  The X-ray quasi-periodic oscillation (QPO) seen in RE J1034+396 is so far
unique amongst AGN. Here we look at the another unique feature of RE J1034+396,
namely its huge soft X-ray excess, to see if this is related in any way to the
detection of the QPO. We show that all potential models considered for the soft
energy excess can fit the 0.3-10 keV X-ray spectrum, but that the energy
dependence of the rapid variability (which is dominated by the QPO) strongly
supports a spectral decomposition where the soft excess is from low temperature
Comptonization of the disc emission and remains mostly constant, while the
rapid variability is produced by the power law tail changing in normalization.
The presence of the QPO in the tail rather than in the disc is a common feature
in black hole binaries, but low temperature Comptonization of the disc spectrum
is not generally seen in these systems. The main exception to this is GRS
1915+105, the only black hole binary which routinely shows super-Eddington
luminosities. We speculate that super-Eddington accretion rates lead to a
change in disc structure, and that this also triggers the X-ray QPO.
