public eurobond offering · this presentation does not constitute a prospectus or other offering...

Public Eurobond Offering

Investor presentationJune 2006

2

Disclaimer

THIS PRESENTATION DOES NOT CONSTITUTE A PROSPECTUS OR OTHER OFFERING DOCUMENT (AN "OFFERING DOCUMENT") IN WHOLE OR IN PART. INFORMATION CONTAINED IN THIS PRESENTATION IS A SUMMARY ONLY, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE OFFERING DOCUMENT. IT IS STRONGLY RECOMMENDED THAT EACH INVESTOR READ THE PROSPECTUS FOR MORE COMPLETE INFORMATION REGARDING THIS OFFERING BEFORE MAKING AN INVESTMENT DECISION. TO REQUEST A COPY OF THE PROSPECTUS PLEASE CONTACT YOUR BARCLAYS CAPITAL, BNP PARIBAS OR DEUTSCHE BANK (THE "UNDERWRITERS") SALESPERSON OR ONE OF THE UNDERWRITER'S REPRESENTATIVES ATTENDING THIS MEETING

THIS PRESENTATION SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITY. THERE SHALL BE NO SALE OF THESE SECURITIES IN ANY STATE OR JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO QUALIFICATION UNDER SECURITIES LAWS OF SUCH STATE OR JURISDICTION

BY RECEIVING THIS PRESENTATION EACH INVESTOR IS DEEMED TO REPRESENT THAT IT IS A SOPHISTICATED INVESTOR AND POSSESSES SUFFICIENT INVESTMENT EXPERTISE TO UNDERSTAND THE RISKS INVOLVED IN THE OFFERING. INVESTORS MUST RELY SOLELY ON THEIR OWN EXAMINATIONS OF THE OFFERING DOCUMENT AND THE OFFERING IN MAKING A DETERMINATION AS TO WHETHER TO INVEST IN THE SECURITIES OFFERED

ALTHOUGH THE STATEMENTS OF FACT IN THIS PRESENTATION HAVE BEEN OBTAINED FROM AND ARE BASED UPON SOURCES THAT THE UNDERWRITERS BELIEVE TO BE RELIABLE, THE UNDERWRITERS DOES NOT GUARANTEE THEIR ACCURACY, AND ANY SUCH INFORMATION MAY BE INCOMPLETE OR CONDENSED. ALL OPINIONS AND ESTIMATES INCLUDED IN THIS PRESENTATION CONSTITUTE THE FIRM'S JUDGEMENT AS OF THE DATE OF THIS PRESENTATION AND ARE SUBJECT TO CHANGE WITHOUT NOTICE

3

Summary terms and conditions

Barclays Capital, BNP Paribas and Deutsche BankJoint Bookrunners

English lawGoverning Law

A2 (stable outlook) / A- (stable outlook)Ratings (Moody’s / S&P)

Issued under Fortum’s €4bn EMTN programmeDocumentation

Refinancing and general corporate purposesUse of proceeds

10 yearsMaturity

Issue

Issuer

Benchmark size

Fortum Oyj

4

Fortum todayFortum’s main markets

Nordic

Northwest Russia and Baltic Rim

Financials, capital and financing structureRecent events and outlookAppendix

5

Fortum is a leading Nordic Power & Heat (“P&H”) company

Focus is entirely on power and heat following the disposal of the oil refining & marketing business (Neste Oil) in 2005

Strong cash generation supported by leading operational efficiency

Operations spanning the entire P&H value chain

Stable long-term majority ownership by Finnish Government (currently 51.2%)

Financial profile benefiting from stable A2 / A- ratings and supported by

Stable and predictable cash flows within the heating business

Compliance with financial targets

Fortum investment highlights

€17bn

Market capitalisation*

€3,158m€1,754m€3,877m

Net debtEBITDARevenues

Source: Company filings* Bloomberg 6 June 2006

Key performance figures as of YE 2005

6

Fortum's strategy

Become the leadingpower and heat

company

Become theenergy supplier

of choice

Benchmark business performance

Fortum focuses on the Nordic and Baltic Rim markets as a platform for profitable growth

7

Fortum provides leadership in core businesses

#1 Electricity #1 Distribution#1 Heat#2 Power Generation

MarketsDistributionHeat/VärmeServicePortfolio

Management and Trading

Generation

Leading efficiency14% Nordic market share

Best-in-class physical and financial market operations

1.2 mio. business and private electricity sales customers

€30m (2%)

