Energy summit 2011 page 6-7

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1 apxendex.com, issue 2/11 Quarterly A D D E D V A L U E F O R E N E R G Y M A R K E T S CLEARING SERVICES page 4 Energy summit 11 page 6-7 Mobile website page 8 Bergen Energi was the first full member to trade short term electricity on behalf of light members. In April, they added a new customer to the list: Schiphol, one of Europe s largest airports and already active on the APX-ENDEX futures market. Bas van Lith, Sales Manager at Bergen Energi and Eric Velthuizen, Advisor Energy & Waste at Schiphol group visited our new head-office in Amsterdam to explain the choice for this type of membership. Interview Eric Velthuizen says: Together with our own internal customers we decided to start trading on APX Power NL. Price transparency is very important for these customers. Eric Velthuizen We have companies only buying spot power, such as the real estate branch. Other companies, for example on the aviation side, are more bound to governmental rules regarding financial securities. They need to divide the energy purchases between forwards and spot. We wanted to become a light member to minimise the counterparty risk, to enhance financial security and to be able to quickly respond to the changes in our demand. As Schiphol is currently investing in renewable energy, such as solar and biomass, it is important for the airport to be able to react quickly to changes in its energy use profile. Schiphol has grown so big that it wants to operate independently on the energy market. We are interested in low prices, while suppliers are interested in high turn-over, so there are conflicting interests. Therefore, a year ago, we started working on a new strategy together with Bergen Energi. Although the EUROPEAN MARKET COUPLING The success of the recent market coupling projects that now link the Nordic, CWE and British markets is now encouraging the realisation of the vision of a single day-ahead market coupling across the whole of Europe. APX-ENDEX is working closely with a number of power exchanges and TSOs to achieve this. Market coupling, or more precisely price coupling, is now clearly established as a key element of the target model for European market integration. Price coupling is where the day-ahead hourly prices on different exchanges in a region are determined in a single calculation, or matching function, optimising the use Schiphol Airport New Light Member via Bergen Energi of available transmission capacity between the hubs. European policy makers have concluded that this model, which was pioneered in the TLC scheme between France, Belgium and The Netherlands in 6, should be implemented across Europe by 14. This implies building a single matching function for Europe. A core group of six exchanges (APX-ENDEX, Belpex, EPEX Spot, GME, Nord Pool Spot, OMEL) are working together in a project called Price Coupling of Regions (PCR) to develop the necessary algorithms, systems and procedures. This group is supported by all the other spot power exchanges in Europex* (OTE, EXAA, HUPX, OPCOM, Polpx and BSP South Pool). The target of 14 is challenging. To achieve it, PCR has adopted an approach of focusing on what has to be done jointly while minimising the need for changes at a local level. Where possible, the intention is to rely on existing pre and post coupling arrangements, such as for capacity determination and shipping. The PCR solution can be adopted in different regions in parallel, facilitating a rapid subsequent evolution to a unified European coupling process as regions link together, rather than following a sequential process starting in one region and then extending it. Continue on page 2 purchase of energy is very important for Schiphol, it is not a core-activity and we need a partner such as Bergen Energi to advise us on how to use the available tools. Bas van Lith Bas van Lith explains the role of Bergen Energi: Our company manages energy portfolios on behalf of the larger end-users, working from a risk management perspective. We do not trade on our own account and are a neutral independent partner. Our advice is objective and purely in the best interest of our clients. The client s preferred purchase/ sell strategy is established via a thorough risk assessment process. The result of the assessment and the energy volume determines how the energy will be purchased or sold. Some clients trade directly on the exchanges, others deal in energy via a full supply contract with an energy supplier. It is up to the client to decide. Continue on page 2 From our CEO In this section we have informed you frequently about the integration developments of the European electricity markets and we will continue to do so. Now that the Central Western European region is coupled with Great Britain via BritNed and the Nordics via the ITVC and NorNed, we are working with other power exchanges and TSOs towards the next step: Price Coupling of Regions or PCR. Internally, we finalised the integration of the clearing rules for the Belgian and Dutch electricity spot markets in June, which resulted in several benefits for our members, such as cross-margining and reduction in collateral. On the derivatives markets we very recently saw new developments as well: we have replaced the pricing panel for the Dutch power and gas futures with a pricing window. From now on these indices are based on prices on the screen. The wood pellets index still continues being formed by means of a pricing panel. There is however other news to read about wood pellets, please see page 3. Meanwhile we are preparing the launch of week contracts and additional TTF gas calendar contracts, planned for early August. I m happy to have seen so many members and other good business contacts participate in our yearly Summit in Brussels. You ll find a special section about this Summit on page 6-7. This quarter we welcomed ten new members to our exchange. We interviewed one of them; Schiphol Group, light member on the Power NL spot market since last April. Bert den Ouden

