E.ON SE

Investor Presentation • Jul 14, 2005

"Delivering Profitable Growth and Performance" July 2005

Strategic review 2005 for further value creation

	We will maintain the overall direction set by "on.top"
Overall direction	ü Continue to deliver performance ü Maintain focus on core European markets
unchanged	ü Stay in the USA, organic growth as a top priority ü
	LNG as a possible opportunity to diversify gas supply to existing markets ü Retain strict financial investment criteria
Enhanced financial flexibility	We have the financial strength to pursue the full range of external growth options, as and when attractive opportunities arise
Flexibility on timing	Due to the excellent position we have built in our core markets we are under no pressure to make hasty investment decisions – we can wait for the right opportunities to arise at the right price

Operational improvement in the energy business – A continuing group-wide process to create further value in million €

In addition to the successful operational improvement program in the past, within only four years (2003 – 2006) E.ON will realize another 1 billion € in its core energy business

1

We focus on five core markets with strong positions in power and gas

Central Europe – Fortify strong market position in power and downstream gas

• Downstream participations partially fragmented
• Partially unbalanced portfolio remaining in some sub-markets
• Managing regulatory changes in the power and gas markets in Germany
• Longer term re-investment needed in generation and distribution

Key issues E.ON's strategic direction

Pan-European gas – Strengthen and diversify

• Break-up of traditional roles, regional production and import regimes within Europe
• Increased opening of European gas markets creates new challenges, but also provides opportunities to profitably increase international sales
• UK's increasing import dependence provides opportunities in supply and infrastructure
• Privatization of Eastern European midstream players offers opportunities for gas supply and investments

Key issues E.ON's strategic direction

Opportunity to extend vertically integrated gas business in UK and Nordic markets

• Construction of the BBL Pipeline from Balgzand to Bacton with a capacity of 16.5 bcm (20% E.ON's share, total investment roughly € 100 m)
• Upgrade of the existing Interconnector for reverse flow (14% share)
• Potential long term development of Nordic gas supply business

UK – Optimize existing strong market position

Power generation

• Environmental policy driving economics of power generation
• Increasing volatility of commodity prices

Gas supply - UK expected to become a net importer of gas 2005-2008

Power distribution – Following DR4¹ review, major investment required in electricity distribution networks:

• Replacing existing infrastructure
• Expanding network to cope with renewable build

Energy retail – Challenge of passing through rising costs in a competitive market

Key issues E.ON's strategic direction

Nordic – Stable position in consolidating market

Power generation – Stabilized market due to normalization of hydropower reservoirs and high availability of nuclear power but volatility will remain high and may be reinforced by the closure of Barsebäck 2

• Planning of CHP-plant in Malmö
• Planning of increased capacity in all nuclear power stations

Gas supply – Potential for oil-to-gas substitution

• Opportunities for growth in industrial and CHP-generation segments
• Opportunity for gas infrastructure development

Key issues E.ON's strategic direction

US-Midwest – E.ON confirms long-term commitment

Key issues E.ON's strategic direction

Stable regulatory environment in Kentucky and strong local market coverage

• Provides sustainable competitive position
• Drives future profitability of US-Midwest market unit

Organic growth through focused capital investment

• Trimble County 2 USD 885 mn in 2005 to 2010
• Environmental Spend on FGD's USD 678 mn in 2005 to 2009 (immediately recoverable through cost recovery mechanism)

LG&E Current focus is on organic growth in Kentucky; long-term external growth opportunities

Expansion into potential new markets

Rationale

• Southern and Eastern Europe as attractive potential new markets for E.ON to expand its business model

E.ON continues to extend its strong integrated position in Eastern Europe

1 Subject to relevant Hungarian authority approval

In Italy E.ON pursues growth activities in both power and gas

Italian power market

• ü Europe's 5th largest power market (290 TWh) offering potential to reach significant scale in operations
• ü One of the fastest growing market in Europe after Spain

E.ON's strategic moves in power

Investments in power generation

• Build 800 MW CCGT power plant in Livorno Ferraris
• Total investment appr. 420 m€

