Valuation Spreadsheet

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1 Europe Utilities (Citi) Industry Focus 32 pages Valuation Spreadsheet February Gas Contract Prices Russia halted gas exports via the Ukraine on 1 January - causing a spike in European gas prices which peaked on Tuesday 6 January. February prices rose across all the major European gas exchanges - with increases of between 3.0% (France) and 8.6% (Germany E.On). However price impact limited - the economic downturn and resulting demand decline and full gas storage levels helped to limit the price impact. Russia and the EU have now agreed a deal - on monitoring gas shipments via the Ukraine which has led to a fall in prices across all European regions to below pre dispute levels. Fall in prices - indeed UK, Dutch and Belgian February contract prices are now an average of 14% below 29 December levels. Figure 1. European February Gas Contract Prices p/therm 66p 64p 62p 60p Russia cuts gas exports via Ukraine Peter Atherton peter.atherton@citi.com Meg Brown meg.brown@citi.com Stephen B Hunt stephen.hunt@citi.com Manuel Palomo manuel.palomo@citi.com Alberto Ponti alberto.ponti@citi.com Sofia Savvantidou sofia.savvantidou@citi.com Andrew M Simms andrew.simms@citi.com 58p 56p 54p 29-Dec Dec Dec Jan Jan Jan-09 UK NBP Dutch TTF Belgian Zeebrugge French PEG Nord German BEB German E.On 04-Jan Jan Jan Jan Jan-09 Source: Citi Investment Research & Platts datacentral is the Citi Investment Research proprietary database, which includes Citi estimates, data from company reports, and feeds from Reuters and Datastream. See Appendix A-1 for Analyst Certification and important disclosures. Citi Investment Research is a division of Inc. (the "Firm"), which does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Non-US research analysts who have prepared this report are not registered/qualified as research analysts with the NYSE and/or NASD. Such research analysts may not be associated persons of the member organization and therefore may not be subject to the NYSE Rule 472 and NASD Rule 2711 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account. Customers of the Firm in the United States can receive independent third-party research on the company or companies covered in this report, at no cost to them, where such research is available. Customers can access this independent research at (for retail clients) or (for institutional clients) or can call (866) to request a copy of this research. 1 Ltd

2 Contents Main Events over Past Week 3 European Utilities Basic Data 13 European Utilities EBITDA, EPS & DPS Forecasts 14 European Utilities Valuation Data (Year Ends Unadjusted) 15 European Utilities Valuation Data (Year Ends Adjusted to December) 16 Ratio Definitions 24 Appendix A

3 5 January 2009 Main Events over Past Week EMEA UTILITIES Russian Gas Dispute Impact on EU Gas Prices Limited The long-running price dispute between Russia and the Ukraine flared up again over the holiday period resulting in Russia suspending gas deliveries to the Ukraine at the end of last week. The Ukraine is a major transit country for Russian gas into Europe. So far the impact on other countries has been limited, with only Poland reporting a substantial (11%) fall in supplies although the Czech Republic, Bulgaria, Romania, and Turkey, have also seen some reductions. So far little impact has been seen in European gas prices. UK prices for January fell at the end of last week to trade at 56p/therm. Zeebrugge is also trading at 55p/therm and the German BEB market is at 57p/therm. The EU has called an emergency meeting to co-ordinate a response. The fear is that unless the dispute is resolved soon then supplies could be curtailed further and prices would undoubtedly rise. However, the weak economy (many large industrial companies like car manufactures are on extended shut down) and ample storage will hopefully mean that a repeat of the sharp price spike we saw in 2006 when Russia last reduced supplies can be avoided. EDP RENOVAVEIS (EDPR.LS; 5.13; 1M) EDPR's US wind business Horizon Wind Energy has raised $256 million of tax equity finance being made available by the end of January The deal involves a consortium of JPM Capital Corporation, New York Life Insurance Company and New York Life Insurance and Annuity Corporation. Although a relatively small amount of finance for EDPR, the deal is interesting in highlighting that good quality renewable projects, backed by experienced and stable developers are still able to raise finance from tax equity investors. E.ON AG (EONGn.DE; 29.73; 1M) E.ON announced on Friday 2 January 2009 that the asset swap agreed with Statkraft last July has now been completed with effect as of 31 Dec With this EON is now the sole owner of EON-Sverige, in which Statkraft held 44.6%. The total value of the transaction is around 4.5 billion and impact (negative) on EON is c 200 million on adjusted EBIT.(A2.MI; 1.34; 1H) The details of the deal were already announced back in July and therefore accounted for in our numbers. The deal was expected to close before year end so the announcement is no surprise. 3

