RWE no longer links increased payout ratio to sale of American Water
In September, the Executive Board of RWE AG decided that the prospective increase of the dividend payout ratio for fiscal 2008 will no longer depend on the successful placement of a majority of shares in American Water on the capital market. We are aiming for a payout ratio of 70 to 80 % of recurrent net income, irrespective of the progress of this transaction. The Executive and Supervisory Boards will decide on the dividend proposal to be made to the April 2009 Annual General Meeting in February next year. We confirm our intention to sell all of our shares in American Water — RWE’s last major non-core business — on the capital market. We have already placed 39.5 % of American Water on the New York Stock Exchange. Our intention is to increase this proportion to over 50 % by year-end. However, our adherence to this schedule is subject to the development of the market environment.
RWE chosen as strategic investor for a nuclear energy project in Bulgaria
The Bulgarian national electricity company NEK selected RWE as its partner in the construction of a nuclear power plant at the Belene site in the north of Bulgaria. The plant is to consist of two units, each with an installed capacity of 1,000 MW. NEK is offering us the opportunity to acquire a 49 % stake in the project company, which will handle the facility’s planning, construction and operation. NEK will retain a 51 % interest itself. We are in negotiations with the company over the details of a joint venture agreement. RWE is considering to involve additional partners. The joint venture will address major technical, legal and economic issues in the subsequent project phase. Compliance with the highest safety standards is the central prerequisite for our participation in the project.
Russian acquisition not implemented
In September, we decided not to take an interest in the Russian regional utility TGK-2. The plan to purchase a majority shareholding in TGK-2 in a joint venture with the Sintez Group was not expedient, partly based on RWE’s acquisition criteria. Irrespective of this decision, the Russian market remains attractive to RWE. We are still exploring other acquisition targets in this region.
RWE Innogy sets stage for construction of biomass and biogas plants
In September, RWE Innogy acquired 100 % of UK-based Helius Energy Alpha Ltd. Helius owns the rights for the development and operation of a 65 MW biomass power station in Lincolnshire (East Midlands), the construction of which is scheduled to begin in 2009. All the necessary permits have already been granted. RWE Innogy will invest a total of approximately € 260 million in the project. The facility will be fuelled with wood residuals. In September, we also announced the construction of a biogas plant with a net installed thermal capacity of 6.5 MW in Güterglück in Saxony-Anhalt (Germany). Our plans envision production of biogas in this facility starting in the summer of 2009. The installation will process the biogas to natural gas grade quality and feed it into the local gas grid. Furthermore, we signed a letter of intent with Schmack Biogas for the construction of up to ten additional facilities of this kind.
RWE chooses site for climate-friendly coal-fired power plant
The planned large-scale power plant, which will feature an integrated gasification combined cycle (IGCC) as well as carbon capture, transportation and storage, will be built at the Goldenbergwerk site in Hürth near Cologne (Germany) and fuelled by Rhenish lignite resources. The construction of the plant, which will have a gross installed capacity of 450 MW, a pipeline and a CO2 storage facility, will cost around € 2 billion. RWE will invest € 1 billion. In addition, we are seeking the participation of partners and state subsidies for the project. The ambitious timeframe foresees completion of the power station by the end of 2014. About 90 % of the CO2 generated by the power plant will be captured and stored in suitable geological rock formations. RWE Dea plans to investigate potential storage locations in Schleswig-Holstein. Furthermore, in order to transport the carbon dioxide from the power plant site to the north of Germany, the upstream subsidiary plans to build a climate-protection pipeline. We aim to initiate the regional planning process for the pipeline route before the end of 2008.
RWE again qualifies for inclusion in two renowned sustainability indices
RWE received two major distinctions in the fields of sustainable management and climate protection. We were included in the Carbon Disclosure Leadership Index, the world’s first climate protection index, for the second time since 2006. This was announced by the Carbon Disclosure Project (CDP) investor group in September. RWE thus ranks among the world’s leading companies in the field of climate protection. The CDP is a collaboration among major institutional investors with the aim of providing transparency for financial markets regarding carbon dioxide emissions and precautionary climate strategies. In addition, RWE was also included in the internationally renowned Dow Jones Sustainability Index (DJSI) for another year in September. RWE is the only German utility to have been included in the DJSI without interruption since its inception in 1999. The Dow Jones Sustainability indices are established and published by SAM Sustainable Asset Management in cooperation with Dow Jones Indexes. They are widely recognized as the world’s prime index group for sustainable corporate performance. The funds licensed according to DJSI criteria account for nearly US$ 6 billion.
Dr. Leonhard Birnbaum appointed to the Executive Board of RWE AG
The Supervisory Board of RWE AG appointed Dr. Leonhard Birnbaum (41) to the Executive Board of RWE AG effective October 1, 2008. He will succeed Berthold Bonekamp as Chief Strategy Officer (CSO). This Executive Board mandate comprises Corporate Strategy and Business Development, Mergers & Acquisitions, Research and Development and Renewable Energies. Berthold Bonekamp will leave the company at the end of the year and retire, as previously announced. Until then, Leonhard Birnbaum will be responsible for the Board Corporate Strategy / Business Development mandates — the areas he was hired to head up when he joined the RWE Group in April 2008. Before then, Dr. Birnbaum worked for the McKinsey consulting group, exiting as senior partner (director). The focus of his consulting activities were the utilities sector and the energy-intensive industry.