RWE Npower 2007 Corporate Responsibility Report.Pdf

RWE npower Corporate Responsibility Report 19/06/2008 09:40

About us Strategic challenges

Who we are, what we do, and how we How we plan to provide a secure, produce energy for our customers. sustainable and affordable energy supply in the future.

Meet the CEO Responsible business

An interview with our CEO, How we run a responsible business, Andrew Duff. and what we’ve achieved in 2007.

This is our fifth full Corporate It has also replaced our traditional printed Responsibility (CR) report. CR report, in order to make the information In this site, we explain how we approach contained in the report more accessible and the different elements of corporate comprehensive. We have, however, responsibility, from our environmental produced a printed summary of what we challenges to how we protect vulnerable achieved in 2007. If you’d like one of these, customers. We also report on what we have please contact us. achieved in the period January to December 2007, and the targets we set ourselves for Finally, the information in this web report 2008 and beyond. has been assured by an independent organisation, csrnetwork. Please read their This site is about RWE npower, part of the report here. RWE Group. It also covers the activities of npower renewables (which became part of RWE Innogy on 1st February 2008), but not the UK operations of RWE Supply and Trading.

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Our business Our sites

Our history How we produce energy

Britain’s brightest energy company Our performance RWE npower is a leading integrated UK energy company and is part of the RWE Group, one of Europe’s leading utilities. We serve around 6.6 million customer accounts and produce more than 10% of the electricity used in England and Wales. We supply electricity and gas to residential and business customers through our retail business, npower, and we operate and manage a flexible portfolio of coal, oil and gas-fired power stations. We also manage a portfolio of cogeneration plant and, through RWE Power International, we sell our expertise in power generation to third parties across Europe. npower renewables, part of RWE Innogy, leads the UK wind power market and are leaders in hydroelectric generation. We’re aware of our responsibilities We recognise the impact that our business has on the world we live in through the burning of fossil fuels, and aim to ensure that we undertake all aspects of our business in a responsible manner. At every stage of our decision making process we consider the social and environmental impacts of our actions. We also take the wellbeing of our employees seriously, as it is their talent, energy and knowledge that enable us to compete successfully in today’s demanding business conditions. It’s not just our employees that make our business a success – from the communities in which we operate to government departments and local liaison committees, all of our stakeholders have a role to play in our success.

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Our business Generation – a constant supply of energy We use a mix of coal, oil and gas-fired power stations, to generate around 10,000 MW of electricity.

Gas. Our combined cycle gas turbine (CCGT) power stations are highly efficient and emit no sulphur dioxide and lower levels of nitrous oxides than other forms of generation. Coal. We own and operate three of the UK’s largest coal-fired power stations, located in southern England with good access to distribution and rail facilities for sourcing fuel from different suppliers. Oil. Our two oil-fired power stations have short start-up times, which helps to balance demand at peak times. Combined Heat and Power (CHP). We use the heat that major industries would otherwise lose to cogenerate around 2,000MW of energy at combined heat and power plants – saving energy and money. Renewables. npower renewables, part of RWE Innogy, is one of the UK’s leading renewable energy developers and operators, dedicated to generating clean electricity using sustainable resources. It operates around 400MW of wind power capacity at 18 onshore wind farms and the UK's first major offshore wind farm. Its 16 hydroelectric sites have a combined capacity of around 60MW. And it is one of the leaders in the practical application of co-firing biomass at three of our power stations. RWE Power International. Through our collaboration with RWE Power, we offer our expertise in power generation to other power plant owners and operators across Europe. Technology Services. This division delivers strategic and operational services to address the technical, commercial and environmental issues faced by our power generation business and our customers.

Retail – supplying the UK at home and work npower, our retail business, is one of the UK’s leading energy suppliers. Serving around 6.6 million residential and business customer accounts, our aim is to deliver competitive solutions, and to give our customers choice: how they communicate with us, how they pay for their energy, how much energy they use, what type of energy they buy, what tariff they choose. We aim to do this through competitive pricing, innovative products and excellent levels of service. npower business is a leading supplier to the UK business market. We serve over 300,000 small to medium sized enterprise sites and around 20,000 industrial and commercial customers at over 100,000 sites. Our Metering and Data Services (MDS) business delivers a range of services to customers throughout the UK, and our home energy service, hometeam, provides boiler installation and gas central heating systems to domestic customers together with boiler servicing and repair.

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Our history Our company, like our industry, has evolved constantly since the electricity industry was privatised in the early 1990s, when we became National Power, one of the UK’s leading power generators. Over the next ten years we transformed our business by disposing of excess generating capacity. Through the acquisition of Midlands Electricity, Calortex and Independent Energy, we also established a substantial presence in the supply market. In April 2000, our various supply businesses were relaunched under a single brand, npower. By becoming an integrated company with both generation assets and a retail business, we were well placed to operate competitively in the volatile UK energy markets. In 2000 National Power demerged to create Innogy, a leading integrated UK energy company, and International Power. As Innogy we acquired the supply businesses of Northern Electric and Yorkshire Electricity, which increased our customer base to nearly 7 million. In 2002 we were acquired by RWE, one of Europe’s largest utilities and became RWE npower, the UK energy business of the RWE Group. On 1 February 2008 the renewable generation assets of the RWE Group were consolidated in a new operating company, RWE Innogy. In the UK, the renewable business of the Group continues to be known as npower renewables.

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Our performance Our results in 2007 were driven by strong performance in the generation business. We are committed to significant expenditure on new power stations, which we need to maintain security of supply and ensure we are delivering on our low-carbon energy targets.

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Key (Click to reveal sites) Our sites across the UK Coal RWE npower and npower renewables sites include coal, gas and oil-fired Gas power stations, onshore and offshore wind farms, hydro schemes, offices and Oil technology services sites. These sites are spread right across the UK from Onshore Wind Farms the north of Scotland to the Isle of Wight. Offshore Wind Farms Hydro Sites Combined Heat and Power RWE npower Offices Technology Services Sites npower Core Customer Area

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How we produce energy Before energy arrives at your home or business in the form of gas or electricity, there’s a chain of events involving all areas of RWE npower. The electricity we generate at our coal, gas and oil-fired power stations and at npower renewables’ wind and hydro stations is sold into the wholesale electricity market through RWE Trading. They also supply our stations with the fuel needed to generate electricity, by buying and selling in the gas, coal and oil markets. The electricity from our power stations is carried around the UK on high voltage transmission lines, owned and operated by National Grid. As this electricity nears its final destination the voltage is reduced and distribution lines deliver it to customers. Gas has a similar journey; it is produced offshore by companies such as Shell and BP. We ship it through the gas transportation network, which is owned by National Grid, to our power stations, and via the gas distribution network to our customers. We’re very aware of the potential environmental impacts of our power stations. Wherever possible we seek to reuse and recycle by-products from our generation activities. For example, pulverised fuel ash (PFA) removed from flue gases and furnace bottom ash (FBA) can be recycled and used in the construction industry. At all of our power stations we have implemented biodiversity action plans that help to conserve the unusual flora and fauna at each of our sites.

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Click questions to reveal answers Q: What does CR mean for RWE npower? A: In its simplest form, I believe our responsibility is to deliver affordable and reliable energy to our customers with the least impact on the environment possible. That means addressing all sorts of issues – from leading the development of cleaner energy technology to identifying and protecting vulnerable customers. And from looking after the wellbeing of our employees to carefully managing our power station emissions. It’s a very broad subject. Q: Isn’t it just a 'nice to have'? A: Not at all. If we’re going to continue to be a successful business, we need to be a sustainable one. Responding to environmental challenges, providing solutions to our customers’ energy needs, building strong relationships with our stakeholders and the communities in which we operate – CR is integral to a sustainable business model. We won’t succeed without it. Q: People often think that CR doesn’t have much impact on big business decisions. Is that true? A: No, that’s not true. Our activities impact on society in many different ways. So developing a robust understanding of these impacts and our stakeholders’ perspectives is a fundamental part of our decision-making process. Apart from anything else, it’s good business sense; if we don’t consider how our decisions affect society, we’ll lose touch with our customers and be unable to build a strong business. Q: Everyone has an opinion on what energy companies should be doing: how do you balance different interests? A: There’s no doubt that ours is a complicated industry. Creating affordable, secure, low-carbon energy inevitably requires the right balance between large-scale investment decisions and social and environmental challenges. I think the key to managing these trade-offs is to have an open and honest dialogue with our stakeholders. This gives us the information we need to strike the right balance. Q: There’s been a lot in the news about oil and gas supplies running low. Are the lights going to go out? A: I don’t think the lights will go out. But at the same time they’re not going to stay on on their own. The UK requires about 35GW of new generating capacity by 2020, which is equivalent to more than 20 large scale power stations. It http://www.wpa-pinfold.co.uk/npower/cr/4_ceo_qanda/ Page 1 of 4 RWE npower Corporate Responsibility Report - Meet the CEO 17/06/2008 17:11

equivalent to more than 20 large scale power stations. It also needs to maintain a varied generation mix to protect against possible risks in the future. This is why we announced new-build investments worth £1.7 billion in 2007, and why we continue to develop a range of possibilities for power generation over and above gas, including cleaner coal, nuclear and renewables. These measures will help us avoid capacity shortages, and provide a diverse generating portfolio for the future. Q: Energy bills are rising but energy companies are still making big profits. How do you justify that? A: Retail price rises are driven by a number of factors. Recently, these have included the huge increase in the wholesale cost of gas and coal, and the higher cost of carbon caused by environmental regulation, increased regulated transmission and distribution costs and increasing energy efficiency and fuel poverty obligations. What they’re not caused by is the company looking for a larger percentage of revenue as profit. In our case, I also think our financial returns should be viewed alongside our investment programmes. As older power stations close, we’re investing in new cleaner power stations, and these cost substantial sums of money. To put it in context, our new power station at Staythorpe alone will cost more than our entire UK profit in 2007and we expect to invest more in new power stations and infrastructure than our total cash flow every year for the next ten years. Q: Does RWE npower have a role in tackling climate change? A: Absolutely. Of all the single issues we face as an industry, there’s no doubt that climate change is the biggest. The sharp increase in environmental awareness, regulation and the expectations of our customers means that it’s dominating the power industry’s attention, and rightly so. I believe we have two roles to play. Like all energy generators, we are a significant emitter of CO2. So our first role is to reduce the emissions produced by energy generation. We’ve committed to cutting emissions by 33% by 2015 from 2000 levels. We’re actively researching renewable energy sources and new technologies like Carbon Capture and Storage. We’ve also committed to reducing the CO2 emissions from our non-generation assets. Our second role is to help our customers reduce their carbon footprint, particularly by developing products and services like smart metering and microgeneration technology to help them reduce their energy consumption. So we have two really important roles, but we can’t fix the problem on our own. Government needs to implement a long-term, energy policy framework for the industry. And at a time when awareness of climate change is higher than ever but energy demand is still increasing, businesses, customers, the public, everyone has a part to play. Q: Why are you planning to build new coal power stations? http://www.wpa-pinfold.co.uk/npower/cr/4_ceo_qanda/ Page 2 of 4 RWE npower Corporate Responsibility Report - Meet the CEO 17/06/2008 17:11

stations? A: Over the coming years, our aim is to move towards a secure but more environmentally sustainable generation mix. Coal will have an important role to play if the UK is going to find the 35GW of new capacity it needs by 2020 and not become overly reliant on a single fuel source. I think it’s also worth saying new coal-fired power stations will be far more efficient than existing coal plants. We believe that Carbon Capture and Storage also has the potential to stop a significant proportion of the CO2 created in the process from ever reaching the atmosphere – not just in the UK, but across the world, if it can be retrospectively fitted to power stations being built in countries like India and China. Q: What is RWE npower's position on nuclear? A: In principle, with climate change such a priority, and secure and affordable energy requiring a diverse mix of power generation, we believe nuclear must play a part in the UK’s energy mix alongside coal, gas and renewables. What’s more, with our parent company RWE’s expertise in operating nuclear power plants in Europe, we’re in a good position to participate in a new nuclear programme in the UK. Q: Will renewable sources really be able to generate enough energy in the future? A: In the short term, renewable energy won’t fill the anticipated energy gap resulting from the closure of coal and oil fired power stations. However, what’s clear is that it’s an absolutely essential part of the UK’s electricity generation portfolio – particularly as we move to a low- carbon economy. We have nearly half a gigawatt of wind and hydro generation in the npower renewables portfolio in the UK, and increased offshore wind generation will be central to the UK’s ability to reach its renewables targets set for 2015. In the longer term? A lot will depend on the success of emergent technology like marine renewables. The UK Government White Paper re-affirmed the role of offshore wind and these new technologies for the future. But for this to really get going, we need a planning regime which allows new sites to be developed much faster. Q: How important is community involvement to RWE npower? A: Hugely important. It enables us to give something back to the communities in which we work. At the same time, it also supports our licence to operate, improves morale within the business, and strengthens our brand. Our investment strategy continues to focus on communities around our operating sites. It has my full support, and through our partnership with Macmillan Cancer Support and programmes like Health Through Warmth, which supports people living in cold, damp houses, we achieved some great results in 2007. Q: What RWE npower achievement(s) are you most proud of in 2007? A: One area I haven’t mentioned so far, but one that I’m personally committed to, is diversity and inclusion. Obviously, our success depends on attracting and holding http://www.wpa-pinfold.co.uk/npower/cr/4_ceo_qanda/ Page 3 of 4 RWE npower Corporate Responsibility Report - Meet the CEO 17/06/2008 17:11

Obviously, our success depends on attracting and holding on to the best people, and getting the right mix of technical and commercial talent into the business. But the value to the whole company of a motivated and engaged workforce cannot be emphasised enough. I was particularly pleased to see the dramatic improvements in employee feedback measured in the 2007 employee survey. I was also very proud that, in an industry traditionally dominated by men, we were rated in the UK’s top 50 places ‘Where Women Want to Work’ by The Times. Long may that continue.

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Low carbon economy Affordable energy

The biggest challenge our Secure supply of energy industry has ever faced We’re entering a period of dramatic change in the energy industry – one dominated by the need to address three big issues:

How we move to a low carbon economy How we maintain a secure supply of energy How we keep energy affordable

Here in the UK, these issues aren’t new. However, recent developments have thrust them firmly into the public spotlight: developments like the increasing awareness of the threat of climate change, the closure of ageing power stations and rising wholesale energy cost. The energy industry, Government, businesses, customers... everyone has an interest in developing a sustainable, secure and affordable energy supply for the future. As an integrated energy company, we recognise that we have an important role to play in that process. Taking a balanced approach Our aim is to adopt a balanced approach to these issues, recognising that action in one area can have significant impacts elsewhere. We also recognise our responsibility to balance the interests of our stakeholders – from the needs of our employees and customers to those of the communities we serve. Risk or opportunity? At RWE npower we have committed substantial investment to reduce the carbon output from our portfolio in future years. By 2015 we plan to have reduced the carbon intensity of the electricity we generate by a third compared to 2000 levels. These investments are necessary, and mustn’t be put off if the UK is to meet the energy gap created by the closure of ageing power stations, and to maintain secure supplies of electricity. The challenge is significant, and requires a power station new-build programme on a scale not seen in decades.

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Low carbon economy New build plans New build plans Nuclear power Carbon Dioxide Capture and Storage

Nuclear power

How we move to a low carbon Carbon Dioxide capture and economy storage

"In the longer term, energy companies need to look at a whole range of CO2 reducing options including much larger scale offshore wind development, cleaner coal with the possibility of Carbon Capture and Storage, further modern gas plants and potentially new nuclear power." Andrew Duff – CEO RWE npower Building a low carbon economy... Recent years have seen an unprecedented rise in the prominence of climate change as an issue for consumers, Governments and business alike. Our challenge is to continue to reduce the impact on the environment of the energy we produce while ensuring secure supplies. At the same time, we need to provide our customers with the products and services they want to be able to manage their own environmental impacts. ...in an atmosphere of uncertainty Several uncertainties complicate the issue:

In 2007, despite long-term CO2 targets providing some clarity, there were still policy decisions to be made at national and international level that will affect the way the energy market operates. Continuing to develop renewable energy sources is essential. Wind power is already providing an increasing percentage of our generating capacity. However, with other technologies advancing all the time, we need to make judgements about the future technology mix. Different people have different priorities. When planning, we have to weigh up the need for cleaner energy with other public concerns like rising energy prices, and the impact on local communities. Despite the uncertainty involved, we need to start investing now to avoid capacity shortages in the future. This means we need to build flexibility into our plans to enable us to adapt to the changing needs of customers and the framework being created by our regulators.

We will cut the carbon intensity of the electricity we generate by 33% by 2015 from 2000 levels In 2007 we announced investments worth £1.7 billion – investments that will help us reduce the amount of CO2 we emit per unit of power generated; 33% by 2015 compared to 2000 levels, and 50% compared to 1990 levels. These are ambitious targets, but we believe they are achievable. However, longer-term emissions targets will require new methods of generation to be developed, so we need to plan for the future, while ensuring we hit our shorter term targets. How? By: Changing the methods and sources of energy we use By 2015 we will have closed our existing coal power stations at both Didcot A and Tilbury, and replaced their generating capacity using cleaner energy sources. These will include modern gas plants like our planned Combined Cycle Gas Turbine (CCGT) power station at Staythorpe in Nottinghamshire. In October last year, our parent company RWE announced a renewed commitment to the development of renewable energy. This growth in renewables will be driven by a new company, RWE Innogy. Through RWE Innogy, we’ll add to our 18 current onshore wind farms with new off- and onshore wind farms. We’ll also be investing over £700 million a year to develop renewable energy in the UK and across Europe. We’re also reviewing other longer-term generation options that will have an impact in the longer term. These include Carbon Dioxide Capture and Storage (CCS) and nuclear power.

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Reducing our own carbon footprint As well as our planned investment in new, cleaner energy generation, we’re looking at our own energy use – including at all of our offices. In 2007, we committed to a plan to reduce the carbon footprint of our non generation operations. Providing new products and services for our customers At RWE npower, we believe the greenest energy around is the energy we don’t use, and that reducing energy consumption is key to reducing total emissions from energy. Our role in this is to give our customers choice in order to help them lead greener lifestyles. We achieve this through a range of energy-saving services and products like loft-insulation, smart metering and green energy products, such as Juice and National Trust Green Energy. We also recognise the important role we can play in advising our customers on how to save energy and reduce their bills by becoming more energy efficient.

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Low carbon economy New build plans Nuclear power Carbon Dioxide Capture and Storage

Investing £1.7 billion in new power generation The UK is facing an energy gap. By 2020 the UK could need as much as 35GW of new generating capacity – the equivalent to over 25 new large-scale power stations. In 2007, our planned investments in new cleaner energy generation were worth £1.7 billion. These investments will equip us with a diverse mix of energy plants including Combined Cycle Gas Turbine (CCGT) and cleaner coal plants, and on and offshore wind farms. Our new build process is carefully phased, as different plant types will take longer to plan, commission and build than others. Gas In 2007 we announced that we were investing £600 million to build a modern CCGT power station at Staythorpe in Nottinghamshire, and £800 million to build a similar power station at Pembroke in West Wales:

Staythorpe, where construction has started, will have a capacity of 1,650 MW, and will reduce average annual CO2 emissions by up to 7.5 million tonnes compared to an existing coal-fired power station. Pembroke, where consent to construct is being sought, will have a capacity of up to 2,000 MW – enough to supply around three million homes – and will reduce average annual CO2 emissions by up to 10 million tonnes compared to an existing coal-fired power station.

Coal We are considering options for new coal plants at Tilbury in Essex and Blyth in Northumberland, which would be able to generate 3,000 MW. Thanks to new cleaner-coal technology, these plants will have greater thermal efficiency. We are also investing £8.4 million in our first pilot CO2 capture plant at Aberthaw in South Wales, which is due to be fully operational in 2010. Wind In 2007, we committed £190 million to develop the 90 MW offshore wind farm at Rhyl Flats in North Wales. We also progressed plans for our major new 750 MW offshore wind farm at Gwynt-y-Mor, also off the coast of North Wales. And in 2007 we received consent to build wind farms at:

Bradwell, Essex– up to 20 MW Lindhurst, Nottinghamshire– up to 12.5 MW Lochelbank, Scotland – up to 18 MW

And the following new wind farms went into commercial operation:

Hameldon Hill, Lancashire– 4.5 MW Burgar Hill, Scotland – 5 MW

Hydroelectricity In 2007, hydroelectric plans were approved at:

Inverlael, Scotland – up to 2.5 MW Carnoch, Scotland – up to 1.3 MW Selset, Northumbria– up to 0.8 MW

And plants went into commercial operation at:

Inverbain, Scotland – 1 MW River E, Scotland – 3 MW

In total, this means that our operating renewables portfolio by the end of 2007 included:

Onshore Wind – 340.7 MW Offshore Wind – 60 MW Hydroelectric – 61.8 MW

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Low carbon economy New build plans Nuclear power Carbon Dioxide Capture and Storage

Our approach to nuclear "An ongoing role for nuclear in the UK has to be seriously considered, along with renewables, gas and coal, as we seek to tackle the challenges of climate change and energy security." Andrew Duff - CEO RWE npower "Nuclear power is a tried and tested technology. It has provided the UK with secure supplies of safe, low-carbon electricity for half a century. New nuclear power stations will be better designed and more efficient than those they will replace. More than ever before, nuclear power has a key role to play as part of the UK’s energy mix. I am confident that nuclear power can and will make a real contribution to meeting our commitments to limit damaging climate change.” Gordon Brown – forward from the ‘Meeting the Energy Challenge’ White Paper on nuclear power, January 2008 In January 2008, Government presented Parliament with a White Paper that laid out the Government’s stance on the future of nuclear power in the UK. The paper confirmed the Government’s belief that new nuclear power stations should have a role to play in the UK’s future energy mix (alongside other low- carbon sources). The paper stated that it would be in the public interest to give energy companies in the UK the option of investing in new nuclear power stations, and that Government should facilitate the process. To that end, energy companies were invited to present their proposals to build new nuclear plants. We welcomed these decisions, but recognise that a lot of hard work still needs to be done to establish the necessary policy, planning and regulatory framework to make new nuclear power a reality. We look forward to contributing to that debate. However, the White Paper was an important step forward. We believe that nuclear power has the potential to be a low-carbon, affordable, dependable and safe energy source for the future and we are well placed to be a part of this country’s nuclear future. And while RWE npower doesn’t currently run nuclear power stations in the UK, our parent company RWE has considerable experience of nuclear power generation. So we have the necessary expertise to make that happen.

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Low carbon economy New build plans Nuclear power Carbon Dioxide Capture and Storage

Researching Carbon Dioxide Capture and Storage (CCS) What is CCS? Carbon Dioxide Capture and Storage (or Sequestration) offers the potential to isolate and store CO2 produced during the combustion of fossil fuels and prevent it from reaching the atmosphere. If the UK is to bridge its energy gap in the long term, coal is likely to play an important part in the country’s energy mix. CCS technology has the potential to dramatically reduce CO2 emissions that are released into the atmosphere as a result of using coal as a fuel. Continuing research Our CCS strategy includes a wide ranging programme of research using the Combustion Test Facility (CTF) at Didcot to examine the technical, operational and commercial issues associated with CO2 removal from coal- fired power station emissions. The necessary equipment is being installed and the test programme is due to commence in the summer of 2008. New pilot plant at Aberthaw In addition to the CTF research work, last year we announced plans to invest £8.4 million in a 1 MW post-combustion CO2 capture plant at Aberthaw in South Wales. Design work has started on this larger plant and construction is due to begin in 2009, so that the plant is fully operational in 2010. The plant will enable further research into CO2 capture, but at a much larger scale. 25 MW demonstrator plant While the initial £8.4 million investment will focus on the 1 MW carbon capture plant, further investment is also planned to support a capture demonstrator plant of at least 100 MW. This larger demonstrator plant will include transportation and storage, and would form part of one of our new, high efficiency supercritical power stations which are currently being considered at our existing sites in Tilbury, Essex and at Blyth, Northumberland.

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How we maintain a secure supply Finding a secure supply of energy... While demand for energy increases, our industry is closing existing coal, oil and nuclear power stations that either won’t comply with future environmental regulations or have come to the end of their lives. Up to 45% of the UK’s current generating capacity will have closed within the next ten years, and the UK may need as much as 35GW of new build operating by 2020. ...for the short and long term future To develop a secure supply of energy in the long term, we need to invest in a range of technologies. Renewable energy, particularly wind power, has an important role to play. However, in the short term it will not be able to close the gap left by closing fossil fuel and nuclear stations. Delivering new power generation by 2020 We need, therefore, to build new cleaner power stations alongside renewables to fill the gap. We started planning this new build programme several years ago and are now committing funds and starting to build. So we’re well placed to address the supply shortfall. But it also means we’re having to invest billions of pounds while policy and industry regulation is still not clear, and lower-carbon technology isn’t yet perfected. Through npower renewables, part of RWE Innogy, we will build as much economically viable renewable generating capacity as we can, which will help to meet the Government’s renewables targets. We currently have 19 operating wind farms, including the North Hoyle offshore wind farm. To supplement this, our development pipeline in total is in excess of 4 GW, of which we aim to have 560 MW in operation by 2012. We are also planning to build up to 3,650 MW capacity of new gas plant (including power stations at Staythorpe, where construction has started, and Pembroke where consent to construct is being sought),as well as investigating options for new, more efficient coal plants at Tilbury in Essex and Blyth in Northumberland, which would be able to generate up to 4,000 MW. Finally, to ensure secure supply in the long term, technologies like nuclear power and Carbon Dioxide Capture and Storage are likely to have an important role to play.

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How we keep energy affordable Managing price pressures... Environmental pressures, wholesale cost increases and the need to invest in new generation technology will have an inevitable impact on the price of energy in the future. Our challenge is to protect our customers by keeping our energy prices as predictable and as low as possible. ...while investing in cleaner, more secure sources Energy prices are coming under pressure from a number of rising costs:

One of these is wholesale costs – over which we have little control: between 2004 and 2007, wholesale gas prices rose 200%. And the cost of coal doubled in 2007, largely due to demand from developing countries. Other increasing costs facing energy suppliers include electricity and gas distribution and transportation costs, and the cost of meeting future environmental regulation like CERT3, which will cost about twice the amount of the Energy Efficiency Commitment (the regulation it replaces).

We will achieve this through: New generation –The new power stations we are developing will help to ensure energy prices remain stable. And because they cover a range of potential energy sources for the future, they will help to protect our customers against unforeseen price spikes caused by over-reliance on one energy source. Reduction – our strategy is also to work with both residential and business customers to minimise the impact of any price rises that do occur. One way is to help them be more energy efficient through energy-saving products and services. Another is by providing expert advice on energy management. Protection – We believe that affordability is not just about cost, it’s about certainty. As a result, we take some of the responsibility for managing and smoothing out wholesale prices on behalf of our customers. We also offer a range of tariffs – from our fixed-price tariff to our market-tracker – to give customers a choice of how they manage their bills. We also take our responsibility to protect vulnerable customers seriously. In 2007, we invested approximately £54 million, supporting over 500,000 households across the UK. This ongoing commitment means we will also continue to train all our customer-facing employees on how to identify customers who are genuinely vulnerable, and then concentrate our efforts on providing them with the range of products, services and support they need, for as long as they need them.