2 apxendex.com, issue 2/11 Schiphol as Light Member, now trading short term power via Bergen Energi Continued from page 1 Bergen Energi has the tools and systems in place to monitor and adjust the forecast. In case forward positions are hedged in advance, this volume will be deducted from the total forecast. The bids for the remaining volume will be traded on APX-ENDEX. In most cases, intraday and cross border trading are carried out to reduce the customer s imbalance risk. As a supporter of a transparent and free market system, Bergen Energi wants to contribute to the market development and the increase of liquidity. Van Lith: The more end-users are operating directly on the wholesale market, the more liquidity increases. This is not only beneficial for the end-users trading on the exchange, but indirectly also for our clients with a bilateral supply contract for whom Bergen Energi buys/sells energy against OTC/ whole sale market prices. Bert den Ouden, Pieter Verboom (CFO Schiphol Group) and Bill Schjelderup (CEO Bergen Energi) Since the introduction of the light membership, Bergen Energi has brought the most light members to the exchange. Currently spot Power NL counts six light members. AVR - part of the Van Gansewinkel Group - was the launching light member in the Netherlands (via Bergen Energi s full membership), and set the tone for other end-users. A light membership brings the following benefits to the end-user: Full volume flexibility Direct benefit from market opportunities Reduced counter party risk (clearing via the exchange) Transparency; no hidden costs and all prices are published Equal access to market information for all An alternative to bilateral trading Flexibility to act on unexpected internal happenings or escalations Reduction of imbalance risk No investment in own systems and infrastructure Reduction of FTEs (operational activities are outsourced) A partner (full member) with up-to-date expertise According to Van Lith, collaterals required by the exchange are sometimes seen as a barrier for direct market access. Clients also consider collaterals complex. Van Lith disagrees. Once all arrangements are in place, it requires less time for the light member. The full member will take care of most activities. Velthuizen tells more about Schiphol s plans aimed at reaching % reduction of CO2 by : By using new production technologies we will save on energy. Next to that we will develop our own renewable local energy production. Schiphol Group is involved in two large projects. We are currently researching for a.4 MW solar-field and researching the production of biogas. The latter will be produced by Schiphol s waste and by the grass that comes from the 27 hectares of the airport s land. Schiphol s energy use has also become more fluctuating as a consequence of new environmental legislation. Since January, the airplanes parked at the gate are not allowed to use their own internal system for cooling anymore. They are forced to use shore power. For all these reasons Schiphol needs the flexibility to change between intraday and day-ahead purchases. APX-ENDEX invites other European airports to follow Schiphol s example and become a light member as well! European Market Coupling Continued from page 1 The PCR project is making good progress. Following an extensive assessment of the options, it has been decided to use Cosmos, the current CWE algorithm originally developed by Belpex, as the starting point for the development of the PCR algorithm, and the further development of a full prototype is now underway. The operational procedures have also been developed for both normal and exceptional situations, the specification of the necessary systems is nearing completion, and it is hoped to start procurement of the necessary software after the summer. APX-ENDEX also collaborates with TSOs and regulators in the North West Europe initiative, which aims to implement price coupling across the Nordic, CWE and British regions by the end of 12. It is expected that NWE will be one of the first regions to adopt PCR, replacing the existing coupling solutions in this region. By using PCR and given its geographic position, the NWE region should be in the forefront of the creation of the European market coupling. PCR and NWE are practical implementation projects, but there are also European legislative processes involved. The so-called Third Package establishes the concept of Framework Guidelines and legally binding Network Codes. These instruments are likely to enforce the implementation of day-ahead price coupling. In addition, the governance of the price coupling arrangements is recognised as a crucial issue, where the public interest regarding efficient use of transmission capacity and price formation needs to be ensured. As the size of market coupling regions grows, and so too the number of exchanges and TSOs involved, it becomes increasingly important to have fair but effective decision making. It is expected that the European Commission will shortly propose a Governance Guideline to establish a legal framework for the governance of the day-ahead market coupling, as well as possibly implicit intraday solutions. It is already clear that the exchanges will be very busy for some time. The implications Current status for trading on APX-ENDEX s immediate borders will be limited since market coupling is already largely established. NWE will, however, mean that GB is fully coupled to CWE - including the IFA cable to France and the ability to offer block Current market coupling arrangements operating in Europe orders in GB. Soon after, it is hoped that we will be at the heart of an efficient and integrated European market. *Europex: Association of European Energy Exchanges. Regional Implicit Auctions CWE - Price Coupling Austria - Price Coupled to GE/CWE (no congestion) GB - Price coupled to NL/CWE via BritNed only Nordic + Estonia - Price Coupling, also Poland via Swepol ITVC - Volume Coupling CWE - Nordic Italy - Slovenia - Price Coupling Mibel - Price Coupling Czech - Slovak - Price Coupling 2

