September at a glance:• Electricity price in Estonia rose in September 4,5%, averaging at

42,2 €/MWh• The electricity price in Lithuania decreased 17,7%, the average price

per megawatt-hour was 44,5 euros• In ELE price area average electricity price was 42,8 €/MWh, which was

16,4% lower than in August• The price in Finland increased 7,5%, compared to August, averaging at

41,0 €/MWh • Estonia started open market electricity sales for all customers • Latvian households will lose the right to buy energy with regulated end

tariff on September 1, 2013• Lithuanian Regulator, National price and energy control commission

under big pressure from municipal heating companies• The average reservoir level raised by the end of September to 90% of

maximum • Carbon permits price dropped in September by 12 cents per ton • Downward trend of German 2013 base energy contract price and

Brent crude oil price continued in September • Coal price (2013. year contract) decreased by 1.7 $/t

Power exchange and electricity marketsPrices decreased in Lithuania and ELE price area, increased in Estonia and Finland

In September the power prices compared to the previous month were higher in Estonia and Finland, but significantly lower in Lithuania and ELE (Estonian-Latvian border) price area. The average price in Estonia was 42,2 €/MWh in September (+4,5% month-over-month), Lithuanian monthly average price was 44,5 €/MWh (-17,7% m-o-m). In ELE price area the average price was 42,8 €/MWh (-16,4% m-o-m), and in Finland 41,0 €/MWh (+7,5% m-o-m).

Compared to August, the peak hour price dropped significantly in Lithua-nia, the highest hourly price being 78,9 €/MWh (200,6 €/MWh in August). In Estonia the highest hourly price was 84,3 €/MWh (82,2 €/MWh in August), and in Finland 143,2 €/MWh (139,5 €/MWh in August).

Nordic hydro reservoir content was higher than usual at this time of year and the strong hydro balance is still the dominant price driver.

Price difference between Estonian and Finnish price areas was slightly smaller compared to August; the average flow from Estonia to Finland has increased. In September the average flow was 83,7 MWh/h (74,1 MWh/h in August). As the power price in Estonia was on average higher than in Finland, the electricity was flowing more from Finland to Estonia (average flow 185,7 MWh/h in September).

Estonia started open market electricity sales for all customers

Estonia started open market electricity sales for all customers on 26th of September. Like the majority of large customers, a significant num-ber of smaller business customers and residential customers have concluded a contract with Eesti Energia during the short period since such contracts have been available for sales of electricity on the open market. By the final date of the market survey, approximately 11 000 contracts had been concluded – 90% of these being fixed price contracts. The most common duration for the contracts is 12 and 36 months.

Latvian households will lose the right to buy energy with regulated end tariff on September 1, 2013

During September more and more information about the plans of Min-

1

Market overview Electricity market in September 2012

EUR/MWh

Nord Pool Helsinki price (Finland) Nord Pool Lithuania price (Lithuania) Nord Pool Estonia price (Estonia)

The prices effective as of 30.09.2012

120

100

80

60

40

20

0

09.0923.09

01.0715.07

29.0712.08

26.08

Spot pric

e

EUR/MWh

55

50

45

40

35

30

25

20

15

Q4 2012

Q1 2013

Year 2013

Next

week Next

month

Price of electricity (forward contracts in Nord Pool, Helsinki price area)

The prices effective as of 28.09.2012

istry of Economics in Latvia have become available. It has become public that the Households should lose the right to buy energy with regulated end tariff on September 1, 2013 in the current market activation plan by Ministry goes accordingly. Another new initiative by the Ministry is to put part of Renewable energy support to energy seller, not directly to consum-ers through Mandatory purchase obligation. This would diminish the risk of further Mandatory purchase obligation increase, but this would result in price increase of electricity as energy seller cost base would be bigger.

Enefit in Latvia has signed agreement with its 1000th customer. This is important milestone that marks Enefit entry into small business enterprise segment. The 1000th client is one of the shops in retail chain LaTS.

Lithuanian Regulator, National price and energy control commission under big pressure from municipal heating companies

In September Lithuanian Regulator – National price and energy control commission – was under big pressure from municipal heating compa-nies, which demanded to increase state purchased quantities of electric-ity under much greater than market price feed-in tariffs during heating season. The main reasoning for this pressure – if state would buy more electricity from heating companies the heat price could be reduced.

According to Regulator’s calculations additional quantities would not notably decrease heating prices but would end up in increasing Public Service Obligation fee from which high price of heating companies pro-duced electricity would be compensated. This would mean that all elec-tricity consumers of Lithuania would have to compensate heating price reduction for largest cities (Vilnius, Kaunas, Klaipeda, Panevezys) which seems unfair and unreasonable. Final decisions regarding this issue will be known at the end of November.

