FORTUM A leading power and heat company in the Nordic area

Tapio Kuula, President & CEOFortum Corporation

EEI Conference, London, March 15, 2010

2

Disclaimer

This presentation does not constitute an invitation to underwrite, subscribe for, or otherwise acquire or dispose of any Fortum shares.

Past performance is no guide to future performance, and persons needing advice should consult an independent financial adviser.

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Our geographical presence today

Nordic countriesGeneration 48.1 TWhElectricity sales 54.9 TWhHeat sales 18.0 TWhDistribution cust. 1.6 millionElectricity cust. 1.2 million

Nr 1

Nr 2

Heat

Electricity sales

Distribution

Power generation

TGC-1 (~25%)Power generation ~6 TWhHeat sales ~8 TWhOAO Fortum Power generation 16.0 TWhHeat sales 25.6 TWh

Russia

PolandHeat sales 3.7 TWh Electricity sales 20 GWh

Baltic countriesHeat sales 1.3 TWhElectricity sales 0.1 TWhDistribution cust. 24,100

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0 20 40 60 80 100 120 140

*) IES

Minsk EnergoKievenergo

Irkutskenergo

Bashkirenergo

RAO ES East

Onexim

TGC-11

TGC-2

Fortum

DongKDHC, Korea

Beijing DHTGC-14

Lukoil

DalkiaGazprom

Tatenergo

ELCEN, Rom.

**)

Vattenfall

SUEK***)

Fortum is a mid-sized European power generation player, relatively larger in heat (#4)

* incl. TGC-5, TGC-6, TGC-7, TGC-9, *** incl. TGC-12, TGC-13Source Company information, Fortum analyses, 2008 figures pro forma, ** 2007

Largest producers in Europe and Russia, 2008 TWh

0 100 200 300 400 500 600

Iberdrola

RusHydroFortum

EnBW

Vattenfall+Nuon

CEZ

GDF SUEZ

RWE+Essent

DEI

Edison

PGE

Scottish&Southern

Statkraft

Rosenergoatom

Irkutskenergo

WGC-1

Gazprom

IES

NNEGC Energoat.

EnelE.ONEDF

Power generation Heat production

Largest global producers, 2008 TWh

5

Fortum's share performance

0

20

40

60

80

100

120

140

160

Fortum DJ utilities2007 2008 2009

0

100

200

300

400

500

600

700

Fortum DJ utilities

2000 2001 2002 2003 2004 2005 2006 2007 2008 20091999

Fortum's 2007-2009 share performance Fortum's share performance since listed

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Total ~ 6,853 MEUR

1999 2001 20032000 2002 2004

0.18 0.23 0.26 0.310.42

0.58

2005

1.12

Dividend per shareEUR

0.13

1998

0.58

0.54

2006

1.26

0.73

0.53

• Dividend proposal 2009 EUR 1.00 per share, in total ~EUR 0.9 billion

• Dividend policy of 50-60% payout of previous year's results on the average

2007

1.35

0.77

0.58

2008

1.00

Capital returns

72% 103% 78% 58%

1.00*

2009

68%

* The BoD proposal for the AGM

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Fortum's carbon exposure among the lowest in Europe

Source: PWC & Enerpresse, 2009Changement climatique et Électricité

0

200

400

600

800

1000

1200D

EI

Dra

x

RW

E

CEZ

Nuo

n

EDP

Sco

ttish

&S

outh

ern

Vat

tenf

all

Ene

l

Uni

on F

enos

a

E.O

N

Don

g En

ergy

GD

F S

uez

Eur

ope

Iber

drol

a

PVO

Brit

ish

Ene

rgy

EDF

Verb

und

Fortu

m

Sta

tkra

ft

g CO2/kWh electricity, 2008

Average 350 g/kWh

41

8

Fortum’s investment programme Nordic region, Poland and Baltic countries

• Olkiluoto 3, Finland, nuclear• Swedish nuclear• Refurbishing of existing hydro assets• Czestochowa, Poland (coal/biomass CHP), Q3/2010• Pärnu, Estonia (biomass/peat CHP), end of 2010• Wind power project development

Electricity capacity ~800 MW~95% CO2 -free

Fortum's annual total capital expenditure during the next 4-5 years within a range of 0.8-1.2 billion euros

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Decision-in-Principle application for Loviisa 3

• A new 1000-1800 MW nuclear power plant unit in Loviisa• Designed service life of the unit at least 60 years• Fortum already has two nuclear power plant units in Loviisa• The power plant unit will be designed to allow for combined heat and

power production• Five reactor alternatives• The investment cost of one nuclear unit is EUR 4-6 billion• The plant site and its basic infrastructure ready, the basic investments in

nuclear waste management have been made

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New capacity, except nuclear, will require over 60 EUR/MWh power price

Other costs ( variation)CO2 cost

Coal Gas Nuclear Hydro Wind Cleancoal

EUR/MWh

Estimated lifetime average cost in nominal 2014 terms.Large variations in cost of new hydro and wind due to location and conditions.

