Vattenfall presents Electricity Market Report 2003

10/20/2003 8:00 AM EST

Vattenfall today presented its Electricity Market Report 2003. The
Report is built on descriptions of Vattenfall 's home markets, i.e.
Germany, Poland and the Nordic region.

Vattenfall's President and CEO Lars G Josefsson pointed out that "the
deregulation of the European power market has been a success story -
however, a lot remains to be done to enhance the understanding of the
open market. Credibility and trustworthiness of the electricity market
and its major players are frequently questioned by public and customers,
especially during difficult periods such as the recent dry winter in the
Nordic region. Vattenfall's Electricity Market Report is meant to
contribute to building trust in the market by being open. As a leading
company, we offer to share our knowledge and understanding of the
present state of our home markets, the overriding development of the
internal electricity market in Europe and how we judge its future
development."

With regard to Germany, today the largest market for the Vattenfall
Group, Dr. Klaus Rauscher, Senior Executive Vice President and Chairman
of the management in Vattenfall's German company Vattenfall Europe AG,
commented that "the German market follows a natural maturing process
that earlier on was seen on the Nordic market". But he also underlined
the impact of political decision-making on future market development.
"The coming regulatory regime, the national allocation plan for the
emissions trading scheme and subsidy schemes for renewable energy are
just three examples of political decisions that have substantial impact
on all companies in the power business."

The Electricity Market Report 2003 gives a broad description of the main
features of how these markets work and also places them in a European
context. A broad team of more than 30 people from the whole Vattenfall
Group worked together to compile this report. Arne Mogren, Vattenfall
Public Affairs, carried the overall responsibility for this work.

Last year, Vattenfall published its first ever Electricity Market Report
based on a Nordic outlook. The scope of the Electricity Market Report
2003 is thus wider, but the ambition remains to describe the market
development as objectively and neutrally as possible.

The Electricity Market Report 2003 contains two different parts:

1. General themes of relevance for the market development seen from a
north European perspective, built on market analyses of Vattenfall's
core markets.

2. Three separate descriptions of the Nordic, the German, and the Polish
markets.

Among the observations the reader will find for example:

- EU energy markets are moving towards free competition. Liberalisation
has progressed at different speeds in different countries, more slowly
in the gas than in the electricity market. The EU Commission noted
progress in terms of the general functioning of the electricity market,
particularly in Germany, Austria and the Netherlands.

- The Liberalised Power Markets where Vattenfall is operating are
performing well, but service levels to small customers as well as other
aspects need to be improved.

- In the Nordic area it is not relevant to discuss the market share of
producers in individual countries, since market integration has already
progressed so far that markets have become regional rather than
national. Seen in a Nordic perspective, the three largest producers
(Vattenfall, Fortum and Statkraft) together represent 47 % of
production. The fifteen largest producers together cover 81 % of
production.

- In Germany the electricity market is in a transition stage. The
influence of political issues upon the energy industry still is and will
continue to be quite high.

- Poland is still in the early stages of deregulation. Deregulation has
sped up the economic transformation of the Polish energy sector. Energy
companies are becoming more commercially minded and customer-oriented.
Customers have become more aware of their rights.

The Electricity Market Report can be downloaded from Vattenfall's
corporate website www.vattenfall.com (select "Responsibilities" >
"Reports"). It can also be ordered by e-mail (contact:
 ).

From Vattenfall's Press Office, telephone: +46 8 739 50 10.

For more information, please contact:
Martin May, Head of Group Media Relations, phone: +46 (0)8 739 52 70.
Arne Mogren, Head of Public Affairs, phone: +46 (0)8 739 5234.