EMA S PROCEDURES FOR CALCULATING THE COMPONENTS OF THE VESTING CONTRACTS. Energy Market Authority. Dec 2013 Version 2.1

EMA S PROCEDURES FOR CALCULATING THE COMPONENTS OF THE VESTING CONTRACTS Energy Market Autority Dec 2013 Version 2.1

Document History Version Number Version Date Summary of Canges 1.0 April 2005-1.1 Marc 2009 Canges to te formulas for calculating HSFO fuel price in Section 3.7 and 3.8 1.2 Jun 2009 Clarification to te HSFO fuel price used in Section 3.7 1.3 October 2009 Canges to include tender of te non-contestable load 1.4 December 2009 Canges to te source to obtain te excange rate in Section 3.8 1.5 April 2010 Canges to include te LNG Vesting Sceme 1.6 September 2010 Canges to te Tariff Reference Price formulas in Section 3.9 1.7 Marc 2011 Cange to Load Forecasting Metodology in Section 3.2, inclusion of Appendix 1 and update to document 1.8 October 2012 Cange to LRMC Scale Factor Indices and update to document 1.9 June 2013 Canges to te calculation of te Fuel Cost 2.0 Sept 2013 Refinement to te Claw Back Mecanism for te LNG Vesting Sceme and update to Figure 3.2b 2.1 Dec 2013 Refinement to te Claw Back Mecanism for te LNG Vesting Sceme

TABLE OF CONTENTS 1. INTRODUCTION 1-1 2. LRMC PROCEDURES 2-2 2.1 Introduction 2-2 2.2 Procedures for Estimating LRMC Parameters and te Allocated Vesting Price 2-3 2.2.1 Procedures for estimating te parameters of LRMC 2-3 2.2.2 Formal Procedure using Panels of Experts 2-4 2.3 Description and Metod of Determining LRMC Parameters 2-5 2.4 Procedures For Allocation of Tender Vesting Quantities And te Tender Vesting Price 2-9 3. Procedures for Determining Oter Data for Allocated Vesting Prices, Allocated Vesting Quantities and Tender Vesting Quantities 3-11 3.1 Day profiles 3-11 3.2 METHODOLOGY TO FORECAST ELECTRICITY CONSUMPTION FOR CALCULATING VESTING CONTRACT QUANTITIES 3-12 3.3 Generation Installed Capacity 3-12 3.4 Vesting Contract Data 3-13 3.4.1 Annual Contract Level and Roll-back 3-13 3.4.2 Period Weigting Factors 3-14 3.4.3 LNG Vesting Sceme 3-16 3.5 Variable edge proportion For Contestable consumers and Payment Reference Price (VHP & PRP) 3-18 3.5.1 Determination of VHP for Contestable Consumers 3-18 3.5.2 Determination of te Allocated Vesting Price for MSSL 3-20 3.5.3 Determination of Payment Reference Price (PRP Q ) 3-21 3.6 Adjustment for Over/Under Recovery 3-21 3.7 Determination of Fuel Cost in LRMC 3-23 3.7.1 HSFO 180 CST Oil Price (US$/MT) 3-23 3.7.2 Brent Index Price (US$/bbl) 3-24 3.8 LRMC Scale Factor Indices 3-24 3.9 determination of tariff reference price 3-25 3.10 Hedge Limits 3-26 3.11 Adjustment for Force Majeure events 3-26 3.12 consultative process 3-26 4. Appendix 1: Metodology To Forecast Electricity Consumption For Calculating Vesting Contract Quantities 4-1 iii

1. INTRODUCTION Te Energy Market Autority ( EMA or te Autority ) implemented Vesting Contracts 1 on 1 January 2004 as a regulatory instrument to mitigate te exercise of market power by te generation companies ( Gencos ). Vesting Contracts commit te Gencos to sell a specified amount of electricity (viz. te Vesting Contract level) at a specified price (viz. te Vesting Contract price). Tis removes te incentives for Gencos to exercise teir market power by witolding teir generation capacity to pus up spot prices in te wolesale electricity market. Vesting Contracts are allocated only to te Gencos 2 tat ad made teir planting decisions before te decision was made in 2001 to implement Vesting Contracts. Starting from 2 nd quarter 2010, to introduce competitive pricing for te setting of te noncontestable tariff, EMA will tender out portions of te non-contestable load ( Tender Vesting Quantity ) for Gencos to bid on a competitive basis. Te awarded tender price, ( Tender Vesting Price ) will be used togeter wit te Allocated Vesting Price for te setting of te tariff for te non-contestable consumers. Te amount put up for tender will be determined by EMA. Te Allocated Vesting Price will be used for te remaining portion of te Vesting Contract. To encourage te uptake of regasified Liquefied Natural Gas (LNG), te Autority as introduced te LNG Vesting Sceme tat will be implemented upon te completion of te LNG Terminal expected around 2013. Te LNG Vesting Sceme sall be in force for 10 years starting from te first complete quarter after te Commercial Operations Date of te Singapore LNG Terminal. Vesting Contract olders wo qualify for te LNG Vesting Sceme are allocated a specified amount of LNG Vesting Quantities based on te regasified LNG Vesting Price as determined by te Autority. Tis paper outlines procedures and/or metods for determining te values of tose components of Vesting Contracts nominated to be provided by te Autority witin te Market Rules, Codes of Practice and Vesting Contracts, including te values of: Allocated Vesting Price using Long Run Marginal Cost ( LRMC ) Tender Vesting Price using te winning tender price(s) Day Profiles Electricity Consumption Forecast Vesting Contract Data Variable Hedge Proportion for Electricity Consumption and Payment Reference Price (VHP & PRP) Generation Installed Capacity Adjustment for over/under recovery LRMC Scaling Factors 1 ttp://www.ema.gov.sg/ema_cms/page/91/id:134/ 2 Tese Gencos are Senoko Energy, PowerSeraya, Tuas Power Generation, SembCorp Cogen, Keppel Merlimau Cogen and Island Power Company. 1-1