3 APX-ENDEX welcomes New Members to its Markets APX-ENDEX welcomed a number of new members to its spot and futures markets. Gas NL (TTF) spot welcomed PCC Energie GmbH, Société Générale SA, Centrica Energy and Noble Clean Fuels Ltd as new members to the market, while EGL AG, Stadtwerke Hannover AG and KI Energy Trading joined the TTF Gas futures market. GDF Suez Trading extended its existing membership to Power NL futures, Power UK futures and Power BE futures. EDF Energy (Transactions) Ltd joined Gas UK as a new member. ESB Independent Generation joined Gas UK and Power UK as a new member. Schiphol Group joined Power NL spot market as a light member in collaboration with Bergen Energi. The Gas NL (TTF) spot market has 32 members, TTF Gas futures 5, Power UK futures 9, Power BE futures 27, Power UK spot 61 and Gas UK 8 members. The Road to a Wood Pellets Exchange Industrial Wood Pellets Exchange in Short: Price index to increase transparency Pricing panel launched in 8, currently 14 members 9 contracts offered: 3 months, 3 quarters and 3 calendars Exchange trading to be launched during the second half of 11 in cooperation with Port of Rotterdam 2-Phase approach for launch starting with non-cleared products, clearing to follow shortly afterwards Wood Pellets listed on Trayport Global Vision The establishment of the Industrial Wood Pellets Index in November 8 was the first step towards the introduction of exchange-traded biomass contracts. The index has since provided the much needed price transparency to the biomass market and is currently being used by market parties to agree on commercial terms with counterparties. In November 1, after a joint feasibility study with the Port of Rotterdam, APX-ENDEX announced the intention to launch the world s first wood pellets exchange during the second half of 11. APX-ENDEX is now in the stage of finalising the market consultation that should be done by end of July. This includes the final product specifications, set up of the market in terms of trading rules, trading calendar, design of the trading system, opening hours etc. Once these steps have been completed, the market rules will be finalised and after the approval from AFM (Authority for Financial Markets) members will be able to sign up as a preparation to start trading. Two-phased Approach APX-ENDEX and Port of Rotterdam have decided on a two-phased /MT approach in the process of developing an operational exchange. In phase 1, the exchange starts with non-cleared products and therefore the physical settlement will be arranged bilaterally between the counterparties. Phase 2 would follow later when the trading and clearing solution will be combined. The functional roles of the new wood pellets exchange between the project partners is divided between the trading aspect and the operational aspect focusing on the logistics: APX-ENDEX will provide the trading platform for trading biomass products (including the clearing services as scheduled for phase 2) and the Port of Rotterdam will contribute its expertise and know-how with regards to shipping, storage and distribution of biomass products (i.e. to facilitate the infrastructure required for the physical settlement of the trades). Industrial Wood Pellets - Index Development 8-Jun-11 8-May-11 7-Apr-11 7-Mar-11 4-Feb-11 4-Jan-11 4-Dec-1 3-Nov-1 3-Oct-1 2-Sep-1 2-Aug-1 2-Jul-1 1-Jun-1 1-May-1 31-Mar-1 28-Feb-1 28-Jan-1 28-Dec-9 27-Nov-9 27-Oct-9 26-Sep-9 26-Aug-9 26-Jul-9 25-Jun-9 25-May-1 24-Apr-1 24-Mar-1 21-Feb-1 21-Jan-8 21-Dec-8 -Nov-8 Month+1 Quarter+1 Calendar+1 Increased Trading on TTF Gas Markets The Dutch gas spot market saw its within-day volumes climbing to 3,866 MWh in April, from 48 MWh in March. In May the within-day volume was 21,669 MWh, in June 19,71 MWh. The number of trades on this market was 151 in April, 157 in May and again 151 in June. The TTF Day-Ahead market showed steady high volumes with 6,672 MWh traded in April, 694,344 MWh in May and 627,888 MWh in June, based on a high number of trades: 313 (April), 385 (May) and 383 (June). Compared to the first quarter the total spot volumes doubled from 1 TWh to 2 TWh. The increased liquidity on the Gas NL (TTF) spot market can partly be attributed to the new GTS balancing system introduced on 1 April 11 that requires traders to balance their own long and short positions, which they are able do through trading with other parties. After the first quarter with record volumes of TWh, the TTF Gas Futures market noted substantial volumes exchange traded as well as OTC cleared- with TWh traded in Q2. The month of April saw a volume of TWh, May TWh and June TWh despite the number of trades going down from 1,364 in Q1 to 839 in Q2. Both the TTF spot and the futures markets welcomed several new members since the start of the year. The spot market counted six new members with another two applications received and being processed. The futures market has signed up five new members with numerous applications being processed.

