Statement re Response to Ofwat

Severn Trent Plc announces today that Ofwat is proposing to fine Severn Trent
Water Ltd a total of £35.8m for deliberately providing false information to the
Regulator and providing a poor service to customers.

Ofwat's proposed fine on Severn Trent Water breaks down as follows:

  * 2.9% of 2006-07 turnover (£34.7 million) for deliberately misreporting some
    key customer service information; and
   
  * 0.1% of 2005-06 turnover (£1.1 million) for providing sub-standard services
    to customers in 2005-06 by failing to meet Guaranteed Standards of Service.
   
Tony Wray, Chief Executive of Severn Trent Plc, said:

"When my new management team and I uncovered misreporting and poor service in
our customer relations department we promptly alerted Ofwat and took steps to
implement proper controls and an ethical working culture with the highest
standards to ensure there can be no repetition of this unacceptable behaviour.

"Without waiting for Ofwat's conclusions we are lowering bills for customers by
£10.6 million, around £2.40 per household, to ensure we have not profited in
any way.

"We fully acknowledge and accept that the Company is responsible for its
failures. Now that we have received the notices from Ofwat setting out the
proposed level of penalties and the reasons for them, we will carefully
consider them and will respond appropriately.

"There is no doubt that the previous regime and culture in place during the era
from 2000 to 2004 was overly bureaucratic and lacked sufficient controls and
procedures. Those who were responsible for the customer relations mistakes are
no longer with Severn Trent and we apologise to our customers for their
failings.

"Severn Trent's new Board and management team has taken, and will continue to
take, all actions appropriate to ensure the maintenance of both high ethical
and professional standards and resilient and effective controls throughout our
organisation.

"A comprehensive root and branch reorganisation of Severn Trent Water has been
completed since I became Managing Director in March 2005 and, now, as Chief
Executive of Severn Trent, I and my new management team are determined to
continue to drive improvements in all our activities for the benefit of all our
customers and other stakeholders."

For further information contact:

Peter Gavan, Director of External Affairs

Severn Trent

0121 722 4310

Andrew Marsh, Media Relations, Severn Trent

0121 722 4555

Gill Dickinson, Media Relations, Severn Trent

0121 722 4380

A conference call will be chaired by Tony Wray, Chief Executive of Severn
Trent, at 0830 am on Tuesday 8 April 2008. Call details are as follows:

Telephone number: [phone]

PIN code: 769508#

This call will be recorded and available after the live call has concluded. It
can be accessed for playback for 30 days as follows:

Telephone number: [phone]

Conference reference: 212191#

It will also be available on the Severn Trent website (www.severntrent.com)