Hafslund ASA. Norway s unique supplier of Power and Security. Capital Markets Day. 13th May Rune Bjerke, President and Chief Executive Officer

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1 Hafslund ASA Norway s unique supplier of Power and Security Capital Markets Day 13th May 2003 Rune Bjerke, President and Chief Executive Officer

2 Agenda New Hafslund by Rune Bjerke Hafslund Power Sales by Tove Pettersen Hafslund Security bybjørn Frogner Hafslund Network by Per KristianOlsen Hafslund Power Generation by Knut Mikalsen Other Business Areas by MortenGrødahl Financial figures by Christian Berg Strategy and goals by Rune Bjerke

3 Hafslund on the right track Former Hafslund years of history Consolidation & restructuring New Hafslund - 15 months of history Hafslund 2003: i) one company, ii) one brand name, iii) significant improvement of results

4 A leading Nordic energy company Dec/Jan 2001 Merger agreed March Company legally established Hafslund today Merger approved rationale: The Nordic energy sector har gone through significant restructuring. Demand for larger players. A more cost efficient structure. Increased financial power. Increased focus on creativity. A leading and independent listed Nordic energy company. Restructuring and integration: Network and contraction separated. Viken Fjernvarme and Viken Eidendom de-merged. A number of companies established. Oslo Energi and Tindra mutually located. continued restructuring and integration: Hafslund Nett Øst established. Majority ownership in Mjøskraft (54.2%). Oslo Energi, Tindra and Gjermå changed name to Hafslund Strøm. Mutual invoicing. Mutual location.

5 Organisational structure Hafslund ASA Rune Bjerke Corporate staff Accounting & finance(1) M&A Morten Grødahl Christian Berg Arne Erik Kristiansen Knut Mikalsen Per Kristian Olsen Tove Pettersen Bjørn Frogner Vibeke Strømme Power Generation Network Power Sales Contracting and Security Service Wholy owned companies Subisidiaries > 50 % Partly owned companies < 50 % Hafslund Produksjon Norge Hafslund Produksjon USA Hafslund Delta (2) Viken Nett Hafslund Nett Øst Fjernvarme Øst Mjøskraft Viken Fjernvarme Hafslund Strøm (3) NorgesEnergi Fredrikstad Energisalg Økokraft Røyken Kraft Göta Energi Holding Hafslund Entreprenør Hafslund El-sikkerhet Hafslund Installasjon Hafslund ToKom Hafslund Sikkerhet Hafslund FakturaService Hafslund Partner Hafslund Kundesenter Nodenet Operation and maintenance of power plants Operation of networks and other infrastructure Delivery of power to private and business market Offers security systems El-contracting, installation and el. security Former cost centres now operated as service companies Medium-sized power producer Norway s largest power distributor Norway s largest power supplier Norway s third largest security company Note (1): Includes Hafslund Venture Note (2): Includes power trading Note (3): Merger of Oslo Energi, Tindra and Gjermå

6 Significant initiatives accomplished Change of focus and new ambitions Expansion and integration of companies. Substantial reduction in number of employees. Distinguish between the order and execution role. Changed operational structure with focus on professional project management and purchasing. Mutual location of support functions within Hafslund Services. Increased margin focus and reduction of debt level. from a traditional energy company to a power and security company

7 Power and Security Production of power: Water power plants in Glomma. Transport of power to approx customers: Power network in Oslo, Akershus and parts of Østfold. Sale of power to approx customers mainly at the eastern part of Norway. Domestic security: Installation and operation of theftand fire alarms for approx customers. Corporate security: Stationary and mobile security. Security technology: High security solution, access control and video surveillance. Norway s unique supplier of power and security