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Managing CR Our supply chain

Low carbon economy Our workplace

Running a responsible business To be a truly responsible company, every part of our business needs to Environmental management Our community operate responsibly, every day. Making sure this happens is a complex task, and one that requires us to focus on six key areas:

The UK’s move to a low-carbon economy Environmental management Our customers Our supply chain Our workplace Our customers Our community

In this section we look at how we approach our responsibilities in each of these important areas. We explain what we’re currently doing to fulfil them, what we achieved in 2007, and the targets we’ve set ourselves in the future. Finally, we also explain how we integrate CR into the day-to-day running of our business, and how we manage CR issues as they arise.

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Managing CR Risk management Risk management Stakeholder engagement CR governance GRI indicators Progress against 2007 targets Stakeholder engagement

The CR Committee

Managing CR Responsible business practice is critical to our success as a company. CR governance It helps us capture economic benefits by adopting a more forward looking Kevin Akhurst approach. It helps us manage risk more effectively. And it helps us identify Managing Director, Generation opportunities for new products and services. Environment and Community Responsible practice is essential in maintaining morale and motivating our workforce, in building effective community relationships, and recruiting and retaining employees. It also helps us develop stronger relationships with our stakeholders so that we can take account of the issues that most concern them. What does responsible business practice mean to us? Volker Beckers It means we: Group Chief Financial Officer Supply Chain consider environmental, ethical and society impacts when making business decisions. For instance, financial investments require an analysis of the potential social and economic impacts of that decision. We also involve stakeholders as part of the analysis for specific decisions. participate in activities that have a social and/or environmental benefit. This ranges from supporting the most vulnerable through our Health Through Warmth Programme to working with organisations such as the Alison Cole National Trust to develop low-carbon villages. Director, Corporate Communications work with our stakeholders to ensure we understand their needs and Community and Communications concerns, and to consult them when we have difficult or controversial decisions to make. ensure that our employees understand the issues that are critical to our business such as climate change, that they understand our company values and code of conduct

Commitment of senior managers We believe that commitment from senior management is essential to embed Yvonne Constance responsible business practices into the decision-making process. Our board- Independent Chairman level CR committee includes representatives from all the business units and our four company directors. It is independently chaired by Yvonne Constance, and includes representatives from our sister company RWE Trading and from RWE AG.

This CR committee provides a forum to:

establish and review progress against annual CR targets Andrew Duff provide updates on key CR issues at an RWE npower level, and on CR Group Chief Executive Officer issues being addressed by RWE AG (for example, the development of Policy, Strategy, Workplace and Human a group-wide sustainability strategy) Rights review sustainability issues, like business ethics training or the development of plans for ash disposal at Radley Lakes scope and approve new CR initiatives like the Greener Schools programme and a ‘carbon reduction’ project in our non generation business operations.

In addition, wider CR issues such as new investment programmes, energy pricing and employee recruitment and retention are discussed at the bi- Guy Johnson weekly RWE npower management meetings. These are attended by all board Company Secretary, General Counsel and members, and the directors of Communication, HR and Regulation. Director of Regulation Human Rights Our CEO and business-managing directors also sit on the Health and Safety

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Human Rights Review Committee (HSRC), which is independently chaired by Sir Robin Mountfield. Formal reports from the chairman of the CR Committee and the HSRC are made to the Board on an annual basis – these focus on progress against targets, providing an overview of annual performance and having an impact on bonus payments for the year.

Anita Longley Head of Corporate Responsibility Integration, Strategy and Community

Julia Lynch-Williams Director, Energy Services Marketplace

John McElroy Head of Environmental Strategy Environment

Dr Hans-Peter Meurer Manager, Environmental Affairs, RWE AG Interface with RWE AG

Kevin Miles Chief Executive Officer, Retail Marketplace

John Rainford Site Manager, Didcot A Power Station Environment

Alan Robinson Director, UK Markets, RWE Trading Pensions and Interface with RWE Trading

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Saudagar Singh Human Resources Director Workplace

Dave Titterton Head of Marketing, npower Business Marketplace

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Managing CR Risk management Stakeholder engagement CR governance GRI indicators Progress against 2007 targets

Managing risk at RWE npower Why is risk management important to RWE npower? A risk conscious culture helps us achieve the financial targets we have promised to our parent company and shareholders consistently and without surprises. This in turn allows us to:

invest prudently in assets (power stations, gas contracts) that ensure security of supply for the UK offer better value for money to our retail and commercial customers, by offering competitive prices and service be a major employer and contribute to the local communities in which we operate do business ethically, taking into account the social and environmental impacts of our operations.

Company structures for managing risk The relative importance of risks and opportunities can change over time. Our challenge is to establish reliable ways to manage and anticipate these risks so that we can achieve our business plan. At a group level, risk management is the responsibility of the RWE Board. It is assisted by a risk management committee (RMC), business unit risk representatives, and risk owners for each individual risk. At RWE npower level, both our Retail and Generation businesses have risk management functions that examine all the risks that arise from our operations. The types of risk examined are usually market, regulatory and operational risks. RWE npower also has Risk Control and Audit departments that report to the Chief Financial Officer (CFO) and to RWE AG to ensure we have independent assessments of the risks we face. In managing the risks associated with transactions, the first port of call is Risk Control and the risk management function of that particular business area. If the size of a contract is above a certain threshold, it has to be approved by our Board. It may also need to be reviewed by Group Risk Management and the Risk Committee (both part of RWE AG). Finally, there are thresholds above which a transaction has to be presented to the RWE AG Board for approval. Usually the acquisition of major assets (i.e. power stations, gas storage facilities) falls in this category.

Managing compliance Our reputation is at stake if we don’t deliver against expectations. So we have procedures in place to mitigate the key causes of reputation risk: compliance failures, failure to deliver minimum standards of service and unethical practices.

RWE npower has a structure in place to help us comply with Utility Legislation, Competition Law and Financial Services Law.

Our policy is to comply with all these regulatory requirements where they are applicable to gas and electricity - primarily the Electricity and Gas Acts and the licences issued by Ofgem. Economic Regulation’s current Utility Legislation process identifies our obligations under the licence, the policies and procedures required to comply with the obligation and the obligation owner within the business.

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It’s also company policy to comply with Competition Law - particularly anti- competitive agreements and concerted practices with competitors. All our employees and those working on behalf of the company are required to read RWE npower's Competition Law Compliance Policy and Manual. Business continuity Business Continuity is an essential aspect of our risk management. In the event of an unplanned incident our reputation would be measured by our ability to look after the welfare of our employees while still serving our customers and protecting our other stakeholders. RWE npower takes such responsibilities very seriously and a clear escalation path exists to manage the response to any major incident. The process includes:

A continuous assessment of threats, operational risks and potential financial and non-financial impacts Ensuring that we can fulfil the requirements of Business-Continuity Management Exercising or rehearsing continuity plans against potential high-risk scenarios Measuring and benchmarking Business-Continuity arrangements against company principles, guidelines and industry best practice.

The kind of risks we face Our key areas of CR risk can be divided into four broad areas: Operational risk Regulatory risk Reputational risks Sustainability/ strategic risk We face price and sales risks from our involvement in wholesale commodity markets such as electricity, gas and coal. We address these risks with differentiated pricing strategies, appropriate marketing policies and measures to cut costs. We limit earnings risks stemming from price fluctuations on energy markets for the generation and sales businesses through our energy trading activities. In our supply business, we are exposed to credit risks from customers who fail to meet their financial obligations. We mitigate this risk by running regular checks on customers according to credit risk guidelines. Our technologically complex plants and systems expose us to risk, too. Earnings risks, for example, from uninsured damage to power plant components and consequent market losses. Or the increasing risk of outages due to the ageing components in our power plants. New power plants being built may experience delays due to unforeseen events, such as accidents or property damage. We address these risks through high safety standards as well as regular audit, maintenance and servicing work. Insurance policies also limit possible effects of damage. The RWE Group’s exposure to the constant change in the political, legal and social environment can also have an impact on earnings. Uncertainty over, for example, the future structure of the EU Emissions Trading Scheme affects the way we look at new power station investments.

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Managing CR Risk management Stakeholder engagement CR governance GRI indicators Progress against 2007 targets

Engaging with our stakeholders A key factor in successful business performance is an open dialogue with all our stakeholders. We must be responsive to their concerns and complaints, and adopt high standards of reporting on our environmental and social performance. Our engagement programme is tailored to suit our wide range of stakeholders. It addresses stakeholder concerns in different ways, and at different levels. Through well established consultation procedures, we talk to our customers, employees and those communities affected by our operational locations about any issues that concern them. Communication and feedback mechanisms include regular customer and employee surveys, Local Liaison Committees at each of our conventional power stations, and extensive consultation with key stakeholders around proposed new developments. Business decisions Our approach to risk management and strategy is based on the 'precautionary principle', which means we don’t take strategic or operational decisions without proper consideration of their potential environmental or social impacts. This is important – the nature of our business means the scope and magnitude of these impacts is varied, and can at times be large. Our stakeholders – including customers, employees, suppliers, Government, regulators and the general public – have a wide range of perspectives to offer. Ensuring that we maintain an open dialogue with them is a fundamental part of our decision-making process. Wherever we can, we also work in partnership with organisations that are able to bring a different perspective to the issues we face. This offers us the opportunity to learn from others and multiply the benefits of our efforts. For example, through our social action programmes such as Health Through Warmth we work with key external stakeholders such as the NHS to help us fulfil our responsibility to protect vulnerable members of society. Understanding our challenges and expectations To secure an economically sustainable future for our company, we must understand the expectations of our stakeholders, and develop solutions that balance the needs of these different stakeholder groups.

This balance includes providing reliable and affordable supplies of electricity and gas to our customers with minimum impact on the environment, while providing a sustainable, positive return on our investments.

This will require the investment of billions of pounds over the next few decades. Such a level of investment, however, is only possible if we have confidence in the public policy framework and regulation governing our industry over the long term.

Communicating our views To explain our position on issues of importance to our business, we maintain an open dialogue with legislators, regulators and opinion formers through meetings and correspondence, and by responding to public consultations. In our submission to the UK Government’s Energy Review consultation last year, for example, we emphasised the importance of long-term, stable policy and planning frameworks to stimulate investment in new viable renewable energy generation. We also highlighted the importance of substantial support for Research and Development (R&D) initiatives, including large-scale

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demonstration projects into emerging renewable and carbon dioxide capture and storage (CCS) technologies. We also make our views known to the outside world, both directly and through trade associations and peer groups such as the UK Business Council for Sustainable Energy (UKBCSE), the Association of Electricity Producers (AEP) and the Energy Retail Association (ERA). Leadership and learning We believe that change within an organisation requires a clear commitment from senior management. By involving our senior executives through the CR Committee, the strategic importance of our CR programme is reinforced. In addition, strong leadership also involves engaging and supporting other companies, and publicly promoting responsible business practice – through workshops and presentations, for example. We are actively involved in a range of business- and sector-led forums such as the UK Business Council for Sustainable Energy (UKBCSE) and the CBI’s Climate Change Taskforce. We have been working with other leading companies through the BitC network to develop new thinking on wellbeing. In 2007, we published a white paper on climate change. And we are Foundation Partners of Forum for the Future, working with them specifically on sustainable marketing and procurement strategies.

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Managing CR Integration with group Risk management Stakeholder engagement CR governance Integration with group Our values Business ethics Our values Environmental protection Ethical behaviour Health and safety Putting policies in place GRI indicators Corporate governance Progress against 2007 targets We aim to make sure that CR strategy is integrated into all our operations. In Business ethics addition group-wide coordination, the relevant management systems and comprehensive internal reporting are all critical to implementing our CR strategy, as are regular controls.

Environmental protection

Ethical behaviour

Health and safety

Putting policies in place

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Managing CR Putting policies in place Risk management Our work is underpinned by a range of policies and practices which describe Stakeholder engagement how we work responsibly within RWE npower. These include: CR governance Integration with group (Click to move to section) Statement of Business Principles Our values Corporate Responsibility Policy Business ethics Environmental Policy Environmental protection Health, Safety, Security Corporate Community Involvement Policy Ethical behaviour Diversity and Inclusion Health and safety Procurement Policy Putting policies in place Statement of Business Principles GRI indicators This Statement of Business Principles describes the basic principles of how Progress against 2007 targets we do business, which should be applied by all employees. It is underpinned by a range of policies to support our employees, which includes Equal Opportunities and Diversity, Human Rights, Health and Safety and Corporate Responsibility policies, and our Code of Conduct. Our reputation for conducting business with integrity and respect for those who are impacted by our activities is critical to our success as we build a company to be proud of. To achieve this all employees need to demonstrate the highest standards of behaviour. Our success as a company cannot be measured solely by our financial performance. We are committed to carrying out our business with a sense of responsibility for the environment, our customers and employees and for the communities in which we work. Corporate Responsibility Policy Our Corporate Responsibility policy is supported by other company-wide policies and sets out our approach to managing the environmental and social impacts of the business. Throughout our businesses we will aim to operate in an environmentally and socially responsible manner that reflects the aims of sustainable development and is consistent with the following principles:

To integrate Corporate Responsibility into our business decision- making processes. We recognise the importance for the company of Corporate Responsibility covering environmental, social and ethical issues, and we have objectives and targets to support this. To ensure effective communication and dialogue with stakeholders. Effective communication is an essential component of our business performance. This includes dialogue with all our stakeholders including customers, suppliers, employees, neighbours, Government, and other interested parties. It means being responsive to concerns and complaints and adopting high standards of reporting on our environmental and social performance. To continuously improve the management of environmental and social issues in our businesses. We will meet and, where appropriate, exceed the requirements of all relevant legislation. We have established appropriate systems to manage environmental and social issues at corporate, business and site level, and have set quantifiable targets to improve our performance continuously. To encourage our employees to help us improve business performance and contribute to the wider community, and to recognise these contributions. We will educate, train and provide incentives for our employees to conduct activities in a manner consistent with our principles. In addition, we will encourage and support employees in environmental and social action in the wider community.

Our Corporate Responsibility policy is supported by other company-wide policies, for example our Environmental, Equal Opportunities and Diversity and our Occupational Health and Safety policies. Environmental Policy At RWE npower we recognise our responsibility towards the environment and we are committed to continuously improving our environmental performance. Together with our parent company, we are committed to meeting the requirements of the UN global compact including its environmental principles. To achieve this we will:

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integrate environmental factors into business decisions and processes comply with relevant environmental regulations set corporate objectives and targets for environmental improvement be responsive to concerns and complaints regarding our operations regularly review at Management Group level our environmental performance and adopt high standards of environmental reporting establish and improve systems for environmental management support our employees involvement in community projects that enhance the natural environment provide appropriate training for employees on environmental issues.

Health, Safety, Security Policy Protecting our people, business partners, customers and the public from ill- health or injury and promoting employee wellbeing, as well as safeguarding our assets from loss, damage and business disruption, are fundamental to our business philosophy. RWE npower takes such responsibilities very seriously and commits to:

providing a safe, secure and healthy working environment for everyone involved in our business assessing and managing risks across our business so that personal injuries, occupational illness, dangerous occurrences and security breaches are avoided eliminating unsafe acts and conditions by establishing a just and fair safety culture which rewards safe behaviour consulting and informing employee representatives, employees and other interested parties to promote risk awareness assisting employees who have been injured or unwell, whether through work or otherwise, to return to work using the workplace to promote a high standard of overall health and wellbeing establishing a framework management system incorporating our core health, safety and security principles, including Incident Response and Business Continuity investigating, monitoring and reporting health and safety performance and security breaches throughout RWE npower measuring, benchmarking and auditing performance against RWE npower principles and industry best practice to ensure continuous improvement ensuring confidentiality, integrity and availability of information systems and data through adoption of physical, technological, personal and systems controls maintaining an adequate level of security for all assets, by physical, technological and system methods providing adequate resources to meet the requirements of the Policy and supporting the management system framework.

Corporate Community Involvement Policy At RWE npower we recognise our responsibility towards the communities in which we operate and we are committed to continuously improving our performance in this area. We aim to develop partnerships which create trust within the communities in which we operate. We recognise that our operations have the potential to impact negatively on local residents and we aim to keep this to a minimum. To achieve this we will:

set corporate objectives and targets for Corporate Community Involvement regularly review at Management Group level our Corporate Community Involvement performance and adopt high standards of reporting (using the London Benchmarking Group model) engage in internal and external stakeholder dialogue to review the scope and impact of our community involvement programme ensure that the impact on the community is taken into consideration when making business decisions recognise the value of employee volunteering and actively encourage this activity during working hours as part of personal and team development reward our employees' contribution to the wider community through the Community Volunteer Award Scheme and the Match Funding Scheme encourage our employees to assist with community projects that enhance the natural environment and promote the safe and wise use of energy involve employees in the development of charity fundraising days donate ‘Gifts in Kind’ to support charity and community groups, where

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appropriate channel applications for support through the charity committee provide appropriate training for employees on Corporate Community Involvement.

Diversity and Inclusion Policy RWE npower is committed to equal opportunity and diversity. This commitment means that all employees and job applicants will be treated equally and fairly without regard to sex, marital status, race, colour, nationality, ethnic or national origins, age, religion or belief, sexual orientation, trade union affiliation or, where not relevant to the job, status as an ex- offender. Employees with disabilities will receive fair treatment and be considered on their ability to do the job, following reasonable adjustments where appropriate. Decisions on recruitment, selection, training, promotion and career management are based on objective and job-related criteria. RWE npower believes that an effective equal opportunity and diversity policy will enable the company to attract and retain good quality employees and allow such employees to develop their talents and skills and thereby contribute to the success of the organisation. Procurement Policy We recognise the significance of the supply chain and the role it plays in delivering value to its customers, through its Core Principles of Sustainable Procurement, which seek to:

minimise impacts through assessment and management of environmental and social risks increase value for money through quality standards, whole-life cost assessment and shared benefits maximise relationships through stakeholder engagement, sector collaboration and shared values.

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Managing CR Risk management Stakeholder engagement CR governance Integration with group Our values Business ethics Environmental protection Ethical behaviour Health and safety Putting policies in place GRI indicators Our values Progress against 2007 targets At RWE npower, we have a set of values that support the implementation of our corporate strategy. The importance of values in our business are emphasised through company- wide communication and by encouraging adoption of these values at a business unit level. Our values are: — Customer Focus — Forwad Thinking — Performance — Trust — Reliability

These company values are embedded within personal development and training targets. They also form part of our performance management across the company, with employees encouraged to ‘live the values’. Responsible business practices form an integral part of delivering our vision. In November these objectives were discussed at our annual management conference and have subsequently been communicated to the company through a number of conferences and internal communications.

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Managing CR Related websites Risk management RWE Code of Conduct Stakeholder engagement CR governance Integration with group Our values Business ethics Environmental protection Ethical behaviour Health and safety Putting policies in place GRI indicators Our business ethics Progress against 2007 targets RWE AG Central to good corporate governance at RWE is the Group-wide Code of Conduct we adopted in 2005. This was drafted by a team that included external experts and is based explicitly on the ten principles of the UN Global Compact. We have also created a taskforce to monitor its implementation. This body – consisting of the Group’s Compliance Officers – develops guidelines on how to interpret and comply with the code. RWE npower Since 2005, we have held briefings to familiarise employees with the Code, and issued guidelines tailored to RWE npower. We have also worked with the Institute of Business Ethics to develop an interactive half-day workshop on business ethics for all managers. By the end of March 2008 nearly all managers had received business-ethics training. We are also working with IBE to develop online training which will be made available to all employees in 2008. Our Compliance Officer advises employees and handles any reports of non-compliance. Awareness of and compliance with all policies is audited on an annual basis through a questionnaire to managers within the company. In addition our ‘speak up’ policy offers a confidential externally managed helpline which enables employees to report infringements of the code and any other concerns.

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Managing CR Risk management Stakeholder engagement CR governance Integration with group Our values Business ethics Environmental protection Ethical behaviour Health and safety Putting policies in place GRI indicators Environmental protection Progress against 2007 targets RWE npower’s environmental management system is based on the international environmental management standard ISO 14001. At the heart of our group-wide environmental management system is the RWE Environmental Reporting and Information System (ERIS), now in place in all those companies in which RWE hold a stake of more than 50 percent, including RWE npower. ERIS supports the conducting of internal audits, the monitoring of specific programmes and collection of the relevant data. These internal audits are conducted annually by both the Group and by us to monitor the state of the environmental management system. Our internal auditing department also independently ensures that our environmental management system is correctly structured and performing properly.

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Managing CR Risk management Stakeholder engagement CR governance Integration with group Our values Business ethics Environmental protection Ethical behaviour Health and safety Putting policies in place GRI indicators Ethical behaviour Progress against 2007 targets We deal with our business contacts in a professional and ethical way to maintain our reputation as a good corporate citizen. This includes promoting personal responsibility, honesty, loyalty and respect for others and the environment. The Board of RWE npower is committed to high legal, ethical and moral standards in all the company’s activities and in its dealings with those that fail to meet these standards. It is the company’s policy to rigorously investigate all cases of suspected impropriety and to apply the full force of both internal disciplinary procedures and the law in all cases of fraud. To avoid these cases altogether, the Board has procedures in place that reduce the likelihood of fraud. These include the Code of Conduct and other functional policies, delegations of authority and employee rules. In addition, the Board promotes a risk (and fraud) awareness culture within the organisation. Every year Internal Audit reviews the effectiveness of this process by requiring management to demonstrate awareness of company policies and procedures.

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assess and manage risks across our business so that personal injuries, occupational illness, dangerous occurrences and security breaches are avoided try to eliminate unsafe acts and conditions by establishing a culture that rewards safe behaviour consult and inform employee representatives, employees and other interested parties about risk awareness help employees who have been injured or are unwell, whether through work or otherwise, to return to work investigate, monitor and report health and safety performance and security breaches throughout RWE npower measure, benchmark and audit performance against the RWE npower principles and industry best practice to ensure continuous improvement and new solutions.

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appropriate channel applications for support through the charity committee provide appropriate training for employees on Corporate Community Involvement.

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Managing CR GRI indicators Risk management The GRI Content index which describes which G3 indicators are included, Stakeholder engagement where they can be found in the report, and the extent to which they have CR governance been reported, is under development and will be added soon. GRI indicators Progress against 2007 targets

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Managing CR Marketplace Risk management Stakeholder engagement 2007 Target Full Year 2007 Performance CR governance Meeting the demands of our customers for renewable energy. GRI indicators Progress against 2007 targets In 2006, 1,300 residential customers took advantage of the 3 newproducts introduced (solar thermal, ground source heat pumps and export reward schemes) for which we provided over £300,000 of funding over and above government grants. Jump to: Final performance to be assessed in Marketplace 2010 Environment By 2010, we aim to have increased the number of residential customers who have installed micro generation to a minimum of Workplace 10,000. Community In 2007, we will: develop a website to provide up to date information on micro Key to Target symbols generation technologies for domestic customers introduce two more renewable energy products (PV and heat pump tariff) designed to reduce a customers carbon footprint; and grow total customers numbers in renewable energy products to 3,000; and

invest an average of £200 per microgeneration customer

In 2006, we funded a number of R&D projects (total value £626,000) designed to advance the long term development of wave and tidal power. Final performance to be assessed in By 2010, we aim to have increased the number of customers who 2010 source their renewable energy through the Juice and other green tariffs by 400% (to 200,000)

2007 represented a very challenging year for renewable tariff sales. Price rises and industry consultation on the In 2007, we will: nature of green tariffs impacted on sales continue this programme and will have 70,000 Juice customers; forecasts. Figures to the end of and November 2007, report a total of 50,000 customers on renewable tariffs (either Juice or National Trust Energy)

contribute £10/customer per annum into the Juice fund.

Reduce carbon dioxide emissions through improvement of customer energy efficiency.

By the end of 2006, we had developed a comprehensive portfolio Two energy management products of energy management tools to educate and empower our launched in 2007, third delayed to Q1 business customers to manage their energy more efficiently. 2008 due to changes to customer We are committed to growing our range of energy services contact software. Launch of fourth products and services, and in 2007 we will pilot and launch three product (Solutions portfolio) scheduled in new energy management products. Q2 2008.

We will grow the gross margin from energy services by 10% in 2007 as compared to 2006.

Consumer research indicates that our residential customers are starting to consider the environmental implications of their domestic energy use. We will continue to provide assistance to our customers through

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developing new products and services that enable more efficient energy use. In 2007, we will: develop and launch trials to assess the impact of Smart Metering to reduce energy consumption and help influence the market to support the introduction of universal smart metering; develop trials of real-time energy display units amongst npower customers – a device that helps customers to better understand their electricity bills, reduces electricity wastage and reduce consumption; and, Consumption data will appear on bills incorporate advice on consumption levels and energy efficiency from 1/5/08. Further enhancements will on customer bills. be delivered later in 2008.

Responsible selling

Maintain the current low level of residential sales complaints to less than 20 per month.

Improve service to our customers

The expansion and improvement of self service facilities will enable residential customers to choose the means by which they interact with us. This will reduce the number of routine contacts with our call centres, allowing more resources to be devoted to those customers who require individual attention and improve the service for those wishing to self serve. To improve accessibility for customers in 2007, we will:

increase the number of customers signing up to view their bills on line from current level (zero) to 100,000; and, The number of contacts via IVR and web/email has reached 7.3% an increase on the initial 5.7% contact increase IVR (Interactive Voice Response) and web forms from volume. The changes to the npower current level (6% of contact volume) to 10% of contact volumes. internet site did not go live until December 07, resulting in less progress being made through this channel than was forecast.

Reduce energywatch recorded complaints for residential customers (customer transfer and account/billing) by a further 10%.

Meet and exceed customers expectations

We will continue building our understanding of residential customers’ expectations through research and feedback and will build approaches that meet and exceed these expectations into both new and existing Product Definitions and Journeys. In 2007, we will:

repeat our detailed quantitative research study of Customer Product Satisfaction drivers;

match or improve our benchmarked 2005/6 scores relating to Customer Product Satisfaction; and,

launch a range of product enhancements based on insights from the previous study.

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energy suppliers an indication of its performance across these competencies. In 2006, npower improved its Datamonitor customer satisfaction figures for business customers by 3.9% whilst overall the industry improved by 1.5%, an increase relative to our competitors of 2.4%.

Within the larger customer segments, npower achieved improvements in customer satisfaction in both absolute terms and in relation to the market In 2007, we aim to deliver a 1% improvement, relative to our average (in both power and gas). competitors, in Datamonitor customer satisfaction scores (using a weighted average indicator). There was a reduction in customer satisfaction in the smaller customer segment for all suppliers. However, npower’s reduction was lower than the market average in power.