4 EMEA UTILITIES Gas Prices Remain Stable 6 January 2009 UK and European spot gas prices remained fairly stable overnight despite the continuing dispute between Russia and Ukraine and the cold weather. UK day ahead prices increased 4.7% to 60.75p/therm and February increased 1.8% to 57.0p/therm. UK gas demand hit a winter high of 420mcm which is some 12% over seasonal norm. Hungary became the latest country to report a shortfall in gas supplies due to the Russia/Ukraine dispute. Hungary's gas transmission operator reported an 8mcm/d reduction in supplies. Meanwhile, the Russian government has reportedly ordered that gas supplies to the Ukraine are reduced by the same amount as the Ukraine is taking from the transit pipelines to meet its needs. The EU is to send a delegated to try and resolve the dispute. GDF SUEZ (GSZ.PA; 35.94; 1M) GDF SUEZ CEO, Mestrallet has said on Bloomberg headlines following a French radio interview "long term strategy unchanged but industrial power demand across Europe will be lower in 2009 (also unhelpful for EDF) and that 2009 will be harder than Mestrallet also suggests that the energy sector will be less affected than other sectors in the market. Mestrallet provides no indicative forecasts for 2009 in the interview but the Group did confirm 10% EBITDA growth in 2008 at their 27 November investor day. We forecast 14% EBITDA growth in 2009 vs and it might be this growth profile in 2009 that Mestrallet might be talking down. We lowered our risk appetite for GDF Suez in Q408 on the back of the strong relative outperformance last year and the EV/EBITDA and P/E valuation premia to the sector, although our GDF Suez target price remains at It looks as if GDF Suez could continue to underperform in this near term market rally. We rate GDF Suez Buy/Medium Risk (1M). ASIAN UTILITIES - China Power Sector: National Generation -9.1% YoY in Dec 08, Versus -9.6% in Nov 08 Large generation cut in Dec, ending exacerbation in recent months - National generation and consumption volumes were -9.1% YoY to 304M MWh and -8.9% YoY to 274M MWh in Dec 2008, according to China Electricity Council, versus -9.6% and -8.1% in Nov The generation cut could persist in 1H09E given the weak economy and high base effect. Cuts geographically widespread - 22 of 30 provinces/municipalities, saw demand cuts, with the sharpest in Hebei (-38% YoY), Ningxia (-32% YoY), and Shanxi (-32% YoY). Generation cuts in Dec could hit CPI most as 60% of its capacity is in the 10 provinces with the largest reductions, followed by Datang (51%), CRP (41%), Huaneng (38%) and Huadian (32%). Cuts driven by falling demand from manufacturing - Demand was -11% YoY to 211M MWh, with light industries at -21% YoY to 29M MWh and heavy industry at -10% YoY to 176M MWh. Light industry saw sharper cuts for the first time in recent months, possible reflecting more pervasive demand weakness across sectors and reduced export. 4

5 Sharp utilisation cut - In Dec 08, national utilisation was -16% YoY to 360 hours or 50.0%; for 2008, utilisation was -6.7% YoY to 4,677 hours or 53.2%, with the deepest falls in Hunan (-13.8% YoY) and Inner Mongolia (- 13.7% YoY). Stock picks - Negative generation growth could persist in 1H09E, but benefits from lower coal prices should exceed harm from the utilisation cut and IPP profits should rise from their trough in 3Q08. Top picks: Huaneng (0902.HK; HK$5.78; 1L) and CPI (2380.HK; HK$1.63; 1L). Please see the full report at: ELECTRICITE DE FRANCE (EDF.PA; 43.23; 1M) The offer by Edf to acquire British Energy was declared unconditional. In due course Centrica should formally offer to acquire 25% of British Energy that is now owned by Edf. 7 January 2009 EUROPEAN GAS Russian Gas Imports via Ukraine Substantially Lower but Still Flowing via Poland The ongoing gas dispute worsened as Czech Republic lamented a complete stop of gas imports from Russia. In Germany, Wingas (one of the two major gas transporters) says imports from Russia via Ukraine have also substantially decreased but imports via Poland are unaffected and that storage fields are now full. Ditto for Italy which imports 30% of its gas from Russia, has almost a month of storage capacity, while at the end of January the new Rovigo LNG terminal (8bcm, gas from Qatar) should come into force. For the moment this gas crisis doesn't seem to have large repercussions for Europe. While the winter is proving pretty cold, the economic downturn has substantially reduced consumption of gas, hence most storage units are full. Were the dispute to continue, at some stage it could become problematic for gas shippers while generators may have to gain as higher cost of gas feeds through higher electricity prices. We think the EU will try to put as much pressure as possible to get things sorted out. In the middle of a recession, the last thing EU governments need is rising costs of energy, especially if oil prices fall, in our view. ENEL SpA (ENEI.MI; 4.73; 1M) - ENEL-Acciona early break up almost closed Grupo Santander will finance Enel with 1.3 billion to acquire Acciona's 25% stake in Endesa (ELE.MC; 28.96; 2M), with BBVA and other seven banks financing the rest of the operation, according to press reports. The final agreement would entail Enel paying 8.0 billion plus Endesa's renewable assets to reach the 11 billion Acciona (ANA.MC; 96.10; 1M) demands. We think a cash injection would be positive for Acciona. Moreover, our valuation of the Endesa's renewable assets is 3.47 billion; therefore, we would find it positive for Acciona if the deal is closed in the above-mentioned conditions. 5

6 GDF SUEZ (GSZ.PA; 34.15; 1M) - GDFSuez has guaranteed gas supplies to its customers amid the Russian- Ukraine conflict GdFSuez issued a press release saying that gas supplies from Russia fell 70% on 6 January but that the company has a diversified enough portfolio (Russia is ca.15%) and access to its own storage capacity and of course to the wholesale market. We are, at least for now, not concerned by the impact of the reduction in Russian gas supplies on GDFSuez. We believe that this 11% reduction in GDFSuez's European supplies can be offset over the next couple of weeks without cost via (i) our expectation of a fall in demand due to the economy, (ii) gas from storage (13bcm in Europe) and (iii) higher take-up from non-russian contracts. Should the situation not improve over that time then we would xpect the company to have to buy gas in the market, as with other companies, which could come at a cost as market gas prices would then spike up. SCOTTISH & SOUTHERN ENERGY (SSE.L; 12.63; 1L) SSE Announce 5% Share Placing SEE announced that it is to place 40m new shares via a bookbuilding exercise amounting to a 5% increase in its issued share capital. At last night's close this would raise 506 million. SSE confirmed that the new shares would qualify for the 19.8p interim dividend and SSE stated that the FY 2008/09 dividend would not be less than 66.0p. Therefore, the dividend cost of the new shares will be not less that 26.4 million this financial year. SSE states that it is making the placement to help finance its 6.7bn capital program out to 2013 and to give itself the financial flexibility to fund bolt on acquisitions. Also SSE announced two possible wind farm acquisitions totaling up to 250MW in the UK and Ireland. A surprise move by SSE will raise some questions as to motives. Taken at face value, we think SSE's explanation is reasonable, and the fairly strong share price over the holiday period may have provided an opportunity. SSE states that no further equity issuances are expected to support the current investment program. SSE has committed itself to investing in renewable energy and current shareholders are largely supportive. But financing and cost issues have been a concern and SSE's move both highlights and partly deals with those concerns. 6