2. LRMC PROCEDURES 2.1 INTRODUCTION Te Allocated Vesting Price approximates te long run marginal cost ( LRMC ) of a teoretical new entrant tat uses te most economic generation tecnology in operation in Singapore and contributes to more tan 25% of total demand. Tis section outlines te procedures for determining te various components of te LRMC. Te underlying concept of te LRMC is to find te average price at wic te most efficiently configured generation facility wit te most economic generation tecnology in operation in Singapore will cover its variable and fixed costs and provide reasonable return to investors. Te plant to be used for tis purpose is to be based on a teoretical generation station wit te most economic plant portfolio (for existing CCGT tecnology, tis consists of 2 to 4 units of 370MW plants). Te profile of te most economic power plants is as follows: Utilises te most economic generation tecnology available and operational witin Singapore at te time. Tis most economic generation tecnology would ave contributed to more tan 25% of total demand at tat time, Te generation company is assumed to operate as many of te units of te tecnology necessary to acieve te normal economies of scale for tat tecnology. Te plants are assumed to be built adjacent to one anoter to gain infrastructure economies of scale. Te plants are assumed to sare common facilities suc as land, buildings, fuel supply connections and transmission access. Te cost of any common facilities sould be prorated evenly to eac of te plants. Te plants are assumed to ave a common corporate overead structure to minimise costs. Any common overead costs sould be prorated evenly to eac of te plants. In estimating te LRMC and te underlying parameters, tere are invariably many elements of judgement suc tat te LRMC and te underlying parameters cannot be determined wit a ig level of precision. In different markets, tere are a variety of views about te value of LRMC. Tis variation in views reflects legitimate differences in te opinions of experts about te underlying parameters and can result in significantly different outcomes for te calculation. Te parties to eac Vesting Contract would typically be te market support services licensee (te Issuer ) and a generation licensee (te Holder ). Te clause in te Vesting Contract tat limits te liability of te Issuer is: Clause 3.7 Acknowledgement of te need for judgement and Binding Nature of Calculations Te Holder acknowledges and agrees tat te calculation of Hedge Quantities and of associated Hedge Prices pursuant to clauses 3.4 and 3.5 involves te exercise of judgement by te Issuer. Te Holder terefore agrees tat it will be bound by any suc calculation and any suc calculation sall not be revised pursuant to any dispute process unless te Issuer in making te calculation: (a) (b) as acted oterwise tan in good fait; as exercised judgement in effecting suc calculation in a manner tat is in error; or 2-2

(c) as exercised judgement in effecting suc calculation in a manner tat is significantly different from te manner in wic suc judgement as previously been exercised by te Issuer and no reasonable justification exists for suc difference. 2.2 PROCEDURES FOR ESTIMATING LRMC PARAMETERS AND THE ALLOCATED VESTING PRICE Te following procedures will be used by te Autority for estimating parameters and making oter valuations for determining te value of LRMC. Te Autority will provide te metodology for calculating te Allocated Vesting Price and determine te first set of LRMC parameters (base parameters) tat will apply at te start of te vesting regime. Te Autority will conduct a review of te LRMC base parameters once every 24 monts (for te first quarter of te calendar year), and at oter times as it considers necessary, and may modify te values of currently used parameters. Te Autority will base te LRMC calculation on CCGT tecnology wit suc updated values as sall be appropriate unless a more economic generating tecnology, wic as contributed to more tan 25% of total demand, is in use in Singapore at tat relevant time. Between te reviews of te LRMC base parameters, te Autority will adjust te Allocated Vesting Price using indices tat correct te relevant components of te LRMC calculation. 2.2.1 Procedures for estimating te parameters of LRMC Te Autority will be responsible for determining te LRMC calculations and parameters. Te procedures are as follows. In determining te parameters, te Autority will: Make an initial determination, seeking any expert advice as it considers appropriate, Communicate te estimates of all parameters to Vesting Contract olders for comment, On receiving te comments of te Vesting Contract olders, te Autority will make a final determination, seeking any furter expert advice as it considers appropriate. Tis Allocated Vesting Price will be updated by applying te adjustment indices every quarter in between eac review of te LRMC base parameters using procedures outlined in Section 3.7 and 3.8. Te Autority will, owever, reserve te rigt to revalue te LRMC parameters (and Allocated Vesting Price) at any oter time were it considers tat special circumstances ave arisen tat, in its opinion, substantially invalidate te previous LRMC calculation. In suc circumstances, te Autority will consult all Vesting Contract olders at least 3 monts in advance of te new valuation taking effect, giving its reasons for deciding to make te revaluation. Te Autority will take into account te comments of te Vesting Contract olders and may take any oter advice as it tinks fit in making its final decision. Te decision of te Autority will be final. 2-3

