CORPORATE GOVERNANCE 1.1 CORPORATE GOVERNANCE CODE

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1 CORPORATE GOVERNANCE SINCE ITS CREATION THROUGH A PARTIAL TRANSFER OF AS- SETS BY ELECTRICITÉ DE FRANCE (EDF) ON 1 SEPTEMBER 2005, THE PUBLIC LIMITED COMPANY RTE EDF TRANSPORT (RTE) HAS BEEN ADMINISTERED AND MANAGED BY AN EXECUTIVE BOARD WHOSE WORK IS CONDUCTED UNDER THE SUPERVISION OF A SUPERVISORY BOARD WITHIN THE LIMITS IN PARTICULAR SET DOWN BY FRENCH LAW OF 9 AUGUST 2004 AND THE ARTICLES OF ASSOCIATION OF THE COMPANY. 1.1 CORPORATE GOVERNANCE CODE In accordance with paragraph 8 of Article L of the French commercial code, RTE has chosen to refer to the Corporate Governance Code resulting from recommendations presented by the Medef and the Afep in October 2003 and October RTE considers that the corporate governance approach implemented since its creation is in line with the recommendations of the Medef and the Afep, subject to legislative and regulatory specificities due to its status of public electricity transmission system operator.

2 1.2MAKE-UP OF THE SUPERVISORY BOARD In compliance with French Public Utility Democratisation Law of 26 July 1983, the RTE Supervisory Board includes staff representatives and State representatives in addition to the shareholder s representatives. The Board is made up of twelve members, in accordance with the Articles of Association, including two state representatives, four staff representatives and six representatives of EDF, the sole shareholder of the company. Messrs Pierre FONTAINE and Edouard VIEILLEFOND, representatives of the State, appointed respectively by the Decrees of 31 August 2005 and 28 September 2006; Messrs Patrick LARRADET, Dominique LORET, Charles NIETO and Patrice SEBILLE, staff representatives, were elected as members of the Board in December 2005; Mrs Marianne LAIGNEAU (Chairman) and Anne LE LORIER, Catherine CROS (appointed on 18 February 2008 by cooptation to replace Mr Michel FRANCONY), Nicole VERDIER NAVES (appointed on 18 February 2008 by cooptation to replace Mr Pierre GASSIAT) and Messrs Gérard MENJON (Vice-Chairman) and Jean-Paul BOUTTES (appointed on 18 February 2008 by cooptation to replace Marc ESPALIEU), representatives of the shareholder, EDF. The rules applicable to cumulative office holdings have been complied with by each member of the Supervisory Board. No member receives director s fees either by virtue of law expressly stating that their offices be held on a free-of-charge basis (staff and State representatives) or of the absence of any resolution on this point voted by the general assembly. Mr Jean-Jacques VINCENT, Secretary of the Works Council of RTE, is automatically invited to each of the Board s meetings and takes part without any right to vote. The members of the Executive Board, Messrs Dominique MAILLARD (Chairman), Pierre BORNARD (Vice-Chairman), Hervé LAFFAYE and Philippe DUPUIS are also invited. The General Secretariat of the Board is assumed by Mr Alain FIQUET, Legal Affairs Director of the company CORPORATE GOVERNANCE // REPORT FROM THE CHAIRMAN OF THE SUPERVISORY BOARD OF RTE 2008