8 Power and Security rationale Power 1. Market leader within sale and distribution in the most densely populated area in Norway. 2. Leading competence and strong company culture. 3. Spearhead within restructuring of the Norwegian energy sector. New meters in all homes Technological convergence. Common client base and customer service. Cross sale. Synergies between activities. Security 1. Significant market share already achieved. 2. Market in strong growth with attractive earnings potential. 3. Limited capital tied up. Power and Security in all private homes

9 Parliament resolution: Two-way communication Innst.S.nr.138 ( ): The Parliament requests the Government, in relation to the signalled review of the network tariffs, to evaluate the various proposed models for financing of voluntary alternatives to digital meter reading between the power customer, the supplier and the network company. The Parliament s resolution on digital meter reading strengthens the rationale behind Hafslund s focus on power and security

10 Hafslund Power Sales Capital Markets Day 13th May 2003 Tove Pettersen, Senior Vice President

11 Hafslund Power Sales Description: Hafslund Power Sales is the largest supplier of power in Norway, mainly focusing on the eastern part of Norway. Facts: Turnover 2002: NOK 3.3 billion Number of employees: 100 Number of customers: approx Market share Oslo and Akershus: approx. 75% Power generation 2002: 15 TWh Share of capital employed: 8.5% Hafslund Power Sales is the leading power supplier in Norway, both within the private and corporate sector

12 Organisation Hafslund Power Sales 100% 100% 75% 50% 100% Hafslund Strøm AS* Fredrikstad Energisalg AS Økokraft AS Göta Energi AB NorgesEnergi AS Market areas: The eastern part of Norway The eastern part of Norway The Mjøs region The V. Götaland area Nationwide Turnover: NOK mill. NOK 168 mill. NOK 297 mill. NOK 270 mill. NOK 265 mill. EBITDA: NOK 159 mill. NOK 16.6 mill. NOK 10.1 mill. NOK (18) mill. NOK 7.6 mill. No. of employees: No. of customers : Generated volume (TWh): Main focus: Preserve and develop existing customer relations Preserve and develop existing customer relations Preserve and develop existing customer relations Preserve and develop existing customer relations Profitable customer growth The main activity lies in Hafslund Strøm AS the country's largest power supplier Note: * A merger of Oslo Energi AS, Gjermå Kraft AS and Tindra AS

13 Hafslund s market position NorgesEnergi No. of customer Hafslund Fjordkraft LOS Lyse Eidsiva Østfold (Fortum) Shell Trondheim NTE Forbr ukerkraft Troms Haugaland Krafinor Ishavskraft Tussa Tafjord 0 Source: Pareto, Hafslund Hafslund is by far the largest supplier of power in Norway, holding a strong position in the eastern part of Norway

14 Increased focus and change of power supplier No. of changes this quarter No. of private households with non-dominating supplier Source: NVE Change from local to regional and national suppliers

15 End-user market for power Mass market: Well-functioning competition: Increased change of power supplier and attention. Average regional market share of 82%. 85% of private households have variable power prices/standard agreements: The majority of the customers who change power supplier also chose a product with a variable price structure and no lock-in period. Corporate market: Tough competition: Historic fight for market shares. Low margins. Complex product structure: Fixed price, spot, portfolio management etc. Efficiency necessary in order to meet competition and increased margin focus

16 Products and segments Mass market Corporate market Product Volume Share Volume Share Variable price / standard contract 7.8 TWh 70 % Guarantee products 1.5 TWh 14 % Fixed prices 0.7 TWh 7 % 1.0 TWh 25 % Spot agreements incl. management and limit 0.9 TWh 8 % 2.2 TWh 56 % Energy funds 0.5 TWh 11 % Boiler power 0.1 TWh 1 % 0.3 TWh 8 % Total 11.0 TWh 100 % 4.0 TWh 100 % Hafslund Power Sales generated 95% of its profit from the mass market in 2002

17 Restructuring Established Hafslund Power (merger): Reduced number of employees (20 man labour-years). Integration of systems and establishment of common customer support centres. Introduction of one brand name Hafslund. Collective invoicing with Viken: Common customer support centre. Invoice production/distribution. Common back-office. Collective invoicing from Full effect within Potential annual cost reduction: approx. NOK 20 million. Further potential in restructuring and increased efficiency