€1,365m (26%)

Markets

Leading Nordic distribution company1.4 mio. customers

€244m (18%)

€707m (14%)

Distribution

€1,063m (20%)€2,058m (40%)

HeatPower Generation

Nordic leader in district heatingDeveloping presence in the Baltics and Poland

Efficient operation and maintenance services

€253m (18%)€854m (62%)

Nordic market position*

Revenues and operating profit are 2005 figures*Including E.ON Finland

Revenues

Operating profit (comparable)

Businesses

8

Baltic countriesDistribution cust. 22,000Heat sales 1.2 TWh Poland

Electricity sales 20 GWhHeat sales 3.9 TWh

NW Russia(in associated companies)Generation ~6 TWhHeat production ~10 TWh

NordicGeneration 51.2 TWhElectricity sales 58.2 TWhDistribution cust. 1.4mElectricity cust. 1.2mHeat sales 19.4 TWh

Nordic market remains key to Fortum’s operations

Source: Company data

9

Fortum’s Nordic P&H production and capacity

20.6 TWh in 2005Total production capacity 8,252 MW

Oil 10%

Peat 7%

Heat pumps, electricity16%

Waste 6%

Biomass 24%

Natural gas 9%

Other 11%

Coal 17%Hydro power 42%

Peat 1%

Coal 3%

Other 2%

Nuclear power 50%

Biomass 2%

51.2 TWh in 2005Total generation capacity 11,136 MW

Fortum’s Nordic power generation Fortum’s Nordic heat production

Source: Company data

10

Majority ownership by Finnish Government

Finnish state 51.2%

International investors 34.4%

Financial and Insurance Institutions 2.2%

Households 5.0%

Other Finnish investors 7.2%

Distribution of ownership

Source: Company data, 30 April 2006

More than 50,000 shareholders

Among the most traded shares on Helsinki stock exchange

11


Nordic



12

Towards an open European power market

Market-based development Increased competitionIncreased efficiency

EU Directive: Market liberalisation, i.e., free choice of supplier

EU Commission Integration of national power strategy: markets through regional

markets into one European power market

1990's 2000 - 2010 -

13

Large customers

Nordic market structure - business value chain

Small customers

Retail marketRetail

marketRetail companies

Competitive businesses

DistributionRegulated monopolies

Transmission and system services

Nordic wholesale

market

Nordic wholesale

market

Nord Pool and bilateral

Generation

Independent TSO Independent DSO

14

Spot history and forwards in Europe

Source: Reuters, OMEL

€/MWhYearly moving average spot price Forwards

€/MWh

UK

Dutch

German

Nord Pool

SpanishMay 2, 2006

2001 2002 2003 2004 2005 2006 2007 2008 20090

10

20

30

40

50

60

70

80

90

100

15

Nordic market becoming more integrated into Europe

Increased transmission capacity between Nordic and Central European markets will over time lead to price convergence

NorNed (Norway-the Netherlands) by 2008

Estlink (Estonia-Finland) by 2007

Nordel priority projects enhance Nordic power market integration

PresentUnder construction

DiscussedPlanned

2750 1500

1300

300

5060

900

2200

900

1200600

1000 200

125

600

10001600

2500

35001700

1500800

500

2050

70

1040630 (490)+901600

550600

1200

3800

700

350

600

+100

100+ 200

1000

600

600

+200

1000

550

+300

+800

1000

16

Demand driven capacity investments will be needed...

Demand and capacity developmentin the Nordic market

Existing/remaining capacityCommitted new capacity

0

100

200

300

400

500

2000 2004 2005 2010 2015 2020

TWh

Electricity demand is expected to increase by around 50 TWh by 2020 compared to 2005

Committed plans of new capacity approx. 30-35 TWh

Additionally:

Possible closures of current capacity may take away up to 10 TWh by 2020

Upgrades of Swedish nuclear capacity requires licences

17

... but new capacity will require €35+/MWh prices

Source: Nord Pool, Fortum Source: NEA & IEA "Projected Cost of Generating Electricity", 2005 update (average of European projects); Elforsk: "El från nya anläggningar", 2003.

