1. Apex presentation 2005 Orlando 31 October 2005 B. den Ouden, CEO of APX Group

2. Page 2 Agenda nState of affairs: APX nMarket integration progress nCO2 project nConclusions

3. Page 3 Building the APX Group n1999: Amsterdam Power Exchange n 2005: APX Gas ZEE, APX Gas NL n2003: APX UK (power), EnMO (gas) n2004: UKPX (power) n2004: Re-branding

4. Page 4 APX Group: n5 markets…………  n~ 100 participants nTraded: ~ 150 TWh/year nOTC and CO2 service  n~ 3 billion Euro/year n~ 12 million budget/year APX activityNLUKB Power exchangeXX+* Gas exchangeXXX Power OTC settl.XX* CO2 services*+* Summary of APX Group today APX GasAPX Power + To be introduced soon * APX is service provider

5. Page 5 Volumes APX Group MWh/day

6. Page 6 Participants per market (December 2003) Electricity marketsGas markets

7. Page 7 Participants per market (December 2004) Electricity marketsGas markets

8. Page 8 Participants per market (March 2005) Electricity marketsGas markets

9. Page 9 Participants per market (Sept. 2005) Electricity marketsGas markets

10. Page 10 Countries of operation

11. Page 11 Co-operation partners Powernext Nord Pool spot LCH.Clearnet Huberator Elia TenneT Gasunie/GTS RTE Stattnet     New values

12. Page 12 > 100 members from 11 countries

13. Page 13 Agenda nState of affairs: APX nMarket Integration progress nCO2 project nConclusions

14. Page 14 Market Coupling: solution for European fragmentation n Not enough transmission capacity n Transmission constraints Fragmented market! n Low # of market parties in each area How to allocate limited transmission capacity? n Market-based! n Explicit auction n Implicit auction (market coupling): n Nordic Model n Decentralized model

15. Page 15 Bel pex APX Power next  TenneT  Elia  RTE nMarket coupling for part of the capacity (daily allocated) nMonthly and yearly explicit auctions remain nCo-operation project : –Exchanges and TSO’s –Joint services –Partnership APX / Powernext nBelpex exchange: jointly owned –60% Elia –40% partners (exch./TSO’s) Step 1: Belpex + market coupling Netherlands-Belgium-France

16. Page 16 Prices depend on transmission constraints / availability F ≠ B ≠ NLF = B ≠ NL F ≠ B = NLF = B = NL

17. Page 17 Price Quantity Area B supply demand Price Quantity Area A demand supply import export Decentralized market coupling: influence of im- and export on area prices

18. Page 18 Decentralized market coupling: Im/export price dependency curve, area A Area Prices Exports Imports price of area A 0 © June 2003 Amsterdam Power Exchange Spotmarket BV www.apx.nl Isolated price A nCurve can be produced by exchange in area A nBased on local bids in the area nWhen good “depth” in the market: low slope nLow depth and high volatility: steep slope

19. Page 19 Area Prices Exports Imports price of area B 0 © June 2003 Amsterdam Power Exchange Spotmarket BV www.apx.nl Isolated price B Decentralized market coupling: Im/export price dependency curve, area B nThis curve produced by exchange in area B nThis area has lower price at zero im/export

20. Page 20 Area Prices Exports Imports price of area B price of area A 0 © June 2003 Amsterdam Power Exchange Spotmarket BV www.apx.nl Decentralized market coupling: Im/export price dependency curves, both areas nBoth curves have the same slope direction: –Price down on imports –Price up on exports nHowever, on coupling the areas……

21. Page 21 Area Prices Export A, import B Import A, export B price of area B price of area A 0 © June 2003 Amsterdam Power Exchange Spotmarket BV www.apx.nl Decentralized market coupling: Import for area A = export for area B….. nNow add the daily available capacity from the TSO’s

22. Page 22 Coupling, constrained situation: prices diverge  auction income Area Prices Flow A->B price of area B price of area A 0 © June 2003 Amsterdam Power Exchange Spotmarket BV www.apx.nl Available transmission capacity

23. Page 23 Coupling, unconstrained situation Area Prices Flow A->B price of area B price of area A 0 © June 2003 Amsterdam Power Exchange Spotmarket BV www.apx.nl Available transmission capacity

24. Page 24 Step 2: Cable Norway-Netherlands (NorNed) + market coupling Nord Pool APX  TenneT  Statnett nNorNed: new cable, decided - Thermal power Netherlands - Hydro power Norway nMarket coupling all capacity, decentralized nCo-operation exchanges, TSO’s

25. Page 25 NBP TTF Zee Step 3: International gas markets develop further n APX Gas market on NBP: Existing liquid market Existing liquid market Technology on gas trading Technology on gas trading Experience on gas trading Experience on gas trading UK Gas infrastructure applied to: à Zeebrugge (Belgian hub) à TTF (Dutch balancing point) + BBL pipeline upcoming GTS Huberator/ Fluxys Interconnector BBL