18 Market goals and customer development Hafslund Power Master brand. Mainly regional focus. Focus on margin and development of customer relations. Product development increased competitiveness. Better service higher loyalty from customers. Power and Security combined marketing and sale cross sales. NorgesEnergi National fighting brand. Organic customer growth. Simpler product structure and service maintaining a low cost base. Competitive products. Flexible operating solutions. Recruiting the swappers with a low price brand

19 Power and Security The group s customer base provides great opportunities for efficient cross selling of Hafslund s products. Examples of common marketing and cross sales: Success with sale of TrippEl customers. Leads generation on security products leads, high hit rate. Campaigns and leads on installation services and El.check. Power and Security great opportunities for Hafslund

20 Finance Hafslund Power Sales NOK million 2000* 2001* Q02 1Q03 Operating income Increase n/a 50.0% -3.5% n/a 99.3% EBITDA 4 (64) EBITDA margin 0.2% Neg. 4.9% 3.9% 0.8% Operating result (67) (164) (3) Operating margin Neg. Neg. 2.2% 2.2% Neg. Profit goals 2003: Operating result per kwh of NOK øre. Increase to NOK øre within Comments 1Q03: Volume reduction of 1 TWh. Increased basic costs. Note: * Pro forma results due to merger 2001 Improved results 2002 due to: i) restructuring, ii) focus on costs, iii) successful protective strategy and iv) stable customer growth

21 Power Sales goals Stable market share in the mass market. Profitable growth in the corporate market. Increased earnings per customer through increased margin and cross sales. Further synergies internally and across Hafslund. Reduced customer recruitment costs. Increased cross sales Power and Security. Goal oriented campaigns. Simplified customer communication and improved availability. Develop the brand Hafslund. Hafslund the preferred power supplier

22 Hafslund Security Capital Markets Day 13th May 2003 Bjørn Frogner, Senior Vice President

23 Hafslund Security Description: Norway s third largest security company with four business areas: Facts: Domestic alarm systems Security services Cash in Transit unit Integrated security services Established 2002 re-branded autumn 2002 Turnover 2002: NOK 203 million Number of employees: approx * Market share 2002: approx. 8% Expected market share 2003: approx % Share of capital employed: 0.8% One of Norway s leading security companies Note: * Inclusive part time and commission based employees

24 From six entrepreneur companies to Hafslund Security Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q Østlandske sikkerhet Eurogard From integration and restructuring to a solid platform for organic growth

25 Business areas and operational structure Hafslund Sikkerhet Privat AS Hafslund Sikkerhet Bedrift AS Private SMEs Large customers Profit centres Operation (mobile and stationary security, Cash in Transit) Cost centres Clear split between sale and operation, aiming to establish a total customer concept for power and security

26 Products and services Private SMEs Large customers Alarm Turn-out/standby TV surveillance Mobile security Stationary security Cash in Transit (Bank, Trade + operating machines) Integrated systems (Alarm+admission control+itv) Tracking systems Full service supplier to the private and corporate market

27 Localisation and coverage Arendal Asker og Bærum Bergen Drammen Fagernes Fredrikstad Gjøvik Hadeland Hamar Haugesund Jessheim Kongsberg Kristiansand Lillehammer Molde Moss Nittedal Oslo Øst Oslo Vest Sandefjord Sandnes Ski Skien Steinkjer Trondheim Tønsberg Ålesund Broad geographical presence

28 Market analysis of the private market Internationally Nationally USA Approx. 24% penetration. Annual growth of approx. 10%. Europe Approx. 8% penetration. Annual growth of approx. 15%. Norway Approx. 11% penetration. Annual growth of approx. 30%. Total market: Approx customers. Market growth: More than doubling during Players (figures as of ): Falken: approx Securitas: approx Hafslund: approx Sector: approx Security: approx Source: Bendi International Source: Hafslund Security An organic growth market where Hafslund is well positioned

