Our Environment policy sets out minimum standards for our environmental performance and behaviour. The policy is managed by the Director of Health, Safety and Environment (SHE), who is responsible for undertaking the annual policy review and reporting to the E.ON UK Executive Board. The review includes information on compliance with this policy requested annually through the Environment Manager of each business unit.

The Environment policy is currently under review with a new strengthened version planned for release during the first half of 2007.

Certification

We have corporate certification to the International Standards Organisation's environmental management standard (ISO 14001) for our electricity and gas operations. Individual sites and businesses have their own Environmental Management Systems (EMSs), many of which are also certified to ISO 14001. This includes our distribution business, power stations, combined heat and power (CHP) plants, the Liverpool Bulk Terminal, Power Technology and Power Engineering Services.

Metering Services and Home Installations, which are part of Energy Services, attained certification in 2006. Our Retail business and Energy Wholesale's central management and construction activities are developing EMSs for implementation in 2007.

Our non-operational sites are managed by the Facilities department of our internal services provider, Business Services. Some of our Facilities-managed sites are already covered by ISO 14001, including eight of the largest, and our offices at Newstead Court, Wherstead Park and Sherwood Park are due to be certified in 2007, along with our new Parklands office in Bolton in 2007/08. Significant activities at four of the remaining are already covered by the Central Networks and Energy Services EMS's. Each business unit has an Environmental Manager who is responsible for the performance in their area and who will take action to prevent or correct and environmental issues. We also have a number of trained environmental who are competent to manage environmental risks and incidents.

Environmental concerns have become an important consideration for our procurement and mergers and acquisitions departments.

We are a licensed waste carrier and ensure that waste handled by third parties on our behalf is also managed responsibly by licensed carriers, handling and treatment facilities. As part of the Company-wide EMS and those within the businesses, we have in place audit programmes to monitor the effectiveness of our environmental protection systems.

Targets

Acquisitions

Environmental concerns form part of the due diligence process we apply to all potential acquisitions. Typical questions which the UK Environment department may ask about a merger or acquisition project include:

• What environmental legislation is relevant to the business or asset under review?
• Does it have an EMS, and if so, is it ISO 14001 or EMAS (Eco-Management and Audit Scheme) certified?
• Has it been prosecuted for an environmental offence in the past five years?
• Have any environmental incidents been reported to the Environment Agency in the past three years?
• Has any land contamination assessment been undertaken?
• In the case of electricity generation plant, how efficient is the operation in terms of CO₂ emitted per unit of electricity produced?

If we're not satisfied with some or all of the answers, we investigate further before making an investment decision.

Incidents and complaints

We operate a large number of power stations across the UK and an electricity distribution network whose equipment contains oil. So it's inevitable that from time to time, incidents that have the potential to impact on the environment may occur, although we try hard to avoid these.

We respond to all incidents that may have a potential impact on the surroundings, however small. In 2006, we implemented a new integrated Health, Safety and Environment incident and near-hit reporting system. Where an incident meets Environment Agency reporting criteria, it is reported to the Agency as soon as possible after it occurs, and certainly within the guidelines set out by the Agency. We have in place internal targets to reduce the number of incidents our operations cause.

Environmental Incidents, Number

2005	2006
35	50

The new Health, Safety and Environment incidents and near-hits reporting system is available to all staff with intranet access, and strengthens the existing processes for collection and investigation of environmental incidents and near hits. As we continued to develop our incident reporting system during 2006, the identification and reporting of incidents continued to improve.

During 2006, we maintained our record of having no environmental prosecutions upheld against us.

Environmental Complaints, Number

2005	2006
166	234

The number of environmental complaints we received rose in 2006 and exceeded 200 for the first time. Although this seems to reflect the increase in incidents, we believe that the improved reporting process may also be a factor. A better picture is expected to emerge in the coming year. We take complaints about our environmental impacts very seriously and investigate every single one we receive. For our Energy Wholesale business, the majority of complaints received related to particulate emissions and noise. The highest number of complaints received was in our distribution business. Data prior to 2005 relates to the East Midlands region only. The majority of the complaints receieved related to amenity, land damage and noise nuisance. Where our sites and activities were found to be at fault, we carried out further analysis and, where necessary, took action.

Central Networks employs a specialist response company, which is able to provide expert containment and clean-up of any spillages from our operations or equipment within a guaranteed response time, and which provides follow-up services to treat any affected areas of the environment.