E.ON Ruhrgas owns numerous shareholdings in integrated gas companies, gas distribution companies and municipal utilities through its subsidiaries ERI and Thüga.
ERI holds both majority and minority shareholdings in European and German energy companies, while Thüga holds primarily minority shareholdings in about 90 regional and municipal utilities in Germany. Effective as of January 1, 2008, Thüga sold its wholly owned Italian subsidiary Thüga Italia S.r.l. (“Thüga Italia”), together with all its majority and minority shareholdings in Italy, to E.ON Italia Holding S.r.l.
ERI: As of December 31, 2008, ERI’s portfolio of shareholdings included stakes in three domestic and 20 foreign companies. In 2008, ERI (including its fully consolidated shareholdings) contributed sales of €5.5 billion (approximately 20 percent of E.ON Ruhrgas’ total sales, excluding natural gas and electricity taxes) and had sales volumes of 182.8 billion kWh in 2008 (2007: 177.6 billion kWh).
Germany
As of December 31, 2008, ERI held interests in the following regional gas distribution companies in Germany:
E.ON Ruhrgas International Shareholdings in Germany
Share held
Ferngas Nordbayern GmbH1 53.10%
Gas-Union GmbH1 25.93%
Saar Ferngas AG2 20.00%
1Interest held via ERI’s wholly owned subsidiary RGE Holding GmbH.
International
As of December 31, 2008, ERI held interests in the following companies in countries outside of Germany, primarily in central Europe and the Nordic region:
As with its German shareholdings, ERI holds some stakes in companies which are customers of E.ON Ruhrgas.
Thüga
As of December 31, 2008, Thüga holds primarily minority shareholdings in about 90 regional and municipal utilities in Germany. Effective as of January 1, 2008, Thüga sold its wholly owned Italian subsidiary Thüga Italia S.r.l., together with all its majority and minority shareholdings in Italy, to E.ON Italia Holding S.r.l. and no longer has any international shareholdings.
With respect to its minority shareholdings, Thüga is an active shareholder, offering operational competence as well as other services. In 2008, Thüga contributed sales of €0.6 billion (approximately 23.0 percent of E.ON Ruhrgas’ total sales, excluding natural gas and electricity taxes). Thüga’s gas sales volumes decreased by 58.4 percent to 8.7 billion kWh in 2008 from 20.9 billion kWh in 2007, primarily as a result of the sale of the Thüga Italia group to E.ON Italia.
E.ON Ruhrgas International Shareholdings outside Germany
Share held
Gasnor AS, Norway 14.00%
Swedegas AB, Sweden 29.59%
Gasum Oy, Finland 20.00%
AS Eesti Gaas, Estonia 33.66%
JSC Latvijas Gāze, Latvia 47.23%
AB Lietuvos Dujos, Lithuania 38.91%
Rytu Skirstomieje Tinklai, Lithuania 20.28%
Inwestycyjna Spólka Energetyczna Sp. z o.o. (IRB), Poland 50.00%
EUROPGAS a.s., Czech Republic1 50.00%
E.ON Földgáz Trade ZRt., Hungary 100.00%
Panrusgáz ZRt., Hungary 50.00%
Colonia-Cluj-Napoca-Energie S.R.L. (CCNE), Romania 33.33% E.ON Ruhrgas Mittel- und Osteuropa GmbH, Germany2 100.00%
Nafta a.s., Slovakia 40.45%
S.C. Congaz S.A., Romania 28.59%
E.ON Servicii România S.R.L., Romania 50.00%
Ekopur d.o.o., Slovenia3 100.00%
SOTEG—Société de Transport de Gaz S.A., Luxembourg 20.00%
Holdigaz SA, Switzerland 2.21%
E.ON România S.R.L., Romania4 69.81%
1EUROPGAS a.s. holds 50.0 percent of SPP Bohemia a.s. and 48.18 percent of Moravské naftové doly a.s. (MND) in the Czech Republic. 2E.ON Ruhrgas Mittel- und Osteuropa GmbH has an indirect interest of 24.50 percent in SPP, Slovakia.
3Ekopur d.o.o. holds 7.09 percent of Geoplin d.o.o. in Slovenia.
4E.ON Romania S.R.L. holds 51.0 percent in each of the four following Romanian companies: E.ON Gaz România S.A., E.ON Gaz Distributie S.A., E.ON Moldova Furnizare S.A.
Germany
As of December 31, 2008, Thüga held interests in operating companies which are primarily municipal utilities. The top ten share- holdings in terms of unaudited total sales in 2008 are as follows:
Competitive Environment
Along with oil and lignite/hard coal, natural gas is one of the three primary sources of energy used in Germany. Gas is cur- rently used for about 22 percent of Germany’s energy consumption, and satisfies about a third of the energy demand of the German industrial and commercial/residential sectors. Competing sources of energy include electricity and coal in all sectors, gas oil and district heating in the commercial/residential sector and gas oil and heavy fuel oil in the industrial sector. Natural gas is also used, but on a limited basis, as an energy source for power stations. Since the 1970s, natural gas has made particu- lar gains in the residential space heating market, where it is marketed as a modern and environmentally-friendly energy source for heating homes. At year-end 2008, approximately 49 percent of German homes were heated using gas, making gas the leading energy source for this market. In 2008, gas was chosen as the heating method for the majority of new homes under construction. Although renewable energies are increasingly popular, natural gas was able to defend its leading position in the heating market.
