23 July 2009

Northumbrian Water Group plc

(the Company or the Group)

Ofwat announces draft price limits

The Group's principal subsidiary, Northumbrian Water Limited (NWL), has received Ofwat's draft determination of price limits to be applied during the period 2010 to 2015.  This is Ofwat's initial response to the very detailed Business Plan submitted by NWL in April 2009.  Following a further period of consultation, Ofwat will announce its final determination in November this year.

Ofwat's proposals allow average annual household bills to rise, in real terms, by £3 over the five year period to £301 in the north east and by £15 to £184 in the area served by Essex & Suffolk Water.  The proposals include an investment programme of £1.2 billion (2007/08 prices) with CIS ratios of 109 (water) and 112 (sewerage).  The proposals also include annual base operating efficiency targets of 1.2% (water) and 1.8% (sewerage).

Managing Director, John Cuthbert, said: 'We submitted a very detailed plan to Ofwat and, when we have received all of the supporting information to the draft determination, we will need time to understand fully the Ofwat approach.  We will then be able to make a proper judgement on the draft determination.'

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