Coal Gas Nuclear Hydro Wind0

10

20

30

40

50

60

70

80€/MWh

Fuel costs, excl. CO2 costs

Fixed costs( variation)

FuturesMay 24, 2006

€/MWh

Electricity production costs

0

10

20

30

40

50

60

1995 1997 1999 2001 2003 2005 2007 2009

70

80

Electricity prices and futures

18

Fortum

Vattenfall

Elsam

others

Statkraft

31%

E.ON

PVOEnergi E2

E-CO EnergiHelsinki

Norsk Hydro

Fortum

Vattenfall

Nesa

others

Hafslund

E.ON54%

CopenhagenHelsinki

StatkraftGöteborgBKK

Still a highly fragmented Nordic power market

Distribution RetailGeneration

Source: Fortum, Company data; Shares of 10 largest actors, 2004 figures

Fortum

Vattenfall

Hafslund

othersE.ON

55%Nesa

PlusenergiCopenhagen

HelsinkiFjordkraft

Öresundskraft

379 TWh> 350 companies

14 million customers>500 companies

14 million customers ~450 companies

19


Nordic



20

Russia is a large country – power market twice the size of Nordic

Generation 931 TWh377 TWh

Demand 923 TWh389 TWh

Capacity 216 700 MW91 300 MW

Population 143 million24 million

Consumption/capita 5 525 kWh15 138 kWh

RussiaNordic

21

Russian power industry reform

"Power industry law" approvedRestructuring of regional energos (P&H companies)Formation of new companiesEstablishment of Russian power exchange (ATS) Launch of the free-trade sector of the wholesale marketIntroduction of vested bilateral contracts for a transitional period to replace the regulated sector of the wholesale marketLaunch of balancing power marketCompetitive market of ancillary services and generating capacityGradual liberalisation of the retail market

Pricing model reform – from tariff regulation to competitive

pricing

Market liberalisation in competitive businesses

TransmissionDistribution

GenerationSales

Regulated monopolies

Competitive businesses

Unbundling of businesses by type of activity

Key steps in the reformA Nordic/Western analogy

22

TGC-1 operating as of 1 October 2005

Finland 16,500

Installed capacity MW

Norway 28,300

Sweden 33,600

Denmark 12,700

Territorial Generating Company TGC-1

Production capacity ~ 5,750 MW, of which hydro 2,874 MW

from Lenenergo, Kolenergo and Karelenergo

Third largest territorial generation company in Russia

Started operation on 1 October 2005 based on a leasing model

Transfer of assets into TGC-1's ownership targeted at the beginning of 2007

Fortum's calculated share ~26% *)

Fortum has 3 members of 11 in total on TGC-1's Board of Directors

*) Direct owners of TGC-1 are initially Lenenergo 63%, Kolenergo 25%, Karelenergo 12%

23

Polish power and heat markets

Population 38 millionGDP growth around 4.5% in 2004Total electricity consumption 130-140 TWh/aPolish generation approx. 150 TWh/aNumber of electricity customers around 15.6 million8 distribution companiesEnergy sector privatisation ongoing in generation, district heating and distributionSize of the heating markets around 165 TWh/a

Source: EIU, Eurelectric/Eurprog; 2004 or 2003 estimates, Fortum

Existing operations of Fortum HeatWrocław Płock

Płock

Operations of Fortum Heat in Poland

24

Baltic countries' power and heat markets

Population 1.3 million (Estonia), 2.3 million (Latvia) and 3.4 million (Lithuania)GDP growth 6.0% (Estonia), 5.5% (Latvia), 6.5% (Lithuania)Total electricity consumption; Estonia and Latvia 6-7 TWh/a, Lithuania 10 TWh/aTotal generation; Estonia 9-10 TWh/a, Latvia 4-5 TWh/a, Lithuania 18 TWh/aThree larger distribution companies in Estonia, one in Latvia, two in LithuaniaPrivatisation not active in generation or distribution, privatisation of district heating started in 2000 Size of the heating markets around 30 TWh/a

Source: EIU, Eurelectric/Eurprog; 2004 or 2003 estimates

25


Nordic



26

A good start of the year

Key financial ratios

Key financial figures (€ m)

N/A43%71%60%Gearing (%)

39.3%

2.4

4,878

386

509

1,133

I/2005

43.2%

1.8

3,158

1,267

1,754

3,877

2005

49.6%

1.7

3,900

492

570

1,343

I/2006

N/AInterest-bearing net debt

1,373Profit Before Tax

34.9%FFO/ Interest-bearing net debt*** (%)

2.1Net debt/ EBITDA** (x)

1,815

4,087

LTM*

EBITDA

Sales

Source: Fortum interim report January-March 2006. Based on key figures from continuing operations unless otherwise stated.

