0 The Legislative Energy Package Panel on the 3 rd Electricity Market Package 13 February 2008 Maria Paatero-Kaarnakari Senior Vice President Corporate Strategy Fortum Corporation

1 Fortum – a leading Nordic power and heat company The Nordic market, Baltic countries, Poland and Russia the focus markets Sales EUR 4.5 billion 8,300 employees Market cap EUR 25 billion 50.8% owned by the Finnish State #2 in Nordic power generation; 51.1 TWh #1 in Nordic distribution; 1.6 million customers #1 in Nordic electricity sales; 1.3 million retail customers #1 in Nordic district heating; 20.4 TWh sales 2007 figures

2 Fortum's policy targets Strong support for EU internal electricity market development Functioning power market essential to achieve environmental, security of supply and competitiveness targets in the most efficient way, i.e. at the lowest cost to society –allows efficient use of market-based EU-level steering mechanisms like EU ETS, EU Green Certificate System in the future

3 Ownership unbundling of TSOs Trustworthiness, neutrality and transparency of TSOs essential Support for full ownership unbundling of TSOs acceptable, provided that –applied equally to all TSOs throughout the EU –can be done relatively quickly Full ownership unbundling of TSOs challenging to implement rapidly and would postpone internal market development

4 Ownership unbundling of TSOs – a pragmatic approach required A compromise is needed –balanced ownership, ideally including power suppliers, producers and customers, financial investors and state –no power producer or supplier in control –transition period

5 Ownership unbundling of TSOs is not, however, enough Balanced division of powers and duties between the Commission, ENTSO 1 and ACER 2 Support for regional approach –fastest way to EU market –region to be understood dynamically Strong political commitment crucial –to market integration in general –to policy harmonisation – one market one set of rules 1 ENTSO = European Network of Transmission System Operators for Electricity 2 ACER = Agency for the Cooperation of Energy Regulators

6 Conclusions A pragmatic compromise on ownership unbundling of TSOs needed Delay with the 3 rd package risks the (efficient) achievement of the Energy and Climate Package

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