3 1.3 FUNCTIONING OF THE SUPERVISORY BOARD The Supervisory Board meets, in compliance with the law, as often as the company s interest so requires, and at least once every two months, by convocation from the Chairman or Vice-Chairman of the Supervisory Board, at the head office of RTE or other place specified in the convocation. The Supervisory Board may validly discuss only if at least half of its members are present. The Chairman organises and directs its discussions and ensures that all of the business on the agenda is examined by the Board. Each year, the Supervisory Board, upon motion by the Chairman, sets down the schedule for its meetings for the coming year. At its meeting of 8 March 2006, the Supervisory Board voted its bylaws, which underscore and complete the Articles of Association governing the functioning of the Board. These bylaws were modified by the Supervisory Board at the meeting of 30 July 2008 in order to include legislative and regulatory changes. These bylaws notably stipulate training and information conditions for the members of the Supervisory Board and the duties and obligations with which they are required to comply. On this point, special reference was inserted regarding their obligation of confidentiality, considering the particular status that the company enjoys in the energy sector, and the penal sanctions provided for under Article 16 of French Law of 10 February 2000 and its decree No of 16 July With regard to information and training, the members of the Supervisory Board were invited to visit certain facilities in 2006 and 2008 (Centre national d exploitation du système (CNES) and the Villejust electric transformation facility in which high voltage work had been carried out). Some of them staff representatives were invited to take part in a training session regarding the transfer, in 2007, to IFRS standards. Since 1 September 2005, when RTE was created, the Supervisory Board met: Five times in 2005: 1 September, 9 September, 30 September, 24 October and 21 December; Six times in 2006: 8 March, 12 April, 28 June, 30 August, 4 October and 6 December; Nine times in 2007: 19 February, 28 February, 26 April, 9 May, 22 June, 29 August, 11 October, 17 October and 7 December. Six times in 2008: 18 February, 18 April, 20 June, 30 July, 16 October and 11 December. The attendance rate of the members of the Supervisory Board for 2008 was 89% (93% in 2007), it being stipulated that at each meeting, members unable to attend were represented.

4 1.4 SUPERVISORY BOARD WORKS The Supervisory Board reviews and makes decisions on the major strategic, economic, financial or technological orientations of the company s operations. It supervises management of the company ensured by the Executive Board. The Executive Board, in view of the specificity of the company as the French public power transmission system operator, has sole authority to implement operations which directly involve the operation, maintenance and development of this system. The Executive Board regularly presents reports to the Supervisory Board; these reports relate the principal actions or facts occurring in the management of the company. It further informs the Supervisory Board of important events that have occurred between each Supervisory Board meeting, which enables the Board to fully conduct its mission. At the end of each financial year, the Supervisory Board checks and controls the accounts prepared by the Executive Board. French Law of 9 August 2004 (article 6) and the Articles of Association of the company (article 14-V) contain specific provisions for RTE, among which are the rights referred to as economic supervision. Accordingly, as part of these rights, certain votes by the Supervisory Board require a double majority, i.e. both a favourable vote by the majority of its members and a favourable vote by the majority of the members of the Supervisory Board appointed by the shareholder, EDF. These involve: - decisions relating to the budget and economic and financial prospects; - decisions relating to financial policy; - decisions relating to any purchases, transfers and sales of assets whenever such operations do not directly involve the operation, maintenance and development of the public transmission system but specifically apply to the valorisation of the public transmission system in amounts exceeding 5 million; - decisions relating to the creation of any company, economic interest group or other legal entity; - the establishment of surety or guarantees of any kind whenever such operations directly involve the operation, maintenance and development of the public transmission system in amounts exceeding 20 million and, for other operations, in amounts exceeding 5 million. It is in this manner that the various programmes connected with RTE s financial policy, such as programmes for the issuance of bonds and commercial papers and decisions relating to the budget, have been subject to doublemajority voting by the Supervisory Board members and by the members representing the shareholder, EDF. Moreover, in addition to RTE s budget and financial policy, the Supervisory Board further reviewed, made decisions or was informed regarding numerous current or major topics in connection with the company s activity, in particular financial communication, appointment of its new Chairman (Marianne LAIGNEAU) and new members (Mrs Catherine CROS and Nicole VERDIER NAVES and Mr Jean-Paul BOUTTES), real estate transfers or regulated conventions, the public transmission system reliability policy and the creation or development of subsidiaries. 01 CORPORATE GOVERNANCE // REPORT FROM THE CHAIRMAN OF THE SUPERVISORY BOARD OF RTE

