E.ON promises steps to increase competition

26 October 2006 — E.ON announced today that it is setting up ways to step up competition in the electricity and gas market and has adopted a set of measures designed to achieve this goal. At today’s annual conference of the German Federation of Industrial Energy Consumers (VIK) in Berlin, Johannes Teyssen, member of the Board of Management of E.ON AG, presented the first few building blocks for the future development of the German electricity market.

Each new power plant that is built by competitors in E.ON’s service area is to be quickly connected to the grid. Should this lead to grid bottlenecks, these will be compensated for by feeding less electricity from all the power stations in the service area, including E.ON’s own plants. This means that E.ON is giving an impetus for the construction of new power stations and for an increase in the supply of electricity in Germany.

The improvement of the electricity exchange with neighboring countries serves the same purpose. As a first step, E.ON is planning to increase its cross-border transportation capacity by approx. 1,000 MW within a short period of time; this is roughly equivalent to the output of a nuclear power station. In addition, E.ON will make available considerable additional capacity for an international exchange of electricity by means of a further expansion of its grid. At the same time, this will be an important prerequisite for bringing electricity trading up to a European dimension. To this end, E.ON will actively participate in combining the various national electricity exchanges and in building up European trading centers.

In order to quickly improve the liquidity and transparency of electricity trading, E.ON will immediately start doing more transactions via public trading centers as of now. On the other hand, the company will reduce the volume of its direct trade with electricity sellers or buyers. In April 2006, the company already started informing all trading players about the generation capacity available on the following day – which is important information for an assessment of the probable supply situation.

Johannes Teyssen commented: “We are convinced that there is only one strategy to prevent high energy prices: Rapid and intensive Europeanization and an even stronger focus on competition for both markets and companies. With the measures that we have announced, we will step up the intensity of competition in the energy market, not only in Germany but also in Europe as a whole. For customers, this will yield more than nonsensical regulatory interventions which, in the final analysis, lead to less competition and higher prices.”