 filed with the SEC by New
                 ScottishPower and ScottishPower and
                            distributed to PacifiCorp Shareholders to seek
                            their approval of the Merger and certain other
matters           

"Water Industry Act"           the Water Industry Act 1991 (as amended)         

                                                                            79

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PART II 

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 20. Indemnification of Directors and Officers.                             

Paragraph 159 of the Articles of Association of New Scottish Power plc and
paragraph 159 of the Articles of Association of Scottish Power plc provide as   
follows:                                                                        

Subject to the provisions of and so far as may be consistent          
with the Statutes, but without prejudice to any indemnity to          
which such person may otherwise be entitled, every Director,          
auditor, Secretary, other officer or employee of the Company          
shall be entitled to be indemnified out of the assets of the          
Company against all costs, charges, losses, expenses and              
liabilities incurred by him in the actual or purported                
execution and/or discharge of his duties and/or the exercise          
or purported exercise of his powers and/or otherwise in               
relation to or in connection with his duties, powers or office        
including (without prejudice to the generality of the                 
foregoing) any liability incurred by him in defending any             
proceedings, civil or criminal, which related to anything done        
or omitted or alleged to have been done or omitted by him as          
an officer, auditor or employee of the Company and in which           
decree or judgment is given in his favour (or the proceedings         
are otherwise disposed of without any finding or admission of         
any material breach of duty on his part) or in which he is            
acquitted or in connection with any application under any             
statute for relief from liability in respect of any such act          
or omission in which relief is granted to him by the Court.           

Section 310 of the Companies Act 1985 (as amended by Section 137 of the   
Companies Act 1989) provides as follows:                                        

310. Provisions exempting officers and auditors from liability            

(1) This section applies to any provision, whether contained in a       
company's articles or in any contract with the company or otherwise, for    
exempting any officer of the company or any person (whether an officer or   
not) employed by the company as auditor from, or indemnifying him against,  
any liability which by virtue of any rule of law would otherwise attach to  
him in respect of any negligence, default, breach of duty or breach of      
trust of which he may be guilty in relation to the company.                 

 (2) Except as provided by the following subsection, any such provision is
void.                                                                       

(3) This section does not prevent a company                             

(a) from purchasing and maintaining for any such officer or auditor 
insurance against any such liability; or                                

(b) from indemnifying any such officer or auditor against any       
liability incurred by him                                               

(i) in defending any proceedings (whether civil or criminal) in 
which judgment is given in his favour or he is acquitted, or        

(ii) in connection with any application under Section 144(3) or 
(4) (acquisition of shares by innocent nominee) or Section 727      
(general power to grant relief in case of honest and reasonable     
conduct) in which relief is granted to him by the court.            

Section 727 of the Companies Act 1985 provides as follows:                

727. Power of court to grant relief in certain circumstances:             

(1) If in any proceedings for negligence, default, breach of duty or    
breach of trust against an officer of a company or a person employed by a   
company as auditor (whether he is or is not an officer of the               

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company) it appears to the court hearing the case that that officer or      
person is or may be liable in respect of the negligence, default, breach of 
duty or breach of trust, but that he has acted honestly and reasonably, and 
that having regard to all the circumstances of the case (including those    
connected with his appointment) he ought fairly to be excused for the       
negligence, default, breach of duty or breach of trust, that court may      
relieve him, either wholly or partly, from his liability on such terms as   
the court thinks fit.                                                       

(2) If any such officer or person as above mentioned has reason to      
apprehend that any claim will or might be made against him in respect of    
any negligence, default, breach of duty or breach of trust, he may apply to 
the court for relief; and the court on the application has the same power   
to relieve him as under this section it would have had if it had been a     
court before which proceedings against that person for negligence, default, 
breach of duty or breach of trust had been brought.                         

