General overview NWE DAY-AHEAD PRICE COUPLING

General overview NWE DAY-AHEAD PRICE COUPLING APX UK NWE Information Session 15 October 2013

Day Ahead Market Coupling 1 2 One common solution rolled out across Europe Promote liquid and robust day-ahead markets Encourage cross-border trading and competition Optimise use of crossborder transmission capacity 4 3 the benefits of the integration due to market coupling, once market coupling is fully implemented across the EU, will be of the order of 2.5bn to 4bn per year, or about 5 to 8 per capita per year booz&cojuly 2013 2

APX driving integration 2006 - Tri-lateral (TLC) market coupling APX and Powernext launched Europe s first market coupling project to connect the French, Belgian and Dutch markets 2010 - Central West Europe (CWE) market coupling APX and EPEX Spot cooperated to extend market coupling to Germany and Luxembourg 2010 - ITVC market coupling Volume coupling connected the CWE market coupling to Nord Pool 2011 GB embedded solution APX implemented GBs first market coupling solution on BritNed 2013 - North West Europe (NWE) market coupling 3

NWE Day-Ahead Market Coupling The central pillar of the European Target Model: legally required under anticipated Network Codes One single coupling algorithm to allow for a sound and robust price formation delivered by a joint-px project: "PCR" Regional implementation projects to establish full solution, including pre- and post- coupling processes: NWE: target go-live date 26 November 2013 Other regions: 2014-5 NWE includes full coupling of GB (IFA & BritNed) GB "virtual hub" arrangement facilitates multiple PXs in GB 4

Price Coupling of Regions Full PCR members Associate PCR members Markets that could join as part of an agreed European roadmap 5 5

NWE market coupling Parties involved 13 Transmission System Operators 4 Power Exchanges Systems & interfaces Approx. 50 systems involved Approx. 250 interfaces 40 serviced interconnectors 30 bidding zones 6

NWE high level architecture Pre-coupling Coupling Post-coupling Input PX orders and TSO capacities Euphemia calculates prices and flows Validation, clearing and settlement 7

GB Hub Arrangement APX Members APX UK BritNed APX NL GB to GB arrangement acts as virtual interconnector with infinite capacity N2EX Members N2EX IFA EPEX Spot Why do we need a GB Hub arrangement? Ensure efficient use of available interconnector capacity Provide robust reference price for EMR intermittent CfDs 8

GB Market Participant Key changes GB coupling BritNed market coupling Embedded solution provided by APX to BritNed. IFA not coupled. 9 9 NWE market coupling GB fully coupled via both BritNed and IFA. Products APX offers only hourly products APX will offer full suite of block, smart and hourly products Auction times APX auction time 10:50 UK Clip Size 1 MW 0.1 MW Fall back Second auctions Max/min prices APX runs de-coupled GB dayahead auction. BritNed capacity allocated intraday. Not supported in GB GB auction timing will be harmonised to 11:00 UK APX runs de-coupled GB DA auction. BritNed capacity allocated intraday. APX may reopen order books if price threshold(s) are breached (+500/-150 GBP) or de-coupling +1000/-150 GBP Harmonise across NWE to +3000/ -500 EUR

APX Members Benefits GB PXs pool liquidity resulting in identical hourly prices, leaving market participants to trade on the PX that offers the most attractive service, products or cost APX will offer the full suite of auction products - block and smart orders: (normal, profile, linked, flexible) APX will only charge fees on net volumes, all members will be charged zero fees on netted volumes, without the need to sign additional contracts GB fully market coupled to continental Europe via 3MW (BritNed and IFA) of interconnector capacity 10

DISCLAIMER the information contained in this document ( Presentation ) has been prepared by APX Group and is subject to change without notice. Copyright and intellectual property right protection exist in this Presentation and it may not be reproduced, distributed or published with any third party, in whole or in part, without the express prior written permission from APX Group. All rights are reserved. While reasonable care has been taken to ensure that the information contained wherein is true and accurate, APX Group makes no representation to its correctness, reliability or completeness including likelihood of achievement or reasonableness of any forecast, prospects, returns or statements in relation to future matters that may be contained in this Presentation. Neither APX Group nor any of its directors or employees accepts any liability in respect of the information contained in the Presentation or for any loss arising from the use of this Presentation, its contents or otherwise arising in connection with it. This Presentation does not constitute an offer, invitation or recommendation to any transaction and neither is it to be taken as any form of commitment on the part of APX Group to proceed with any transaction. 11

