1. 2 nd Mini-Forum for Central-Southern European Region EuroPEX Discussion Points Milan, 17 th of July 2006

2. Transparency – The Goals Provide transparency on fundamentals that have a “noticeable impact on prices” in order to create a more level playing field and thus enhance market trust by reducing the risk of insider trading, and abuse of dominant position Facilitating monitoring of market developments for both regulators and other stakeholders Promoting market participation resulting in increased competition and liquidity of the markets Reducing the risk that the data available provides a distorted picture of the markets and their openness to manipulation Levelling playing field for the different trading arrangements (PX-based and OTC) in similar products

3. Transparency – Consistency and Adequacy of Information Disclosure Minimum standards to be applied EU-wide –coverage – minimum set of information disclosed –level of detail – compatible for the minimum set of information –definition – compatible to allow effective use of information –time resolution and updating frequency – harmonised –format – ready to use by IT systems Public disclosure of ring-fencing and “firewalls” methods applied (and approved by the regulator) between the grid operation branches and the rest of vertically integrated companies in order to raise trust in the markets Information is to be published rather than provided on request

4. Transparency – PXs as Common Information Publishers Improving effectiveness of information publishing and transparency –single point of reference for market data in a jurisdiction –timely and logically consistent disclosure of all relevant information in a jurisdiction (or more of them) PXs have no direct interest in the markets and can gain no advantage from withholding information –independence from market participants –non-discriminatory access to information disclosed –proven capability to manage commercially-sensitive information –technical competence and established information systems already in place PXs can facilitate cross-border access to information as their membership is already multinational

5. Market Coupling - Market design elements Implicit auctions complemented by hedging instruments represent the most efficient solution to congestion management –implicit auctions are the most efficient short-term method for congestion management –financial Transmission Rights (FTRs) and, where sufficiently liquid compared to cross-border volumes, electricity derivatives are preferred hedging instruments –physical Transmission Rights (PTRs) with UIOSI are possible interim solution Price difference bids (or ‘capacity bids’, but for firm flow obligations) if desired and beneficial to the market Implicit intra-day cross-border markets: continuous matching, or intraday market coupling, or both

6. Market Coupling - Governance of Market Coupling Recognised as a critical issue PXs have a critical role in market coupling: provide orders, enable firm positions, clear and settle Governance needs to reflect roles and responsibilities of TSOs and PXs –TSOs: capacity allocation according to regulation –PXs: price formation, fair and orderly market, may be regulated Market coupling should be supported by a Central Coupling Office (CCO) – possibly jointly owned –contractual interface to TSOs and PXs –possible role of CCO in price formation –limit regulation to existing scope, and may vary locally

7. Market Coupling - Way Forward EuroPEX should play an active role on two aspects: –need to define a longer-term model –need to define a strategy for transition towards the longer-term model – how build on existing/planned arrangements? Institutional and governance issues are crucial in progressing towards a common approach to congestion management EuroPEX can facilitate consultation process across markets

8. EuroPEX Members’ Projects – CS Region Member(s)ProjectInvolved CountriesStatus GMESpecific unilateral Market Splitting via virtual trading zones connected to Italy Austria, France, Greece, Italy, Slovenia, Switzerland Operative NordPoolMarket Splitting over Kontek cable Germany, Denmark, Finland, Norway, Sweden Operative OMEL Specific unilateral Market Splitting via virtual trading zone connected to Spain and Phase 1 of the Spain- France arrangement France, Morocco, Portugal, Spain Operative APX, Belpex, Powernext TLC – Trilateral Market CouplingFrance, Belgium, Netherlands To be launched soon, subject to regulatory approval EEXOMC – Open Market Coupling Germany Regulatory Due Dillingence APX, Belpex, Nord Pool, Powernext NorNed: extension/co-operation of Nord Pool & TLC – Market Coupling over NorNed cable France, Germany, Belgium, Denmark, Finland, Netherlands, Norway, Sweden Common approach between 4 PXs and 4 TSOs APX, Belpex, Nord Pool, OMEL, Powernext Iberian-market & Nord Pool & TLC – Market Coupling of markets primarily belonging to separate market coupling/splitting mechanisms France, Germany, Belgium, Denmark, Finland, Morocco, Netherlands, Norway, Portugal, Spain, Sweden Phase 1 (of 3 phases defined) approved by regulators of Spain and France BorzenContinuous Market Splitting in the after- day-ahead and intra-day time horizon Slovenia, Croatia Common approach between Market operators Borzen, OPCOM Market Coupling Slovenia, Bosnia and Herzegovina, Bulgaria, Croatia, FYRoM, Montenegro, Romania, Serbia, UNMIK Proposal EXAAMarket Coupling Austria, Hungary Proposal