Italian gas market

• ü Europe's 3rd largest gas market (740 TWh) offering potential for scale downstream
• ü Among the fastest growing markets in Europe

E.ON's strategic moves in gas

Extend gas downstream activities via Thüga Italia

• ü Current market share app. 5% in gas downstream
• ü Targeted market share up to 10%

Western Europe will increasingly rely on gas imports

Provisional data for 2003 *) of which: 2010 / 2020: Nigeria 3%, Qatar 2% Basis for imports: Contracted volumes and prospective contract prolongations in bcm 2003 2010 2020 8% 11% 24% 15% 5% 33% 4% 8% 11% 14% 21% 10% 23% 6% 9% 10% 21% 8% 30% 16% 585-625 507 660-715 Indigenous production for domestic use Algeria Norway Netherlands Russia Other non-EU imports* Other EU imports Supply gap Advanced projects 10% 15% 17% LNG share (in imports)

• Increasing supply gap driven by growing demand (almost 60% of total growth comes from power sector), reduced indigenous production and expiry of supply contracts
• Norwegian gas, Russian gas (e.g. via NEGP) and LNG will compete to fill that gap

E.ON's gas supply position is planned to be further strengthened through equity gas and, potentially, LNG

Extend E.ON's current small equity gas position in the North Sea

Long-term target: Cover up to 15-20% of gas supply from equity gas

Target regions

• North Sea (UK, Norway)
• Russia

Equity gas Potential LNG options

Strong projected growth in global LNG demand of 9.1% to 2010¹ which gives E.ON opportunity to:

• Diversify gas supply portfolio through long-term LNG-supply contracts and share in re-gasification capacity in E.ON's target markets
• Potentially build up an integrated LNG position including upstream

High returns available in upstream business

E.ON has identified various cooperation areas with Gazprom

Memorandum of Understanding – July 8, 2004

Gas production in Russia: Yushno Russkoje

• Estimated start of production 2008
• Proven reserves of 700¹ bcm or at least 25 years
• Production of approximately 25 bcm p.a. (equivalent to yearly demand of Spain 100% or U.K. 25%)
• Total investment (100%) USD 1 bn
• E.ON's share still to be determined
  • 1 Assessment of proven reserves based on Russian standards

North European Gas Pipeline

• Start of operations expected between 2010 and 2012
• Planned investment (100%) from Vyborg to Greifswald € 2.0 – 2.4 bn
• Equity / debt financing still to be decided
• E.ON's share still to be determined

Russian energy market is of significant size and offers attractive opportunities for growth

• The government has agreed to raise gas and power prices by 20% and 9.5% in 2005 respectively

• As a prerequisite to WTO-membership, Russia has committed to raising domestic natural gas prices for industrial customers from the current USD 27-28 per 1000 m³ to USD 37-42 in 2006 and USD 49-57 in 2010

The investment plan reflects our selective approach towards future investments

Investment plan 2005-07 in bn €

Split of Investments 2005 - 07

Financial Investments

Strengthening position in upstream gas	€ 2.0 bn
MOL1	€ 0.7 bn
Further acquisitions in Central Europe	€ 0.6 bn
Put-option on Sydkraft	€ 2.2 bn
Put-option on ZSE	€ 0.3 bn
Other	€ 0.3 bn
Total	€ 6.1 bn
Fixed Assets
Growth
Power generation2 •	€ 2.4 bn
• Power transmission and distribution	€ 0.6 bn
• Gas transmission, distribution and storage	€ 1.0 bn
• Other	€ 0.2 bn
Subtotal	€ 4.2 bn
Investments in existing fixed assets
• Power generation	€ 2.9 bn
• Power transmission and distribution	€ 4.4 bn
• Gas transmission, distribution and storage	€ 0.7 bn
• Other	€ 0.4 bn
Subtotal	€ 8.4 bn
Total	€ 12.6 bn
Total Investments	€ 18.7 bn

fixed assets

All external growth opportunities are subject to E.ON's strict strategic and financial investment criteria

