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Energy Policy for the Transition

The energy landscape is changing in Switzerland, as well as in Europe and the rest of the world. With its “BKW 2030” strategy, the BKW Group1 is fully in tune with the new energy environment.

Dear Shareholders

In Switzerland and internationally, energy policy is undergoing fundamental change. The worldwide economic situation is only recovering slowly, and the North American supplies of oil and natural gas that can now be tapped due to modern technology are also transforming the European energy market. Low electricity prices, the regulatory environment, the opportunities and challenges of the planned energy transition as well as increasing political pressure on the Mühleberg nuclear power plant all impact BKW's business environment.

The promotion of new renewable energies provides BKW with attractive investment opportunities, but at the same time puts increasing pressure on non-subsidised energy sources such as hydroelectricity.

BKW has therefore addressed this situation, which is unstable and associated with a number of uncertainties, with its new “BKW 2030” strategy. Electricity will no longer be generated from nuclear energy, but primarily from renewable sources such as water and wind power. The strategy also focuses on the system integration of distributed electricity generation, the development of new business models, and expansion of the services business to incorporate offers associated with energy efficiency.

The distribution grid must be smart.

Smart grids will be needed to integrate renewable energies into the energy supply system and take advantage of the potential for energy efficiency and energy conservation. The grids will be optimised with new technologies rather than comprehensively upgraded. This will allow cost-effective distributed feed-in at lower grid levels from sources such as photovoltaic systems.

BKW will focus on marketing of energy services as well as on hydroelectric power and wind energy.

Taking advantage of our vertical integration

In this challenging situation, BKW is always exploring new developments and opportunities. These include innovative use of our vertical integration (production, networks, trade and distribution) in the development and marketing of new energy services. BKW is therefore supporting industrial and service companies, energy suppliers, government agencies, municipalities and private customers in finding a solution that is best for them among the increasing variety of options for improving energy efficiency. With its systems capability and many years of expertise, BKW can support its customers from their initial consultation through project planning and implementation to long-term operation and maintenance.

Cost reduction programmes take effect

While BKW is developing new markets, it is also concentrating on achieving the best possible cost efficiency in its traditional business areas. Its cost reduction programmes already took effect in 2012 and are being continued in 2013. These programmes also contributed to a strong operating result for 2012. Despite the necessity of value adjustments for a number of our production facilities due to the market changes outlined above, BKW can report a solid net profit.

Following the new strategy

In 2013, BKW will continue in its chosen course of action: improving efficiency and reducing costs while taking advantage of new market opportunities wherever possible. This will allow us to develop a strong third pillar alongside our major production and network business: energy services for the benefit of our customers, and therefore our shareholders and our employees.

Everything is changing except BKW's primary role, which we will continue to perform with total commitment: supplying our customers with safe, economical and environmentally sustainable electricity.

BKW is constantly exploring new developments and opportunities.

Election to the Board of Directors

The 2012 Annual General Meeting confirmed the Board of Directors for its next term of office until 2015. It was a challenging and exciting year for the Board, which developed and helped to implement a number of important changes. The new Board members, Kurt Rohrbach and Kurt Schär, played an important part in this process.

BKW plans to take advantage of market opportunities.

We thank our employees, our customers and our shareholders

BKW can look back on a busy and eventful year. What we achieved in 2012 was only possible with the trust of our customers, the loyalty of our shareholders and the great personal commitment of our colleagues and employees.

They all deserve our special thanks.
With kind regards,

Urs Gasche, Chairman of the Board

Suzanne Thoma, CEO


I1 The BKW Group comprises BKW Inc. and its consolidated companies. In order to make this report easier to read, the Group will be referred to below simply as BKW. Specific reference to BKW Inc. or BKW FMB Energy Ltd. will be made where appropriate.