Provide Services for vulnerable customers

To support our vulnerable customers, we will continue to develop our Spreading Warmth initiative, including the Warm Response Service and the First Steps scheme. In 2007, we will:

During 2007 an additional 11,748 customer accounts were registered onto increase the number of customers registered for Warm The Warm Response Service taking the Response Services by a further 25%; total number of customer’s accounts registered on the service to c113,000 an increase of 12% over 2006.

continue to offer our cheapest tariff (irrespective of payment type) to vulnerable customers as part of our First Step scheme;

During 2007 approximately 2,500 home visits have been completed, this is because we have had fewer home advisors than planned and fewer referrals for home visits from the contact continue to offer energy efficiency advice to all of our centre. customers. This service will be supplemented by 5000 home Steps have been undertaken to increase visits per year; and, the number of home visits and ensure there are sufficient home advisors to support this volume of home visits, which is planned to be circa 3500 – 4000 in 2008.

identify the most effective process for ensuring that our vulnerable customers receive their full benefit entitlement.

In 2007, our aim is that 75% of front line service staff have received vulnerable customer awareness training.

In 2007, we will further extend our First Step and Home Advisor schemes to link with our corporate charity. 100% of First Step and Home Advisor team to have received Macmillan Cancer Support awareness training.

Implement Sustainable Procurement Strategy to ensure that our approach to supply chain management is aligned with our CR policy.

In 2007, we will:

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policy of RWE npower;

aim to have received responses from 50% of suppliers surveyed.

Identify high risk/ high impact (HR/HI) issues across our supply chain and monitor performance of suppliers.

In 2007, we will:

complete the 2006 activity of supply chain mapping 3 critical supply chains and agree action plans with suppliers to mitigate the identified risks; refresh the HR/HI (High Risk / High Impact) commodities/service matrix to reflect the current supply chain of RWE npower, and consider requirement further supply chain mapping; design and implement an assurance framework that ensures the RWE npower Corporate Responsibility standards are met by the supply chains of RWE Group Companies providing services internally (eg. RWE Systems for IT and Procurement Services);

incorporate the assurance framework in contracts / SLA for RWE Systems UK;

develop and agree in conjunction with RWE Trading an approach to evaluate the feasibility of a similar approach for the supply of fuel; assess the quality and effectiveness of internet content for direct competitors of RWE npower with respect to sustainable procurement; and,

develop and implement proposal for an internet offering appropriate to RWE npower.

Develop an offering to strategic vendors which promotes the corporate responsibility framework of RWE npower.

In 2007, we will:

identify and develop a set of approaches and products which can be offered to strategic vendors at preferential rates to encourage the adoption of the RWE npower CR principles, e.g. carbon neutrality reviews; and,

design and implement a means of communicating with strategic vendors to roll out the approaches and products on offer.

Improve internal processes for taking account of environmental issues when making procurement decisions.

In 2007, we will review existing procurement procedure for reference to environmental considerations, and implement recommendations.

Environment Back to top

Reduce carbon intensity of electricity generated

As at the end of 2006, RWE npower were the leaders (by market share) in wind generation; our aim is to maintain a leadership position over the next 5 years.

Typically, the timescales involved from placing contracts to

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commercial operation for major windfarms is in the order of 2 years. Therefore, the measures we have chosen span a 3 year period (2007 to 2009 inclusive) to give a representative view of project activity. By the end of 2009, we aim to:

Final performance to be assessed in submit an additional 750MW to planning; 2009

Final performance to be assessed in achieve consent for a further 280MW; and, 2009

Final performance to be assessed in increase commercial capacity by over 200MW. 2009

Climate change is one of the key issues that face RWE npower. As a significant emitter of CO , we are committed to developing 2 strategies and plans to ensure we are able to minimise our impact going forward and to play our part in the overall RWE group approach.

Our CCS strategy comprises a wide ranging programme of research using the combustion test facility at Didcot to examine the technical, operational and commercial issues associated with CO removal from coal-fired power station emissions. The 2 Final performance to be assessed in necessary configuration works is expected to be complete by the 2010 end of 2007 with the test programme due to commence in 2008. To complement this research, by 2010 we will develop a 1MW pilot plant to test the feasibility of CO capture from power station 2 emissions gases.

Improve the energy efficiency of our office based operations

By 2010, our aim is that the energy consumption at 75% of our Final performance to be assessed in office sites is classified as “Good Practice” under ECG19. 2010

In 2007, we will:

undertake a baseline study of our offices’ carbon footprint;

develop options to become carbon neutral at our office sites;

benchmark the current carbon impact associated with office sites;

We improved mechanisms in the areas improve mechanisms for monitoring and reporting: use of of greatest impact but have deferred energy in offices; road / rail / air transport; billing and other improvements in billing and other operations; operations to subsequent years.

develop and implement programme of action to reduce consumption of electricity and gas across the office portfolio by 10%, assuming no increase in occupancy rates. develop a programme of action to manage carbon emissions through business mileage across company (road / rail / air travel). In 2006, we invested in technology to reduce the need for attendance at meetings and to improve home working in order to reduce road mileage in our B2B division.

In 2007 we estimated that mileage increased by almost 14.0%. A significant

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proportion of this increase is as a result of the growth of the business sales team. Several operational areas have controlled and reduced their business mileage. There has been a tangible shift in the adoption of regular In 2007, we will reduce business road mileage by 5% in npower teleconferencing supported by trials and business. subsequent investment in related technologies. Focus on the reduction of business mileage will continue in 2008 and beyond. This will be supported by the increased use of video and teleconferencing, home working and by encouraging car sharing and coach travel for team and corporate events.

Reduce the environmental impact of our power station operations through improved waste management and efficient use of resources

In 2007, we will improve resource efficiency at operational sites particularly water use and waste reduction/recycling (ongoing but particular emphasis on water management and contractor awareness training).

Our internal indicator of the thermal performance of coal-fired stations is TEMP factor, which is used as a key business indicator and indicates the actual thermal efficiency of the station.

We achieved an overall increase in TEMP factor on a like-for-like generation basis of 0.31%. In 2007, we will continue to invest in efficiency improvements at This was a result of the delay in re the coal-fired stations to deliver an increase in overall TEMP commissioning Aberthaw following the factor, on a like-for-like generation basis, of 0.4%. This is investments in steam turbine retrofits equivalent to a reduction in fuel consumption, on a like-for-like and FGD. generation basis, of 0.42%. However, the shortfall was off-set by the enhanced thermal performance at Tilbury.

In 2007, we will continue to develop our ash strategy for the management of ash from coal stations, including: maximising utilisation opportunities for power station ash; construct an ash processing plant at Aberthaw power station during 2007 with start of operation in 2008; and, minimise environmental impacts of surplus ash disposal.

Reduce the environmental impact of our office facilities through improved waste management and efficient use of resources

By 2010, we aim to have reduced water consumption at 75% of Final performance to be assessed in our offices to Building Research Establishment best practice level 2010 of 9,000l per employee per annum.

In 2007, we will:

identify baseline water consumption data across all office sites and implement reduction schemes at pilot sites; and,

calculate baseline measurement data across all office sites and identification of waste reduction schemes at pilot sites.

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In 2007, we will review and develop environmental training on the During 2007 we maintained our existing intranet site including programme for delivery to key employees intranet based environment training. We including technical officers, new starters and environmental have also reviewed this resource and we champions plan to develop a new resource in 2008.

Continuously improve our methods and approaches to environmental management

In 2007, we will roll out the Project Management Dept EMS to cover all new project activities

Comply with all applicable environmental regulations and related authorisations

In 2007, we will:

Unit 7 was commissioned in Q1 2008. commission first unit of Aberthaw FGD; and, The remaining units are due to be commissioned in Q2/3.

review processes for managing and responding to complaints caused by abnormal operations at power stations.

Workplace Back to top

Promote diversity and inclusion in the workplace

In 2007, our aim is that Diversity & inclusion forms a key part in every induction and over 90% of new starters receive awareness training.

In 2007, we will create a mechanism for capturing diversity information about job applicants, by site and business area, enabling an analysis of appointments made within the Personal Contract population.

In 2007, we will ensure recruitment suppliers are fully aware of our diversity requirements and where used are sourcing high quality talent from all backgrounds, including females and those from BME (Black Minority Ethnic) groups to short-list for senior level opportunities.

In 2007, our aim is that for at least 50% (25% in G&R) of high criticality posts that become vacant a suitable internal or external female candidate is short-listed for consideration (high criticality means high impact on customers, revenue, or key business processes).

For 2008, we aim to attract a pool of applicants, from which we Final performance to be assessed in select our graduates, made up of at least 50% females. 2008

For 2008, we aim to attract a pool of applicants, from which we Final performance to be assessed in select our graduates, made up of at least 10% from black and 2008 minority ethnic groups.

In 2007, we will build our reputation at locations within multi- cultural communities (e.g. Oldbury/Quayside) by engaging with local BME groups to promote understanding of the company and potential employment opportunities.

Staff survey feedback indicates 79% of employees feel that we provide equal opportunities with regard to age, In 2007, we will achieve a greater awareness and understanding disability, gender, race, religion and about the importance of diversity and inclusion to the business sexual orientation (the key diversity http://www.npower.com/rwenpowercr/6_responsible_business/6_1_managing_integrating_cr/6_1_5_progress_against_targets.html Page 7 of 10 RWE npower Corporate Responsibility Report - Progress against 2007 targets 06/18/2008 09:54 AM

sexual orientation (the key diversity than 2 years ago (as measured by the 2007 staff survey). measures); this is 20% better than the UK benchmark of 59%. This result is the same as our 2005 figure.

Demonstrate our commitment to wellbeing throughout npower

Initial analysis of npower sites indicated In 2007, we will undertake analysis at all significant RWE npower the need to appoint a full time Well sites (i.e. all sites > 100 employees) to determine the opportunities Being Manager. The manager was where we can influence employees’ wellbeing on a site by site recruited in January 2008 and will be basis. We will prioritise these sites’ opportunities and develop site responsible for the development of a specific strategies to address the three most significant. well being strategy.

In 2007, we will hold a company wide ‘npower Games’ event, with:

more than 500 employees participating; and,

at least 1 representative from each site with greater than 100 employees.

Succession planning and career management

In 2007, we will extend the RWE npower NVQ programme The NVQ programme is currently active throughout the business and ensure that there is a 25% increase in Newcastle (Carliol House), Peterlee in the number of learners commencing and progressing through call centres, Limewood and Oldbury. A NVQ qualifications compared to 2006 (200 actual in 2006; 250 total of 150 NVQs are in progress. proposed in 2007).

In 2007, we will increase the number of employees who are satisfied with their opportunities for advancement within the company, as measured by the 2007 staff survey.

Promoting employee satisfaction and commitment

In 2007, we will:

create a policy and/or set of guidelines that support career breaks and flexible working across the businesses;

develop and implement a method to communicate value of total benefits package to employees; and,

increase the number of employees whose job allows them to utilise their skills and abilities above that measured two years ago, as measured through the 2007 staff survey.

Attracting talent/building for the future

In 2007, we will benchmark and review our reputation as a graduate employer, including our ability to attract graduates from diverse backgrounds, by obtaining feedback from careers departments and students and measuring progress against this at end of the year.

In 2007, our aim is that a diversity and inclusion component will become part of our wider education package to schools and other schemes aimed to encourage women and under represented groups into engineering.

Company values and business ethics

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In 2007, we will complete the development of and implement the business ethics training programme.

Improve knowledge within the workplace (to support our external marketplace positioning)

The sustainability training course was In 2007, we will ensure that 50% of all B2B staff have received rolled out in July and has received Sustainability Awareness training. positive feedback. We aim to achieve 50% take up in 2008.

Improve working environment at offices to increase staff morale and improve recruitment / retention

In 2007, we will develop the RWE npower Property Charter, which will set down and monitor the working conditions and business requirements of our offices.

In 2007, we will measure the percentage of building area allocated to support activity in our offices and to benchmark for application as part of Property Charter.

In 2007, we will apply the BREEAM (Building Research There have been delays in training Establishment Environmental Assessment Method) pre- people to undertake BREEAM assessment checklist to review the working environment of all key assessments. Targets will be delivered offices in portfolio. in 2008.

Community Back to top

Maintain a company wide community involvement programme which provides effective relationships with the local communities where we operate

In 2007, we will review current business risks, and ensure that community programme is aligned to address issues and support business aims.

In 2007, we will develop and embed two external stakeholder community partnerships.

In 2006 we launched the first phase of our Urban Cricket initiative, which involved the distribution of over 45,000 Urban Cricket kits to children throughout the UK. The next stage of the initiative will involve the construction of Urban Cricket Stadia (proposed in London, the West Midlands and the North West), and the creation of urban cricket 'zones' in existing school playgrounds.

In 2007, we aim to have completed the London stadium and five surrounding zones.

In 2007, we aim to commence work on the West Midlands Stadium.

In 2007, we will bring in additional resources to our projects from external partners in excess of our direct contributions (including £5 million grant-aided measures through our Health Through Warmth Scheme).

In 2007, we will increase the value of the partnership with Macmillan Cancer Support to £2 million.

In 2007, we will refer 5,000 vulnerable, low income households where occupants have a cold and damp related illness and facilitate the installation of insulation and heating measures based on individual assessment and need.

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Increase staff involvement in the community

In 2007, we will increase the number of employees volunteering in the community to 10% of total employees (based on total employee numbers of 12,359, as at January 2007).

In 2007, we will increase the number of employees using their specific skills and expertise in volunteering

In 2007, we will review, develop and communicate the range of schemes available to employees (£4£, Awards, Payroll Giving, Volunteering, e-mentoring). We will benchmark schemes against LBG members to ensure initiatives are best practice.

Increase awareness of our community programme amongst internal and external stakeholders

In 2007, we will implement a plan to communicate the benefits and impacts of our community involvement programme to key internal and external stakeholders.

We did not undertake a specific survey this year. However we were able to In 2007, we will maintain the number of employees who believe demonstrate a direct link between RWE npower makes a positive contribution to the community at community activity and our employee’s 70%. positive perception of the company through a research project undertaken by Omilia.

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Low carbon economy Reducing our electrcity's carbon Reducing our electricity's carbon intensity intensity Reducing our carbon footprint Building new power stations Renewable energy New products and services Helping business save energy Reducing our carbon footprint Raising awareness of climate change 2008 targets Moving to a low carbon economy As a company, RWE npower generates most of its electricity by burning fossil fuels, emitting Carbon Dioxide in the process. However, it’s clear Building new power stations that we need to reduce our CO emissions in the long term. As a result, we 2 have committed to reducing the amount of CO we emit per unit of power 2 generated 33% by 2015 compared to 2000 levels, and 50% compared to 1990 levels. To do that, we need a clear policy and planning framework from government that will encourage serious investment in lower-carbon technologies and new generating capacity, promote energy-efficient technologies in the market, and Renewable energy encourage energy saving in society as a whole. In 2007, several steps were made to establish that framework. The European Commission set a target of a 20% reduction in greenhouse gases by 2020 compared to 1990 levels (a target which may be higher following an international agreement post-Kyoto). And the UK government also introduced the Climate Change Bill in Parliament. This bill will create a framework for setting UK targets to reduce CO emissions by at least 26% by 2020 – and at 2 least 60% by 2050 – against 1990 levels. New products and services At RWE npower, we welcome these steps. However, they do present a considerable challenge to Government, industry and society as a whole. In the short term, we cannot simply stop burning coal as there isn’t enough alternative generating capacity available. Instead, it will take a diverse energy mix to reconcile the three UK goals of a secure, affordable and low-carbon energy. It’s also a task which will require society as a whole to look at ways of managing its energy use. As an integrated energy business, we also have an Helping business save energy important part to play in helping them do that. Act today In our strategic challenges section, we explained our long term plans for moving to a low-carbon economy. In this section, we look more closely at what we did in 2007, and what we’re planning to do in 2008.

Raising awareness of climate change

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Low carbon economy Power station improvements Reducing our electricity's carbon intensity Power station improvements Carbon Dioxide capture and storage Using biomass as a fuel Reducing our carbon footprint Carbon Dioxide capture and Building new power stations storage Renewable energy New products and services Helping business save energy Raising awareness of climate change Reducing our electricity’s carbon 2008 targets intensity Using biomass as a fuel As well as building new high-efficiency plants, we need to improve the efficiency of our existing power plants. So what did we do in 2007? We improved the efficiency of our power stations There are ongoing energy-efficiency improvements at our Aberthaw, Didcot and Tilbury power stations. These resulted in a small overall improvement in the efficiency of our coal-station portfolio in 2007 – an increase of 0.3%, based on the improvement in the factor which compares efficiency on a like for like basis, with the prospect of further improvements in 2008. We continued to invest in CCS In the longer term, Carbon Dioxide Capture and Storage (CCS) could have a major part to play in reducing the carbon intensity of our energy generation. In 2007 we continued our research in CCS technology and have committed to increase funding in future years. We continued to burn biomass The total amount of electricity we generated from biomass fell during 2007 – this was due to high levels of generation in 2006, when we were trialling the use of palm oil at Littlebrook power station. We did, however, open a £3.5 million biomass facility at our Didcot A Power Station. At Aberthaw Power Station, we also completed the final stage of our £10 million investment in a solid biomass plant.

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Low carbon economy Reducing our electricity's carbon intensity Power station improvements Carbon Dioxide capture and storage Using biomass as a fuel Reducing our carbon footprint Building new power stations Renewable energy New products and services Helping business save energy Raising awareness of climate change Power station improvements – 2008 targets some examples Aberthaw Our aim is to make Aberthaw one of the most efficient coal-fired power stations in the UK. In 2007, we launched a £65 million programme to install new steam turbines in our power station at Aberthaw. The new turbines have been successfully installed on two of the station’s three units with the programme expected to be completed by the end of summer 2008. The new turbines will deliver an increase in capacity of at least 45 MW per unit from the same amount of fuel. Didcot B We have committed £60 million to replace the two gas turbines on one of the modules at Didcot B gas-fired power station. Work will start during 2008, and the upgrading should be finished by early 2009. Tilbury Over the past few years we have invested in Tilbury power station to improve its overall reliability and efficiency. This includes installing new generator transformers and turbine upgrades. In 2007, two of Tilbury’s three turbo generator units were also refitted with a modern design of rotor/cylinder assembly. Once these turbo generator refits were finished, each unit was able to generate 17 MW more electricity from the same amount of fuel. Overall unit efficiency has improved by 2.4%.

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Low carbon economy Reducing our electricity's carbon intensity Power station improvements Carbon Dioxide capture and storage Using biomass as a fuel Reducing our carbon footprint Building new power stations Renewable energy New products and services Helping business save energy Raising awareness of climate Researching carbon dioxide change 2008 targets capture and storage (CCS) What is CCS? Carbon Dioxide Capture and Storage (or Sequestration) offers the potential to isolate and store CO produced during the combustion of fossil fuels and 2 prevent it from reaching the atmosphere. If the UK is to bridge its energy gap in the long term, coal is likely to play an important part in the country’s energy mix. CCS technology has the potential to dramatically reduce CO emissions that are released into the atmosphere 2 as a result of the use of coal as a fuel. Continuing research Our CCS strategy comprises a wide ranging programme of research using the Combustion Test Facility (CTF) at Didcot to examine the technical, operational and commercial issues associated with CO removal from coal- 2 fired power station emissions. The necessary equipment is being installed and the test programme is due to start in the summer of 2008. New pilot plant at Aberthaw In addition to the CTF research work, last year we announced plans to invest £8.4 million in a 1 MW post-combustion CO capture plant at Aberthaw in 2 South Wales. Design work has started on this larger plant and construction is due to begin in 2009 so that the plant is fully operational in 2010. The plant will enable further research into CO capture, but at a much larger scale. 2 25 MW demonstrator plant While the initial £8.4m investment will focus on the 1 MW capture plant, further investment is also planned to support a capture demonstrator plant of at least 100 MW. This larger demonstrator plant will include transportation and storage and would form part of one of our new, high efficiency supercritical power stations which are currently being considered at our existing sites in Tilbury, Essex and at Blyth, Northumberland.

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Low carbon economy Reducing our electricity's carbon intensity Power station improvements Carbon Dioxide capture and storage Using biomass as a fuel Reducing our carbon footprint Building new power stations Renewable energy New products and services Helping business save energy Raising awareness of climate change Using biomass as a fuel 2008 targets In 2006, we opened a £3 million biomass facility at our Didcot A Power Station. And we completed the final stage of our £10 million investment in a similar facility at our Aberthaw Power Station. The new facility at Didcot will enable different types of biomass materials to be handled, like sawdust, wood chips and Palm Kernel Expeller. It will also be used to test purpose-grown energy crops like Miscanthus. The facility will make it possible to replace up to 10% of coal used at Didcot with biomass. This means as much as 300,000 tonnes of coal could be replaced with biomass each year. And at Aberthaw, the biomass equipment will be capable of using up to 250,000 tonnes of sawdust and woodchip across the station’s three units. Combined Heat and Power (CHP) CHP is an efficient way of providing both electricity and useful heat, as the heat produced during electricity generation is used to produce steam or hot water. This increases the efficiency of energy production, and therefore reduces consumption of fossil fuels. We are continuing to look at opportunities for investment in high efficiency CHP plant, including opportunities to reduce CO emissions even further by using biomass as a fuel. 2

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In 2007 we ran a project to find out how much Carbon Dioxide (CO2) we emitted in 2006 through our non-generation activity. The total of our direct emissions was over 44,500 tonnes – the majority of which came from our buildings, and from business travel. As a result, in December we approved a project to reduce our carbon footprint.

Raising awareness Through energy audits conducted at six of our buildings in 2007, we have already found ways to improve our energy efficiency and reduce our CO2 emissions. However, reducing our footprint won’t be easy. It will require everyone across the business to reduce the amount of energy they use. Key to this is raising employee awareness, and one of our biggest awareness initiatives last year was the ‘Big Switch Off’ – RWE npower’s annual energy- efficiency event. The campaign was not only aimed at other businesses; we encouraged our own employees to turn off unnecessary electrical equipment at their offices before the August Bank Holiday. During 2007, we refurbished part of our head office in Swindon, and used this opportunity to install some best-practice energy-saving measures. For example, lighting controls now include passive infra-red movement sensors and daylight sensing. And we installed innovative desk-cooling systems to combat ‘hot-spots’ caused by IT equipment. These supplementary cooling systems not only provide more localised temperature control for the occupants, they also reduce the load on the main air conditioning system.

Reducing travel to cut CO2 After our buildings, travel is the next biggest contributor to our carbon emissions. In 2006 our employees drove over 17 million miles on business – the equivalent of 683 times around the world – without even counting their travel to and from work. We have set a target to reduce this distance. To reach our targets, we are developing a travel plan to help people understand how and when they can cut down on travel. We are introducing additional mileage payments for car sharing and promoting our virtual mileage scheme. And we have also invested in video conferencing, and tele-conferencing facilities to reduce the need for people to travel to meetings.

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Low carbon economy Modern gas power stations Reducing our electricity's carbon intensity Reducing our carbon footprint Building new power stations Modern gas power stations Cleaner coal power stations Cleaner coal power stations Renewable energy New products and services Helping business save energy Raising awareness of climate change 2008 targets Building a powerful future RWE npower has announced that it will be closing existing coal-fired power stations at Didcot A and Tilbury by 2015 as a result of the EU legislation under the Large Combustion Plant Directive (LCPD). Over the next 10 to 15 years, however, the UK needs to develop around 35 GW of new power generation. While as much of this as possible will be generated using renewable energy, it’s unavoidable that we will also need modern gas, cleaner coal plants and potentially nuclear if we are to bridge the energy gap. In our strategic challenges section, we’ve outlined how we plan to tackle this issue while still meeting our emissions targets, along with full details of our planned new power plants. In this section, we explore the highlights of what we’ve done in 2007 to develop more efficient coal and gas-fuelled generating capacity, and how this will help reduce our future emissions of greenhouse gases:

In May, we announced we will construct a 1650 MW Combined Cycle Gas Turbine (CCGT) power station at Staythorpe. Then in August we announced plans for our new modern 2000 MW, CCGT power station at Pembroke. In March, we set out plans for a 1600 MW cleaner-coal power station to replace the existing coal-fired station at Tilbury. Then in May we launched a feasibility study into a 2400 megawatt cleaner-coal power station on the site of our former Blyth power station.

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Low carbon economy Reducing our electricity's carbon intensity Reducing our carbon footprint Building new power stations Modern gas power stations Cleaner coal power stations Renewable energy New products and services Helping business save energy Raising awareness of climate change 2008 targets Building modern gas power stations Staythorpe In May 2007 we announced our plans to build a new state-of-the-art 1650 MW CCGT power station at Staythorpe, near Newark in Nottinghamshire. The power station will be made up of four generating units, each around 400 MW, with the combined ability to generate enough power for almost 3 million homes, or the whole of Nottinghamshire. With engineering firm Alstom appointed as main contractor, construction started in the latter half of 2007, with the first unit planned to be operational by 2010. Around 10% of the power station scheme has already been constructed, including the gas pipeline, foundations and perimeter roads. What’s more, the new power station will bring around £600 million of investment to Nottinghamshire, with around 1,600 people involved in its construction. Once operational the new power station will create up to 80 permanent jobs, ranging from skilled operating and maintenance staff to professional engineering, environmental, management and security staff. It’s expected that the Station will provide an ongoing contribution to the local economy of around £10 million each year. "Staythorpe will be a modern highly efficient power station and will produce less than half the CO per unit of electricity than an existing coal station. The 2 investment will bring long term benefits to the area and RWE npower is committed to investing in educational schemes to ensure that local people and businesses can benefit from the power station." Simon Jameson, RWE npower Project Manager Pembroke In August 2007 we announced we had identified the contractor Alstom for the possible construction of another new CCGT power station at Pembroke in West Wales. We are now aiming to get consent under Section 36 of the Electricity Act to allow us to start construction in 2008.

The new power station would have a capacity of around 2,000 MW. It should also create around 80 to 100 permanent jobs in Pembroke (with around 1,600 people expected to be involved in its construction). Once operational the Station is expected to contribute around £10 million each year in knock-on benefits to the local economy.