Strategic Criteria Financial Criteria

• Market attractiveness (returns, growth, regulation, country risk)
• Target attractiveness (asset quality, market position, management quality)

• Value creation potential (cost reduction, integration benefits, transfer of best practice)

• Earnings enhancing in the first full year after acquisition

• Returns exceeding cost of capital three years after acquisition in general
• Not endanger overall group performance targets

Commitment to defend at least a strong single-"A" rating

• When considering an optimum leverage structure, E.ON focuses not only on minimizing its cost of capital but also on maintaining its balance sheet strength and rating in order to ensure future financial flexibility with ready market access at favorable terms and conditions at all times
• Based on our understanding of the rating agencies' methods we regard the following ratios as compatible with a rating of at least strong "A" over a medium-term period:
  • ü Gearing¹ : 80 - 100% (actual 2004: 73%)
  • ü EBITDA/net interest: average of about 10x (actual 2004: 16x)
  • ü EBITDA/net debt: average of about 0.5 1.0x (actual 2004: 1.92x)
• Rating agencies look at a wider range of ratios it is therefore not appropriate to consider this ratio on an isolated basis. Moreover, qualitative factors play an important role for our rating and they cannot be measured in terms of ratios

Returning value to shareholders

Ordinary dividend of 2.35 Euros per share for 2004

• Represents a 17.5% year-on-year increase, thus keeping our ''on.top'' commitment to double-digit dividend growth to 2006
• Reinforcing our position as a leading dividend payer amongst DAXlisted companies in Germany

Intention to return the full value of our stake in Degussa to our shareholders

• Precise timing and manner of disposal remain to be determined

New commitment to achieving a payout ratio of between 50% and 60% of net income excluding exceptional items by 2007

• Confident of delivering further earnings growth in the future

E.ON Group – Dividend increase of 74% since 2000

E.ON Group – Financial highlights

First quarter in million €

	2005	2004	+/- %
Sales	16,418	14,622	+12
Adjusted EBITDA1	3,243	3,024	+7
Adjusted EBIT2	2,515	2,345	+7
Consolidated net income	1,459	1,455	-
Cash provided by operating activities	1,724	1,090	+58
Free cash flow3	1,279	627	+104
Net financial position4	-3,790	-5,483	+31

1) Non-GAAP financial measure; reconciliation to consolidated net income see Interim Report I, p. 7

2) Non-GAAP financial measure; reconciliation to consolidated net income see Interim Report I, p. 7, for commentary see p. 30-31

3) Non-GAAP financial measure; reconciliation to cash provided by operating activities see Interim Report I, p. 8

4) Non-GAAP financial measure; reconciliation see Interim Report I, p. 9

E.ON Group – Adjusted EBIT by market unit

First quarter in million €

	2005	2004	+/- %
Central Europe	1,281	1,179	+9
Pan-European Gas	486	416	+17
U.K.	268	270	-1
Nordic	301	279	+8
U.S. Midwest	101	93	+9
Corporate Center	-41	-8	-
Core Energy Business	2,396	2,229	+7
Other Activities1	119	116	+3
Adjusted EBIT2	2,515	2,345	+7

1) This segment consists of Viterra and Degussa; the latter being accounted for using the equity method

2) Non-GAAP financial measure; reconciliation to consolidated net income see Table in Interim Report I, p. 7

E.ON Group - Outlook 2005

To be substantially above last year's level, owing to the gains from the successful divestment of Viterra Expected net income

Our vision: "E.ON - the world´s leading power and gas company"

Back-up Charts

Central Europe – Electricity Wholesale Prices

Å The line represents the switch of the futures, addressed by y+1 and y+2. Base/peak 2006 replaces base/peak 2005 (2007 replaces 2006 respectively)

• •Hot weather lead to tight plant availability
• •High carbon prices
• Volatile spot prices affected forward prices

base future for year+1 (2005/2006) base future for year+2 (2006/2007) base spot (average of last 12 months) base spot (only shown for last month) peak future for year+1 (2005/2006) peak future for year+2 (2006/2007)

