Report of the Supervisory Board

Ladies and Gentlemen,

In the 2008/09 financial year, the Supervisory Board dealt closely with the situation of the company and diligently performed the duties incumbent on it by law and under the Articles of Incorporation. We monitored and advised the Executive Board in its management of the business on an ongoing basis and satisfied ourselves as to the correctness of its actions.

In this, we were provided by the Executive Board with regular, prompt and comprehensive information about the performance and position of the company, as well as about all business transactions of particular significance. The reports from the Executive Board included presentations of the company’s business, sales and earnings performance, as well as of its net asset and financial position. The Executive Board also regularly briefed us on the company’s financial, investment and personnel budgets, its strategic planning and its risk situation and risk management.

The Supervisory Board met on seven occasions during the period under report, while the Audit and Personnel Committees held seven and three meetings respectively. We carefully examined and held detailed discussions, prepared where appropriate by the relevant committees, concerning the presentations and oral reports from the Executive Board. The Supervisory Board reached its decisions on the basis of this information and of the draft resolutions submitted by the Executive Board.

Main topics of our discussions
In the past financial year, the Supervisory Board dealt extensively with the implications of the global financial and economic crisis for the MVV Energie Group. The Executive Board informed us in detail as to the economic consequences for the company of the macroeconomic downturn and the change in conditions on the financial markets.

One key topic of our discussions was the review and realignment of the company’s strategy. We discussed the results of the MVV 2020 strategy project presented by the Executive Board on 25 September 2009 in great detail and approved the strategic courses of action identified on this basis. The Executive Board informed us at the same time of the necessity of posting one-off expenses and a write-down in the energy-related services business division.

By resolution dated 8 May 2009, the Supervisory Board awarded the assignment to audit the separate and consolidated financial statements of MVV Energie for the 2008/09 financial year to PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Stuttgart. The Annual General Meeting in March 2009 had previously resolved in line with the proposal made by the Supervisory Board to appoint PricewaterhouseCoopers as auditors and group auditors for the 2008/09 financial year.

Major personnel matters addressed by the Supervisory Board in the year under report included the appointment of Dr. Georg Müller as CEO of MVV Energie AG and the extension of Dr. Werner Dub’s appointment to the Executive Board. Other important topics dealt with at our Supervisory Board meetings were the acquisition by MVV Energie Gruppe of a further 49 % of the shares in MVV Energiedienstleistungen Wohnen GmbH & Co. KG, the acquisition by MVV Energie AG of a shareholding in 8KU Renewables GmbH, the contribution of the gas grid in Sinsheim into a municipal grid company and the raising of the cash pool limit at 24/7 Trading GmbH. The Executive Board provided us with regular status updates concerning the planned construction of a new generation block (Block 9) at Grosskraftwerk Mannheim AG. Furthermore, we also dealt with the 2020 Climate Protection Programme at MVV Energie AG, the progress made on expanding district heating in Mannheim and the construction of the district heating pipeline to Speyer.

Corporate governance
Within the framework of the implementation of the German Corporate Governance Code, the Supervisory Board held an efficiency review pursuant to Point 5.6 of the Code in the past year once again, adopting the resultant enhancements for its work. Moreover, the Supervisory Board also reviewed the independence of its members in line with Point 5.4.2 of the Code. This review concluded that no member of the Supervisory Board had any business or personal dealings with the company or its Executive Board which could provide grounds for any conflict of interest. This is also unrestrictedly the case for
Dr. Rolf Martin Schmitz and his successor on the Supervisory Board,
Dr. Dieter Steinkamp, in respect of their membership of the Executive Board of RheinEnergie AG. As strategic partners, RheinEnergie AG and MVV Energie AG aim to establish close cooperation. The two companies do not compete with each other on the individual stages of the value chain (generation, grids, sales) either geographically or in terms of their activities. Reference is made to the internet site www.mvv-investor.de for details of corporate governance and the Declaration of Conformity adopted for the past financial year. This Declaration of Conformity can also be found here.

Committee meetings
The Supervisory Board has established three committees to prepare topics and resolutions for the full Supervisory Board. The Supervisory Board is informed in detail of the work of the committees by their respective chairmen, namely Dr. Manfred Fuchs (Audit Committee) and Dr. Peter Kurz (Personnel Committee; Mediation Committee).

In the year under report, the Audit Committee discussed the annual, consolidated and quarterly financial statements prepared by the Executive Board in great detail. Furthermore, the Committee also dealt with the 2009/10 business plan and the company’s medium-term planning, as well as examining its risk situation and risk management system. Further topics of deliberation included the optimisation of working capital and the implications of the financial market and economic crisis. Moreover, the Committee prepared the procedure for selecting the auditors and submitted a corresponding recommendation to the Supervisory Board.