Te Autority will, if it considers it necessary, call upon te opinions of experts in determining te LRMC calculation. Tese opinions may be obtained as seen fit by te Autority, including by using te formal procedure set out below. Tis procedure for seeking expert opinion is not mandatory and may be substituted by te Autority wit oter arrangements considered appropriate given te circumstances prevailing at te relevant time 3. Tis procedure uses panels of experts to advise te Autority on te parameter values. Tis procedure may be particularly appropriate for tose parameters were a general consensus of te Vesting Contract olders cannot be acieved. 2.2.2 Formal Procedure using Panels of Experts Since te opinions of experts can vary, in relation to te parameters for wic te Autority may seek an expert opinion, te Autority intends to obtain suc expert opinions from a number of industry-based experts. Different experts may be required to estimate different parameters, depending on teir respective expertise. Tree different categories of expertise may be required to estimate te parameters, as follows: 1. Engineering and power systems: comprising engineering experts wit international experience and establised credentials in te Asian region in electricity plant purcase, installation, operation and valuation. 2. Finance: comprising finance experts from international mercant banking companies wit expertise in investment in electricity power plants and knowledge of te Singaporean economy and electricity system. 3. Real estate: comprising Singapore-registered real estate valuers. Since te opinion of a single expert may not give a sufficiently representative view, te Autority intends tat in eac category, a panel of tree experts be appointed. Were any parameter is to be determined by a panel of experts appointed by te Autority, te following procedure will be adopted: 1. Te Autority will, as it deems necessary, select up to tree panels comprising of tree experts eac, based on eac of te categories described above. 2. For eac applicable category, one expert will be cosen as te lead expert. 3. Panel members will normally be appointed for a period of approximately 4 years to cover two consecutive LRMC revaluations and seven quarterly adjustments subsequent to te quarter covered by te initial LRMC valuations. 4. Te Autority will present te experts wit a statement of te requirements for te valuations or estimation of te parameters assigned to tem. 5. Eac expert will independently develop teir estimate of te parameter values and present it to te lead expert in is respective category. 6. Eac lead expert will collate te results of is respective category and send te collated results to eac member of is respective panel and all olders of Vesting Contracts for teir comment. 7. Eac lead expert will tereafter present a written report: 3 An example of a circumstance tat may give rise to a substitution of procedure is te existence of recent and applicable data from an actual new plant or entrant in Singapore 2-4

summarizing te estimates of eac expert in is category and te comments received from te panel and olders of Vesting Contracts, and presenting a single final estimate for eac parameter. 8. Te Autority will, in its discretion, accept suc single final estimate for eac parameter, wic will be final. 9. Te Autority will apply tese final parameter estimates and valuations to te LRMC calculation. Te estimate of te LRMC produced by te calculation will be te base Allocated Vesting Price. 2.3 DESCRIPTION AND METHOD OF DETERMINING LRMC PARAMETERS No. Parameter Description Metod of Determination 1 Determination Date on wic te calculations of te Determined by EMA. Date LRMC, wic is to apply at te Application Date, are deemed to be made. 2 Base Mont Cut-off mont for data used in determination of te LRMC base parameters. For te following base parameters wic tend to be volatile in nature, te data to be used for estimating eac of tem sall be based on averaging over a tree mont period leading up to and including te Base Mont: Determined by EMA 1. Excange rate denominated in foreign currencies into singapore dollars; 2. Diesel price to calculate cost of carrying backup fuel; 3. Debt premium to calculate cost of debt; and 4. MAS Core Inflation Index. For te risk free rate, te data sall based on averaging over a twelve mont leading up to and including te Base Mont. 3 Application Date Period for wic te LRMC is to apply. Determined by EMA. 4 Current Year Year in wic te Application Date Determined by EMA. falls. 5 Excange Rate ($US per $Sing) Te excange rate is tat as determined in Section 3.8. Determined by EMA (in consultation wit finance 6 Economic capacity of te Te size of te most termally efficient unit taking into account te experts) Determined by EMA (in consultation wit te 2-5

No. Parameter Description Metod of Determination most economic tecnology in operation in Singapore (MW) 7 Capital cost of te plant identified in item 6 ($US/kW) 8 Land, infrastructure and development cost of te plant identified in item 6 ($Sing million) 9a 9b HSFO 180 CST Oil Price (US$/MT) Brent Index Price (US$/bbl) requirements of te Singapore system, including te need to provide for contingency reserve to cover te outage of te unit and te fuel quantities available. It is acknowledged tat tis value may depend on te manufacturer. (For CCGT tecnology te size of te unit is expected to be around 370MW.) Capital cost includes te purcase and delivery cost of te plant in a state suitable for installation in Singapore and all associated equipment but excludes switc gears, fuel tanks, transmission and fuel connections, land, buildings and site development included in item 8. Were more tan one unit is expected to be installed tat will sare any equipment, te costs of te sared equipment sould be prorated evenly to eac of te units. Were more tan one unit is expected to be installed tat will sare any equipment or facilities, te costs of te sared equipment or facilities sould be prorated evenly to eac of te units. Tese costs sould include all capital, development and installation costs (excluding all costs included in te capital cost of plant included in item 7 and financing costs during te build period). Tese costs sould include te following specific items: Acquisition costs of sufficient land to accommodate te plant defined above in item 6 (alternatively land may be included as annual rental cost under Fixed Annual Running Costs) Site development Buildings and facilities Connections to gas pipelines Switcgear and connections to transmission Emergency fuel facilities Project management and consultancy Te HSFO 180 CST Oil Price is tat as determined in Section 3.7.1 Te Brent Index is tat as determined in Section 3.7.2 engineering and power systems experts) Determined by EMA (and in consultation wit te engineering and power systems experts) Determined by EMA, (a) In consultation wit te engineering and power systems experts in relation to te following values: size of site required site development buildings and facilities connections to pipelines switcgear connections to transmission emergency fuel facilities project management and consultancy; and (b) In consultation wit te real estate experts in relation to land value. Determined by EMA. Determined by EMA. 2-6