7 8 January 2009 EUROPEAN GAS - Gas Prices Stabilise Despite Ongoing Dispute UK and European spot gas prices stabilised despite the ongoing supply dispute between Russia and the Ukraine and the exceptionally cold weather throughout Europe. UK day ahead prices declined 2.9% to 66.5p/therm and February delivery decreased 3% to 58.15p/therm having increased by 5.18% the previous day. UK gas demand hit 426.8mcm which is nearly 14% over seasonal norm. In Europe, Dutch TTF day ahead prices increased slightly by 1.51% to 71.83p/therm and February decreased 4.16% to 58.48p/therm having increased by 9.86% the previous day. Talks between Russia and the Ukraine continue in Moscow as the EU issued a 24 hour deadline for Russia to restore gas supplies while Czech supplies from Ukraine remained halted. Bulgaria was hit hard as Businesses and schools across the country were closed with at least one city having no central heating according to the Guardian. Bulgaria receives 96% of its gas from Russia. FRENCH UTILITIES - France Faced with Rising Peak Demand and Possible Blackouts Electricity grid operator RTE said that French electricity consumption set a new record on Wednesday 7 January, apparently its third since Monday (5 January), hitting 92,400MW vs 91,500MW on Tuesday (6 January). This is on the back of low temperatures. Separately, EDF's CEO is quoted on Bloomberg saying that there is a risk of blackouts. France is short peaking capacity but so far focus on new investments, particularly from dominant player EDF, has been on baseload (eg. nuclear). This means that security of supply in such situation is dependent on imports and interconnection capacity. By the same token, EDF's profitability is also dependent on the quantity and price of these imports for which it can charge to customers only the regulated tariff. UK CLIMATE POLICY - Advisory Body Recommends New Power Station Emissions Standards The Government's advisory body on sustainable development has recommended the introduction of emissions standards for new power stations as they believe that relying on the EU's Emissions Trading Scheme will be insufficient to incentivise the construction of plants fitted with carbon capture technology. This recommendation echoes the Environmental Audit Committee and Conservative Party which have called for emissions standards for new plants which would effectively prevent new coal power stations being constructed without carbon capture and storage technology fitted. The current government chose not to include emission standards in the Climate Change Bill which passed into law at the end of last year. It would therefore be surprising if the issue was seriously debated this year, and we suspect it will be left until after a general election. New coal power stations are expected to be "CCS ready" which means that they need to allow sufficient square meterage at a proposed site on which to construct the equipment. 7

8 US CLIMATE POLICY Obama Emphasises Energy Saving as Priority President-elect Obama held his first press conference in which he emphasised "energy saving" alongside education and healthcare as priorities for his economic stimulus package. Democratic election promises included a $150 billion investment in renewable energy over the next 10 years to boost low carbon power generation as well as providing five million green jobs. With no specific commitment to funding for the industry in the short term investors are still waiting to see how renewable energy will be dealt with in the stimulus package. PUBLIC POWER CORP (DEHr.AT; 13.26; 1H) Greek Government Reshuffle could be Marginally Positive for PPC The Greek PM announced the new structure of the ministerial cabinet substituting MinFin, Mr. Alogoskoufis, and MinDev, Mr. Folias, with Mr. Papathanasiou and Mr. Hatzidakis respectively. Our understanding has been that policies affecting PPC has been driven by a government consensus rather than the agenda of just one of the relevant ministers and therefore do not expect to see big changes following these substitutions. We would note however that the relationship of the previous ministers with the unions became tense and therefore this change might ease the situation on that front. RWE AG (RWEG.DE; 66.00; 1M) RWE Reportedly Close to Bid for Essent Commercial Operations Platts reports that RWE could be close to bid for the commercial operations of the Dutch utility Essent for 6 billion. Both RWE and Essent did not comment on the speculation according to Platts. That RWE was interested in the Dutch utility is not new news, but we think the market was not expecting a bid soon. There could be some weakness on the back of this as credit markets are tight and terms for financing a deal could be punitive, and SSE's capital increase does not bode well in this sense. Eventually it will come down to what they get for what they pay, and we know close to nothing as to the profits of Essent's commercial operations; also details as to contractual arrangements (purchase/sale contracts) are important and we will know these only when/if a deal is announced. We like both RWE and E.ON from a fundamental stand point but our preference goes to E.On (EONGn.DE; 28.99; 1M) as it has no reinvestment risk (acquisitions have already been made) and it has less exposure to commodities. 8

9 SCOTTISH & SOUTHERN ENERGY (SSE.L; 11.59; 1L) SSE Completes Share Placement Raising 479 million Scottish and Southern Energy completed a placement of 42m new ordinary shares at 1,140p representing a 4.8% increase in issued share capital. The placing grossed 479 million, which SSE said would be used to help finance its 6.7 billion investment program and provide sufficient flexibility for "bolt on acquisitions" should opportunities arise. SSE's shares closed at 1,159p, a fall of some 8% on the day. The new shares being issued will be entitled to both the 19.8p interim dividend announced in November (payable in March) and also the final dividend for 2008/09 that SSE stated would not be less than 46.2p. The dividends to be paid on the new shares for the current financial year will therefore be no less than 27.7 million. 24 hours on and this placement by SSE is still perplexing. The size of the new equity raising is fairly small and therefore has only a limited impact on SSE's balance sheet and should have no impact upon SSE's credit ratings. If the issuance had been linked to a specific asset purchase (such as the two power plants that Edf are to dispose of following the British Energy purchase) then the size and timing might be understandable. As it is the placement seems to make little economic sense. Shareholders have just handed over 479 million to SSE, but will receive back around 590 million when SSE pays its interim and final dividends in a few months time. If SSE wanted to bolster its equity base it could have passed its final dividend (circa 410 million) - although the impact on the share price might have been somewhat bigger than the fall. 9 January 2009 EUROPEAN GAS - February Gas Prices Continue Falls as Gas Monitoring Deal Struck with Russia Russia and the European Union have clinched a deal on monitoring gas shipments through Ukraine which should allow the resumption of deliveries through the Ukraine pipeline to EU countries. However, Russia and Ukraine have yet to agree a price for Russian gas deliveries which have been subsidised since Soviet times and Vladimir Putin on Thursday again demanded Kiev pays the going market rate. Gas prices for February delivery declined across the European exchanges with UK NBP down 4.30% to p/therm while TTF for February declined 1.37% to p/therm. JAPANESE UTILITIES - Oil and Utilities Share Price Prospects: Potential Benefits of Cheap Oil Summary - While utilities stocks are likely to be firm in 2009 H1, we see limited upside in H2. Catalysts may include upward revisions accompanying FY3/09 Q3 results and expectations of profit growth in FY3/10. However, as shares are trading at historically high relative PBR levels, we think once good news is priced in, share price formation will depend on expectations of overall market recovery. 9