In the past financial year, the Personnel Committee held preparatory discussions concerning the compensation and contracts of members of the Executive Board and, among other matters, recommended to the Supervisory Board that Dr. Georg Müller be appointed and that Dr. Werner Dub’s appointment be extended. Furthermore, the Committee dealt with the variable compensation confirmed by the auditor for members of the Executive Board for the 2007/08 financial year.

The Mediation Committee did not require convening pursuant to § 27 (3) of the German Codetermination Act (MitbestG).

Changes in the composition of the Supervisory Board and Executive Board

Dr. Rolf Martin Schmitz, former CEO of RheinEnergie AG, Cologne, retired from his position on the Supervisory Board of MVV Energie AG upon retiring from his positions at RheinEnergie AG as of 30 April 2009. He was succeeded as of 9 July 2009 by
Dr. Dieter Steinkamp, who became CEO of RheinEnergie AG on 15 June 2009.

Furthermore, the following individuals also retired from the Supervisory Board of MVV Energie AG: Uwe Spatz, member of the Works Council of MVV Energie AG,
Klaus Lindner, trade union secretary at ver.di Rhine/Neckar, and Dr. Rudolf Friedrich, retired job centre director, who stood down for reasons of ill health as of 30 September 2009. Peter Dinges, Chairman of the Group Works Council of MVV Energie AG, joined the Supervisory Board on 1 February 2009. Bodo Moray, trade union secretary at ver.di Rhine/Neckar, was appointed as a member as of 1 September 2009. We would like to thank all retiring members of the Supervisory Board for their constructive contributions to the work of our body.

Manfred Lösch retired from his position as Deputy Chairman of the Supervisory Board as of 30 September 2009. Pursuant to the proposal made by employee representatives, Peter Dinges was elected to succeed him. We would like to thank Manfred Lösch for his longstanding and committed involvement in the work of the Supervisory Board.

At an extraordinary meeting held on 23 October 2008, the Supervisory Board of MVV Energie AG appointed Dr. Georg Müller to be a member of the Executive Board of MVV Energie AG for a five-year term and appointed him as CEO. Dr. Müller assumed office at the beginning of 2009. The employment contract with Dr. Werner Dub, which was due to expire on schedule, was extended on 12 March 2009 for a further five years until the end of 2014. Since January 2000, Dr. Dub has been responsible for the technology board division.

Approval of the consolidated financial statements
The consolidated financial statements and group management report of the
MVV Energie Group for 2008/09 were audited by PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Stuttgart, and granted an unqualified audit opinion. Both the consolidated financial statements and the group management report were prepared in accordance with International Financial Reporting Standards (IFRS), taking due account of § 315a of the German Commercial Code (HGB). The annual financial statements of MVV Energie AG prepared in line with HGB and the accompanying management report for the 2008/09 financial year were also audited by the auditor and granted an unqualified audit opinion.

The consolidated financial statements and group management report of the
MVV Energie Group, the annual financial statements and management report of MVV Energie AG, the appropriation of profits proposed by the Executive Board and the auditor’s audit reports were all submitted to the Supervisory Board in good time for its respective meeting. These documents were carefully inspected by the Audit Committee and the Supervisory Board and were discussed in detail in the presence of the auditor. We endorse the findings of the audit performed by the auditor. At our meeting on
18 December 2009, we approved the consolidated financial statements and group management report of the MVV Energie Group and the annual financial statements and management report of MVV Energie AG. The annual financial statements are thus adopted. We endorse the appropriation of profits proposed by the Executive Board.

The Executive Board further compiled a report for the 2008/09 financial year on the company’s relationships with closely related companies (dependent company report). According to the report, MVV Energie AG was not disadvantaged by the legal transactions performed with associated companies outlined therein. The dependent company report was audited by the auditor, who granted the following audit opinion:

“Following our audit and assessment performed in accordance with professional obligations, we confirm

• that the factual disclosures made in the report are accurate
• that the compensation of the company in the transactions listed in the report was not incommensurately high based on the circumstances known at the time of such transaction being executed.”

Both the dependent company report and the audit report compiled by the auditor were provided to us in good time. Following its own review, the Supervisory Board concurred with the auditor’s assessment and approved the report. The auditor also audited the early warning risk identification system established at MVV Energie AG by the Executive Board pursuant to § 91 (2) of the German Stock Corporation Act (AktG). Based on the auditor’s assessment, this system is suited to fulfil its legal obligations.

The Supervisory Board would like to thank the Executive Board, the executive boards and management teams at the shareholdings, as well as all employees, members of works councils and employee representatives, for their active contributions to the successful development of our company in the 2008/09 financial year.

Addendum to the report of the Supervisory Board
To ensure compliance with the new legal requirements governing management board compensation (VorstAG), at the end of the year under report the Supervisory Board commissioned a review of the existing compensation system from an independent compensation expert. Any adjustments required to the compensation system once the review is available will be implemented by the Supervisory Board in the course of the 2009/10 financial year.

Mannheim, December 2009
Supervisory Board

Dr. Peter Kurz
Chairman