Page 1

German Investment SeminarDr. Erhard Schipporeit, E.ON AG

January 15, 2002

Page 2

E.ON Group - Strategy

Expand to become a top global integrated energy service provider via focus and growth:

• Concentrate exclusively on core energy services business

• Pursue accretive acquisitions to cement leading position in Europe and to establish solid position worldwide

• Dispose of non-utility activities

• Continually cut costs and restructure throughout the Group

Page 3

Energy

E.ON Energie 100%

– Electricity

• Generation

• Trading

• Transmission/ distribution

• Supply

– Gas

– Water

Non-core activities

E.ON AG

E.ON Group – Focus on core business

OilVEBA Oel*100%ChemicalsDegussa 64.6%Real EstateViterra100%Other ActivitiesVIAG Telecom 100%E.ON Telecom 100%Stinnes 65.5%VAW aluminium* 100%

*Divestment initiated

Page 4

E.ON Group - Divestment of non-core assets ahead of plan€ in millions

77,872 19,455

42.5 - Divested1,320

1 Sales 1999 2 At E.ON consolidated sales

Orange Communications SA

Stake%

Sales2000

Proceeds(equity value)

Comments

71.84971

100100313245

9441,891

8361

3,4385,355

--

Divestment initiatedDivested

DivestedDivested

64.6 20,139 -

--

215

100 28,062 2,800

1,900300

3,800870

- Divested7,250

Listed companies

MEMCSchmalbach-LubecaGerresheimer Glas

Other companies

VAW aluminiumKlöckner & Co.E-PlusCablecomVIAG Interkom

Degussa

VEBA Oel

Stinnes 65.5 11,981 -

VEBA Electronics 100 3,9262 Divested1,000Viterra 100 1,300 -

Bouygues Telecom 17.5- -Connect Austria ONE 50.1- -

Put option with BP

Divested

Divested

Divested

Page 5

E.ON Group - Implementing E.ON‘s global growth strategy

• Establish premier supply business in Germany (eg. #1 - brand)• Participate in further privatization of municipalities• Increase stakes from minority to majority interests

Strengthen corebusiness inGermany

• Expand around Germany (eg. majority in Sydkraft)• Establish European-wide wholesale presence• Enter into non-contiguous markets (eg. UK through

Powergen)

Broad expansion inEurope

Growth outside Europe

• Acquire integrated utilities in North America (eg. LG&E)

• Selectively engage in South America

Page 6

E.ON Energie - Second-largest utility in Germany

Majority participations

Minority participations

Includes only participations > 25%=

SCHLESWAGSCHLESWAG

TEAGTEAG

SCHLESWAGSCHLESWAG

e.dise.disAvaconAvacon

PESAGPESAGEAMEAM

EWEEWE

E.ON Bayern

E.ON Bayern

EMREMR

Page 7

Participation%

Municipal utilitiesStadtwerke GermersheimStadtwerke StadeStadtwerke ChemnitzGemeindewerke AnsbachGemeindewerke HaßlochStadtwerke HomburgStadtwerke Villingen SchwenningenStadtwerke PforzheimEnergieversorgung HildesheimWasser- und Energieversorgung SalzgitterStadtwerke EnnigerlohStadtwerke GrünstadtStadtwerke KirchheimbolandenStadtwerke Braunlage

Salesmill €

2520154025252535132440212020

5064

4008240

1258550

16090243017

7

Number of customers

10,00023,000

176,00025,00010,00025,00033,00075,00064,00029,00013,50025,500

8,3004,300

E.ON Energie - Acquisitions of Municipalities (Examples)

Page 8

E.ON Energie - Strong market share in gas distribution in Germany2000 (pro forma)

Turnover(mill €)

1,594

Sales volume(bn kWh)

72.5

•The leading local distribution company in Germany*

•Further participations in Italy, Austria, Czech, Hungary, Latvia,Sweden, Netherlands and Poland (co-operation)

•German gas market: € 20 bnEuropean gas market: € 60 bn

Thüga

Thüga

Gelsenwasser

E.ON Bayern

SCHLESWAG

AVACONEWE

Thüga

Thüga

Heingas

Gelsenwasser

E.ON Bayern

SCHLESWAG

AVACONEWE

*Including minority participations = 20%>

EWE

Page 9

In Germany‘s gas market, E.ON needs to make up ground in the import and long-distance delivery segments

GENERATION

TRANSMISSIONDISTRIBUTION SUPPLYELECTRIC

TY

IMPORTLONG-

DISTANCELOCAL SUPPLYGAS

* Includes shareholdings greater than 20 %

Source: E.ON

Market position*ExcellentGoodWeak

Page 10

59.8%

10.1%

Through Gelsenberg (total stake: 25.5%) E.ON can obtain a substantial interest in Ruhrgas