No. Parameter Description Metod of Determination 10a Gas Price ($Sing/GJ) Te current most economic generating tecnology in Singapore uses natural gas. Tis is te Singapore price for gas delivered to electricity generating companies as calculated by te Autority using existing Singapore pipeline gas contracts based on te HSFO price or any oter metod as determined by te Autority and Determined by EMA. 10b LNG Price ($Sing/GJ) announced to te gas industry. Tis is te Singapore regasified LNG price as determined by te Autority. Te LNG Price is used in place of 10a for te LNG Vesting Quantities under te LNG Vesting Sceme. Determined by EMA. 11 HHV Heat Rate of te plant identified in item 6 (Btu/kW) 12 Build duration of te plant identified in item 6 (years) 13 Economic lifetime of te plant identified in item 6 (years) Te LNG Price includes: te LNG ydrocarbon carge any fees or carges imposed by te Autority on te imported gas te LNG terminal tariff te average gas pipeline transportation tariff applicable to regasified LNG users te LNG Aggregator s margin te cost of Lost and Unaccounted For Gas (LUFG) Te ig eat value eat rate of te plant specified under item 6 tat is expected to actually be acieved, taking into account any improvement or degradation in efficiency from installation in Singapore and oter reasonable factors. Te time from te commencement of te major cost of development and installation being incurred up to te time of plant commissioning. Tis parameter is used to calculate te financing cost over te duration of te building period and assumes tat te development costs are incurred evenly across tis period. Te build duration sould be specified to reflect tis use and meaning as opposed to te actual time from te commencement of site development to te time of plant commissioning. Te expected time from commissioning to decommissioning of te plant. Tis number is used to amortise te capital cost of te plant, and of installation and development. Determined by EMA (in consultation wit te engineering and power systems experts) Determined by EMA (in consultation wit te engineering and power systems experts) Determined by EMA (in consultation wit te engineering and power systems experts) 2-7

No. Parameter Description Metod of Determination 14 Average expected utilisation factor of te plant identified in item 6, i.e. average generation level as a percentage of capacity (%) Te utilisation factor is te expected annual proportion of plant capacity tat will be used for supplying energy for sale. It sould exclude station usage, expected maintenance and forced outages and te expected time spent providing reserve capacity. Te determination of te factor sould assume tat te plant is efficiently Determined by EMA (in consultation wit te engineering and power systems experts) 15 Fixed annual running cost of te plant identified in item 6 ($Sing) 16 Variable non-fuel cost of te plant identified in item 6 ($Sing/MW) 17 Proportion of debt to assets 18 Risk free Rate (%) base-loaded. Tese costs are te fixed operating and overead costs tat are incurred in aving te plant available for supplying energy and reserves but wic are not dependent on te quantity of energy supplied. It is acknowledged tat some costs are not easily classified as fixed or variable. Te costs expected to be included in tis parameter are: Operating labour cost it is expected tat te plant will be running for tree sifts per day and seven days per week so all operating labour cost is likely to be a fixed annual cost Direct overaul and maintenance cost, wit any semi-variable costs treated as annual fixed costs Generating license Insurance Property tax Costs of emergency fuel Oter carges Oter overead costs Any costs, oter tan fuel costs, tat vary wit te level of energy output for a base-load plant and are not covered by item 15. Te proportion of debt to total assets at market value. It is an estimate of te industry standard ratio for private sector generators in an economic environment similar to Singapore. Te ratio is used to calculate te weigted average cost of capital ( WACC ). Te risk-free rate in Singapore sall be determined as te average of te daily closing yield on a default-free bond issued by te local government 19 Cost of Debt (%) Risk-free rate plus a premium as determined by te Autority. Te total cost of debt will comprise te base (a) Determined by EMA, in consultation wit engineering and power systems experts in relation to te following values: Operating labour Direct overaul and maintenance cost Costs of emergency fuel Oter overead costs; and (b) Determined solely by EMA Generating license Insurance Property tax Oter carges Determined by EMA (in consultation wit te engineering and power systems experts) Determined by EMA (in consultation wit te finance experts) Determined by EMA (in consultation wit te finance experts) Determined by EMA (in consultation wit te finance experts) 2-8

No. Parameter Description Metod of Determination lending rate, te loan margin and upfront and oter fees. 20 Market Risk Premium (%) Te market risk premium represents te additional return over investing in risk-free securities tat an investor will demand for investing in electricity generators in Singapore, as determined by te Autority. 21 Beta Parameter for scaling te market risk premium for calculating te cost of equity as determined by te Autority. Beta is a measure of te expected volatility of te returns on a project relative to te returns on te market, tat is, te systematic risk of te project. 22 Tax rate (%) Corporate tax rate applicable to generating companies in Singapore at te base date. Tis rate sould include any applicable tax rebates or tax incentives available to generating companies, and be consistent wit te gearing and interest rates defined in 17 & 18. 23 Cost of equity (%) Te return of equity for te business as calculated from previous data. It is calculated as item 18 + (item 20)(item 21) + item 22. Determined by EMA (in consultation wit te finance experts) Determined by EMA (in consultation wit te finance experts) Determined by EMA. Calculated by EMA (in consultation wit te finance experts) 2.4 PROCEDURES FOR ALLOCATION OF TENDER VESTING QUANTITIES AND THE TENDER VESTING PRICE Te following procedures will be used by te Autority to obtain te tender vesting price: To introduce competitive pricing to te electricity tariff for non-contestable consumers, EMA may coose to put up a portion of te Vesting Contracts of between 3 to 12% of te total electricity consumption for tender. All olders of te Vesting Contracts wit available generation installed capacity and ave signed te necessary supplemental agreements are eligible for te tender. Te Tender Vesting Quantities and te tenure of te tender contract sall be determined by EMA. Te winner(s) of te tender(s) sall be contracted wit te Tender Vesting Quantities at te Tender Vesting Price as determined in te outcome of te tender(s) for te tenure of te tender contract. Te sum of te Tender Vesting Quantities and te Allocated Vesting Quantities will make up te total Vesting Quantities. In an event tat a portion of te tender was unawarded, EMA will determine te metodology of ow tese unawarded quantities are to be allocated. Te tender contract will ave a provision for planned maintenance of up to a specified number of days for te duration of te contract, during wic te 2-9