0102030405060708090

100110

0102030405060708090

100110

Source: Nord Pool

EUR/MWh

Futures1 March 2010

1995 -97 -99 -01 -05 -07 -09 -11 -13-03 -15

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New interconnections could double the capacity to over

8000 MW by 2020

Nordic and Continental markets are integrating – interconnection capacity could double by 2020

Additional 700 MW cable NO-NL, as well 1400 MW

NO-DE links studied

EU financial support for 700 MW DK-NL link to

connect offshore wind, too

EU support to connect Kriegers Flak offshore wind area to DK&DE; new 400 kV

AC cable SE-DK by 2017

Jylland – DE capacity to be increased by 500 MW in 2012

and by further 500 MW by 2018 LitPol Link of 1000 MW to connect the Baltic market to Poland by

2015/18. It would open a new transmission

route from the Nordic market to the Continent

New internal Nordic grid investments provide for

increased available capacity for export to the

Continent and Baltics

EU’s European Energy Programme for Recovery to cofinance to Estlink 2

and NordBalt

1400 MW link to the UK could connect offshore wind, too; North Seas Countries’ Offshore Grid Initiative launched for supergrid development

In the EU's Second Strategic Energy Review the Commission focuses

strongly on interconnecting the Baltic states and Poland to form an electricity

market around the Baltic Sea

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Signs of demand picking up towards the end of 2009

2009 consumption decreased ~5% in the Nordic area372 TWh (393 TWh)

2009 consumption decreased ~5% in Russia• +/- 0% in Tyumen• -11% in Chelyabinsk

-25 %

-20 %

-15 %

-10 %

-5 %

0 %

5 %

10 %

Tyum

en

Che

lyab

insk

Rus

sia

Ura

ls a

rea

Rus

sia

Q1 2009 vs Q1 2008Q2 2009 vs Q2 2008Q3 2009 vs Q3 2008Q4 2009 vs Q4 2008

-25 %

-20 %

-15 %

-10 %

-5 %

0 %

5 %

10 %

Finl

and

Swed

en

Nor

way

Den

mar

k

Nor

dic

Q1 2009 vs Q1 2008Q2 2009 vs Q2 2008Q3 2009 vs Q3 2008Q4 2009 vs Q4 2008

Fortum currently expects Nordic power demand to recover back to the 2008 level by 2012-2014

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Improving efficiency, accountability and simplicity

• New organisation structure was implemented from 1 October 2009 onwards

• A programme targeting improved efficiency, accountability and simplicity initiated

• The process will continue in 2010

Number of employees, 31 Dec.

15579

11613

0

3000

6000

9000

12000

15000

18000

2008 2009

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Russia is a large market – World’s 4th in power

Figures at the end of 2008. Electricity generation Based on gross output.*) incl. Montenegro, KosovoSource: BP Statistical Review of World Energy June 2009

0

10

20

30

40

50

Russia Ira

nQata

r

Turkmen

istan

Saudi

Arabia US

UAENige

riaVen

ezue

laAlge

riaInd

ones

iaIra

q

0

10

20

30

40

Saudi

Arabia

Iran

Iraq

Kuwait

Venez

uela

UAERus

siaLib

yaKaz

akhs

tanNige

ria USCan

ada

0

1 000

2 000

3 000

4 000

USChin

aJa

pan

Russia

India

German

yCan

ada

France

South

Korea

Brazil

Nordic UK

0

50

100

150

200

250

USRus

siaChin

aAus

tralia

India

Ukraine

Kazak

hstan

South

Africa

Serbia*

Poland

Brazil

Colombia

Power generation

Oil reserves Natural gas reserves

Trilli

on c

ubic

met

res

billio

n to

ns

Coal reserves

TWh

billio

n to

ns

0

10

20

30

40

50

Russia Ira

nQata

r

Turkmen

istan

Saudi

Arabia US

UAENige

riaVen

ezue

laAlge

riaInd

ones

iaIra

q

0

10

20

30

40

Saudi

Arabia

Iran

Iraq

Kuwait

Venez

uela

UAERus

siaLib

yaKaz

akhs

tanNige

ria USCan

ada

0

1 000

2 000

3 000

4 000

USChin

aJa

pan

Russia

India

German

yCan

ada

France

South

Korea

Brazil

Nordic UK

0

50

100

150

200

250

USRus

siaChin

aAus

tralia

India

Ukraine

Kazak

hstan

South

Africa

Serbia*

Poland

Brazil

Colombia

Power generation

Oil reserves Natural gas reserves

Trilli

on c

ubic

met

res

billio

n to

ns

Coal reserves

TWh

billio

n to

ns

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Fortum has long experience of successful co-operation with Soviet Union and Russia