4 apxendex.com, issue 2/11 Further harmonisation of spot clearing services The improvement of APX-ENDEX s clearing services has been in sharp focus for much of the past year. Nine months ago the starting position saw APX-ENDEX made up of several separate legal entities most of which performed both trading and clearing activities. As the group became more integrated internally, measures were also being taken to create a more logical and efficient clearing organisation that brought with it tangible member benefits. At the heart of these changes was the desire to improve APX-ENDEX s spot clearing offering to the market, by consolidating and integrating clearing, collateralisation and settlement of all spot and prompt markets operated by APX-ENDEX. Consolidation On 4 October 1, APX-ENDEX consolidated its continental spot markets and the related trading and clearing arrangements. This resulted in a number of changes to the legal group structure and delivered the following member benefits: Reduced initial margin requirements for Dutch and Belgian gas; Operational efficiencies arising from clearing Dutch and Belgian gas and power under a single contractual clearing relationship through a single clearing entity; More attractive interest conditions on cash collateral held in escrow accounts; and Revised fee structure. The most recent step in the development of APX-ENDEX s clearing services was delivered on 15 June 11. This saw the consolidation of its clearing services for Belpex with its other continental clearing services and marks an important step in the process of finalising the integration between APX-ENDEX and Belpex. Interview An Account Manager s Perspective Integration of APX-ENDEX and Belpex Rob Loos The merger between Belpex and APX-ENDEX was finalised at the end of 1. This has lead to several benefits for the members, such as reduction of transaction fees, crossmargining and administrative simplification, and will lead to further benefits in the future, says Rob Loos, Account Manager Continental Spot. In March we lowered the fees on the Belpex day-ahead and intraday markets. This reduction in the trading costs was possible thanks to increasing volumes and synergies that are passed on to the members, explains Loos. In June, Belpex adopted the APX-ENDEX Clearing Rule Book, the same set of clearing rules as APX-ENDEX other spot markets. This allowed the implementation of cross-margining between the day-ahead auctions of the Belgian and Dutch power markets. It also allowed full netting of unrealised settlements for Belgian and Dutch power trading. At the same time, the back-office websites for both markets were merged. Rob Loos: The implementation of cross-margining lead to significant reductions in the collateral requirements. Members who for example buy in the Netherlands and sell in Belgium have a lower net risk for the clearing house and therefore have to lodge less collateral. The consolidation of banking arrangements and the back-office websites resulted in a simplification of members back-office processes. In cooperation with Nord Pool Spot, APX-ENDEX and Belpex launched a cross-border intraday market for power between the Netherlands and Belgium. At the same time the margin requirements for this market were improved. This leads to a more efficient usage of the transmission capacity between both countries until close to real-time and to an increase of Power NL intraday volumes. We expect to offer our members further benefits in the near future The initiative will be extended to the NorNed cable in February 12, in effect creating one intraday market from Brussels to Helsinki. APX-ENDEX and Belpex integrated their teams, amongst which the commercial teams. Rob Loos: I was Account Manager for Belpex and now also manage most accounts for the Dutch spot power market. Product development teams and operational teams have also been integrated, strengthening the teams and leading to a more optimal allocation of resources. Further harmonisation We expect to offer our members further benefits in the near future, continues Loos. APX-ENDEX and Belpex are currently looking into consolidation of the invoicing processes. The aim is to harmonise as much as possible, to have one single point of contact and to further facilitate back-office processes for the members and the exchange. Currently, for historical reasons, one cannnot use the same EuroLight client (front-end software) for trading on Belpex and APX-ENDEX markets. Technically, the software for the trading clients for Belpex and APX NL Power is very similar, so by merging the trading clients, members will be able to see both spot power markets on one EuroLight client and log on to both markets with one single digital pass. This will allow easier introduction of orders and more efficient portfolio management. 4