General principles OPERATIONAL PRINCIPLES & POSSIBLE SCENARIOS APX UK NWE Information Session 15 October 2013

Price Coupling Process General term for ATC and/or FB parameters used = CZCs : Cross Zonal Capacities 2

PCR Process 3 Some changes apply in the Nordic/Baltic region

NWE Business Process 09:30 CZCs and Allocation constraints submitted to PCR 11:00 Orderbooks closure Global Preliminary PX confirmation 11:55 Global final confirmation Publication 11:55 13:00 Nominations CZCs and allocation constraints submission and integration Final confirmation of the results Price coupling results and scheduled exchanges transfer Trading confirmation and scheduled exchanges notification PCR process: CZCs and allocation constraints process Orderbook processing PMB calculation Preliminary confirmation process Final confirmation process 4

PCR Process Timings for NWE Normal process 55 minutes 11:00 OBK GCT 11:00 11:10 Check of OBK and sending to PMB 11:10 11:27 Calculation 11:28 11:41 Preliminary PX validation 11:42 Publication of preliminary results (incl. market clearing price) to the market and in parallel sending of these preliminary results for final confirmation/approval to the TSOs 11:42 11:54 Final TSO validation 11:55 Publication of Final Results (incl. market clearing price) Start of Notification Process 5

Process is delayed Target Time Latest Time to Start an IC Partial Coupling/Full Decoupling Deadline TIME Normal Procedure Normal procedures can still apply after target time Backupprocedure canapplybeforethe target time Backup procedures Fallback procedures can apply before fallback time Fallback procedures Decoupling preparation decoupling 6

Process delayed assumptions Pre-coupling Deadline to solve incidents with Network Data (CZCs) publication is 10:45 (UK Local Time) Coupling Time allowance for technical problem solving up to 55 min Time allowance for special market procedures such as handling of curtailment situations or price threshold reached via a second auction used by CWE PXs or the NPS-applied regulated routines that include peak load capacity (production/load) reserves activation. Deadline for final Market Results is 12:50 (UK Local Time) Max. Time /Flexibility to solve technical problems 55min 2 nd Auction CWE/ GB 48 min Full Decoupling Deadline 12:50 - - - - - - - - - - - - - Post-coupling Final notification deadline of 14:30 (UK Local Time) in CWE, CWE-GB and CWE-Nordic interconnectors 7

Second Auction 2 nd Auction CWE/ GB 48 min A Second Auction is triggered in case at least one of the CWE/GB prices reach or exceed the predefined price thresholds The routine consists in Reopening the PXs order books for 10 minutes to give the Market Participants the opportunity to modify their bids in order to improve the market situation Execution of a second calculation with the new Order Data The thresholds to trigger a 2nd auction in CWE remain the same: + 500 EUR/MWh and -150 EUR/MWh In GB thresholds will be introduced: + 500 GBP/MWh and -150 GBP/MWh In case the prices still reach the thresholds after the Second Auction calculation, no additional Second Auction will be triggered 8

PCR PROCESS TIMINGS for NWE 11:00 11:42 12:50 12:55 14:30 13:50 13:43 13:43 13:50 13:50 13:50 * This is the maximum time which could be used to solve a technical problem in order to avoid a decoupling. If the technical problem is resolved in less than 55 min than the next processes will start earlier. ** the Second Auction in CWE / GB is a single process taking 48 minutes. *** the Special Procedure for the Nordics is an iterative process which will run the number of times necessary taking into the 12.50 full decoupling deadline when NWE is coupled. 9

Fallback procedures Target Time Latest Time to Start an IC Partial Coupling/Full Decoupling Deadline TIME Normal Procedure Normal procedures can still apply after target time Backupprocedure canapplybeforethe target time Backup procedures Fallback procedures can apply before fallback time Fallback procedures Decoupling preparation decoupling 10

