www.powernext.com

Powernext Gas Exchange

International Seminar on Electric Power Markets Medellin – 15th August 2013

www.powernext.com

Outline

Introduction

Company Overview

European Gas Markets

Gas Exchange / members

Market model

Products Pegs & TTF

Trading

Price References : spot & futures

Clearing – Nomination

Corporate structure, markets and services

Powernext

develops and operates its own markets

establishes partnerships to help other exchanges setting up new markets (“Powering the Next Markets”)

EPEX Spot (French / German power spot exchange)

owns shares in various exchanges or companies in the commodity sectors

Services

VPP EDF

EPEX Spot

Registry for Garanties

of Origin

Markets

Powernext Gas Spot

Powernext Gas Futures

Powernext Energy

Savings

Gas Traded volumes in Europe (Spot)

PSV

CEGH

MS-ATR

GTF

NCG

NBP TTF

ZEE

PEG

-2,00

0,00

2,00

4,00

6,00

8,00

10,00

0 0,2 0,4 0,6 0,8 1 1,2

NBP

GASPOOL

GSPL

980 TWh 358 TWh

120 TWh

105 TWh

223 TWh

103 TWh

Estimated 2012 volumes based on OTC and Exchanges Spot traded volumes from January to December 2012

+ 30% + 42%

+ 32%

+ 7% -1%

+-17%

All European hubs are steadily developing on the Spot

4

PSV

CEGH

MS-ATR

NCG

GTF

GSPL

NBP

TTF

ZEE

PEG

16 248 TWh

7 627 TWh

660 TWh

224 TWh

776 TWh

380 TWh

Estimated 2012 volumes based on OTC and Exchanges Spot traded

volumes from January to December 2012

+ 13% + 27%

+ 79%

+ 20%

-9%

-17%

Extreme price correlation on Futures

TTF attracted the liquidity of the continent

Massive use of spread contracts

PEG Nord vs. TTF settlement prices on Summer 2013 contract (over 2012)

Gas Traded volumes in Europe (Futures)

5

Brokers94%

APX3%

EEX2%

Brokers59%

PWX41%

PEGBrokers

92%

EEX8%

GASPOOL

Brokers100%

APX0%

ZEE

PSV

CEGH

MS-ATR

GTF

NBP

ZEE

Based on OTC and Exchanges Spot traded volumes from January to December 2012

NCG

TTF

Brokers92%

EEX8%

GASPOOL

GSPL

Brokers86%

APX14%

NBP

NBP

PEG

Powernext Gas Spot is the leading Spot exchange in continental Europe

Powernext Gas is the only Exchange having a representative market share of its domestic hub

In other Hubs, brokers account for 90% of the traded volumes

Gas Exchanges in Europe (Spot)

6

Brokers92%

APX-Endex

5%

ICE3%

Brokers82%

PWX18%

Brokers100%

ICE0%

EEX0%

GASPOOL

Brokers61%

ICE39%

NBP

Brokers100%

ZEE

Gas Exchanges in Europe (Futures + OTC Clearing)

PSV

CEGH

MS-ATR

GTF

ZEE

GSPL NBP

TTF

Brokers95%

ICE0%

EEX5%

NCG

NCG

Based on OTC and Exchanges futures traded volumes from January to December 2012

PEG

Powernext is the only continental Exchange having a significant market share on Futures

Powernext is the only Exchange to offer geographical spreads

There is room for an Exchange to offer clearing and anonymity on the TTF

7

Powernext Gas Spot is the leading exchange in continental Europe

2nd largest market share in Europe on Futures

Powernext traded volume development on Spot and Futures markets

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

40 000

2009 2010 2011 2012

Annual traded volumes on Powernext Gas Spot (GWh)

0

10 000

20 000

30 000

40 000

50 000

60 000

2009 2010 2011 2012

Annual traded volumes on Powernext Gas Futures (GWh)

FUTURES OTC clearing

8

Powernext Membership development

2

14

12

3

3

1 1

6

2

1

2

11 members on launch date (26 Nov. 2008)

As of November 2012, 47 members:

