1. © Vattenfall AB WHY DO WE NEED WELL FUNCTIONING EXCHANGE AND BILATERAL MARKETS? Piotr Wąsik Financial Managing Director, Member of the Board VATTENFALL ENERGY TRADING POLAND „The Power of the Market” Congress Warsaw, 8 October 2010

2. © Vattenfall AB Agenda 1.Proper market – how should it look like? 2.Costs and risks 3.Exchange and OTC markets shape in Poland 4.What are there still missing? 5.What are the benefits of a properly functioning market?

3. © Vattenfall AB Wholesale energy market Exchange market OTC market Organization and Standardization Transparency and Anonymity Access Reference price Market securityBilateral nature Flexibility and matching Equal and market rules Delayed cash flows Brokers’ role

4. © Vattenfall AB Costs and risks on the exchange and OTC markets EXCHANGE MARKETOTC MARKET RISKS Liquidity risk Exchange and clearing fees Financing costs Counterparty risk Credit risk management Brokerage fees COSTS

5. © Vattenfall AB Share of PPX spot market in domestic consumption 0% 1% 2% 3% 4% 5% 6% 7% 8% 2009 01-201002-2010 03-201004-201005-201006-2010 07-2010 08-2010 09-2010

6. © Vattenfall AB Wholesale energy market structure in 2007-2009

7. © Vattenfall AB Wholesale energy market structure in 2007-2009

8. © Vattenfall AB … and in 2010

9. © Vattenfall AB What are the weak points of the wholesale energy market in Poland? EXCHANGE MARKETOTC MARKET Size and liquidityMaster agreement standard Tradable horizonTransparency and availability Available productsRisk management rules Exchange obligationTrading techniques >1 spot exchange? Role of brokers Entry and operation barriers

10. © Vattenfall AB What are the benefits of the properly functioning wholesale energy market? PROPER WHOLESAL E MARKET COMPETITIVENESS RETAIL MARKET DEREGULATION REFERENCE PRICE PREPARATION FOR MARKETS INTEGRATION EFFECTIVE MARKET RISK MANAGEMENT

11. © Vattenfall AB THANK YOU FOR YOUR ATTENTION Piotr Wąsik Financial Managing Director, Member of the Board VATTENFALL ENERGY TRADING Sp. z o.o. ul. Złota 59 00-120 Warsaw Poland tel. +48 22 587 50 34 e-mail: piotr.wasik@vattenfall.pl www.vattenfall.com/trading