*Last Twelve Months, **Quarterly figures are annualised, ***Quarterly figures are annualised. Based on Total Fortum

Comparable operating profit from continuing operations, up by 24%

All segments excluding Markets improved their performance

From continuing operations

Earnings per shareup by 39%

Net cash from operating activities €303 (62) million

27

Continued improvements in performance metrics

Source: Fortum 2005 Annual report. Gearing is defined as interest-bearing net debt over shareholders’ equity plus minority interestYears 2001-2003 have not been restated to comply with IFRS. They are presented under Finnish Accounting Standards (FAS). Year 2004 figures include discontinued operations.

0

1

2

3

4

5

6

7

8

9

2001 2002 2003 2004 2005 2006Q1

€bn

20%

30%

40%

50%

60%

70%

80%

90%

Gearing (%

)

Interest-bearing net debt Gearing

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2001 2002 2003 2004 2005 2006Q1 LTM

€bn

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Net debt/ EBITD

A (x)

EBITDA Net debt/ EBITDA

Stable cash flow generation Comparatively low leverage

28

Capital structure

Fortum wants to have a prudent and efficient capital structure, which at the same time allows the implementation of its strategy

Access to flexible funding sources is key

Dividend policy of 50 - 60% payout on the average for Fortumcontinuing operations' results

In the medium term, allowing the implementation of strategy and the returns of capital, Fortum expects to have its net debt to EBITDA round 3.0x (including)

Repurchase programme ~ €500m

E.ON Finland acquisition ~ €750m

29

Stable ratings and compliance with financial targets

Actual performance

< DepreciationNormal CAPEX

Target 3.0-3.5x

Minimum 12%

Financial target

1.8x

1.4x

13.5%

16.6%2005

-

2.1x

11.4%

15.8%2004

Net Debt/ EBITDA cont operations

Net Debt/ EBITDA

ROCE cont operations

ROCE

Source: Fortum 2005 Annual Report. 2004 and 2005 under IFRS. Year 2001-2003 presented according to Finnish Accounting Standards (FAS)

"Due to the cash outflows, which in 2006 total €2.23 billion, Fortum’s debt is expected to increase significantly and credit measures are likely to weaken as a

result, thereby markedly reducing rating headroom. Nevertheless, given the company's very strong financial results in 2005 that led to a low adjusted debt-to-

total-capital ratio of 33% at year-end, we expect credit metrics to remain in line with our previously indicated ratio targets." Standard & Poor's 27 March 2006

A- (stable outlook) A2 (stable outlook)

30

Capital expenditure

In the power and heat business, the investment horizon is measured in decadesMaintenance/productivity capex:

Annual level in the Group ~ depreciation. This is currently~ €450 millionDistribution investment programme, including AMM and reliabilityinvestments ~€700 million in the next 5 years

Capacity expansions:Nuclear (OL3) in Finland ~€225 million (2004-2009) Nuclear investments in Sweden ~€600 million in 10 yearsExpansion of E.ON Finland's Suomenoja CHP plant to 400 MW of power generation (+300 MW)

Acquisitions:E.ON Finland acquisition and further consolidation of fragmented Nordic Power and Heat market expected.Strategy to grow Power and Heat business in North Western part of Russia, and Heat business in Poland and Baltic rim

31

Funding sources and maturity profile

Funding and treasury risk management centralised on parent company level and managed by Group Treasury unit

Strategy to raise unsecured debt at parent company level

Stable investment rate rating and access to all relevant debt markets

Today, approx.60% of total debt financing in Fortum is under EMTN or Swedish MTN documentation

Source: Company data. Average interest rate disclosed at the end of 2005 for the year 2005 was 4%

0.0

0.2

0.4

0.6

0.8

1.0

2006 2007 2008 2009 2010 2011 2012-2015

2016-2020

2020+

€bn

Debt maturity profile

Interest bearing loans at the end of March 2006

Total €4,107m

32


Nordic



33

Finnish competition authority approved Fortum's acquisition of E.ON Finland (total acquisition approximately €750m). E.ON Finland in brief