5 Introduction of Pricing Window Trading Screen Dutch Power Baseload Qty Bid Ask Qty Aug , 5,7 5 Sep , Oct-11 5, 61,5 5 Nov ,5 64,5 5 Dec-11 5, 61, 5 Jan ,75 63,75 5 Q ,65 61,85 5 Q , 62,15 5 Q ,9 51, 5 Q ,75 52,5 5 Q4-12 5,3,85 5 Q1-13 5,75 61,75 5 Cal , 56,75 5 Cal ,55 57, 5 Cal ,3 57,65 5 Cal Cal Last update: 11:49 1st July 11 On each business day, APX-ENDEX establishes reference and settlement prices for all contracts listed on its futures exchange. The end-of-day settlement prices serve as input for the daily margining process by the clearing house, European Commodity Clearing AG (ECC). The intra-day reference prices on Power NL Futures and TTF Gas Futures could be used as input for monitoring intra-day price movements by the clearing house, based on which the clearing house may decide to require additional margins. These prices may also be used by third parties as reference price in Business-to- Business transactions. As per 1 July 11, APX-ENDEX has refined the process to derive reference and settlement prices for its futures markets by the introduction of a settlement window methodology. This will increase the transparency of the pricing process and will enable all members to contribute to the establishment of the daily reference prices. For each tradable contract of the Power NL, Power BE, Power UK and TTF Gas futures markets, the reference prices will be established, based on the activity on the exchange during a specific time window of 15 minutes. Orders entered and trades executed during these time periods and meeting the specifications will be used to determine the reference price for that session. In case no valid orders and/or trades are available during the applicable time period, the reference price will be derived from the Pricing Panel. The Pricing Panels for all products will therefore remain in place. All reference and settlement prices are made arbitrage free, in order to ensure a secure margining process at the clearing house. On the website, prices which are derived by the Pricing Panel are marked with an asterisk. Market Results on the website ENDEX Power NL Base Peak 16hrs Peak Aug Sep Oct Nov Dec Jan Q Q Q Q Q Q Cal Cal Cal Cal * 71.36* - Cal-16.8* 73.63* - BOM Jul * 61.88* 59.68* Last update: 12: 1st July 11 Prices marked with * are derived by means of the pricing panel methodology. Financial Results 1 The year 1 marked a period of rapid development and continued growth. In short, the exchange successfully merged with Belpex, the integration of the European electricity market reached the milestone by seeing the CWE market coupling being launched, and the exchange completed several (internal) development projects. Revenues were up to 3.1 million while operational earnings (EBITA) showed a structural improvement and amounted to 5.3 million. Net income in 1 was 3. million. Milestones These strong financial results were due to a number of milestones which APX-ENDEX achieved during 1. APX-ENDEX and Belpex integrated their positions thereby accelerating the integration of the European energy markets. Cross-border intraday In addition, APX-ENDEX, Belpex and Nord Pool Spot developed an integrated cross-border intraday electricity market launched February 11 between Belgium and the Netherlands. Earlier on, another decisive step towards the integration of the European electricity market had been taken with the successful launch of the Central West European (CWE) price coupling and the CWE-Nordic coupling on 9 November 1, followed up by including the NorNed cable in the market coupling on 12 January 11. These milestones marked a period of rapid development of APX-ENDEX, and allowed the company to set the stage for the further development of existing markets and new products in 11. This year s report can be downloaded from the press section of the corporate website: Events Calendar 1 1 Date Title Location Organised by September European Gas Trading Forum Berlin, Germany UniPower International October 11 Platts European Gas Supply Infrastructure Brussels, Belgium Platts 19- Bio Energy Commodity Trading 11 Copenhagen, Denmark Active Communications International Europe Ltd 26 APEX & Brazil Energy Market and Industry Rio de Janeiro, Brazil CCEE November EMART Energy Lyon, France Synergy