26. Page 26 n Region as a hub n Trading opportunities n Integrated system n Economy of scale NBP ZEE TTF APX Spot Bel- pex Power next Nord pool UKPX Spot NorNed BritNed BBL Step 4: integrate gas and electricity markets, systems

27. Agenda n State of affairs: APX n Market intyegration progress n CO2 project – General EU CO2 trading situation – APX and New values initiative for CO2 spot trading n Conclusions

28. Page 28 Trading activity EUA nThe Dec 2005 delivery contract remains the most liquid market nSpot has started and is increasing as more registries are opened nTraded volumes increased rapidly in January 2005 nLiquidity is still hindered by contractual mismatch nExchanges: emerging but fragmenting market.

29. Page 29 Impact EUA on the power price  Power sector expected to deliver proportionately far larger reductions than any other sector due to:  average lower marginal reduction cost  cost pass through to customers  1MWh coal powered  0.8 tonne CO 2  1MWh gas powered  0.35 tonnes CO 2

30. Page 30 EUA price drivers; political environment nPolitical –Local distribution of EUA (natural long/short positions in countries) –“Windfall profit” discussion –Future political decisions? nFuel prices –Reduction of EU emissions by fuel switching possible –Swing in world oil&gas prices drives CO2 volatility –EU emissions prices influence dark-spread/spark-spread, power price nWeather –Hot/Cold, Dry/Wet (Hydro v.s. Fossil), Wind nPsychological price barriers –From time to time the market decouples from fuel prices nWorld-wide worries –Kyoto versus non-Kyoto; biomass discussion; VLT CO2 storage n  Security of supply uncertainties / discussion

31. Page 31 Climex Proposition nAPX Group is working with New Values to create a European wide pool of liquidity for spot trading of CO 2 nAPX and UKPX linking clearing functions to give participants a “local” counterparty either in the Netherlands or the UK nFast and easy accession to the market nLow cost and flexible solution

32. Page 32 Corporate Relationship Customer service Back office CCP New Values BV Rabobank BV Tennet BV APX BV UKPX 50%100% 50% Corporate Ownership Structure UKPX is the trading name for APX Power Ltd and is regulated by the FSA

33. Page 33 Sendeco2 Cooperation Model New Values APX (Netherlands)UKPX (UK) Member B Member A APX Power UK and APX BV have a back-to -back clearing agreement to allow pan European traders to access a “local” clearing house Dutch Utility signs clearing agreement with APX BV and trading agreement with New Values UKPX Member signs trading agreement with New Values Dutch Registry UK Registry UKPX holds account in UK registry Member C Spanish Utility signs trading agreement with New Values/Sendeco2 Spanish Registry APX holds account in Dutch and Spanish registry X Registry Relationship with other registries as they become operational Climex

34. Page 34 Market Access - Climex Platform nSimple browser based technology nAbility to –Post orders –Execute trades –Bilateral negotiation –Bilateral deal give ups for clearing –Broker give ups for clearing –Manage trading account effectively –Make requests to transfer collateral or transfer certificates from your trade account

35. Page 35 Climex Alliance - European Liquidity UKPX :  UK region  Trading on Climex  Sign up members with Climex  Central counterparty (CCP) for UKPX members Sendeco2 :  Spain, Portugal and Italia  Trading on Climex but look and feel Sendeco2  Sign up members with Sendeco2  APX as CCP New Values :  Benelux and Germany  Trading on Climex  Sign up members with Climex  APX as CCP Vertis Finance :  Central and East Europe  Trading on Climex  Get member with Climex  APX as CCP STX Services  Broker functions  Trading on Climex  Sign up members with Climex  APX or UKPX as CCP

36. Page 36 Timetable nProject –Updated MSPA to include UKPX Carbon Contract (30 day lead time) –Back to back clearing agreement with APX –UKPX registry application –Procedures UKPX - APX to handle collateral, settlement and delivery –Member visits and presentations –Sign up campaign –Building momentum of members across Europe as registries come on line nNew Values co-operations with: –Sendeco2: ready and waiting for the Spanish registry –APX already provide clearing services in Netherlands, –Vertis Finance: committed and getting ready –Asia Carbon: CER auction in November –UKPX: launch 9th Nov Go Live in November

37. Page 37 Agenda nState of affairs: APX nMarket integration progress nCO2 project nConclusions

38. Page 38 Conclusions nMarket integration is well on its way in Europe nPower: decentralized market coupling nGas: multi-hub integrated gas trading nCO2 rocking the boat nMany initiatives, many questions still unanswered nPositive: Yes, this market is developing and underway – but to where exactly ? nMore discussion needed between all parties