(3) Where a case to which subsection (1) applies is being tried by a    
judge with a jury, the judge, after hearing the evidence, may, if he is     
satisfied that the defendant or defender ought in pursuance of that         
subsection to be relieved either in whole or in part from the liability     
sought to be enforced against him, withdraw the case in whole or in part    
from the jury and forthwith direct judgment to be entered for the defendant 
of defender on such terms as to costs or otherwise as the judge may think   
proper.                                                                     

Scottish Power plc and New Scottish Power plc have obtained insurance     
policies which provide for the indemnification of their respective directors    
and officers in the event they are found liable for "Wrongful Acts." A          
"Wrongful Act" is defined in the insurance policies as:                         

Any actual or alleged breach of duty, breach of trust,                
neglect, error, misstatement, misleading statement, omission,         
breach of warranty of authority or other act by the directors         
or officers in their respective capacities as a director or           
officer of the company or as a director or officer of any             
outside entity or any matter claimed against them solely              
because of their status as a director or officer of the               
company.                                                              

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Item 21. Exhibits and Financial Statements and Schedules.                       

(a) The following Exhibits are filed herewith unless otherwise indicated: 

                                                                [Download Table]

Exhibit                                                                       
  No.                                Description                              
-------                              -----------                              
                                                                              
 2(a)    Agreement and Plan of Merger, dated as of December 6, 1998, as       
         amended as of January 29, 1999 and February 9, 1999, by and          
         among Scottish Power plc, NA General Partnership, Scottish           
         Power NA1 Limited, Scottish Power NA2 Limited and PacifiCorp         
         (included as Annex A to the proxy statement/prospectus which         
         is part of this registration statement).                             
 2(b)    Amended and Restated Agreement and Plan of Merger dated as of        
         February 23, 1999, by and among New ScottishPower plc,               
         Scottish Power plc, NA General Partnership, Scottish Power NA1       
         Limited, Scottish Power NA2 Limited and PacifiCorp (included         
         as Annex B to the proxy statement/prospectus which is part of        
         this registration statement).                                        
 3(i)(a)  Memorandum and Articles of Association of New Scottish Power        
          plc.                                                                
 3(i)(b)  Memorandum and Articles of Association of Scottish Power plc        
          (incorporated herein by reference to Exhibit 1a of the Annual       
          Report on Form 20-F for the fiscal year ended March 31, 1998        
          (File No. 1-14676)).                                                
 4(a)     Form of Amended and Restated Deposit Agreement among New            
          Scottish Power plc, Scottish Power plc, The Bank of New York,       
          as depositary and the holders from time to time of New              
          Scottish Power American Depositary Receipts and/or Scottish         
          Power American Depositary Receipts issued thereunder                
          (incorporated herein by reference to Exhibit A of the               
          Registration Statement on Form F-6 filed on the date hereof).       
 4(b)     See Exhibits 3(i)(a) and 3(i)(b) for provisions of the              
          Memoranda and Articles of Association of New Scottish Power         
          plc and Scottish Power plc defining rights of holders of New        
          Scottish Power ordinary shares and Scottish Power ordinary          
          shares.                                                             
 5        Opinion of Shepherd & Wedderburn WS regarding validity of           
          securities being registered.                                        
 8(a)     Opinion of Milbank, Tweed, Hadley & McCloy LLP regarding            
          United States tax consequences of the merger if the scheme of       
          arrangement is adopted.                                             
 8(b)     Opinion of Milbank, Tweed, Hadley & McCloy LLP regarding            
          United States tax consequences of the merger if the scheme of       
          arrangement is not adopted.                                         
 8(c)     Opinion of Stoel Rives LLP regarding United States tax              
          consequences of the merger if the scheme of arrangement is          
          adopted.                                                            
 8(d)     Opinion of Stoel Rives LLP regarding United States tax              
          consequences of the merger if the scheme of arrangement is          
          not adopted.                                                        
 8(e)     Opinion of LeBoeuf, Lamb, Greene & MacRae LLP regarding             
          United States tax consequences of the merger.                       
21        Subsidiaries (incorporated herein by reference to the Annual        
          Report on Form 20-F for the fiscal year ended March 31, 1998        
          (File No. 1-4676)).                                                 
23(a)     Consent of Deloitte & Touche LLP.                                   
23(b)     Consent of Coopers & Lybrand.                                       
23(c)     Consent of PricewaterhouseCoopers.                                  
23(d)     Consent of Milbank, Tweed, Hadley & McCloy LLP (included in         
          the opinions filed as Exhibits 8(a) and 8(b) to this                
          registration statement and incorporated herein by reference).       
23(e)     Consent of Stoel Rives LLP (included in the opinions filed as       
          Exhibits 8(c) and 8(d) to this registration statement and           
          incorporated herein by reference).                                  