UK – Electricity Wholesale Prices

** Exchange rate: 0,681 EUR/GBP; slide only for internal use

Nordic – Electricity Wholesale

Europe – Coal- and CO² -Prices

With increasing necessity to build new power plants, the power prices will approach and fluctuate within the investment breakeven corridor

German power forward prices (next-year deliveries) in €/MWh

In addition to our plans to create new capacity of 2,000 MW by 2012, a further 3,000 MW can be made available within a very short timeframe

New capacity and flexibility through boosting capacity, lifetime extensions for power plants & demothballing

Option 1

New construction

of CCGT and hard coal power plants

Capacity Increase: 2,000 MW

Timeframe: In operation by 2012

Option 2

Demothballing of power plants

Capacity Increase: 1,500 MW Timeframe: short

Option 3 Lifetime Extension of conventional power plants Capacity Increase: 1,000 MW

Timeframe: short

Option 4 Boosting Capacity of power plants

Capacity Increase: 500 MW Timeframe: short

Gas price adjustment

Oil indexation

• Main competitors of natural gas are gas oil and fuel oil.
• Long-term contracts need an automatic indexation.
• Oil indexation secures competitive gas prices.

German gas import prices follow the development of oil prices

Natural gas supply and temperatures, January 2005

Power – Regulation a key component of E.ON´s business

E.ON´s Target Markets	Generation	Transmission	Distribution	Supply/Retail
Central Europe: • Germany • Netherlands • Czech Republic	UR UR UR	R1) - -	R1) - R	UR2) - R/UR3)
• Hungary • Slovakia	UR -	- -	R R	R/UR3) R/UR3)
UK	UR	-	R	UR
US (Kentucky)	R	R	R	R
Nordic: • Sweden • Finland	UR UR	- -	R R	UR UR

R: Regulated

UR: Unregulated

• : No presence of E.ON

1) Planned regulation

2) Except for standard rate customers

3) Fully liberalized from 2007

German Energy Law to come into force begin of July

• Establishment of a federal regulator supported by regulators on the state-level with ex-ante powers.
• Cost regulation for existing investment partly based on current cost accounting; for new investments historic cost accounting.
• Exemption from cost regulation for gas transmission networks if competition can be proved.
• Entry-/exit access regime for gas with strong obligations to cooperate between network operators.
• New incentive regulation to be implemented soon afterwards via special sub-law.

Germany – Current status on network charges regulation

• Gas transmission: exemption from cost regulation accepted if grid-to-grid competition in transmission can be proved.
• Gas distribution and electricity: calculation of allowed costs largely identical.
• Cost of Capital: Return on equity 6.5% real (electricity) and 7.8% real (gas distribution) post trade tax; for new investment: 7.91 % nominal (electricity) and 9.21% nominal (gas distribution) post trade tax.
• Maximum level of accepted equity ratio for cost calculation: 40%.
• Corporate tax allowance to be fully included with implementation of incentive regulation.
• Cancellation of netting out of accumulated regulatory depreciation and re-investment.
• Benchmarking of network charges of "comparable" network operators.

Germany - Only grid access fees to be regulated

2004 (assumed consumption for a household: 3,500 kWh/a)

1) Electricity supplied to households; annual sales volume 3,500 kWh .

• 2) Concession fee in cities between 100,000 and 500,000 residents.
• 3) Arithmetic medium for grid fees as published by VDN, November 2004.

State burden on power prices

2004 (assumed consumption: 3,500 kWh/a)

European grid fees comparison 2003

1) EU Commission: 3rd Benchmarking report 2004

2) ETSO: Benchmarking Transmission Pricing in Europe 2003

German NAP (Act of August 25, 2004)

Free grandfathering based on historic 2000 - 2002 emissions
Power + Industry sector 2000-02:	505 Mt CO /a 2
Total allocation proposed for 2005-07:	503 Mt CO /a (- 0.4%) 2
Total allocation proposed for 2008-12:	495 Mt CO /a (- 2.0%) 2

New entrants

Reserve of 9 Mt CO² /a to be distributed with an emission cap of 750 g/kWh.