winner(s) of te tender(s) can be relieved of its Tender Vesting Quantities 4. Te winner(s) of te tender(s) wising to exercise tis option will ave to obtain prior approval from te Power System Operator (PSO) for te planned maintenance dates. Te winner(s) of te tender(s) sall ten inform te Autority of te dates, in periods of 1 day, tat it wises to be relieved of its Tender Vesting Quantities at te same time tat it submits its generation installed capacity for te determination of te Allocated Vesting Quantities for te following quarter. During te period were te winner(s) of te tender(s) is relieved of its Tender Vesting Quantities, te MSSL will buy te equivalent amount of electricity from te wolesale electricity market at te Uniform Singapore Electricity Price (USEP) to supply to non-contestable consumers. Te difference between te USEP and te Tender Vesting Price will be taken into account for te calculation of te electricity tariff for non-contestable consumers in te following quarter. 4 No relief will be given for unplanned outages. 2-10

3. PROCEDURES FOR DETERMINING OTHER DATA FOR ALLOCATED VESTING PRICES, ALLOCATED VESTING QUANTITIES AND TENDER VESTING QUANTITIES Te following procedures will be used by te Autority (or by te market support services licensee (te MSSL ) on te Autority s bealf) for estimating oter data on a quarterly basis, for wic te Autority is responsible, for use in te determination of bot price and quantity for Vesting Contracts, oter tan te determination of te Allocated Vesting Price already discussed in section 2 above. 3.1 DAY PROFILES Te MSSL sall, on bealf of te Autority, calculate te values of te day profile [Period_Type (Day_Type, Period)] for te purposes of calculating te contract Allocated Vesting Quantities and Tender Vesting Quantities as stated in Scedule B of te Vesting Contract in accordance wit te following procedure: divide te week into tree representative day-types: (a) Sundays and public olidays, (b) Saturday, and (c) all oter days (week-days). every two years or suc oter time corresponding to a re-estimate of te LRMC value: for eac day-type, allocate eac alf-ourly period into one of tree period-types: (a) peak, (b) soulder and (c) off peak. Tere will be only tree classifications wic will be applicable to all tree day-types (as opposed to separate categories for eac daytype). tese peak, soulder and off peak classifications will be calculated from actual data derived over te previous 12-mont period concluding 3 monts before te commencement of te application of te profiles 5. Tis will normally be te 12 mont period from 1 October to 30 September. Te actual data used could be, at te Autority discretion s, eiter 6 : An aggregated day of eac day type (being te average electricity consumption of eac alf our over all days of tat day-type in te 12-mont period), or; A representative day of eac day type (wic could come from a representative week ) Te classifications will ten be made as follows: Peak periods will be te 1/3 rd of alf-ours wit te igest average electricity consumption for all day-types Off peak period will be te 1/3 rd of alf-ours wit te lowest average electricity consumption for all day-types. Soulder will be te remaining 1/3 rd of alf-ours for all day-types. Te Autority will ave te discretion to re-classify any alf-our periods into alternate period classes if tey are close in electricity consumption value to te alternative 5 If te first quarter of vesting commencement is less tan twelve monts after market starts, ten te available data can be extrapolated to determine te classification of te day profiles. 6 Te Autority will use aggregated day. 3-11

classification and if suc reclassification simplifies te total allocation scedule. Examples of tis are: Making a set of alf-our periods into a contiguous classification (eg. removing a one or two soulder alf-our from te middle of a run of peak alf-ours) or; Eliminating a classification from a day-type (eg removing a single peak period from a Saturday) A sample of te format and data type is provided in Figure 3.1. Period_Type(Day_Type, Period) (Updated at irregular intervals) Day_Type Period Weekday Saturday Sunday/Holiday 1 2 16 17 20 21 47 48 Off Off Soulder Soulder Peak Peak Soulder Off Peak Peak Peak Off Off Soulder Soulder Peak Peak Off Peak Off Peak Peak Peak Off Off Off Peak Off Peak Off Off Off Peak Off Peak Peak Peak Peak Peak Figure 3.1 Day Profile (SAMPLE ONLY) 3.2 METHODOLOGY TO FORECAST ELECTRICITY CONSUMPTION FOR CALCULATING VESTING CONTRACT QUANTITIES Te MSSL sall use te metodology as set out in Appendix 1 to forecast electricity consumption for te purpose of calculating te Vesting Contract Quantities. 7 3.3 GENERATION INSTALLED CAPACITY Eac Vesting Contract Holder sall notify te Autority in writing at least tree (3) monts prior to te commencement of te next quarter of any planned canges during te quarter of te Holder s generation installed capacity resulting from all or part of its generation plants being brougt into or taken out of normal operation during te quarter. If notified as suc by te Holder, te Autority sall take into account te planned canges to determine te Holder s generation installed capacity (Installed_Capacity [Company, Station]) for te purpose of allocating te Allocated Vesting Quantity to te Holder by MSSL. Te Autority will determine te Vesting Contract Holder s generation installed capacity (Installed_Capacity [Company, Station]) based on te standing data (including revisions tereof) approved by te Power System Operation Division of te Autority (PSO) wit respect to te relevant generation plants Te Holder s generation installed capacity tat is unavailable for a period of more tan six consecutive monts overlapping wit te Hedge Quarter Q will not be considered for allocating te Allocated Vesting Quantity by MSSL to te Holder for tat quarter. Te Autority may decide to use a lower amount tan te standing data, in wic case te Autority will inform te generating company and give tat company an opportunity to comment on te figure to be used by te Autority. Te Autority will take into account te comments of te generating company and may take any oter advice it tinks fit in making its final decision. Te decision of te Autority will be final. 7 Te forecasting metodology in Appendix 1 sall apply for Hedge Quarter Q4 2011 and onwards. 3-12