E.ON

Ruhrgas

Bergemann Gelsenberg Brigitta

Schubert Other

100.0%0.2%

25.0% 15.0% 0.2%

ThyssenKrupp

RWE

Mannesmann

52.5%

13.5%

23.6%

50.0%

50.0%

Shell

ExxonMobil

3.1%

30.0%

Gelsenberg

Preussag

ExxonMobil

17.7%

49.2%

RAG

Pooling agreement

Gelsenberg0.1%

58.2% 41.8%

Page 11

Geographically, Ruhrgas activities outside Germany fit E.ON‘s strategy very well

E.ON‘s gas interests

Ruhrgas shareholdings

Page 12

Thüga participationsT

REWAG

N-ERGIE

swb

T

TT

TT

T

T

Turnover(mill €)

217

Sales volume(mill m3)

259

•15% market share in Germany*

•Broad experience in drinking and sewage water

•German water market: € 25 bnEuropean water market: € 80 bn

*Including minority participations = 20%>

E.ON Energie - Largest privately-owned water operator in Germany2000 (pro forma)

Page 13

subsidiarysubsidiaryshareholdingshareholding

co-operationco-operationco-operation

RAO "Gazprom"

Eesti Energia

Jantarenergo

RAO "EES Rossii"

Poland (9 Distribution Comp., PSE and PGNiG)

Latvenergo RAO "Gazprom"

Eesti Energia

Jantarenergo

RAO "EES Rossii"

Poland (9 Distribution Comp., PSE and PGNiG)

Latvenergo RAO "Gazprom"

Eesti Energia

Jantarenergo

RAO "EES Rossii"

Poland (9 Distribution Comp., PSE and PGNiG)

Latvenergo

BKW

E.ON Italia

Watt

E.ON Bohemia

Lenenergo

E.ON Polska

Viking Cable

RAGE.ON Hungária

E.ON Benelux

Polenergia

Baltic Cable

Sydkraft

E.ONScandinavia

Electra Italia

Lietuvos Energija

Latvijas Gaze

EV3 I/S

BKW

E.ON Italia

Watt

E.ON Bohemia

Lenenergo

E.ON Polska

Viking CableGraninge

RAGE.ON Hungária

E.ON Benelux

Polenergia

Baltic Cable

Sydkraft

E.ONScandinavia

Electra Italia

Lietuvos Energija

Latvijas Gaze

EV3 I/S

E.ON Energie - Strong international expansion

Page 14

The UK - A key European market

• Third largest European electricity market (~ 300 TWh sales)

• Leading country in energy liberalization

• Value creating opportunities exist for

– flexible portfolio generators

– experienced asset backed traders

– efficient operators of distribution assets

– innovative retailers with strong nationwide brand

• Scope for further synergistic consolidation

Page 15

Powergen: UK excellence

• Integrated trading strategy• Leading market player

• World-class, flexible and diversified generation portfolio

• Efficient distribution assets

Retail • Targeted marketing strategy with strong brand• More than 3 million customer accounts - and

growing

Trading

Assets

Page 16

The US - World‘s largest power market

• Larger than total European electricity market

• Offers higher growth and return potential than Europe

• Integrated utility as the accepted business model

• Value creation opportunities from introducing European best practices

• Further opportunities arising from

– fragmented nature of the market

– market liberalization

– convergence of gas and electricity

Page 17

Midwest an attractive region within the US power market

ECAR

MAIN

New York

Philadelphia

Frankfort

Detroit

ChicagoMAAC

(1) MAIN = Mid-America Interconnected Network; ECAR = East Central Area Reliability Coordination Agreement; MAAC = Mid-Atlantic Area Council(2) Including Illinois, Indiana, Kentucky, Maryland, Michigan, Missouri, New Jersey, Ohio, Pennsylvania, West Virginia and Wisconsin

North American Electricity Pools(1)

• Midwest(2) with around 30% of US electricity demand

• Crossroads of major energy flows, well interconnected and with good fuel supply options

• Heavily industrialized region

• Consolidation opportunities in a fragmented market

• Positive regulatory environment

LG&E

Page 18

LG&E: US excellence

• Reliable, low cost generation assets• Opportunities for off-system sales at attractive rates

(1) USA, 1999 National and Midwest, 2000 Midwest.

Regulation

Distribution

Generation

• Favourable regulatory environment– incentive based rate plan– pass-through of fuel costs– recovery of environmental costs

• Top quartile regional efficiency ranking in distribution - and improving

• High service levels and customer satisfaction• (#1 JD Power survey1))

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Divestment of non-core activities

ASTA Medica-GroupAWD PharmaOnkologieHealthcare/RXZentarisGerman Remedies (27.7%)

dmc2

PhenolchemieDegussa DentalAgro ChemicalsMetallurgical ChemicalsGelatinSaltTFL (50% JV with Ciba SC)KWH (51% Degussa)Textile AdditivesOther (Zeolites, DMT, Oxo-C3)Degussa Bank

Total

Sales 2000

0.80.10.20.5------

2.51.20.50.20.30.20.2---------0.5---

approx. 6.5

Chemicals - Systematic focus on specialty chemicals€ in billions Diveste

dComments

Enterprise value

0.050.53

1.200.420.58

n.a.n.a.n.a.n.a.n.a.

approx. 2.8

Sold to Pliva Group (Croatia)Sold to Baxter International Group (USA)