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                                                                [Download Table]

Exhibit                                                                     
  No.                                Description                            
-------                              -----------                            
                                                                            
23(f)    Consent of LeBoeuf, Lamb, Green & MacRae LLP (included in the      
         opinion filed as Exhibit 8(e) to this registration statement and   
         incorporated herein by reference).                                 
23(g)    Consent of Morgan Stanley & Co. Limited.                           
23(h)    Consent of Salomon Smith Barney Inc.                               
24       Powers of Attorney (included in the signature page of this         
         registration statement).                                           
99(a)    Opinion of Morgan Stanley & Co. Limited (included as Annex D to the
         proxy statement/prospectus which is part of this registration      
         statement).                                                        
99(b)    Opinion of Salomon Smith Barney Inc. (included as Annex C to the   
         proxy statement/prospectus which is part of this registration      
         Statement).                                                        
99(c)    Form of letter from solicitation agents to brokers, dealers,       
         commercial banks, trust companies and other nominees regarding the 
         solicitation of proxies from holders of PacifiCorp preferred stock.
99(d)    Form of letter from brokers, dealers, commercial banks, trust      
         companies and other nominees to their clients.                     
99(e)    Forms of PacifiCorp's proxy cards.                                 

(b) Financial Statement Schedules. Schedules are omitted because they are   
     either not required, are not applicable or because equivalent information
has been included in the financial statements, the notes thereto or 
elsewhere herein.                                                   

(c) Reports, Opinions and Appraisals. Omitted because they are included as  
  Annex B and Annex C to the proxy statement/prospectus which is part of
this registration statement.                                        

Item 22. Undertakings.                                                          

(a) The undersigned registrant hereby undertakes:                           

 (1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement;                    

(i) To include any prospectus required in Section 10(a)(3) of the   
Securities Act of 1933;                                                 

(ii) To reflect in the prospectus any facts or events arising after 
the effective date of the Registration Statement (or the most recent    
post-effective amendment thereof) which, individually or in the         
aggregate, represent a fundamental change in the information set forth  
in the Registration Statement. Notwithstanding the foregoing, any       
increase or decrease in volume of securities offered (if the total      
dollar value of securities offered would not exceed that which was      
registered) and any deviation from the low or high end of the estimated 
maximum offering range may be reflected in the form of prospectus filed 
with the Securities and Exchange Commission pursuant to Rule 424(b) if, 
in the aggregate, the changes in volume and price represent no more     
than 20 percent change in the maximum aggregate offering price set      
forth in the "Calculation of Registration Fee" table in the effective   
Registration Statement; and                                             

 (iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or  
any material change to such information in the Registration Statement.  

(2) That, for the purpose of determining any liability under the        
Securities Act of 1933, each such post-effective amendment will be deemed   
to be a new registration statement relating to the securities offered       
therein, and the offering of such securities at that time will be deemed to 
be the initial bona fide offering thereof.                                  

(3) To remove from registration by means of a post-effective amendment  
any of the securities being registered which remain unsold at the           
termination of the offering.                                                

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(4) To file a post-effective amendment to the Registration Statement to 
include any financial statements required by Rule 3-19 of Regulation S-X at 
the start of any delayed offering or throughout a continuous offering.      

(b) The undersigned registrant hereby undertakes that, for purposes of    
determining any liability under the Securities Act of 1933, each filing of the  
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities 
Exchange Act of 1934 that is incorporated by reference in the Registration      
Statement will be deemed to be a new registration statement relating to the     
securities offered therein, and the offering of such securities at that time    
will be deemed to be the initial bona fide offering thereof.                    

(c)(1) The undersigned registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use of  
a prospectus which is a part of this Registration Statement, by any person or   
party who is deemed to be an underwriter within the meaning of Rule 145(c), the 
issuer undertakes that such reoffering prospectus will contain the information  
called for by the applicable registration form with respect to reofferings by   
persons who may be deemed underwriters, in addition to the information called   
for by the other items of the applicable form.                                  

