President ratified the law setting price limits for monopolies On 5 August 2010 the President of Estonia ratified the law setting price limits for monopolies. As we reported in our announcement on 3 August 2010 the main consequence of this Act is that from 1 November 2010 the company's tariffs will be approved by the Competition Authority and not the City of Tallinn. At this point in time it is very unclear what impact this will have on ASTV as the Competition Authority has not yet defined the price methodology nor the service standards that ASTV must achieve. Both ASTV and the City of Tallinn will need to engage in professional and open dialogue with the Competition Authority to ensure the terms and conditions of the current contract are respected. ASTV has no objection to balanced and professional quality and economic regulation of the Water industry that meets with internationally acceptable principles. To date however no professional discussions have taken place with ASTV regarding this subject. Over the past few weeks the Competition Authority has made a number of public comments stating that, as a result of their thorough analysis of ASTV's financial performance ASTV's tariffs will now have to reduce by anything between 15% and 25%. We would like to point out to our investors and customers that these our headline statements only, and that the Competition Authority's analysis was, in their own words, a high level simulation which did not thoroughly analyse ASTV's results and performance since privatisation. Before statements such as these have any economic credibility there needs to be a thorough analysis of past performance using best practice regulatory principles. The Competition Authority's simulation includes a number of aspects that require further discussion as the regulatory principles used do not appear to be in accordance with internationally acceptable principles of economic regulation. For example, it is not clear: 1) What are the service standards that the company will have to achieve post November 2010? 2) How has the privatisation value of ASTV been factored into the calculation of invested capital? 3) What is the methodology for calculating the weighted average cost of capital? 4) What principles does the Competition Authority use to protect the purchasing power of invested capital from inflation? 5) Has the Competition Authority calculated ASTV's returns since privatisation and does it believe that ASTV has been too profitable over this period? 6) the current structure lacks independence as according to the law the company can make pre-court appeals about the methods and decisions of the Competition Authority only to the Competition Authority, this needs reviewing. ASTV looks forward to open and professional dialogue with the Competition Authority on the above points and many others prior to any changes in methodology being implemented. ASTV is only interested in open and transparent regulation that meets with internationally acceptable principles and recognises the terms and conditions of the privatisation agreement signed in 2001. ASTV will keep its investors fully informed of these discussions over the weeks ahead. Ian Plenderleith Chairman of the Management Board AS Tallinna Vesi 6262201 ian.plenderleith@tvesi.ee