"The new station at Pembroke would reduce the need to run an equivalent sized coal fired power station in the UK, reducing annual emissions of carbon dioxide by between six and ten million tonnes a year." Tim Calver, RWE npower

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Low carbon economy Reducing our electricity's carbon intensity Reducing our carbon footprint Building new power stations Modern gas power stations Cleaner coal power stations Renewable energy New products and services Helping business save energy Raising awareness of climate change 2008 targets Building cleaner coal power stations Tilbury In March 2007 we submitted a scoping study to the Department of Trade and Industry proposing a 1600 MW state-of-the-art cleaner-coal power station to replace our existing coal-fired station at Tilbury, Essex. This scoping study is the first step towards making an application, under Section 36 of the Electricity Act, for consent to build the station. The new power station will cost over £1 billion to build and could be operational by 2013. It will have the capacity to reduce CO emissions by 2 22% per unit of electricity generated, resulting in a CO reduction of almost 2 two million tonnes a year, compared to an equivalent-sized existing UK coal- fired power station operating at the same level. What’s more, it will also be designed to accommodate carbon dioxide capture and storage (CCS) technology, when it becomes available, and will be able to burn carbon neutral sustainable biomass (like sawdust). Blyth In May 2007 we submitted an environmental scoping document that outlined our proposal to build a new 2400 MW plant on the site of the former Blyth power station. This high-efficiency coal-fired plant would generate enough energy to supply around 4.5 million homes, and could reduce CO emissions 2 by over 22% per unit of electricity generated compared to an equivalent-sized existing UK coal-fired power station operating at the same level. Like the planned plant at Tilbury, it would be designed to be 'carbon capture ready'. The new station would also be developed to include the capability of replacing up to 10% of coal used with biomass.

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Low carbon economy Wind power at Rhyl Flats Reducing our electricity's carbon intensity Reducing our carbon footprint Building new power stations Renewable energy Wind power at Rhyl Flats Tidal power at the Skerries Tidal power at the Skerries New products and services Helping business save energy Raising awareness of climate change 2008 targets Generating more renewable energy During 2007 we generated a total of 1,258 GW of renewable electricity compared with 1,662 GW in 2006. The decrease was due to lower levels of generation from biomass in 2007 than 2006. High biomass generation in 2006 was because of trials of palm oil at Littlebrook. In addition, changes in the Renewables Obligation have reduced the potential for biomass generation at power stations. Levels of generation from both wind and hydro increased in 2007 compared with 2006. The Renewables Obligation (RO) The RO requires electricity suppliers to supply an increasing proportion of electricity from renewable sources or to pay a ‘buy-out’ price. The money raised from the buy-out fund is recycled to suppliers and further supports the development of renewables projects. The RO is a market mechanism and at any time the value of the Renewables Obligation Certificates (ROCs) may be above or below the level determined by the buy-out price that has been put in place to limit the cost to customers. In order to minimise the cost to our customers we only buy ROCs when they represent better value than paying the buy-out. The relative proportions of ROC redemption and buy-out we use for compliance in any one year will depend on the price at which ROCs can be obtained and the buy-out price in that year. Between April 2006 and March 2007 we met 45.5% of our obligation through the use of ROCs and redeemed the rest through the buy-out option. RWE Innogy In October last year, our parent company RWE announced the formation of a new company within the group, called RWE Innogy. On the 1st of February 2008 this company took over responsibility for our existing UK renewables assets, and has also announced the intention to invest over £700 million a year to develop renewable energy in the UK and across Europe. A growing portfolio This future investment by RWE Innogy is needed to help us meet our Renewable Obligation (RO) and the UK renewable targets. However, work on renewable energy has obviously been going on for many years. What’s more, 2007 saw promising steps forward in several areas of renewable generation: we are already the biggest wind-farm operator in the UK (with 19 in operation), but we grew our on and offshore wind power capability with three new wind farms receiving planning permission, and two going into commercial operation. Likewise, three new hydroelectric plants received planning permission and two went into operation. The development of solar and geothermal energy, wave plants and tidal power also continued, and will be a focus for RWE Innogy in 2008 and beyond.

Highlights:

Wind – we began building our second major wind farm off the welsh coast at Rhyl Flats. Tidal – we are launching the world’s first commercial tidal energy scheme in North Wales. Hydro – two new hydroelectric power plants were commissioned in 2007, and three received planning permission. Wave – We are several steps closer to building the Cornish wave hub.

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Low carbon economy Reducing our electricity's carbon intensity Reducing our carbon footprint Building new power stations Renewable energy Wind power at Rhyl Flats Tidal power at the Skerries New products and services Helping business save energy Raising awareness of climate change 2008 targets Wind power at Rhyl flats In July 2007 we began building a new offshore windfarm at Rhyl Flats, off the Welsh coastline. This included signing a major contract with Siemens Power Generation to supply and install turbines for the 90 MW farm, which is due to be fully operational by mid-2009. Related websites npower renewables Once operational, the 25 wind turbines at Rhyl Flats, along with their neighbours at North Hoyle (completed in 2003), will produce enough clean, green electricity every year to meet the needs of over 100,000 homes. It will prevent the release of around 410,000 tonnes of CO into the 2 atmosphere every year, which would have been caused by generating the equivalent amount of energy at existing coal-fired power stations. Over 150 jobs are expected to be created during the construction phase between 2007 and 2009, with a further 12 or more jobs being created to operate and maintain the wind farm once it is up and running.

The electricity from both wind farms will be used to supply customers’ homes through our existing green product, npower Juice.

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Low carbon economy Reducing our electricity's carbon intensity Reducing our carbon footprint Building new power stations Renewable energy Wind power at Rhyl Flats Tidal power at the Skerries New products and services Helping business save energy Raising awareness of climate change 2008 targets Tidal power at the Skerries In 2007, we teamed up with Bristol-based tidal power developers Marine Current Turbines (MCT) to scope out the potential of tidal power off the coast of North Wales. The result was our announcement on 7 February 2008 that we are planning to build one of the world's first commercial-scale tidal stream projects off the coast of Anglesey. This showcase tidal farm will include seven 1.5 MW SeaGen turbines It will be capable of generating 10.5 MW of clean, green power, drawn entirely from the sea's tidal currents. The proposed spot for the tidal stream project is the Skerries – an area of 25- metre deep open sea off the north-west coast of Anglesey. It’s an ideal location for a tidal stream project: it has good tidal conditions and is naturally sheltered, it will be relatively easy to connect to the National Grid, and being close to the busy port of Holyhead will make it easier to build and maintain. What next? RWE Innogy and MCT have formed a new development company called SeaGen Wales to take the project forward – first with a full assessment, then by preparing an outline scheme. The assessment has already started and will last throughout 2008, with a consent application likely to be submitted in mid 2009. With successful planning consent and financing, the tidal farm could be commissioned as early as 2011 or 2012.

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Low carbon economy Buying green energy Reducing our electricity's carbon intensity Reducing our carbon footprint Building new power stations Renewable energy New products and services Microgeneration Buying green energy Microgeneration Saving energy at home Helping business save energy Raising awareness of climate change Products and services for our 2008 targets customers Saving energy at home As an integrated energy company, it’s not our role to dictate how people should live their lives. What we must do is give our customers choice. So if a customer decides to lead a lower carbon lifestyle we have the products and services at hand to help them do that. In short, we must help our customers be as green as they want to be.

We’ve called this our ‘new energy’ approach, and it includes allowing our Related websites customers to: npower — Go green buy green energy – npower Juice gives our customers access to 100% renewable energy, and invests on their behalf in supporting the development of the UK marine energy industry. We’ve also joined forces with the National Trust to promote green energy. By 2010, we are aiming to increase the number of our customers on green energy tariffs by 400% to 200,000. generate their own electricity – through npower solar and other microgeneration options, we want to help our customers generate their own electricity and hot water for the home. In 2007, the number of our customers using renewable energy products has grown from 1,851 to 3,618, beating our 2007 target of 3,000. We also launched our new ‘go green’ website, featuring ‘people power’, the virtual power station tool designed to complement our existing export-reward scheme for microgeneration customers. save energy at home – by expanding our range of energy saving services, particularly for vulnerable customers. In 2007, we set ourselves several objectives in this area. In particular, these included developing new smart metering technology, and further development of our energy-saving website.

Greener business RWE npower also serves business customers at around 373,000 sites across the UK. In 2007 we continued to try to get business thinking about energy consumption, too. This included providing services like 'smart save' and 'encompass' to help them lower their energy bills.

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Low carbon economy Reducing our electricity's carbon intensity Reducing our carbon footprint Building new power stations Renewable energy Related websites New products and services npower Juice Buying green energy Microgeneration Saving energy at home Helping business save energy Raising awareness of climate change Buying green energy 2008 targets How Juice works Juice was established in 2001. Since then, Juice has been generated from a number of renewable energy sources, primarily at North Hoyle Offshore Wind Farm. Through Juice, npower matches every unit of normal electricity that you use and feeds the same amount, generated from renewable sources, into the electricity network*. Customers can switch online, and there is no premium to pay as Juice costs exactly the same as standard npower electricity. The Juice Fund For every year a customer stays on Juice, we contribute £10 into the Juice fund. We created the Juice Fund in 2003 to assist the development of projects in renewable energy fields. At the moment the Juice fund is supporting wave and tidal technologies. These technologies are having the same difficulties wind power had 10 – 15 years ago, such as gaining funding and finding suitable sites to test new technologies. By 2010… We aim to have increased the number of customers who source their renewable energy through Juice and other green tariffs by 400% (to 200,000). However, 2007 was a very challenging year for renewable tariff sales. Price rises and industry consultation on the nature of green tariffs had an impact on sales and sales forecasts. The figures to the end of November 2007 show a total of 50,000 customers on renewable tariffs (either Juice or National Trust Energy) against our 2007 target of 70,000. These challenges will continue throughout 2008, and we believe only well-constructed green propositions will permit this industry segment to grow. Funding wave energy in Cornwall The world’s first large scale wave farm will soon be up and running off the Cornish coast. The £28 million project, called the ‘Wave Hub’ is like an underwater plug socket. Engineers will be able to plug in large devices, which will then use the power of waves to generate electricity. The Hub will also transport the energy generated back to the shore.

This is the first project to go live with the support of the npower Juice fund. When the Wave Hub opens in 2009, it will generate enough electricity for 7,500 homes, saving 300,000 tonnes of CO over the next 25 years. 2 "This is great news – exactly the type of project the npower Juice fund is designed to assist. All our Juice customers will get a kick out of seeing the real impact the fund is having on the development of marine renewables." Rob Harper, Sustainable Technology Manager

*npower will estimate your Juice energy consumption throughout the year until year end when we check your annual consumption data and ensure the correct amount of renewable energy has been purchased to cover your annual consumption.

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Low carbon economy Related websites Reducing our electricity's carbon npower - Go green intensity npower — About microgeneration Reducing our carbon footprint Building new power stations Renewable energy New products and services Buying green energy Microgeneration Saving energy at home Helping business save energy Raising awareness of climate change Encouraging customers to 2008 targets generate their own electricity What is microgeneration? Microgeneration is defined in section 82 of the Energy Act 2004 as ‘the small- scale production of heat and /or electricity from a low carbon source’. There are lots of different technologies covered by this definition, including solar, wind and hydro power, domestic combined heat and power (DCHP), and the use of biomass. 2007 and our aims for 2010 The total number of customers using microgeneration by the end of 2007 is 3,618, against 1,851 at the end of 2006, and a target of 3,000 by the end of 2007. We still have big ambitions in this area – by 2010, we aim to have increased the number of residential customers who have installed microgeneration to a minimum of 10,000. We anticipate that solar hot-water systems and Solar Photovoltaic (PV) will provide the majority of this growth. Ground source heat pumps Full year figures for 2007 show that we sold 1,048 ground source heat pump units through our partner ICE Energy, of which the majority have been installed. All of the units have been subsidised by £1,500 – a private finance deal that was shortlisted for the REA Energy Advocate of the Year Award in 2007. npower Solar Since the launch of npower Solar PV, we have received more than 1,000 enquiries from potential customers. Unfortunately, planning permission and system design can take a long time. This means that these enquiries are progressing at different rates, from systems destined to be installed in early 2008 to others going through the planning process with customers’ local authorities. Following the inclusion of solar products in the UK permitted development rights in April 2008, this process should become both easier and quicker. Full year figures for 2007 show 106 solar thermal installations through npower’s A1-low carbon solutions project (formally A1-Boilers). During 2008, we will continue to develop our interest in this technology through our domestic heating business 'hometeam'.

Go Green on the web The final phase of the npower Go Green website also went live in the autumn of 2007 and included the new Virtual Power Station (VPS). Referred to as ‘People Power’, the VPS provides accurate information on the power generated by our microgeneration customers and the associated CO 2 emission savings.

Our new export-reward scheme As part of our investment in microgeneration, we continued to develop our export-reward scheme, in which we enter into buy-back agreements with customers who want to export excess electricity that they produce from their microgenerators. As part of the scheme, npower pay customers a ‘net-tariff’ based on the amount of electricity that they export back onto the electricity distribution network. Customers are paid the same amount for exported electricity as the standard tariff follow on unit rate that they pay for the electricity they buy from http://www.npower.com/rwenpowercr/6_responsible_business/6_2_transit…arbon/6_2_5_new_product_services/6_2_5_2_microgeneration_solar.html Page 1 of 2 RWE npower Corporate Responsibility Report - Microgeneration 06/18/2008 10:27 AM

npower. In 2007, a total of 588 microgeneration customers benefited from this scheme. Ecofirst In 2007 we appointed Ecofirst to make the process of installing Solar PV panels easier. Once a customer has decided to adopt solar PV energy, Ecofirst visit their home to discuss the suitability of different systems and what grants are available. They then manage the installation, and link it up to the National Grid.

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Low carbon economy Related websites Reducing our electricity's carbon npower — Britain's brightest energy intensity company Reducing our carbon footprint Building new power stations Renewable energy New products and services Buying green energy Microgeneration Saving energy at home Helping business save energy Raising awareness of climate change Saving energy at home 2008 targets In 2007 we continued to expand our ‘Britain’s brightest energy company’ website – a useful and popular source of information on how to improve energy efficiency at home. We also continued to increase the number of energy-saving and eco-friendly services we offer our residential customers. These included: Smart metering Smart Metering allows our customers to gauge how much energy they use on a day-to-day basis. The provision of real-time consumption information (either on a display unit in the home or through the web), combined with innovative tariffing options will enable consumers to manage their energy usage better. The display unit will show, in terms of consumption, money or carbon, specific usage at any time of day, the effect of switching on appliances, as well as total and comparative values for the week or month. Smart metering also provides a direct link between the meter and supplier, allowing for remote collection of accurate meter reads, thus ending the problems associated with estimated bills. In 2008 we are going to trial some of these new products using smart metering technology, with the first trial starting in quarter two. In addition, we are planning to develop trials of real-time energy display units for our customers that let them see exactly how much energy they are using at any time of the day. Carbon Emissions Reduction Target (CERT) In April 2008, CERT succeeded the Energy Efficiency Commitment (EEC) as our main energy efficiency obligation. To fulfil our obligation, last year we spent £48 million encouraging and helping people to implement energy efficiency improvements in their homes. In 2007 we achieved lifetime energy savings in households of 6,695 Gwh. Of these savings, 3,708 Gwh were achieved with a priority group of households. An award-winning A1 boiler service In 2007, our A1-Boilers scheme picked up the ‘Partnering Initiative of the Year’ award at the heating industry’s H&V (Heating and Ventilation) News Awards.

Launched in 2003, A1 Boilers – renamed A1 Low-Carbon Solutions in September 2007 – is a partnership which encourages heating installers to fit high-efficiency heating technologies in our customers’ home, instead of less efficient alternatives. Through this work, over 65,000 households have installed efficient heating systems, including A-rated boilers and solar thermal systems, saving the individual households money, and helping to reduce the UK’s carbon emissions.

Paperless billing In March 2007 we launched our paperless billing service. Since then, there have been over 100,000 registrations for the service, and hundreds of people are registering every day. What’s more, one of our objectives in 2007 was to incorporate advice on consumption levels and energy efficiency on customer bills. This consumption data will appear on bills from May 2008.

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Low carbon economy E3 and the carbon cube Reducing our electricity's carbon intensity Reducing our carbon footprint Building new power stations Renewable energy New products and services The Big Switch Off Helping business save energy e3 and the carbon cube – Trafford Park case study The Big Switch Off Raising awareness of climate change Helping business save energy 2008 targets One of our goals is to be the UK’s leading energy and environmental Related websites solutions company for businesses. So we offer our business customers npower — Business energy advice on how to reduce their energy consumption, as well as energy npower - e3 solutions to help turn that into action. Downloads Our main drive is through e3 – our campaign to promote energy efficiency PDF — Making Sense of The Low and environmental responsibility to all our business customers. In 2006 we Carbon Economy launched our new e3 website, which has gone from strength to strength in 2007. We also managed two major awareness campaigns – the carbon cube tour, and the big switch off. In 2007, we also launched:

NBEI4 – the latest npower business energy index. This index tracked our business customers’ opinions on energy prices, energy management and the low carbon economy. It found that business customers didn’t understand the implications of a low carbon economy. As a result, we produced a white paper 'Making Sense of the Low Carbon Economy' explaining where the principle of a low carbon economy came from, the legislation driving it, and what it would mean for businesses of different sizes. To read the report please click here. Encompass – a service that allows businesses to analyse their energy consumption online. Using half-hourly data from our npower ‘smart meters’, encompass identifies energy waste quickly to help companies reduce energy consumption, save money and reduce their environmental impact. This is the first of many products and service initiatives we’re investing in as part of our new ‘m3 enlightened energy package’; the package is designed to guide customers along the energy management journey, from measurement to monitoring and then to minimizing (the three Ms). Smart Save – a service which enables customers to purchase Good Quality Combined Heat and Power (GQCHP) and offset three tonnes of CO , as well as get access to half-hourly on line energy surveys and 2 an energy-efficiency helpline.

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Low carbon economy Trafford park case study Reducing our electricity's carbon intensity Reducing our carbon footprint Building new power stations Renewable energy New products and services Related websites Helping business save energy npower e3 — examples e3 and the carbon cube – Trafford Park case study The Big Switch Off Raising awareness of climate change e3 and the carbon cube 2008 targets e3 is our integrated marketing campaign to promote energy efficiency and environmental responsibility to npower business customers. In 2007 we started giving all our new business customers an npower e3 package, including a free Electrisave monitor, energy efficiency tools, advice on how to reduce energy bills by up to 25%, and access to The CarbonNeutral Company – experts in carbon footprint calculations and carbon offsetting. Over the past couple of years, e3 has helped many companies successfully reduce their energy bills and CO emissions – companies including M&S, 2 Sky, Honda, and O2. But since e3 is not just for big business, in 2007 we added several case studies to our website showing how energy-efficiency projects have helped smaller companies, too. The Carbon Cube – helping people visualise the problem The Carbon Trust estimates that British businesses emit around 78,000 tonnes of CO into the atmosphere every day. But one of the problems with 2 talking to people about the effect that this causes is putting it into scale. Our Carbon Cube tour helps do just that. Over the summer of 2007, we visited London, Birmingham, Manchester and Leeds with a ‘Carbon Cube’. It represented one tonne of CO – only a fraction 2 of the amount of CO emitted every day. But it was big enough to make 2 people realise just how huge an amount 78,000 tonnes really is. We also asked members of the public to sign the cube to pledge their business’ support to cutting carbon emissions. The tour was a successful way of raising awareness about the harm that wasted energy is causing to our environment, and around 4,000 businesses signed up.

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Low carbon economy Reducing our electricity's carbon intensity Reducing our carbon footprint Building new power stations Renewable energy New products and services Helping business save energy e3 and the carbon cube – Trafford Park case study The Big Switch Off Raising awareness of climate change Reducing emissions at Trafford 2008 targets Park In 2007, npower business worked in partnership with the Greater Manchester Chamber of Commerce to run the Trafford Park Carbon Reduction Project. It had two aims – to help businesses within Trafford Park reduce emissions, and to understand the needs of a small but diverse group of businesses. As part of the project, npower business worked closely with partners including The Carbon Trust, Groundwork, Northwest Development Agency and project managers Quantum Strategy and Technology. Those companies involved in the Carbon Reduction Project exchanged ideas and personal experience on energy issues. Participant companies that required it received advice and guidance from npower business on how to use energy more efficiently and how to manage their consumption using monitoring and targeting software. A calendar of workshops also took place in 2007. Advice covered green energy supply, energy efficiency, lighting technology and building controls systems, combined heat and power, transport energy, and water and waste management. The project also helped us understand the barriers that companies face in cutting their CO emissions, and how we can provide solutions to shape the 2 way businesses think about and use energy. "There remains a great deal of confusion amongst UK business about the environment. The Carbon Reduction Project offered not only the advice, information and resources businesses need to cut their carbon emissions and energy bills, but also practical help to get initiatives into action. We offer sound, professional advice, meeting a wide range of business needs whatever the size, sector or stage in their green agenda. The year-long initiative is a vital business asset." Ray McGloin, Head of Sales at npower business.

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Low carbon economy Related websites Reducing our electricity's carbon npower.com — The Big Switch Off intensity Reducing our carbon footprint Building new power stations Renewable energy New products and services Helping business save energy e3 and the carbon cube – Trafford Park case study The Big Switch Off Raising awareness of climate change The Big Switch Off 2008 targets Our third annual Big Switch Off was bigger than ever. More and more people are realising that switching off appliances at home can save them money. But it’s not always the same at work. In fact, by leaving monitors, printers, lights and air conditioning units running overnight, businesses in Britain waste an estimated £2 billion of energy a year. Our annual Big Switch Off campaign encourages both employers and employees to take responsibility for turning things off at work. The campaign asks our business customers across the country to pledge support online, and then to turn off all non-essential electrical appliances for the whole of the August Bank Holiday long weekend. This was the third year of the campaign, and hundreds of companies took part – more than ever before. More npower offices joined in too, showing that we can practise what we preach. We calculated the energy consumption of 14 of our sites over the weekend (compared with the weekend before), and found that they saved 3,841 kWh. That’s enough energy to heat over 400,000 cups of tea!

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Low carbon economy Climate cops Reducing our electricity's carbon intensity Reducing our carbon footprint Building new power stations Renewable energy New products and services Helping business save energy Raising awareness of climate change Climate cops 2008 targets Raising Awareness of Climate Change We have a range of activities to raise awareness of climate change amongst our key stakeholder groups and to help them through a range of products and services. These include the 'Big Switch Off' campaign and the 'White Paper - Making sense of the Low Carbon Economy' aimed at business customers. Awareness programmes and training for our own employees and the 'go-green' website for residential customers. In addition we launched our £20 million five-year 'Greener Schools' programme in 2007. Last year we launched our £20 million five-year ‘Greener Schools’ programme. The programme is designed to help teachers and empower young people to make a real difference to their school and environment by helping to ‘green’ their schools. This includes giving them free energy audits and the opportunity to apply for funding support for energy efficiency and micro-generation measures. The programme also includes ‘Climate Cop’ days – interactive events for children aged 9 to 13, in which they can learn about climate change and ways to save energy at school and at home. The programme, complementing the Sustainable Schools framework from the Department for Children, Schools and Families, aims to reach 2,500 schools, and in 2008 will reach around 68,000 pupils at 180 schools around our main operating locations.

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Low carbon economy Reducing our electricity's carbon intensity Reducing our carbon footprint Building new power stations Renewable energy New products and services Helping business save energy Raising awareness of climate change Climate cops 2008 targets Climate Cops – raising awareness of climate change An important part of our new Greener Schools programme is engaging students at primary and secondary schools to learn about climate Related websites change, and inspiring them to take positive action to help support the www.climatecops.com global movement towards sustainability. We do this through our ‘Climate Cops’ initiative, which includes free educational resources for 4-14 year olds, interactive events for 9-10 and 11-13 year olds, and an interactive web site. To engage and excite 4-11 year olds we’ve created Climate Cop characters – three ordinary friends (Will, Skye and Oscar) and their polar bear friend K’eyush – who seek out ways to help save energy, tackle climate change and help the planet, supported by their Chief Climate Cop – Charlie Our Climate Cop Academy events are highly interactive days based around the important issue of climate change. As well as developing their personal skills, pupils aged 9-10 actively learn about energy efficiency and renewable energy through a combination of hands on activities, video presentations and team challenges. Our feedback shows that 100% of teachers strongly agreed/agreed that the Climate Cop event had helped their school to work towards the government’s Sustainable Schools strategy. 100% also strongly agreed that their class is now more interested in making changes to the way we use and save energy in the classroom and at home. Kevin Brennan, Parliamentary Under-Secretary of State for Children, Young People and Families said: "I welcome the efforts businesses are making, together with our sustainable schools programme, to encourage young people to think about their contribution to climate change. I hope young people use these resources to reduce their energy use both at school and at home."

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Low carbon economy Our targets for the future Reducing our electricity's carbon As a significant emitter of CO , we are committed to developing intensity 2 strategies and plans to ensure we play a leading role in minimising Reducing our carbon footprint emissions in the future. Our strategies are focused on reducing CO 2 Building new power stations emissions, developing products and services for our customers, and raising Renewable energy stakeholder awareness of climate change. New products and services Reducing the carbon intensity of electricity generated Helping business save energy We operate one of the largest and most diverse portfolios of power Raising awareness of climate generating plant in the UK, including gas, coal and oil-fired power stations, change Combined Heat & Power (CHP) plant and renewables facilities. Our challenge is to move to a low carbon economy, whilst maintaining affordable and secure 2008 targets sources of energy. In the short term, our strategy involves increasing generation efficiency, co- firing biomass, and investment in new renewable capacity. In the medium term, our strategy is to invest in lower carbon generating plant. In 2007, we committed £1.7 billion in both conventional and renewable capacity that will reduce the by 50% by 2015 compared to 1990. Our strategy after 2015 is to invest in Research and Development (R&D) into low carbon generation. We will complete construction of the UK’s first carbon dioxide capture plant at Aberthaw Power Station by 2010, which will act as a crucial test-ground for the potential of carbon dioxide capture and storage (CCS) technology as a means to generate low-carbon energy from fossil fuels. We also aim to pre-qualify, in March 2008, for the UK Government competition to build a 100 MW (minimum) project to demonstrate the large scale feasibility of carbon dioxide capture, transport and offshore storage. We also support new marine renewable technologies through the npower juice fund, to which we contribute in excess of £500,000 per year. Reducing the carbon footprint of non-generation assets In 2007, we undertook a major exercise to benchmark the carbon footprint of our business (excluding generation assets). In 2008, we will undertake further analysis to determine CO emission reductions that can be achieved through 2 innovation in our business processes and supply chain. Developing products and services to enable customers to reduce their carbon footprint To support the increase in residential customers with microgeneration installed in their homes, during 2008 we will complement our suite of microgeneration products by launching npower solar (thermal), and will expand npower solar PV technologies to include solar slates. We also aim to increase the number of customers with domestic green tariffs. Develop products and services to enable customers to use energy more efficiently Throughout 2008, we will continue to develop our commercial position for business customers through environmental products and thought leadership, and will remain at the forefront on industry discussions on Smart meters, which enable suppliers to develop products and services that will assist customers in changing behaviour and saving energy. We will continue to support the installation of , and aim to significantly grow the number of customers for whom we provide .

