Continued Strong Financial Performance – Ruling by German Network Regulator Alarming

In the second quarter of 2006, Vattenfall has once again been able to improve its operating profit, primarily on account of strong contributions from the German generation operations. However, at the same time the company is perceiving a weaker trend, mainly on account of network regulation in Germany but also because of higher taxes in the Nordic Region. • Net sales during first six months increased by 22.0% to SEK 78 502 million (64 328) • Operating profit excluding items affecting comparability during first six months rose by 29.5% to SEK 18 132 million (14 002) • For the second quarter, operating profit excluding items affecting comparability rose by 15.5% to SEK 5 697 million (4 933) • Profit for the period grew by 34.1% to SEK 11 378 million (8 486)

For the first six months, operating profit excluding items affecting comparability increased by 29.5% to SEK 18 132 million (14 002). Net sales increased by 22.0 % to SEK 78 502 million (64 328). For the second quarter, operating profit excluding items affecting comparability fell by 15.5 % to SEK 5 697 million (4 933). This is accounted for mainly by improvements in the German electricity generation and heat busi-ness. The Nordic operations — despite higher electricity prices and the share of earnings from the Danish associated company Elsam A/S — saw an unchanged operating profit due to higher taxes and reduced hy-dropower generation as a result of poorer hydro availability, along with a deterioration in the electricity sales business unit. In Poland, all business units are contributing improved earnings for the second quarter compared to the previous year. Return on equity was 20.22 %, and return on net assets was 17.7 %; both figures exclude items affecting comparability. The financial position of the Group was enhanced. The debt/equity ratio improved to 0.58 times compared to 0.71 times at year-end 2005. Net debt fell by SEK 2 295 million during the second quar-ter to SEK 54 179 million as at 30 June 2006. Vattenfall’s total electricity generation for the second quarter fell to 37.8 TWh compared to the second quarter last year (39.4). Hydropower generation amounted to 7.9 TWh (9.1), nuclear power generation amounted to 13.7 TWh (14.2), and fossil-based and wind power generation amounted to 16.2 TWh (16.1). In June the German network regulator, Bundesnetzagentur, decided that Vattenfall Europe Transmission GmbH has to reduce its network tariff by 17.9 % from July 2006 until December 2006. It disapproved e.g. costs for network losses, costs for balancing power in conjunction with increased find in of wind power, along with depreciation related to the transmission network. This is equivalent to an amount of SEK 459 million, which will burden the operating profit. The entire report is available at www.vattenfall.com (select “Investors” -> “Financial Reports”). Conference Call at 10:00h At 10:00 (CET) Lars G Josefsson, CEO and Matts Ekman, CFO will host a conference call presenting the results, followed by a question & answer session. The conference call will be webcast. Details regarding the Conference Call To participate in the conference call please dial one of the following numbers a few minutes before 10:00 CET. +44 (0) 20 7107 0611 (UK) +46 (0)8 5069 2105 (Sweden) +33 (0)1 7070 0543 (France) +49 (0) 69 2 22220593 (Germany) Playback: A playback will be available one hour after the conference call and for at least a further 72 hours. If you should request to listen to the playback please dial +44 20 7108 6233 and enter the ID code 217 followed by the # sign. Presentation slides: To download the presentation slides please go to http://www.vattenfall.com and select Investors -> Presentations. Slides will be available at around 09:15 CET. Webcast To follow Vattenfall's presentation on the Internet (audio + slides), please click on the link “webcast” which will be displayed on www.vattenfall.com, select Investors -> Presentations. Alternatively you can access the webcast via http://www.financialhearings.com, select "Vattenfall July 27". The presentation will be available on the archive for several months. Please note that you will need “Real Player” or “Windows Me-dia Player” to follow the presentations. For further information, please contact: Knut Leman, Senior Vice President Communications, phone: +46 (0) 8 739 50 31 Klaus Aurich, Head of Investor Relations, phone: +46 (0) 8 739 65 14 Martin May, Head of Media Relations, phone: +46 (0) 8 739 52 70. From Vattenfall's Press Office, telephone: +46 (0)8-739 50 10.