6 apxendex.com, issue 2/11 APX-ENDEX Energy It has been a privilege for Stratos Energy Consulting and for me personally to arrange and moderate the Energy Market Summit for APX-ENDEX for a second year running at the Amigo Hotel in Brussels. We welcomed back many invitees who joined the Summit in 1, and several who attended energy trading symposia sponsored by APX Group in prior years. The title for the 11 event was: Our Energy Market: Structural Challenges in Power and Gas. We followed up on 1 Summit topics such as transparency and investment signals, but this year through the prism of the structure of the gas and power markets in Europe. Our platform speakers and commentators covered in four sessions prospects for gas hubs, electricity market coupling, the integration of renewable electricity in the wholesale power market, and supervisory regulation of energy markets. A theme linking each of these sessions was the way in which the European market structure, which has emerged postliberalisation, is already coming under pressure from originally unforeseen contractual, commercial, financial and policy developments. Session 1: Gas hubs as marketplaces and service providers This session dealt with success factors for gas hubs; we included speakers and commentators familiar with the evolution of hubs in the Netherlands, Great Britain and the United States. Delegates heard that contract renegotiation is bringing about opportunities to augment short term delivery volumes and thereby hub liquidity. A hypothesis emerged that hubs benefiting from close-by storage and equivalent flexibility mechanisms may be those which can best flourish in the long run. We asked delegates to express their opinion as to which continental gas hub will attract most liquidity in coming years. The results of an electronic vote are shown in Graph 1. Session 2: Integrating renewable power into the European wholesale market This session, moderated by Professor Peter Cameron, covered the impact of growing financial support for renewable power producers on the functioning of the wholesale electricity market. Our speakers and commentators considered the following questions: Have price formation in the mainstream wholesale power market and the determination of prices realised by RES-E generators become completely separate processes? If so, is this situation distorting the EU internal energy market? The new Directive makes priority dispatch for RES-E output mandatory. What will be the impact of that? Will the absolute priority prove sustainable in all European countries? Within the current EU legislative framework, can we ever develop a credible and effective renewable attributes trading mechanism for the whole of Europe? Delegates in an electronic vote proved highly sceptical about the prospects for most EU countries meeting their targets. We then asked delegates to express their opinion as to an effective and economically efficient means of increasing RES-E penetration after. Results are shown in Graph 2. Graph 1: Which of the following continental European hubs or delivery zones do you believe will enjoy the greatest liquidity by 15: 1. TTF in the Netherlands 2. A German delivery zone (NCG and/or Gaspool) 3. A French delivery zone (PEGs combined) 4. CEGH (Baumgarten) 5. Another? 29% 65% Graph 2: What do you think will prove post- an effective and most economically efficient means of increasing the penetration of RES-E in Europe? 1. Compulsory feed-in tariffs 2. Compulsory consumption quota plus tradable certificates 3. Only voluntary targets led by consumer choice 4. Tougher rationing of emission allowances in the EU ETS 5. None of the above 3% 2% 2% 6% 13% 14% 3% 38% 6

7 Market Summit 1 1 Graph 3: Do you think a power price coupling of regions for the whole of Europe (with possible exceptions in the cases of the Balkans, Greece and Ireland) can be achieved? 1. By By 3. Sometime later Graph 4: Do you see a need for reform of MiFID so as to capture in the financial regulatory net all traders of commodity derivatives? 1. Yes 2. Yes, but not if this implies an obligation for physical suppliers to post capital to back their deals 16% 19% 4. Not at all 19% 18% % 3. No 42% 46% Graph 5: Do you see a need for the EMIR legislative initiative, proposed by the European Commission, as far as commodity markets are concerned? 