Fallback procedures Target Time Latest Time to Start an IC Partial Coupling/Full Decoupling Deadline TIME Normal Procedure Normal procedures can still apply after target time Backupprocedure canapplybeforethe target time Backup procedures Fallback procedures can apply before fallback time Fallback procedures Decoupling preparation decoupling 11

Full Decoupling of NWE (1) Internally in CWE and for the CWE Nordic interconnectors (except Baltic Cable): Shadow auctions organised by CASC will be held and results published The 3 PXs within CWE will reopen the order books (20 min) and perform local DA spot market calculations without using cross border capacities The notification deadline of 14.30 is applicable for the notification by market parties of utilisation of Explicit Capacity bought in Shadow Auctions Fallback for Baltic cable: capacity goes back to the cable owner In GB Shadow auctions organised by RTE/NGIC are applicable for FR/GB border only (IFA interconnector), this consists of daily explicit auctions Capacity of virtual interconnector set to zero The 2 PXs will reopen the order books (APX UK 15 min) and perform local DA spot market calculations without using cross border capacities Fallback for BritNed: capacity goes to intraday For the Nordic Baltic area including the link with Poland Shadow auctions on 3 CWE-Nordic links Re-opening of NPS order books Price coupling will be performed by NPS utilising the cross border capacities within this region 12

Shadow Auctions Bids submitted through the Shadow Auctions interface at CASC.EU are default bids : They are valid for every day of the year, for a specific border, direction and an hourly period (Volume in MW and a Price in /MWh) Participants can update their default bids at any time before the freezing of the database when Shadow Auctions are run Description in Harmonised Auction Rules for CWE, CSE and CH Possibility to register only for Shadow Auctions, with a lighter status: Participant to Shadow Auctions Only" Market Participants need to submit a nomination towards the respective TSOs by the notification deadline of 14:30 13

Full Decoupling scenario CWE : 4 local PX auctions Nordic-Baltic Market Splitting Virtual Capacity is set to Zero 2 local PX auctions Shadow Auctions Local matching process In case of full decoupling the processes are local Communication in case of fallback is organised locally (different info, different timings) 14

CWE TSO investigate flexibility of notification deadline The CWE TSOs and 50 Hertz have agreed upon a joint target solution for the deadlines for submitting the different schedules towards the TSOs available as of Go-Live of the Price Coupling in the NWE region Taken into account that it is important for the TSOs to receive data of good quality, the TSOs agreed to extend the deadline for submitting generation schedules in the very rare cases of specific fallback situations to a later time than 14:30 In these extraordinary situations, all CWE TSOs and 50 Hertz will extend the deadline for submitting generation schedules until at least 14:45. Some TSOs can extend this deadline even beyond 14:45 depending on local market rules This means that market participants have at least 60 minutes for the submission of generation schedules 15

CWE TSO investigation on flexibility of notification deadline impact on procedures Exceptional cases Notification Process 45 min 14:30 14:30 14:30 14:45 16 Crossborder Notification Process 45 min Generation Notification Process At least 60 min

PCR PROCESS TIMINGS for NWE 11:00 11:42 11:00 12:50 14:30 14:45 17

Full decoupling before OBK GCT (12:00) OBK GCT = 12:00 12:50 11:00 Case X10 Full decoupling before 11.00 Case X11 X10 + delay Case X12 X10 + 2nd Auction CWE Publication of preliminary results =12:42 11:42 11:00 Full decoupling 42 min Full decoupling 42 min Full decoupling 42 min Notification Process 60 min Max. Time /Flexibility to solve technical problems 55min* 2 nd Auction CWE/ GB 28 min** Notification Process 60 min Notification Process 60 min Final Notification deadline =15:30 14:30 which applies to: Internal CWE, CWE-GB and CWE-Nordic interconnectors * This is the maximum time which could be used to solve a technical problem in order to avoid a decoupling. If the technical problem is resolved in less than 55 min than the next processes will start earlier. ** the Second Auction in CWE / GB is a single process taking 48 minutes. *** the Special Procedure for the Nordics is an iterative process which will run the number of times necessary taking into the 12.50 full decoupling deadline when NWE is coupled. 18