5 1.5 THE ECONOMIC AND AUDIT SUPERVISORY COMMITTEE To carry out its missions in accordance with the Articles of Association of the company (article 16), the Supervisory Board may create committees commissioned to review and prepare files prior to their being presented at plenary meetings. For this reason, the Economic and Audit Supervisory Committee (CSEA) was created in 2006 and played an integral role in The Committee, made up of four Supervisory Board members, is chaired by Mrs Anne LE LORIER, representative of the shareholder, EDF. Other members of the Committee are: Mr Edouard VIEILLEFOND, representative of the State; Mrs Catherine CROS, representative of the shareholder, EDF; Mr Patrice SEBILLE, staff representative. The Committee s missions are stipulated in the Supervisory Board bylaws adopted on 8 March As part of its missions, the Committee reviews and gives its opinion on all financial elements of the company, on the budget and economic and financial prospects, on the annual and half-year accounts, on the risk followup and management policy, the audit programme and internal control before being presented to the Supervisory Board. At each meeting of the Supervisory Board, the Chairman of the CSEA or a rapporteur takes account of the Committee s works and provides any necessary clarifications to the members of the Board prior to Board decisions. The Economic and Audit Supervisory Committee met six times in 2008, with an attendance rate of 80% (97% in 2007) to examine the following points: - 14 February 2008: presentation of 2007 accounts and results, examination of the Executive Board s management report for 2007, report of the Chairman of the Supervisory Board on corporate governance and internal control procedures, project to create the company CASC (Capacity Allocation Service Company), programme of work for CSEA in 2008, road map of the - 14 April 2008: first update of the 2008 budget, report on 2007 audits and programme of 2008 audits, insurance policy, update on case, update on TURPE 3 (transmission network access tariff), road map of the - 18 June 2008: second update of the 2008 budget, risk mapping and analysis, economic and financial prospects for , update on implementation of the financing policy, road map of the - 30 July 2008: presentation of RTE results as at 30 June 2008, project to create a joint RTE/REE (Spanish transmission system operator) subsidiary within the context of interconnections between France and Spain, road map of the - 10 October 2008: update on TURPE 3 (transmission network access tariff), 3rd update on the 2008 budget, yearly report on RTE subsidiaries, follow-up of the - 10 December 2008: probable results for 2008, 2009 budget, 2009 financing policy, audit programme, risk analysis and mapping, update on the RTE insurance policy, comparison of transmission system operators, project to create a joint Co-ordination Centre with Elia (Belgian transmission system operator) and RTE, follow-up of the

6 1.6 EXECUTIVE BOARD The company s guidance and management are the responsibility of the Executive Board. This is made up of four members: Mr Dominique MAILLARD, Chairman; Mr Pierre BORNARD, Vice-Chairman; Mr Hervé LAFFAYE; Mr Philippe DUPUIS. Since the arrival of Mr Dominique MAILLARD, the Executive Board meets every 15 days, with rare exception. The Chairman organises and directs the discussions. He makes sure that all the points on the agenda are covered. The Executive Board does not have any rules of procedure as is the case with the Supervisory Board. 1.7 REMUNERATION OF MANAGERS The remuneration of RTE managers is set down in accordance with the rules prevailing in the electricity and gas industry. More specifically, as part of the above-cited process, the Executive Board controls the remunerations awarded. The remuneration of Members of the Executive Board themselves is set down under article 2 of French Decree of 25 November 2005, which provides for measures guaranteeing the professional interests of persons ensuring management functions within the French public power transmission system operating company. As part of this process, members of the Executive Board who hold effective employment in the company retain their employment contracts with the company and receive no remuneration for their administrative offices. The remuneration of the Chairman of the Executive Board is set down in accordance with the provisions of article 3 of the French Decree of 9 August Under this article, salaries and other remuneration are set down by the French Minister of Finance and any other Minister concerned, specifically the Minister of Environment, Sustainable Development and Planning. The creation of a Committee of remunerations was on the agenda of the Supervisory Board meeting of 9 February As for remuneration of Members of the Supervisory Board, only those members who represent staff receive remuneration from RTE as part of their employment contracts (salaries and benefits in kind: special gas and electricity rates). However, no member receives director s fees either by virtue of law expressly providing that their offices be held on a free-ofcharge basis (staff and State representatives: Law of 26 July 1983 concerning democratisation of the public sector), or of the absence of any resolution on this point voted by the general meeting. 01 CORPORATE GOVERNANCE // REPORT FROM THE CHAIRMAN OF THE SUPERVISORY BOARD OF RTE SHAREHOLDER PARTICIPATION IN THE GENERAL MEETING The particular conditions relating to RTE s unique shareholder s participation in General Meeting are set down in articles 21 and following of RTE s Articles of Association. 9