Raising stakeholder awareness of climate change In 2007, we launched our Greener Schools programme which aims to reach 2,500 schools by providing a combination of free energy audits, advice on how to lower their carbon emissions, financial grants and where possible, practical help and funding towards energy efficiency and microgeneration measures including wind, solar or ground-source equipment and educating children about climate change and how they can become greener.

We will adapt the resources developed by the programme and provide an opportunity for all employees to receive climate change and energy efficiency awareness training by 2009. We will improve awareness of climate change amongst our suppliers, for example, through providing education, tools or support to improve energy management performance in their businesses.

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Environmental management Controlling emissions Controlling emissions Maintaining air quality Managing water and by-products Environmental management systems Putting systems in place Protecting biodiversity Managing air quality The Landfill Community Fund Emissions trading Adapting to climate change 2008 targets Reducing our impact on the environment Water and waste management Our operations, particularly those associated with energy generation, have an impact on the environment. So managing our emissions and by- products, and protecting the areas around our sites are important and challenging areas for us. The environmental impacts of our operations are carefully controlled, both by regulations and by our own environmental management systems (EMS) Environmental management (which are in place across all our major sites, including power stations). Our systems ongoing aim is to reduce the impact of our operations by continuously improving our environmental management both at power stations and office sites. Specifically, this means:

maintaining a high level of environmental management that goes beyond compliance ensuring the efficient use of all our resources reducing and recycling as much of our by-products as possible. Putting systems in place How? We have a system to manage air quality around our coal power stations. We monitor emissions of potentially harmful gases, such as sulphur dioxide and nitrogen oxides, and also predict the concentrations of sulphur dioxide in the air around our power stations. Using the system we can proactively manage our fuel use during periods of adverse meteorology – when there would otherwise be a risk of exceeding air-quality standard threshold concentrations. Protecting biodiversity We’re also trying to reduce the amount of water we use whenever we can, along with carefully managing by products from our power stations. Last year, we set targets for water reduction from 2008 onwards, and we agreed contracts with companies in the construction industry to use the ash produced from burning coal. The areas around our power stations are often rich with wildlife. To protect and maintain these local environments, each one of our sites also has a The Landfill Community Fund biodiversity action plan.

Emissions trading

Adaptation to climate change

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Environmental management LCPD and IPCC permitting Controlling emissions LCPD and PCC permitting Our emissions performance Maintaining air quality Managing water and by-products Environmental management systems Our emissions performance Putting systems in place Protecting biodiversity The Landfill Community Fund Emissions trading Adapting to climate change Controlling emissions 2008 targets Burning fossil fuels such as coal and oil in our power stations results in emissions of Carbon Dioxide (CO ), Sulphur Dioxide (SO ), Nitrogen 2 2 Oxides (NOx) and dust particulates. There are several industry regulations in place to control the level of these emissions from power stations. In 2007, we prepared for the revised Large Combustion Plant Directive (LCPD), which came into force on 1 January 2008. We also acquired all the Pollution Prevention and Control (PPC) permits our plants needed from the Environment Agency – permits that replace the previous Integrated Pollution Prevention (IPC) authorisations.

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Environmental management Controlling emissions LCPD and PCC permitting Our emissions performance Maintaining air quality Managing water and by-products Environmental management systems Putting systems in place Protecting biodiversity The Landfill Community Fund Emissions trading Adapting to climate change LCPD and PCC permitting 2008 targets Complying with the LCPD The revised EU Large Combustion Plant Directive (LCPD) came into force on 1 January 2008, introducing new – and stricter – environmental compliance rules for our coal- and oil-fired power stations. The new rules limit the levels of sulphur dioxide (SO ), nitrogen oxides (NOx) 2 and dust that each plant can emit. While all power stations in the UK have to comply, there is a range of ways to do that, either by ‘opting in’ (meeting prescribed emissions standards) or by ‘opting out’ (reducing a plant’s operating time and lifespan). Opting in Back in 2006, we decided to opt in at Aberthaw, by investing in Flue Gas Desulphurisation (FGD) equipment to meet the new sulphur emission limits, and improving the combustion control systems to reduce the NOx emissions in line with new limits. This will enable the plant to meet emission limit values while still operating at full capacity. Opting out We also decided to opt out at each of our other coal stations at Didcot A and Tilbury, and our oil-fired stations at Fawley and Littlebrook. This limits how much we use them: each power station can operate for up to 20,000 hours between 1 January 2008 and 31 December 2015, when they will have to close. However, opting out doesn't mean we're not trying to make these four power stations cleaner. At the same time as reducing operating times, we’re reducing the amount of SO the coal fired stations emit by burning imported 2 low-sulphur coal. And we’re reducing NOx by improving combustion control, by investing in forced draught overfire air at Didcot A and gravimetric feeders and dynamic classifiers at Tilbury, for example. PPC permitting In 2007, new PPC permits were successfully issued to all our power stations by the Environment Agency. These permits replaced the system of environmental regulation that has been in place since the early 1990s. They are also the instruments by which the LCPD is regulated at our power stations.

How we got our permits First, we took part in two years of discussions with the Environment Agency and other companies from the industry’s Joint Environmental Programme (JEP). This was to agree a regulatory framework of Best Available Techniques (BAT) for controlling emissions of SO , NOx and particulates. 2 This framework applies to all large combustion plants. It covers the period 1 January 2008 to 31 December 2015, and sets the environmental limits that we have to operate by. In addition to limits on levels of emissions, the framework sets requirements for monitoring, reporting and demonstrating ongoing environmental improvements. We then showed that the environmental controls at each of our sites satisfied this BAT framework. We demonstrated that we had assessed the different options available, and then found the most cost-effective method of environmental compliance. A key part of this was showing that the controls applied were appropriate for stations that have been opted out of the LCPD

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(and which therefore have a limited life) as well as those that are opted in. We also demonstrated that we had the appropriate management systems in place. And we assessed our impact on local and national habitats to demonstrate compliance with the Habitats Directive. We carried out this assessment in conjunction with the Environment Agency, along with other companies from the JEP. As a result, all our power stations received the necessary PPC permits on time. Employee training In 2007, our Environmental training was focussed on our generation and renewables business. In particular, this training included how to understand and manage the impact of these new PPC licences on power plants.

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The main reason for the decrease in emissions was lower generation from coal-fired power stations than in 2006. This was because coal was relatively expensive last year so we used more gas. In addition, extended outages at Aberthaw (because of investment in the FGD plant) resulted in lower generation at the station. The energy efficiency improvements we made at our coal-fired power stations resulted in an overall improvement in the efficiency of our coal station portfolio, which contributed to the reductions in CO emissions. This 2 improvement wasn’t as big as expected, because there was lower generation than anticipated at Aberthaw power station – the place where most of the improvements were made. However, we expect to see these investments pay off in 2008 through further improvements in efficiency. Overall the intensity of our CO emissions reduced from 678 g/kWh to 621 g/kWh. 2 SO 2 During 2007 we significantly reduced our emissions of SO : total 2 emissions fell from 69.9 to 55.6 kt, with emissions intensity falling from 1.80 to 1.56 g/kWh. The reasons for this fall were increased gas generation compared with 2006, and the burning of lower-sulphur coals. NOx Total NOx emissions fell from 70.1 ktonnes in 2006 to 51.3 ktonnes in 2007. This reduction was due to increased gas generation, together with the investments we have made to meet the emission limits that apply from 2008 onwards.

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35 occasions when the Sulphur Dioxide (SO ) concentration, averaged 2 over a 15-minute period, is above 100 parts per billion 24 occasions when the one-hour concentration of Sulphur Dioxide (SO 2 ) is above 131 parts per billion.

We have agreed air quality monitoring and fuel management programmes around our coal stations to ensure that we do not exceed these limits. Our Air Quality Risk Management plans allowed us to manage any potential air quality risks at our stations during 2007. A major influence on ambient concentrations is the weather, and the management plans enabled our power stations to manage their fuel usage to reduce concentrations during potentially adverse conditions. How we did in 2007 In 2007, we were fully compliant with air quality limits: during the year there were 18 occasions when SO concentrations were over the 15-minute 2 concentration threshold at Aberthaw and nine occasions at Didcot. There were also three occasions when the SO concentration, averaged over one- 2 hour at the Aberthaw monitoring site, was greater than 131ppb. This means that the number of occasions when concentrations were above the threshold concentrations was well below the annual allowances of 35 and 24, respectively.

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Environmental management Ash recycling Controlling emissions Maintaining air quality Managing water and by-products Ash recycling An update on Radley Lakes Environmental management systems An update on Radley Lakes Putting systems in place Protecting biodiversity The Landfill Community Fund Emissions trading Adapting to climate change Managing water and by-products 2008 targets Our industry uses a lot of water – primarily for cooling. For example, at any one time, Didcot has 60 tonnes of water going through its system. And it takes two tonnes of water out of the Thames every second. Our PPC permit from the Environment Agency sets parameters for discharging cooling water back into the environment (including setting limits on its temperature and concentrations of any pollutants). In addition to cooling water, the station also uses towns’ mains water for processes on the site. So there is always pressure for us to improve the efficiency of water usage in our plants. A number of sites already have initiatives in place to reduce water usage and waste, and increase water recycling. These have had a real effect in 2007. At Great Yarmouth, for example, raw water use was reduced by over 40% during 2007, while at Didcot the reduction was around 35%. Aberthaw has also introduced a system that uses captured rainwater for ash conditioning. Making use of ash High on our agenda is how we deal with the ash that comes from our coal- fired power stations. In 2007 the percentage of ash we recycled increased from 45% in 2006 to 48%, thanks to contracts successfully secured with companies in the construction industry. The ash that is not used in construction has to be disposed at the ash disposal sites at Aberthaw, Didcot and Tilbury.

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using as much power-station ash as we can improving the quality of ash to increase potential sales (by building an ash-processing plant at Aberthaw power station, for example) minimising the environmental impact of surplus ash disposal.

In 2007 the amount of ash we recycled went up to 48%, compared to 45% in 2006. This increase was thanks to two big contracts with the construction industry:

The amount of ash we recycled from Didcot power station increased thanks to an ongoing contract to supply engineering-fill material for the Ridgemont bypass. We secured a major contract to supply ash to Celtic Manor in Wales. This is potentially a win-win situation: not only will it help us recycle ash, but the ash itself will potentially replace other fill material for the construction of the golf course – fill material that might include primary aggregates or materials sourced from further away.

We also started building a plant which will improve the quality of the ash at Aberthaw. This ash benefication plant is due to go into operation in August 2008. The ash-beneficiation plant will work by dividing the ash into two fractions by an electrostatic carbon separation (STI) process. The operation will process approximately 200KT of ash per year. It will create a refined, low- carbon fraction to be used in the cement industry, and a high-carbon fraction (basically unburnt fuel) to be refired in the Station boilers. There are major environmental benefits associated with the process as the operation will maximise Station fuel consumption, reduce demand for primary aggregate and provide alternative solutions to the current landfill operation for ash disposal.

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Environmental management Controlling emissions Maintaining air quality Managing water and by-products Ash recycling An update on Radley Lakes Environmental management systems Putting systems in place Protecting biodiversity The Landfill Community Fund Emissions trading Adapting to climate change An update on Radley Lakes 2008 targets While we always look to reuse or recycle the ash from our coal power stations, traditionally there hasn’t been enough demand to reuse all of it. Over the past 20 years, we have sent excess ash from Didcot Power Station to the former gravel pits near Abingdon now known as the Radley Lakes. So far, eight pits have been used. The areas that were filled earliest have now been restored to Oxfordshire countryside and have achieved County Wildlife Status along with the rest of the Radley Lakes area. The development and operations on the site have been monitored by the Environment Agency and through a Local Liaison Committee comprising the Parish Council and Power Station employees. New Radley Lakes scheme on hold As the existing pits have filled up, we’ve had to make plans to start using Thrupp Lake near Radley as our final ash lagoon. These plans include our most extensive ecological restoration programme to date, designed to leave behind a mixed wetland and woodland habitat for Oxfordshire plant and animal life. Nevertheless, the decision to use Thrupp Lake has been a difficult and sensitive one. The issue has raised concerns among the local community and at the time of going to print, the local Parish Council is intending to challenge a legal ruling that Thrupp Lake and its surroundings should not be registered as a ‘Town or Village Green’. We have been meeting and corresponding regularly with local people and stakeholders to work through these concerns, and have provided information via public exhibitions, briefing packs and the media. Ideally we wouldn’t have to use Thrupp Lake at all. But Didcot A is a vital part of the UK's power infrastructure and requires a guaranteed ‘backstop’ for ash disposal if it’s to respond to demand from the national grid at any time of day or night throughout the year. We firmly believe that filling and restoring Thrupp Lake is the least environmentally damaging way to provide Didcot A with the flexible ash disposal facility it needs, once all the ash re-use and recycling opportunities have been taken. Other routes, even if they could be found, could involve an over-reliance on lorry movements and use of landfill sites much-needed for municipal waste.

In 2007 there have been some significant changes and we have been able to put our plans to use Thrupp Lake on hold for the time being. This is because we have secured new contracts to recycle an increased amount of Didcot ash for use in industry and civil engineering. Milder weather conditions over two successive winters have also resulted in less coal being burned than expected at Didcot. As a result, less ash than we originally anticipated has been produced on the site. Finally we anticipate changes to the rate at which the station will generate power – and ash – over its remaining lifetime, which could help make the production and use of ash more manageable.

"This is good news. We have always worked very hard to find the best ash solutions and we’ll continue to do so. As a result of our efforts we’ve managed to take advantage of a stronger market for ash re-use. This means we are now able to put the use of Thrupp Lake on hold for the time being... It is still too early to say whether we can avoid having to use Thrupp Lake before the station’s closure by end of 2015, but we will of course keep the

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local community up to date on developments." John Rainford, Manager of Didcot Power Station

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Environmental management Controlling emissions Maintaining air quality Managing water and by-products Environmental management systems Putting systems in place Protecting biodiversity The Landfill Community Fund Emissions trading Adapting to climate change 2008 targets Environmental management systems Environmental Management Systems (EMS) are in place across our business – including all power stations. They all comply with the requirements of ISO14001:2004, and they underpin our good environmental performance. Under the requirements of our PPC permits, we are required to report any exceedences of our permit conditions to the Environment Agency following the Common Incident Classification Scheme (CICS). This identifies 5 category levels – from 1 (a non-compliance that caused or had the potential to cause major extensive harm) through 4 (a non-compliance that had no potential to cause environmental harm), plus a category where there is a level of measurement uncertainty and is classified as ‘approach to limit’ or ‘ATL’. During 2007 (the first year we have used these reporting categories), there were no permit non compliances classified as level 1 or 2. There have been six permit non-compliances at our sites (two level 3, four level 4). One of the level 3 incidents related to a discharge of hot water via the station drains system at Littlebrook, which the EA classified as having a potentially minor environmental effect. The other incident related to a flood control valve during flooding in the summer of 2007 at the Didcot A Radley ash site. The station have written to the EA stating that appropriate environmental action was carried out during the flooding and they would like the EA to reconsider the wording of the PPC permit to reflect likelihood of flooding happening again. As well as these non-compliances with permit conditions, there were seven justified complaints around our stations and 101 incidents reported through our Madison reporting system.

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Environmental management Controlling emissions Maintaining air quality Managing water and by-products Environmental management systems Putting systems in place Protecting biodiversity The Landfill Community Fund Emissions trading Adapting to climate change 2008 targets Putting the right systems in place Madison In 2006, we started using the information system Madison, developed from our safety reporting system, to report on environmental compliance. These types of systems have been used in other sectors – for example, to allow airline pilots to report near misses – as a way of identifying underlying trends in incidents. As a result of now reporting near-misses as well as actual incidents, there have been more reports in 2007 than in 2006, as we had expected. The great thing about the system is that analysts can now work out the trends and the root causes of near accidents – before they turn into real ones. In 2007, further changes were made to Madison for a trial period. The system now has a series of prompts for the potential different types of complaint (like noise or dust), so that the investigation and treatment of any complaint can be more consistent. This means that a complaint handled out of hours by shift staff would be in line with those handled by the Environmental Representatives, who would deal with incidents if they occur during the day. New projects RWE npower is planning a number of major construction projects (including at Staythorpe, where construction has started, and Pembroke, where consent to construct is being sought). As a consequence, we have reviewed our approach to environmental management in the early stages of projects. The number of incidents has also led our projects department to implement an environmental management system (EMS) based on the ISO14001 system. Training on the system was carried out in April 2007. A management review in early 2008 will decide whether the EMS should be taken through the stages to achieve ISO 14001 certified status.

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Environmental management Conservation day Controlling emissions Maintaining air quality Managing water and by-products Environmental management systems Putting systems in place Protecting biodiversity Our Green apple award Conservation Day Our Green Apple Award The Landfill Community Fund Emissions trading Adapting to climate change Protecting biodiversity 2008 targets People are often surprised to hear that the areas around our sites have grown to become diverse wildlife habitats of ecological importance. This is in part thanks to our biodiversity framework, which focuses on conserving and enhancing biodiversity within our power station boundaries. It also aims to minimise the effects of our operations beyond our boundaries where we have a direct effect, and promotes biodiversity by supporting broader initiatives. In 2007, our biodiversity programme covered both direct action and education within the local community. For example:

we continued to raise interest and awareness of local environmental issues through our programme of power station conservation days we partnered with the Yorkshire Wildlife Trust on the Wildlife Wealth project (and received a Green Apple Award as a result) our Landfill Tax Credit Fund (renamed the Landfill Community Fund in 2008) gave over £97,000 to environmental and conservation organisations around the UK.

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Environmental management Controlling emissions Maintaining air quality Managing water and by-products Environmental management systems Putting systems in place Protecting biodiversity Conservation Day Our Green Apple Award The Landfill Community Fund Emissions trading Adapting to climate change Back to nature – the 2007 2008 targets Aberthaw Conservation Day Following the success of the inaugural conservation day at Aberthaw in 2006, conservation enthusiasts from Aberthaw Power Station, the local community and nearby schools all braved the autumnal weather to take part in the site’s second conservation day. The event took place on 11th October. Mark Picton, section head of regulation at Aberthaw, helped organise it, and explained: "There’s an area of land on the south eastern corner of Aberthaw Power Station that has remained undeveloped since the station was built in the 1960s. Left to its own devices, this land has gradually developed into an area of great ecological importance. At its centre is a rare saline lagoon, one of only four in Wales, which is now referred to as the East Aberthaw nature reserve. It’s managed by Aberthaw Power Station in partnership with the Wildlife Trust of South & West Wales. "Back in 2006, the station held a Conservation Day, which gave employees, local residents and school pupils the opportunity to volunteer their help to protect this important habitat and the 20,000 plus species that live here. The day was such a fantastic success that we decided to hold another event." This year, the volunteers helped clear shrubs, remove brambles and clean the beach. Notice boards were also erected to give future visitors an idea of the wide variety of birds, flora and fauna – including bloody nose beetles, cockles, adders, tree sparrows and rare types of grasses and orchids – that can be seen throughout the year. In addition, pupils and staff from Barry Boys Comprehensive School, who designed and built bird boxes and insect feeders as part of their GCSE Design & Technology course, came along to help put them up. Other local schoolchildren from St Athan and St David’s Primary Schools took part in a nature trail.

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Environmental management Controlling emissions Maintaining air quality Managing water and by-products Environmental management systems Putting systems in place Protecting biodiversity Conservation Day Our Green Apple Award The Landfill Community Fund Emissions trading Adapting to climate change A Green Apple Award for RWE 2008 targets npower In November we went to the Houses of Parliament in London to collect our first National Green Apple Award – the highest award of its kind. We were presented with the award for the work we’ve done in partnership with the Yorkshire Wildlife Trust on the Wildlife Wealth Project. Wildlife Wealth was a project engaging people in the Yorkshire region with their wildlife heritage. The scheme covered 14 nature reserves in Yorkshire, and worked closely with local communities to help them enjoy and learn about nature conservation. In the first seven months of the project, the Wildlife Wealth team ran 43 successful events, attended by over 1,000 people. These included walks, talks, workdays and family events. The team held dry stone walling days at Stoneycliffe Wood, bird surveying training at Stocksmoor Common, fencing in Mexborough and popular woodland crafts at Oxclose Nature Reserve. Families and groups also worked together on activities like charcoal burning and a real favourite – making green furniture. The awards are run by The Green Organisation, an independent environment group who recognise and reward environmental best practice around the world. In the past our Community Investment team has won bronze, silver and gold awards, but never a national one.

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The Northmoor Trust – £10,989 towards their arboretum project, which includes all of Oxfordshire’s native trees and shrubs. The arboretum will be open to the public. Norfolk Wildlife Trust – £20,000 towards interpretation facilities in the new visitor centre at the Cley Marshes Nature Reserve. Coalhouse Fort Project – £23,300 for the restored fort adjacent to Tilbury Power Station. Bedfordshire, Cambridgeshire, Northamptonshire and Peterborough Wildlife Trust – £7,000 towards phase 3 of the ‘Mouse- Ears on Summit’ project, which aims to protect the rare grey mouse-ear plant that exists at only two other sites in the UK. Woodland Trust – £11,889 towards community access and habitat management at Cwm George and Casehill Woods near Barry. RSPB – £15,144 to improve the RSPB Cliffe Pool Nature Reserve on the North Kent marshes for both visitors and wildlife. Larkmead School – £9,216 towards a dance studio in the school which has specialist status in visual and performing arts and serves a deprived area in Abingdon.

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Environmental management Controlling emissions Maintaining air quality Managing water and by-products Environmental management systems Putting systems in place Protecting biodiversity The Landfill Community Fund Emissions trading Adapting to climate change 2008 targets The EU Emissions Trading Scheme The European Union Emissions Trading Scheme (EU ETS) is the main regulation to help reduce industrial emissions of CO and meet our 2 targets under the Kyoto protocol. It was introduced at the start of 2005, the first period of the scheme ran to the end of 2007, and phase two started on 1 January 2008. Under the EU ETS, every installation (such as a power station) covered by the scheme is allocated a set number of CO allowances for each year. If 2 emissions exceed the allocated allowances, installations have to buy allowances from other operators who have reduced emissions below their allocation. Allowances can be traded with other operators covered by the scheme in the UK or Europe. In 2007, the allocations under phase two of the EU ETS were announced. The allocation to our power stations reduced from an average of 16.02 million tonnes of CO (MtCO ) per year in Phase 1 to 12.36 MtCO per year from 2 2 2 the beginning of 2008 onwards. To put this in context, the emissions from our power stations (excluding CHP plants) totalled 20 MtCO in 2007. We will 2 therefore need to buy a significant proportion of the allowances we need for 2008 onwards. 2013 and beyond Phase two of the EU ETS will continue until the end of 2012, when phase three begins. We need to start planning for phase three now. To do that we need to put in place a long-term framework that allows the market to operate efficiently and helps set the context for future investment decisions. Proposals by the European Commission in January 2008 have helped to clarify some things: for example, there will be a Europe-wide cap on emissions, which will get lower year on year; and allowances will be allocated on a consistent basis across all member states. There will also be no free carbon allocations for the electricity sector in phase three, while other sectors will move to full auctioning of allowances by 2020.

Now we need to understand how any new international agreement to tackle climate change will impact the EU ETS. We also need to know how the EU ETS will be linked to other emissions trading schemes and global climate- change policy instruments like the Clean Development Mechanism (CDM) and Joint Implementation (JI).

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http://www.npower.com/rwenpowercr/6_responsible_business/6_3_environmental_management/6_3_9_adaptation_to_climate_change.html Page 1 of 1 RWE npower Corporate Responsibility Report - 2008 targets 06/18/2008 11:05 AM

Environmental management Maintaining environmental Controlling emissions Maintaining air quality compliance – our targets in 2008 Managing water and by-products Our aim is to maintain 100% compliance with all relevant authorisations, Environmental management systems permits, and local air quality management plans at all of our coal and Putting systems in place oil-fired power stations. We also aim to reduce the number of environmental Protecting biodiversity incidents that result in justified complaints each year. Meeting these targets will involve: The Landfill Community Fund Emissions trading Continuous improvements in standards of environmental management. We are maintaining ISO14001 accredited Environmental Management Adapting to climate change Systems (EMS) for all key operational power stations and office sites. And will 2008 targets have fully operational EMS for all construction projects that are undertaken by our Projects department. Ensuring the efficient use of resources – and reducing and recycling waste. We will continue to find new opportunities for power station ash utilisation. Our target is to improve year on year and we will commission the ash benefication scheme – increasing the amount of ash that can be put to beneficial use – at Aberthaw in 2008. We will also continue to identify and evaluate emerging ash benefication technologies and ensure that our new plant design strategy delivers high quality products and an infrastructure to facilitate maximum utilisation. During 2008 all of our power stations will carry out audits to identify opportunities for a reduction in water usage and improvements in waste recovery. Our aim is to achieve best practice for water consumption and to collect benchmark data for resource use, waste management and recycling at our office sites.

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Our customers Helping vulnerable customers Helping vulnerable customers Improving our services Selling products responsibly Managing customer complaints Pricing Working with business Improving our services 2008 targets

More customer choice. Better customer service Selling products responsibly We provide energy to around 6.6 million residential customer accounts and approximately 245,000 business customers. A strong focus on customer needs is vital to our success, and we aim to provide all our customers with excellent service. We are committed to selling our products responsibly and protecting the most vulnerable members of society.

Above all we want to give our customers choice: how they communicate with Managing customer complaints us, how they pay for their energy, how much energy they use, what type of energy they buy, what tariff they choose. In 2007, we extended our range of products and services that offer them that freedom. In addition:

We have initiatives in place to help vulnerable customers (and other vulnerable members of the community). We take a targeted approach to make sure help is given where it’s most needed. We’re always looking at ways of improving our services and providing Pricing new products – a new billing system, and intelligent metering are some of the improvements we’ve introduced this year. We’re committed to selling responsibly. We train all our residential sales people in the Association of Electricity Suppliers’ (AES) code of conduct, and we take steps to manage customer complaints quickly. We’re very aware of how changes in energy pricing can affect our customers. So we’ve continued to develop products that help them budget. And we work with business to help them keep their energy Working with business bills as low as possible.

