Letter from the CEO

»Our electricity and gas business is robust.
We expect to achieve our targets for 2009.«


Dear Investors, (handwriting)

The first three quarters of 2009 have gone well for RWE. We managed to largely decouple ourselves from the weak economy. Electricity and gas consumption decreased by 7 % in Germany, which is our largest market. However, we were only affected by this to a limited extent. As a rule, we secure prices for our electricity generation up to three years prior to delivery in order to minimise earnings risks. This means that our power stations had virtually sold all their production for 2009 before the crisis started. In so doing, we realised prices that were far above levels currently seen on the market. Our generation company, RWE Power, was therefore able to improve its earnings. Another “safe haven” was RWE Energy. Its sales activities benefited from relatively stable household consumption as well as from the carefully designed contracts we have with our key accounts. RWE Energy’s regulated grid business delivered robust earnings.

RWE Supply & Trading doubled its operating result. Energy trading, the earnings of which typically fluctuate substantially, generated above-average profits from forward transactions concluded in earlier years. In the gas midstream business, our strategy of managing and optimising all European gas purchases from a single entity resulted in rising earnings.

The fact that the operating result and recurrent net income were 4 % and 7 % down from last year is on the one hand due to the disappointing earnings contribution made by the UK business and our oil and gas production. RWE npower’s operating result more than halved, mainly owing to the extreme pressure on prices and costs in the UK electricity and gas supply business. Our gas and oil production company, RWE Dea, experienced a similar decline, above all due to a drop in oil prices. On the other hand, RWE Supply & Trading was not able to match the high level of earnings achieved in the third quarter of 2008.

But we will catch up again in the fourth quarter. The good developments at RWE Power and RWE Supply & Trading will be the main reasons, with cost-cutting measures also playing a role, especially in the UK business. We can therefore confirm our latest outlook: We expect that the RWE Groups operating result, excluding the acquisition of Essent effective September 30, 2009, will be in the order of last year. In addition, the Dutch energy utility will make a contribution to earnings. You can therefore already look forward to an attractive dividend!

Sincerely yours,

Dr. Jürgen Großmann
CEO of RWE AG

Essen, November 2009