E.ON on the Romanian Energy Market ZF Power Summit

1. E.ON on the Romanian Energy MarketZF Power Summit Bucharest, February 27, 2013 Frank Hajdinjak CEO E.ON România

2. Challenges Going Forward Natural Gas and Power Supply • Liberalization of the energy market and transparency; • Increase of tariffs and proper management of impact on vulnerable customers; • Consolidation and increase of competition; • Security and development of current customer portfolio; • Improvement of energy efficiency.

3. Challenges Going Forward • Legal/regulatory framework of support and incentives for long-term investments and continuous improvement; • Grid upgrade and grid losses reduction; • Rehabilitation of pipelines and connections; • Security of the network and reliable services for our customers; • Implementation of innovative solutions and latest available technologies, grid automation (e.g. SCADA, Smart Metering); • Uncertainty regarding application of tariff methodology in the gas distribution for the third regulatory period (2013-2017). Natural Gas Distribution

4. Challenges Going Forward • Legal/regulatory framework of support and incentives for long-term investments and continuous improvement; • Improvement of distribution service quality; • Grid upgrade and of grid losses reduction; • Integration in the grid of significant production capacities of intermittent renewable energy sources (wind and solar); • Significant growth of distributed energy production share (renewable resources and low-power cogeneration) connected to the distribution network; • Innovative solutions and latest technologies (e.g. Smart Grid, Demand Response, Virtual Power Plant, Generation Integrated Weather Forecast) to ensure an optimal integration of intermittent renewable sources, and safety of the national energy system. Power Distribution

5. Energy Market Overview • 80% of thermal power plants in Romania are too old, being installed in the 70’s - 80’s. • 65% of electricity distribution networks and 40% of gas distribution networks (RED) are aged. • 70% of the natural gas transportation networks are too old. Source: Updated Romanian Energy Strategy for the period 2011 - 2020

6. Energy Market Overview • More than half of electricity produced in 2012 stems from traditional power plants, especially based on coal; • Most of the thermal power plants don’t have high tech equipment to reduce pollution and risk being closed startingwith 2014; • Power plants have to bear costs of hundreds of millions of Euros, to upgrade existent capacities according to European Environmental Standards, to modernize electricity generation capacities and to increase energy efficiency. Source: Updated Romanian Energy Strategy for the period 2011 – 2020, INB

7. Energy Market Overview • Needed investments for the next ten years are estimated to ca. Euro 30-35 Billion. More than half of it should be directed towards new electricity generation capacities; • Foreign investors operating in the energy sector have invested over Euro 16 Billion in Romania since 2002; • The investments made so far by the foreign companies represent only a part of the overall financial effort required to modernize the energy sector; • Foreign direct investments are the most important source for the following years. Source: Updated Romanian Energy Strategy for the period 2011 – 2020,, CIB

8. Conditions to be Achieved • General conditions: • Stability, Predictability, Transparency, Fair and Non-discriminatory Treatment for the operators. • Specific conditions: • Adapting methodologies taking into account the technical economic requirements for the transformation of the energetic system; • Ensuring the independence of the regulator; • Consulting and involving relevant operators in the process of adapting the regulatory framework; • The operators activity should be stimulated and encouraged for further streamlining (sharing efficient earnings); • Ensuring a favorable climate for investments; • Promoting investments in innovative solutions and new technologies; • Minimize risk investments, especially those related to regulatory framework by avoiding uncertainties.

9. E.ON Investments in Romania • Investments were directed to an area of high importance: gas and electricity network rehabilitation and modernization; • Last year, the investments exceeded Euro 85 Mil. and for this year, the targeted investments are aroundEuro 87 Mil.; • Since it entered on the Romanian energy market in 2005, E.ON has invested about Euro1 Billion. Investment in electricity distribution have focused on the modernization works in over 110transformation stations and replacement ofover 1,260 km of power lines. During 2005-2012, E.ON has rehabilitated and upgraded approximately 4,840 km of gas network, more than the total length of Romania’s borders.

10. E.ON Group in Romania * Trade volumes ** 2012 Statutory Reporting (estimated figures) *** 2012 IFRS Group Reporting (final figures)

11. E.ON Romania - Strategic Directions • Supply – E.ON Energie România • Improved market positioning on Romanian energy market, to build on potential generation options; • Stabilization of regulated sales segment and targeted eligible sales expansion; • Offer better services (focus on implementation of Continuous Customer Centric Culture) and products (e.g. dual fuel plus value added services, such as energy efficiency services). • Distribution– E.ON Gaz Distribuţie and E.ON Moldova Distribuţie • Continue sustainable level of network investments; • Increase safety for our customers and employees; • Focus on operational excellence, especially via continuous efficiency improvement (including lean management and grid automation).

12. Thank you for your attention!