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Our customers Spreading Warmth programme Helping vulnerable customers Spreading Warmth programme – Spreading Warmth in action Health Through Warmth Improving our services Selling products responsibly Health Through Warmth Managing customer complaints Pricing Working with business 2008 targets Helping vulnerable customers Electricity and heating are essential requirements for people’s health and wellbeing, so protecting vulnerable customers who are struggling to pay for them is hugely important. We believe in taking a targeted approach to helping vulnerable customers. That way we can make sure that genuine help gets to those that need it most. In 2007, we invested approximately £54 million, supporting over 500,000 households across the UK. Of the £48 million we spent on our Energy Efficiency Commitment, more than half was spent helping disadvantaged groups by installing energy-saving measures in their homes. These groups included customers on low incomes, the elderly, disabled and chronically ill. We spent approximately another £6 million on other assistance of which £5.4 million was on voluntary initiatives of our own. Identifying vulnerable customers Our customer-facing employees are trained to make sure they can identify a vulnerable customer when they speak to one, and that they know how to refer them to the right team. For instance our collections team have an established 12-step programme in place to identify anyone struggling to make payments. In 2007, our aim was to make sure that 75% of front line service employees had received vulnerable customer awareness training. As part of this, all new starters received comprehensive training on vulnerable customers and the products and services available to them, and we ran refresher training on our Warm Response Service for all front line employees to ensure 100% coverage. In addition, 100% of our First Step and Home Advisor teams have received Macmillan Cancer Support awareness training. In 2007 we also trained 1234 key community workers through our Health Through Warmth scheme to identify and refer anyone whose health condition is made worse as a result of living in a cold or damp home – not just npower customers. And we use direct mailing to offer people energy-efficiency measures such as free insulation and gas insulation checks. What are we doing to help? We have two programmes to reach and support vulnerable customers and members of the community. In 2008 we are investing over £7.5 million in Spreading Warmth, which reaches our own vulnerable customers. Health Through Warmth is our community scheme for the vulnerable people – whether they’re npower customers or not – and in 2007 we committed an additional £4.5 million to continue to support this scheme until 2011.

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Our customers Spreading Warmth in action Helping vulnerable customers Spreading Warmth programme – Spreading Warmth in action Health Through Warmth Improving our services Selling products responsibly Managing customer complaints Pricing Working with business 2008 targets Spreading Warmth In 2007, we continued to develop our Spreading Warmth programme – in 2006 we spent £2 million assisting 65,000 customers. In 2007, we spent around £4.5 million, including £2m in rebates, assisting around 100,000 customers. The different parts of the Spreading Warmth programme The programme is designed to make sure we deliver relevant products and services to our vulnerable and fuel-poor customers. This helps them manage their energy use more effectively. It also meets our regulatory obligations (like our obligation to maintain a Priority Service Register). Warm Response line – We recognise that vulnerable customers need a friendly point of contact to reassure them and guide them through the measures that can be taken to help them. Our Warm Response line gives them a personal response and acts as an internal referral mechanism to make sure they’re given the best possible assistance and advice. Warm Response service – The Warm Response Service also provides extra services like large print and Braille bills, free gas safety checks, special adaptors to make appliances easier to use and password protection to prevent against fraudulent visits. In 2007 our target was to increase customers registered to this service by 25%. While we didn’t hit this target, we managed to register an additional 11,748 customer accounts, taking the total number to approximately 113,000 – an increase of 12% compared to 2006. First Step – We offer a total care package First Step that includes debt relief, social tariffs, personal account management, help with benefit entitlements checks and energy efficiency measures. The average benefit to a household in First Step is over £1,200 – of which £670 is a recurring benefit that those households will see every year through income savings and energy efficiency measures. First Step tariff – First Step customers are eligible for our First Step tariff. This is our cheapest tariff, and is on average £230 cheaper than our standard tariffs for households that are npower customers for both electricity and gas. The tariff was also protected from price increases in January 2008. During 2007 npower also committed to providing a rebate to 50,000 of our most vulnerable customers. During 2008 they will each receive a credit of between £80 and £100. In addition they have also been offered free loft and cavity wall insulation.

Energy efficiency advice – To make sure vulnerable customers are saving as much as possible we give Energy Efficiency advice through a dedicated telephone service and a network of home advisors who can show customers how to heat their homes affordably, and who can offer services like free loft insulation.

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Our customers Helping vulnerable customers Spreading Warmth programme – Spreading Warmth in action Health Through Warmth Improving our services Selling products responsibly Managing customer complaints Pricing Working with business 2008 targets Case study: Spreading Warmth in action Judith has been in the energy industry for over 30 years, but her current post, which she’s held for four and half years, is a unique one. As Energy Services Representative Manager, she is responsible for a team of eight Energy Efficiency Home Advisors. They visit customers’ homes to provide face-to-face energy efficiency advice, and assess whether they need any npower services or support. As first impressions don’t always give away how in need a customer really is, it’s very important that Judith and her team can get people to open up to them and admit they need help. Judith says: “It’s a specialised role and it needs certain characteristics such as patience and diplomacy. You need to be able to judge the situation, sense how the customer wants to be dealt with, and react appropriately.” During 2007, approximately 2,500 home visits were completed. Specifying the exact amount of energy saved as a result is extremely difficult. However, according to the Energy Saving’s Trust, the potential savings on energy bills of the average household through energy-saving measures is approximately £250.What’s more, there are often behavioural changes which come about from home visits, which in themselves result in energy savings.

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Our customers Helping vulnerable customers Spreading Warmth programme – Spreading Warmth in action Health Through Warmth Improving our services Selling products responsibly Managing customer complaints Pricing Working with business 2008 targets Health Through Warmth (HTW) We believe it’s very important to target community support where it’s most needed. That’s why we established the HTW scheme in 2000– to find people in the community living in cold, damp homes, and helping them by installing energy efficiency measures and heating. Since then we’ve accessed £29.5million to identify and help vulnerable people whose health is affected by these poor conditions. In 2007, 8,508 households were referred to the scheme and we announced plans to invest an additional £4.5 million to continue to support HTW until 2011. It’s not something we could ever do on our own. We work closely with the National Health Service (NHS), Local Authorities, Home Improvement and Care and Related websites Repair agencies, and National Energy Action in 12 areas across England and npower — Health Through Warmth Wales. Often the people who are most in need are hard to reach or unaware that they are eligible for support. So the scheme trains key community workers to identify the most vulnerable people and refer them to the Health Through Warmth team – whether they are an npower customer or not. Once someone is referred to us, the HTW team helps them get access to statutory national grants schemes and other locally available funds. If they’re not eligible for these, the team looks for funding from charitable organisations on their behalf. Depending on their circumstances, they could also get help from our unique npower HTW Crisis Fund. An added bonus is that the energy efficient measures that we put in place will benefit future occupants of the homes. Insulation is a permanent fixture that helps to keep heat in the home and running costs down. Energy efficient boilers help to reduce energy use and carbon emissions for a more sustainable future. So what we do today lasts well into tomorrow.

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Our customers Self service and better billing Helping vulnerable customers Improving our services Self service and better billing New meters Selling products responsibly Managing customer complaints New meters Pricing Working with business 2008 targets Improving our services It’s important for us to talk to our customers regularly to discover what Related websites we can do for them – whether we’re providing the products and services npower — Britain's Brightest Energy they need and how satisfied they are with our service. We do this in a Company variety of ways, including focus groups and customer surveys. All of these are important contributions when it comes to making continuous improvements to our customer service. Improvements in 2007 We’ve made several improvements in 2007, including a new billing and complaints management system, and ‘intelligent meters’. We also used customer feedback to make smaller improvements. For example, we discovered that our vulnerable customers often found form filling difficult and time consuming – shown by the fact that only half of them were actually returning their Spreading Warmth joining packs at all. As a result, we now collect all the information we need over the phone. In 2007, we also added to our products and services that help our customers become more energy efficient – products such as self-service and paper-free billing, easier microgeneration installation and free insulation. Finally, our ‘Britain’s Brightest Energy company’ website, launched in 2006, is going from strength to strength, offering customers a range of information, including free advice on how to save money on their bills. In 2007, it had over 3 million visitors.

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Our customers Helping vulnerable customers Improving our services Self service and better billing New meters Selling products responsibly Managing customer complaints Pricing Working with business 2008 targets Self service and better billing Self service In 2007, one of our key objectives was to expand and improve our self- service facilities to give customers more choice about how they interact with us. As part of a programme of substantial investment (around £54 million between 2003 and 2008) to improve our billing systems, additional functionality was introduced to allow customers to contact us through Interactive Voice Recognition (IVR) and web/email. This would reduce the number of routine contacts with our contact centres. It would allow more resources to be devoted to customers who require individual attention, and would also improve the service for those wishing to self serve. By the end of 2007, the percentage of contacts made via IVR and web had reached 7.3% – an increase on the initial 5.7% contact volume, but not yet at our target of 10%. This was partly because of delayed upgrades to the npower internet site, resulting in less progress being made through this channel than was hoped. Better billing In March 2007 we launched our paperless billing service. Since then, there have now been over 100,000 registrations for the service, and hundreds of people are registering every day. In 2006, in support of the introduction of the Energy Supply Ombudsman (ESO) scheme, we also built a new system to deal with billing complaints. It means there’s now one system for receiving and dealing with complaints from all corners of the company, so they can be dealt with quicker. The launch of the ESO has proven to be an effective ‘backstop’ for customers and, as such, was extended to include sales complaints in 2007, in addition to Transfer and Billing complaints.

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Our customers Helping vulnerable customers Improving our services Self service and better billing New meters Selling products responsibly Managing customer complaints Pricing Working with business 2008 targets Smart meters Changing consumer’s behaviour in how they use energy is a key element in reducing the UK's carbon dioxide emissions. Smart metering technology can help customers to better manage their energy usage by providing meaningful data to enable them to manage their usage and inturn save energy. Smart metering also offers the potential for energy suppliers to improve customer service through the improved management of data. However for smart metering to be implemented comprehensively, an agreed level of standardisation is required. We are fully committed to the joint work being undertaken by the major domestic suppliers and continue to work with the Energy Retail Association (ERA) to develop an appropriate universal roll out model to an agreed level of technological standardisation. In 2007 a formal submission, supported by all suppliers, including RWE npower, was made to Government requesting the inclusion in the Energy Bill primary legislation for the mandating of residential smart metering over the next 10 years, to an agreed meter specification. New 'intelligent meters' To make it easier to use a prepayment tariff, in 2007 we started testing a brand new meter design. Instead of having to buy credit from local shops, post offices and garages and adding the credit to the meter by means of a card or key, customers will be able to add credit to the meter electronically by using their mobile phone SMS system (or text online). There’s no payment device to lose and because customers can buy credit by texting they don’t have to leave the house. This new meter is also ideal if customers find themselves without credit when the local outlet is closed. Using SMS also means that when a customer calls us we can ‘talk’ directly to the meter to check that it’s working correctly, see what the meter reading is, diagnose faults or switch the meter to run as a regular credit meter instead of exchanging the unit. And all of these changes can be done in real time whilst the customer is talking to our contact centre.

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Our customers Helping vulnerable customers Improving our services Selling products responsibly Managing customer complaints Pricing Working with business 2008 targets

Selling responsibly We know that, in the past, irresponsible selling has given the energy industry a bad name. We have a residential sales force of over 1,000 people and whether they’re selling door to door or over the phone, we put them through a rigorous recruitment and training process to make sure selling is done responsibly, sensitively, and in compliance with legal requirements and both formal and self-regulation. Trained to give good advice Last year, we revamped our sales training process to make it more comprehensive. The new training programme takes five days with an assessment at the end. All new sales people are then partnered with an experienced advisor for their first two weeks, and are regularly accompanied by external assessors to check that they’re adopting the Association of Electricity Suppliers’ ‘Energy Sure’ Code-of-Practice, which covers areas including training, customer contact and complaint handling. As well as sales skills, candidates are also trained to be ambassadors for the company through how they appear, how they conduct themselves and the services they offer (such as advice on energy efficiency). More importantly they’re trained to be sensitive to customer's needs. Hard selling techniques are unacceptable; candidates are given diversity training and are also taught how to identify vulnerable customers and how to refer them to our specialist services. We deal firmly with complaints We know that things can go wrong and we have an independent Compliance team who will thoroughly investigate any evidence of mis-selling and we dismiss anyone found guilty of fraudulent behaviour. In 2007, our target was to maintain the level of residential sales complaints at less than 20 per month – in fact, we averaged around 12 per month. In order to improve the way we deal with complaints, we’ve also changed our complaints reporting process to ensure a faster more effective response. If customers do not accept the solutions offered they can now appeal to the Energy Supply Ombudsman which provides an additional route for redress.

2008 – The Sunday Times investigation While outside the timeframe of this report, we wanted to mention the Sunday Times’ article, published on 6 April 2008, criticising our door-to-door selling.

We were shocked and disappointed by the Sunday Times’ findings. After immediately suspending the sales teams concerned, we then dismissed six people as a result of our disciplinary investigation.

We genuinely don’t believe this behaviour is widespread in npower. But we want to make sure it never happens again. We already have a strict code of conduct to make sure we comply with regulations, and we send out letters to all of our new customers to check they’re happy with the whole sales process. Since the incident, we’ve also introduced new checks including mystery shoppers. And we now contact 2,000 new customers a week to get more feedback on our door-to-door sales team.

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Our customers Helping vulnerable customers Improving our services Selling products responsibly Managing customer complaints Pricing Working with business 2008 targets

Managing customer complaints Managing complaints effectively continued to be a key focus for us in 2007. The Energy Supply Ombudsman scheme (introduced in 2006) is now fully embedded in our complaint process, with the extension of the scheme meaning it now also covers sales complaints. In 2007 we received 424 complaints through the Ombudsman scheme. Energywatch also made changes to their complaint-handling processes in 2007, by enabling customers who contacted them to take up their queries directly with their supplier, through the ‘empowerment’ process. This change was introduced from April 2007, and was in recognition of the transition to the new consumer representation framework which comes in to effect in Q4 2008. Overall, our energywatch complaints reduced in 2007 compared to 2006. However in October 2007, energywatch changed their reporting to include ‘empowerment’ and enquiry cases from April, as well as complaints. As a result, there is no clean comparison with previous years’ statistics. The total number of energywatch complaints for 2007 was 3,695.

During 2007 we managed 243 MP's complaints (compared to 186 in 2006) and 325 press complaints (compared to 241 in 2006). Customer satisfaction In July 2007, we ran our annual product satisfaction survey. The results showed that overall satisfaction levels were up marginally from 79.5% to 79.8%.

In 2008, we are introducing quarterly product focus groups. And product- satisfaction research is now in place specifically for Spreading Warmth products and services for vulnerable customers. This includes research into customer satisfaction on our First Step Programme and customers receiving a home visit for energy efficiency advice. The initial results of both pieces of research have shown promising results in terms of the service offered to vulnerable customers. Customers receiving home visits have found them extremely beneficial, with 85% finding them useful and 81% preferring the personal contact as they needed to be shown what do (this was particularly prevalent amongst elderly customers).

In npower business, Datamonitor results also help us measure customer satisfaction. The programme identifies the key competencies that make up good services, and gives major energy suppliers an indication of its performance across these competencies. In 2007 we improved our electricity customer satisfaction rating from major energy users by 3.7% – up 1.3% relative to market performance – and our gas rating +4.7% – up 5.8% relative http://www.npower.com/rwenpowercr/6_responsible_business/6_4_customer_relations/6_4_4_customer_complaints/index.html Page 1 of 2 RWE npower Corporate Responsibility Report - Managing customer complaints 06/18/2008 11:26 AM

to market performance. For small and medium enterprises, our electricity customer satisfaction rating decreased by 5.2%. While disappointing, this was still 1.5% better than average market performance. However, our gas customer satisfaction rating decreased by 10.9%, and was 4.0% worse than average market performance.

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Our customers Helping vulnerable customers Improving our services Selling products responsibly Managing customer complaints Pricing Working with business 2008 targets

Energy pricing Energy prices are never far away from the news. In February 2007, we announced a 16% reduction in residential customers’ gas prices. Since mid Feb 2007, however, wholesale costs for 2008 increased dramatically, with electricity and gas wholesale costs increasing by around 60%. This meant we had to increase our residential prices – by an average of 12.7% for electricity and 17.2% for gas from 5th January 2008. Similarly, all other energy companies also increased their prices this year. A rise in wholesale prices isn’t the only reason we face higher costs. Along with all energy suppliers, we’re facing substantial increases in distribution costs, particularly in transport costs for gas and distribution and transmission costs for electricity. Also, while we welcome the government’s new Carbons Emissions Reduction Target (CERT), it will cost us around twice as much as the previous Energy Efficiency Commitment (EEC). To hit the new CERT target, we’re spending around £300million on energy efficiency measures for customers over the next three years. What can we do? We can do very little about wholesale prices dictated by world markets, but there are things we can do to make sure energy remains affordable:

We give customers a choice of products. For instance a tracker product for people who want their energy prices more directly linked to wholesale costs. Or a fixed tariff until 2011 that allows customers to budget more accurately. Or a product for our loyal existing customers only – which offers a year-long price fix with no fee. Energy efficiency is always going to help our customers save money and we’ve got a range of products and advice services in place to help. We find and help vulnerable customers who are hardest hit by price rises through our First Step tariff and Spreading Warmth programme.

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Our customers Helping vulnerable customers Improving our services Selling products responsibly Managing customer complaints Pricing Working with business 2008 targets

Working with business npower business is one of the UK’s top energy suppliers to the UK business market, serving over 245,000 customers at over 373,000 sites. In our B2B business, our mission is to be the UK’s leading energy and environmental solutions company, shaping the way business thinks about and Related websites uses energy. npower — Business Energy Working in partnership – an example Our mission means helping our customers use energy more efficiently. For example, in 2007 we signed our biggest ever business retail deal to supply BT with 4.8 TWh of greener electricity. The contract is an extension of our original energy deal signed with BT in October 2004. The renewed contract is part of an initiative by BT to supply its 6,100 telephone exchanges, satellite earth station, offices and depots with greener energy. Information, products and services In 2007, through activities including the Carbon Cube awareness campaign, business consultation and the publication of a climate change white paper, we have continued to inform and educate mid-sized companies about the Carbon Reduction Commitment, along with how and where they can make energy savings. We also extended our range of energy management products. These now include a web-based tool to help customers monitor and understand their energy consumption, and half-hourly Smartsave audits to help people monitor exactly when and where waste energy occurs in their business.

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Our customers Our targets in 2008 Helping vulnerable customers Selling our products responsibly Improving our services We will maintain the current low level of residential sales complaints at less Selling products responsibly than 20 per month. Managing customer complaints Improving service to our customers Pricing In 2008 we will continue to expand our self-service facilities, and develop and Working with business benchmark our Net Promoter Score measure. This provides a means for 2008 targets rating residential customers’ satisfaction with npower, based on analysis of customer responses. The overall aim is to improve our business customer satisfaction scores by 1% above competitors. Providing services for vulnerable consumers We continue to offer a broad range of support services for our vulnerable customers, and aim to increase the number of vulnerable customers who we have provided assistance to over the coming years. We will continue to ensure that all our front line service centre employees are trained in vulnerable customer awareness

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Our supply chain 2008 targets

Running a responsible supply chain Running a responsible supply chain is an important strategic challenge for us. In the competitive environment we operate in, the pressure to keep the cost of non-fuel goods and services down is very high. Without careful management, this pressure could lead to unacceptable social and environmental risks further down the supply chain. What’s more, we work in a sector where there’s not always a large choice of suppliers to choose from. So we have to work with them to address potential CR issues. To achieve this, we need to make sure corporate responsibility is fully integrated into our sourcing policies. This is done through the published ‘Principles of Sustainable Procurement’. The aim of these principles is to:

Through this integration, we also believe the business will be able to identify new opportunities to save money, to innovate, and to create better relationships with suppliers. What we did in 2007 We set ourselves three key objectives in 2007:

To ascertain the effectiveness of our sustainable procurement policy, by checking that our suppliers understand, and are aligned with, our CR principles. The way we did this was to design and implement a continuous programme of supplier surveys. By the end of the year, 82 suppliers had been sent surveys, and 56 (68%) had responded. Responses are being collated, and will be turned into action in 2008 and beyond. To mitigate areas of high risk in our supply chain. To date, the most significant contribution of sustainable procurement practices within RWE npower has been the improved management and mitigation of potential risks to our corporate reputation.

In 2006, we identified the need to map our supply chain to find out which commodities we buy are susceptible to the highest level of risk. To achieve this, we developed a new Risk Management Process (RMP) in 2007.

Part of this included updating our High Risk, High Impact (HR/HI) matrix for commodities in all our supply chains – something which has provided a stronger awareness and basis for future risk management in supply chain. We also mapped three critical supply chains in 2007, and will put the new RMP process fully into operation in 2008.

To work with our suppliers and npower Business sales teams on our ‘Make a Difference’ scheme. This scheme aims to develop a set of approaches and products – including carbon-neutrality reviews and smart meters, for example – which would be attractive to strategic vendors, and which would encourage the adoption of our CR principles. The scheme is being developed through joint workshops with a cross- http://www.npower.com/rwenpowercr/6_responsible_business/6_5_responsible_supply_chain/index.html Page 1 of 2 RWE npower Corporate Responsibility Report - Our supply chain 06/18/2008 11:32 AM

section of our suppliers to gain their views on what sort of products would be most appealing. It’s a great opportunity to embed CR into overall business practices, and is a good example of how we work across functions within RWE npower.

During 2007, in conjunction with our sister company RWE Trading, we also undertook a review of due diligence procedures relating to risks in our coal supply chain. The findings of this review were that RWE Trading's current compliance framework put the company in a strong position in terms of managing supply chain risks. Nevertheless, we can see that there is value in developing consistent standards with other coal buyers in the UK and Europe, and will therefore continue to participate in the appropriate trade association working groups.

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Our supply chain Improving our supply chain in 2008 targets 2008 In 2008, we want to address four more important objectives:

. 1We. are entering a period where CR needs to be at the forefront of our buyers’ minds, and much has been done to make sure they are appropriately trained to know what constitutes a risk or opportunity, to know what to look out for, and to provide a framework for the risk mitigation process. To make sure all our buyers continue to consider sustainability issues during the procurement process, we are planning to implement more training for buyers to help them weave risk management into their day-to-day business processes. . 2We. need to continue to manage all types of risk in our supply chain. In 2007, we reviewed existing procurement procedures in our retail, generation and renewables, and corporate business to make sure that environmental risks were being taken into consideration. We’ve refreshed our procurement procedures as a result, and will continue to manage all areas of environmental risk in 2008. . 3We. want to continue to monitor the social and environmental performance of our suppliers. To help us do that, we’re going to enhance our market intelligence reporting mechanism. This will provide us with third-party data to enable early identification of CR- related risks amongst suppliers. . 4We. want every tier in our supply chain to have the same standards and expectations as we do, so we are using our influence to improve CR performance throughout our supply chain. This includes working with suppliers to provide the education and support needed to help them improve their own CR performance.

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Our workplace Diversity and inclusion Diversity and inclusion Recruitment Career development Employee survey results Health, safety and wellbeing Pensions Recruitment 2008 targets

Our workplace We have around 12,000 employees at RWE npower, and the success of Career development our business depends on these people. Our objectives are to attract the right mix of skills, talent and diversity; to create a healthy and safe working environment, and to provide our employees with the opportunities, training and motivation needed for them to do their jobs to the best of their ability. The nature of our business as not only an energy retailer but also an energy generation company means that health and safety is a critical issue for us. We have set ourselves high standards and established strong leadership to Employee survey results make sure that the appropriate measures and training are in place to protect employees, contractors, visitors and the general public. Retention of our best people is very important for our continued success. This is a challenge, given increasing demands for flexibility, people looking for faster career progression, and other companies competing for the same talent.

We run a number of recruitment programmes to make sure we have the Health, safety and wellbeing right mix of skills for the future. We recognise particular issues in generation, where it can be difficult to recruit engineers due to shortages of people moving into the engineering profession. To help us retain talent, our career development activities include personal development plans which link in with individual training programmes. And we are committed to diversity and inclusion in the workforce, so we can be sure of benefiting from the best people in all areas of society. Pensions To get feedback from our workforce we run a biennial employee survey. In 2007, the results were positive with almost every score an improvement on comparable figures in 2005, but there are still a number of issues to address.

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Our workplace Recognition in The Times Diversity and inclusion Recognition in The Times Diversity case study Recruitment Career development Employee survey results Health, safety and wellbeing Pensions 2008 targets

Diversity and inclusion Diversity case study We continue to believe that an active diversity and inclusion programme offers the business many benefits. Through valuing the differences in our people we recognise that:

We are attracting and retaining the talented people we need in the business. We better understand our customers and their requirements, and therefore deliver a higher quality service. We encourage our people to come forward with fresh ideas and foster a creative spirit in the business.

So what have we been doing? During 2007, we continued to promote diversity and inclusion in the workplace. Specifically, we aimed to develop our reputation externally as an employer of choice, review the attitudes of our recruitment suppliers, analyse the mix of applicants for senior level jobs and review our progress through feedback from our staff survey.

During the year we completed our programme of awareness workshops that had begun in 2005. These have now been attended by 2,000 people managers, and our related e-learning training tool has had over 4,000 hits. This means we have achieved strong coverage across all of our business units. We were pleased to learn that in our employee survey 79% of our people feel that we provide equal opportunities with regard to the key diversity measures: age, gender, disability, race, religion and sexual orientation. This is 20% better than the UK benchmark. In 2007 we achieved two important marks of external recognition for the first time: we entered The Times top 100 graduate recruiters, and we were listed in The Times Top 50 companies where women want to work. Both of these are highly prestigious listings which benchmark us alongside the UK’s best companies in these fields. We want to be confident that our recruitment providers are helping us source high quality talent from all backgrounds, without any form of covert discrimination taking place. So, as part of a review of our preferred suppliers, our selection process now requires those tendering to provide evidence of their attitude towards diversity and their commitment to sourcing candidates from all backgrounds. It’s important for us to make sure that those with high potential feel they have opportunities to develop and grow their careers. As a result, we have set up a new mechanism for capturing information about the mix of our people applying for our executive and senior level management jobs. It allows us to monitor the breakdown of applicants and compare it with those appointed, which in turn helps us make sure that appointments are being made strictly on merit. Of 63 jobs analysed in 2007, 28% of applicants were women and 3% from a non white/non British background. 27% of those appointed were women and 10% non white/non British. Although we don’t set quotas for the number of women in senior level jobs, we know it’s important that talented women continue to emerge as leaders across our businesses. So once again in 2007 we looked carefully at our succession planning. Of the potential successors for future senior level roles, over 50% have women named as credible contenders. In total, over half of the executive posts advertised in 2007 had women applicants under consideration.

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Our employee survey also showed that the percentage of employees who felt that we allow them to use their skills and abilities in their job rose in two years from 56% to 86%, with men, women and ethnic groupings all at around the same level. This was the single biggest improvement in the survey, and very reassuring.

Moving forward The above indicates some of the highlights of 2007 which our ongoing focus on diversity and inclusion has helped us achieve. We now have a responsibility to build on these foundations in 2008 and beyond. We particularly want to be sure that newcomers receive appropriate awareness training. So we will include this subject as a core part of the new corporate induction package being rolled out in 2008. We are also looking at the important areas of flexible working and the balance between work and non-work activities We have reviewed our policies to make sure that basic principles are in place, however we understand that flexible working practices place demands on both individuals and their managers. Last year we looked at the flexible working cultures of several organisations, including one of our largest business customers, BT. The aim now is to understand what suits us best, and then provide the type of workplace where flexibility benefits both our employees and our business. Our objectives for 2008 In 2008 we will take further actions to support the recruitment of people from all backgrounds. We will also continue working to provide a positive and inclusive environment for our employees and those with whom we have regular contact. We will seek to further the balance between workforce stability and the injection of new skills and ideas. Our plans include:

a prominent and improved Diversity & Inclusion element as part of our recruitment website, and an improved presence on other appropriate external sites actions that will build the number of apprentice and graduate applicants from diverse backgrounds a study of the demographic make up of the communities from which our major facilities are resourced a close look at suppliers who provide regular staff at our sites, to ensure their attitudes and policies are in line with our own principles.

