Grid Operations in Sweden Matthias Herzog Senior Vice President Distribution E.ON Capital Market Day Nordic Stockholm, July 3, 2006

Overview Swedish grid (400/200kV)

National grid Svenska Kraftnät (state owned) High voltage grid

(130/40kV)

E.ON Fortum Vattenfall (state owned) Mid and low voltage grid

(20 - 0,4kV)

E.ON, Fortum, Vattenfall and 180 other grid companies E.ON´s share is 20% of the total liberalized grid Page 2

The three largest grid companies in Sweden 1.200.000

1.000.000 800.000 Customers

600.000

Total grid length 400.000 200.000

0 E.ON Elnät Sverige

Fortum Sverige

E.ON Elnät Sverige Customers Total grid length (km)

Vattenfall Sverige

Fortum Sverige

Vattenfall Sverige

1,000,000

860,000

850,000

125,000

70,000

115,000 Page 3

E.ON Elnät Sverige 2005 Today fully unbundled and regulated grid business Customers:

1 million

Turnover:

€ 624 million

EBIT:

€ 211 million

Employees:

640

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Our grid reaches three times around the earth

y Total grid-length: around 125 000 km1 y Percentages (%) are for airborne lines 40-130 kV: 10-20 kV: 0.4 kV:

7,970 km (99%) 45,500 km (74%) 71,590 km (37%)

y Grid length per Customer: 125 meters

1 As of January 1, 2005.

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Challenges in the grid business well managed Main challenges

Strategy

• Large investment needs especially according to “Gudrun”-legislation

y Investment project in place y Broadening the grid channels y Automatic Meter Reading

• Face tough regulatory challenge

y y y y

• Improving customer satisfaction

y Customer focus y Cultural change

• Keeping costs under control

y Benchmarking and cost cutting program

Strong lobbying activities Transparency in court submissions Working with other stakeholders Suggest and apply a new model

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Major damage through hurricane Gudrun Hurricane Gudrun hit southern Sweden in January 2005 resulting in: • 258,000 customers without power • 20,000 km of damaged grid • 2,000 km of destroyed grid • 10,000 damaged poles • Cost: around € 140 million

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New legal obligations for our license to operate Technical function request: Power failures must be resolved within 24 hours Investment requirement: Widening of 2,500 km direction channels in the high voltage network Cabling of 17,000 km of medium voltage network in forest areas One million automatic meters

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The Swedish regulation regime y The regulators ex-post decision upon tariffs is mainly based on “Nätnyttomodellen,” an IT-based tool to build up a virtual grid.

y Every grid company is bound in law to send in data on specific tariffs, customers coordinates, yearly consumption, etc.

y The model then builds up a virtual grid and gives a sum for the virtual grid tariff income.

y This value is compared to what the company has actually charged, and if it is higher – the grid companies are obliged to pay back that part to the customers. Page 9

Nätnyttomodellen is a failure and needs an alternative • The virtual grid is far too restrictive and would not work in real life.

• The virtual grid is valued using the wrong cost base.

• The whole model is unstable, unrealistic, and unreliable.

• The model can never give any incentives for future investments in our grid. Need sustainable regulation that allows efficient companies to make decent returns and supports our customers demands on increased security of supply Page 10

E.ON takes an active position for regulatory change • Strong lobbying activities show positive results in public opinion.

• Working with stakeholders to achieve a sustainable outcome for all affected

• Good collaboration within the industry gives a strong position – all affected grid companies (even state owned Vattenfall) have taken legal actions against the regulator.

• E.ON has suggested a new model based on UK and Finnish regulation – in consensus with the industry. Page 11

Conclusion • Serious and successful strategic work have put us in a good position to continue to be a profitable business.

• Even after unbundling and regulatory measures the infrastructure business presents good and sustainable results.

• Regardless of the tough circumstances, demands, and requirements…

…we have a strong positive attitude for the future! Page 12

This presentation do not constitute an invitation to sell or an offer to buy any securities or a solicitation of any vote or approval. Endesa investors and security holders are urged to read the tender offer prospectus from E.ON regarding the proposed tender offer for Endesa when it becomes available, because it will contain important information. The tender offer prospectus and certain complementary documentation will be filed in Spain with the Spanish Comisión Nacional del Mercado de Valores (the “CNMV”). Likewise, a tender offer statement, which will incorporate the prospectus by reference, will be filed in the United States with the U.S. Securities and Exchange Commission (the “SEC”). Investors and security holders may obtain a free copy of the tender offer prospectus (when it is available) and its complementary documentation in the central offices of E.ON, Endesa, the four Spanish Stock Exchanges, and Santander Investment Bolsa SV SA. The prospectus will also be available on the websites of the CNMV (www.cnmv.es) and E.ON (www.eon.com). Likewise, investors and security holders may obtain a free copy of the U.S. tender offer statement (when it is available) and other documents filed by E.ON with the SEC on the SEC’s web site at www.sec.gov. The tender offer statement and these other documents may also be obtained for free from E.ON, when they become available, by directing a request to E.ON AG, External Communications, phone +49-211-4579-453. This presentation may contain forward-looking statements. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of E.ON and Endesa and the estimates given here. These factors include the inability to obtain necessary regulatory approvals or to obtain them on acceptable terms; the inability to integrate successfully Endesa within the E.ON Group or to realize synergies from such integration; costs related to the acquisition of Endesa; the economic environment of the industries in which E.ON and Endesa operate; and other risk factors discussed in E.ON’s public reports filed with the Frankfurt Stock Exchange and with the SEC (including E.ON’s Annual Report on Form 20-F) and in Endesa’s public reports filed with the CNMV and with the SEC (including Endesa’s Annual Report on Form 20-F). E.ON assumes no liability whatsoever to update these forward-looking statements or to conform them to future events or developments. E.ON prepares its consolidated financial statements in accordance with generally accepted accounting principles in the United States ("U.S. GAAP"). This presentation may contain references to certain financial measures (including forward looking measures) that are not calculated in accordance with U.S. GAAP and are therefore considered "non-GAAP financial measures" within the meaning of the U.S. federal securities laws. E.ON presents a reconciliation of these non-GAAP financial measures to the most comparable U.S. GAAP measure or target, either in this presentation, in its Annual Report, or on its website at www.eon.com. Management believes that the non-GAAP financial measures used by E.ON, when considered in conjunction with (but not in lieu of) other measures that are computed in U.S. GAAP, enhance an understanding of E.ON's results of operations. A number of these non-GAAP financial measures are also commonly used by securities analysts, credit rating agencies, and investors to evaluate and compare the periodic and future operating performance and value of E.ON and other companies with which E.ON competes. These non-GAAP financial measures should not be considered in isolation as a measure of E.ON's profitability or liquidity, and should be considered in addition to, rather than as a substitute for, net income, cash flow provided by operating activities, and the other income or cash flow data prepared in accordance with U.S. GAAP. The non-GAAP financial measures used by E.ON may differ from, and not be comparable to, similarly titled measures used by other companies.

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