3.4 VESTING CONTRACT DATA Te Autority will determine for eac period-type te Vesting Contract level [Contract_Level (Day_Type, Period_Type)] tat reflects te percentage of electricity consumption in tat period-type tat will be subject to Vesting Contracts. Te Vesting Contract level for eac period-type will be te same for all day-types. Tis will be determined by te Autority as follows: Te Autority will determine and publis te total average Vesting Contract level as a percentage of electricity consumption. Te Autority will determine and publis te total average contract level as a percentage of consumer load to be contracted at te Allocated Vesting Price. Te Autority will determine and publis te Tender Vesting Contract level as a percentage of electricity consumption to be contracted at te Tender Vesting Price. Te Autority will determine and publis period weigting factors tat apportion te average Vesting Contract level to peak, soulder and off-peak periods. Te Autority will determine te LNG Vesting Quantities tat eac Holder qualifies under te LNG Vesting Sceme. 3.4.1 Annual Contract Level and Roll-back To acieve te objective of effectively curbing te potential exercise of market power by te Gencos, te Autority will, in consultation wit te industry, review and reset te Vesting Contract level every two years based on supply and demand projections at te point of review. Wile te long-term plan is to reduce te Vesting Contract level over time, suc reduction is contingent on te dilution of Gencos market power in te generation market. Te Autority will use an analytical model, preferably a market gaming model, to derive te overall expected annual market prices for different contract levels (as a percentage of annual load). Tese will be derived from te weigted average expected annual market prices for eac period type. More specifically, te Autority will use te model to simulate non-collusive interactions amongst te Gencos and determine te Vesting Contract level to effectively control te Gencos market power. Specifically, te model estimates te Vesting Contract level required to remove te Gencos incentives to witold capacity to raise te spot prices in te wolesale electricity market above a certain target price. Te Vesting Contract level is set to target te long run marginal cost ( LRMC ) of a teoretical new entrant using te most economic generation tecnology in Singapore contributing more tan 25% of total demand. Tis mimics te outcome of a competitive market over te long-run and ensures appropriate price signals remain for investors to plant new and efficient generation capacity to meet demand growt. Te total average Vesting Contract level will be cosen taking into account te following factors: Te expected LRMC of a teoretical new entrant using te most economic generation tecnology in Singapore contributing more tan 25% of te total demand, Supply and demand projections at te point of review, Te robustness of different contract levels to data uncertainty, Te likely data scenarios including te range of plant configurations tat may exist, 3-13

Te transition away from Vesting Contracts by use of, if possible, a monotonic rollback scedule and tus avoidance of fluctuations in te Vesting Contract level percentage from year to year. Te Autority will use its discretion to balance tese and oter relevant factors in coosing te Vesting Contract levels and consequential rollback scedule, in particular taking into account te key regulatory objective to effectively curb te potential exercise of market power of te Gencos. Te rollback scedule announced by te Autority at te commencement of te Vesting Contract regime in 2004 sall form te minimum or floor rollback scedule (i.e. te Vesting Contract level determined by te Autority for a given year sall not be lower tan te level specified in te scedule for tat year). Tis scedule may potentially be extended in relation to bot te total contract coverage and te duration of te vesting regime, based on information assessed at 2-yearly intervals or at oter times in exceptional circumstances. For eac year, te rollback of Vesting Contract level will be determined by te Autority as eiter: Te Vesting Contract level in te previously announced rollback scedule, or Were te Autority believes tat exceptional circumstances prevail requiring te actual Vesting Contract level to differ from te corresponding level in te previously announced roll-back scedule, it may recalculate te rollback of Vesting Contract level in te same manner as in te 2-year review cycle. For avoidance of doubt, te actual Vesting Contract level need not necessarily decline year on year. If te Autority makes tis determination, it must consult wit all Vesting Contract Holders at least 3 monts in advance of te recalculation taking effect, giving its reasons for deciding to make te recalculation and te proposed revised average Vesting Contract levels. Te Autority will take into account te comments of te Vesting Contract Holders and may take any oter advice it tinks fit in making its final decision. Te decision of te Autority will be final. Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Coverage 65% 50% 50% 50% 50% 40% 40% 40% 40% 40% Figure 3.2a Minimum/Floor Rollback scedule (establised prior to 2004) Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 1H 2013 (Jan Jun) 2H 2013 (Jul Dec) Coverage 65% 65% 65% 55% 8 55% 55% 55% 60% 55% 55% 50% 40% Figure 3.2b Actual Vesting Contract levels If te Autority decides to rollback te Vesting Contract level, Holders wo are allocated LNG Vesting Quantities under te LNG Vesting Sceme sall retain teir LNG Vesting Quantities until te termination of te LNG Vesting Sceme regardless of te Vesting Contract level under te rollback scedule. 3.4.2 Period Weigting Factors Te MSSL will, on bealf of te Autority, use te following steps to determine te period weigting factors: 2014 8 Vesting Contracts level was reduced to 55% in Jul 2007. 3-14