We will continue to look at succession planning and the diversity of those applying to senior jobs. And, through the efforts of our cross-business diversity action group, we will constantly review practices and undertake actions that underpin our published principles. As part of the wider RWE group we are going to carry on providing thoughts and experiences that support colleagues working in other group companies.

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Our workplace Diversity and inclusion Recognition in The Times Diversity case study Recruitment Career development Employee survey results Health, safety and wellbeing Pensions 2008 targets The Times Top 50 ‘Places Where Women Want to Work’ In October 2007 we were named by The Times as one of the 50 progressive companies in the UK where women would prefer to work. To become part of The Times’ Top 50 ‘Places Where Women Want To Work’, organisations are judged on five key areas:

. 1The. opportunities they provide for women . 2Having. a progressive and transparent culture . 3An. ability to celebrate diversity . 4An. eagerness to embrace new technology to facilitate work-life balance . 5A. commitment to social responsibility.

Our listing is recognition for the work we have carried out in providing genuine opportunities for women at all levels. It is evidence that we are making real cultural changes in attitude, and taking responsibility for changing the image of our industry.

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Our workplace Diversity and inclusion Recognition in The Times Diversity case study Recruitment Career development Employee survey results Health, safety and wellbeing Pensions 2008 targets Case study: Breaking the mould Operational engineering has traditionally been a man’s world. But an increasing number of women are taking up engineering roles within RWE npower. One of them is Jo Fagan. After studying energy and environmental technology at Glamorgan University, she started working for National Power in 1998. And following engineering jobs at Aberthaw, Swindon and Didcot, Jo became Shift Process Leader at our Fawley Power Station in 2004. "I was attracted to the job because of the variety", said Jo. "When you come in at the start of your shift, you never know whether the plant’s going to be running, what maintenance work needs doing or what needs attention. The job’s changing all the time." "When I started, people didn’t really expect the new shift manager to be a woman. Particularly with a name like Jo, when people came to see me, they expected to meet a guy! I found it quite amusing, really. Nowadays, with more female graduates on site more often, people don’t get so shocked seeing a woman wandering around in overalls." As a mother of two young children – Elise, 6, and Lili-Jo, 3 – Jo finds shift work a good way to balance the demands of home and work. "The shift pattern is quite complicated. But basically, you work 12-hour day shifts, then 12-hour night shifts with time off in between. In my case this works really well. You’re working full-time, but it doesn’t feel like full-time because of the time off between shifts. It gives me the chance to do things like take the children to school and get involved with after-school clubs." "As a female engineer at a power station, you have to prove you know what you’re talking about. But it’s not a hindrance. Like anything, if you’re going to progress you need to do the right things, and open the doors yourself. If you do, the opportunities are out there."

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Our workplace Graduate opportunities Diversity and inclusion Recruitment Graduate opportunities Apprentice opportunities – The enthuse programme Career development Employee survey results Health, safety and wellbeing Pensions 2008 targets Opportunities at RWE npower Apprentice opportunities With challenging customer growth targets and an ambitious new build programme, we need to make sure we are recruiting the right people with the right skills. That means attracting a variety of people into the business – from energy professionals, engineers and scientists to project managers, environmental planners and people with the skills to run our finance, procurement and HR functions effectively. We also place great value on those who display the personal attributes that can enable them to develop Related websites into leadership roles. www.npowerjobs.co.uk We also think it’s important – for our business and the industry as a whole – to recruit and nurture people at the start of their careers. As a result, we run both a graduate recruitment and apprenticeship scheme. We also foster a strong diversity culture across the business to make sure we recruit the best people regardless of age, gender or ethnicity.

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Our workplace Related websites Diversity and inclusion npower careers — Graduates Recruitment Graduate opportunities Apprentice opportunities – The enthuse programme Career development Employee survey results Health, safety and wellbeing Pensions 2008 targets Graduate opportunities In 2007, we offered places on our graduate programme to 86 people. Of these 86, 22 were female graduates. We were also voted one of The Times top 100 graduate employers – the only energy company to feature in the rankings. Graduates can join schemes across the business in engineering, commercial and risk, finance, HR and as business generalists. In each of these areas, they get a comprehensive development programme that helps them become important members of their chosen teams, gain insights into different areas of the business and take on responsibility from an early stage. Each scheme runs its own training programme, and all graduates are given mentors when they first start. In 2007 we launched a competition for engineering students in the form of the ‘The RWE npower Challenge’. This challenge was called 'Keeping the lights on – how should the UK plug the impending energy gap?'. Engineering departments from target universities were invited to enter teams of four students and one lecturer to present to a panel of RWE npower technical and commercial experts and one academic from each University. Each team had six minutes to present and were then cross-examined by the panel for 5 minutes. This competition was designed to position RWE npower as an employer of choice with high calibre graduates and raise awareness of RWE npower within IMechE (Institution of Mechanical Engineers) and IET (Institute of Engineering and Technology). In 2007 the winners were students from Cardiff University.

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Our workplace The enthuse programme Diversity and inclusion Recruitment Graduate opportunities Apprentice opportunities – The enthuse programme Career development Employee survey results Health, safety and wellbeing Pensions 2008 targets Apprentice opportunities In 2007 we had over 80 npower apprentices on our apprenticeship programme. The key objective of the programme is to provide structured training for people wishing to become the craftspeople, technicians and engineers of the future. The programme provides training in core engineering areas, be that mechanical, electrical, or control and instrumentation. The programme extends over four years, and is managed by npower Generation Learning and Development team in collaboration with training partners at Rotherham College, Yorkshire, and Bridgend College, South Wales. By the end of this time, trainees will have achieved a National Certificate in engineering and maintenance skills, NVQs (National Vocational Qualifications) at levels 2 and 3 in relevant engineering disciplines, and may have progressed on to studying for a Higher National Certificate. On completion of training our apprentices go on to careers at power stations and at our Technical Services Group (TSG) at Ferrybridge. Targeting engineers In the UK there is a shortage of engineers in the marketplace. We believe this is because many students have a negative perception of engineering. It’s a problem that we’re tackling with a variety of strategies to give engineering and science careers a more positive image. For example, through our enthuse programme, we’re working hard to persuade students still at school to consider whether a career in engineering might be for them.

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Our workplace Diversity and inclusion Recruitment Graduate opportunities Apprentice opportunities – The enthuse programme Career development Employee survey results Health, safety and wellbeing Pensions 2008 targets The enthuse programme A skills shortage in STEM-based professions (professions linked to science, technology engineering or maths) has affected many sectors in the UK, including ours. It’s a problem recognised by leading trade and government bodies including the Royal Academy of Engineering, the Institute of Engineering and Technology and the Department for Trade and Industry. One of the big reasons for this shortage is that too few young people are studying STEM subjects at GCSE, A and degree level. To tackle this underlying problem, and to make sure RWE npower has the calibre of engineers and scientists needed in the future, three of our graduates created our enthuse programme in 2006. The aim of the programme is to inspire young people to consider a career in STEM subjects. Aimed principally at 13 to 14 year-olds as they consider their GCSE options, enthuse primarily comprises an activity day for students involving teamwork exercises, problem solving and hands-on challenges with an engineering and science focus. Nearly 2,000 students from 9 schools across England and Wales participated in 16 enthuse event days during 2007, and so far 20 more event days have been planned in 2008. Students benefit... The programme helps young people get a better understanding of what it means to pursue a STEM career today. It gives them information on possible entry routes and career paths, and helps them to make more informed GCSE and Further and Higher Education choices. After participating in enthuse:

90% of students at the end of the event said they now know more about engineering to consider it as a career 56% of students at the end of the event said they are now interested in a career in engineering, from only 10% at the beginning of the day.

...and so do our employees Over the course of 2007, 85 of our engineers and scientists were involved in delivering enthuse, enhancing the programme with real-life experiences and skills. From feedback, we know they enjoy participating in these initiatives and that it boosts motivation and morale, with 100% saying they felt they had ‘made a difference’ and 92% saying they would like to be involved again. enthuse also helps our staff to stay in touch with how students are learning and the challenges young people face today.

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Our workplace Diversity and inclusion Recruitment Career development Employee survey results Health, safety and wellbeing Pensions 2008 targets

Supporting career development Supporting career development is a must for the sustainability of our business. It enables our existing employees to be more effective, and it helps us retain them in the business, which in turn contributes towards reliable management succession. We are committed to continual growth and personal development for all and will endeavour to fill our vacancies with internal talent wherever possible. We have a diverse workforce with different career needs and concerns, so we provide a mixture of Personal Development Plans, formal training and structured succession to help all our employees reach their full potential. We also encourage out-of-work learning and employee volunteering to help broaden their perspectives. Career development in 2007 In 2007 we launched a new pilot approach to career development within our HR team. Its objective was two-fold:

To build a framework to help individuals identify the future career opportunities that exist within RWE npower. To help individuals plan ahead so that, when these opportunities come up in the future, they are able to be considered for the role.

The pilot has been so successful within the HR team that it is being rolled out to other business functions in 2008, starting with the Finance and Marketing functions. Management training in 2007 In 2007 we continued to run our management and leadership development programmes. In particular we focused on building the capability of our leadership team in areas like coaching, strategic influencing and commercial acumen. In 2007, 13 executives from RWE npower also attended our new Leadership Development Programme in association with SMT Business School in Berlin. This programme promotes and enables the sharing of knowledge and best practice between RWE group companies. It also provides new professional development opportunities, and encourages our high-potential managers to create international peer networks.

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Our workplace Diversity and inclusion Recruitment Career development Employee survey results Health, safety and wellbeing Pensions 2008 targets

Employee survey – the results We carry out an in depth survey every two years to get comprehensive feedback from all our employees. It’s an important way of gauging how one of our main stakeholder groups feel about the way we operate. The survey covers employee morale and levels of motivation. It also tells us how they feel about their environment, the work culture at RWE npower, and whether they have the right tools to do their jobs effectively. The results were very encouraging, although there are areas which we need to address. The results To start with the overall response to the survey was up by 14% to 65%, which shows that this is seen as an increasingly useful form of feedback. 64% feel proud to work for RWE npower – an increase of 15 percentage points on 2005. And in general, people indicated that they were more satisfied and motivated by their work. In particular:

86% (compared to 56% in 2005) feel they can use their skills and knowledge to deliver higher levels of customer satisfaction 75% felt they enjoyed good team work 74% believed that they felt sufficiently trained 73% agreed RWE npower takes its environmental responsibility seriously.

Where we’re focusing our efforts in 2008 The survey also gave us useful pointers as to where we can make improvements, and we have created action plans to address these areas. In 2008 we will be running a number of pulse surveys to monitor our progress against these action plans. There are four key areas where we need to focus our efforts in 2008:

Performance management – We aim to give new managers more people management training and give new starters more information on what performance management means to them. Career development – We’re helping our managers develop meaningful Personal Development Plans for their employees and identify clear career paths. We’re also rolling out our mentoring and coaching programmes. Leadership – Leadership teams will renew their efforts to do more to communicate what RWE npower means to employees. Improving collaboration between departments – As well as greater use of secondments and internal communication channels, we’re introducing internal customer satisfaction surveys to measure the quality of collaboration.

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Our workplace Diversity and inclusion Recruitment Career development Employee survey results Health, safety and wellbeing Health and safety Occupational health Wellbeing at work – Giving up smoking – npower games Pensions Helping people kick the habit 2008 targets When the smoking ban came in on July 1 2007, the management team at our contact centre in Stoke decided to take the opportunity to help employees kick the habit. Having researched what services were available locally to help people stop smoking, the team got in touch with the Primary Care Trust (PCT), who agreed to send a trained counsellor to run smoking cessation courses on site. Last year the PCT ran four of these courses. Each lasted seven weeks and had between 8 – 12 attendees. 50%+ success rate Off the back of the courses, just over 50% of participants stopped smoking. One of the biggest influencing factors was that people had no excuse not to attend, along with the effects of peer pressure from the rest of the group if they were spotted heading to the smoking hut! The initial courses were a great success, with a success rate of over 50%. In fact, Gareth Martin, an employee who had been through the course successfully himself, felt so passionately about the help he had been given to quit that he volunteered to go through training to become a qualified counsellor. He is now planning to run courses throughout 2008, and has come up with several ideas on how else to encourage people to quit smoking. These include setting up a weekly or monthly drop in centre, where people can receive one-to-one support, either to start the journey or to keep them on track. Positive feedback "It was very good to be doing it in work time, as there was one less excuse not to do it. Also, for me, there was a sense of not letting other people down as they were investing time in me." "It wasn't as hard as I thought it was going to be to quit – probably because I did it this way, through the support group."

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Our workplace Diversity and inclusion Recruitment Career development Employee survey results Health, safety and wellbeing Health and safety Occupational health Wellbeing at work – Giving up smoking – npower games Pensions Health and safety 2008 targets Achieving and maintaining the high standards of health and safety we set ourselves requires strong leadership. It also requires a supportive culture based on employee-led safety (ELS) at all levels, and a structure of clearly understood rules and practices. The nature of our business as an integrated energy company means that safety is a critical issue for us. We need to make sure that appropriate measures are always in place to protect employees, contractors, visitors and the general public. And we recognise the importance of reviewing these issues on a regular basis. Tragically, in 2007, we had our first fatality in five years, at Aberthaw power station. The fatality is currently under investigation by the Health and Safety Executive. We have conducted our own internal investigation into the incident by setting up a panel of inquiry (POI), and have acted upon the recommendations in the POI report which was published at the end of 2007. RWE npower, along with the other major power generating companies in the UK, are also involved in a longer term programme of major reinvestment in the UK's generation infrastructure. We have therefore taken a separate initiative through our Trade Association (the Association of Electricity Producers) to jointly develop ideas to further reduce the possibility of fatalities during the construction of major projects. This will be progressed during 2008. Safety culture, training and employee engagement Culture – One of our key objectives when it comes to health and safety is to reinforce an ‘employee-led’ safety culture across the business. Experience shows that such a culture brings substantial benefits, as individuals and teams are often in the best position to identify and address potential risks. Training – To make this possible, it’s essential that employees know what to look out for. To that end, and to comply with all legal requirements, health and safety training is provided as part of our company induction programme, and employees also get training specific to the business and location where they work. For example we have produced a Managing Occupational Road Risk (MORR) policy, which sets out the rules and procedures relating to driving for work, and a Mobile Phone Policy which provides guidance and instructions on the use of mobile phones when driving. Both these policies are extremely comprehensive and reflect best practice; the MORR was so successful that in May 2007 we were presented with a Gold Award by the Royal Society for the Prevention of Accidents (ROSPA).

Specialised safety training is also provided to employees who work in hazardous or potentially hazardous environments as a matter of course. For example, Meter Installation Operatives receive training on electrical safety.

Employee engagement is vitally important in achieving a strong safety culture. To make sure that employees are properly engaged in health and safety, we have local committees at all of our sites that provide regular opportunities to meet and discuss all aspects of health and safety. In addition, we ran a competition in October 2007, during which all of our office sites were judged on their health and safety performance. Process safety In 2007, as part of our ongoing commitment to identify, reduce and manage

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process safety, we formed a working group across our generation business to consider the recommendations of the Baker report into the Texas City Oil refinery disaster. As a result, a map of our approach to managing process safety was developed, and each element tested for effectiveness. We identified areas for improvement and developed an action plan. As part of this project, we also clarified safety roles and responsibilities, and decision-making responsibilities. Research with Aberdeen University During 2007 we conducted a review of the safety culture at our coal-fired power stations. This built on work started in 1998 with the Industrial Psychology Research Centre of Aberdeen University to modify behavioural safety. The 2007 objectives were:

to understand employees’ perceptions of the current safety culture through face to face interviews to use the information gathered to carry out a safety climate survey to gain feedback on attitudes, perceptions and beliefs concerning safety to 600 personnel at each of the power stations to use the data to provide meaningful feedback in the form of site- specific reports.

The output data provided by the study produced an invaluable baseline upon which to:

continuously improve and determine the effect of future safety initiatives benchmark between sites re-invigorate core safety teams.

The project was so successful that the work will be expanded to Engineering during 2008. Overall performance Although we did not achieve the stringent safety targets that were set in 2007, this was in no way reflective of any reduction in standards. We have robust procedures and strong management commitment, and have put in place comprehensive action plans for 2008 with initiatives to help us to meet our challenging targets. Benchmarking In 2007, we continued to submit our data openly for benchmarking purposes to the Corporate H&S Performance Index (CHaSPI) and The Association of Energy Producers (AEP). In 2008, we will continue to challenge our performance by benchmarking it against companies in comparable sectors. We were also awarded a gold medal for our overall company performance in the 2007 RoSPA Occupational Health and Safety Awards.

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Our workplace Diversity and inclusion Recruitment Career development Employee survey results Health, safety and wellbeing Health and safety Occupational health Wellbeing at work – Giving up smoking – npower games Pensions Occupational health 2008 targets Voluntary health screening Our ‘Get Healthy Stay Healthy’ programme gives employees access to confidential health screening. Each check-up with an Occupational Health nurse lasts about one hour and provides the employee with an assessment of their health and lifestyle, along with tailored health advice. In 2007, 1,134 employees joined the programme, and we have continued to expand the programme so that it will eventually be available to everyone. Stress and mental wellbeing Our programme of stress risk assessments (SRA) continued in 2007. These assessments help managers identify the key sources of excess pressure in their team, and then agree targeted interventions with their team members to reduce the risks of stress. The potential benefits of the programme are enormous. 20% of SRA projects started in 2007 were completed, which is an improvement on last year. But it’s clear we have a lot of work to do. We’re now researching why managers who have begun the process have had difficulty completing it, and we have introduced a feedback system so that senior managers and HR can track managers’ progress. We anticipate these measures will improve the number of finished projects next year. Our stress workshops for managers and stress awareness presentations for employees will carry on next year, as well as other initiatives to help people manage their own and their colleagues’ levels of stress. Sickness absence and rehabilitation As in previous years, sickness absence in 2007 was much higher in the Retail businesses than in the Generation business. There are likely to be many reasons for this, including socio-economic, demographic and geographical differences. We also know from anonymous data collated by our Occupational Health department that absence due to common mental-health problems and low back pain is more common in the Retail business. The level of sickness in the company as a whole was around 4%, which is above the target of 3.7% and above the all-industry CBI figure of 3.3%. However, we believe this is similar to other companies in our sector. We will carry our target of 3.7% over to 2008.

We also set ourselves targets related to the rehabilitation of workers who have been off work through illness or injury for more than a few weeks. We call this figure ‘person days saved’. In 2007 the number of person days saved was just over 2,000 compared to our target of 2,200. This deficit was mainly due to the Retail business, where management focused on reducing multiple short spells of absence rather than long-term absence.

Occupational Health is working with managers in Retail to encourage them to refer more long-term sickness cases for a medical view on the type of adjustments to work that would enable an early return. Our target for 2008 will stay at 2,200 person days.

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Our workplace Giving up smoking Diversity and inclusion Recruitment Career development Employee survey results Health, safety and wellbeing Health and safety npower games Occupational health Wellbeing at work – Giving up smoking – npower games Pensions Wellbeing at work 2008 targets As well as being physically healthy, it’s our responsibility to make sure our employees stay in good shape in an emotional and mental sense. This is quite a challenge for such a large business. Our wellbeing plan has been put together to provide the right stimulus to help personal development. In 2007, our wellbeing programme pulled together a range of initiatives from healthy eating and fitness campaigns to programmes for people who want to quit smoking. We ran walking and running clubs, and held the npower games – a day of team sports which attracted over 800 of our people. Ongoing, our aim for 2008 is to help our people get a better understanding of what is meant by wellbeing and what activities are on offer. We will also be making site specific targets, to help raise awareness of the programme. Measuring wellbeing Measuring something like wellbeing is not easy. Some parameters are essentially subjective, like satisfaction with work/life balance, physical conditions at work or the opportunities for personal development. Others are more objective and easier to measure, and form part of our health management KPIs. Examples include sickness absence rates, take up for health screening, use of the SRA tool, levels of work-related ill health and the health status of the workforce. In 2008 we’ll continue to try and identify critical success factors and measurable indications of progress, success and failure, using the BitC key performance indicators on wellbeing. We will also be developing a measurement grid to identify gaps in the programme, and then review this grid each year. We will work with external organisations and other leaders in wellbeing to help us pinpoint which areas we need to improve on.

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Our workplace Diversity and inclusion Recruitment Career development Employee survey results Health, safety and wellbeing Health and safety Occupational health Wellbeing at work – Giving up smoking – npower games Pensions npower games – bringing all our 2008 targets employees together The npower games was our largest employee event of 2007. Held at Nottingham University in September, its aim was to be a company- wide team-building day, where for the first time ever we saw all the diverse areas of our business brought together at one event. Around 800 people took part, representing 29 of our sites and all areas of our business – from power stations to offices. Many of them would never have met face-to- face without the games, so it was a really good chance for everyone to put faces to names and to make new friends. We chose 16 events including netball, football, badminton, squash, tennis and running. Although the day was competitive, the aim was to get people working as a team. At the end of the day, our CEO, Andrew Duff, and Olympic legend, Sir Steve Redgrave, hosted an awards ceremony for winning teams and individuals. Trophies were given out for non-sporting qualities too, like the best team name. The event then ended with a charity fun dash raising just under £2,000 for our corporate charity, Macmillan Cancer Support, and a party for all the athletes and spectators to properly let their hair down. "We work in such a diverse company, spread across lots of different sites, so events like this are really important because they bring people together socially and show we are all working towards a common goal." Wellbeing manager, Zoe Eccleston

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Our workplace Diversity and inclusion Recruitment Career development Employee survey results Health, safety and wellbeing Pensions 2008 targets

Pensions Long-term pension provision is one of the most significant challenges facing businesses today. As a responsible employer we monitor developments in this area very closely and also conduct regular valuations of our scheme to ensure that we can meet our future liabilities. We recognise that pensions form an important part of the remuneration package that we offer our employees. Our pension scheme has around 38,000 members, of whom more than 25,000 are pensioner members. It is managed by nine trustees, six of whom are directly elected by the members. The trustees’ primary responsibility is to act in the best long-term interests of the members in managing the scheme’s assets and in administering the benefits. They do not impose specific ethical investment restrictions on the fund managers, but do require them to monitor and report on the governance arrangements and behaviour of companies whose shares they hold. The valuation of the fund in 2007 revealed a deficit in the funding level of around 4.5% which the company has agreed to repair by 2010 through additional payments.

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Our workplace Our targets for 2008 Diversity and inclusion We aim to treat current and prospective employees from all sections of the Recruitment community fairly, ensuring they work in a healthy and safe environment, and Career development to provide development opportunities to enable them to achieve their Employee survey results professional and personal potential. Health, safety and wellbeing Recruiting the right people to deliver business objectives and contribute Pensions to company values 2008 targets In 2008 we aim to retain our position as a Times ‘Top 100 Graduate Recruiter’, and will ensure that Diversity and Inclusion features prominently on our recruitment website. We will assess the demographic make-up of the communities from which our major facilities are resourced, and if necessary take actions to engage with under-represented groups. To assist in addressing the current and anticipated shortage of technical and engineering skills, we will continue our ‘enthuse’ programme, which encourages children to consider science and engineering as a future career. Developing our people to ensure they have the knowledge and skills to deliver objectives We will ensure that our management population have participated in appropriate development programmes, and will establish NVQ programmes to provide vocational training. Achieving the optimum balance between workforce stability and the injection of new skills and ideas In 2008, we will develop an improved Diversity and Inclusion presence on the internet. The wellbeing of all of our employees is a high priority for us, and in 2008 we will develop and implement a formalised company-wide wellbeing strategy. We will communicate to our employees the benefits of community involvement in terms of enhancing skills and qualifications that all of our employees can gain through volunteering and contributions to the community. We will complete the development and implementation of an online Business Ethics training for all employees. We will ensure that all new buildings are compliant with, and that existing offices have plans in place to be compliant with our property charter by 2010. Encouraging employee involvement in the community Volunteering helps to build relationships with local charities and community groups, whilst motivating employees and increasing job satisfaction. We continually aim to increase the number of employees volunteering in community projects. Fundraising and charitable giving encourages employees to engage with local communities, again increasing motivation and engagement with the company. We have adopted ambitious targets to further increase the value of our partnership with Macmillan.

Protecting the Health and Safety of our employees In 2008 we will:

reduce 1 to 3 day accidents (combined accident frequency rate less than 0.19) decrease the number of serious injuries (combined serious injury rate less than 0.13) roll out the health and safety climate survey tool, used on our coal stations in 2007, into our technical services engineering community continue the roll out of process safety measure in our Engineering and Safety functions.

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Our community Health Health Education Environment Supporting employees in the community 2008 targets Education

Putting something back We know that we have a big impact on the communities around our Environment operations and community investment enables us to give something back. It’s also important for the success of our business, as it improves employee morale and motivation. As well as this, it helps to support our licence to operate and earns us local trust which strengthens our brand. Our approach Our community involvement focuses on health, education and the environment – three principle areas that we believe are most relevant to our Supporting employees in the business, and where we can deliver real benefits to the communities in which community we operate. Our investment decisions are guided and shaped by our stakeholders as part of our stakeholder-engagement process. This is particularly important at a local level. Currently, our support is invested in the following ways:

To recognise, reward and facilitate our employees’ involvement in the community. Through programmes and partnerships with other organisations, charities and community groups on a long-term basis. These give us more scope to impact the community in a positive and sustainable way, while benefiting the business by enhancing our reputation. Through charitable donations. In 2007, we contributed more than £4,945,000 to the community through charitable donations, community investment (including volunteering) and commercial activities.

Measuring success We continued to use the London Benchmarking Group model to measure and demonstrate the community and business impacts of our investments. And our work has received a good deal of recognition over the last year, including:

A Hollis Award for our involvement with Macmillan’s World’s Biggest Coffee Morning. A Business in the Community (BitC) Silver Jubilee Big Tick for our npower active programme, which promotes sport for all abilities Another BitC Big Tick for our education programme at Didcot power station A Directory of Social Change Award for our Health Through Warmth scheme A Utility Week Award and MCCA Award for our partnership with Comic

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A Utility Week Award and MCCA Award for our partnership with Comic Relief’s 2007 Red Nose Day campaign

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Our community Health Through Warmth Health Health Through Warmth Macmillan Cancer Support npower active Education Environment Macmillan Cancer Support Supporting employees in the community 2008 targets Investing in health One of the main ways we invest in health is through our award-winning npower active Health Through Warmth (HTW) scheme, which provides help to vulnerable people living in cold, damp homes. Since it was set up, the programme has delivered over £29.5 million of practical help to vulnerable households. For the last four years, RWE npower employees have also chosen Macmillan Cancer Support as our charity partner. This four-year partnership is now valued at over £2 million, and will continue until at least 2009. We also have a longstanding partnership with the English Federation of Disability Sport, called npower active, which was awarded a 'Silver Jubilee Big Tick' by Business in the Community in 2007.