10 Oil - We expect gradual appreciation in the share prices of refineries in We anticipate that bad news such as downward revisions accompanying FY3/09 Q3 results announcements will play out in H1 and that expectations of FY3/10 earnings growth could serve as catalysts also in H1 and that industry benefits from progress toward a Nippon Oil/Nippon Mining Holdings merger could also serve as catalysts in 2009 H2. We think share prices of upstream oil development companies are likely to rise as crude prices recover in Crude oil price outlook - We think the price of crude is likely to bottom in early spring and may then rise slowly through the brisk summer demand period. Potential catalysts include OPEC production cutbacks and the bottoming out of US gasoline demand. However, we think demand will probably remain weaker than in the past few years, and doubt that prices will top $70/bbl. Crude demand - Since the 4% YoY drop of October 2008, the pace of decline in US gasoline demand has slowed a bit to around -3%, but the downtrend since end-2007 continues. Meanwhile, OPEC daily production volume was down by 500,000bbl (nearly 2%) MoM in December 2008, with Saudi Arabia accounting for 400,000bbl of the reduction. It thus seems compliance with planned reductions has increased, led by the world's largest oil-producing nation. Demand trends - We expect the global economic slump to impact demand for electric power and gas as well. Electric power demand has declined at rates between -2.0% and -6.3% since September 2008, and the full-year decline for FY3/09 could exceed the post-it bubble decline of FY3/02. However, as changes in fuel costs have a large impact, we think earnings growth in FY3/10 is very likely. To view this full article click on the link below: RENEWABLE ENERGY Obama Plans Doubling of Alternative Energy Capacity within the next 3 years President-elect Obama's economic speech included the most specific commitment yet to boosting renewable energy in the US in announcing a planned doubling of alternative energy capacity within the next 3 years. He also highlighted his enthusiasm for a nationwide "smart grid system" to better manage electricity demand and improve energy efficiency. The US currently has 38GW of renewable energy capacity installed. The inclusion of a specific short term target for renewable energy was good news for US solar stocks which outperformed (key names up over 6%). Although details of how the target will be reached were not included and sceptics are already vocal in their disbelief that it can be achieved, the emergence of a short term target for the sector is clearly good news. We expect that the tax credit system would be an obvious place to start, but would not rule out direct subsidies to companies that commit to expanding facilities to create new construction and manufacturing jobs, which is one of the key drivers behind the policy. 10

11 E.ON AG (EONGn.DE; 28.88; 1M) - E.ON Issues 1.5 billion Euro Bond E.ON has issued a Euro-denominated benchmark bond with for 1.5 billion. The bond has a maturity of 7 years and carries a coupon of 5.50 per cent. It was issued at a price of per cent. According to the company press release, the bond issue was heavily oversubscribed and successfully placed. Eon was expected to refinance c. 6 billion this year and this is the first part of it. The coupon is not onerous and shows debt markets are well open to E.ON so this is positive news for E.ON given there had been concern over E.ON's debt levels. Investors have worried for a while as to E.ON's ability to refinance existing debt at attractive terms and this news shows the company is able to use the debt markets at reasonably attractive levels. GAS NATURAL (GAS.MC; 20.99; 2M) Columbian Regulator Approves GAS-UNF Deal Colombian regulator has approved the Gas Natural Union Fenosa (Gas, UNF) operation without conditions, which leaves Spain s CNC as Gas Natural s last hurdle Colombian regulator has not imposed any condition on the GAS-UNF deal, despite both companies having a relevant position in the country (GAS 1.5mn clients, UNF (UNF.MC; 17.61; 2M) 2.3mn supply points plus 1GW installed power). Spain s competition regulator Comisión Nacional de la Competencia (CNC) is now the last hurdle for the deal; however, we do not expect any significant conditions to be imposed by this regulatory body. The CNC could announce whether it approves the deal or not, and potential conditions, by the beginning of February.. 11

12 Figure 2. Forthcoming Events Date Company Event Jan Citi Investor Lunch with Dr. Tim Stone, KPMG - new start time of 11.45am! 26-Jan Citi Investor Day with Dr. Tim Stone, KPMG 03-Feb Citi Investor Lunch with Kate Hampton, Climate Change Capital 05-Feb Citi Investor Lunch with Niels Kirk re Debt Markets 12-Feb Citi Investor Lunch with Moody's Team Mar Edison 2009 Financial Conference, London Hilton Electric Institute Mar Citi West Coast Symposium Source: Citi Investment Research 12