Partial (De)coupling within NWE Any scenario where one or more bidding areas and/or interconnectors are temporarily not participating in NWE Market Coupling while the remaining bidding areas/interconnectors still participate in NWE Market Coupling The CZCs for the decoupled borders / interconnectors will be allocated via the fall back solution for these temporarily not participating borders / interconnectors NWE parties will try to couple as many borders / interconnectors as possible Partial coupling is triggered during the pre-coupling process, at the latest at 10:45 during the coupling process, at the latest at 11:40 19

Partial Coupling Scenario Example : CWE+GB <> Nordic PCR coupling Nordic-Baltic: Market Splitting Shadow Auctions Adobe Acrobat Document Local matching process PCR matching process 20

Partial Coupling Scenario Example : NorNed PCR coupling Shadow Auctions PCR matching process 21

Partial Coupling Scenario Example : EPEX OBK missing PCR coupling Shadow Auctions PCR matching process Local matching process 22

Partial Coupling Scenario Example: APX NL/Belpex OBK missing PCR coupling Shadow Auctions Local matching process 23

Partial Coupling Scenario Example : no CWE CZCs in PMB PCR coupling Shadow Auctions PCR matching process Local matching process 24

Decoupling scenarios Where s the problem What decouples? Resulting configuration APX/Belpex EPEX NPS (Nordic) CWE internal borders (FR- DE, FR-BE, BE-NL, NL-DE) and NorNed and BritNed and GB-GB CWE internal borders and IFA, DK-DE, DE-SE Nordic area, NorNed, DE-DK, DE-SE 25 NL, BE and APX UK markets isolated DE, FR, and BE markets isolated Nordic markets isolated (but internally coupled) N2EX GB-GB, IFA N2EX market isolated CWE TSOs CWE internal borders BE market isolated BritNed BritNed No market isolated NorNed NorNed No market isolated Any other individual interconnector That interconnector No market isolated PMB, or problem after 11:20 Entire region All markets isolated (but Nordic markets internally coupled)

Partial Coupling before OBK GCT (11:00) 11:00 11:00 11:42 12:50 12:55 13:50 13:43 13:50 13:50 13:50 14:30 * This is the maximum time which could be used to solve a technical problem in order to avoid a decoupling. If the technical problem is resolved in less than 55 min than the next processes will start earlier. ** the Second Auction in CWE / GB is a single process taking 48 minutes. *** the Special Procedure for the Nordics is an iterative process which will run the number of times necessary taking into the 12.50 full decoupling deadline when NWE is coupled. 26

Partial Coupling before OBK GCT (11:00) 11:00 Partial coupling followed by Full Decoupling + Special Routine Nordics 11:42 12:50 14:30 14:45 * In case X6b, the NPS special procedure, being an iterative process, may take the same timeframe as when all markets are still coupled, but this is not relevant in a full decoupling since Nordic and Baltic TSOs do not impose a nomination deadline, but instead NPS can take as long time as needed to finish the Price Calculation and subsequent notifications can be submitted (updated) by NPS and market parties to relevant TSOs until about 1 hour before delivery hour.

Partial coupling after OBK GCT (11:00) Case X7 Case X8 Case X9a Case X9b 11:00 (11:00) Publication of preliminary results =12:42 11:42 12:50 14:30 14:45 28

Timings and messages DETAILED OPERATIONAL PROCEDURES APX UK NWE Information Session 15 October 2013

Normal NWE/PCR process Normal timing PX GCT 09:30 11:00 11:42 11:55 Final results As soon as the results are finalised CZC publication MPs introduce orders Preliminary result publication Coupling process PX notifications to ELEXON 2

Normal process timeline PX gate closure time at 11:00 Publication of preliminary market results 11:42 Publication of final market results 11:55 Notification in the UK single side notification, notifications sent by APX as soon as the results are finalised Notification deadline ELEXON Cross-Border Local/hub One hour before delivery One hour before delivery 3