(2) The registrant undertakes that every prospectus (i) that is filed     
pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet  
the requirements of Section 10(a)(3) of the Act and is used in connection with  
an offering of securities subject to Rule 415, will be filed as a part of an    
amendment to the Registration Statement and will not be used until such         
amendment is effective, and that, for purposes of determining any liability     
under the Securities Act of 1933, each such post-effective amendment will be    
deemed to be a new registration statement relating to the securities offered    
therein, and the offering of such securities at that time will be deemed to be  
the initial bona fide offering thereof.                                         

 (d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of  
the registrant pursuant to the foregoing provisions, or otherwise, the          
registrant has been advised that in the opinion of the Securities and Exchange  
Commission such indemnification is against public policy as expressed in the    
Act and is, therefore, unenforceable. In the event that a claim for             
indemnification against such liabilities (other than the payment by the         
registrant of expenses incurred or paid by a director, officer or controlling   
person of the registrant in the successful defense of any action, suit or       
proceeding) is asserted by such director, officer or controlling person in      
connection with the securities being registered, the registrant will, unless in 
the opinion of its counsel the matter has been settled by controlling           
precedent, submit to a court of appropriate jurisdiction the question whether   
such indemnification by it is against public policy as expressed in the Act and 
will be governed by the final adjudication of such issue.                       

  (e) The undersigned registrant hereby undertakes: (i) to respond to requests
for information that is incorporated by reference into the prospectus pursuant  
to Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of 
such request, and to send the incorporated documents by first class mail or     
other equally prompt means; and (ii) to arrange or provide for a facility in    
the United States for the purpose of responding to such requests. This includes 
information contained in documents filed subsequent to the effective date of    
the registration statement through the date of responding to the request.       

(f) The undersigned registrant hereby undertakes to supply by means of a  
post-effective amendment all information concerning a transaction, and the      
company being acquired involved therein, that was not the subject of and        
included in the registration statement when it became effective.                

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SIGNATURES

 Pursuant to the requirements of the Securities Act, the registrant has duly
caused this registration statement to be signed on its behalf by the            
undersigned, thereunto duly authorized in the city of Glasgow, Country of       
Scotland on May 5, 1999.                                                        

                                NEW SCOTTISH POWER plc
                      (Registrant)

                                         /s/ Andrew Mitchell
                                        By: ________________________________
                                     Name: Andrew Mitchell
                                        Title: Company Secretary

Each person whose signature appears below hereby constitutes and appoints 
each director his true and lawful attorney-in-fact and agent with full power of 
substitution and resubstitution, for him and in his name, place, and stead, in  
any and all capacities to sign any and all amendments, including post-effective 
amendments, and supplements to this registration statement, and to file the     
same, with all exhibits thereto, and other documents in connection therewith,   
with the Securities and Exchange Commission, and hereby grants to such          
attorney-in-fact and agent full power and authority to do and perform each and  
every act and thing requisite and necessary to be done, as fully to all intents 
and purposes as he might or could do in person, hereby ratifying and confirming 
all that said attorney-in-fact and agent or his substitute or substitutes may   
lawfully do or cause to be done by virtue hereof.                               

Pursuant to the requirements of the Securities Act of 1933, this          
registration statement has been signed by the following persons in the          
following capacities on May 5, 1999.                                            

  Signature                              Title

 /s/ Charles Murray Stuart             Chairman of the Board
-------------------------------------        and Director             
Charles Murray Stuart CBE                                 

/s/ Ian Robinson                  Chief Executive 
-------------------------------------        Officer and Director     
       Ian Robinson                     (Principal Executive
                            Officer)

/s/ Ian Simon MacGregor Russell          Deputy Chief Executive 
-------------------------------------        and Finance Director     
Ian Simon MacGregor Russell             (Principal Financial
                                  and Accounting
                            Officer)

/s/ Kenneth Leslie Vowles             Director            
-------------------------------------                                 
Kenneth Leslie Vowles                                 

/s/ Duncan Whyte                  Director        
-------------------------------------                                 
Duncan Whyte                                  

/s/ Charles Berry                 Director        
-------------------------------------                                 
Charles Berry                                 

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  Signature                              Title

/s/ Alan Richardson                Director         
-------------------------------------                                 
Alan Richardson                                 

/s/ Ewen Cameron Stewart Macpherson        Director                 
-------------------------------------                                 
Ewen Cameron Stewart Macpherson                                 

/s/ John Parnaby                  Director        
-------------------------------------                                 
John Parnaby CBE                                  

/s/ Peter Gregson                 Director        
-------------------------------------                                 
Sir Peter Gregson                                 

