Recent issues in Germany

APEx Conference

Dr. Hans-Bernd Menzel

Leipzig, October 11, 2004

2

EEX‘s participant base is international

2

3

10

1

2

3

18

2

1 61

120 participants from15 countries

108 Spot Market participants

48 Derivatives Market participants

51 OTC Clearing participants

9 General Clearing Member

5 Broker

5 Market Maker

4 Transmission grid operators

1

5

11

8

1

2

3

Liberalization of electricity market in Germany is achieved

Spot Market at EEX

Recognized price signal in Continental Europe

- By regulatory bodies

- By laws

- By bilateral contracts

- By derivative OTC-products

Hedging available on a long-term basis

Next steps: what is coming soon

4

The turnover of physical power on the spot market rises continuously

0

200.000

400.000

600.000

800.000

1.000.000

1.200.000

1.400.0002

4-0

0

31

-00

38

-00

45

-00

52

-00

07

-01

14

-01

21

-01

28

-01

35

-01

42

-01

49

-01

04

-02

11

-02

18

-02

25

-02

32

-02

39

-02

46

-02

01

-03

08

-03

15

-03

22

-03

29

-03

36

-03

43

-03

50

-03

05

-04

12

-04

19

-04

26

-04

33

-04

MWh

0

10

20

30

40

50

60

70

80

90

EURO

Volume/Auction Weekly average price

10% of the German electricity consumption

MWh per week Euro per MWh

5

Liberalization of electricity market in Germany is achieved

Spot Market at EEX

Recognized price signal in Continental Europe

- By regulatory bodies

- By laws

- By bilateral contracts

- By derivative OTC-products

Hedging available on a long-term basis

Next steps: what is coming soon

6

Not a German market anymore

EEX is in the center of a Central European price zone

10

20

30

40

50

60

70

80

90

100

Jan

. 02

Fe

b. 0

2

Mrz

. 02

Ap

r. 0

2

Ma

i. 0

2

Jun

. 02

Jul.

02

Au

g. 0

2

Se

p. 0

2

Okt

. 02

No

v. 0

2

De

z. 0

2

Jan

. 03

Fe

b. 0

3

Mrz

. 03

Ap

r. 0

3

Ma

i. 0

3

Jun

. 03

Jul.

03

Au

g. 0

3

Se

p. 0

3

Okt

. 03

No

v. 0

3

De

z. 0

3

Jan

. 04

Fe

b. 0

4

Mrz

. 04

Ap

r. 0

4

Ma

i. 0

4

Jun

. 04

France Netherlands West-Denmark Germany Austria Italy

€/MWh

monthly average price for day-ahead base load

7

Not a German market anymore

High correlation between Germany and France

Source: Powernext Website

8

Liberalization of electricity market in Germany is achieved

Spot Market at EEX

Recognized price signal in Continental Europe

- By regulatory bodies

- By laws

- By bilateral contracts

- By derivative OTC-products

Hedging available on a long-term basis

Next steps: what is coming soon

9

Risk hedging instruments available

... for the current month

Month1

Month2

Month3

Month4

Month5

Month6

Quarter1

Quarter2

Quarter3

Quarter4

Quarter5

Quarter6

Quarter7

Year1

Year2

Month0

Year 3

Year4

Year5

Year6

Base and peak load Futures:

... for the next 6 months in the future

... for the next 7 quarters in the future

... for the next 6 years in the future

10

EEX Futures are accepted

0

20

40

60

80

100

120

140

Jan. 03 Apr. 03 Jul. 03 Okt. 03 Jan. 04 Apr. 04 Jul. 04 Okt. 04

TWh

Open Interest: 120 TWh or more than 4.2 billion Euro

11

Liberalization of electricity market in Germany is achieved

Spot Market at EEX

Recognized price signal in Continental Europe

- By regulatory bodies

- By laws

- By bilateral contracts

- By derivative OTC-products

Hedging available on a long-term basis

Next steps: what is coming soon

12

Risk Hedging Instruments are available

price of underlying

future (Euro/MWh)

profit

strike price

Premium

example: buyer of a Call-Option (Long Call)

loss

Options will be launched:

on November 8, 2004

13

CO2-emissions trading

The energy intensive industry

represents about two thirds of all certificates

is already connected to EEX‘s trading and clearing system

has the trained personnel already in house

seeks low transaction costs and low process risk

14

CO2-emissions trading

EEX will launch a market for CO2-emissions certificates

on its Xetra trading system

- integrated with electricity market

- no additional effort for electricity traders

- low costs through usage of existing infrastructure

- Short time-to market

lauch will be early January 2005

15

Integration of Spot Market in February

One screen for power and CO2

One software

One connection

One training and admission process

Synergies in clearing&settlement