Market comment:

The forward prices for Helsinki area saw a slight decrease in September, most of all the price for the first quarter of 2013, which dropped to 47.84 €/MWh (-1.94 €/MWh m-o-m). The price for the last quarter of current year reached its lowest point in two months, declining to 44.75 €/MWh (-1.18 €/MWh m-o-m). The 2013 Helsinki forward price went through a decline as well, rising only temporarily near the end of the month due to the concurrent stabilization of CO2 and coal prices. Hydroreservoir levels have stayed high, filling 90% of maximum capacity in September and 84% on the average in long term, suggesting possible low future prices in rainy areas.

Exchange Average Change M-o-M

Min Max

NP Estonia €/MWh 42,2 4,5% 15,1 84,3

NP Helsinki €/MWh 41,0 7,5% 15,1 143,2

NP Lithuania €/MWh 44,5 -17,7% 15,0 78,9

NP ELE €/MWh 42,8 -16,4% 15,1 84,3

The hydro reservoir levels in Nordic countries still exceed comparable figures from previous years. The average reservoir level raised by the end of September to 90% of maximum, long term median level is ca 84%. Stable high levels mean that some of the reservoirs are com-pletely full. If the weather is wet then hydro production will increase and in some price areas prices will be under pressure.

Downward trend of German 2013 base energy contract price continued in September, instrument was trading at the level of 47.4-49.5 €/MWh. The base energy contract price closed at 47.8 €/MWh (-1.3% m-o-m).

The downward trend of Brent crude oil price, which started in the mid-dle of August, continued until 19th of September, when Brent closed at 108.19 $/bbl, decreasing 3.4% compared to previous day and 7.45% since beginning of downward trend (16th Of August). The main reason behind the drop of price was increase in crude oil supply and US crude inventories. Steep bottom on 19th of September was probably caused by elimination of crude oil positions. Crude oil price has recovered since 20th of September, closing at 112.39 $/bbl at 28th of September. All in all Brent crude oil price decreased in September by 2.18 $/bbl (3.7 €/bbl) or 1,9% (3,7% in terms of euros).

EXPLANATION OF TERMS

Base energy is the purchase/sale of 1 MWh or electricity every hour of the given periodMWh or megawatt-hour; 1 MWh=1000 kWhNord Pool – power exchange that consists of price regions in Finland, Sweden, Lithuania, Denmark, Norway and GermanyICE – Intercontinental Exchange

DISCLAIMERThe market review has been prepared by an analyst of Eesti Energia to the best of their knowledge. It is not an official standpoint of Eesti Ener-gia. The information given is based on public information and the sources specified in the overview.

The market overview has been presented as informative material and it has in no case whatsoever been presented as a promise, proposal or of-ficial forecast of Eesti Energia.

The standpoints contained in the market overview may change and the person presenting them reserves the right to amend said standpoints. Due to the fast changes in the electricity market regulation, the Market Overview or the information contained herein are not final and they need not correspond to situations emerging in the future.

The market overview does not create, terminate or amend legal relation-ships (incl. contracts).

Eesti Energia cannot be held liable for any expenses or damages that may emerge as a result of the use of the information contained in the Market Overview.

Kai Suurkülakai.suurkula@energia.ee

Coal price (2013. year contract) decreased by 1.7 $/t (3,1 €/t) to 97.8 $/t (76.1 €/t) by the end of September. Coal price was under pressure as there is still global oversupply. Producers in Asia have cut their production as weak coal prices (coal price is in dollars down 17,1% since beginning of the year while oil price is up 4.7%) hit profits.

The average reservoir level raised by the end of September to 90% of maximum

Downward trend of German 2013 base energy contract price and Brent crude oil price continued in September

2

Market overview Electricity market in September 2012

Nordic hydroreservoir levels from maximum*, %

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52

2010 2012Median** 2011

* – Maximum 121,2 TWh** – Median values for the period 1990 - 2006

90

80

70

60

50

40

30

20

10

0

Price of crude oil (ICE) €/bbl Price of crude oil (ICE) $/bbl

130

125

120

115

110

105

100

95

90

85

80

75

70

65

€,$/bbl

01.0131.01

11.0331.03

30.0430.05

29.0629.07

30.0928.08

Price of baseenergy for the year 2013 in EEX, Germany

€/MWh

60

55

50

45

01.0131.01

01.0331.03

30.0430.05

29.0629.07

30.0928.08

Price of coal for year 2013, €/tPrice of coal for year 2013, $/t

€,$/t

130

125

120

115

110

105

100

95

90

85

80

75

01.0131.01

01.0331.03

30.0430.05

29.0629.07

30.0928.08

€/t

December 2012 CO2 emission price

10

9

8

7

6

5

01.0131.01

01.0331.03

30.0430.05

29.0629.07

30.0928.08

Electricity market impact factors Carbon permits price dropped in September by 12 cents per ton, closing at 7.96 €/t. Within the month, prices were in range of 7.27 €/t to 8.38 €/t. Increase of carbon prices at the end of September was driven by growth of oil price, which is spurring demand for emission rights.