Net sales of €237m (Electricity 2,7 TWh and Heat 2,5 TWh) in 2005

0.2m distribution and electricity customers

Fortum signed a service agreement on the delivery of an automated meter management (AMM) system in Sweden

Service agreement covers years 2006-2016

Total value of the procurement is approximately 2.2bn Swedish kronor (approximately €240m)

Fortum's Board of Directors decided to start repurchasing the company's own shares (€500m or maximum 35m shares)

Recent events

* Heat sales represent 2.5TWh in energy terms

34

Hedging of Power Generation's Nordic sales

Fortum's achieved Nordic Generation power price was on average €31.3 /MWh in 2005

Fortum has hedged Power Generation's Nordic sales volume at the beginning of April 2006

April to December 2006

Hedge ratio Hedge price

~ 80 % ~ €33 per MWh

Calendar year 2007 ~ 55 % ~ €37 per MWh

35

Concluding remarks

Strong market positions in the Nordic market and platforms established in NW Russia, Poland and the Baltic countries

Competitive corporate structure, costs and production portfolio

Solid financial position and strong underlying strong cash-flow generation capacity enables further developments in the focus markets

Positive market fundamentals supporting continued strong performance (Need for new capacity and liberalisation of European electricity markets)

Opportunities for strengthening presence in the consolidating Nordic and developing Russian, Polish and Baltic markets

Stable ownership structure

Fortum has the foundations for good performance

36


Nordic



Fortum37

... in the UK and Germany ...

... in Nordic countries ...

Source: Eurprog

~50 TWh

0100200300400500

2005 2010 2020

TWh

DemandSupply

0200

400

600TWh

2005 2010 2020

~180 TWh

Source: Eurprog 10/2005: 2005 generation, capacity closures by 2010 and 2020 included

0200

400

600

2005 2010 2020

TWh

~170 TWh

New capacity will be needed

... and in Russia

Source: Ministry of Energy; Russian Energy Strategy 2020

Demand growth~300-400+ TWh before 2020

38

The large Russian power market is undergoingmajor change

Source: IEA

A major need for new capacity

Big potential for efficiency improvement

Power generation 2003

0

500

1 000

1 500

2 000

USCh

inaJa

pan

Russ

iaInd

iaGe

rman

yCa

nada

Fran

ce UKNo

rdic

Bras

il

> 4,000TWh

39

Prices of fuel and electricity in Russia are currentlylow

Source: IEA, RAO UESAverage prices Jan - Oct 2005

Hydro 17%

156 TWh

Nuclear16%

150 TWh

Oil 3%

Gas 45%407 TWh

Coal 19% 172 TWh

Russian power generation914 TWh in 2003

Price liberalisation of gas is important in setting the electricity price in RussiaSo far, the implicit price cap set by the tariff in the regulated sector has prevented free price formation in the free-trade sector of the wholesale market

0

10

20

30

40

50

Russia Germany

Electricity price and typical marginal costs for gas-fired power plant

Gas cost

CO2 cost

Electricity price

40

MEUR I/2006 I/2005 2005 LTMPower Generation 293 224 854 923Heat 126 107 253 272Distribution 81 66 244 259Markets 0 7 30 23Other -14 -11 -47 -50Comparable operating profit 486 393 1,334 1,427Non-recurring items 0 6 30 24Other items effecting comparability -14 7 -17 -38OP from continuing operations 472 406 1,347 1,413

Comparable operating profit

Source: Fortum Interim Report January-March 2006

41

MEUR I/2006 I/2005 2005 LTMSales 1 343 1 133 3 877 4 087Operating profit 472 406 1 347 1 413

Share of profit of associates and joint ventures 35 15 55 75Financial expenses, net -15 -35 -135 -115

Profit before taxes 492 386 1 267 1 373Income tax expense -120 -116 -331 -335

Profit for the period from continuing operations 372 270 936 1 038Profit for the period from discontinued operations 0 84 474 390Net profit for the period 372 354 1 410 1 428

Of which minority interest 26 25 52 53

Income statement


42

MEUR I/2006 I/2005 2005

Operating profit before depreciations, continuing operations 570 509 1 754Non-cash flow items and divesting activities 24 -14 15Financial items and taxes -110 -205 -405

Funds from operations, continuing operations (FFO) 484 290 1 364Change in working capital -181 -228 -93