6 producers

23 utilities

3 industrial consumers

6 trading companies

7 banks

2 TSOs

10

23

37 43

47

11

20

32 34 41

Dec 2008 Dec 2009 Dec 2010 Dec 2011 Nov 2012

Evolution of Powernext Gas number of registered members

Spot registered Cies Futures registered Cies 9

Jan 2013

Powernext® Gas – Members List

47 Members:

A2A Trading Alpiq AG (Spot Only) Altergaz Antargaz Axpo Trading AG (ex EGL AG) Barclays Bank BP Gas Marketing Limited ConocoPhillips Danske Commodities Deutsche Bank (Spot Only) E.ON Energy Trading Econgas GmbH EDF Trading Limited Electrabel ENEL Trade ENOI ENOVOS Luxembourg ExxonMobil (Spot Only) Gas Natural Espagne Gas Natural France Gazprom Marketing & Trading Limited GDF SUEZ Trading Goldman Sachs

GRTgaz Gunvor International Iberdrola Generacion JP Morgan Securities Limited Koch Supply & Trading sarl Lampiris SAS Macquarie Mercuria Morgan Stanley NovaWatt Petroineos (Spot only) Poweo Direct Energie RWE Supply & Trading GmbH Solvay Energy Services (Spot Only) Société Générale Société Valmy Défense 17 (Dalkia) Shell Energy Europe Limited Statkraft Statoil TIGF (Spot only) Total Gas & Power UEM Verbund AG Vitol

10

Powernext® Gas –PEGs - Tradable Products

Spot contracts on all three PEGs (Nord, Sud, TIGF)

Within-Day

Day-Ahead

WE

Futures contracts with physical delivery on PEG Nord

The next 3 Months

The next 3 Quarters

The next 3 Gas Seasons

The next first calendar

OTC Clearing services on all Futures contracts

TTF outright contracts

3 months

4 quarters

3 gas seasons

3 calendar years

Months

Quarters

Seasons

Calendar

TTF

3

4

3

Nord/TTF

3

3

3

3

1

PEG Nord / TTF Spreads

3 months

3 quarters

3 gas seasons

1 calendar year

Futures contracts for physical delivery on TTF hub

All contracts are available for OTC trade registration and legacy trades

12

12

Powernext® Gas –TTF - Tradable Products

www.powernext.com

Clearing Overview

In 2001, Powernext selected LCH.Clearnet to rationalise power clearing (Endex and ICE were using it at the time)

In 2008, ECC (based in Leipzig, subsidiary of EEX) becomes the main central counterparty for clearing of energy contracts

By using ECC, players benefit from Cross-margining with Endex and EEX (only gas products)

Gas (EGT, BEB) Power Coal CO2

Gas (PEG) Gas (TTF) Power

Powernext Gas – Trading session

18h00 08h30 CET

Powernext® Gas Spot & Futures Opening time

Powernext® Gas Spot & Futures

Closing time

GRTgaz balancing interventions

WD 15h45 – 16h

DA / WE 16h30 – 17h30

French Time

Price References determination periods

GRTgaz balancing interventions on Powernext Gas Spot

Service hours : 08:30 AM - 06:00 PM

EOD for DA/WE & Settlement Prices

EOD Prices for WD (not published)

Powernext Gas Spot Price References

Powernext publishes two spot price references on a daily basis:

Powernext Gas Spot EOD (End of Day Price) Closing price which is determined, for a given product, based on the trades and spreads over a 15 min period (settlement period) close to the end of the trading session (from 17:15 – 17:30 French Time).

Powernext Gas Spot DAP (Daily Average Price) Volume weighted average of trade prices for a given product during the entire trading session : all-day reference.

Powernext Gas Spot EOD & Powernext® Gas Spot DAP are published:

For Day-Ahead & WE contracts

On both PEG Nord and PEG Sud

Powernext Gas Futures Price References

Powernext publishes the following price references for its futures contracts:

Powernext Gas Futures Settlement Prices

Closing price which is determined, for a given product, based on the trades and spreads over a 15 min period (settlement period) close to the end of the trading session (from 17:15 – 17:30 French Time)

Determined every day, for each future contract

Powernext ® Gas Futures Monthly Index

Simple average of the daily settlement prices for the front month contract over the last month of trading

