FOLLOWING THE DECISION TO CUT THE PRICE OF NATURAL GAS BY 3% E.ON Romania is considering legal action against the energy market regulators

A.D.

E.ON Romania has acknowledged the decision of ANRE (the energy market regulator) to cut the price of natural gas by 3% starting May 1st 2009, and it is currently analyzing in detail the effects that the decision will have on natural gas operators.

According to a press release by E.ON, "it is likely that following this cut of the consumer price of natural gas, companies which are part of the E.ON Group in Romania, will be forced to drastically cut their investment budgets for this year. This would make it impossible to complete the program for the rehabilitation of the distribution network, as well the as acquiring and storing the necessary amount of natural gas for the next winter season, thus posing safety problems and endangering the ability to supply natural gas".

Given these circumstances, companies belonging to the E.ON Romania group are considering a lawsuit against ANRE. The goal of this action would also be the passing and implementation of decisions which would allow natural gas operators, to ensure the technical safety and ensure the supply of natural gas to consumers.

In the period before the decision to cut the price of natural gas, ANRE had asked natural gas market operators, to come up with solutions which would allow cutting the price of natural gas in the near future, without disrupting the services of gas supply operators.

The press release of E.ON states: "Companies belonging to the E.ON group have warned at the time that any decision to lower the price of natural gas would have to be based on a solution sustainable in the medium run, because a price cut that doesn"t cover the current costs incurred by operators will later lead to price levels which will be even less bearable for consumers. That is because the final price will eventually have to include tariffs that would allow recovering the anticipated cut of the final price, as well as covering operators" costs, according to regulations in effect. Also, had ANRE implemented a price cut anticipating the evolution of real gas acquisition costs incurred by operators, such a decision would need to have the backing of all the operators on the market involved in the production, storage, distribution and supplying of natural gas".

Already, at the end of last year, E.ON Gaz România"s posted losses of around 97 million RON from the acquisition of gas alone. On top on the costs of the previous year, which it still hasn"t covered, E.ON Gaz România posted a 38 million RON loss in Q1 2009 due to the regulated gas prices, caused by the fact that ANRE postponed introducing the new tariffs on January 1st 2009, as initially planned.