VERBUND Supervisory Board Says "Yes" To European Hydro Power

7/16/2001Wien

Figures of the hydro power company with European dimensions speak for themselves - Leading role of VERBUND, holding over 60 percent - Transnational hydroelectric power company offers economic and ecological advantages and strengthens renewable energy in the liberalized market - Ownership and water rights remain in Austria, contrary to false statements

Today the Supervisory Board of VERBUND has approved the framework agreement between E.ON Energie and Verbundgesellschaft on the establishment of European Hydro Power GmbH (EHP). This was an important step to the establishment of a hydroelectric power company with European dimensions under the leadership of VERBUND.

The figures of EHP, in which the hydroelectric plants of VERBUND-Austrian Hydro Power AG (AHP) and those of E.ON Wasserkraft GmbH will be merged, speak for themselves. The company will dispose of more than 200 hydroelectric plants with a capacity of approx. 9,600 MW and a mean generating capacity of over 35,000 GWh when completed and employ approx. 2,500 persons in Austria and in Germany. EHP is to be headquartered in Salzburg, where approx. 300 highly trained persons will be employed.

In the company, which bundles the activities of the two large producers of power generated from eco-friendly, renewable water power and will thus guarantee the optimal use of this valuable form of energy, VERBUND will clearly take the leading role, holding a share of over 60 percent.

To VERBUND and its shareholders the leading role in the joint hydro power company means a considerable economic boosting, particularly since EHP will be consolidated in the VERBUND balance sheet. This will bring a 15 percent jump in sales and an increase of even 25 percent in the operating result. Considering the moderate growth of the domestic power market - one to two percent annually - these values could be reached in seven years at the earliest. The savings potential resulting from the joint operation of the power plants and an optimized use of funds in all sectors amounts to approx. 300 million ATS (25 million Euro) p.a.

In addition to the economic benefits the transnational hydroelectric power company also offers clear ecological advantages: Hydro power will be better able to hold its ground in the liberalized European market – also versus nuclear power.

The total production of EHP will be at the disposal of VERBUND and E.ON Energie according to their shares. VERBUND and E.ON commit themselves to buy the total production of EHP at market prices derived from wholesale prices.

Contrary to false statements that have repeatedly been made this joint hydro power company does not at all mean giving up Austria’s hydroelectric plants or the water rights, particularly since EHP takes on the operational management and coordination but not the direct ownership of the power plants or the water rights. The latter will remain under the ownership of AHP in Austria and E.ON Wasserkraft GmbH in Germany respectively. Thus E.ON is not only a minority partner in EHP but it also does not gain any influence over the domestic water resources in terms of property rights.