Main points of debate

One of the Supervisory Board’s main topics of debate was the IPO of American Water at the end of April 2008, through which 39.5 % of the shares in the company were sold. The Supervisory Board’s Executive Committee had approved the transaction in its meeting on April 21, 2008. The Executive Committee and the Supervisory Board’s plenary had concerned themselves with the IPO and progress made in preparatory work in the run-up to the transaction. At its session on September 18, 2008, the Supervisory Board’s debate centred on the preparation for the placement of a second tranche of shares in American Water.

RWE’s planned acquisition of the Dutch-based energy utility Essent N.V. was also the subject of thorough debate. On January 12, 2009, the two companies agreed the conditions for a binding cash offer by RWE to Essent shareholders for the purchase of all of the shares in Essent, excluding its distribution grid and waste management business. The Supervisory Board’s Executive Committee had approved RWE’s binding offer in its extraordinary meeting on December 18, 2008.

Furthermore, the RWE Group’s extensive investment programme was the subject of in-depth discussion at several meetings, focusing on large-scale projects for the expansion and modernization of the power plant portfolio in Germany and abroad. Two especially important projects are the 2,100-MW Glossary dual-block lignite-fired power station in Neurath, located near Cologne, Germany, and the 1,530-MW hard coal twin-unit power plant in Hamm, Germany. Another major project is the planned 1,560-MW hard coal-fired dual-block power station in Eemshaven, the Netherlands. In addition, RWE intends to become involved in the construction and operation of a new nuclear power station in Belene, Bulgaria. Besides the aforementioned power plant projects, debates addressed RWE’s participation in the consortium for the construction and operation of the “Nabucco” international gas pipeline. The pipeline will connect major gas reserves of the Caspian region, the Near and Middle East, and other regions with the European market in 2014.

Our discussions also focussed on the political and regulatory framework in the energy policy arena. Centre stage was taken by the shaping of the European CO₂ emissions trading scheme from 2013 onwards, among other things. The unbundling of ownership of the grid business from other activities of integrated energy utilities desired by the EU Commission was also debated extensively. The Supervisory Board kept abreast of the abuse proceedings brought by the EU Commission against RWE Transportnetz Gas GmbH. As set out in detail in the chapter legal procedures, RWE has agreed on a solution with the Commission: The Group has made a commitment to sell its German gas transmission grid to a party independent from RWE; in exchange, the EU will end the proceedings. The Supervisory Board had discussed the proposed compromise with the Executive Board at length in the run-up to the agreement with the EU.

Other topics of deliberation.

The Supervisory Board concerned itself repeatedly with the state of the deliberations regarding the reorganization of the RWE Group, focusing on the German supply and grid activities. The €2.5 billion RWE share buyback programme which has since been concluded was the subject of consultation at the sessions on February 20 and April 17, 2008. In its meetings on May 31, 2008, and December 11, 2008, the Executive Board reported on the sample audit of the financial statements of RWE Aktiengesellschaft and the Group for the period ended December 31, 2007, conducted by Deutsche Prüfstelle für Rechnungslegung (DPR). The sample audit was completed by DPR on October 30, 2008, without a single error having been discovered. In addition, the progress and interim results of the compliance audit performed within the Group were discussed in several sessions.

Last financial year, the Supervisory Board also debated material acquisition and divestment projects and passed the necessary resolutions requiring approval in its committees and in the plenum. The Executive Board provided us with regular reports on revenue and earnings, measures to reduce costs, and the development of energy prices. In our session on December 11, we concerned ourselves with the Executive Board’s planning for 2009, the forecast for 2010 and 2011 and the long-term prognosis through to 2018. We received detailed commentary in cases where there were deviations from plans and goals established previously.