Te soulder period weigting factor will be set to 1 Te Autority will determine a peak period weigting factor for eac day type (greater tan unity) to be applied to te total average contract level required to calculate te contracting level in te peak periods. Tis factor will be cosen so as to bring te market power in te peak period to witin an acceptable range of tat in te soulder period. Te Autority, in determining te peak period weigting factor will use an analytical model, preferably a market gaming model, to derive expected annual market prices in eac period type for different peak period weigting factors (and teir consequential off-peak weigting factors, as explained below). A weigting factor will be cosen to acieve similar expected prices across te tree period types. Since it may not be possible to acieve exactly equal prices from te model, and given te uncertainty of future data assumed in te model, te Autority will use its discretion to coose a peak period weigting factor tat will approximately acieve tese objectives. If an alternative market power model is used, ten anoter measure of equal market power across te periods may be substituted for te measure specified ere. Te peak period weigting factor sall be revised in conjunction wit te review of te roll-back scedule. Te revision may be based eiter on a predetermined factor for tat year or it may be recalculated by te Autority. Were te Autority cooses to recalculate te peak period weigting factor, it must consult wit all Vesting Contract Holders at least 3 monts in advance of te recalculation taking effect, giving its reasons for deciding to make te recalculation and te proposed revised peak period weigting factor. Te Autority will take into account te comments of te Vesting Contract Holders and may take any oter advice it tinks fit in making its final decision. Te decision of te Autority will be final. Te contract levels for eac period-type, being te percentage of tat period s electricity consumption, will be specified as follows: Te peak contract level equals te total average contracting percentage multiplied by te peak period weigting factor. Te soulder contract level equals te total average contracting percentage. Te off-peak contract level is calculated as follows: te peak contract level multiplied by te electricity consumption during te peak periods plus te soulder contract level multiplied by te electricity consumption during te soulder periods plus te off peak contract level multiplied by te electricity consumption during te off peak periods equals te total average contract level multiplied by te total electricity consumption A sample of te form and nature of tis data is provided in Figure 3.3. 3-15

Contract_Level (Day_Type, Period_Type) (Updated Quarterly) Period_Type Day_Type Weekday Saturday Sunday/Holiday Peak Period 72% 72% 72% Soulder Period 65% 65% 65% Off-Peak Period 50% 50% 50% Figure 3.3 Contract Level Data (SAMPLE ONLY) 3.4.3 LNG Vesting Sceme Te LNG Vesting Sceme assumes tat te generation tecnology for te LNG Vesting Quantities will use regasified LNG as te primary source of fuel 9. From te onset, te Autority sall determine te Annual LNG Vesting Quantities ( ALVQ ) to eac eligible Holder for te term of te LNG Vesting Sceme. Te Holder sall use for power generation in eac calendar year, equivalent 10 regasified LNG quantities tat are no less tan te ALVQ in te calendar year, unless it as obtained prior written approval from te Autority. Te regasified LNG quantities wic BG Singapore Gas Marketing Pte Ltd ( BGSGM ) supplied to, and invoiced, te Holder in eac calendar year sall be deemed as te Holder s LNG usage quantities for te purpose of calculating te Holder s equivalent LNG usage quantities ( ELUQ ) for te calendar year. Te Holder sall submit to te Autority a statement of its LNG usage quantities for eac calendar year no later tan te Business Day on or following 15 Marc (wicever is earlier) of te following calendar year. Suc statement sall be in te form of a letter from BGSGM to te Holder, stating te invoiced quantities wit a breakdown of te actual LNG usage quantities and any sortfall LNG quantities below te Holder s Take or Pay ( TOP ) obligations (or any LNG quantities drawn down from te banked LNG). Eac Holder is also required to submit a declaration to te Autority stating tat te invoiced quantity from BGSGM ad been used solely for power generation. In respect of eac calendar year, te Autority sall determine te Sortfall LNG Vesting Quantities ( SLVQ ) of te Holder i as follows: If ELUQ i ALVQ i, SLVQ i = 0; and If ELUQ i < ALVQ i, SLVQ i = ALVQ i - ELUQ i. Te SLVQ incurred by te Holder i in eac calendar year sall be used to reduce te LNG Vesting Quantities ( LVQ ) to be allocated to te Holder i over a period of twelve monts starting from July in te subsequent calendar year. More specifically, te Holder s LVQ sall be calculated as follows: For te monts July to December in calendar year x, te LVQ for alf-our period to Holder i, 9 Sould te economic generating tecnology wic contributed to more tan 25% of te total demand no longer use natural gas as te primary source of fuel, te Autority sall review te setting of te LNG Vesting Price in consultation wit te Holders of LNG Vesting Quantities. 10 7,085 Btu of regasified LNG is equivalent to 1 kw of LNG vesting quantities 3-16

=. 48 1. +1 48 For te monts January to June in calendar year x+1, te LVQ for alf-our period to Holder i, =. +1 48 1. +1 48 Te Balance Vesting Quantity ( BVQ ) for eac alf-our period to Holder i tat qualify for te LNG Vesting Sceme, BVQ i = max(0, PAVQ i LVQ i ) were: LVQ i PAVQ i is te total LNG Vesting Quantity for alf-our period to Holder i'; and is te total preliminary Allocated Vesting Quantity for alf-our period for Holder i' as determined by te Issuer based on Sections 3.2, 3.3, 3.4.1 and 3.4.2. In te event were a Holder, witout te prior written approval of EMA, (i) on-sold any amount of LNG corresponding to te LNG Vesting Quantity allocated to te Holder under te LNG Vesting Sceme and/or (ii) on-sold any amount of PNG tat as an effect of reducing te Holder s total contracted amount of PNG prior to te signing of te LNG Gas Sales Agreement, te Autority may suspend te Holder s eligibility to te LNG Vesting Sceme and/or impose a financial penalty on te Holder. Upon te termination of, or suspension of te Holder s eligibility to, te LNG Vesting Sceme, te Holder will need to make payment in respect of any outstanding SLVQ ( O_SLVQ ) tat te Holder i' as incurred in period T (i.e. te Holder s SLVQ not offset by te Holder s ELUQ prior to te termination or suspension), determined as follows: Max [ 0, { _ - }] were: is te sum over all corresponding alf-our periods in period T T is te corresponding period over wic O_SLVQ was incurred by Holder i is te LNG Vesting Price for alf-our period to Holder i' is te Balance Vesting Price for alf-our period to Holder i' o Note: In te case were tere is no BVQ attributable to te Holder in te period prior to te suspension or termination, te Vesting Contract Reference Price ( VCRP ) or weigted average Market Energy Price tat is used to allocate any 3-17