Compensation for nuclear phase-out

Compensation of 1.5 Mt CO² /a for 2005–2007, no political sign whether there will be any compensation in 2008-12

Decommissioning of plants and transfer of certificates

In case of a shut down, full transfer of certificates to new installation for 4 years. Possible certificate surpluses, particularly when shifting from lignite to gas.

Afterwards, no further required reduction of emissions / certificates for 14 years.

Additional reserves for e.g. CHP, early actions and process emissions leave power and industry with a reduction up to 7.5 % in the period to 2005-07 dependent on the specific allocation rule.

The political process for negotiating NAP II – to be delivered to Commission by June 30, 2006 – has just started.

Effects of the NAP on E.ON Energie

• Overall, E.ON accepts the compromise, but objected the allocation for a few installations mainly because the authority didn't follow our application or because of miscalculation of allowances.
• Total impact on E.ON Energie depends mainly on developments in the highly volatile CO² market and the corresponding wholesale power market. Depending on the development of the CO² market, the burden from E.ON Energie's short position on CO² may by less than 30 Mio € p.a. 2005 - 2007.
• E.ON is basically in favor of emissions trading as a tool to reduce greenhouse gas emissions, but only under conditions that are economically feasible
• E.ON Energie's CO2 emissions were on average 407 g CO² /kWh in 2004 compared to a German average of 580 g CO² /kWh. The risk of higher costs is therefore comparably low
• E.ON is confident that costs for CO² allowances can be passed through to customers

In summary, there may be no additional burden on E.ON

Effects of Emission Trading on E.ON Group

E.ON Energie objected to some of the allocations for its installations, but in general received the expected amount of allowances in Germany and Benelux (total allocation: 54 Mt CO² /a).

E.ON Ruhrgas is satisfied with its allocation and received certificates of about 0.6 Mt CO² /a.

E.ON Nordic has a very low CO² exposure because of its high CO² free generation capacity. The remaining CO² emitting power stations received allowances as almost needed of about 1.5 Mt CO² /a.

E.ON UK received allowances from the revised UK NAP of about 21.3 Mt CO² /a.

In total, the E.ON Group received CO² allowances under the European Trading System of about 77.4 Mt CO² /a in 2005 – 2007.

The actual CO² position also depends on the merit order and / or weather conditions (e.g. power production from wind).

The E.ON Group will be short on EU allowances as intended by the idea of an emissions trading system. Actual numbers on our short position will not be announced so as not to influence the CO² market through our compliance strategy.

All MU's will try to pass CO² costs through to the customer, so there may be no overall burden for the Group.

Market units – Key financial figures 2004

in million €

E.ON Group	49,103	10,5206	7,3616	64,987	11.37	9.0	5,972
Degussa4	-	107	107	2,229	4.8	9.65	-
Viterra	988	621	471	3,649	12.9	7.3	5
Core Energy Business	48,115	9,792	6,783	59,109	11.5	-	5,967
Corporate Center	-813	-273	-314	1,700	-	-	241
U.S. Midwest	1,913	544	349	6,441	5.4	8.0	182
Nordic	3,347	1,121	701	7,333	9.6	9.0	957
U.K.	8,490	1,592	1,017	11,446	8.9	9.2	633
Pan-European Gas	14,426	1,900	1,428	15,251	9.4	8.2	1,016
Central Europe	20,752	4,908	3,602	16,938	21.3	9.0	2,938
	Sales	Adjusted EBITDA1	Adjusted EBIT1	Capital Employed	ROCE (%)	Pre-tax CoC (%)2	Cash flow3

1) Non -GAAP financial measure; reconciliation see Annual Report, p. 25

2) Cost of capital for 2004

3) Cash provided by operating activities

4) Degussa is included at equity in the Group Financial Statements since February 2003.

