The Powergen Group is an Anglo-American energy company, which on 1 July 2002 was acquired by the German utility company E.ON AG, making us part of the world's largest investor-owned energy company. From this date, Powergen became a fully consolidated division of E.ON.

Since its creation in 1989, Powergen has transformed its business from an electricity generator into a vertically-integrated energy company, with operations in the UK, US and Indonesia.

The diagram below shows Powergen's major business units in the UK and the US in 2002.

With effect from 1 March 2003, following an internal restructuring, LG&E Energy Corp., its immediate parent and its subsidiaries, were, as had been previously announced, transferred out of the Powergen Group of companies to E.ON US Holding GmbH, a direct subsidiary of E.ON AG. However, Powergen retained responsibility for the LG&E Energy Corp. business within the E.ON Group through the Powergen Board.

On 6 May 2003 E.ON announced the launch of its group-wide on top project. on top looked to optimise E.ON's organisational structure in light of acquisitions and divestments and to adapt the role of E.ON AG with regard to its subsidiaries, as well as refining E.ON's strategy to achieve sustainable value-added growth in the medium to long term and raise performance in all divisions.

On 14 August 2003, E.ON announced the first results of the on•top project. This stated E.ON's strategy to be an integrated power and gas group with clear European focus and proposed a change in organisation for E.ON's power and gas business, along the lines of a single pan-European market for up and mid-stream gas, together with predominantly regional markets for gas distribution and supply and for electricity (Central Europe, the UK, the Nordic region, and the Midwestern U,S.). These market units are each to report directly into the E.ON AG Corporate Centre from the beginning of 2004. Powergen is to have responsibility for the UK, whilst LG&E Energy Corp. will have responsibility for the Midwestern US.

Powergen UK
In the UK, Powergen is now one of the leading integrated electricity and gas companies. It is actively involved in electricity generation, distribution, retail, and trading. In addition, Powergen also has significant gas retail and trading operations.

Powergen UK provides electricity, gas and fixed line telecommunications to 9.1 million residential, small and medium sized enterprise (SME), and industrial and commercial (I&C) customer accounts. Powergen produces electricity from its portfolio of coal, gas, oil, wind and hydro power stations, and also operates and maintains combined heat and power (CHP) plants. In addition, the company also owns and operates the electricity distribution network for the East Midlands region of the UK, where it serves 2.4 million customers.

In October 2002, Powergen acquired the retail operations of TXU Europe, more than doubling its retail customer base. Powergen is now the UK's second largest energy retailer, with 6.3 million electricity customer accounts, and 2.6 million gas customer accounts. The enlarged customer base strengthens Powergen's competitive position within the retail sector. The company is now well balanced between its generation and mass-market retail operations, which helps to reduce the impact of wholesale price movements on the company's future profitability.

At the year end, Powergen UK employed 7,034 people.
 

LG&E Energy Corp.
LG&E Energy Corp. has operations focussed on the regulated electric and gas utility sector in Kentucky. The company's two regulated utility businesses, Louisville Gas and Electric (LG&E) and Kentucky Utilities (KU), are vertically integrated and serve retail customers through generation, transmission, distribution and retail. The two utilities also sell power in excess of their native load demand to wholesale customers outside the regulated service territory (off-system sales). LG&E also provides a natural gas service to approximately 310,000 customers in Louisville and adjacent areas.

In the unregulated business, Western Kentucky Energy (WKE) operates coal-fired power stations with a capacity of approximately 1,800 MW. LG&E Energy also operates power plants in Kentucky and elsewhere in the US through its subsidiary, LG&E Power. CRC-Evans provides equipment and services for gas and oil pipelines. It is intended to sell this company by the end of 2003. In Argentina, LG&E Energy supplies gas to approximately 2 million customers.

At the year end, LG&E Energy employed 4,152 people.
 

International
In Indonesia, Powergen holds a 35% equity stake in PT Jawa Power, which owns the Paiton II Power Station, a coal-fired station located at Paiton, Probolinggo, East Java, and a 100% equity stake in PT Powergen Jawa Timur, which operates the power station on behalf of Jawa Power.

Elsewhere overseas, over 2002, Powergen held an equity stakes in power projects in Australia, India and Thailand. It is intended to sell the stakes in these projects in 2003.
 

As a low-cost, innovative and environmentally responsible operator, Powergen delivers value and quality to its customers, employees, partners and communities, as well as creating value for shareholders of E.ON AG. We aim to help E.ON to become a truly global company by growing our business responsibly in the UK   & US markets.