Case 1 Process delayed with max timing Normal timing Exceptional timing PX GCT 9:30 11:00 11:42 11:55 12:38 12:50 As soon as the results are finalised CZC publication MPs introduce orders Preliminary result publication Coupling process / Backup procedures Message to MP PX notifications to ELEXON Technical problem 4

Case 1 Process delayed with max timing CZC published at 09:30 PX gate closure time at 11:00 Delay in Market Coupling results Timing Message Additional actions for MPs Market results Publication deadline Local hub Notification Cross border notification deadline 11:42 [ExC_02]: Delay in Market Coupling Results publication 11:50 As soon as the results are finalised As soon as the results are finalised 5

PX sends message [ExC_02] Delay in Market results 6

Case 2a second auction Final Normal PX GCT results timing 09:30 11:00 11:30 12:00? Exceptional timing >11:42 >11:55 <12:50 As soon as the results are finalised CZC publication MPs introduce orders Preliminary result publication Coupling process Message to MP PX Notifications to ELEXON 7

Case 2a second auction CZC published at 09:30 PX gate closure time at 11:00 Threshold reached - 150 or + 500 / CWE - 150 or 500 Second Auction triggered (re-opening of Order Books) Timing Message Additional actions for MPs ±11:30 [ExC_01]: Thresholds reached - Reopening of the order books Market results Publication deadline Local hub Notification Cross border notification deadline PX: OBK open for 10 minutes after message 12:50 n/a n/a 8

PX sends message [ExC_01] second auction 9

Case X7 partial coupling after GCT Normal timing PX GCT 09:30 11:00 Final results Exceptional timing 11:20 11:30 11:40 12:38 12:50 As soon as the results are finalised CZC publication MPs introduce orders Preliminary result publication Partial coupling preparation* Partial coupling MPs update orders* Coupling process / backup procedures Message to MP 10 Note: PX Notifications to ELEXON * Reopening of order book for 10 min

Case X7 partial coupling after GCT BritNed capacity goes to intraday PX gate closure time at 11:00 Publication of preliminary market results at the latest 12:38 Publication of final market results at the latest 12:50 Timing Message Additional actions for MPs Market results Publication deadline Local hub Notification Cross border notification deadline 11:20 [ExC_03a]: Risk of Partial Decoupling n/a n/a n/a 11:40 [ExC_04a]: Partial Decoupling Reopening of the PX order books PX: OBK open for 10 minutes after message 11:50 As soon as the results are finalised As soon as the results are finalised 11

PX sends [ExC_03a] message 12

Case X3a partial coupling after GCT + second auction Normal timing PX GCT 09:30 11:00 Final results Exceptional timing 11:20 11:30 11:40 12:00 12:38 12:50 As soon as the results are finalised CZC publication MPs introduce orders Preliminary result publication Partial coupling preparation* Partial coupling MPs update orders* Message to MP Coupling process / backup procedures Note: MPs update orders** * Reopening of order book for 10 min **Reopening of order book second auction 10 min Notifications to ELEXON

Case X3a partial coupling after GCT BritNed capacity goes to intraday PX gate closure time at 11:00 Publication of preliminary market results at the latest 12:38 Publication of final market results at the latest 12:50 Timing* Message Additional actions for MPs Market results Publication deadline Local hub Notification Cross border notification deadline 11:20 [ExC_03a]: Risk of Partial Decoupling n/a n/a n/a 11:40 [ExC_04a]: Partial Decoupling Reopening of the PX order books PX: OBK open for 10 minutes after message 11:50 As soon as the results are finalised As soon as the results are finalised >12:00 [ExC_01]: Thresholds reached - Reopening of the order books PX: reopening second auction OBK open for 10 minutes after message 12:50 As soon as the results are finalised As soon as the results are finalised

PX sends message [ExC_01] second auction 18

Case 4 Full Decoupling Normal timing PX GCT 09:30 11:00 11:55 Final results Exceptional timing 11:42 12:05 12:20 12:50 >13:25 As soon as the results are finalised CZC publication MPs introduce bids Process run Full decoupling preparation* Full decoupling Exceptional procedures MPs update orders* PX Notifications to ELEXON Message to MP 19 Note: * Reopening of order book for 15 min