Within the German gas market, E.ON Ruhrgas competes with domestic and foreign gas companies, the gas subsidiaries of oil producers and pure trading companies. Major domestic competitors include RWE Energy, Verbundnetz Gas AG and Wingas. Foreign competitors include Gaz de France, Econgas, Essent and Nuon. E.ON Ruhrgas currently enjoys a strong market posi- tion, supplying approximately 49 percent of all gas consumed in Germany in 2008. Nevertheless, E.ON Ruhrgas considers com- petition in the German gas market to be vigorous, with both new and established competitors vying for the business of E.ON Ruhrgas’ direct and indirect customers. E.ON Ruhrgas believes it was able to successfully compete in 2008 by remaining flex- ible in its contract and price negotiations and by offering attractive terms and services to its established and potential cus- tomers. In the future it is expected that the new network access model described above in “—Transmission and Storage— E.ON Gastransport” will lead to further intensification of competition.
For information about gas price trends in 2008, see “—Sales” above.
Outside Germany, the gas markets in which E.ON Ruhrgas operates are also subject to strong competition. Thüga’s Major Shareholdings in Germany
Share held
Stadtwerke Hannover Aktiengesellschaft 24.00%
N-ERGIE Aktiengesellschaft 40.81%
Mainova Aktiengesellschaft 24.44%
DREWAG-Stadtwerke Dresden GmbH 10.00%
badenova AG & Co. KG 47.30%
Gasag Berliner Gaswerke Aktiengesellschaft 36.85%
Erdgas Südbayern GmbH 50.00%
Stadtwerke Karlsruhe GmbH 10.00%
Stadtwerke Duisburg AG 20.00%
Overview
E.ON UK is one of the leading electricity and gas companies in the United Kingdom. It was formed as one of the four succes- sor companies to the former Central Electricity Generating Board as part of the privatization of the electricity industry in the United Kingdom in 1989. E.ON UK and its associated companies are actively involved in electricity generation, distribution, and retail. E.ON UK’s trading operations were legally transferred to E.ON Energy Trading at the beginning of 2009. However, this business was managed and reported by the Energy Trading market unit throughout 2008. As of December 31, 2008, E.ON UK owned or through joint ventures had an attributable interest in 10,330 MW of generation capacity, including 359 MW of CHP plants. E.ON UK served approximately 8.1 million electricity and gas customer accounts at December 31, 2008 and its Central Networks business served a further 5.0 million customer connections. The U.K. market unit recorded sales of €11.1 billion in 2008 and adjusted EBIT of €0.9 billion.
Operations
In the United Kingdom, electricity generated at power stations is delivered to consumers through an integrated transmission and distribution system. For information about the principal segments of the electricity industry, see “—Central Europe—Oper- ations.” All electricity transmission in Great Britain is operated by National Grid plc (“National Grid”).
E.ON UK operates significant generation and retail gas and electricity businesses. The company served approximately 8.1 mil- lion retail customer accounts at December 31, 2008, including approximately 5.2 million electricity customer accounts and 2.9 million gas customer accounts. E.ON UK’s Central Networks distribution business served 5.0 million customer connections as of the end of 2008.
The U.K. market unit comprises the non-regulated business, including generation, retail and energy services, the regulated Dis- tribution business, and other activities, such as certain non-distribution assets and the E.ON UK corporate center. In 2008, elec- tricity accounted for approximately 67 percent of E.ON UK’s sales, gas revenues accounted for approximately 29 percent and other activities accounted for 4 percent.
The following table sets forth the sources and sales channels of electric power in E.ON UK’s operations during each of 2008 and 2007:
E.ON UK’s Sources and Sales of Electric Power
Million kWh 2008 2007 +/– %
Sources of Power
Own production 40,390 41,236 –2.1
Purchased power from power stations in which E.ON UK has an interest of 50 percent or less 1,400 1,239 +13.0 Power purchased from Energy Trading/other suppliers1 51,126 35,499 +44.0
Power used for operating purposes, network losses and pump storage –166 –159 +4.4
Net power supplied2 92,750 77,815 +19.2
Sales of Power
Mass market sales (residential customers and small- and medium-sized enterprises)3 32,494 34,164 –4.9
Industrial and commercial sales 18,632 18,363 +1.5
Energy Trading/other4 41,624 25,288 +64.6
Net power sold2 92,750 77,815 +19.2
1In 2007, this figure reflects external purchases from the market, activity that was transferred to Energy Trading in 2008. Accordingly the figure for 2008 represents purchases-
from Energy Trading needed to satisfy retail customer demand.
2Excluding proprietary trading volumes in 2007. This activity was transferred to Energy Trading in 2008. 3Mass market sales were lower in 2008 due to lower customer numbers and customer behavior.
The following table sets forth the sources and sales channels of gas in E.ON UK’s operations during each of the periods presented: