For the attention of Mr Marius Kohl

Administration des Contributions Directes Bureau d'imposition Societes VI 18, Rue du Fort Wedell L-2982 Luxembourg

January 14, 2008

References: CDT/TSAZ/P 127c09001M-FYHS

PriccwatcrhouscCoopcrs Socictc a rcsponsabililc lirnitcc Rcviscur d'cntrcpriscs 400, route d'Esch B.P. 1443 L-1014 Luxembourg Telephone + 352 494848-1 Facsimile +352 494848-2900 www.pwc.com/lu i11fo@lu.pwc.co111

Powergen Luxembourg S.ar.I ("PLS") - tax number: 2000 2419 468 Dutchdelta Finance S.ar.I ("Dutchdelta") - tax number: 2004 2401 596 Powergen US Securities Limited ("PUSSL")- tax number: 1600 3208 471 Powergen Luxembourg Holding Sari ('~PLHS") - tax number: 2000 2419 476 Powergen Holding Sari ("PHS") - tax number: 2004 2418 723

DearMrKoW,

Further to our meetings dated 17 September and 28 November and at the request of the above mentioned client, we are pleased to submit for your review and approval, an analysis of the transactions described below. Alternatively, we would be pleased to receive your written comments on this restructuring.

A Facts

Within the framework of a restructuring of the E.ON Group and further to the implementation of a first Phase "TK 14 (Phase 1 )" desc1ibed in our Jetter referred RBS/FYHS/P127c08001M-CACI, several operations impacting the Luxembourg companies of the group, i.e. PLS, Dutchdelta, PUSSL, PLHS and PHS have been carried out. For your information, you wi ll find attached to this letter a chart reflecting the initial situation (Appendix 2), a description of the transactions in relation to this reorganisation "TK 14 (Phase 2)" (Appendix 3), a chart reflecting the final situation (Appendix 4) and a brief description of the E.ON Group, to which PLS, Dutchdelta, PUSSL, PLHS and PHS are affiliated (Appendix 1).

(3)

B Applicable tax regime

B.1 Change of legal form of PLS (Steps 1-2 and 3-3)

2 The transformation of PLS into an SA and then into an SE has been carried out in accordance with Article 1 70 (2) of the Luxembourg Income Tax Law (hereafter referred as "LITL"). Accordingly, assets and liabilities have been taken over at book value by the transformed company without any tax consequences. This should then not challenge the possibility for PLS to carry forward its tax losses in accordance with article 172bis (I) LITL (Appendix 5).

B.2 Transfer of Ergon Holdings Ltd by PLS to Dutchdelta (Step 6)

3 In Jw1e and in August 2008, Ergon Holdings Ltd distributed dividends to PLS of a total amount of GBP 386,227,685.

4 On September 9, 2008, PLS disposed of Ergon Holdings Ltd by transferring it to Dutchdelta for market consideration.

5 According to Article l (2) of the Grand Ducal Decree dated 21 December 2001, the exempt amount of the gain is reduced by the algebraic sum of income (mainly derived from the interest expense and potential write-downs in the value of the participation), to the extent that they have reduced the taxable base of that year or previous years.

6 Should PLS realize a forex loss upon the disposal of Ergon Holdings shares, this potential loss will not be considered as linked with the dividend distribution made in June and August and would therefore be deductible (and not subject to recapture) to the extent that the loss is due to a foreign exchange rate variation upon disposal of the Ergon Holding shares.

7 In this respect, the potential foreign exchange loss realized by PLS would equal the negative difference between the GBP denominated acquisition p1ice converted into EUR at historical rate and the said acquisition price converted into EUR at the rate applicable on the date of the transfer from PLS to Dutchdelta.

B.3 Thin-capitalization (step 6)

8 Based on the developments detailed in Appendix 7 and given the majority shareholding of Dutchdelta in its subsidiary PLS, no debt-to-equity ratio will apply in the hands of Dutcbdelta for financing granted by PLS. Accordingly, the tax treatment will follow the accounting treatment.

B.4 Set up of Irish Branch by PLS (Step 7)

9 Based on the developments detailed in Appendix 6, the Irish branch should be treated as a "permanent establishment" of PLS in Ireland.

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10 The EUR 22bn receivable recorded in the commercial accounts of PLS will be offset for determining the unitary value of the Luxembourg company, by the EUR 22 bn (less EUR 10 million) non-interest bearing debt owed to the Irish non-trading branch. The tax treatment will follow the accounting treatrnen ~DE

c$-'a 11 Accordingly, approximately EUR 10 million of the total of the net tax ~ a

of PLS wiln remain subject to Luxembourg net wealth tax.

8.5 Migration of PLS SE and PUSSL to UK (Step 10.3)

12

13 According to Article 172 (1) LITL, the migration of a resident company involves the liquidation of said entities (i.e. PUSSL and PLS SE). In this respect, Article 169 LlTL will apply in order to determine the taxable basis of the transferred entities. This involves in practice that the migration of these entities will trigger the realization of the latent gains (if any).

14 However, any gain on shareholdings should be exempt provided conditions of the Grand Ducal decree of 21 December 2001 in execution to Article 166 LITL (hereafter referred to as "Grand Ducal decree") are met.

15 From a Luxembourg tax point of view, the liquidation proceeds received by Outchdclta upon migration of PUSSL and PLS SE will be considered as a dividend distribution. It should be tax exempt in Luxembourg under article 166 LITL, as both companies are covered by article 2 of the EU Parent - Subsidiary Directive, and since, at the time of receiving the liquidation proceeds, Dutchdelta has continuously held a participation in PUSSL and PLS SE representing more than 10% of their share capital for more than 12 months.

16 Potential recapture in the hands of Dutchdelta on interest expenses in relation to those shareholdings will be limited to interest deducted in the accounting year in which the liquidation proceed has been received. The change of Dutchdelta's accounting year should not challenge this rule.

8.6 Foreign currency rate

17 Consistent with internal policy of the group, the foreign exchange rate used by the Luxembourg entities of the Group to record the transactions of the restructuring will be that of the working day preceding the effective date of the transaction.

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We remain at your disposal should you need any further information and would like to thank you for the attention that you will give to our request.

Yours sincerely,

c~ L Catherine Dupont Partner

Enclosures:

Enclosure l: Enclosure 2: Enclosure 3: Enclosure 4: Enclosure 5: Enclosure 6:

Enclosure 7: Enclosure 8:

Description of the E.ON Group Initial chart structure

_ftede · ue-Audrey Hakkens ~ Senior advisor

Description of the transactions in relation to TKl 4 (Phase 2) Description of the final structure Detailed tax analysis of the change in the legal fom1 of PLS Detailed tax analysis of the tax treatment applicable to PLS's Irish Branch Thin-capitalization analysis Our letter of 11 June 2008 - RBS/FYHS/P127c08001M-CACI

For approval

Le prepose du bureau 'imposition Socii!tes 6

Kohl

171is 1ax agreement is based on the facts as presenled lo Pricewat rhouseCoopers Sari as al 1he dale the advice was given. 77ie agreement

is dependent on specific facts and circumstances and may nol b appropriate to another party than the one/or which it was prepared.

This tax agreement was prepared wilh 011/y the interests of P0Terge11 Luxembourg S.ar.l in mind. and was not planned or carried ou1 in

conlemplation of any use by any other party. PricewalerhouseCqofers Sari. ifs parlners, employees and or agents, neilher owe nor accept

any duty of care or any responsibility to any other parly, whethe\111 contract or in tort {including wi1ho111 limitation. negligence or breach

of s1a1uto1y duty) however arising. and shall not be liable in resptt~ of any loss. damage or expense of wlwtever nature which is caused to

any other party. \ I

\. \

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Enclosure 1

Description of the E.ON Group

Powergen was created from the privatisation of the Central Electricity Generating Board (CEGB) in 1990 and grew from being an electricity generator to being the UK's largest integrated power and Gas Company, generating and distributing electricity, and retailing power and gas.

In April 2001 the Geiman utility company E.ON AG announced a pre-conditional offer for the purchase of Powergen. This purchase was completed on 1st July 2002.

E.ON has become the world's largest privately-owned electricity and gas company, in line with its strategy of focused growth in the energy sector. The Powergen UK group has now been renamed E.ON UK and operates as a subsidiary of E.ON AG to help achieve its aim of leadership across the European energy market : Powergen's US Operations - initially held via Luxembourg - were sold to E.ON AG and continue to be used as a platform for expansion in the American energy market.

Nowadays, the E.ON UK Group is a leading energy supplier, with around nine million electricity and gas customer accounts. E.ON UK also produces electricity from a portfolio of world-class power stations and is one of the leading names in green generation. Its trading business is also a major player in the UK's electricity and gas markets.

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Enclosure 2

Initial chart structure

The initial structure is as follows:

EON AG (Germany)

~~~~~·~~~~~~-'I~,~~~~~~~~~~~~~~~

EON UK Holding GmbH

(Germany)

EON UK Holding Co Ltd (UK)

Powergen Ltd (UK)

Powergen Holding Sar1

(Luxembourg)

/,.,'

Loan GBP 14 bn

... Powergen US Holdings Ltd

(UK)

EON Finanzanlagen

GmbH (Germany)

Dutchdelta Finance Sar1

(Luxembourg)

EON US Holding GmbH

(Germany)

EON US Investments Co

(USA)

1 1

EON US Group

~ (USA)

Gltsmay Ltd (Ireland)

i - ······--··-Powergen

Holding Co Ltd (UK)

Powergen UK Securities

(UK)

Powergen US Investments -C·

(UK)

!

Powergen Luxembourg

SM (Luxembourg)

Bond i EUR 0.2 bn.----..__-~

Powergen US Securities Ltd (Luxembourg)

..

Lurcon Ltd (Ireland)

Powergen

EON Nordic AB (Sweden)

EON Sverige AB (Sweden)

'., ',

\\ •\ . ~ \ I\,

' ' . : ' ' ',

Loan USO 2.6 bn "·

~ Powergen Group

Investments (UK)

Caremount Ltd (Ireland)

Ganaz Ltd (Ireland)

Luxembourg Ergon Holdings Holding Sar1 Ltd (Malta)

(Luxembourg) Loans SEK 1 O bn

EON UK Group (TK25)

(UK)

LoanGBP 5bn

Ergon Financial Management Ltd

(Malta)

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Enclosure 3

Description of the transactions in relation to TK 14 (Phase 2)

Step 1

On May 29, 2008, PLS reduced its ordinary share capital to EUR 122,960 crediting EUR 15,247,114 to the share premium account (Step 1. 1).

At the same time, PLS converted into a Societe Anonyme (Step 1.2).

Step 2

On June 18, 2008, Ergon Financial Management Ltd ("Ergon FM"), Ergon Insurance Ltd and Ergon Holdings Ltd declared and paid dividends of all of their profits available for distribution (Step 2.1 ).

PLS and E.ON Nordic AB ("Nordic") used the dividends received to subscribe for new Ergon Holdings Ltd "B" shares. In addition, Nordic subscribed for further shares by assigning a SEK 2.36 billion loan note issued by E.ON Sverige AB (Step 2.2).

Step 3

On June 30, 2008, the various loans from Ergon FM to E.ON UK group companies and Powergen US Holdings Ltd ("PUSHL") were redirected via Powergen Ltd (Step 3 .1)

On July 30, 2008, PLS converted its share premium account and legal and statutory reserves into distributable reserves (Step 3 .2).

On July 31 , 2008, PLS completed the process of converting into a Societe Europeenne (Step 3.3).

Step 4

On August 26, 2008, Ergon Financial Management Ltd ("Ergon FM") (Step 4.1) and Ergon Holdings Ltd (Step 4.2) declared and paid a further dividend of all of their profits available for distribution as at the end of August.

Step 5

On September 1, 2008, Nordic transferred its entire holding of Ergon Holdings Ltd "A" shares to Dutchdelta on an ex-dividend basis for market value cash consideration of GBP 5 million (Step 5.1 ).

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On September 3, 2008, the dividends declared at Step 4.1 were settled, and used by PLS and Nordic to subscribe for new Ergon Holdings Ltd "B" shares (Step 5.2).

Step 6

On September 9, 2008, PLS transferred: - its shareholdings in Ergon Holdings Ltd and PLHS; - its income-generating monetary assets (i.e. loans to E.ON US Investments Corp, bond and cash deposited with E.ON AG) to Dutchdelta for market value cash consideration (Step 6.1).

On September 9, 2008, PLS used the entire proceeds to acquire two interest-bearing loan notes issued by Dutchdelta. The loan notes are freely assignable within the E.ON group (Step 6.2).

Step 7

In the course of December 2008, PLS set up an Irish non-trading branch and allocated the receivable it held toward Dutchdelta up to an amount of EUR 22,682,000,000.

Step 8

On 16th December 2008, Lurcon Ltd and Gistrnay Ltd were sold outside the E.ON group

Step 9

In the first quarter of 2009, E.ON UK Holding GmbH will merge into E.ON Finanzanlagen GmbH (Step 9.1).

E.ON Finanzanlagen GmbH will contribute E.ON UK Holding Company Ltd ("EUKHC") to Dutchdelta (Step 9.2).

Dutchdelta will be renamed E.ON International Holdings Sarl ("EIH") (Step 9.3) and will change its accounting year from 31 December to a date in February/March.

Step 10

In the first quarter of 2009, PU SSL, Powergen US Investments ("PUSI") and PUSHL will reduce their share capital to a minimal level thereby creating distributable reserves (Step 10.1).

E.ON AG will grant a loan facility to Powergen US Securities Ltd ("PUSSL") equivalent to the amount of its distributable reserves (Step 10.2).

One day after the new Dutchdelta year-end, PUSSL and PLS will migrate from Luxembourg to the UK (Step 10.3).

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Step 11

Shortly after Step l 0.3 above, PLS and PU SSL will distribute materially all of their assets.

Step 12

On the same day as Step 11, Powergen Ltd will distribute the EUR 8.4bn loan to ETH (the "EIH Loan") to EUKHC (Step 12.1).

On the same day, EUKHC will make a EUR 8.4bn distribution to EIH resulting in the elimination of the Ell I Loan (Step 12.2).

Step 13

Later in 2009, Powergen Group Investments, Powergen Group Holdings Ltd, Powergen UK Securities and Powergen UK Holding Company Ltd will reduce their capital to create distributable reserves (Step 13. l ).

PUSI, PUSHL, PUSSL, Powergen Group Investments, Powergen Group Holdings Ltd, Powergen UK Securities and/or Powergen UK Holding Company Ltd will reduce their capital to create distributable reserves, and will distribute out materially all of their assets and will be placed into liquidation (Step 13 .2)

Powergen Ltd will distribute its shareholdings in PHS and Powergen UK Securities to EUKHC for market value consideration (Step 13.3)

EUKHC will distribute its shareholding in PHS to EIH (Step 13.4).

PHS will then transfer its shareholding in Powergen UK Holding Co Ltd to EUK.HC for market value consideration (Step 13.5).

Before the end of 2009, EIH will sell its shareholding in PLS to an unrelated purchaser (Step 13 .6).

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Final chart structure

Bond EUR0.2 bn

\ I

EON UK Group (TK25)

(UK)

Irish Non­Trading Branch

EON AG (Germany)

1· ... EON

Finanzanlagen GmbH

(Germany)

EON Loan USO 2.6 bn

International Holding Sari

(Former Dutchdelta)

(Luxembourg)

i Powergen

Holding SM EON UK Holding

Co Ltd (UK) (Luxembourg)

--,

Powergen Ltd (UK)

/ .___ ____ _ Loan GBP3 5 bn

Powergen Luxembourg SE

(UK)

Caremount Ltd (Ireland)

Ganaz Ltd (Ireland)

Powergen Luxembourg Holding Sart

(Luxembourg)

Enclosure 4

EON us Holding GmbH

(Germany)

EON US Investments Co

(USA)

EON US Group (USA)

..........

EON Nordic AB (Sweden)

EON Sverige AB (Sweden)

Loan GBP 5 bn

Loans SEK 10 bn

Ergon Holdings Ltd

(Malta)

Ergon Financial , · Management Ltd

(Malta)

/

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Enclosure 5

Detailed tax analysis of the change in the legal form of PLS

According to Article 170 (1) LITL, when the assets and liabilities of a fully taxable joint­stock company are transferred to another person, whether upon liquidation or not, the operation is regarded as a liquidation for tax purposes. The note 5 to the article further mentions that in case of transformation, the change of legal form is assimilated, from a tax point of view, to the dissolution of the company followed by the creation of a new company.

However, under Article 170 (2) LITL, when the assets and liabilities of a fully taxable resident joint-stock company are transferred as a whole to another fully taxable resident company, the profit resulting from the transfer of the assets is tax exempt provided that:

a) The transfer has to be carried out either by means of the issue of shares by the receiving company to the shareholders of the transferring company and, if this be the case, of a cash payment not exceeding 10% of the nominal value (or, if no nominal value exists, the accounting par value of the securities issued), or by the cancellation of a participation held by the receiving company in the transferring company;

b) The transfer has to be carried out in such a way that the profit will be taxable in Luxembourg at a later date when, if no such provision existed, it would have been taxable there.

Given that the aforementioned requirements are met, the transformation of PLS into a SA and then to a SE should be tax neutral.

Furthermore, Article 1 72bis (1) LITL states that when a joint-stock company is transformed into another joint-stock company within the framework of a tax neutral operation according to Article 170 (2) LITL, the carry forward losses according to Article 114 LITL are continued in the same conditions that those applicable in the hands of the transformed company.

Accordingly, the transformation of PLS into a SA and then to a SE should be fully tax neutral and should not challenge the possibility g]ven to PLS to carry forward its losses.

(13)

Enclosure 6

Detailed tax analysis applicable to PLS' Irish Branch ("Irish Branch")

A Double tax treaty concluded between Luxembourg and Ireland

PLS is a Luxembourg tax resident company according to article 159 LITL and according to article 3§ I (g) and (h) of the tax treaty concluded between Luxembourg and Ireland (hereafter referred to as "the Treaty").

From a Luxembourg tax perspective, the tax treatment of Irish Branch will depend on its substance. The Irish branch should be considered to be a non-trading branch in Ireland.

In this respect, the branch will have:

an office space and an Irish address; all necessary material to carry out its activities (i.e., desk, fax, etc.); a company name which will be displayed at the premises; a telephone number which will be made available to the public; its own bank account; separate accounting records.

One manager will be appointed. This manager will be in charge of the daily management of the Irish branch.

The branch will be managed and controlled only in Ireland by its own Irish manager. All decisions pertaining to the business of the branch will be taken in Ireland. The permanent establishment will have the authority to conclude contracts in the name of the company and the signatory authority on the bank account of the company.

Moreover, the following documents will be retained in Ireland and made available upon request:

the minutes of the board meeting of PLS creating the Irish branch and allocating funds to the Irish branch; the minutes of the board meeting of PLS appointing the Irish branch manager and any subsequent minutes of board meeting in relation with the branch; a copy of the management services agreement covering the branch manager; a copy of the licence agreement covering the provision of office space and services; a copy of a contract for an own telephone number; a copy of the registration deed in Ireland; a copy of the payrolls of the branch; a copy of the contract for a local Irish bank account; a copy of the employment contract of the branch's employee; a copy of the registration deed in Ireland (or a substitute).

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In view of the aforementioned local substance in Ireland, the Irish branch will be qualified as a "permanent establishment" of PLS in Ireland, as defined in article 4 of the Treaty.

B Tax treatment of income realized by the Irish permanent establishment

According to article 6§ 1 of the Luxembourg-Irish Treaty (in this section referred to as "the Treaty"), the business profits attributable to an Irish permanent establishment of a Luxembourg company may be taxed in Ireland.

Moreover, article 23 of the Treaty provides for methods to eliminate double taxation. Article 23§3 (a) of the Treaty stipulates that where a Luxembourg resident derives income, which in accordance with the Treaty may be taxed in Ireland, such income shall be exempt from tax in Luxembourg. Article 23§ 1 of the Treaty, however, subjects the exemption provided by article 23§3 (a) to the condition that the income to be exempted in Luxembourg has been "subject to tax" in Ireland (French wording: "passible de l 'impot").

Article 23§ 1 of the Treaty in its French version does not provide for a subject to tax condition but merely to a "may be subject to tax" condition. Indeed, the French version1 of the Treaty is clear concerning article 23§1 of the Treaty, whereas the English version2 could give rise to some doubts concerning the notion of "subject to tax".

Since, in case of doubt, both texts are equally authoritative, reference should be made to other sources. Article 23 of the Treaty is based on the OECD Model Convention3 ("the Convention"). As a consequence the interpretation in case of doubt should be inspired by the Convention and its official comments4

.

In this respect, it should be noted that the Convention in French is similar to the French version of the Treaty5

, whereas the English version of the Treaty does not use the same wording as the Convention 6. The comments of the draft bill do not mention an intention of the parties not to follow the Convention, whereas it is mentioned for other articles when it is the case7

.

Furthermore, the Convention does not usually require "an effective taxation" of the income as a condition for the application of an exemption. As a consequence, article 23§ 1 of the Treaty should not be viewed as requiring an effective taxation but rather and only as referring to the right to tax that both countries have8

. Moreover, this analysis of article 23§1 is consistent with all paragraphs of article 23.

1 The French version Jays down that "lorsqu 'un revenu est passible de I 'impot dans !es deux etats contract ants ... '', which can be translated by ''where an income may be taxed''. 2 The English version lays down that "where income is subject to tax". 3 Preparatory works 11°1679, pages 34, 1933 and 1950 4 Preparatory works n° 1679, pages 34 and 1933 5 The French version of the Treaty uses ·~1assible de /'impot" and the French version of the Convention uses "imposable". 6 The Treaty mentions "subject to tax", whereas the Convention mentions "may be taxable". 7 E.g articles 18 and 20, cf page 1935 of the Preparatory work n° 1679. 8 Cf. comments on Article 23 A of the OECD Model Convention

(15)

Notwithstanding the above analysis, and complementarily, even in case a doubt would remain with respect to the interpretation of the English version of article 23§ 1 of the Treaty, such doubt would disappear in the light of the general interpretation of the Convention and official commentaries thereof.

As mentioned above, the comments of the draft bill 9do mention that the Treaty follows in principle the Convention.

For the purpose of this interpretation, it has to be noted that a new anti-abuse provision was included in the Convention in 2000. New article 23 A paragraph 4 of the Convention provides that the exemption method for elimination of double taxation, provided by article 23 A paragraph 1, will not apply if the income is exempt from tax in the source country by application of the provisions of the Convention itself. In the case at hand, this would mean that Luxembourg could not exempt the income from tax if Ireland exempts this income from tax by application of the Convention.

The official commentaries to the Convention (Comment C(23) (24) point 56.2) expressly provide for the following: « Such provision (article 23 (A) 4) would therefore not apply where the state of source considers that it may tax an item of income or capital in accordance with the provisions of the Convention but where no tax is actually payable on such income or capital under the provisions of the domestic laws of the state of source. In such a case, the state of residence must exempt that item of income under the provisions of § 1 because the exemption in the state of source does not result from the application of the provisions of the convention but rather from the domestic Law of the state of source ».

Thus, article 23§ 1 of the Treaty may not be considered as exhaustive and as a consequence the Treaty therefore allows the application of the method to eliminate double taxation under article 23 §3a either in case of double taxation or in case of single taxation in the state of residence when the source country is entitled to levy tax in accordance with the Treaty but docs not tax the income by application of its domestic Jaw.

As a consequence of the above, based on the conclusion that the Irish branch constitutes a pennanent establishment and on the understanding of article 23§ 1 of the Treaty set out above, the right to tax the profits deriving from the activities of the Irish branch will be granted to Ireland by virtue of article 6§ 1 of the Treaty and such profits will be exempt from any Luxembourg corporate tax and municipal business tax in Luxembourg by application of article 23§3a of the Treaty. Profits include any possible foreign exchange profits (or losses).

Consequently, corporate income tax and municipal business tax can only be levied on profits attributable to the Luxembourg company, since profits attributable to the Irish branch should be taxable in Ireland.

9 Preparatory works n°1679, pages 34, 1933 and 1950

(I 6)

C Net wealth tax

For net wealth tax purposes, article 22§2 of the Treaty states that assets consisting of movable property being part of a permanent establishment may only be taxed in the state where this permanent establishment is located. According to article 23§3a of the Treaty, those assets will be exempt in Luxembourg from net wealth tax. Consequently, no net wealth tax will be levied in Luxembourg on the Irish branch assets.

(17)

Enclosure 7

Thin-capitalization analysis (step 6)

Background

Further to Project TK 14 (Phase I), Dutchdelta's part1c1pation in PLS is substantially financed by a debt of EUR 14 billion granted by PLS, a subsidiary of Dutchdelta. It has been agreed that no adverse tax consequence would arise in relation to the non-compliance with the debt-to-equity ratio to the extent the debt-to-equity ratio was respected at the closing of financial year 2008 (see Appendix 8 - our letter of 11 June 2008 referenced RBS/FYHS/Pl27c08001M-CACI).

An additional debt of around EUR 9 billion granted by PLS on September 9, 2008 financing the participation in PLHS and in Ergon Holdings Ltd (hereafter referred to as "Ergon Holdings") was transferred to Dutchdclta on Step 6.

As a result, Dutchdelta has financed its shareholdings in PLS, PLHS and Ergon Holdings Ltd by debt granted by its subsidiary, PLS.

Luxembourg practice

Based on a Luxembourg practice, companies have to meet a 85115 debt/equity ratio for participations financed by loan granted by their group companies. The application of this practice entails that 15% of the interest expenses would be re-classified as a dividend and would then not be tax deductible and subject to withholding tax. This rcqualification is based on article l 64al3LITL, i.e. interest paid is considered as hidden dividend distribution since a third party would not have granted such a loan in the same situation.

It has to be noted that the rcqualification of the interest into a dividend, based on article l 64al3 LITL, is part of a more general theory regarding freedom of the taxpayer in the choice of fonn that he considers the most appropriate and the less costly from a tax point of vicw. 10 In this respect, some authors 11 consider that if the lender is not also a shareholder, the juridical and economical qualification of the loan could not be challenged from a tax point of view.

Luxembourg practice adapted to financing from a subsidiary

In the case of a wholly owned subsidiary, there is no decrease in value of the company and no advantage is granted to the shareholders of the company. Accordingly, there should be no rcqualification of the interest expense into dividend. The debt-to-equity ratio is not applicable.

10 Steichen, Manuel de Droit Fiscal, Tome l, n°553. 11 Steichen, ibidem ; Elvinger, Aspects internationaux de la sous-capitalisation, IF A, CDFI, vol 8Ib, Deventer,

1996, p.559 ct svt.

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In the case at hand, Dutchdelta owns 100% of Ergon Holdings Ltd, 100% of PLHS and around 64 % of PLS shares (directly 63,3% and indirectly 0,7%). The remaining 36% shareholding in PLS is held indirectly by Powergen US Holdings Limited UK (hereafter referred to as "PUSHL") a sister company of Dutchdelta.

Considering in the present case, the majority shareholding of Dutchdelta in PLS, no debt/equity ratio should apply. Accordingly, the tax treatment will follow the accounting treatment.

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Enclosure 8

Our letter of 11June2008 - RBS/FYHS/Pl27c08001M-CACI

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CLASSIFICATION SHEET

This document relates to the following request:

l J June 2008

References: RBS/FYHS/P l 27c0800 l M-CACI

Powcrgen US Securities Limited- tax number: 1600 3208 471 Powergen Luxembourg S.ar.1- tax number: 2000 2419 468 Dutchdelta Finance S.ar.1- tax number: 2004 2401 596

1. Key topics: Net wealth tax structure

2. Name of the advisor : PwC

3. Corporate group' s name, or fund sponsor: ITS 2 I 4. Name of the project: Net wealth tax I ~5._A_n_1o_u~n~t~in~te~n~d~cd~t~o~b_c_in_v_c~st_cd_:_l_O_b_ill_io~n~~~~~~~~~~~~~~~~~---'I

6. Date of receipt: I

2

For the attention of M r Marius Kohl

Administration des Contributions Directes Bureau d'imposition Societes VI 18, Rue du Fort Wedell L-2982 Luxembourg

June l I , 2008

References: RBS/FYHS/P l 27c0800 l M-CACI

l'riccwutcrhouscCoopcrs Socictc ii rcsponsabilih' limitec Reviscur d'cntrcpriscs 400, route d'f:sch B.I'. 1443 L-10 14 Luxembourg Telephone + 352 494848-1 Facsimile+ 352 494848-2900

www.pwc.com/lu inlb@lu.pwc.com

Powergen US Securities Limited- tax number: 1600 3208 471 (hereafter referr ed as to "PUSSL")

Powergen Luxembourg S.a r .1- tax number : 2000 2419 468 (hereafter refer red as to "PLS")

Dutcbdelta F inance S.ar.1- tax number : 2004 2401 596 (hereafter referred as to "Dutchdelta")

Dear Mr Kohl,

At the request of the above mentioned client, we are pleased to submit for your review and approval, an analysis of the transactions described below (all steps pe11aining to "US Funding Project" have already been discussed with you during our meeting dated December 5, 2007). Alternatively, we would be pleased to receive your written comments on this restructuring.

A Facts

For your infonnation, you will find attached to this letter a brief desc1iption of the E.ON Group, to which PUSSL, Dutchdelta and PLS are affiliated (Enclosure 1), a description of the transactions in relation to the "US Funding Project" (Enclosure 2), a chai1 reflecting the intermediate situation after the "US Funding Project" (Enclosur e 3), a desc1iption of the transactions in relation to "TK 14 (Phase 1) Project" (Enclosur e 4) and a description of the final structure (Enclosure 5) after the latter project.

3

B Applicable tax regime

8 .1 US Funding Project

8.1.1 Change of the accounting year-end for PUSSL and conversion of PUSSL's functional currency from USO to EUR (Step 4)

On 19 December 2007, PUSSL closed its accounting period and changed its accounting functional cuJTency from USD to EUR for the period from December 20lh 2007 lo December 31 51 2007 and thereafter.

Since PUSSL's functional currency for tax purposes is the EUR, we consider that the change in accounting functional currency from USD to EUR should be neutral (the tax functional cuJTency remaining the same).

B.1.2 Foreign exchange considerations

Based on the transactions described in Enclosure 2 and their timing no foreign exchange exposure has arisen at the level of PU SSL or PLS with respect to the operations.

B.1.3 Dividend distribution at the level of PUSSL (Step 12 of US Funding Project)

On 2 January 2008, Ganaz declared a dividend of approximately EUR 2 million payable to PUSSL.

AI1icle 23 3) b) of the Double Tax Treaty signed between Luxembow·g and Ireland states that dividends paid by a company which is a resident of Ireland to a company which is a resident of Luxembourg shall be exempt from Luxembourg tax if the company receiving the dividends controls directly at least 25 per cent of the voting power in the company paying the dividends.

In the case at hand, PU SSL held 33 per cent of the voting power in Ganaz at the moment the dividend was declared by Ganaz.

As a consequence, the dividend income recorded by PUSSL from Ganaz under Step 12 is not subject to tax in Luxembourg in accordance with Article 23 (3) (b) of the Double Tax Treaty signed between Luxembourg and Ireland.

4

B.1.4 Contribution of the Ganaz shares from PUSSL to PLS (Step 13 of US Funding Project)

On 20 December 2007, PUSSL contributed the PLS EUR Loan (i .e. EUR 1,552 million) to Ganaz's share premium attached to the value of Ganaz's ordinary shares. On 2 January 2008, PUSSL transferred the ordinary shares of Ganaz to PLS in exchange for new PLS "A" shares issued on arm's length terms.

Since Ganaz had declared a dividend payable to PUSSL immediately ptior to this transaction for an amount not less than the profits eamed since fonnation (approximately EUR 1.95 million), the transfer of the Ganaz ordinary shares to PUSSL under step 13 occurred at book value. Accordingly, no capital gain or loss arose under this step.

Further, since PUS SL has the EUR as its accounting and tax functional currency as of 20 December 2007 and the underlying asset held by Ganaz is also in EUR, there would have been no foreign exchange movement on the value of the Ganaz shares at the level of PUSSL.

B.1.5 Repayment of PLS EUR Loan (Step 16 of US Funding Project)

On 3 January 2008, Ganaz paid a dividend in favour of PLS, settled by offset against the maturity of the PLS EUR Loan. As a result, the dividend receivable and the PLS EUR Loan recorded by PLS were cancelled.

Article 23 3) b) of the Double Tax Treaty signed between Luxembourg and Ireland states that dividends paid by a company which is a resident of Ireland to a company which is a resident of Luxembourg shall be exempt from Luxembourg tax if the company receiving the dividends controls directly at least 25 per cent of the voting power in the company paying the dividends.

In the case at band, PLS held 33 per cent of the voting power in Ganaz at the moment the dividend was declared by Ganaz.

As a consequence, the dividend income recorded by PLS from Ganaz under Step 16 is not subject to tax in Luxembourg in accordance with Article 23 (3) (b) of the Double Tax Treaty signed between Luxembourg and Ireland.

B.1.6 Net wealth tax at the level of PU SSL (Steps 8, 12, 13 and 16)

On 20 December 2007, PUSSL contributed the PLS EUR Loan (i.e. EUR 1,552 million) to Ganaz's share premium attached to the value of Ganaz's ordinary shares that it had acquired the previous day. PUSSL increased the value of its shareholding in Ganaz accordingly (Step 8).

5

On 2 January 2008, Ganaz declared a dividend to PU SSL in the amount of approximately EUR 1.95 million (Step 12).

On 2 January 2008, PU SSL transferred the ordinary shares of Ganaz lo PLS in exchange for new PLS "A" shares (Step 13).

On 3 January 2008, Ganaz paid a dividend in favour of PLS, settled by offset against the maturity of the PLS EUR Loan (Step 16).

Based on Paragraph 60 of the Prope1ty and Secw·ities Valuation Act a pmticipation is excluded from the net operating assets notably in the case where a fully taxable joint­stock resident company holds a direct participation in a company covered by Article 2 of the Parent I Subsidiary Directive representing at least I 0% of the share capital of the subsidiary or with an acquisition price of at least EUR 1.2 million at the end of the operational year preceding the key date for the determination of the taxable base of the company for net wo1th tax.

As a result, the patticipation held by PUSSL in Ganaz as at 1 .January 2008 is to be excluded from the net operating assets as of that date.

B.1.7 Net wealth tax at the level of PLS (Steps 9 and 15)

On 20 December 2007 (Step 9), PLS made a capital contribution to Caremount, settled by issuing a EUR Promissory Note equivalent to the net value of its monetary assets less EUR 10 million.

On 3 January 2008 (Step 15), Caremount distributed a dividend to PLS resulting in the cancellation of the EUR Promissory Note and the extraction of excess Caremount funds.

As a result, the dividend receivable and the EUR Promissory Note recorded by PLS were cancelled leading to a net operating value of PLS on 1 January 2008, subject to net wealth tax, of approximately EUR 10 mill ion.

B.1.8 Priority of financing

For corporate tax, municipal business tax and net wealth tax purposes, the participation held in Caremount by PLS and in Ganaz by PUSSL and then by PLS were, are and will be deemed to be financed in priority by PLS' or PUSSL's equity, including share capital, share premium, retained earnings and profits of the year.

Conversely, the receivables held by PLS were deemed financed in priority by PLS liabilities.

6

B.2 TK 14 (Phase l) Project

B.2.1 Thin-capitalisation consideration

As a result of the TK 14 Restructuring, Dutchdelta will be financed substantially by a debt granted by its subsidiary, i.e. PLS with the consequence that Dutchdelta will not comply with the debt-to-equity ratio between the issuance of DD Loan Note 2 and its expiration, i.e. between 8 Ap1il 2008 and 2 December 2008.

However, provided Dutchdelta's debt-to-equity ratio is respected at the closing of financial year 2008, no adverse tax consequence will arise in relation to the non­compliance with the debt-to-equity ratio.

B.2.2 Conversion of the Profit Funding Agreement ("PFA") (Step 6 of TK 14 (Phase 1) Project)

On 8 April 2008, the PF A between PUSSL and PLS was capitalised, i.e. converted into PLS "A" Ordinary Shares issued to PUSSL.

As mentioned in our letter of 19 April 2007 (Ref.: RBS/FYHS/Pl27c07001M-CACI -Enclosure 9) in relation to the tax treatment of the PF A, "the PF A [was] conve1iible into capital and share premium of PLS at any time if all the necessary and allowable legal actions are undertaken."

Moreover, it has been confinned fu11her to the above-mentioned letter that considering the overall characteristics of the PFA (specifically, the yield on the PFA depends on the distributed profits of PLS, combined with the long maturity of the loan, the fact that the PF A ranks in tenns of subordination, behind all secured obligations, unsecured and unsubordinated obligations and unsecured and other subordinated obligation of the issuer, and that PUSSL may not transfer its interest in the PFA unless it also transfers its shares in PLS), the PF A was assimilated to a class of shares or equity for net wealth tax, corporate tax and municipal business tax pill-poses at the level of PLS.

As a result, no gain or loss arose upon the conversion which is considered as a non event from a Luxembourg tax point of view.

B.2.3 Dividend distribution from Lurcon to Dutchdelta (Step 9 of TK 14 (Phase l) Project - Enclosure 4)

On 8 Ap1il 2008, Lurcon declared a EUR 14 million dividend (approx.), settled by cancelling the DD Loan Note 3 and leaving a EUR I 00 debt owing from Dutchdelta.

7

In this respect, Article 23 3) b) of the Double Tax Treaty signed between Luxembourg and Ireland states that dividends paid by a company which is a resident of Ireland to a company which is a resident of Luxembourg shall be exempt from Luxembourg tax if the company receiving the dividends controls directly at least 25 per cent of the voting power in the company paying the dividends.

In the case at hand, Dutchdelta held 100 per cent of the voting power in Lurcon at the moment the dividend was declared by Lurcon.

As a consequence, the dividend income recorded by Dutchdelta from Lurcon under Step 9 of TK 14 (Phase I) Project is not subject to tax in Luxembourg in accordance with Article 23 (3) (b) of the Double Tax Treaty signed between Luxembourg and Ireland.

B.3 Net wealth tax considerations

In the future, the Luxembourg entities of the E.ON Group may make capital contributions to one or several subsidiaries covered by Article 2 of the Parent I Subsidiary D irective, prior to the year-end closing. The said capital increase may be settled by issuing a EUR Promissory Note equivalent to the net value of the monetary assets less a total margin equivalent to EUR 10 million for the Luxembomg entities of the E.ON Group.

Moreover, the relevant subsidiary may distribute a dividend to its Luxembourg parent resulting in the cancellation of the EUR Promissory Note and the extraction of excess funds not before 13 days after the capital contribution to the EU Subsidiary.

Provided the timing of the above-mentioned transactions is complied with, the consequences deriving from the said operation will be considered as regular (i.e. non abusive) and will not be challenged by the Luxembourg tax authorities.

As a result of the above, the net wealth tax basis for the Luxembourg entities of the E.ON Group will globally not exceed EUR I 0 million per year assuming that no other assets subject to Net Wealth tax than the ones deriving from the above-mentioned operations are reflected in the balance sheet of the Luxembourg entities of the E.ON Group.

8

We remain at your disposal should you need any further information and would like to thank you for the attention that you will give to our request.

Yours sincerely,

Rene Beltjens Partner

Enclosures:

Enclosure 1: Enclosure 2: Enclosure 3: Enclosure 4: Enclosure 5: Enclosure 6:

Description of the Group

Claudia Centoni Director

Description of the transactions in relation to US Funding Project. Description of the intermediate structure Description of the transactions in relation to TK 14 (Phase I) Project Description of the final structure Our letter of 19 April 2007 - RBS/FYHS/P127c07001M-CACJ

For approval

Le prepose du bureau d'impositio11 Societes 6

Marius Kohl

Luxembourg, 11 June 2008

17iis tax agree111enl Is based on 1/te facts as presented to PricewaterhouseCoopers Stir/ as at tl1e dtlte 1/te tldvice was given. 111e

agreemellt is dependenl on specific facts and circumslances and may nol be appropriate to another parry than the one/or which it was

prepared. This tax agreement was prepared with only rhe interesrs of Powergen Luxembourg S.ar.I in mind, and was nor planned or

carried 0 111 in contemplation of any use by any other party. PricewaterhouseCoopers S(/rl. its parrners. employees and or agents.

11either owe nor accept any duty of care or any responsibility 10 any orher pany. whether in contract or in fort (including without

limirarion. negligence or breach ofsra111rory duty) however arising. and shall not be liable i11 respect of any loss, damage or expense

of whatever nawre w/Jich is caJLred to any other party.

9

Enclosure 1 Description of the Group

A Background

Powergen is one of the best-known names in energy in the UK, generating, distributing and retailing electricity to millions of customers around the country. Powergen is part of the E.ON group, the world's largest investor-owned utility. E.ON AG is listed in New York (NASDAQ) and in Frankfurt (DAX).

Powergen is a leading energy supplier, with around nine million electricity and gas customer accounts. Powergen also produces electricity from a portfolio of world-class power stations and arc one of the leading names in green generation. Its trading business is also a major player in the UK's electricity and gas markets.

B Initial structure

Cun-ently, the structure is as follows:

Caremount Ltd

---

E.ON AG

,,owcrgcn us Securities Ltd

--- ---

Finance Sari

C"all1

------ --·

----------~------------ -------

Powc1)1,cn Lux llold1ng.oSart

EON US Group

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Enclosure 2

Description of the transactions in relation to US Funding Project

Step 1

Before 19 December 2007, Dutchdelta acquired 100% of the ordinary shares with a par value of I EUR in Ganaz Limited, an inactive Irish company (hereafter referred to as "Ganaz"). The initial share capital of Ganaz of EUR 100 was acquired for fa ir market value consideration of EUR JOO).

Step 2

On 19 December 2007, Dutchdelta subscribed EUR 200,000 for 200,000 Ganaz voting fixed-rate preference shares with a par value of EUR 1 and 5 votes per share, and PUS SL subscribes EUR 500,000 for further Ganaz ordinary shares. Both subscriptions were funded by short-te1m loans from PLS.

Step 3

On the same day, Dutchdelta transferred the Ganaz ordinary shares acquired in Step I to PUS SL for market value consideration.

Step 4

On the same day, PUSSL closed its cmTent accounting period and changed its accounting functional currency for the period from 20 December 2007 to 31 December 2007 and thereafter to EUR.

Step 5

On 20 December 2007, E.ON US Investments Company (hereafter referred to as "BUSIC") pays the caJls now due and an amount equivalent to the Net Present Value of the future remaining calls (together the "Calls") on the "C", "D", & "E" non-voting PUSSL shares.

Step 6

On the same day, PUSSL used the amounts received from BUSIC (Step 5) and PUSHL (Step 6) in respect of the Calls to acquire a sho11-term EUR-denominated promissory note (the "PLS EUR Loan") maturing on 3 January 2008, issued by PLS.

11

fRJcEWA1fRJ-1ousE[mPERS I Step 7

On the same day, PLS applied most of the funds lent by PUSSL to make a USD loan to EUSIC, and entered into a USD/EUR swap with E.ON AG. Any residual funds were converted to EUR and deposited with E.ON AG.

Step 8

On the same day, PUSSL transferred the PLS EUR Loan to Ganaz as a capital contribution.

Step 9

On the same day, PLS made a capital contribution to Caremount Ltd., settled by issuing a EUR promissory note (the "PLS Promissory Note") equivalent to the net value of its monetary assets (loans, bonds and cash) less EUR 10 million.

Step 10

On 2 January 2008, E.ON Finanzanlagen GmbH subscribed EUR 5,2 million for fmther Dutchdelta shares, enabling Dutchdelta to repay the funding obtained at Step 2 and make the subscription for shares at Step 12.

Step 11

On the same day, Dutchdelta subsc1ibed EUR 5,000,000 for fu11her PLS "B" shares.

Step 12

On the same day, Ganaz declared approximately (and not less than the profits earned since its fo1mation) a EUR 1.95 million dividend payable to PUSSL on 3 January 2008.

Step 13

On the same day, PUSSL transferred the Ganaz ordinary shares (ex-dividend) to PLS in exchange for new PLS "A" shares issued on arm's-length terms.

Step 14

On 3 January 2008, PLS settled all interest due to Caremount and Ganaz in respect of the PLS EUR Loan and the PLS Promissory Note.

12

fR/cEWA1fRJ-1ousF(mPERS I Step 15

On the same day, Caremount paid a dividend in favour of PLS, resulting in the cancellation of the PLS Promissory Note and the extraction of excess Carcmount funds.

Step 16

On the same day, Ganaz paid a dividend in favour of PLS, settled by offset against the maturity of the PLS Loan together with the extraction of any excess Ganaz funds, and settled the dividend due to PUSSL (as declared on 2 January 2008).

Step 17

On the same day, PUSSL repaid the EUR 500,000 short-term loan obtained from PLS at Step 2.

13

Description of the intermediate structure

E.ON AG

E.ON UK Holding E.ON

Finru17,.anJagcn

E.ON UK Holding Co Dutchdclta

Powergen Ltd

Powcrgcn US Holdings Ud

i , Powcrgcn US

1.--Powcrgcn US

Investments Securities Ltd 1.--

PFAs -€1 IOm -------__ ___ ... --· ~-

Pow erg en Luxembourg Sari ....

. (PLS) ....

- ----- ... - ------ ----------- ---------- ---- --- ---

I• 1 ,, Carcmount Ltd

Powergen Lux lloldings Sari Ganaz Ltd (PLllS)

-I -

Enclosure 3

l E.ON US llolding

T E.ON US

lnvcstmcnts Co

T ~~~ LLC

l E.ON US Group

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, --I Loans --I -$2.6bn

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14

Enclosure 4

Description of the transactions in relation to TK 14 (Phase 1) Project

Step 1

ln March 2008, Dutchdelta acquired two new off-the shelf Irish limited companies (Gistmay Limited, hereafter referred as to "Gistmay" and Lurcon Limited, hereafter refened as to "Lurcon")

Step 2

On 28 March 2008, Dutchdelta issued a EUR 14 billion interest-free loan note (the "DD Loan Note l ")to Gistmay in exchange for a further EUR 14 billion interest-free loan note issued on identical tenns by Gistmay (the "INJ Loan Note"). Both loan notes were repayable on demand and were freely assignable between E.ON group members.

Step 3

On the same day, D utchdelta made a EUR 14 billion capital contiibution to Lurcon, settled by assigning the IN 1 Loan Note to Lurcon.

Step 4

On 8 Ap1il 2008, the DD Loan Note 1 was replaced with a new EUR 14 billion interest­bearing loan note (the "DD Loan Note 2).

The DD Loan Note 2 is interest-beaiing, matures on 2nd December 2008 with monthly interest fixings on the second of each month and is assignable between members of the E.ON group. It is guaranteed by E.ON Finanzanlagen GmbH, and the holder of the Loan Note is entitled to demand repayment at any time.

Step 5

On the same day, Gistmay transfcn ed the DD Loan Note 2 to Lurcon in settlement of the IN l Loan Note.

Step 6

On the same day, the Participating Funding Agreement between PUSSL and PLS was capitalised, i.e. converted into PLS "A" Ordinary Shares issued to PUSSL.

15

Step 7

On the same day, Lurcon contributed all its assets and liabilities (including the DD Loan Note 2) to PLS in exchange for PLS "A" ordinary shares issued on arm's-length tenns.

Step 8

On the same day, the PLS shares acquired by Lurcon at Step 7 were transfeJTed to Dutchdclta in return for a EUR 14 billion (approx.) interest-free Joan note (the "" DD Loan Note 3") which was repayable on demand.

Step 9

On 8 April 2008, Lurcon declared a EUR 14 million dividend (approx.), settled by cancelling the DD Loan Note 3 and leaving a EUR 100 debt owing from Dutchdelta.

16

Description of the final structure

E.ON AG

E.ON UK Holding

E.ON UK Holding Co

Powergen Ltd

DD Loan Note 2 EUR 14 bn Powergen US

Holdings Ltd _. -- ............ -, , , , ,

i , , , ,,. ,

Powcrgcn US ,' Powcrgcn US Invcsuncnt..~ ,' +--- Securities Ltd

I

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' ,, Carcmount Ltd

Powergen Lux Uoldings Sari

E.ON

Finan7.anlagen

Dutchdelta

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Oistmay Ltd r-+ +---

r-+ Lurcon Ltd

--_,---------------------

l ,, Ganaz Ltd

Enclosure 5

i E.ON US llolding

l E.ON US

Investments Co

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i E.ON US Group

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$2.6b1

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17

Enclosure 6

Our letter of 19 April 2007 - RBS/FYHS/P127c07001M-CACI

18

For the attention of Mr Marius Kohl

Administration des Contributions Dircctes Bureau d'imposition Socictcs VI 18, Rue du Fort Wedell L-2982 Luxembourg

June 11, 2008

References: RBS/FYHS/P l 27c08001 M-CACI

l'rkcwaterhouseCooptrs Soclele II l'csponsabillte limitee Reviscur d'cntrcprbu 400, rout.: J Esch Ill'. 1443 L-1014 I u.~.:mbourg

rdcphonc + 352 4948411-1 Facsimile 1-352 494848-2900 www.pwc.com/lu inlb@lu.pwc.com

Powergen US Securities Limited- tax number: 1600 3208 471 (hereafter referred as to "PU SSL")

Powcrgen Luxembourg S.ar.1- tax number: 2000 2419 468 (hereafter referred as to "PLS")

Dutchdclta Finance S.ar.1- tax number: 2004 2401 596 (hereafter referred as to "Dutchdelta")

Dear Mr Kohl,

At the request of the above mentioned client, we are pleased to submit for your review and approval, an analysis of the transactions described below (all steps pertaining to "US Funding Project" have already been discussed with you during our meeting dated December 5, 2007). Alternatively, we would be pleased to receive your written comments on this restructuring.

A Facts

For your information, you will find attached to this letter a brief description of the E.ON Group, to \.\ hich PU SSL, Dutchdelta and PLS arc affiliated (Enclosure l), a description of the transactions in relation to the "US Funding Project" (Enclosure 2), a cha11 reflecting the intermediate situation atler the "US Funding Project" (Enclosure 3), a description of the transactions in relation to ''TK 14 (Phase I) Project" (Enclosure 4) and a description of the linal struclun; (Enclosure 5) alh:r the latter project.

3

B .\pplicable tax regime

B. l US Funding Project

8.1.1 Change of the accounting year-end for PUSSL and conversion of PUSSL's functional currency from USO to EUR (Step 4)

On 19 December 2007, PUSSL closed its accounting period and changed its accounting functional currency from USO to EUR for the period from December 20th 2007 to December 3 151 2007 and thereafter.

Since PUSSL's functional currency for tax purposes is the EUR, we consider that the change in accounting functional currency from USD to EUR should be neutral (the tax functional currency remaining the same).

B.1.2 Foreign exchange considerations

Based on the transactions described in Enclosure 2 and their timing no foreign exchange exposure has arisen at the level of PUSSL or PLS with respect to the operations.

8.1.3 Dividend distribution at the level of PUSSL (Step 12 of US Funding Project)

On 2 January 2008, Ganaz declared a dividend of approximately EUR 2 million payable to PUSSL.

Article 23 3) b) of the Double Tax Treaty signed between Luxembourg and Ireland states that dividends paid by a company which is a resident of Ireland to a company which is a resident of Luxembourg shall be exempt from Luxembourg tax if the company receiving the dividends controls directly at least 25 per cent of the voting power in the company paying the dividends.

[n the case at hand, PUSSL held 33 per cent of the voting power in Ganaz at the moment the dividend was declared by Ganaz.

As a consequence, the dividend income recorded by PUSSL from Ganaz under Step 12 is not subject to tax in Luxembourg in accordance with Article 23 (3) (b) of the Double Tax Treaty signed between Luxembourg and lreland.

4

B.l.4 Contribution of the Ganaz shares from PUSSL to PLS (Step Funding Project)

On 20 December 2007, PUSSL contributed the PLS EUR Loan (i.e. EUR 1,552 million) to Ganaz's share premium attached to the value of Ganaz's ordinary shares. On 2 January 2008, PUSSL transferred the ord inary shares of Ganaz to PLS in exchange for new PLS "A" shares issued on ann's length tenns.

Since Ganaz had declared a dividend payable to PUSSL immediately prior to this transaction for an amount not less than the profits earned since formation (approximately EUR 1.95 million), the transfer of the Ganaz ordinary shares to PUSSL under step 13 occurred at book value. Accordingly, no capital gain or loss arose under this step.

Further, since PUS SL has the EUR as its accounting and tax functional currency as of 20 December 2007 and the underlying asset held by Ganaz is also in EUR, there would have been no foreign exchange movement on the value of the Ganaz shares at the level of PUS SL.

B.1.5 Repayment of PLS EUR Loan (Step 16 of US Funding Project)

On 3 January 2008, Ganaz paid a dividend in favour of PLS, settled by offset against the maturity of the PLS EUR Loan. As a result, the dividend receivable and the PLS EUR Loan recorded by PLS were cancelled.

Article 23 3) b) of the Double Tax Treaty signed between Luxembourg and Ireland states that dividends paid by a company which is a resident of Ireland to a company which is a resident of Luxembourg shall be exempt from Luxembourg tax if the company receiving the dividends controls directly at least 25 per cent of the voting power in the company paying the dividends.

In the case at hand, PLS held 33 per cent of the voting power in Ganaz at the moment the dividend was declared by Ganaz.

As a consequence, the dividend income recorded by PLS from Ganaz under Step 16 is not subject to tax in Luxembourg in accordance with Article 23 (3) (b) of the Double Tax Treaty signed between Luxembourg and Ireland.

B.l.6 Net wealth tax at the level of PUSSL (Steps 8, 12, lJ and 16)

On 20 December 2007, PUSSL contributed the PLS EUR Loan (i.e. EUR l ,552 million) to Ganaz 's share premium attached to the value of Ganaz's ordinary shares that it had acquired the previous day. PUSSL increased the value of its shareholding in Ganaz accordingly (Step 8).

5

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On 2 January 2008, Ganaz declared a dividend to PUSSL in the amount of approximately EUR 1. 95 million (Step 12).

On 2 January 2008, PUSSL transferred the ordinary shares of Ganaz to PLS in exchange for new PLS "A" shares (Step 13).

On 3 January 2008, Ganaz paid a dividend in favour of PLS, settled by offset against the maturity of the PLS EUR Loan (Step 16).

Based on Paragraph 60 of the Property and Securities Valuation Act a participation is excluded from the net operating assets notably in the case where a fully taxable joint­stock resident company holds a direct participation in a company covered by Article 2 of the Parent I Subsidiary Directive representing at least 10% of the share capital of the subsidiary or with an acquisition price of at least EUR 1.2 million at the end of the operational year preceding the key date for the determination of the taxable base of the company for net worth tax.

As a result, the participation held by PUSSL in Ganaz as at 1 January 2008 is to be excluded from the net operating assets as of that date.

B.1.7 Net wealth tax at the level of PLS (Steps 9 and 15)

On 20 December 2007 (Step 9), PLS made a capital contribution to Caremount, settled by issuing a EUR Promissory Note equivalent to the net value of its monetary assets less EUR l 0 million.

On 3 January 2008 (Step 15), Caremount distributed a dividend to PLS resulting in the cancellation of the EUR Promissory Note and the extraction of excess Caremount funds.

As a result, the dividend receivable and the EUR Promissory Note recorded by PLS were cancelled leading to a net operating value of PLS on l January 2008, subject to net wealth tax, of approximately EUR l 0 million.

8.1.8 Priority of financing

For corporate tax, municipal business tax and net wealth tax purposes, the participation hdd in Carcmount by PLS and in Ganaz by PUSSL and then by PLS were, arc and will be deemed to be financed in priority by PLS' or PUSSL 's equity, including share capital, share premium, retained earnings and profits of the year.

Conversely, the receivables held by PLS were deemed financed tn priority by PLS liabilities.

6

B.2 TK 14 (Phase l ) Project

8.2.1 Thin-capitalisation consideration

As a result of the TK 14 Restructuring, Dutchdelta will be financed substantially by a debt granted by its subsidiary, i.e. PLS with the consequence that Dutchdclta will not comply with the debt-to-equity ratio between the issuance of OD Loan Note 2 and its expiration, i.e. between 8 April 2008 and 2 December 2008.

However, provided Dutchdelta's debt-to-equity ratio is respected at the closing of financial year 2008, no adverse tax consequence will arise in relation to the non­compliance with the debt-to-equity ratio.

~ B.2.2 Conversion of the Profit Funding Agreement ("PF A") (Step 6 of TK 14 (Phase 1) Proj ect)

On 8 April 2008, the PF A between PUS SL and PLS was capitalised, i.e. converted into PLS "A" Ordinary Shares issued to PUSSL.

As mentioned in our letter of 19 April 2007 (Ref.: RBS/FYHS/Pl27c07001M-CACI -Enclosure 9) in relation to the tax treatment of the PF A, "the PF A [was] convertible into capital and share premium of PLS at any time if all the necessary and allowable legal actions are undertaken."

Moreover, it has been confirmed further to the above-mentioned letter that considering the overall characteristics of the PF A (specifically, the yield on the PF A depends on the distributed profits of PLS, combined with the long maturity of the loan, the fact that the PF A ranks in terms of subordination, behind all secured obligations, unsecured and unsubordinated obligations and unsecured and other subordinated obligation of the issuer, and that PUSSL may not transfer its interest in the PF A unless it also transfers its shares in PLS), the PFA was assimilated to a class of shares or equity for net wealth tax, corporate tax and municipal business tax purposes at the level of PLS.

As a result, no gain or loss arose upon the conversion which is considered as a non event from a Luxembourg tax point of view.

B.2.3 Dividend distribution from Lurcon to Dutcbdelta (Step 9 of TK 14 (Phase 1) Project - Enclosure 4 )

On 8 Apri l 2008, Lurcon declared a EUR 1-l million dividend (approx.), sdtlcd by cancelling the DD Loan Note 3 and leaving a EUR l 00 debt owing from Dutchdelta.

7

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c:-..,u, soc\'t:.» In this respect, A11icle 23 3) b) of the Double Tax Treaty signed between Luxembourg and freland states that dividends paid by a company which is a resident of [rcland to a company which is a resident of Luxembourg shall be exempt from Luxembourg tax if the company receiving the dividends controls directly at least 25 per cent of the voting power in the company paying the dividends.

In the case at hand, Dutchdelta held 100 per cent of the voting power in Lurcon at the moment the dividend was declared by Lurcon.

As a consequence, the dividend income recorded by Dutchdelta from Lurcon under Step 9 of TK 14 (Phase 1) Project is not subject to tax in Luxembourg in accordance with Article 23 (3) (b) of the Double Tax Treaty signed between Luxembourg and Ireland.