Case 4 Full Decoupling BritNed capacity goes to intraday PX gate closure time at 11:00 Full decoupling announcement Follow the local auction rules Timing* Message Additional actions for MPs 11:42 12:20 12:50 [ExC_02]: Delay in Market Coupling Results publication [ExC_03b]: Risk of Full Decoupling [ExC_04b]: Full Decoupling Reopening of the order OBK open for 15 minutes after message Market results Publication deadline n/a Local hub Notification As soon as the results are finalised Cross border notification deadline As soon as the results are finalised n/a n/a n/a n/a As soon as the results are finalised As soon as the results are finalised books 20

PX sends message [ExC_02] Delay in Market results 21

PX sends [ExC_03b] message

PX sends [ExC_04b] message 23

Case 5a Full Decoupling + 2 nd Auction Normal timing PX GCT 09:30 11:00 11:55 Final*** results Exceptional timing 11:42 12:05 12:20 12:50 13:00 13:25 13:25 As soon as the results are finalised CZC publication MPs introduce bids Coupling process Full decoupling preparation* Full decoupling MPs update orders* Exceptional procedures MPs update orders** Notifications to ELEXON Message to MP 24 Note: * Reopening of order book for 15 min ** Reopening of order book second auction 10 min ***PX publish at best effort base at before 13:25

Case 5a Full Decoupling + 2 nd Auction BritNed capacity goes to intraday PX gate closure time at 11:00 Full decoupling announcement Follow the local auction rules Timing* Message Additional actions for MPs 11:42 12:20 12:50 [ExC_02]: Delay in Market Coupling Results publication [ExC_03b]: Risk of Full Decoupling [ExC_04b]: Full Decoupling Reopening of the order books Px: OBK open for 15 minutes after message Market results Publication deadline n/a Local hub Notification As soon as the results are finalised Cross border notification deadline As soon as the results are finalised n/a n/a n/a n/a As soon as the results are finalised As soon as the results are finalised 13:25 Px: OBK open for 10 minutes after message n/a As soon as the results are finalised As soon as the results are finalised 25

PX sends message [ExC_02] Delay in Market results Note: content of the message can be changed after the member test period 26

PX sends [ExC_03b] message Note: content of the message can be changed after the member test period 27

PX sends UMM_05 message 29

Case X1 Partial coupling known in advance Normal timing Exceptional timing 09:30 11:00 10:45 PX GCT 11:42 11:55 Final results As soon as the results are finalised CZC publication MPs introduce bids Partial coupling known in advance Preliminary result publication Process run 11:00 PX Notifications to ELEXON Message to MP 30

Case X1 Partial coupling known in advance BritNed capacity goes to intraday PX gate closure time at 11:00 Publication of preliminary market results 11:42 Publication of final market results 11:55 Timing* Message Additional actions for MPs Market results Publication Local hub Notification Cross border notification deadline Max 10:45 [ExC_05a]: Partial Decoupling known in advance 11:42 As soon as the results are finalised As soon as the results are finalised 31

Case 10 full decoupling known in advance Normal timing Exceptional timing 09:30 10:30 PX GCT 11:00 Final results 11:42 As soon as the results are finalised CZC publication MPs introduce bids Full decoupling known in advance Process run PX Notifications to ELEXON Message to MP 33

Full decoupling known in advance timeline CZC published at 09:30 on CASC website PX gate closure time at 11:00 Announcement full decoupling Follow the local auction rules Timing* Message Additional actions for MPs Market results Publication deadline Local hub Notification Cross border notification deadline 09:30 [ExC_05b]: Full Decoupling known in advance Local auction results As soon as the results are finalised As soon as the results are finalised 10:45 [CWE_UMM_03] One or more interconnectors decoupled 10:45 [ ExC_GB_04] Zero capacity on IFA and BritNed No Virtual Capacity (GB1-GB2) 34