*) Including single largest purchase agreement of uranium with TVEL

Agreement on Joint Implementation of Kyoto Protocol with TGC-1

Sale of Fortum's stakein Lenergo (Distribution)

TGC-1

Construction of hydro power plants in Kola area

1950 1960 1970 1980 1990 2000

Lenenergo shareholding

Nuclear fuel import to Finland*

Automation & information system deliveries to thermal power plants

Safety improvements for nuclear power plants

Permanent presence in Moscow & St. Petersburg

Construction of Loviisa nuclear power plant

Electricity import to Finland

Construction of North-West CHP in St. Petersburg

St Petersburg Sales Co

Lenenergo split

TGC-10 acquisition

OAO Fortum (delisted)

Co-operation

Ownerships

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• Further liberalisation of energy market increased to 60% in January 2010

• The rate of liberalised volume is based on 2007 balance. All new capacity is sold with liberal prices

• The sales to households will remain regulated still after 2011

Share of liberalised trade for existing capacity

5 %10 %

15 %25 %

30 %

50 %60 %

80 %100 %

0 %

10 %

20 %

30 %

40 %

50 %

60 %

70 %

80 %

90 %

100 %

Jan 2007

100 %

July 2007

Jan 2008

July 2008

Jan 2009

July 2009

Jan 2010

July 2010

Jan2011

Further power market liberalisation

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2007 2013

MW

+73%+2,270 MW

3,020

0

1,000

2,000

3,000

4,000

5,000

6,000

5,290

Investment programme of OAO Fortum

Power generation capacity (MW)

Plant Fuel type Existing Planned Total

Tyumen CHP-2 Gas 755 450 1,205Tyumen CHP-1, Q3/2010 Gas 472 190 662Tobolsk CHP, Q3/2010 Gas 452 210 662Chelyabinsk CHP-3, Q4/2010 Gas 360 220 580Chelyabinsk CHP-2 Coal, gas 320 320Argayash CHP Coal, gas 195 195Chelyabinsk CHP-1 Coal, gas 149 149Chelyabinsk GRES Gas 82 82Nyagan GRES Gas 3x400 1,200Boilers -

Total 3,020 2,270 5,290

(Kurgan Generation (49%) Gas 235 235)

(CHP/Condensing)

(CHP/Condensing)(Condensing)

(Condensing)

(Condensing)

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Main earnings drivers of OAO Fortum

Development of the Heat business

Margin increase(power price vs. gas price)

Increased income from new volume sold

Increased income from new capacity(higher payments for new capacity)

Efficiency improvement programme

New capacity and volume through investment programme;appr. 2,270 MW new capacity

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MEUR 2009 2008 2007

EBITDA 2 292 2 478 2 298Net cash flow from operations 2 264 2 002 1 670Interest-bearing net debt 5 969 6 179 4 466Equity 8 491 8 411 8 651Balance sheet total 19 841 20 278 17 674Net debt/EBITDA* 2.6 2.5 2.2Return on capital employed (%)* 12.1 15.0 14.0Return on shareholders' equity (%)* 16.0 18.7 15.8

Key ratios

*2007 adjusted for REC and Lenenergo gains

Strong financial position

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Nord Pool year forwards

05

1015202530354045505560657075

Year 15Year 07 Year 08 Year 09 Year 10 Year 11 Year 12 Year 13 Year 14€/MWh1 March 2010

2006Q1 Q2 Q3 Q4 Q1

2007Q2 Q3 Q4 Q1

2008Q2 Q3 Q4 Q1

2009Q2 Q3 Q4 Q1

2010

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Hedging of Power division's Nordic sales

Hedge ratio Hedge price

2010 ~ 70% ~ EUR 44 per MWh

Status at the end of December 2009(Status at the end of Sep 2009)

(~65%) (~ EUR 44 per MWh)

2011 ~ 40% ~ EUR 42 per MWh(~35%) (~ EUR 42 per MWh)

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Fortum in a strong position

• Flexible, low-cost and climate-benign generation portfolio• Russian power reform proceeding and the results of OAO Fortum

improving as planned• Nordic power demand recovering• New power plants to be commissioned this year• Good hedging positions• Strong financial position and liquidity

Fortum in a strong position