/s/ Mair Barnes                  Director       
-------------------------------------                                 
Mair Barnes                                 

/s/ Donald J. Puglisi               Authorized U.S.   
-------------------------------------        Representative           
Puglisi & Associates                                  

By: Donald J. Puglisi                                             
Title: Managing Director                                          

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SIGNATURES

 Pursuant to the requirements of the Securities Act, the registrant has duly
caused this registration statement to be signed on its behalf by the            
undersigned, thereunto duly authorized in the city of Glasgow, Country of       
Scotland on May 5, 1999.                                                        

                      Scottish Power plc
                (Registrant)

                                         /s/ Andrew Mitchell
                                         By: _________________________________
                               Name: Andrew Mitchell
                                  Title: Company Secretary

Each person whose signature appears below hereby constitutes and appoints 
each director his true and lawful attorney-in-fact and agent with full power of 
substitution and resubstitution, for him and in his name, place, and stead, in  
any and all capacities to sign any and all amendments, including post-effective 
amendments, and supplements to this registration statement, and to file the     
same, with all exhibits thereto, and other documents in connection therewith,   
with the Securities and Exchange Commission, and hereby grants to such          
attorney-in-fact and agent full power and authority to do and perform each and  
every act and thing requisite and necessary to be done, as fully to all intents 
and purposes as he might or could do in person, hereby ratifying and confirming 
all that said attorney-in-fact and agent or his substitute or substitutes may   
lawfully do or cause to be done by virtue hereof.                               

Pursuant to the requirements of the Securities Act of 1933, this          
registration statement has been signed by the following persons in the          
following capacities on May 5, 1999.                                            

                                                                [Download Table]

                 Signature                           Title          
                 ---------                           -----          
                                                                    
         /s/ Charles Murray Stuart          Chairman of the Board   
___________________________________________  and Director           
         Charles Murray Stuart CBE                                  

             /s/ Ian Robinson               Chief Executive Officer 
___________________________________________  and Director (Principal
               Ian Robinson                  Executive Officer)     

      /s/ Ian Simon MacGregor Russell       Deputy Chief Executive  
___________________________________________  and Finance Director   
        Ian Simon MacGregor Russell          (Principal Financial   
                                             and Accounting Officer)

         /s/ Kenneth Leslie Vowles          Director                
___________________________________________                         
           Kenneth Leslie Vowles                                    
             /s/ Duncan Whyte               Director                
___________________________________________                         
               Duncan Whyte                                         


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                                                                [Download Table]

                 Signature                                 Title          
                 ---------                                 -----          
                                                                          
             /s/ Charles Berry              Director                      
___________________________________________                               
               Charles Berry                                              

            /s/ Alan Richardson             Director                      
___________________________________________                               
              Alan Richardson                                             

    /s/ Ewen Cameron Stewart Macpherson     Director                      
___________________________________________                               
      Ewen Cameron Stewart Macpherson                                     

             /s/ John Parnaby               Director                      
___________________________________________                               
             John Parnaby CBE                                             

             /s/ Peter Gregson              Director                      
___________________________________________                               
             Sir Peter Gregson                                            

              /s/ Mair Barnes               Director                      
___________________________________________                               
                Mair Barnes                                               
           /s/ Donald J. Puglisi            Authorized U.S. Representative
___________________________________________                               
           Puglisi & Associates                                           

                                                                [Download Table]
                                          
         By: Donald J. Puglisi            
         Title: Managing Director         

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EXHIBIT INDEX 

                                                                [Download Table]

                                                                    Pagination
                                                                        by    
                                                                    Sequential
Exhibit                                                             Numbering 
  No.                          Description                            System  
-------                        -----------                          ----------
                                                                              