29 Hafslund s customer growth retail market e No. of customers Anticipated customer growth per quarter: Stable growth of customers from q q q q q q q q q q. 04e More than 20 times as many customers in two years

30 Why is Hafslund successful within security? Strong brand name Hafslund Security. Substantial and well-operating sales personnel: 30 sales units. 30 sales executives and 250 security consultants. Motivated and commission based sales personnel. Standardisation: Product Price Sale Operation Customer Satisfaction Index A sales and service oriented organisation

31 Income and cost development in the retail market 600 The income is based on fixed and stable subscription income. Low number of customers leaving Hafslund NOK 300 NOK 260,- Customer acquisition costs are stable. The operating costs per customer are gradually reduced Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Cost/cust. Income/cust. For the private market, break even is anticipated in 2003

32 Finance Hafslund Security NOK million 2000* 2001* Q02 1Q03 Profit goal 2003: EBITDA in balance in Operating income Increase n/a n/a 142% n/a 41% EBITDA - 5 (71) (7) (28) EBITDA margin n/a 6.0% Neg. Neg. Neg. Operating result - (2) (97) (12) (42) Operating margin n/a Neg. Neg. Neg. Neg. Note: * Pro forma results due to merger in 2001 Comments: 29% of the turnover generated in the private market and 61% in the corporate market. The share of turnover generated in the private market is quickly increasing. As of , the part of capital employed in Hafslund Security constituted 0.8%. Positive EBITDA during 2nd half of 2003

33 Digital meter reading Proposal presented in the Norwegian Parliament : Parliament requests the Government to offer power customers nationwide two-way communication between power customer, power supplier and net company. Parliament decided to ask the Government to evaluate proposals regarding the different models for financing of digital meter reading based on a voluntary arrangement. Hafslund ToKom AS established The objective is to develop a common, technological solution for the customer with regards to electricity control, measuring data and security solutions. Digital meter reading opens up for multifunctions

34 Hafslund Security goals Ongoing growth in number of home alarm customers. The largest supplier of security products in the private market within Standardise and quality assure all parts of the value chain. Increased focus on Cash in Transit and SME market. Establish a common alarm and operation central. Increase cross sales of power and security products and services. Making every day safer and better

35 Hafslund Network Capital Markets Day 13th May 2003 Per Kristian Olsen, Senior Vice President

36 Hafslund Network Description: Hafslund Network operates and owns the regional network in Oslo, Akershus and Østfold, and the distribution network in Oslo and Akershus as well as part of Østfold. Hafslund Network is the majority owner of Mjøskraft which owns the regional and distribution network in Gjøvik and Østre Toten. Facts: Turnover 2002: NOK million Number of employees: 220 (excl. Mjøskraft) Number of network customers: approx in Oslo, Akershus, Østfold and Mjøskraft Spread GWh 2002: approx. 15 TWh (incl. loss of 1,4 TWh) Cord/cable: approx km Share of capital employed: 72.0% Hafslund - the fourth largest network owner in the Nordic region

37 Hafslund s market position Source: NVE and the largest network owner in Norway 54 No. of customers Hafslund Network BKK Skagerak Energi Agder Energi Lyse Energi Trondheim Energiverk N-Trøndelag Elekt. Eidsiva Energi

38 Organisation Hafslund Nett AS Viken Nett AS Remote heating East 100% Treasury El-network Profit/common General conditions VA/fibre, street lights ICT Hafslund Network East 100% Viken Remote heating 33% Mjøskraft 54% Rakkestad Power plant 33%

39 Business model Administer the values in Hafslund s regional and distribution network. Distinguish between the order and execution role. Professional project management and purchase organisation. A business model with strong focus on project management and purchasing

