Market stress

APEX Conference, SEOUL 2006

Torger LienPresident & CEO Nord Pool ASA

Power production capacityin the Nordic countries

Production cost

Combined heat and power production

Gas turbine

100 200 400 TWh

Condensing, oil

Hydropower (mean)

Nuclear power

300

Annual Nordic consumption

Pumped storage power

Hydro

Thermal

Condensing, coal

P1

P2

Hydro reservoir level Norway and Sweden

Reservoir Levels Norway & Sweden Weekly 2005-2006

0%

20%

40%

60%

80%

100%

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51

Levels 2005 Min Max Median levels 2006

Price development Nordic market

Electricity Spot and Nearest Season/Quarter Fwd Prices Weekly 2004-2006

100

250

400

550

700

des

-03

mai

-04

okt

-04

mar

-05

aug

-05

jan

-06

jun

-06

NO

K/M

Wh

NP Spot (Average system price) Nearest Season/Quarter

Forward curve Nordic market

Electricity Spot and Forward Prices2002-2011

0

10

20

30

40

50

60

70

80

90

100

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

EU

R//M

Wh

NP Spot (Average system price) Week Fut Month Fwd Q & Yr Fwd

Forward curveNordic market

Electricity Forward Price CurveOctober 2006

30

40

50

60

70

80

90

2005

2006

2007

2008

2009

2010

2011

EU

R/M

Wh

Week Fut Month Fwd Q & Yr Fwd

EUA EUA Prices and Turnover Nord Pool

Daily 2005-2006

0

100

200

300

400

500

jan

-06

feb

-06

mar

-06

apr-

06

mai

-06

jun

-06

jul-

06

aug

-06

sep

-06

okt

-06

1000

t C

O2

6

11

16

21

26

31

EU

R/to

n

Daily Activity Nord Pool EUA (Exchange)Price EUADEC-06

Volatility Nordic market

Volatility

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

des

. 05

jan

. 06

feb

. 06

mar

. 06

apr.

06

mai

. 06

jun

. 06

jul.

06

aug

. 06

Risk interval % Market vol % Impl.vol %

Example Daily Margin

Daily Margin Call

-60

-50

-40

-30

-20

-10

0

des

. 05

jan

. 06

feb

. 06

mar

. 06

apr.

06

mai

. 06

jun

. 06

jul.

06

aug

. 06

Mln

EU

R

Scenario risk Liq.value

Reflections

Psychology or real fearPolitical dilemmaDemand side responseLong lead time for new generation/transmissionThe market is always in balance, the politicians does not always like that balance priceConsequences ?

www.nordpool.com

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