 2(a)    Agreement and Plan of Merger, dated as of December 6,                
         1998, as amended as of January 29, 1999 and February 9,              
         1999, by and among Scottish Power plc, NA General                    
         Partnership, Scottish Power NA1 Limited, Scottish Power              
         NA2 Limited and PacifiCorp (included as Annex A to the               
         proxy statement/prospectus which is part of this                     
         registration statement).                                             
 2(b)    Amended and Restated Agreement and Plan of Merger dated              
         as of February 23, 1999, by and among New ScottishPower              
         plc, Scottish Power plc, NA General Partnership,                     
         Scottish Power NA1 Limited, Scottish Power NA2 Limited               
         and PacifiCorp (included as Annex B to the proxy                     
         statement/prospectus which is part of this registration              
         statement).                                                          
 3(i)(a)  Memorandum and Articles of Association of New Scottish              
          Power plc.                                                          
 3(i)(b)  Memorandum and Articles of Association of Scottish                  
          Power plc (incorporated herein by reference to Exhibit              
          1a of the Annual Report on Form 20-F for the fiscal                 
          year ended March 31, 1998 (File No. 1-14676)).                      
 4(a)     Form of Amended and Restated Deposit Agreement among                
          New Scottish Power plc, Scottish Power plc, The Bank                
          of New York, as depositary and the holders from time                
          to time of New Scottish Power American Depositary                   
          Receipts and/or Scottish Power American Depositary                  
          Receipts issued thereunder (incorporated herein by                  
          reference to Exhibit A of the Registration Statement                
          on Form F-6 filed on the date hereof).                              
 4(b)     See Exhibits 3(i)(a) and 3(i)(b) for provisions of the              
          Memoranda and Articles of Association of New Scottish               
          Power plc and Scottish Power plc defining rights of                 
          holders of New Scottish Power ordinary shares and                   
          Scottish Power ordinary shares.                                     
 5        Opinion of Shepherd & Wedderburn WS regarding validity              
          of securities being registered.                                     
 8(a)     Opinion of Milbank, Tweed, Hadley & McCloy LLP                      
          regarding United States tax consequences of the merger              
          if the scheme of arrangement is adopted.                            
 8(b)     Opinion of Milbank, Tweed, Hadley & McCloy LLP                      
          regarding United States tax consequences of the merger              
          if the scheme of arrangement is not adopted.                        
 8(c)     Opinion of Stoel Rives LLP regarding United States tax              
          consequences of the merger if the scheme of                         
          arrangement is adopted.                                             
 8(d)     Opinion of Stoel Rives LLP regarding United States tax              
          consequences of the merger if the scheme of                         
          arrangement is not adopted.                                         
 8(e)     Opinion of LeBoeuf, Lamb, Greene & MacRae LLP                       
          regarding United States tax consequences of the                     
          merger.                                                             
21        Subsidiaries (incorporated herein by reference to the               
          Annual Report on Form 20-F for the fiscal year ended                
          March 31, 1998 (File No. 1-4676)).                                  
23(a)     Consent of Deloitte & Touche LLP.                                   
23(b)     Consent of Coopers & Lybrand.                                       
23(c)     Consent of PricewaterhouseCoopers.                                  
23(d)     Consent of Milbank, Tweed, Hadley & McCloy LLP                      
          (included in the opinions filed as Exhibits 8(a) and                
          8(b) to this registration statement and incorporated                
          herein by reference).                                               

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                                                                    Pagination
                                                                        by    
                                                                    Sequential
Exhibit                                                             Numbering 
  No.                          Description                            System  
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23(e)    Consent of Stoel Rives LLP (included in the opinions                 
         filed as Exhibits 8(c) and 8(d) to this registration                 
         statement and incorporated herein by reference).                     
23(f)    Consent of LeBoeuf, Lamb, Green & MacRae LLP (included               
         in the opinion filed as Exhibit 8(e) to this                         
         registration statement and incorporated herein by                    
         reference).                                                          
23(g)    Consent of Morgan Stanley & Co. Limited.                             
23(h)    Consent of Salomon Smith Barney Inc.                                 
24       Powers of Attorney (included in the signature page of                
         this registration statement).                                        
99(a)    Opinion of Morgan Stanley & Co. Limited (included as                 
         Annex D to the proxy statement/prospectus which is part              
         of this registration statement).                                     
99(b)    Opinion of Salomon Smith Barney Inc. (included as Annex              
         C to the proxy statement/prospectus which is part of                 
         this registration Statement).                                        
99(c)    Form of letter from solicitation agents to brokers,                  
         dealers, commercial banks, trust companies and other                 
         nominees regarding the solicitation of proxies from                  
         holders of PacifiCorp preferred stock.                               
99(d)    Form of letter from brokers, dealers, commercial banks,              
         trust companies and other nominees to their clients.                 
99(e)    Forms of PacifiCorp's proxy cards.