Suez Lyonnaise des Eaux announced today that John Prescott, the UK minister of Environment, Transportation and Regions, just issued the British government's guidelines concerning the improvement of the quality of the environment, which he will present to OFWAT, the economic regulator of the water sector. His statements were made in the context of establishing rates for the period 2000-2005.

These guidelines are part of a process which, starting April 2000, will lead to the establishment of regulated rates for water and sewage treatment. The next step is expected to be the publication by OFWAT in late October of a document entitled « Prospect for Prices », in which the impact of above mentionned governmental guidelines on rates will be established. OFWAT has already noted that the new rates will take into account regional differences within the country.

Following discussions last summer with OFWAT, and as a result of unplanned capital expenditure in coastline sewage treatment (new water purification plants on the shoreline of the North Sea), Northumbrian Water Limited (Suez Lyonnaise des Eaux group) obtained from OFWAT a 2.8% raise in revenues for the year 1999-2000. This will translate into increased revenues for this company of approximately 9 million pounds during the period. This exceptional rate increase illustrates case by case examination of needed capital expenditure by the regulator in the UK.