Determined once a month

Powernext® Gas Spot DAP Powernext® Gas Futures Monthly Index

6,00

10,00

14,00

18,00

22,00

26,00

30,00

34,00

38,00

42,00

46,00n

ov

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-12

Powernext Gas SpotDaily Average Price and Powernext Gas Futures Monthly

Index (PEG Nord)€/MWh

Daily Average Price(PEG Nord)

Monthly Index (PEG Nord)

Powernext Gas indices

Thanks to this positive development of liquidity, Powernext has positionned its price references with all gas infrastructures operators in France

Retailers have launched their first gas supply offers based on Powernext references:

Transmission system operator

Transmission & storage operator

Storage operator LNG terminal

operator Distribution

system operator

www.powernext.com

Powernext® Gas www.powernext.com

Trading calendar

Spot an futures tradable contracts

Market Rules and Notices

Settlement price methodology

ECC, Powernext, TSOs : contractual framework

TSOs Powernext

ECC

Trading

Participant

(NCM)

Clearing

Member

(CM)

Trading Agreement

Market Rules

NCM/CM Agreement

Clearing Licence

Clearing Rules

Clearing Service

Agreement

Hub Agreement

+ Side Letter

Hub Agreement

Thank you for your attention For any further question, you can contact

Richard KATZ r.katz@powernext.com

Back-up

Powernext Price list

Spread Products are included in the Membership PEG Sud / PEG Nord Spread transaction: only the PEG Sud leg is invoiced (both by PWX and ECC) PEG Nord / TTF Spread transaction: only the PEG Nord leg is invoiced (both by PWC and ECC)

When aggressing an implied price, no matter how many orders are involved, only one leg is invoiced (both by PWX and ECC)

Netted deliveries Spot and Futures nominations from all TTF contracts at ECC will be netted to minimize delivery fees for market participants

Powernext® Gas Spot

Powernext® Gas Futures

PEGs PEG Nord TTF

Fixed fees

Powernext entrance fees 10,000 €

Powernext Membership fees (annual)

15,000 € for Spot 15,000 € for Futures

20,000 € for Spot and Futures

Additional Trayport GV license 1,000 € per quarter and per license

Variable fees

Powernext trading fees 1c€ / MWh 0.5c€ / MWh 0.2c€ / MWh

Powernext OTC clearing fees and legacy

n/a 0.4c€ / MWh 0.2c€ / MWh

ECC clearing fees 1c€ / MWh 0.25c€ / MWh 0.25c€ / MWh

ECC delivery fees (for Futures going into delivery)

n/a 1c€ / MWh 1c€ / MWh

23

Product Specifications - Spot

PEG Nord PEG Sud PEG TIGF

PEG Sud / PEG Nord

Units MWh/d MWh/d

Volume 1MWh/d 1MWh/d

Lot size 240 contrats 240 contrats

Volume increment 10 contrats 10 contrats

Quotation unit €/MWh €/MWh

Quotation increment 0.025€/MWh 0.025€/MWh

Volume Min/Max (GV) 240 - 50 000 MWh/d 240 - 50 000 MWh/d

« Valid price » range (GV) [0;1000000000] €/MWh/d [-15;15] €/MWh/d

« Sane price » range (GV) [5;100] €/MWh/j

[-5;5] €/MWh/j

« Price threshold » (GV) 20 % 20%

Product Specifications - Futures

TTF PEG Nord / TTF PEG Nord

Units MW MWh/d MWh/d

Volume 1MW 1MWh/d 1MWh/d

Lot size 10 contrats 240 contrats 240 contrats

Volume increment 10 contrats 240 contrats 10 contrats

Quotation unit €/MWh €/MWh €/MWh

Quotation increment 0.025€/MWh 0.025€/MWh 0.025€/MWh

Volume Min/Max (GV) 10 – 9 999 MW 240 – 9 999 MWh/d 240 - 9 999 MWh/d

« Valid price » range (GV)

[0;1000000000] €/MWh/d

[-15;15] €/MWh/d [0;1000000000]

€/MWh/d

« Sane price » range (GV)

[5;100] €/MWh/d [-5;5] €/MWh/d [5;100] €/MWh/d

« Price threshold » (GV) 20 % 20 % 20 %