PX sends UMM_03 CWE and ExC_04b] GB 36

NWE process overview Normal timing PX GCT 09:30 11:00 11:55 Exceptional timing CZC publication 10:45 11:20 11:40 12:05 12:50 As soon as the results are finalised MPs introduce bids Process run Partial coupling due CZC reason Partial coupling preparation Partial coupling Full decoupling preparation Exceptional procedures Full decoupling PX Notifications to ELEXON 37

Full Decoupling scenario CWE : 4 local PX auctions Nordic-Baltic Market Splitting Virtual Capacity is set to Zero 2 local PX auctions Shadow Auctions Local matching process In case of full decoupling the processes are local Communication in case of fallback is organised locally (different info, different timings) 38

Decoupling scenarios Where s the problem What decouples? Resulting configuration APX/Belpex EPEX NPS (Nordic) CWE internal borders (FR- DE, FR-BE, BE-NL, NL-DE) and NorNed and BritNed and GB-GB CWE internal borders and IFA, DK-DE, DE-SE Nordic area, NorNed, DE-DK, DE-SE NL, BE and APX UK markets isolated DE, FR, and BE markets isolated Nordic markets isolated (but internally coupled) N2EX GB-GB, IFA N2EX market isolated CWE TSOs CWE internal borders BE market isolated BritNed BritNed No market isolated NorNed NorNed No market isolated Any other individual interconnector That interconnector No market isolated PMB, or problem after 11:20 Entire region All markets isolated (but Nordic markets internally coupled) 39 39

Communication to the market - summarised Time/ Deadline Communication 11:20 Increased risk for partial coupling in certain region TSO message to MPs: Inform Market of fall back processes (update of explicit shadow auction bids) ~ 11:35 Second Auction PCR message to PXs and subsequently MPs and TSOs: Second Auction is declared Regular publication time (11:42) PCR message that process is delayed from PXs* to TSOs and MPs (timings to be confirmed). (TSO message to MPs: Inform Market of fall back processes) Message number [EXC_03a] [EXC_01] Local PX msg NB 1. The fallback solutions and processes as well as their associated contents and timings are organised on local / regional level and not on NWE level. Timings are therefore indicative and additional messages can be sent (e.g. IFA CMS will also sent messages in case of a fall back situation) NB 2. The shift of notification deadlines only applies for CWE internally and CWE borders. 40

Communication to the market - summarised Time/ Deadline Communication 12:20 PCR message to PXs and subsequently MPs and TSOs: Inform Market about Incident and risk of decoupling. TSO message to MPs: Inform Market of fall back processes (update of explicit shadow auction bids) & shifting of notification deadline to 14h00 12:40 End of update shadow auction bids Start of explicit shadow auction calculation 12:50 Decision of Full decoupling PCR message to PXs and subsequently MPs and TSOs: Full decoupling is declared (TSO message to MPs: notification deadline has been extended to 14h30) 12:50-13:00 Publication of the explicit shadow auction fall back results (target is to publish immediately after 12.50 and at the latest at 13:00, feasibility of these timings must still be confirmed) 12:55-13:15 Update of local auction bids according to shadow auction results [EXC_03b] - [EXC_04b] - Local PX msg 41

Smarter Day-ahead ahead Smart bids project NEW DAY-AHEAD PRODUCTS & ORDER ENTRY TOOL APX UK NWE Information Session 15 October 2013

SMART ORDERS In this presentation, APX provides details of the new order types for the Day-Ahead market, that will be implemented at the launch of NWE market coupling Block Orders Linked Blocks Exclusive Blocks XML Functionality Additionally, APX continuously performs extensive R&D to develop more advanced products for its Day-Ahead and Intra-Day markets 2

Block Orders 3

Linked Block Orders Definition: The execution of (a set of) profile block(s) is subject to the execution of another block Other standard execution rule apply in full Use: Allows to explicitly consider technical and economical constraints For example, a first block may include the start-up costs of a production facility, and additional blocks comprising fuel costs may be linked to this block Possibility to design complex linked structures (i.e. families) Q 1 3 5 7 9 11 13 15 17 19 21 23 Hour Block Order Block Order 2 Block Order 3 Q 1 3 5 7 9 11 13 15 17 19 21 23 Hour Block Order Block Order 2 Block Order 3 4