13 European Utilities Basic Data Target Price Upside to Target Price Total Return (FY08) Share Price Shareprice Movement % Market Value Market Value Firm Value 2008E Firm Value 2008E Year Free Debt/ Debt+Mkt Cap Valuation Spreadsheet 13 Country Company Recommendation Value Curr 1w 1m 12m US$ bn Euro bn US$ bn Euro bn End Float 2008E Austria Verbund AG Hold/ Medium Risk % 40% EUR 3% 11% -28% December 16% Czech Republic CEZ Hold/ Medium Risk % 39% CZK 1% 3% -38% December 15% Finland Fortum Oyj Buy/ Medium Risk % 107% EUR 11% 23% -44% December 30% France GDF Suez Buy/ Medium Risk % 44% EUR -4% 15% -20% December 22% France Suez Environnement Buy/ Low Risk % 77% EUR 6% 10% December 46% France Veolia Environnement Hold/ High Risk % 4% EUR -5% 16% -66% December 96% 65% Germany E.ON AG Buy/ Medium Risk % 38% EUR -3% 11% -43% December 99% 37% Germany RWE AG Buy/ Medium Risk % 23% EUR 0% 9% -34% December 10% Greece Public Power Corp. Buy/ High Risk % 86% EUR 12% 10% -63% December 55% Italy A2A Buy/ High Risk % 126% 1.36 EUR 3% 14% -55% December 37% 70% Italy ENEL SpA Buy/ Medium Risk % 80% 4.55 EUR -1% 6% -44% December 65% Italy Hera SpA Buy/ Medium Risk % 131% 1.56 EUR -4% 4% -46% December 50% Italy Snam Rete Gas SpA Buy/ Medium Risk % 20% 3.93 EUR -1% -2% -13% December 45% Italy TERNA SpA Hold/ Medium Risk % 37% 2.30 EUR -3% -1% -21% December 38% Portugal Energias de Portugal Buy/ Medium Risk % 33% 2.76 EUR 2% 11% -39% December 56% Spain Acciona Buy/ Medium Risk % 137% EUR 2% 23% -54% December 40% 72% Spain EDP Renovaveis Buy/ Medium Risk % 20% 5.81 EUR 13% 27% December 25% Spain Endesa SA Hold/ Medium Risk % 12% EUR 1% 17% -21% December 29% Spain Enagas SA Buy/ Medium Risk % 48% EUR 0% 11% -26% December 39% Spain Gas Natural SDG SA Hold/ Medium Risk % 40% EUR 5% 9% -46% December 30% Spain Iberdrola SA Buy/ Medium Risk % 44% 6.45 EUR -2% 14% -40% December 49% Spain Iberdrola Renovable Buy/ Medium Risk % 16% 3.16 EUR -2% 21% December 18% Spain Red Electrica de Espana SA Buy/ Medium Risk % 40% EUR 1% 4% -17% December 40% Spain Union Fenosa SA Hold/ Medium Risk % 7% EUR 1% 1% 14% December 26% United Kingdom Drax Group Plc Sell/ High Risk % -7% 6.03 GBP 6% 15% -2% December 9% United Kingdom International Power Buy/ Medium Risk % 32% 2.76 GBP 13% 26% -39% December 54% United Kingdom National Grid PLC Hold/ Medium Risk % 11% 6.84 GBP -1% 7% -20% March 1% 53% United Kingdom Pennon Group PLC Hold/ Low Risk % -1% 5.25 GBP 3% 20% -20% March 99% 49% United Kingdom Scottish & Southern Energy PLC Buy/ Low Risk % 54% GBP -2% 8% -29% March 99% 26% United Kingdom Severn Trent PLC Buy/ Low Risk % 36% GBP 0% 8% -21% March 99% 55% United Kingdom United Utilities PLC Hold/ Low Risk % 14% 6.09 GBP -2% 4% -16% March 99% 35% Continental Europe weighted average (by mkt.cap.) 37% 42% 0% 12% -30% UK weighted average (by mkt.cap.) 18% 23% 1% 9% -22% TOTAL/WEIGHTED AVERAGE (by mkt.cap.) 34% 40% 0% 12% -29% Source: Powered by datacentral (9/1/09)