1. Yes, including obligatory clearing of energy derivative transactions by systemically important trading firms 2. Yes, but only the derivative transaction reporting provisions 3. No 3% 3% 41% Session 3: Electricity market day-ahead coupling: into the finishing straight? This opening session on the second day of the Summit, moderated by Andrew Claxton, gave delegates a chance to learn about the prospects for the extension of day-ahead price coupling of mostly national electricity markets beyond the traditional boundaries of Central West Europe. Speakers, commentators and delegates appeared to agree that: Efficient capacity allocation is naturally a TSO responsibility, but market coupling is a broader concept, involving other issues of public interest There is a public interest in the development of fair and orderly markets, price formation and market access The development of an integrated European wholesale power market implies additional requirements, including: The facilitation of competition between suppliers on an international basis The possibility for consumers to access existing generation capacity in an efficient manner, irrespective of their national location The provision of a low cost and effective means for market participants to acquire and/ or utilise transmission capacity Delegates however appeared sceptical about the prospects for extensive price coupling of regions across Europe much before in an electronic vote. Graph 3 shows the estimation they made. Session 4: Regulating energy transactions and marketplaces This session was preceded by a special address by Philip Lowe, Director General for Energy in the European Commission. We also had the benefit of a speech by Alberto Pototschnig, founding Director of ACER (the Agency for the Coordination of Energy Regulation in the EU), and of remarks made by Hannes Huhtaniemi from DG Market of the European Commission about the impact of planned changes to financial markets regulation on wholesale transacting in power and gas. It transpired that energy traders present generally welcomed the move to put in place harmonised European regimes, whereby regulators may receive necessary information about wholesale power and gas transactions. Some delegates emphasised, however, that the future regimes must be carefully designed, so as not unduly to harm the market nor hinder its development, and to recognise the secular and physical realities of the commodities concerned. In electronic votes delegates proved to be sceptical about the appropriateness of applying at least some provisions of EU financial markets legislation (MiFID and EMIR) to non-financial sector participants in European energy markets, as Graphs 4 and 5 make clear. Peter R. Styles Stratos Energy Consulting

8 apxendex.com, issue 2/11 In the UK, the power spot market the volumes increased considerably from 2.7 TWh in the first quarter of 11 to 4.4 TWh in the second quarter. There was more activity on the Power UK auction, which can attributed to the BritNed cable and the market coupling solution integrating the GB power market with the Central West European power market, launched on 31 March 11. Spot Markets The Power NL Day-Ahead Auction showed a stable volume; just as the previous quarter, 9.3 TWh of electricity was traded. Two daily records were noted on this market. The first record was for delivery on 25 April, when 132,89 MWh was traded with an average price of 43.47/MWh. The second daily volume record during the second quarter of 11 was traded on 18 June for delivery on 19 June: 134,32 MWh with a corresponding index of 29./MWh. This was a weekend-day, when prices usually are lower than on business days. The Belpex Day-Ahead volumes decreased from 3.4 TWh in Q1-11 to 2.8 TWh this quarter. On the Dutch and Belgian Intraday markets we saw the Dutch volumes grow from GWh in Q1 to GWh in Q2 and the Belgian volumes slightly diminish from GWh in Q1 to 61. GWh in Q2. Market Coupling During the second quarter there was a total price convergence within the coupled areas of APX-ENDEX launches Mobile Website Recent web analytics prove that the number of times is accessed by using a smart phone is constantly growing. To respond to this development and to increase the accessibility of the site, we are proud to announce the launch of our mobile website. France, Belgium, Luxembourg, the Netherlands and Germany during 57% of the time. There were two price zones 38% of the time. The Netherlands and Germany formed one price area with similar prices, while France together with Belgium showed equal