B.3 Net wealth tax considerations

In the future, the Luxembourg entities of the E.ON Group may make capital contributions to one or several subsidiaries covered by Article 2 of the Parent I Subsidiary Directive, prior to the year-end closing. The said capital increase may be settled by issuing a EUR Promissory Note equivalent to the net value of the monetary assets less a total margin equivalent to EUR l 0 million for the Luxembourg entities of the E.ON Group.

Moreover, the relevant subsidiary may distribute a dividend to its Luxembourg parent resulting in the cancellation of the EUR Promissory Note and the extraction of excess funds not before 13 days after the capital contribution to the EU Subsidiary.

Provided the timing of the above-mentioned transactions is complied with, the consequences deriving from the said operation will be considered as regular (i.e. non abusive) and will not be challenged by the Luxembourg tax authorities.

As a result of the above, the net wealth tax basis for the Luxembourg entities of the E.ON Group will globally not exceed EUR l 0 million per year assuming that no other assets subject to Net Wealth tax than the ones deriving from the above-mentioned operations are reflected in the balance sheet of the Luxembourg entities of the E.ON Group.

8

We remain at your disposal should you need any fu11hcr information and would like to thank you for the attention that you will give to our request.

Yours sincerely,

a~ W Q Rene Beltjens '\ \ Partner

Enclosures:

Enclosure 1: Enclosure 2: Enclosure 3: Enclosure 4: Enclosure 5: Enclosure 6:

Description of the Group Description of the transactions in relation to US Funding Project. Description of the intermediate structure Description of the transactions in relation to TK 14 (Phase I) Project Description of the final structure Our letter of 19 April 2007 - RBS/FYHS/Pl27c07001M-CACI

l

Le prepose du b11reau d impositio11 Societes 6

Mariu Kohl

J111s tcu t1greement is bcis. d 011 tlu• fi1cts 11S pri!sentt'd to l'riccl\U/crl11111S< Coopers Sari ns at the c/11/I! the 11.!1 ice 111is g11 e11. 1711!

11i:recmc1111s cl1•p1111/ent on l'pi•cijir ji1cls and cirrn111s11111ces and ma\ 1101 be npproprlt1tl! to anotlrer party than tire one for "o/iich 11 11 as

pr,·pnr<!d. 7111s /1U 11greeme11/ 1Ms prep11n•J """ 011/y the' mtaests u~·l'owo.'rgen l.1Lr£•mho11rg S.iir.I in nund, 1md lt'llS not planned or

<'ltrr1l!d 0111 111 co11tc111pla1io11 of wry use by 1111y oth~r p11r(v. Pricewnterlro11seCoopcrs Stir/, its p11r111crs. cmployas w1d or ugents.

lli!llher 011 t• nor 1cet·p1 1111v duf); of,.,,,,. or 1111y r.·sponsibi/uy to any other pc1rry. 11 f1,•1/rer 111 co11trc1c1 or in t1Jrl (111c/11</i11g 1111ho111

/111111011011. 11rgltgt'llCI! or hrt•11d1 v/.st111111orv c/11~~') /w11ever 11ris111g, and .1!111/11101 be lwble i11 rt'spec1 u/any loss, d11mt1~.: or erp1•11se

9

Enclosure 1 Description of the Group

A Background

Powergen is one of the best-known names in energy in the UK, gen~rating, distributing and retailing electricity to millions of customers around the country. Powergen is part of the E.ON group, the world's largest investor-owned utility. E.ON AG is listed in New York (NASDAQ) and in Frankfurt (DAX).

Powergen is a leading energy supplier, with around nine million electricity and gas customer accounts. Powergen also produces electricity from a portfolio of world-class power stations and are one of the leading names in green generation. Its trading business is also a major player in the UK's electricity and gas markets.

B Initial structure

Currently, the structure is as follows:

E.ON AG

, - _P.f & • • - , , ,

··­--- .. ---

---

Ou1chdel1a Finance <;Ari

... -... -

1--------.-------- --- ------ -

\.trt"rtl'lUnl

I 1J r .,.(""""' r u1

II ,Jn i> S t

,.,11. ---

EON US Gm up

,'

,'

, , ,

, , , ,

' ,'

I I I I I I I I I I I I I I I I I I I I I I

I I I I

I I

,' I I I

' I

, , , , I

I I

I

10

Enclosure 2

Description of the transactions in relation to US Funding Project

Step 1

Before 19 December 2007, Dutchdelta acquired I 00% of the ordinary shares with a par value of l EUR in Ganaz Limited, an inactive Irish company (hereafter referred to as "Ganaz"). The initial share capital of Ganaz of EUR l 00 was acquired for fair market value consideration of EUR l 00).

Step 2

On 19 December 2007, Dutchdelta subscribed EUR 200,000 for 200,000 Ganaz voting fixed-rate preference shares with a par value of EUR 1 and 5 votes per share, and PUSSL subscribes EUR 500,000 for further Ganaz ordinary shares. Both subscriptions were funded by short-term loans from PLS.

Step3

On the same day, Dutchdelta transferred the Ganaz ordinary shares acquired in Step l to PUSSL for market value consideration.

Step 4

On the same day, PUS SL closed its current accounting period and changed its accounting functional currency for the period from 20 December 2007 to 31 December 2007 and thereafter to EUR.

Step 5

On 20 December 2007, E.ON US Investments Company (hereafter referred to as "EUSIC") pays the calls now due and an amount equivalent to the Net Present Value of the future remaining calls (together the "Calls") on the "C", "D", & "E" non-voting PUSSL shares.

Step 6

On the same <lay, PUSSL used the amounts received from EUSIC (Step 5) and PUSHL (Step 6) in respect of the Calls to acquire a short-te1m EUR-denominated promissory note (the "PLS EUR Loan") maturing on J January 2008, issued by PLS.

II

fRJcEWA7£R1-1ousf(SxJPERS I Step 7

On the same day, PLS appl ied most of the funds lent by PUSSL to make a USO loan lo EUS!C, and entered into a USO/EUR swap with E.ON AG. Any residual funds were converted to EUR and deposited with E.ON AG.

Step 8

On the same day, PUSSL transferred the PLS EUR Loan to Ganaz as a capital contribution.

Step 9

On the same day, PLS made a capital contribution to Caremount Ltd., settled by issuing a EUR promissory note (the "PLS Promissory Note") equivalent to the net value of its monetary assets (loans, bonds and cash) less EUR l 0 million.

Step 10

On 2 January 2008, E.ON Finanzanlagen GmbH subscribed EUR 5,2 million for further Dutchdelta shares, enabling Dutchdelta to repay the funding obtained at Step 2 and make the subscription for shares at Step 12.

Step 11

On the same day, Dutchdelta subscribed EUR 5,000,000 for further PLS "B" shares.

Step 12

On the same day, Ganaz declared approximately (and not less than the profits earned since its formation) a EUR 1.95 million dividend payable to PUSSL on 3 January 2008.

Step 13

On the same day, PUSSL transferred the Ganaz ordinary shares (ex-dividend) to PLS in exchange for new PLS "A" shares issued on arm's-length te1ms.

Step 14

On 3 January 2008, PLS settled all interest due to Carcmount and Ganaz in respect of the PLS EUR Loan and the PLS Promissory Note.

12

f'RlcEWAJERJ-JousE[mPERS I Step 15

On the same day, Carcmount paid a dividend in favour of PLS, resulting in the cancellation of the PLS Promissory Note and the extraction of excess Caremount funds.

Step 16

On the same day, Ganaz paid a dividend in favour of PLS, scttled by offset against the maturity of the PLS Loan together with the extraction of any excess Ganaz funds, and settled the dividend due to PUSSL (as declared on 2 January 2008).

Step 17

On the same day, PUSSL repaid the EUR 500,000 short-term loan obtained from PLS at Step 2.

13

Description of the intermediate structure

Powergcn US Investments

Powcrgen Luxembourg Sari (PLS)

..... _________ _

" C:ircrnount Ltd

E.ON AG

l E.ON UK 1 lolding

E.ON UK Holding Co

Powergcn Ltd

Powcrgen US I foldings Ltd

,, Powergcn US Securities Ltd

i EON

Finanz.inlaacn

l Dutchdclta

1.-

---------- -- ----- ---- --- - --- ---

Powcrgen I ux I foldings Sari (Pl llS)

1 Ganaz Ltd

-- .-·

Enclosure 3

i E.ON US lloldmg

l E.ON US

Investments Co • I I

l I I I I I

V1~~ I I

. . . .

l E.ON US Group

, , , , , , , , Loans -

$2.6bn

' , ' I

' I

I I

I I

I I

'

14

·'

Enclosure 4

Description of the transactions in relation to T K 14 (Phase I) Project

Step l

In March 2008, Dutchdelta acquired two new off-the shelf Irish limited companit:s (Gistmay Limited, hereafter referred as to ''Gistmay'' and Lurcon Limited, hereafter referred as to "Lurcon")

Step 2

On 28 March 2008, Dutchdclta issued a EUR 14 billion interest-free loan note (the "DD Loan Note l ")to Gistmay in exchange for a further EUR 14 billion interest-free loan note issued on identical terms by Gistmay (the "IN I Loan Note"). Both loan notes were repayable on demand and were freely assignable between E.ON group members.

Step 3

On the same day, Dutchdelta made a EUR 14 billion capital contribution to Lurcon, settled by assigning the IN l Loan Note to Lurcon.

Step 4

On 8 April 2008, the DD Loan Note l was replaced with a new EUR 14 billion interest­bearing Joan note (the "DD Loan Note 2).

The DD Loan Note 2 is interest-bearing, matures on 2nd December 2008 with monthly interest fixings on the second of each month and is assignable between members of the E.ON group. It is guaranteed by E.ON Finanzanlagen GmbH, and the holder of the Loan Note is entitled to demand repayment at any time.

Step 5

On the same day, Gistmay transfc1Ted the DD Loan Note 2 to Lurcon in settlement of the IN l Loan Note.

Step 6

On the same day, the Partic ipating Funding Agreement between PUSSL and PLS was capitalised, i.e. convc11cd into PLS "A" Ordinary Shares issu<.:d to PUSSL.

15

Step 7

On the same day, Lurcon contributed all its assets and liabilitil.!s (including the DD Loan Note 2) to PLS in exchange for PLS "A" ordinary shares issued on aim 's- lcngth terms.

Step 8

On the same day, the PLS shares acquired by Lurcon at Step 7 were transfetTed to Dutchdelta in return for a EUR 14 billion (approx.) interest-free loan note (the "" DD Loan Note 3") which was repayable on demand.

Step 9

On 8 April 2008, Lurcon declared a EUR 14 million dividend (approx.), settled by cancelling the DD Loan Note 3 and leaving a EUR 100 debt owing from Dutchdelta.

16

Description of the final structure

E.ON l\G

i E.ON UK I folding E.ON

Finanzanlal!:en

E.ON UK Holding Co Dutchdcllll

l

Powc.'l'gcn ' ' Ltd ' ' I I

I I

I I

DD Loan Note 2 I ,

, EUR 14 bn Powergcn US , , ,

Holdings Ltd • • . , -------·

, , . , ,

~ , , .'

,, I

Gistmny Ltd Powergen US ,' Powcrgen US --+ Investments ,' I+- Securities lid +--

' I , , ,

f-+ Lurcon Ltd ,, Powergen Luxembourg Sari

~

. (l'LS) ·---- . . . .... .. ... .. . . ------------- -------- --........ --·

' ' l r

l'uwc1 gen Lux Carcmount l td I loklings !'Jrl Gnnaz Ltd

Enclosure 5

! E.ON US Holding

l E.ON US

Investments Co

l ~

I I I