14 14 European Utilities EBITDA, EPS & DPS Forecasts Pre-exceptional EBITDA (Local Currency) EBITDA Growth (%) Pre-exceptional EPS (Local Currency) EPS Growth (%) Ordinary DPS (Local Currency) DPS Growth (%) Payout ratio (%) Country Company 07A 08E 09E 10E 08A 09E 10E CAGR A 08E 09E 10E 08A 09E 10E CAGR A 08E 09E 10E 08A 09E 10E CAGR A 08E 09E 10E Austria Verbund AG 1,179 1,407 1,590 1,630 19% 13% 3% 11% % 16% 3% 14% % 14% 12% 16% 47% 47% 46% 50% Czech Repub CEZ 75,366 88, , ,646 17% 18% 7% 14% % 23% 7% 16% % 24% 7% 17% 54% 55% 55% 55% Finland Fortum Oyj 2,076 2,452 2,972 3,321 18% 21% 12% 17% % 25% 16% 20% % 24% 14% -4% 110% 58% 57% 56% France GDF Suez 13,665 14,646 16,629 18,147 7% 14% 9% 10% % 13% 8% 9% % 69% -24% 13% 46% 49% 73% 52% France Suez Environnement 1,876 1,940 2,102 2,282 3% 8% 9% 7% % 7% 7% 16% % 11% 0% 45% 47% 49% France Veolia Environneme 4,237 4,170 4,495 4,908-2% 8% 9% 5% % 5% 11% -2% % 0% 15% 8% 35% 49% 47% 48% Germany E.ON AG 13,649 14,159 15,010 16,297 4% 6% 9% 6% % 14% 10% 9% % 14% 10% 13% 50% 55% 55% 55% Germany RWE AG 8,456 9,205 9,304 10,180 9% 1% 9% 6% % 7% 9% 12% % -27% 9% 9% 59% 80% 55% 55% Greece Public Power Corp ,484 1,602-44% 219% 8% 24% % -320% 2% 128% % 2% 91% 52% 0% 30% 30% Italy A2A 2,019 2,195 2,352 2,466 9% 7% 5% 7% % 9% 5% -13% % 6% 6% 14% 19% 45% 43% 44% Italy ENEL SpA 10,035 13,282 13,656 14,674 32% 3% 7% 14% % -33% 18% 2% % 0% 0% 0% 78% 57% 86% 73% Italy Hera SpA % 12% 6% 14% % 19% 7% 18% % 11% 20% 14% 61% 53% 49% 55% Italy Snam Rete Gas SpA 1,511 1,553 1,633 1,697 3% 5% 4% 4% % 5% 2% -4% % 10% 3% 8% 59% 78% 81% 82% Italy TERNA SpA ,026 1,109-3% 8% 8% 4% % 6% 4% -7% % 3% 3% 3% 77% 108% 106% 105% Portugal Energias de Portuga 2,651 3,075 3,492 3,849 16% 14% 10% 13% % 10% 7% 15% % 11% 11% 11% 70% 60% 60% 62% Spain Acciona 1,416 2,844 3,263 3, % 15% 14% 38% % 27% 19% 20% % 25% 25% 25% 36% 39% 39% 41% Spain EDP Renovaveis ,002 92% 68% 33% 63% % 102% 14% 269% % 269% 20% 0% 0% 20% Spain Endesa SA 7,461 7,076 7,551 8,114-5% 7% 7% 3% % 25% 10% 8% % 9% -1% 3% 78% 88% 77% 69% Spain Enagas SA % 13% 15% 12% % 10% 14% 11% % 10% 14% 11% 60% 60% 60% 60% Spain Gas Natural SDG SA 2,284 2,672 2,822 2,863 17% 6% 1% 8% % 6% 0% 9% % 15% -2% 10% 60% 57% 62% 61% Spain Iberdrola SA 5,579 7,118 8,556 9,652 28% 20% 13% 20% % 21% 17% 16% % 7% 11% 12% 70% 73% 65% 62% Spain Iberdrola Renovable 765 1,214 1,674 2,298 59% 38% 37% 44% % 36% 42% 79% % 66% 0% 25% 33% 39% Spain Red Electrica de Es ,024 10% 14% 13% 12% % 15% 15% 15% % 15% 15% 61% 60% 60% 60% Spain Union Fenosa SA 2,084 2,602 2,422 2,668 25% -7% 10% 9% % -16% 14% 10% % 2% 18% 6% 63% 46% 56% 58% United Kingd Drax Group Plc % -11% 6% -6% % -17% 2% -9% % -27% -19% 18% 23% 72% 63% 50% United Kingd International Power 1,724 1,922 2,069 2,105 11% 8% 2% 7% % 6% 11% 9% % 6% 11% 12% 37% 40% 40% 40% United Kingd National Grid PLC 3,333 3,968 4,367 4,809 19% 10% 10% 13% % 21% 10% 18% % 8% 8% 10% 75% 69% 61% 61% United Kingd Pennon Group PLC % 5% 2% 8% % -8% -1% 3% % 7% 7% 7% 61% 54% 62% 67% United Kingd Scottish & Southern 1,547 1,742 1,991 2,172 13% 14% 9% 12% % 8% 9% 11% % 10% 10% 10% 62% 59% 60% 60% United Kingd Severn Trent PLC % 8% 6% 5% % -13% 4% 3% % 6% 7% -31% 275% 65% 81% 83% United Kingd United Utilities PLC ,063 9% 7% 7% 8% % 18% 2% 3% % -30% 5% -9% 90% 102% 60% 62% Valuation Spreadsheet Euro Stoxx weighted average (by mkt.cap.)* -4% 8% 10% 10% -1% 12% 8% 8% 10% -1% 12% 8% FTSE 100 weighted average (by mkt. cap.) 5% 5% 12% 12% -2% 9% 11% 11% 7% -2% 9% 11% Continental Europe weighted average (by mkt.cap.) 15% 13% 10% 12% 39% 9% 11% 16% 12% 20% 4% 13% 57% 58% 62% 57% UK weighted average (by mkt.cap.) 13% 9% 8% 10% 16% 11% 7% 11% 15% 2% 7% 6% 79% 67% 60% 60% TOTAL/WEIGHTED AVERAGE (by mkt.cap.) 15% 12% 10% 12% 37% 10% 11% 16% 12% 18% 4% 12% 59% 59% 62% 57% Source: Powered by datacentral