Net cash from operating activities, continuing operations 303 62 1 271Net cash from operating activities, discontinued operations - 152 133Total cash from operating activities 303 214 1 404Capital expenditures -71 -49 -346Other investing activities -59 4 -52Investing activities, discontinued operations - -137 1 155Cash flow before financing activities 173 32 2 161

Cash flow statement


43

Balance sheet

MEUR Mar 31 Dec 312006 2005

Non-current assets 13 106 13 075Current assets 1 595 2 055ASSETS 14 701 15 130

Total equity 6 498 7 411 of which minority interest 231 260Interest-bearing liabilities 4 107 3 946Non-interest bearing liabilities 4 096 3 773EQUITY AND LIABILITIES 14 701 15 130

Net debt / EBITDA 1.7 1.8Net debt, (MEUR) 3 900 3 158


44

Source: , ; market prices May 3, 2006 ; 2006-2008 future quotations

Fuel and CO2 allowance prices

Gas price (UK)

0

20

40

60

80

100

120

GB

P / t

herm

2004 2005 20082006 2007

CO2 price

05

101520253035

EUR

/ tC

O2

2004 2005 20082006 2007

Oil price

01020304050607080

USD

/ bb

l

2004 2005 20082006 2007

Coal price

0102030405060708090

USD

/ t

2004 2005 20082006 2007

45

Development of the European Emission Trading System

Future challenges• EU committed to emission trading• Improving the market by

increasing market transparency– information available to all

market participants at the same time

– common procedures -harmonisation

– stability and predictability• Expansion of emission trading

during the Kyoto period– JI and CDM utilisation– National allocation plans for

second trading period (NAP 2)

ETS Prices 2005-2006

€/tC

O2

0

5

10

15

20

25

30

35

1 /05 4 /05 7 /05 10 /05 1 /06 4 /06

46

Forsmark

Oskarshamn

Olkiluoto

Loviisa

Fortum's nuclear power plants

*) In Olkiluoto the third nuclear power plant is under construction. Plant will be in operation in 2009. Fortum's share will be 25 %, 400 MW and 3,2 TWh

Source: Fortum Generation

Fortum's Fortum's Average Fortum'sownership share (MW) production (TWh)

FinlandLoviisa 100,0 % 976 7,8Olkiluoto (TVO) 26,6 % 452 3,7

SwedenOskarshamn 43,4 % 964 7,6Forsmark 22,2 % 699 5,7

TOTAL 3 091 ~25

47

Provisions for future costs relating to nuclear decomissioning and safe keeping of spent fuel

Nuclear Fund has been built based on current legal system (Nuclear Energy Act in Finland and Act of the Financing of Future Expenses for Spent Nuclear Fuel etc. in Sweden)The funds are administrated and managed by Ministry of Trade in Finland and by the Swedish Government respectivelyFortum's direct and indirect share of the Nuclear waste funds in Finlandand Sweden exceeds the provisions calculated in accordance with IAS 37

As of 31.12.2005 EURm

Nuclear plantDiscounted

nuclear liabilityFortum's

ownership**Fortum's share

of liability Nuclear fund***Fortum's share

of fund

Loviisa 418 100,0% 418 618 618

Olkiluoto 1&2 570 26,6% 152 827 220

Forsmark * 923 22,2% 205 1210 268

Oskarshamn * 715 43,4% 310 943 409

1085 1515

Source: Company information

* Numbers for Forsmar and Oskarshamn are indicative and unaudited. ** excluding possible minority. *** Share of fund per year end including paid in fee for 2005

48

Distribution regulation differ country by country

Finland

Maximum allowed rate ofreturn based on actualdefined cost data

Sweden Norway

Maximum annual income limitbased on historical or definedcost data

Regulation authority has supervised 41 areas for 2003 and 55 areas for 2004 due to claimed overpricing. All companies that have received a decision to reimburse customers have appealed to court.

Status

Regulation principle

Allowed return

New model for period 2005 - 2007

New regulatory model is being applied to 2003 and 2004 tariffs

The regulator has proposed a model for the next 5-year period starting in 2007.

Rate of return,ex-post regulation

Yardstick, ex-post regulation, with benchmarking based on hypothetical efficient company

Revenue cap, ex-ante regulation

Actual operation vs.fictious network parametersdefines return

public eurobond offering · this presentation does not constitute a prospectus or other offering...

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