~~~ LLC

l E.ON US Group

, , , ,

, . , , , ,

, ,

I I

I I ,

I I , ,

Loans·

S2.6bn

' ' ' I I

I I

I

17

Enclosure 6

Our letter of 19 April 2007 - RBS/FYHS/Pl27c070011\-I-CACI

18

. . ..

Mr. Marius Kohl

Administration des Contributions Directes Bureau Socict~s 6 18, rue Fort W cdell L-2982 Luxembourg

April 19, 2007

References: RBS/FYHS/P l 27c07001 M-CACI

Powergen Luxembourg Sari- fiscal number 2000 2419 468 Powergen US Securities Ltd

Dear Mr. Kohl,

l'rlc~walerhoustCoopcn

Socirle • rcsponsabllilt limllh R'•·lseur d'cntreprlses 400. mule <l'Esch BP. 1443 L-1014 Luxembourg Tckrlwnc ~ JS2 494R-18-1 FJ~similc ~ 352 494g43.2900

On behalf of our client, Powergcn Luxembourg Sari ("PLS"), we submit for your review and confirmation the Luxembourg tax treatment of the Profit Funding Agreement ("PF A") orally discussed and agreed upon at the occasion of our meeting on 11 October and 25 October 2006.

Alternatively, we would be pleased to receive your written comments in this respect.

I. BACKGROUND

Powergen is one of the best-known names in energy in the UK, generating, distributing and retailing electricity to millions of customers around the country. Powcrgen is part of the E.ON group, the world's largest investor-owned utility. E.ON AG is listed in New York (NASDAQ) and in Frankfurt (DAX).

They arc leading energy suppliers, with around nine million electricity and gas customer accounts. They also produce electricity from a portfolio of world-class power stations and are one of the leading names in green generation. Their trading business is also a major player in the UK's electricity and gas markets.

As discussed, Powcrgen US Securities Ltd ("PUSSL") h'fantcd EUR 75 million to PLS through the above-mentioned PF A.

It C I 11\<1111>.""ll II OS ~77. rY.\ l.Ul 7)1>1447

II. CHARACTERISTICS OF THE PF A

The PFA between PUSSL and PLS has the following characteristics:

The PFA is denominated in EUR, The PFA has a maturity of 50 years, The Yield corresponds to a percentage of the profit distributed to the Class A shareholder, determined as follows:

Amount of initial investment under PFA

Value of "A" shares on effective date of PFA

value of subsequent X + "A" share capital

increases

If no dividends are distributed, no yield will accrue or be due;

Amount distributed to "A" shareholders

The PFA is unsecured and is ranked in terms of subordination, ahead of the shares of PLS and behind all secured obligations, unsecured and unsubordinated obligations and other subordinated obligations of PLS; The PFA is convertible into capital and share premium of PLS at any time if all the necessary and allowable legal actions are undertaken; In case of liquidation of PLS, PUSSL will be entitled to participate in liquidation proceeds; The PF A principal is repayable at any time, totally or partially, in anticipation of the Maturity Date, but only in so far as PLS has sufficient retained earnings to do so; The investor, PU SSL, may not transfer its interest in the PF A unless it also transfers its shares in the issuer, PLS.

Ill. TAX CHARACTERISATION OF THE PFA

Based on the characteristics mentioned above, the PFA issued by PLS will be considered and treated as equity for Luxembourg direct tax purposes. Indeed according to the explanatory notes to the income tax reform law of 1967 Project of Law no. 571 (p.294-295) dated 1955 (Projct de Loi on Article 114 - currently Article 97 - Luxembourg Income Tax Law ("LIR")) point out that the distinction between debt and equity must bt: <lone on the basis of the economic characteristics of the financial instrument. In particular, the main c1,;onomic features that characterise a financial instrument as equity are amongst others:

The foct that the instrument's yield is determined on the basis of the company's distributed profits; The subordinated character of the instrument and;

(2)

· ..

The fact that the;: investor (PUSSL) cannot transfer all or part of its interest in the PFA to ::i third party without also transferring all or part of its shares in the borrower (PLS) to the same third party according to a proportion similar to the PF A transfer.

Considering the overall characteristics of the PF A as mentioned above, specifically, the yield on the PF A depends on the distributed profits of PLS, combined with the long maturity of the loan, the fact that the PF A ranks in terms of subordination, behind all secured obligations, unsecured and unsubordinated obligations and unsecured and other subordinated obligation of the issuer, m1d that PUSSL may not transfer its interest in the PF A unless it also transfers its shares in PLS, the PF A will be assimilated to a class of shares or equity for net wcalth tax, corporate tax and municipal business tax purposes at the level of PLS.

It will result from the above that payments of return on the PFA will be qualified as dividends and not as interest for Luxembourg tax purposes.

In this respect, the PFA shall be recorded on PUSSL's tax balance sheet as un additional participation in PLS and will benefit from the participation exemption for corporate tax, municipal business tax and net wealth tax subject to the conditions of Article 166 LJR, the Grand-Ducal Decree of 21 December 2001 for the application of Article 166 UR and paragraph 60 of the Net Wealth Tax Law, respectively.

* * *

(3)

Considering the importance of the above matters for our client, we respectfully request that you confinn the tax treatment of the situation described above or that you provide us with your remarks, if any.

We remain at your disposal for any further information you may need.

Yours sincerely,

{~utkl {1,,/'lJ))/ I

Claudia Ccntoni Director

Encl. : copy of the Pf A

For approval

Please take note that the decision is nf of general nature nnd is only applicable to the present case.

le prepos~u bureau d 'impol'illof Sociiles VI

M"TKohl

L mmbo• .... J-~---,! t 9 AVR. 2007 •,

ii 'I

\ ., This tax agreement was prepared for Powergen Luxembourg Sari, and is based on the facts as presented to Prict.'waterhouseCoopers Sari as at the date of this letter. This tax agreement should not be distributed or oth1trwise made available, or be relied upon by any other party for any other purpose, without the express wrillen authorisation of Pricewaterhous1tCuopers Stir!, save only that notwithstanding anything to the contrary the client and each of its employees, representatives, or other ag1tnts may disclose to any and all pasons, without linutation of any kind, the US Federal income tax treatment and US Federal income tax stmcture of the transaction(s) related to <1ny US Federal incoml! tax advice. This tax agreement was prepared with only the client's interests in mind, and was not planned or carried nut in contemplation uf any 11se by any oth11r party. PricewaterhomeCoopers Scirl, its partners, employees and or aKents. neither owe nor accept nny duty of care or any re.1ponsibility to any other party, whether in contract or in tort (including without limitation, negligence or breach ofstat11tory duty) however arising. and shall not be liable in respect of any loss, damage or expense of whatev11r nature which is caused to any other party.

(4)

..