1 MARKET OPPORTUNITIES AND BARRIERS Speaker: Vidas Čebatariūnas Commercial director UAB Energijos realizacijos centras

About Energijos realizacijos centras (ERC) 2 ERC is a private owned joint stock company founded at the end of 2002; Company belongs to INTER RAO GROUP; ERC’s main activity is electricity trading; The company has the license of the Independent supplier and authorizations to import and export the electricity to/from Lithuania; In 2008, ERC sold almost 2 TWh of electricity.

About INTER RAO UES 3 INTER RAO UES OJSC is a fast growing power supplier with a number of generation and distribution assets in Russia and abroad; the total installed capacity of electric power stations of INTER RAO UES Group is about MW; at present, INTER RAO is developing its business along several lines: export and import of electricity; generation of electricity; trading in electricity in the domestic and foreign markets; investments; management of foreign assets; retailing of electricity. RAO UES OJSC currently heads a group of more than 20 companies based in fourteen countries.

Structure of Inter RAO Group 4

Generators of Inter RAO Group 5

Our contacts 6

Current market situation and development trends / Nordic market 7  Most developed common electricity market, over 70 % of physical volume traded through spot, size of financial market 5 – 8 times physical market;  High volatility in prices due to large share of hydro production;  Prices currently depressed due to economical recession;  Due to large share of hydro and nuclear market prices in general lower than in rest of the European markets, but new interconnectors will reduce the difference in future;  Large price-differences between different bidding areas (7) especially during exeptional (wet or dry) years especially during network restrictions;  Nord Pool spot has the monopoly on cross-border connections, no physical cross-border trading.

State of Finish power system 8

THE PRICES OF RUSSIAN ELECTRICITY SOLD TO NORDPOOL? 9

Nordpool spot prices in July,

Opportunities in common Baltic market 11  From the 1 st of January, 2009 ERC and Inter RAO have started hourly trading (before that we had only one single price);  From the June, 2009 ERC has the official mandate from Inter RAO to develop electricity trading not only in Lithuania, but also in Latvia, Estonia and Finland. The ammendment of the contracts have been already signed and trading will start from 1 st of October,  The possibilities of Inter RAO Group for electricity supply to Baltic states and Finland through Estlink are up to 1000 MW per hour or up to 7 TWh per year;  The only factor in transparent and open market influencing the decitions of the sellers and buyers is market price;  Possibilities to develop retail trade of electricity;  Possibilities to transfer electricity through existing and planned interconnections (Sweden-Lithuania, Poland –Lithuania, Estlink 1 and Estlink 2).

Barriers 12  In Lithuania for 2010 only 35% of the market is left for spot trading although the possibilities to import from Russia, Estonia or Latvia are almost four times bigger and the prices could be much more lower than from domestic generation;  Input fees raises the electricity prices for the consumers by eliminating cheap electricity suppliers;  Different time schedules of trading in Lithuania, Finland and Russia: → In Russia market trading closes at 8.30 (Vilnius time); → In Lithuania it is planned to close at (local time); → Nordpoolspot closes at (Vilnius time).  There are still no free trading between the Baltic states.

13 THANK YOU FOR YOUR ATTENTION!