1. Oct 23 th, 2000

2. MAIN DEVELOPMENTS IN THE SPANISH ELECTRICITY MARKET MARIA LUISA HUIDOBRO President and CEO COMPAÑÍA OPERADORA DEL MERCADO ESPAÑOL DE ELECTRICIDAD, S.A.

3. Oct 23 th, 2000 LIBERALISATION PRINCIPLES IN SPAIN èPRODUCERS participates in free competence, with freedom to build new power plants. They submit bids to the market or trade directly with qualified consumers èTRADERS participates in free competence: they buy energy in the market to sell it to qualified consumers. The can buy energy from external agents from producers to incorporate it to the market. èQUALIFIED CONSUMERS acquire energy through trading companies, directly in the market, or through bilateral contracts. Every consumer will be considered qualified on January 2003 LAW 54/1997 LIBERALISES THE ELECTRIC SYSTEM, CREATES THE POWER PRODUCTION MARKET MANAGED BY “COMPAÑÍA OPERADORA DEL MERCADO ESPAÑOL DE ELECTRICIDAD, S.A.” (OMEL) èMARKET OPERATOR receives electricity purchase and sell bids every day, obtains a matching price for each hour and is responsible for the ELECTRIC SYSTEM ECONOMIC MANAGEMENT èSYSTEM OPERATOR is responsible for the electric system technical management ACCESS TO TRANSMISSION AND DISTRIBUTION NETWORKS AT ACCESS TARIFFS OR MAXIMUM TOLLS APPROVED BY THE GOVERNMENT

4. Oct 23 th, 2000 PURCHASES BY RESELLERS, QUALIFIED CONSUMERS AND EXTERNAL AGENTS Total energy purchased (period)(*): 380,208.3 GWh Energy at free prices (last week): 889.7 GWh (29.8 %) Total energy purchased (last week): 2,986.0 GWh * Excluding pumping and self-producersDailyIntraday 19981999 2000

5. Oct 23 th, 2000 POWER MARKET PARTICIPANTS Production agent Self-production agent Special regime Selling External Agent Distribution agent Reseller agent Qualified Consumer Purchasing External Agent Phisical Bilateral Contract Tariff Consumer OMEL SELLERS BUYERS

6. Oct 23 th, 2000 DEMAND INTEGRATION IN THE MARKET èMore than 70.000 qualified consumers can access the market directly or indirectly: annual consumption greater than 1 GWh. From July 2000, 55% of the whole consumption is qualified consumers èCurrently 34% of the demand goes directly or indirectly to the market è80% of the energy liable to abandon tariff, is trading at free prices èImportant development of trading activity in a very competitive environment

7. Oct 23 th, 2000 MAIN TOPICS èINFORMATION èINTERNATIONAL INTERCONECTION CONSTRAINTS AND NEW PARTICIPANTS IN THE MARKET èFORWARD SUPPLY CONTRACTS IN ORGANIZED MARKETS èMETERING èMARKET POWER AND COMPETITION

8. Oct 23 th, 2000 INFORMATION èEQUAL INFORMATION FOR PARTICIPANTS IN THE MARKETS AND FOR THIRD PARTIES èAGREGATED DEMAND AND SUPPLY CURVES PUBLICATION

9. Oct 23 th, 2000 Source: REE COMMERCIAL CAPACITY (MW)

10. Oct 23 th, 2000 MEASUREMENT AND SETTLEMENT PROCESS Meter registers Secondary Concentrator Main Concentrator Settlement SIMEL analysis Border points measurements Border points Losses International deviations Assignment of border points to units System operatorMarket operatorParticipants Measurements

11. Oct 23 th, 2000 MARKET POWER AND COMPETITION èTEMPORARY LIMITATIONS TO DEVELOP NEW POWER STATIONS èTEMPORARY LIMITATION FOR CONTRACTS BETWEEN PRODUCERS AND TRADERS èNUMBER OF AGENTS