Our Environment Policy sets out minimum standards for the business in the UK. The policy is managed by the Environment and Corporate Responsibility Department, which is also responsible for undertaking annual reviews of the policy and reporting to the E.ON UK Executive Board (EUEB). The reviews include information on business unit compliance with this policy, which is requested annually from individual business units via nominated environmental managers (NEMs).

Certification

E.ON UK has certification to the International Standards Organisation's environmental management standard (ISO14001) for its electricity and gas operations. Many individual sites and businesses have their own EMSs, many of which are also certified to ISO14001. This includes ten ISO14001 certificates covering power stations, combined heat and power (CHP) plants and the Liverpool Bulk Terminal, Power Technology and Power Engineering Services.

The Central Networks EMS gained ISO14001 certification in September 2005. Within Energy Services, New Connections renewed its ISO14001 certification in October 2005; Metering Services gained certification in March 2006 and Home Installation is developing an EMS for implementation later in 2006. We are presently assessing the requirement for an ISO14001 EMS for our retail business.

Our offices at Phoenix Park, Newland House, Westwood, Pegasus, Bilborough, Sleaford, Hinckley, Moorgreen, Tipton, Worcester, Gloucester and Stoke and our Leicester Call Centre are all covered by an ISO14001-certified EMS. Work is underway to achieve certification at our other offices at Wherstead Park, Sherwood Park and Newstead Court.

Acquisitions

Environmental concerns form part of the due diligence process we apply to all potential acquisitions.The environmental questions for which we typically require answers before making an acquisition include:

• What environmental legislation is relevant to the business or asset under review?
• Does it have an EMS, and if so is it ISO14001 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 generation plants, how efficient is the operation in terms of carbon dioxide (CO₂) per unit of electricity?
• In the case of electricity generation plants, how efficient is the operation in terms of CO₂ emitted per unit of electricity produced?

Incidents and complaints

In operating a portfolio of power stations and an electricity distribution network that has equipment, much of it containing oil, spread across such a wide region, it is inevitable that incidents will occur that have the potential to impact on the environment. As our operations are situated in a wide variety of environments, some of these very sensitive, it is important we respond to and report all incidents with a potential impact on the surroundings - no matter how small. We have internal reporting systems in place for environmental incidents, and where an incident meets the Environment Agency 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 are currently developing an improved electronic reporting system for environmental incidents and near hits to ensure that we are able to manage the impacts of incidents and our response to them as effectively as possible. A number of internal targets are in place within our business units aimed at reducing the occurrence of incidents caused by our operations.

The reduction in reported incidents between 2004 and 2005 reflects a change to the definitions used for internal reporting which now follow a standardised cross-business format.

During 2005 we maintained our record of having no environmental prosecutions upheld against us.

Central Networks upgraded its environmental emergency processes in 2005, and has now employed a specialist response company which will be able to provide expert containment and clean-up of any releases from our operations or equipment within a guaranteed response time, and which provides follow-up services to deal with any resulting contamination.

The business also received notice of 457 environmental issues through its hazard and near-hit reporting process in 2005, against a target of 500. 60% of the issues raised have been addressed and closed out, and the process has been reviewed to improve this level further during 2006. This is a marked improvement from the 313 received during 2004, but further work is being done to speed up the resolution and close-out process.

We received 166 substantiated environmental complaints from the public and other stakeholders in 2005, an increase of 62 from 2004. However, 33 of these arose from the introduction of a new system for recording complaints, to represent the wider operating area of Central Networks. Whilst the total number of complaints in Central Networks and Business Services rose, the majority of these were minor in nature. We continue to monitor all the complaints we receive and use the information we gain from them to improve our performance.