1. 2 nd Stakeholder Group Meeting 14 November 2006 France-UK-Ireland Electricity REM Paper 5 - Imbalance Pricing Shaun Kent – Economist, European Affairs Ofgem

2. 2 France-UK-Ireland REM – TOPIC Summary Objectives  Do differences in imbalance pricing arrangements by themselves distort trade ?  Complement reciprocal access to balancing question Analysis  Constructed hypothetical examples of imbalance pricing in each country, assuming same generation set and prices First view  Clear that significant differences in price may exist  Hence in principle distortions to trade might happen

3. 3 France-UK-Ireland REM – TOPIC Questions for consultation  Does the analysis capture the issues correctly ?  Are any effects or market distortions material ?  How might any such effects be ameliorated ?  Are there any other factors / issues that we should consider ?

4. 4 France-UK-Ireland REM – TOPIC Thank You Shaun Kent – Economist, European Affairs shaun.kent@ofgem.gov.uk