Sold to OM Group Inc. (USA)

Sold to Ineos Plc. (GB)Sold to Dentsply International Inc. (USA)

1st step: Reduction in share from 64% to 49%

Sold to Schroder Ventures

Sold to Allied Resource Corporation (USA)

Zeolites partly sold to FMC (USA)

Sold to Calida (India)

1st step: Joint venture with Pechiney

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realized1993 - 2000

planned2001 - 2003

1,490

340

876

-

2,706

1,020

60

380

50

1,510

realized1993 - 1999

realized2000

1,060

308

796*

-

2,164

430

32

80

-

542

E.ON Group - Cost Management€ in millions

Electricity

Oil

Chemicals

Holding

Total

*Only Degussa-Hüls,without SKW Trostberg and Goldschmidt

Page 21

+/- %2001

E.ON Group - Internal Operating ProfitNine Months€ in millions

Energy

Chemicals

Oil

Real Estate

Telecommunications

Distribution/Logistics

Stinnes

Klöckner

VEBA Electronics

Aluminum

E.ON AG/Other/Consolidation

Total

Pro forma2000

1,335

431

294

109

-100

236

180

56

0

229

324

2,858

1,255

516

226

53

-670

400

153

89

158

180

-117

1,843

+6

-16

+30

+106

+85

-41

+18

-37

-

+27

-

+55

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Group internal operating profitNet book gainsCost management and restructuring expensesOther non-operating earningsForeign E&P taxes

Results from ordinary business activitiesIncome taxesMinority interests

Results from ongoing operationsResults from discontinued operationsEarnings from first-time application of SFAS 133

Group net income

Earnings per share (in €)- from ongoing operations- from discontinued operations

1,8434,570-116264365

6,926-2,994

-338

3,594-50

3,589

4.94-0.01

+/- %2001E.ON Group - ResultsNine Months€ in millions

Pro forma2000

2,858193

-174-188337

3,026-926-245

1,855-827

-2

1,026

2.74-1.22

+55-96-50

--8

-56+69+28

-48--

-71

-45-

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E.ON Group - Outlook 2001

• Full year Group internal operating profit to markedly surpass previous year‘s number

- Energy: Slightly above prior-year figure

– Chemicals: Distinctly below previous year‘s number

– Oil: On par with prior year‘s solid results

– Real Estate, Telecommunications, Stinnes, VAW aluminium:

Earnings improvements

• Results from ordinary business activities significantly below the 2000

figure.

Page 24

E.ON AGBack up charts

Page 25

Standard-rate customers

(households)

Medium-sized special rate

customers (manufacturing)

Large industrial customers

(manufacturing)

Largest customers

Grid access fee: This covers

the grid operator’s costs for

providing the grid and system

services, for meter reading

and for billing.

ca. 13.0 Pf/kWh ca. 6.5 Pf/kWh ca. 3.0 Pf/kWh ca. 1.0 Pf/kWh

Protective measures for CHP 0.45 Pf/kWh 0.45 Pf/kWh 0.45 Pf/kWh 0.45 Pf/kWh

Concession fee Maximum rate: 2.60 Pf/kWh

(communities under 25,000)

to 4.69 Pf/kWh

(communities over 500,000)

Maximum rate: 0.22 Pf/kWh none none

Electricity tax 3.0 Pf/kWh 0.6 Pf/kWh 0.6 Pf/kWh 0.6 Pf/kWh

VAT from 3.05 to 3.38 Pf/kWh

(depending on size of

concession fee)

1.24 Pf/kWh 0.65 Pf/kWh 0.33 Pf/kWh

Total point of connection fee 22.10 to 24.52 Pf/kWh 9.01 Pf/kWh 4.70 Pf/kWh 2.38 Pf/kWh

New agreement for electricity transmission – Examples for point of connection fees for customers, January 2001

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E.ON Energie - Reduction of installed generation capacity (1) (2001-2003)Shutdowns 2,279 MW Realized

- Offleben C 280 MW- Rauxel 2 164 MW- Westerholt 1 138 MW- Westerholt 2 138 MW- Stade 630 MW- Arzberg 5 104 MW- Arzberg 7 121 MW- Schwandorf D 292 MW- Franken II B1 206 MW 206 MW

- Franken II B2 206 MW 206 MWCold reserve 1,333 MW - Staudinger 2 249 MW 249 MW

- Pleinting 2 402 MW 402 MW

- Emden 4 430 MW 430 MW - Arzberg 6 252 MWReduction 3,612 MW

- Staudinger 1 (winter only) 249 MWTotal reduction of installed capacity 3,861 MW

1,493MW

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Realized

Total reduction of installed capacity 3,861 MW1,493 MW

Shutdown of assets currently in cold reserve 293 MW- Aschaffenburg 21 150 MW

150 MW- Aschaffenburg 31 143 MW

143 MW

Continuation of cold reserve 755 MW- Irsching 1 151 MW- Irsching 2 312 MW- Pleinting 1 292 MW

Total reduction 4,909 MW1,786 MW

E.ON Energie - Reduction of installed generation capacity (2) (2001-2003)