The Natural Gas/Electricity Nexus Brad Leach Senior Director, Electricity and Natural Gas Research NYMEX APEX 2006 Annual Conference Association of Power Exchanges Seoul, Korea October 31, 2006

An Overview of NYMEX Regulated by Commodity Futures Trading Commission as a Trading Facility and a Clearing Organization Two Divisions: NYMEX and COMEX Continuous 133-Year History as Commodity Exchange Open Outcry Floor Trading Web-Based Clearing and Trading

NYMEX Regulatory Protections NYMEX CFTC Regulation Compliance Department Market Surveillance Trade Surveillance Financial Surveillance

NYMEX Clearinghouse and Financial Protections Currently 40 Clearing Members Clearing Member Financial Requirements –$5 Million Minimum Net Working Capital Currently $14 Billion on Deposit in Margin Funds Rated AA+ by S&P Clearing Member Guaranty Fund of Over $140 Million $100 Million Default Insurance Margin Requirements –Original –Variation NYMEX Emergency Procedures

Total Volume of NYMEX Cleared Contracts in Million Contracts / Year

NYMEX Natural Gas Annual Volumes

NYMEX-CME Alliance – Growth thru Distribution and Superior Technology Why the NYMEX/CME Alliance Is Succeeding –Customer Access to Superior Technology –Global Distribution – Our customers want efficiency of transaction, in one location. –Ability to add key new contracts for better market efficiencies.

NYMEX CME Globex® Contracts Energy Contracts Listed on CME Globex® Full Size Contracts NYMEX miNY™ Contracts Crude Oil Financial Futures (WS) NYMEX miNY Crude Oil Futures (QM) Heating Oil Financial Futures (BH)NYMEX miNY Natural Gas Futures (QG)RBOB Gasoline Financial Futures (RT) NYMEX miNY Heating Oil Futures (QH) Natural Gas (Penultimate) Financial Futures (HP)NYMEX miNY Gasoline Futures (QU) Natural Gas (Last-day) Financial Futures (HH) Crude Oil Financial Futures (WS)NYMEX miNY Crude Oil Futures (QM) Heating Oil Financial Futures (BH)NYMEX miNY Natural Gas Futures (QG)RBOB Gasoline Financial Futures (RT) NYMEX miNY Heating Oil Futures (QH) Natural Gas (Penultimate) Financial Futures (HP)NYMEX miNY Gasoline Futures (QU) Natural Gas (Last-day) Financial Futures (HH) NYMEX Europe Contracts Brent Crude Oil Futures (SC) NYMEX Europe miNY Brent Futures (QB) Gasoil Futures (GR) Brent Crude Oil Futures (SC)NYMEX Europe miNY Brent Futures (QB) Gasoil Futures (GR) Physically Delivered Contracts Crude Oil (CL) Natural Gas (NG) Gasoline (HU, RB) Heating Oil (HO)Crude Oil (CL)Natural Gas (NG) Gasoline (HU, RB) Heating Oil (HO)

NYMEX NATURAL GAS FUTURES FRONT MONTH SETTLE (4/3/90-11/30/05)

NYMEX NATURAL GAS FUTURES FRONT MONTH SETTLE (4/1/05-10/20/06)

Natural Gas Volatility Front Month

Gulf Of Mexico Gas Decline First Year Well Depletion SOURCE: Simmons & Company International

Texas First Year Natural Gas Well Depletion Source: Gary S. Swindell

Canada First Year New Well Depletion SOURCE: Simmons & Company International

Source: EIA

U.S. Natural Gas Total Consumption Source: EIA

U.S. Natural Gas Sector Distribution Summary ( ) Industrial use has declined from 41% to 32% of total U.S. consumption (-1.9 Tcf) Electricity use has increased from 20% to 29% of total consumption (1.7 Tcf) This shift from industrial to electric use has resulted in an increase in total natural gas that is subject to weather sensitive demand and pricing

2003 Natural Gas Electricity Generation Source: IEA

NYMEX Electricity Complex Volume

NYMEX Electricity Complex Monthly Peak Contracts –PJM –NYISO –ISO-NE –AEP-Dayton –NI Hub –MISO Hubs –ERCOT –DOW Jones Western Indices Monthly Off-Peak Contracts –PJM Western Hub –NYISO –ISO-NE –AEP-Dayton –NI Hub –Cinergy PJM Options Contract Daily Peak Contracts –PJM –NYISO –ISO-NE –NI Hub –AEP-Dayton –Cinergy

Mass Hub and PJM Western Hub Electricity Real-Time Peak Daily Prices

Many Storage Fields Will Reach Capacity Before November

NYMEX NG Forward Curves

December Natural Gas Prices Settlements in USD 10/23/06 12/13/05 NYMEX: $7.81 $15.38 UK: $11.15 $16.65 Zeebrugge: $11.06

December Spark Spreads Quotes in USD 10,000 7,000Btu/KWh U.S U.K Germany

DISCLAIMER The New York Mercantile Exchange, Inc., (the “Exchange”) is making this information available for informational purposes only. The Exchange has attempted, wherever possible, to make statements in good faith based upon current information and expectations by using words such as "anticipate," "believes," "expects" and words and terms of similar substance. Any forward-looking statements made by, or on behalf of the Exchange, involve a number of risks, trends, and uncertainties and other factors that may cause actual results to differ materially. As such, readers are cautioned not to place undue reliance on the information contained herein, which only speaks as of the date of the issuance of this information.