15 European Utilities Valuation Data (Year Ends Unadjusted) PE (Pre-Exceptional) Adjusted EV/EBITDA (Pre-Exceptional)* Adjusted EV/EBITDA (Pre-Exceptional, Pre-Associates)* P/CF Dividend yield (%) Free cash flow yield (%) Valuation Spreadsheet 15 Country Company 07A 08E 09E 10E 07A 08E 09E 10E 07A 08E 09E 10E 07A 08E 09E 10E 07A 08E 09E 10E 07A 08E 09E 10E Austria Verbund AG % 3.2% 3.6% 4.0% 5.3% 5.6% 4.9% 4.0% Czech Republic CEZ % 5.9% 7.3% 7.8% 6.0% 4.1% 7.5% 7.4% Finland Fortum Oyj % 5.0% 6.1% 7.0% 7.1% 5.2% 6.4% 8.2% France GDF Suez % 4.2% 7.0% 5.4% 4.9% -4.6% 3.6% 4.1% France Suez Environnement % 5.0% 5.5% 6.1% -10.2% -0.1% 1.2% 2.2% France Veolia Environnement % 6.2% 6.2% 7.1% -44.0% -33.6% -4.3% 3.6% Germany E.ON AG % 5.5% 6.2% 6.8% 3.4% 2.7% -1.1% 2.1% Germany RWE AG % 7.9% 5.8% 6.3% 5.5% -0.6% 3.2% 2.1% Greece Public Power Corp % 0.0% 5.2% 5.3% -5.0% -30.5% -21.4% -29.0% Italy A2A nm % 5.5% 5.8% 6.1% -44.9% 35.4% 24.0% 21.6% Italy ENEL SpA % 10.8% 10.8% 10.8% -12.1% 27.9% 5.2% 8.9% Italy Hera SpA % 5.8% 6.5% 7.8% -3.2% -2.4% 3.5% 6.4% Italy Snam Rete Gas SpA % 5.0% 5.5% 5.7% 1.4% -0.2% -4.0% -2.8% Italy TERNA SpA % 7.2% 7.4% 7.6% 5.4% 3.9% -6.1% -5.3% Portugal Energias de Portugal % 4.9% 5.5% 6.1% 26.2% -10.7% -12.0% -8.5% Spain Acciona % 4.8% 6.0% 7.6% -20.7% 10.3% -10.0% -4.5% Spain EDP Renovaveis % 0.0% 0.0% 0.8% -13.5% -32.8% -24.4% -25.5% Spain Endesa SA % 6.2% 6.8% 6.7% -1.5% 21.6% 8.0% 7.3% Spain Enagas SA % 4.2% 4.6% 5.2% -0.3% -8.5% -11.2% -10.7% Spain Gas Natural SDG SA % 6.4% 7.4% 7.3% -1.3% 5.0% 6.2% 10.9% Spain Iberdrola SA % 5.5% 5.9% 6.5% -1.3% -2.4% -0.7% 1.0% Spain Iberdrola Renovable % 0.7% 1.3% 2.2% -30.4% -12.8% -16.5% -16.8% Spain Red Electrica de Espana SA % 3.5% 4.0% 4.6% -2.9% -4.0% -4.0% -3.5% Spain Union Fenosa SA % 3.1% 3.1% 3.7% 4.7% 1.7% 1.4% 3.0% United Kingdom Drax Group Plc % 10.3% 7.5% 6.1% 10.6% 10.9% 8.5% 6.6% United Kingdom International Power % 4.4% 4.7% 5.2% 10.3% 10.5% 10.6% 7.9% United Kingdom National Grid PLC % 4.8% 5.2% 5.6% 3.1% 1.6% 5.6% 7.3% United Kingdom Pennon Group PLC % 3.8% 4.0% 4.3% -0.3% 1.0% 1.5% 1.8% United Kingdom Scottish & Southern Energy PLC % 5.1% 5.6% 6.2% 3.3% 2.6% 2.6% 2.7% United Kingdom Severn Trent PLC % 5.6% 5.9% 6.3% 2.2% 0.3% -1.0% 1.0% United Kingdom United Utilities PLC % 7.7% 5.4% 5.6% 7.0% -3.0% 1.0% 3.8% Continental Europe weighted average (by mkt.cap.) % 5.4% 6.2% 6.3% -0.6% 1.8% 1.0% 2.2% UK weighted average (by mkt.cap.) % 5.4% 5.4% 5.7% 4.4% 2.4% 4.4% 5.3% TOTAL/WEIGHTED AVERAGE (by mkt.cap.) % 5.4% 6.1% 6.2% -0.1% 1.8% 1.4% 2.6% Source: Powered by datacentral

16 European Utilities Valuation Data (Year Ends Adjusted to December) PE (Pre-Exceptional) Adjusted EV/EBITDA (Pre-Exceptional)* Adjusted EV/EBITDA (Pre-Exceptional, Pre- Associates)* P/CF Dividend yield (%) Free cash flow yield (%) Valuation Spreadsheet 16 Country Company 07A 08E 09E 10E 07A 08E 09E 10E 07A 08E 09E 10E 07A 08E 09E 10E 07A 08E 09E 10E 07A 08E 09E 10E Austria Verbund AG % 3.2% 3.6% 4.0% 5.3% 5.6% 4.9% 4.0% Czech Republic CEZ % 5.9% 7.3% 7.8% 6.0% 4.1% 7.5% 7.4% Finland Fortum Oyj % 5.0% 6.1% 7.0% 7.1% 5.2% 6.4% 8.2% France GDF Suez % 4.2% 7.0% 5.4% 4.9% -4.6% 3.6% 4.1% France Suez Environnem % 5.0% 5.5% 6.1% -10.2% -0.1% 1.2% 2.2% France Veolia Environne % 6.2% 6.2% 7.1% -44.0% -33.6% -4.3% 3.6% Germany E.ON AG % 5.5% 6.2% 6.8% 3.4% 2.7% -1.1% 2.1% Germany RWE AG % 7.9% 5.8% 6.3% 5.5% -0.6% 3.2% 2.1% Greece Public Power Co % 0.0% 5.2% 5.3% -5.0% -30.5% -21.4% -29.0% Italy A2A nm % 5.5% 5.8% 6.1% -44.9% 35.4% 24.0% 21.6% Italy ENEL SpA % 10.8% 10.8% 10.8% -12.1% 27.9% 5.2% 8.9% Italy Hera SpA % 5.8% 6.5% 7.8% -3.2% -2.4% 3.5% 6.4% Italy Snam Rete Gas % 5.0% 5.5% 5.7% 1.4% -0.2% -4.0% -2.8% Italy TERNA SpA % 7.2% 7.4% 7.6% 5.4% 3.9% -6.1% -5.3% Portugal Energias de Port % 4.9% 5.5% 6.1% 26.2% -10.7% -12.0% -8.5% Spain Acciona % 4.8% 6.0% 7.6% -20.7% 10.3% -10.0% -4.5% Spain EDP Renovaveis 1, % 0.0% 0.0% 0.8% -13.5% -32.8% -24.4% -25.5% Spain Endesa SA % 6.2% 6.8% 6.7% -1.5% 21.6% 8.0% 7.3% Spain Enagas SA % 4.2% 4.6% 5.2% -0.3% -8.5% -11.2% -10.7% Spain Gas Natural SDG % 6.4% 7.4% 7.3% -1.3% 5.0% 6.2% 10.9% Spain Iberdrola SA % 5.5% 5.9% 6.5% -1.3% -2.4% -0.7% 1.0% Spain Iberdrola Renova % 0.7% 1.3% 2.2% -30.4% -12.8% -16.5% -16.8% Spain Red Electrica de % 3.5% 4.0% 4.6% -2.9% -4.0% -4.0% -3.5% Spain Union Fenosa SA % 3.1% 3.1% 3.7% 4.7% 1.7% 1.4% 3.0% United Kingdom Drax Group Plc % 10.3% 7.5% 6.1% 10.6% 10.9% 8.5% 6.6% United Kingdom International Po % 4.4% 4.7% 5.2% 10.3% 10.5% 10.6% 7.9% United Kingdom National Grid PL % 5.1% 5.5% 6.0% 2.0% 4.6% 6.9% 7.8% United Kingdom Pennon Group P % 4.0% 4.2% 4.5% 0.7% 1.4% 1.8% 2.2% United Kingdom Scottish & South % 5.5% 6.0% 6.2% 2.7% 2.6% 2.7% 2.7% United Kingdom Severn Trent PLC % 5.8% 6.2% 6.6% 0.7% -0.7% 0.5% 4.5% United Kingdom United Utilities P % 5.9% 5.5% 5.8% -0.5% 0.0% 3.1% 5.2% DJ Sotxx European stocks 9.2* FTSE All Share - UK stocks 9.5** Continental Europe weighted a % 5.4% 6.2% 6.3% -0.6% 1.8% 1.0% 2.2% UK weighted average (by mkt.c % 5.5% 5.6% 5.9% 2.9% 4.0% 5.3% 5.9% TOTAL/WEIGHTED AVERAGE (by % 5.4% 6.2% 6.3% -0.2% 2.0% 1.5% 2.6% Source: Powered by datacentral