Linked Block Orders use cases Optimise thermal power plants Offer plant using multiple orders, allowing it to run at different outputs, each reflected by their own cost level Run one/several hour(s) earlier or later if power prices remain interesting outside of the peak period Optimise consumption processes Only execute part B of consumption process if part A of process was started earlier Or only start A+B when combination does not exceed certain costs Optimise storage capacity Sell only during peak period if off-peak purchase order has been accepted and buy/sell combination is in the money 5

Exclusive Block Orders Definition: Within a set of profile blocks, at most one block can be accepted Other standard execution rule apply in full Use: Allows to propose for trading different production patterns For example, a specific production plant can be offered at a low price for baseload production, at a medim price for peak load production >at a high price for super peak load production but can only be executed once Low price order Medium price order High price order 1 3 5 7 9 11 13 15 17 19 21 23 1 3 5 7 9 11 13 15 17 19 21 23 1 3 5 7 9 11 13 15 17 19 21 23

Exclusive Block Orders Optimise thermal power plants Similar to using Linked Block Orders Optimise combined heat & power installations Heat demand with flexible timing, or some heat buffer Flexibility might allow to produce heat & power when power prices are highest, using several exclusive production profiles Optimise demand side management Case: End user can stop consumption, but only if DAM prices > 500 /MWh and for max 2 hours/day Program load shedding on the DAM on the most expensive hours (and only of threshold is reached), using a combination of exclusive blocks of 2 hours Block 1: hours 1 & 2, Block 2: hours 2 & 3, 7

Benefits of Smart Orders Smarter orders give more flexibility when introducing orders for the auction Better reflecting technical constraints of generation units E.g. no partial clearing at non-cost reflective price levels, lower PRB frequency (plant offered in smaller blocks), Easier bidding, less operational work Result: better asset optimisation (generation + consumption) Better price formation More robust against uncertainties faced when making Day-Ahead price forecasts 8

Smarter Day-ahead ahead Smart bids project Submit Orders using XML files AUTOMATIC ORDER SUBMISSION TOOL

Automatic Order Submission Intro New tool to facilitate submitting orders in automated way using XML files Easier workflow Eliminates operational risks involved with Paste from Excel functionality Planned to be available before launch of Smart Orders 10

Automatic Order Submission Details Software to be installed alongside EuroLight client Tool will monitor specific folder and Process all xml files contained in folder Give feedback via «acknowledgement» xml file Orders introduced via tool will be visible in EuroLight Order Book Editing via EuroLight possible 11

Automatic Order Submission Testing + XML Specifications Tool available on Member Testing environment Please refer to APX/Belpex websites for: Installer of tool Manual of tool & specifications for xml files Will be available in Production environment in November 12

APX Promoting Healthy Markets One Stop Shop Liquid Spot & Prompt Market Day-Ahead Auction Third Party Notification Service Bilateral Trading Collateral Efficiency 24hr Operational Support Dedicated Account Management Training Services 13

CHANGE TO RULES

APX Power GB Market Rules Market Spcifications New execution conditions for Block Orders Market Closes: 11:00 (UK Time) Clip Size 0.1 MW Price Limits EUR -500 /MWh, EUR 3000 /MWh Thresholds GBP -150/MWh, GBP 500/MWh Rollback 15

Trading on Behalf Member can request APX to submit or delete Orders into the Trading System. An Authorised User will send a fax or attachment via email to APX s operations department. The Authorised User must inform APX immediately that a request was submitted. An Authorised User needs to send a signed fax in which APX is given a power of attorney for submitting Orders on Member's behalf and in which APX is indemnified from all consequences resulting from APX submitting Orders on Member's behalf. If this fax is not received prior to the Matching Process APX reserves the right to withdraw all Orders which APX submitted on Member's behalf. Requests for trading on behalf and the relevant Order(s) must be received by APX ultimately by the time as indicated in the relevant Instrument Specifications. Any request submitted after that time shall not be considered by APX. The service of "Trading on Behalf" is subject to availability of resources at APX and provided on a best efforts basis only. APX does not accept any liability for damages in whatever form, which may be the consequence or result of providing or denying this service. 16