The news source reported that E.ON's Mitte unit is also increasing gas prices in central German states by 14%, while E.ON Avacon said that it will be increasing prices for 83,000 households in the Lower Saxony and Saxony-Anhalt states.

Local German utilities are also expected to follow with price hikes by trying to match the increases announced by E.ON Ruhrgas, according to Reuters. E.ON Ruhrgas imports gas and sells it to shippers, local utilities and industrial users. Germany imports about 80% of its natural gas.

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According to the MoU, an independent valuation of the existing assets of Termoelectrica and an analysis on the new capacity will be carried out, as part of a feasibility study. Based on the results of the feasibility study, expected by the end of 2008, the parties will decide whether or not to implement the power plant project.

Within the joint venture, Termoelectrica will contribute the existing assets of the Braila power plant, while the E.ON-Enel consortium will contribute capital for the investment. The consortium will have the majority of the shares in the joint venture, while Termoelectrica stake will be based on the value of its existing assets.

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The Enel Group assets sold to E.ON include Enel's direct and indirect equity investments in Enel Viesgo Generacion, Enel Viesgo Servicios and Electra de Viesgo Distribucion, as well as their subsidiaries; with the exception of the 50% equity investment in Enel Union Fenosa Renovables, which has been already transferred to Enel Investment Holding.

The total value of the transaction that has been finalized amounts to approximately E11.5 billion, including a debt equivalent of about E1.8 billion which has been transferred with the companies that have been sold and net of minority stakes.

The 100% equity investment of Endesa in Endesa Europe has been sold to E.ON for a consideration of E7.12 billion, with an additional E1.15 billion for the balance of the intragroup's net financial position.

The sale of the Tarragona and Los Barrios thermoelectric power stations has been finalized for a consideration of E769 million. The identified assets of the Enel Group related to Viesgo have been sold to E.ON for a consideration of E702.5 million.

The transaction enables Enel to reduce its consolidated net financial debt by approximately E8.4 billion, including the debt equivalent of about E1.6 billion, attributable to the assets sold.

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Meanwhile, Bernotat said the company is considering building a nuclear plant in France, where it has the country's third-largest power generation capacities.

Germany is phasing out nuclear energy, but E.ON and peer RWE AG. are prepared to invest in nuclear power generation in other European markets.

E.ON to that effect recently signed a cooperation agreement with Siemens AG. and France's Areva on developing and constructing nuclear reactors.

frederik.richter@thomsonreuters.com fr1/jlc

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