Transfer of management of transmission grids with a voltage level of 110 kV or higher

As a result of the adoption of the Independent Grid Administration Act (‘Segmentation Act’) in 2006, TenneT TSO was given responsibility for managing all transmission grids with a voltage level of 110 kV and higher with effect from 1 January 2008, with the exception of grids encumbered by Cross Border Leases. This transfer of responsibility has major consequences. In combination with the Method Decision for the fourth regulatory period, the consequences of this transfer of management for TenneT’s results are negative. TenneT has concluded an interim contract with Alliander for the period up to and including 31 March 2009.

(Long-term) financial obligations

By 31 December 2008, commitments totalling EUR 139.4 million (2007: EUR 57.7 million) had been entered into with regard to tangible fixed assets.

In 2007, a decision was taken to construct a cable link between the Netherlands and the UK. The total investment sum is expected to exceed EUR 588 million, 50% of which will be borne by TenneT. Agreements have been concluded with third parties for approx. EUR 250 million in total.

TenneT has issued guarantees as security against BritNed Development Ltd. in case the company is unable to meet its financial obligations under the cable contract. The guarantees issued by TenneT cover 50% of the commitments of BritNed Development Ltd.

In 2008, TenneT TSO concluded a contract with a value of EUR 71 million with NKT in respect of the Wateringen-Bleiswijk line. TenneT TSO’s remaining obligation under this contract had a value of EUR 49.8 million at year-end 2008.

TenneT TSO has entered into commercial ground lease contracts with the owners of the land on, under or over which TenneT’s substations, lines and underground cables are sited or routed. TenneT’s annual obligation under these contracts amounts to EUR 2.3 million (2007: EUR 2.3 million).

The total obligation under the operating leases for office premises and vehicles is as follows:

Subject to approval from the Provincial Council, agreement was reached with the provincial authorities of Groningen, Drenthe and Overijssel in November 2007 to retain and upgrade the existing 220 kV line from Zwolle to Vierverlaten. The line section between Zwolle and Hoogeveen is to be retained under the agreement. To compensate, TenneT will invest EUR 10 million in projects designed to strengthen nature and landscape values in the provinces of Drenthe and Overijssel. TenneT intends to recognise this sum in its accounts as a substantial investment.

Conditional obligations

In 2004, the Office of Energy Regulation decided that APX B.V.’s spot market activities would no longer be regulated. This decision was based on the assumption that the advance bid obligation in the APX spot market for the daily auctioning of cross-border interconnection capacity would be retained until 1 January 2009. If this obligation is abolished either before or after 1 January 2009, this would give rise to a claim by or obligation on TenneT, respectively.

TenneT has entered into a long-term commitment to sell its head office and rent a new office building.

Conditional rights

At the close of 2008, TenneT had received bank guarantees totalling EUR 78.7 million.

Securities

Participants active on the energy exchanges have issued guarantees and securities with a total value of

EUR 803 million (2007: EUR 788 million) to APX B.V. and APX Commodities Ltd. to cover their trading positions.

Parties with programme responsibility have issued bank guarantees totalling EUR 30.1 million (2007:

EUR 26.2 million) to TenneT TSO in connection with the latter’s maintenance of the energy balance between supply and demand.

TenneT Holding has issued a group guarantee with a maximum value of GBP 29.5 million to National Grid Electricity Transmission (NGET) to underwrite TenneT’s obligations with regard to the BritNed project. The guarantee covers the period from 1 April 2009 to 30 September 2009 inclusive.

The group has various other off-balance sheet rights and obligations, which are not sufficiently large to be mentioned separately.

Termination of activities

TenneT has decided to terminate the activities of TSO Auction B.V. in 2009. The annual auction will be organised by a newly established company called CASC-CWE S.A. (Capacity Allocation Service Company for the Central Western European Electricity Market), a joint venture between the TSOs of the Central Western European (CWE) region. The daily auction (on the Belgian-Dutch border) now takes place by means of market coupling on the APX exchange.

On 13 July 2007, the Minister of Economic Affairs announced that implementation of the Promotion Scheme for Sustainable Energy Production (SDE) and the MEP grant scheme would be transferred to the Ministry’s SenterNovem agency. The activities of EnerQ B.V. were therefore transferred to SenterNovem as of

1 January 2009.

Consequently, the financial statements of TSO Auction B.V. and EnerQ B.V. have been prepared on a liquidation basis.

The above-stated decisions have not resulted in the devaluation of assets.