40 General conditions for network companies Revenue scope is determined annually by the authorities (NVE). Revenue scope for the period is determined based on costs in the period Revenue scope shall cover costs/expenses in own network: Operating costs. Depreciations. Financial costs. Yield. Investments. The network activity is strongly regulated by Norwegian authorities

41 General conditions for network companies - illustration Revenue scope (allowed revenue) Standardised yield: 2-20% Operating results Efficiency requirement= 1.8% annually Based on figures reported to NVE ( ) (NOK mill.) Operation and maintenance Depreciations Operating costs??? Network loss Opening value Annual adjustments: Inflation Increase in transferred amount/customers (new investments) Modified interest level 2006 new general conditions period Altered general conditions will provide the network activity with new opportunities

42 Development of revenue scope Revenue scope for 2002 was NOK million (excl. central network). Revenue scope for 2003 estimated to NOK million. Reasons for a total revenue increase of NOK 97 million: Increase as a result of retail price adjustment: NOK 62 mill. Reduction as a result of efficiency demands: NOK (39) mill. Reduction as a result of reduced NVE interest: NOK (44) mill. Adjustment of new investments/disposable comp.: NOK 36 mill. (Adjusted price on network loss: NOK 82 mill.) NOK 97 mill. Expected revenue increase is a result of factors that are out of Hafslund s control

43 Dynamics in today s general conditions Inflation Efficiency requirements Capital cost 1995 Cost reduction Depreciation 1995 Operating cost Revenue scope Capital cost 1999 Depreciation 1999 Operating cost Revenue scope ?? Yield regulation before 1997 First period Second period The costs in the current general conditions period forms the basis for the revenue conditions in the next period

44 Network tariff households ( kwh) Øre/kWh National average (weighed) Hafslund Network Note: Network tariff = the price the customer is paying per kilowatt hour including fixed part Source: NVE Hafslund offers a network tariff far below the national average

45 Restructuring Consolidation of the company after several acquisitions, mergers and demergers. Integration of Viken Energinett, Østnett and Gjermå Energi to one network company Hafslund Network. Reduction of maintenance and investment costs through coordination. Separation of the contractor activity, measuring and settlements of accounts, accounts and customer service. Accomplished collective localisation of operating centres and established common system support. Establishment of Hafslund Nett Øst AS. Majority owner in Mjøskraft (54.2%). DBE* rise with significant economic consequences. Accomplished restructuring is reflected in improved margins Note: *DBE = Directorate for Fire and Electricity (Direktoratet for Brann og Elektrisitet)

46 Cost development last 12 months 100% NOK mill % % Mar May Jul Sep Nov Jan Mar Main. Consul. Pers. Other Total Significant reduction in personnel and maintenance costs

47 Stability and ability to deliver Hours/ year 7 Ability to deliver National average Hafslund Akershus Hafslund Oslo Source: NVE Stable network with high ability to deliver (99.98%) and low investment requirement

48 Yield NVE capital 16% 14% 13.5% 12% 11.7% Yield NVE capital 10% 8% 6% 4% 7.9% Maximum yield NVE capital 20% 2% 0% e Increasing yield on NVE network value which is approx. NOK 6.3 billion (new value approx. NOK 20 billion)

49 Development for EBITDA and investments EBITDA Investments NOK million NOK million NOK million NOK million 0 2Q 3Q 4Q 1Q Q 3Q 4Q 1Q e Last 12 months e Last 12 months Improved results and reduced investments

50 Finance Hafslund Network NOK million 2000* 2001* Q02 1Q03 Operating income Growth n/a 16.0% -4.3% n/a% 25.8% EBITDA EBITDA margin 38.5% 36.0% 38.0% 45.3% 49.4% Operating result Operating margin 13.9% 13.7% 16.4% 26.0% 34.5% Note: * Pro forma results due to merger 2001 Profit goal 2003: Yield NVE capital 13.5%. Comments: Improved results due to: Coordination of processes. Improved operating processes. Accomplished staff adjustments. The result of restructuring and focusing is seen in 1st quarter 2003 figures

