Welcome

2006 will be remembered as the year that climate change hit the headlines – and stayed there.

It is now one of the biggest issues facing us and, at EDF Energy, we are responding to the challenge with swift and decisive action.

We are proud to be part of the EDF Group, the lowest carbon dioxide emitter among all the large energy groups. Consistent with the group’s leadership positions we have taken significant steps in the UK, which are already contributing to a better future. We have also set out a programme of pledges to guide our actions until 2020. Read them here in Our Climate Commitments.

Our employees are joining us in rising to the challenge. We are encouraging each and every one of them to see Al Gore’s powerful film about climate change, An Inconvenient Truth, and to discuss how they, personally, can make a difference.
We are also enabling our customers to play their part, by committing that all our new products are designed to help them reduce their carbon footprint.
In summer 2006, climate change was one of the key elements in the Government’s Energy Review, alongside the need for affordable energy and security of supply. Our detailed submission to this debate described how we can play our part in providing reliable, affordable and low-carbon energy over the long term, with nuclear power as part of the mix. We are pleased that our views were largely reflected in the published review.

In response to the triple challenge of security of supply, affordability and climate change, we launched our Sustainable Future project. This is part of our commitment to a programme of business transformation, which will impact on everything we do as a company.

A strong brand is key to growing our business so during 2006 we invested in sponsorships and other activity to help raise our profile. Using our TV sponsorship of the World Cup as a launch-pad, we unveiled our new company logo which identifies us even more clearly as part of EDF Group. At the same time, we moved away from our regional brands to a single brand for all of our customers, wherever they live in the UK.

The year was one of wholesale price volatility affecting the whole of the energy industry. Rising energy costs forced us to increase our tariffs, but careful management meant we were able to protect our customers from the highest increases. In fact, we were slower to raise our prices than some of our rivals and raised our prices by a smaller percentage. For our customers most in need we introduced the first social tariff in the industry, ‘Energy Assist’, offering discounts against our normal prices. We achieved month-on-month growth in our customer numbers. This was possible because our prices were competitive, our product range provided choice and our customer service standards have been consistently at or near the top of industry rankings.

Overall, our financial performance in 2006 was strong in the context of the tough market conditions. Although our turnover went up 24.3%, much of that was due to the increased prices linked to the extra costs we had to pay. Intense competition in the market meant it would not have been possible to pass on the full increase in our costs without losing market share to our competitors. We were pleased nevertheless to be able to achieve month-on-month growth in customer numbers throughout the year.

We made strong progress during 2006 against the ambitions we set for ourselves in 2003 with targets for delivery by the end of 2007. To help us achieve these ambitions and meet future challenges, we strengthened our Executive team and updated our governance structures. These changes, together with our rigorous approach to managing projects and the way we engage with our employees (which we call our 'e' factor) will support our ability to deliver on our promises.

And what of 2007 so far? The big issues of 2006 continue to be at the forefront of our agenda. The publication of the Energy White Paper and the further consultation on the need for new nuclear power stations in the UK create further opportunity to contribute to development of energy policy in the UK. We will continue to be actively engaged in this process and look forward to working with Government on its implementation. We have seen continued energy market price volatility but our careful management of pricing has meant that in April 2007 we were able to announce a price cut for customers who buy gas from us. We remain focused on our five ambitions and their associated targets, and we are redoubling our efforts to achieve them by the end of this year. In this context we are placing a special emphasis on health and safety, with a programme of activity throughout the company to embed an even stronger culture for taking care of the safety and wellbeing of ourselves and each other.

In our 2005 performance report, our stakeholders challenged us to say more about how we are tackling climate change through reduced CO2 emissions. We acknowledged, and welcomed, their comments.

We have risen to this challenge in Our Climate Commitments. These pledges mark a decisive step in our journey to becoming a truly sustainable business and, at the time they were published, go far beyond any commitments to emission reductions made by others in our industry.

Vincent de Rivaz,
Chief Executive