prices in another price zone. Gas In line with the past two quarters, the volumes of the British gas spot market were very stable; from a quarterly total of 31.4 TWh in 1-Q4 and TWh in 11-Q1, the volumes totaled TWh during the second quarter. On the continent, the Dutch gas market TTF doubled its quarterly volume: up from 1. TWh in Q1-11 to 2. TWh. Futures Markets In Q2 11, a total volume of 69.4 TWh was recorded on the APX-ENDEX futures markets. The Power NL Futures totalled 7.1 TWh, of which 3.5 TWh was traded on the exchange and 3.6 TWh was registered for OTC Clearing. The total volume for the Power BE Futures saw an increase of 25%, going from 2.4 TWh in Q1 to 3 TWh in Q2 11 (2.9 TWh exchange traded,.1 TWh OTC Clearing). The total volume of the TTF Gas Futures reached 59.3 TWh, of which 36 TWh was recorded as exchange traded volume and 23.3 TWh as OTC Clearing volume. The reference prices of all front calendar contracts declined over the last quarter. The price for the Power NL Cal+1 contract decreased by 3.9%, going from 58.88/MWh to 56.56/MWh. Power NL Peak Cal+1 fell with 2.7% (from 72.24/MWh to 7.31/MWh) over the last quarter. The Power NL 16Hrs Peak Cal+1 contract closed 2.7% lower as well going from 7.63/MWh to 68.71/MWh. The Belgian front calendar contract went down from 58.7/MWh to 55.44/MWh, which is a decrease of 5.6%. On the TTF Gas market, the price for the Cal+1 contract diminished by 3.9 %, going from 27.39/MWh to 26.33/MWh the price for the front seasonal contract went from.67/mwh to 56.8/MWh in the last quarter, which is a decrease of 6.4%. GBP/MWh TWh Euro/MWh Frequency Pence/Therm % 8% % % % % 1 8 Apr May 1 Jun Jul Aug 1 Sept Oct Nov 1 Dec Jan Feb 11 Mar Apr May 11 Jun Quarter 2 Quarter 3 Quarter 4 Quarter 1 Quarter 2 Power BE Futures* TTF Gas* Power Spot Markets Average Monthly Price Index Q2-9 to Q2-11 Jun-9 Jul-9 Aug-9 Sep-9 Oct-9 Nov-9 Dec-9 Jan-1 Power UK Spot Index ( /MWh) Feb-1 Mar-1 Power NL Day-Ahead Base ( /MWh) Total Volume Q2-1 to Q2-11 Apr-1 May-1 Jun-1 Jul-1 Aug-1 Sep-1 Oct-1 Nov-1 Dec-1 Jan-11 Feb-11 Power UK Day-Ahead Base ( /MWh) Power NL Spot Belpex * EFE & OTC Clearing Gas Spot Markets Average Monthly Price Index Q2-9 to Q2-11 Jun-9 Jun-9 Jul-9 Gas ZEE & NL Spot Power NL Futures* Power UK Spot Gas UK Spot Number of Price Areas in CWE 1 Area 2 Areas 3 Areas 4 Areas Jul-9 Aug-9 Mar-11 Apr-11 May-11 Power and Gas Markets Price Indices Cal + 1 Q2-9 to Q2-11 Aug-9 Sep-9 Sep-9 Oct-9 Oct-9 Nov-9 Nov-9 Dec-9 Dec-9 Jan-1 Jan-1 Feb-1 Gas UK SMP Sell (Pence/Therm) Gas NL TTF All-Day Index ( /MWh) Feb-1 Mar-1 Apr-1 Mar-1 May-1 Apr-1 Jun-1 May-1 Jul-1 Jun-1 Aug-1 Jul-1 Sep-1 Aug-1 Oct-1 Sep-1 Nov-1 Oct-1 Dec-1 Gas UK SAP (Pence/Therm) Gas UK SMP Buy (Pence/Therm) Gas ZEE All-Day Index (Pence/Therm) Nov-1 Jan-11 Dec-1 Feb-11 Jan-11 Mar-11 Apr-11 Feb-11 May-11 Mar-11 Jun-11 Jun-11 Apr Q3 8- Q4 9- Q1 9- Q2 9- Q3 9- Q4 1- Q1 1- Q2 1- Q3 1- Q4 11- Q1 11- Q2 May-11 Euro/MWh Euro/MWh Jun-11 You are automatically directed to this miniature version of our corporate website when browsing from a smart phone. It is userfriendly and has an easy access path to the information you need. Much attention was given to the display of the daily market results pages, which are by far the most accessed pages of the entire website. Power NL Base Power BE Base TTF Gas Base Power NL Peak (8-) Power NL 16 hrs Peak (7-23) Colophon APX-Endex Quarterly is published by APX-ENDEX and is also available via Editors Ingrid Stoop, Eric-Jan Hadderingh. Editorial office Sanna-Maaria Mattila, Johanna Quelle, Stacy-Ann Wilson. Contributor Peter Styles, Stratos Energy Consulting Images Aeroview, APX-ENDEX, Schiphol Group. Design and print Headline Integrated Communication, Amsterdam. Contact APX-ENDEX Corporate Communications, PO Box 12628, 11 AP Amsterdam T +31 () 35 E quarterly@apxendex.com W Disclaimer The data and statements contained in APX-ENDEX Quarterly are only intended for the purpose of information and do not constitute an advice, offer or recommendation. Under no circumstances shall APX-ENDEX be liable for any loss or damage resulting from, or connected to the use of the data as published in APX-ENDEX Quarterly. APX-ENDEX makes no warranties or representations about the information available. No part of this publication may be reproduced in any form without prior written permission of APX-ENDEX. APX-ENDEX reserves all rights. Third party contributions do not necessarily express opinions of, or information generated by, APX-ENDEX. 8