51 Hafslund Network goals Continued focus on cost reductions and improved results through: Economies of scale. Identify and realise further synergies. Increase resource efficiency. Tender oriented activity. Become an efficient business oriented unit within Hafslund. Further development to achieve goal and business oriented organisation. Improve purchasing. Dispose non-core activities. Hafslund Network s value potential is realised through efficiency processes and mergers/purchases

52 Hafslund Power Generation Capital Markets Day 13th May 2003 Knut Mikalsen, Senior Vice President

53 Hafslund Power Generation Description: Hafslund Power Generation owns and operates nine water power plants in the Glomma river. In addition, Hafslund Power Generation owns three water power plants, a chip-fired plant in USA, and the trading business Hafslund Delta AS. Facts: Hafslund Power Generation s history starts before the introduction of the obligation to get a concession in Turnover 2002: NOK 733 million* Number of employees: 17 Annual average power generation: 2.9 TWh Share of capital employed: 12.5% A mid sized commodity producer of power Note: * Including Delta (power trade)

54 Hafslund s power generation capacity 825 m3/s Hafslund s production capacity 825 m3/s: 719 GWh GWh 929 GWh Source: Glommens and Laagens Brukseierforening

55 The market for power producers Altered market structure: Conversion from bilateral contracts to trading on the stock exchange. Physical power generation is delivered through Nord Pool (authorised market place). Efficient market place. Reduced predictability regarding revenue and increased requirement of handling risk. Desired revenue stability is ensured through futures and forwards (hedging). Success factors: Handling of volume (+/- 15%) and price risks. Efficient operation which gives competitive advantages in the form of low unit costs. High availability in the power generation units. Maintenance is carried out in periods of production in the power generation system. From bilateral agreements to an efficient Nord Pool

56 Hafslund s market position relative to the large Nordic power producers TWh Fortum Statkraft Sydkraft Elsam Norsk Hydro Agder Energi E-CO Vannkraft BKK Agder Energi Lyse Energi Trondheim EV Hafslund Elkem Opplandskraft Source: E-CO Vannkraft, Pareto Securities Hafslund, a medium-sized power producer in a market dominated by publicly owned manufacturers

57 Power generation in Glomma GLOMMA KRAFTPRODUKSJON GLOMMA GWh EIER (75) RØROS (750) OK DA 55/45 KURUSFOSS 55 GWh (635) (265) HEAS HrE 58/42 Several players. EINUNNA 60 GWh SAVALEN 150 GWh RØSTEFOSS 20 GWh (125) (865) (60) ELVERUM A K NØK Hafslund the largest player with 30% of the watercourse s power generation volume. RENDALEN 600 GWh LØPET 130 GWh OSA 260 GWh OSAFALLET 20 GWh (320) (580) (2785) STATKRAFT E-CO HAFSLUND Cooperation between players with regards to operation and maintenance. STRANDFOSSEN 135 GWh SKJEFSTAFOSS 125 GWh TRYSILELVA Potential for further consolidation of Glomma players. BRASKEREIDFOSS 115 GWh KONGSVINGER 150 GWh LUTUFALLET 90 GWh Hafslund efficient and optimised operating model with a good starting point for consolidation. LÅGEN BØHNSDALEN 15 GWh FUNNEFOSS 190 GWh RÅNÅSFOSS 490 GWh BINGSFOSS 170 GWh SVERIGE SOLBERGFOSS 900 GWh KYKKELSRUD 1070 GWh Significant player at the bottom of Glomma VAMMA 1290 GWh SARPSBORG 860 GWh

58 Development in volume weighted average price against spot price 1998 to Power price in øre/kwh e Gained average price Spot price Average price gained has over the last couple of years been exceeding spot price