5) Due to equity consolidation, the cost of capital for Degussa equ als the cost of equity after taxes

6) Non -GAAP financial measure; reconciliation to internal operating profit see Annual Report, p. 25

7) Non -GAAP financial measure; derivation see Annual Report, p. 25

E.ON Group - Strong financial profile

2004	2003
16.0 x	14.8 x
192 %	120 %
0.9 years	1.4 years
33%	36%

¹⁾ Non -GAAP financial measure; reconciliation see Annual Report, p. 25

²⁾ Non -GAAP financial measure; reconciliation see Annual Report, p. 160

³⁾ Non -GAAP financial measure; reconciliation see Annual Report, p. 29

⁴⁾ Non -GAAP financial measure; gross external debt equals financial liabilities to banks and third parties less interest portion, see Annual Report, p. 140

⁵⁾ Non -GAAP financial measure; total capital equals gross external debt plus shareholders' equity plus minority interests

E.ON Group - Strong rating

• Moody's (Aa3, "stable outlook")
  • E.ON's A1 Rating upgraded to Aa3 on April 30, 2004
  • The rating reflects E.ON's improving credit protection measurements and reduced debt, its more narrowly defined medium-term plan and investment discipline, its good underlying core operating performance and the remaining divestme nts.
• Standard & Poor's (AA-, "negative outlook")
  • AA- Rating confirmed on 14 March 2005, outlook revised from "stable" to "negative"
  • The ratings on E.ON are supported by its very strong business position as the world's largest private electricity and gas utility and vertically integrated positions in a number of high-quality electricity and gas markets, together with a robust financial profile. However, a combination of regulation impact and acquisitions, together with ongoing shareholder pressure or investments in riskier growth markets could ultimately lead to a ratings adjustment.

Ratings

Moody's

E.ON Group - One of the Strongest Ratings Within the Peer Group As of June 2, 2005

Ratings S&P

Market Unit Ratings within the E.ON Group

E.ON Group - Split of gross external debt¹

As of December 31, 2004, in billion €

	Central Europe	Pan European Gas	U.K.	Nordic	U.S. Midwest	Corporate Center	Viterra	E.ON Group
Bonds	0.0	0.0	0.5	0.5	0.9	7.2	0.0	9.1
Commercial paper	0.0	0.0	0.0	0.2	0.0	3.4	0.0	3.6
Bank loans/others	1.3	0.4	0.2	0.7	0.0	0.4	2.6	5.6
Gross external debt1	1.3	0.4	0.7	1.4	0.9	11.0	2.6	18.3

1) Non -GAAP financial measure; gross external debt equals financial liabilities to banks and third parties less interest portion, see Annual Report, p. 140

2) Before hedging

This presentation may contain forward-looking statements based on current assumptions and forecasts made by E.ON Group management. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of the company and the estimates given here. These factors include those discussed in our public reports filed with the Frankfurt Stock Exchange and with the U.S. Securities and Exchange Commission (including our Annual Report on Form 20-F). The company assumes no liability whatsoever to update these forward-looking statements or to conform them to future events or developments.

E.ON prepares its consolidated financial statements in accordance with generally accepted accounting principles in the United States ("U.S. GAAP"). This presentation may contain references to certain financial measures (including forward looking measures) that are not calculated in accordance with U.S. GAAP and are therefore considered "Non-GAAP financial measures" within the meaning of the U.S. federal securities laws. E.ON presents a reconciliation of these Non-GAAP financial Measures to the most comparable US-GAAP measure or target, either in this presentation or on the website under www.eon.com. Management believes that the Non-GAAP financial measures used by E.ON, when considered in conjunction with (but not in lieu of) other measures that are computed in U.S. GAAP, enhance an understanding of E.ON's results of operations. A number of these Non-GAAP financial measures are also commonly used by securities analysts, credit rating agencies and investors to evaluate and compare the periodic and future operating performance and value of E.ON and other companies with which E.ON competes. These Non-GAAP financial measures should not be considered in isolation as a measure of E.ON's profitability or liquidity, and should be considered in addition to, rather than as a substitute for, net income, cash provided by operating activities and the other income or cash flow data prepared in accordance with U.S. GAAP. The Non-GAAP financial measures used by E.ON may differ from, and not be comparable to, similarly-titled measures used by other companies.