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Our community Health Health Through Warmth Macmillan Cancer Support npower active Education Environment Supporting employees in the community 2008 targets Health Through Warmth We believe it’s very important to target community support where it’s most needed. In 2000, we established the HTW scheme to find people in the community living in cold, damp homes, and then to help them by installing energy efficiency measures and heating. These measures include insulation, a permanent fixture that helps to keep heat in the home and running costs down, and energy efficient boilers to reduce energy use and carbon emissions. Since 2000, we’ve accessed £29.5 million to identify and assist vulnerable people affected by these poor conditions. In 2007, 8,508 households were referred to the scheme and we announced plans to invest an additional £4.5 millions to continue to support HTW until 2011. As part of the HTW scheme, we work closely with the National Health Service (NHS), Local Authorities, Home Improvement and Care and Repair agencies, and National Energy Action in 12 areas across England and Wales. Often the people who are most in need are hard to reach or unaware that they are eligible for support. Since 2000, the scheme has trained 14,897 key community workers to identify the most vulnerable people and refer them to the Health Through Warmth team – whether they are an npower customer or not. Once someone is referred to us, the HTW team helps them access statutory national grant schemes and other locally available funds. If they’re not eligible Related websites for these, the team looks for funding from charitable organisations on their npower — Health Through Warmth behalf. Depending on their circumstances, they could also get help from our unique npower HTW Crisis Fund. Newcastle reaches 10,000 milestone In 2007, the Health Through Warmth scheme reached another milestone: 10,000 households in Newcastle have now been made warmer and more comfortable since Health Through Warmth was launched in the area in 2000. Working in partnership with Newcastle City Council and Newcastle Primary Care Trust (PCT), the scheme has received over 10,000 referrals across the city, and accessed over £3.9 million of grants and other funds, which includes £370,000 from the npower Health Through Warmth Crisis Fund.

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Our community Health Health Through Warmth Macmillan Cancer Support npower active Education Environment Supporting employees in the community 2008 targets Macmillan Cancer Support We have been working with Macmillan since 2004. Over the last four years, our employees have helped to raise vital funds to improve the lives of those affected by cancer. In 2007, they once again voted to keep Macmillan as the company’s charity partner. Our partnership with Macmillan is now valued at over £2 million. Related websites www.macmillan.org.uk Employees have participated in a whole host of fundraising events, including the London Marathon and the Great North Run. Last September, they raised £45,000 for Macmillan in just one day at the World’s Biggest Coffee Morning. The business then matched all our employees’ fundraising efforts pound for pound. We were delighted when their support was recognised in 2007 with a Hollis Award for the most effective use of sponsorship in the charity and community category. Last year, we also became official sponsor of Macmillan’s new national fundraising campaign, Walk Wonders, which is now in its second year. As well as organising our own walks in both Swindon and Worcester – and raising over £5,000 for the charity in the process – we found that this campaign was a great opportunity to get employees thinking about their own wellbeing. As an ongoing part of our relationship with Macmillan, we continue to develop new ways of working together through a range of commercial initiatives.

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Our community Related websites Health www.efds.co.uk Health Through Warmth www.fdso.co.uk npower Active Macmillan Cancer Support npower active Education Environment Supporting employees in the community 2008 targets npower active The npower active programme is the largest sports development programme for people with disabilities in the country. We started running the programme way back in 1992 – so it was very gratifying to be awarded a ‘Silver Jubilee Big Tick’ by Business in the Community (BitC) in 2007, in recognition of our long-term partnership. Through its support of the English Federation of Disability Sport (EFDS) and the Federation for Disability Sports Organisations (FDSO), npower active has given people with disabilities in the UK the opportunity to try a whole range of sports. We’ve encouraged the competitive spirit in some athletes to such an extent that they’ve gone on to compete at the highest international level. It’s also a great opportunity for sports enthusiasts to meet, socialise and compete at any level of ability. Key facts

The npower active partnership has won four Sports Match Awards over its duration It has also won a Silver JubileeBig Tick Award from Business in the Community (BitC)

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Our community Greener Schools Health Education Greener Schools Finding future engineers The enthuse programme Urban cricket Finding future engineers Environment Supporting employees in the community 2008 targets Educating the next generation Our education commitment focuses on energy. Its aims are to enthuse The enthuse programme young people and to help them learn about the engineering and science skills we need in our industry, and to raise their awareness of both environmental issues and what we can all do to help. In 2007 we launched our £20 million, five-year Greener Schools programme. This programme helps primary and secondary schools to reduce their carbon emissions by using less energy, and gets young people thinking about how to tackle climate change through the way in which they use energy Urban cricket at home and school. In 2007 we continued to enhance our enthuse programme to inspire and engage students in science, technology, engineering and maths – both as subjects and potential career paths. We've also had great success with our Urban Cricket programme, giving inner city children the chance to play sport and develop an interest in cricket.

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Our community Health Education Greener Schools Finding future engineers The enthuse programme Urban cricket Environment Supporting employees in the community 2008 targets Related websites Greener Schools www.climatecops.com Last year we put £20 million behind our five-year ‘Greener Schools’ programme. The programme is designed to help teachers and empower young people to make a real difference to their school and environment by helping to ‘green’ their schools. This includes giving them free energy audits and the opportunity to apply for funding support for energy efficiency and micro-generation measures. The programme, complementing the Sustainable Schools framework from the Department for Children, Schools and Families, aims to reach 2,500 schools, and in 2008 will reach around 68,000 pupils at 180 schools around our main operating locations. Climate Cops Another important part of our new Greener Schools programme is engaging students at primary and secondary schools to learn about climate change, and inspiring them to take positive action to help support the global movement towards sustainability. We do this through our ‘Climate Cops’ initiative, which includes free educational resources for 4-14 year olds, interactive events for 9-10 and 11-13 year olds, and an interactive web site. To engage and excite 4 – 11 year olds, we’ve created Climate Cop characters – three ordinary friends (Will, Skye and Oscar) and their polar bear friend K’eyush – who seek out ways to help save energy, tackle climate change and help the planet, supported by their Chief Climate Cop, Charlie. Our Climate Cop Academy events are highly interactive days based around the important issue of climate change. At these events, pupils aged 9-10 develop their personal skills and actively learn about energy efficiency and renewable energy through a combination of hands on activities, video presentations and team challenges. Our feedback shows that 100% of teachers agreed that the Climate Cop event had helped their school to work towards the Government’s Sustainable Schools strategy. 100% also strongly agreed that their class is now more interested in making changes to the way they use and save energy in the classroom and at home.

Kevin Brennan, Parliamentary Under-Secretary of State for Children, Young People and Families said: "I welcome the efforts businesses are making, together with our sustainable schools programme, to encourage young people to think about their contribution to climate change. I hope young people use these resources to reduce their energy use both at school and at home."

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Our community Health Education Greener Schools Finding future engineers The enthuse programme Urban cricket Environment Supporting employees in the community 2008 targets Finding future engineers The shortage of young people studying science, technology, engineering and maths (STEM) options at school, college and university means fewer people are pursuing STEM-based professions. This short fall, coupled with the challenge of finding and developing tomorrow’s energy sources, poses a big challenge to our industry. To help us address the recruitment and skills challenges faced by our engineering business and the power industry, we’re committed to increasing the pool of STEM talent in the long term through our education activities. Through these activities, we aim to inspire and engage students in science, technology, engineering and maths (STEM) at all stages of their learning. We aim to promote the exciting benefits of a career in engineering and science (with the help of our own employees). We also offer support to education professionals to help them teach these subjects in an exciting way, by focusing on the use of STEM in our business. And at the same time we help students understand the environmental impacts of our industry and what we can all do to reduce our energy needs. Power stations in the community Our power stations actively engage in the communities in which they operate to:

raise awareness of how STEM are used at Power Stations raise the achievement levels of young people within these subjects inspire young people to enter the engineering profession position ourselves as an employer of choice.

Many of our stations offer help both in and out of the classroom through:

educational guided tours around the station that focus on the curriculum – 14,114 students visited our sites in 2007 from 481 schools, colleges and universities work-experience placements for students, and Continuing Professional Development Placements for teachers presentations in schools and colleges focusing on the role of STEM as a career voluntary involvement by staff through national education initiatives in local schools and colleges.

Didcot Power Station – an example Didcot Power Station plays a major role in the local community. It’s one of the largest employers in the area with 400 employees and permanent contractors.

In 2007, it gave 4,779 students from 176 schools and colleges guided tours of the power station to help with their studies, along with 154 days of work experience to 15 students.

Over the years, Didcot has also developed relationships with 30 out of 34 secondary schools in Oxfordshire, and since 2003 has recruited 21 apprentices from 11 local secondary schools. Of the 21 apprentices, 13 had attended a power station tour or done work experience with us while at school.

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Our community Health Education Greener Schools Finding future engineers The enthuse programme Urban cricket Environment Supporting employees in the community 2008 targets The enthuse programme To make sure RWE npower has the calibre of engineers and scientists needed in the future, three of our graduates created our enthuse programme in 2006. The aim of the programme is to inspire young people to consider a career in STEM subjects, to create a positive change in the perception of STEM, and to engage our staff in sharing their STEM knowledge and skills. Aimed principally at 13 to 14 year-olds, enthuse primarily comprises an activity day for students involving teamwork exercises, problem solving and hands-on challenges with an engineering and science focus. Nearly 2,000 students from 9 schools across England and Wales participated in 16 enthuse event days during 2007, and so far 20 more event days have been planned in 2008. Students benefit... The programme helps young people get a better understanding of what it means to pursue a STEM career today. It gives them information on possible entry routes and career paths, and helps them to make more informed GCSE and Further and Higher Education choices. After participating in enthuse:

90% of students at the end of the event said they now know more about engineering to consider it as a career, from only 10% at the beginning of the day 56% of students at the end of the event said they are now interested in a career in engineering, from only 10% at the beginning of the day.

...and so do our employees Over the course of 2007, 85 of our engineers and scientists were involved in delivering enthuse, enhancing the programme with real-life experiences and skills. From feedback, we know they enjoy participating in these initiatives and that it boosts motivation and morale, with 100% saying they felt they had ‘made a difference’ and 92% saying they would like to be involved again. Enthuse also helps our employees to stay in touch with how students are learning and the challenges young people face today.

2008 and beyond During 2008, more of our Generation sites and schools will get involved in our enthuse programme. We are also looking to develop our work-experience programme further, in order to give students the opportunity of spending structured time within our Generation business at Swindon to learn about the application of STEM skills in the workplace.

This programme will also support the Government’s new employer-led Engineering Diploma qualification, which is one of five Diplomas being introduced in September 2008.

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Our community Health Education Greener Schools Finding future engineers The enthuse programme Urban cricket Environment Supporting employees in the community 2008 targets Urban Cricket We're well known supporters of cricket through the npower tests. But we wanted to get involved at a grass roots level too. Working in partnership with the England & Wales Cricket Board we developed the innovative Urban Cricket scheme. Launched in 2006, Urban Cricket aims to introduce cricket to a new, young audience, and to get children active. 55,000 kits and counting The philosophy of Urban Cricket is to keep it simple. The kit is a plastic bat and tennis ball in an easy to carry case, there are no complicated rules, and no need for a pitch or teams. To get the ball rolling we delivered more than 55,000 kits to over 130 separate organisations including councils, Related websites regeneration initiatives, police forces, schools, junior cricket clubs, community www.ecb.co.uk and youth clubs. England stars, Kevin Pietersen and Monty Panesar have helped us raise the profile even further and we’re now building a series of cricket specific sporting facilities in inner-city locations. We’ve already opened the first ones at Wyck Park in Brixton, South London, and Abbeyfield Park, Sheffield, and a further three arenas are planned. Five selected primary schools around each arena will also be turned into ‘Urban Cricket Zones’, with cricket specific playground markings and targets encouraging the children to get involved.

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Our community The Comic Relief - 'Book of Light' Health Education Environment The Comic Relief 'Book of Light' Our National Trust partnership Conservation Days Our National Trust partnership Supporting employees in the community 2008 targets Environment Over the past year, we’ve been involved with several initiatives that aim Conservation days to raise awareness of environmental issues. In 2007

We topped the book charts with our book of light bulb jokes as partners with Comic Relief. We introduced a new green energy programme in partnership with the National Trust. We held conservation days at several of our power stations, including Aberthaw.

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Our community Health Education Environment The Comic Relief 'Book of Light' Our National Trust partnership Conservation Days Supporting employees in the community 2008 targets Comic Relief and the ‘npower Book of Light’ Energy efficiency can sometimes appear hard work. So we wanted to know what we could do to get people more involved and to encourage them Related websites to do their bit for the environment in a more appealing and light-hearted way. www.rednoseday.com A partnership with Comic Relief provided the answer. www.comicrelief.com The npower Book of Light One of the easiest ways to save energy in the home is to switch to energy saving light bulbs. This gave us the idea for the book; the light bulb joke holds a special place at the heart of British comedy, so we launched a campaign to find the nation’s top 100 and compile them into a definitive collection – the ‘npower Book of Light’. We became Comic Relief’s official energy partner for Red Nose Day 2007 and pledged to raise £0.5 million. Lenny Henry launched our campaign and Amazon.co.uk agreed to sell the book with all proceeds going to Comic Relief. We even took the idea on tour with Bob Mills hosting a ‘Brighten up Britain Tour’ encouraging people to buy the book and call for a quote which triggered a donation to Comic Relief. As a result:

We smashed the £0.5 million Comic Relief donation target raising a grand total of £538,403. Over 10,000 existing and potential customers received ‘Brighten up Boxes’, which included a selection of light bulb jokes and an energy saving light bulb Employees across npower’s 60 sites raised £24,089.60 for Comic Relief through raffles, auctions, head shaves and karaoke competitions.

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Our community Health Education Environment The Comic Relief 'Book of Light' Our National Trust partnership Conservation Days Supporting employees in the community 2008 targets Our National Trust partnership In September 2007, we joined forces with the National Trust in a multi- million pound partnership. It’s a partnership that we hope will encourage significant investment in microgeneration of renewable energy, stimulate innovation in carbon-saving measures, and help consumers make their own Related websites homes greener. www.nationaltrust.org.uk National Trust Green Energy. National Trust Green is a renewable electricity tariff that provides renewable energy. Every time someone switches to the new tariff, we make a contribution to the National Trust Green Energy Fund, which invests in renewable energy at National Trust properties. With 3.5 million members and over 13 million visitors a year, National Trust properties are a brilliant showcase for renewable energy. We hope seeing it in action will encourage people to make the switch. We also want people to start generating their own, so we’re offering incentives totalling over £2,000 to encourage people to save energy and install their own micro-generation. National Trust low carbon villages. The Trust also wants to create a network of "low carbon villages" from the 60 villages partly or wholly owned by them, and we will be contributing £200,000 annually to support the first three villages. The aim is to help the local community develop and share positive and practical solutions to reduce the carbon footprint of their homes and community. Helping the Trust reduce its energy use. Our experts are working closely with the National Trust to see how they can generate renewable energy where possible and switch its electricity supply to a renewables tariff. We’re doing everything we can to help them reduce their carbon footprint from effective metering and ‘green’ refurbishment of buildings to replacing fossil fuels in heating systems with renewables.

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Our community Health Education Environment The Comic Relief 'Book of Light' Our National Trust partnership Conservation Days Supporting employees in the community 2008 targets Back to nature – the 2007 Aberthaw Conservation Day Following the success of the inaugural conservation day at Aberthaw in 2006, conservation enthusiasts from Aberthaw Power Station, the local community and nearby schools all braved the autumnal weather to take part in the site’s second conservation day on 11th October 2007. Mark Picton, section head of regulation at Aberthaw, helped organise the event and explained: "There’s an area of land on the south eastern corner of Aberthaw Power Station that has remained undeveloped since the station was built in the 1960s. Left to its own devices, this land has gradually developed into an area of great ecological importance. At its centre is a rare saline lagoon, one of only four in Wales, which is now referred to as the East Aberthaw nature reserve. It’s managed by Aberthaw Power Station in partnership with the Wildlife Trust of South & West Wales. Back in 2006, the station held a Conservation Day, which gave employees, local residents and school pupils the opportunity to volunteer their help to protect this important habitat and the 20,000 plus species that live here. The day was such a fantastic success that we decided to hold another event." This year, the volunteers helped clear shrubs, remove brambles and clean the beach. Notice boards were also erected to give future visitors an idea of the wide variety of birds, flora and fauna – including bloody nose beetles, cockles, adders, tree sparrows and rare types of grasses and orchids – that can be seen throughout the year. In addition, pupils and staff from Barry Boys Comprehensive School, who designed and built bird boxes and insect feeders as part of their GCSE Design & Technology course, came along to help put them up. Other local school children from St Athan and St David’s Primary Schools took part in a nature trail.

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Our community Helping out at Christmas Health Education Environment Supporting employees in the community Helping out at Christmas 2008 targets

Supporting employees in the community Here at RWE npower, we recognise the valuable contribution each and every employee can make to the local community. Our employees have a variety of skills and knowledge which can make a real impact on the communities within which we operate. We operate a number of schemes to recognise and reward their involvement including: £4£ This scheme matches the contribution our employees make to the local community through their fundraising efforts. In 2007 we supported 390 employees and contributed £262,014.66 to charities and community groups. £4£ in action... Last October, Rob Scrivener, a manager in the Collections Team at our office in Bridge House in Hull, joined thousands of runners to raise money for Macmillan Cancer Support by taking part in the 'Great North Run'. Rob completed the run and raised more than £1,000 for the charity – a sum which npower matched £4£. Volunteer award scheme Our volunteer awards programme recognises those employees who continue their good work outside of the working week – with an award of £500 a year for their charity or community organisation. Last year 119 employees received Community Volunteer Awards totalling £58,606. Payroll Giving In 2007 npower was recognised with the Government’s Silver Quality Mark. This award recognises that more than 5% of our employees give to charity – raising over £75,000 for a range of charities in the process. All donations made to Macmillan Cancer Support are matched £4£. Volunteering programme Everyone is encouraged to take time out of the working week to get involved in volunteering projects. Getting out into the local community is a fantastic way to build sustainable relationships with local charities and community organisations and adds depth to our sponsorships and programmes.

Everyone benefits: the local community get access to a range of skills and knowledge whilst employees get the chance to build on existing skills, develop new ones and get to know each other better in a new and challenging environment.

In 2007 over 1,600 employees (12% of our workforce) were involved in employee volunteering, supporting a wide range of activities.

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Our community Health Education Environment Supporting employees in the community Helping out at Christmas 2008 targets

Helping out at Christmas In December, npower employees in the Midlands gave their time and energy to a festive feast of volunteering opportunities. In total, 35 npower employees offered their support to a range of activities, which included:

providing a gift wrapping service in Debenhams to raise money for St Mary’s Hospice at Selly Park, Birmingham helping to set up a breakfast at the SIFA (Supporting Independence From Alcohol) drop-in centre, close to Birmingham city centre providing Christmas activities, including a Christmas Carol sing-a-long at two Age Concern centres in Birmingham for people with dementia.

Allen Whitby from Birchfield House, Oldbury, commented, "The high point of my day was knowing that, just from wrapping a few presents, we managed to raise a considerable amount of money that can help the lives of less fortunate people." Linda Pritchett from Oak House, Worcester, added, "Taking part in the event has made me realise how important it is to create a network with organisations within our local areas and to see life from a different point of view."

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Our community Our targets for 2008 Health Earning the trust and confidence of the communities in which we operate can Education bring substantial benefits for the npower brand, and provides significant Environment motivation to our employees. Our aims are to: Supporting employees in the community Build and maintain effective relationships with communities We will develop an action plan for the implementation of our strategic 2008 targets community involvement programme for all existing and proposed sites and business units. We will develop a process that enables us to quantify the benefits delivered to the local area/region by our operational sites. Partnership with other organisations allows us to bring in additional resources to our projects above and beyond our direct contributions. In 2008, we aim to bring in an additional £7m from external partners. Our Health Through Warmth community scheme operates by way of locally based partnerships that seek to identify vulnerable people whose health is adversely affected by cold and damp conditions in their home. In 2008, we aim to refer 7,000 vulnerable, low income households through the HTW scheme. Deliver enhanced brand attributes through our community activities In 2008, we will refine our existing metrics to enable us to demonstrate that, through the community involvement programme, we are improving perceptions of the npower brand, both on a national and on a programme-by- programme basis. We will also ensure that all of our major brand sponsorship programmes include community investment elements.

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Related websites Independent Assurance www.csrnetwork.com Statement Scope and objectives RWE npower commissioned csrnetwork to undertake an independent assurance engagement over the information and data within the RWE npower 2007 Corporate Responsibility Report (‘the Report’) as published at www.rwenpowercorporateresponsibility.com . The objectives of the assurance process were to check claims and the systems for collection of data, and to review the arrangements for the management and reporting of corporate responsibility issues. The assurance process was conducted in accordance with the AA1000 Assurance Standard, and we have commented on the report against the principles of materiality, completeness and responsiveness. The scope of our work did not include assurance of the ‘Power Station News’ section of the internet site. Any financial information contained within the Report is excluded from the scope of this assurance process. Responsibilities of the Directors of RWE npower and the assurance providers The directors of RWE npower have sole responsibility for the preparation of the Report. In performing our assurance activities, our responsibility is to the management of RWE npower, however our statement represents our independent opinion and is intended to inform all RWE npower’s stakeholders, including the management of RWE npower. We were not responsible for the preparation of the Report. We have no other contract with RWE npower. This is the second year that we have acted as independent assurance providers for RWE npower. We adopt a balanced approach towards all RWE npower stakeholders and a Statement of Impartiality relating to our contract with RWE npower will be made available on request. The opinion expressed in this assurance statement should not be relied upon as the basis for any financial or investment decisions. The independent assurance team for this contract with RWE npower comprised Jon Woodhead, Louise Hawson, Thomas Krick and Anne Euler. Further information, including a statement of competencies relating to the team, can be found at www.csrnetwork.com Basis of our opinion Our work was designed to gather evidence on which to base our conclusions. We undertook the following activities:

We conducted interviews with a selection of directors and senior managers responsible for areas of management and stakeholder relationships covered by the Report. The objective of these discussions was to understand RWE npower’s governance arrangements and management priorities; We discussed RWE npower’s approach to stakeholder engagement with relevant managers; We conducted a top level review of issues raised by external parties that could be relevant to RWE npower’s policies to provide a check on the appropriateness of statements made in the report; Subject to the exclusions set out below under ‘Observations’, we reviewed data collated at the corporate level, and claims made in the Report. We met with managers responsible for this process, reviewed their processes and undertook a limited number of sample checks. This included a detailed review of systems for monitoring and collating generation site environmental data at corporate level. The scope of our work included a visit to an operational site in the Generation Division, at Didcot. Selected performance data at site level were reviewed during this visit. We undertook an assessment of the company’s reporting and management processes against the principles of materiality, completeness and responsiveness as described in the AA1000 Assurance Standard. We reviewed the work undertaken by RWE npower to compare the Report against the Global Reporting Initiative (GRI) G3 Sustainability Reporting Guidelines.

Observations:

Materiality – has RWE npower provided information on material issues to enable stakeholders to make informed judgements?

In our opinion the Report includes information on RWE npower’s main corporate responsibility performance issues and should enable stakeholders to make informed judgements. The Report represents a significant step forward for the company in terms of the level of detail and type of analysis of information presented. In our statement last year we recommended that future reports should http://www.npower.com/rwenpowercr/verification_statement.html Page 1 of 3 RWE npower Corporate Responsibility Report - Verification Statement 14/08/2008 15:06

explain the carbon footprint of the company in the context of UK national emissions and (existing and proposed) national targets, and that future reports should include targets for carbon intensity. Each of these recommendations has been addressed in this Report. Confirmation during 2007 of the company’s plans for the development of new generation capacity have enabled a much clearer presentation in the Report of how the company plans to manage its emissions in the period up to 2015. Of particular positive significance is the section in the Report on ‘transition to a low carbon economy’. The Report describes measures taken or planned by the company in an attempt to keep energy prices affordable, stable and predictable. These objectives are clearly an area of great challenge, and the company will be judged by its stakeholders on the effectiveness of these measures going forwards. Clear and transparent reporting against these measures will be essential in future reports. We recommend that future reports should include a discussion of factors affecting renewable tariff uptake and other measures under the ‘new energy’ approach.

Completeness – does RWE npower have systems in place to understand changes to stakeholder expectations and to provide complete and accurate information against the issues identified as material for inclusion in the Report? On the basis of the method and scope of work undertaken and the information provided to us by RWE npower:

For environmental performance data, nothing came to our attention to suggest that these data have not been properly collated. We are not aware of any errors that would materially affect the consolidated company level data. For health and safety performance data, nothing came to our attention to suggest that these data have not been properly collated. We are not aware of any errors that would materially affect the consolidated company level data. For other social performance data, nothing came to our attention to suggest that these data have not been properly collated. We are not aware of any errors that would materially affect the consolidated company level data.

We note the overall improvement in the robustness and auditability of data reporting processes this year, and in particular the significant work done to improve recording, collation and auditing of generation site environmental data. We recommend that future reports should include information on the improvements delivered through the new customer complaints management system that was introduced during the year. On the issue of social tariffs, as the position and expectations of Government, RWE npower and others in the utility sector evolve, it will be important in future reports to demonstrate systematic reporting on the impacts of the company’s approach. In future reports, it will also be important to show the company’s current status against the new carbon intensity targets; to demonstrate year on year movements towards (or away from) the 2015 reduction goals, and to make predictions about the rate of progress over the intervening period as the generation base evolves. We recommend that future reports should also make clear the actual and expected contribution to these reductions from investments in renewable generation through RWE Innogy. In our statement last year we recommended that the Corporate Responsibility Committee should consider how to keep appraised of new and emerging stakeholder concerns. We restate this recommendation.

Responsiveness – how does RWE npower demonstrate that it has responded to stakeholder concerns? The new internet based reporting structure has significantly increased the accessibility of information. In our statement last year we recommended that future reports should seek to explain in more detail how the company is responding to stakeholder concerns around energy prices and climate change. The content of this Report does not contain sufficient information on the views of external stakeholders on material issues or how RWE npower has responded to stakeholders about their concerns. We recommend that future reports should demonstrate how the company understands the expectations and concerns of its stakeholders on material issues such as future developments in generation capacity, carbon emissions, price changes, and measures to promote energy efficiency.

csr network ltd U.K. June 2008

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