17 Figure 3. European Utilities Adjusted EV/EBITDA, 2008E DEHr.GR EDPR.ES UU.GB IBR.ES SEVI.FR NGT.GB REE.ES PNN.GB UNF.ES ENAG.ES VERB.AT SRG.IT SVT.GB IBE.ES GAZ.FR EDPP.PT FUM1V.FI TRN.IT ENEI.IT ANA.ES VIE.FR ELE.ES EONG.DE CEZP.CZ HRA.IT AEMI.IT GAS.ES RWEG.DE DRX.GB IPR.GB SSE.GB Source: Citi Investment Research Figure 4. European Utilities Dividend Yield, 2008E 14% 12% 10% 8% 6% 4% 2% 0% SSE.GB ENEI.IT DRX.GB RWEG.DE TRN.IT GAS.ES ELE.ES VIE.FR CEZP.CZ HRA.IT SVT.GB EONG.DE IBE.ES AEMI.IT NGT.GB SRG.IT SEVI.FR FUM1V.FI EDPP.PT ANA.ES IPR.GB ENAG.ES GAZ.FR PNN.GB REE.ES VERB.AT UNF.ES UU.GB IBR.ES DEHr.GR EDPR.ES Source: Citi Investment Research 17

18 Figure 5. European Utilities Free Cash Flow (After Total Capital Expenditure), 2008E AEMI.IT ENEI.IT ELE.ES DRX.GB IPR.GB ANA.ES SSE.GB VERB.AT FUM1V.FI GAS.ES NGT.GB CEZP.CZ TRN.IT EONG.DE UNF.ES PNN.GB UU.GB SEVI.FR SRG.IT RWEG.DE SVT.GB HRA.IT IBE.ES REE.ES GAZ.FR ENAG.ES EDPP.PT IBR.ES DEHr.GR EDPR.ES VIE.FR Source: Citi Investment Research Figure 6. European Utilities Share Price Performance Over Last Week 16% 14% 12% 10% 8% 6% 4% 2% 0% -2% -4% -6% EDPR.ES IPR.GB DEHr.GR FUM1V.FI DRX.GB SEVI.FR GAS.ES AEMI.IT VERB.AT SSE.GB PNN.GB ANA.ES EDPP.PT ELE.ES CEZP.CZ UNF.ES REE.ES UU.GB RWEG.DE ENAG.ES NGT.GB ENEI.IT SRG.IT SVT.GB IBE.ES IBR.ES TRN.IT EONG.DE HRA.IT GAZ.FR VIE.FR Source: Citi Investment Research 18

19 Figure 7. European Utilities Performance Comparison with Geographical Regions (One-Month Relative to DJ World) Asia Pacific Latin America North America Europe Global -15% -10% -5% 0% 5% 10% 15% Source: Citi Investment Research Figure 8. European Utilities Performance Relative to DJ STOXX Index (1 Jan 08 to date) 120% 100% 80% 60% 40% DJ STOXX UTILS 20% 0% -20% ` -40% -60% Union Fenosa Drax SNAM Rete Gas GDF Suez Red Electrica Terna Endesa Pennon Enagas Suez Env Verbund RWE United Utilities National Grid Severn Trent EDP Renovaveis Iberdrola EDP CEZ E.ON Scottish & Southern Enel Iberdrola Ren Fortum EDF Gas Natural Hera International Power A2A Acciona PPC Veolia Env Source: Citi Investment Research 19

20 Figure 9. Credit Ratings Moody's S & P Rating Outlook Rating Outlook Acciona *n/a *n/a *n/a *n/a A2A *n/a *n/a BBB+ st British Energy PLC Ba2 - BB - Centrica PLC A3 st A neg CEZ A2 st A- st Drax Group Plc *n/a *n/a *n/a *n/a Electricite de France Aa1 - AA- - Energias de Portugal A2 neg A- st Endesa SA A3 neg A- neg Enagas SA A2 st AA- st ENEL SpA A2 neg A- neg E.ON AG A2 st A st Fortum Oyj A2 st A- st Gas Natural SDG SA *n/a *n/a A - GDF-Suez Aa3 st A pos Hera SpA A1 st A neg Iberdrola SA A3 st A- st International Power Ba3 st BB- st Suez Environnement *n/a *n/a *n/a *n/a National Grid PLC Baa1 neg A- st Pennon Group PLC *n/a *n/a *n/a *n/a Public Power Corp. A2 neg BBB+ neg Red Electrica de Espana SA A2 st AA- st RWE AG A1 neg A st Snam Rete Gas SpA *n/a *n/a *n/a *n/a Scottish & Southern Energy A2 st A neg PLC Severn Trent PLC A3 st A st TERNA SpA A1 st AA- neg Union Fenosa SA A United Utilities PLC Baa1 st A- st Verbund AG A1 st A st Veolia Environnement A3 st BBB+ st * no rating at present Source: Standard & Poor, Moodys & Bloomberg 20