Ent. 7, 12 Krasnopresnenskaya Embankment, Moscow, , Russia Administrator of Trading System (ATS) Russian Power Exchange

2October 2007 Paris Company profile Nonprofit Partnership Administrator of Trading System (NP ATS) was established on November 23, 2001 pursuant to the Government Resolution No. 526 dated July 11, 2001 “On Reforming Power Industry in the Russian Federation” The only power exchange in Russia Cost of services regulated by State ATS members are: 31 major Russian power producers and consumers ATS owns 100% of a clearing company ATS main governing body - Supervisory Board - consists of: - 8 state representatives - 4 representatives of power producers - 4 representatives of power consumers

3October 2007 Paris Organization of wholesale power trading Developing market rules, ensuring implementation Granting market access, maintaining market participants database Settlement of financial transactions for the energy traded Power production/consumption metering system control Market monitoring and analysis Providing alternative dispute resolution Control over System Operator Main Functions

4October 2007 Paris Vesting contracts -Starting from July, ~90% of electricity sold under tariff regulation -100% of capacity is sold under vesting contracts -Tariff is set by a state regulator – Federal tariff service -Predefined parties to contracts; -Financial arrangements under vesting contracts are supervised by ATS. The volume of electricity traded under vesting contracts is decreasing every half a year; -By 2011 all electricity will be traded on competitive market; Population is supplied with electricity under tariff Market liberalization: Wholesale market - Regulated sector

5October 2007 Paris “Day ahead” market: –Market participants submit price bids –Price is set by auction for every hour of the next day –Market participants compete for full amount of generators’ output/users’ consumption –Nodal marginal pricing at 6400 nodes –Centralized financial settlement Non regulated bilateral contracts: –Price is defined by parties to a contract –Hourly basis delivery –Parties pay the difference in nodal prices between respective nodes –Direct financial settlement between parties Wholesale market - Competitive sector

6October 2007 Paris Difference between trading schedules and actual generation/consumption volume Initiatives are fixed by system Operator and calculated by ATS Price calculated on the basis of: –Day ahead market prices –Tariffs for producers System Operator chooses a generating equipment configuration on the basis of bids submitted at Day ahead market Centralized financial settlement Balancing market

7October 2007 Paris Market today, 2007Market Balancing market Vesting contracts (Starting from July 1, 2007 ~90% of electricity sold under tariff regulated by the Federal tariff Service) “Day ahead” market (~10% of electricity) Regulated bilateral contracts Electricity Capacity Competitive Regulated Balancing market Free bilateral contracts (Price is set by parties) Long-term auctions Capacity Electricity “Day ahead” market Each year volume of electricity sold under vesting contracts’ will be decreasing until the market becomes fully competitive in % competitive Free bilateral contracts Government resolution setting pace for liberalization in 2011 Competitive Market Today and Tomorrow

8October 2007 Paris (1,2) Territories with Day ahead Market (full market modal) (3) Territories with tariff regulated market: Far East, Komi Republic, Archangel Region, Kaliningrad Region. 3 3 Wholesale Market Geography

9October 2007 Paris Average annual price in European Russia – 14.5 €/MWh Average tariff – 8,8 €/MWh Trade Volume Prices, euros/MWh Tariff European Russia, pricing

10October 2007 Paris Trade Volume Prices, euros/MWh Tariff Average annual price in Siberia – 5.1 €/MWh Average tariff – 6.4 €/MWh Siberia, pricing

11October 2007 Paris Annual turnover – 18.7 billion euros (from September 1, 2006 to August 31, 2007) Traded volume (two price zones) reached approximately 1,000 TWh (from September 1, 2006 to July 31, 2007) 187 market participants: - Power suppliers Power consumers % of electricity produced in the Russian Federation is traded in the Wholesale power (capacity) market Key Market Statistics

12October 2007 Paris 14% Irkutsenergo Tatenergo Bashkirenergo Novosibirkenergo Trunk transmission lines (220 kV) Central dispatch administration Power sales 52% Russia Federation Minority shareholders RAO UESRosenergoatom Government 10 NPP - Independed AO-energo 48% Generation 45% - 100% 21% NP ATS Wholesale market Distribution lines (110 kV) Market Regulation

13October 2007 Paris 100% belongs to State Federal antimonopoly service Wholesale market >75% belongs to State Commercial Operator - ATS System operator Federal Grids NP “Market Council” (All market participants) Representation in the BoD Representation in the BoD Ministry of Industry and Energy Federal tariff service Representation in Market Council RAO UES Market Regulation Tomorrow

14October 2007 Paris – 100% capacity sold under regulated contracts In 2008: first auction for generation capacity for the following year (85% of capacity will still be covered by a tariff, the rest traded at competitive prices) ~ 17 “zones of free power flow”, with one price determined for each zone Competitive prices payment method: –Free bilateral contract –Contract with an infrastructure for Suppliers selected by an auction for generation capacity Capacity Market

15October 2007 Paris Ancillary services market (2008) Financial derivatives market ( ) Financial Transmission Rights Market ( ) Markets in the Future

16October 2007 Paris Thank you for your time and attention! Dmitry Ponomarev, NP ATS Management Board Chairman