(31) Contingent liabilities and financial commitments

As of December 31, 2008, the €50 million in surety bonds reported under contingent liabilities as of December 31, 2007 no longer existed.

As of December 31, 2008, the Group had €4,176 million in capital commitments (previous year: €2,073 million). Moreover, assurances regarding acquisitions of investments existed in the amount of €127 million (previous year: €129 million).

Commitments from operating leases refer largely to long-term rental arrangements for power generation and supply plants as well as rent and lease contracts for storage and administration buildings.

Minimum lease payments have the following maturity structure:

Payment obligations for non-current financial assets amounted to €2 million (previous year: €2 million).

The RWE Power Division has entered into long-term purchase and service agreements for uranium, conversion, enrichment, production and waste management.

We bear the legal and contractual liability from our membership in various associations which exist in connection with power plant projects, profit- and loss-pooling agreements and for the provision of liability cover for nuclear risks, amongst others.

By signing a mutual benefit agreement, RWE AG and other parent companies of German nuclear power plant operators undertook to provide approximately €2,244 million in funding to liable nuclear power plant operators to ensure that they are able to meet their payment obligations in the event of nuclear damages. RWE AG has a 25.851 % contractual share in the liability, plus 5 % for damage settlement costs.

RWE Group companies are involved in litigation and arbitration proceedings related to their operations. However, RWE does not expect any material negative repercussions from these proceedings on the RWE Group’s economic or financial position. Additionally, companies belonging to the RWE Group are directly involved in various administrative and regulatory proceedings (including approval procedures) or are directly affected by their results.

Outside shareholders initiated several legal proceedings to examine the appropriateness of the conversion ratios and the amount of cash paid in compensation in connection with company restructurings pursuant to German company law. We are convinced that the conversion ratios and cash compensation calculated on the basis of expert opinions and verified by auditors are adequate. If a different legally enforceable conclusion is reached, the affected shareholders will be compensated, even if they are not involved in the conciliation proceedings.

On December 22, 2008, a settlement was reached to end the conciliation proceedings on the appropriateness of the conversion ratios in relation to the merger of RWE and VEW. Within the framework of this settlement, compensation of €130 million plus interest and costs will be made to previous shareholders of VEW. The compensation to be provided by RWE AG in fiscal 2009 essentially results in an increase in goodwill and liabilities in the consolidated financial statements for the period ended December 31, 2008.

The EU Commission conducted follow-up inquiries at several European power utilities in May and December of 2006. This also affected RWE Group companies in Germany. Afterwards, the EU Commission filed requests with companies including RWE for information on individual energy market issues, which it will process further.

In early May 2007, the EU Commission initiated an abuse procedure against RWE. It suspects that RWE and affiliated companies hindered access to the natural gas transmission system in Germany in order to attain a purportedly market-dominating position in the gas supply business. Following an agreement between RWE AG and the EU Commission in May 2008, in December 2008 RWE AG submitted a formal statement of commitment to sell its German gas transmission network to a third party independent of RWE. This commitment does not constitute admission that anti-trust regulations were violated. The EU Commission is presently surveying other market participants and, on this basis, is expected to decide on an end to the proceedings against all of the RWE companies involved in the spring of 2009.