Vesting Contract Settlement Credit or Debit to te Holder i for alf-our period as specified under te Market Rules will be used instead of BVP. Accordingly, te portion of O_SLVQ wic te Holder is eligible for BVQ allocation will be settled using BVP as te reference price, and any remaining portion of O_SLVQ will be settled using te Holder s VCRP as te reference price. _ is te O_SLVQ incurred by te Holder i' for alf-our period, determined as follows: _ _ =. Te Autority will inform te Holder of te total amount payable by te Holder wit respect to any O_SLVQ incurred by te Holder 10 Business Days after te receipt of te Holder s statement of its LNG usage quantities. Te Holder sall tereafter promptly make payment troug te Market Company to MSSL 10 Business Days after te receipt of te letter from te Autority. 3.5 VARIABLE HEDGE PROPORTION FOR CONTESTABLE CONSUMERS AND PAYMENT REFERENCE PRICE (VHP & PRP) Te Autority sall provide te metodology for calculating te values of te variable edge proportion [VHP ] for contestable consumers (CC) and te corresponding Payment Reference Price [PRP Q ] to te MSSL for te purposes of settling Allocated Vesting Quantities in accordance wit te Market Support Services Code (te MSS Code ). Tis metodology is detailed below. Te Vesting Contract regime calls for te Tender Vesting Quantity to be allocated to te non-contestable consumers (NCC) entirely. Te Allocated Vesting Quantity would be first allocated to te remaining electricity consumption of NCC not covered by te Tender Vesting Quantity, wit any remaining Allocated Vesting Quantity being distributed on an equal proportion basis to all CC. Te metodology for calculating te proportion of Allocated Vesting Quantity to be allocated to CC (VHP) and te associated Payment Reference Price (PRP) for tese Allocated Vesting Quantities is provided below in tis section. 3.5.1 Determination of VHP for Contestable Consumers Te MSSL will, using a metodology provided by te Autority, calculate te value of VHP required by its settlements system for eac quarter. Tat metodology is defined below in tis section. Section 6.1 of te MSS Code, defines te metodology used for settling Vesting Contract Credits (VCC) wit CC. Specifically it provides te equation replicated below wereby te VCC for consumer r in billing period B as being calculated as 11 : VCC r B k r nmr, ( VCRP PRP ) TLF [ E VHP ] B = Q or zero if E nm,r is negative Were: 11 Tis is a replication of equation 6.1(c) from te MSS Code. 3-18

nmr E, VHP k VCRP is te energy in kw measured in alf-our at te meter or meters measuring consumer r s net witdrawal of energy from te transmission system or te internal electricity system of te building. is te proportion of te consumers energy witdrawal to be covered by Vesting Contract as calculated using te metodology provided in tis section. is te Vesting Contract Reference Price for alf our for te settlement account associated wit te MSSL counterparty calculated in accordance to te applicable provisions of Capter 7 of te Market Rules. For eac representative day and for eac representative period, te total contracted generation over te quarter is MW_CONTRACT [Day_Type, Period_Type] were MW_CONTRACT [Day_Type, Period_Type] = TENDER_VEST_QTY [Day_Type, Period_Type] + ALLOCATED_VEST_QTY [Day_Type, Period_Type] Te MSSL is fully edging NCC wo are expected to consume FORECAST_NCC_LOAD [Day_Type, Period_Type]. REP_NCC_LOAD [Day_Type, Period_Type] is te forecasted total electricity consumption for te NCCcorresponding to te day type and period type over te quarter. FORECAST_TOTAL_LOAD [Day_Type, Period_Type] is te forecasted total electricity consumption of all consumers for te corresponding day-type and period-type over te quarter FORECAST_CC_LOAD [Day_Type, Period_Type] is te forecasted total electricity consumption of all CC for te corresponding day-type and period-type over te quarter. Te metodology for forecasting total electricity consumption of all consumers and of CC and NCC separately is set out in Appendix 1 and in particular Tables 4.2, 5.2 and 6 respectively terein. After te NCC ave been covered, te total amount of Allocated Vesting Quantity tat needs to be distributed amongst te CC for a given day-type and period-type is: Z[Day_Type,Period_Type] = MW_CONTRACT[Day_Type, Period_Type]- FORECAST_NCC_LOAD[Day_Type, Period_Type] It is possible tat Z will be negative for some representative day/periods. Tis as to be corrected to prevent te allocation of negative Allocated Vesting Quantities. To correct tis, te following calculation must be made: X =Σ for all day types and period types Z[Day_Type, Period_Type] Y = Σ for all day types and period types for wic Z[day_type, period_type] <0 (ABS(Z[Day_Type, Period_Type])) Tus X represents te total contracted capacity over te quarter, wile Y represents te absolute value of te total of all negative contracted capacities over te quarter. So: CONTRACT_CC_LOAD [Day_Type, Period_Type] =Max (0, Z [Day_Type, Period_Type]) * X/(X+Y) 3-19