59 Restructuring and optimalisation Improvement of operation and maintenance: Transition from periodical to critically evaluated maintenance has resulted in a significant decrease in the controllable operating costs. From 70 to 17 employees last three years. All major maintenance and upgrading on tender. Controllable operating costs are reduced by 25% from 2001 to From maintenance with own resources, through staff reductions, to personnel based on the level of maintenance which may be performed during operation. All major maintenance and upgrading on tender. Limited need for reinvestment: Extensive renovation program for the power plants ended in the spring invested NOK 380 million. Limited future reinvestment need (annually NOK million the next 20 years). Further efficiency potential for Glomma players by closer cooperation

60 Hedging Hafslund Power Generation exposure position 2003 Remaining exposure 14% Successful hedging: Participated in the price increase during autumn 2002 through open positions. Hedging position 59% Economic rent neutrality volume 27% Still a few open positions. Economic rent neutrality. Expected self-production 2003: 2.73 GWh. An active tool to optimize revenues and reduce risks

61 Cost structure Illustrative Nat. Taxes 21% Economic rent 31% Operating maintenance 23% E. taxes 12% Reg. costs 5% Licence fees 3% Network costs 5% Controllable operating costs constitute 20-25% of total costs. Charges and surtaxes constitute more than 60% of the company s total costs. The business area s cost structure is influenced by public regulations. A cost structure which to a large extent is controlled by public authorities

62 Finance Hafslund Power Generation NOK millioner Operating income EBITDA Note (1): Proforma results due to merger 2001 Note (2): Does not include Delta (power trade) Note (3): Does not include Delta (power trade) 2000 (1) (2) 2001 (1) Q02 1Q03 (3) (3) (3) (3) Growth n/a n/a 15.8% n/a 22.2% EBITDA margin 64.6% 51.2% 72.4% 69.6% 78.8% Operating profit Operating profit margin 49.1% 40.8% 66.0% 59.3% 71.5% Profit goals 2003: Continue the profit increase seen in 1Q03 for the remaining quarters in Well positioned for expected price increase. Comments: Reduced revenues from 2001 to 2002 mainly due to the decrease in power generation volume: 2001: GWh 2002: GWh (due to dry autumn) Normal: GWh Good profitability prospects for 2003 despite lower self-production than expected

63 The trading business Hafslund Delta Activity: Trade in power derivatives in Nord Pool. Futures, forwards and options. Mainly system price products (the entire area). Market maker at Nord Pool. All futures contracts. Risks: Low credit risk % of all trades are cleared. Strict demand with regards to bilateral parties. Limited market risk. Management according to Value at Risk principles. Stop/loss routines. Objective: Profit maximation within the risk mandate.

64 License and reversion Hafslund s water power plant is not subject to licensing: Acquisition of water power plants took place before the introduction of the obligation to get a concession in The government can not revert the power plants. There is a demand for full license management in case of any future share transfer in the holding companies. Changes in the reversion institute which may affect Hafslund s future situation: The government s right of first refusal in connection with section 1.4 of the Industry Concession Act (Industrikonsesjonsloven) is repealed. Reversion is also implemented for watercourse licenses too. The license period is increased from 60 to 75 years. Reversion is evaluated by the ministry Hafslund s view: Cessation of the reversion arrangement makes it possible with higher predictability in industrial solutions. Suggested changes of the rules improves Hafslund s position but does not result in any immediate changes. There should be legislative amendments which result in flexibility in stead of obstruction. Reversion should be attended with less pressing regulations, e.g. the license conditions.

65 Hafslund Power Generation goals Implement efficiency measures which further reduces controllable operating costs. Develop cooperation with other players in the Glomma river. Implement measures to further strengthen power plants with a view to increased power generation volume. Sale of power generation activity in USA. Further positioning for a possible appearance of green certificates. An efficient operation and maintenance oriented organisation with modernised power generation plants