Electricity and gas market Observatory

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2nd Quarter of 2011

Market Observatory

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SUMMARY

Introduction ... 3

The electricity market ... 4

The retail electricity market ... 4

1. Introduction ... 4

2. Customer segments and their respective weight... 5

3. Status on June 30^th 2011 ... 6

4. Dynamic analysis: 2^nd Quarter of 2011 ... 13

5. Electricity retail prices ... 16

The wholesale electricity market... 21

2. Wholesale market activity in France ... 22

3. Prices on the French wholesale market and European comparison ... 26

4. Fundamentals on the electricity market ... 33

5. Imports and Exports ... 35

6. Concentration on the French electricity market ... 36

The gas market ... 39

The retail gas market ... 39

2. Customer segments and their respective weights ... 40

3. Status on June 30th, 2011 ... 41

4. Dynamic analysis: 2nd Quarter of 2011... 48

5. Natural gas retail prices ... 51

The wholesale gas market ... 55

1. Main steps in the French Wholesale gas market... 55

2. Gas pricing and gas markets in Europe... 55

3. Evolution of gas consumption in France ... 56

4. The wholesale market in France... 59

5. Activity on organized markets and international comparison ... 60

6. French network ... 62

7. Concentration of the French gas market ... 62

Electricity and gas market observatories combined glossary ... 65

Specific electricity market observatory glossary... 66

Specific gas market observatory glossary ... 68

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Introduction

The purpose of the observatory is to provide the general public with indicators for monitoring market deregulation. It both covers the wholesale and retail electricity and gas markets in Metropolitan France.

This observatory is updated every three months and data are available on CRE website (www.cre.fr).

Since the 1^st of July 2007, all customers can choose their gas and electricity suppliers.

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The electricity market

The retail electricity market

1. Introduction

The deregulation of the French electricity market took place in several stages:

− In June 2000, all sites with annual electricity consumption over 16 GWh became eligible.

− In February 2003, all sites with annual electricity consumption over 7 GWh became eligible.

− In July 2004, all companies and local government agencies became eligible.

− In July 2007, all customers became eligible, including residential customers.

On June 30^th, 2011, the French retail market represents 35.2 million sites¹, which account for 446 TWh² of annual electricity consumption.

Each client has the choice between three types of contracts:

− Contracts under regulated tariffs (offered by incumbent suppliers only)

− Contracts at market prices (offered by incumbent suppliers and alternative suppliers)

− TaRTAM Contracts. A client has access to this kind of contract provided he has previously subscribed a contract at market price.

Distribution of electricity contracts – illustrative diagram –

Contracts under regulated

tariffs

Incumbent suppliers

Alternative suppliers Contracts

at market prices TaRTAM

sites

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Distribution), Electricité de Strasbourg, Gaz et Electricité de Grenoble, URM (ex Usine d’Electricité de Metz), SICAE de l’Oise, Géredis Deux-Sèvres (ex Sorégies Deux-Sèvres) and SRD (Sorégies). These networks operators cover over 98% of French sites and national electricity consumption.

2. Customer segments and their respective weight

Typology of sites

13%

1%

15%

86%

32%

10%

42%

0,1%

Number of sites Electricity consumption

Large non residential sites Medium non residential sites Small non residential sites Residential sites

Sources: DSO, TSO, suppliers – Analysis: CRE

The market consists of four segments:

• Large non residential sites: sites whose subscribed power level is at least 250 kW. These sites include large industrial sites, hospitals, hypermarkets, large buildings, etc. (with an annual consumption generally over 1 GWh).

• Medium-sized non residential sites: sites whose subscribed power level is between 36 kVA and 250 kW. These sites correspond to SME premises, for example (with an annual consumption generally between 0.15 GWh and 1 GWh).

• Small non residential sites: sites whose subscribed power level is below 36 kVA. These sites correspond to the professional mass market (private professionals, trades, etc.). Their annual consumption is generally under 0.15 GWh.

• Residential sites: Residential sites whose subscribed power level is below 36 kVA. Their annual consumption is generally under 10 MWh.

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3. Status on June 30^th 2011

A) Summary tables

Synthesis in number of sites

Residential sites Non residential sites Situation (number of sites) June 30^th 2011 March 31^st 2011 June 30^th 2011 March 31^st 2011

Total number of sites 30,300, 000 30,300, 000 4,907,000 4,894, 000

Sites under regulated tarifs 28,626,000 28,674, 000 4,202,000 4,174, 000

• Sites with contracts at market

prices, among which : 1,674,000 1,626, 000 705,000 720, 000

• Sites at TaRTAM all suppliers,

among which : – – 7,220 12, 300

o Incumbent suppliers – – 1,790 1, 800

o Alternative suppliers – – 5,430 10, 500

• Sites not at TaRTAM all

suppliers, among which : 1,674,000 1,626, 000 698,000 708, 000

o Incumbent suppliers 13,000 14, 000 337,000 347, 000

o Alternative suppliers 1,661,000 1,612, 000 361,000 361, 000

Alternative suppliers’ market

share within all sites 5.4 % 5.3 % 7.4 % 7.6 %

Sources: DSO, TSO, Incumbent suppliers– Analysis: CRE

Synthesis in annualized consumption

Residential sites Non residential sites Situation

(annualized consumption)

June 30^th 2011 March 31^st 2011 June 30^th 2011 March 31^st 2011

Total number of sites 142 TWh 143 TWh 295 TWh 294 TWh

Consumption contracted at

regulated tariffs 134,2 TWh 135.4 TWh 161 TWh 162.3 TWh

• Consumption contracted at

market prices. among which : 7.8 TWh 7.6 TWh 134 TWh 131.7 TWh

• Consumption at TaRTAM all

suppliers. among which : – – 75 TWh 73.7 TWh

o Incumbent suppliers – – 35.7 TWh 34.3 TWh

o Alternative suppliers – – 39.3 TWh 39.4 TWh

• Consumption not at TaRTAM

all suppliers. among which : 7.8 TWh 7.6 TWh 59 TWh 57.9 TWh

o Incumbent suppliers ~ 0 TWh 0.1 TWh 43 TWh 50.8 TWh

o Alternative suppliers 7.8 TWh 7.5 TWh 15 TWh 7.1 TWh

Alternative suppliers’ market

share within all sites 5.4 % 5.2% 18.0 % 15.8 %

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B) Evolution of the number of sites with contract at market prices Number of sites with contract at market prices

– NON RESIDENTIAL sites –

339 000

366 000

0 100 000 200 000 300 000 400 000 500 000 600 000 700 000 800 000

juil.-10 août-10 sept.-10 oct.-10 nov.-10 déc.-10 janv.-11 fév.-11 mars-11 avril-11 mai-11 juin-11

Incumbent suppliers Alternative suppliers

, , , , , , , ,

Sources: DSO. TSO. Incumbent suppliers – Analysis: CRE NB: TaRTAM sites are included with sites at market prices

Number of sites with contract at market prices – RESIDENTIAL sites –

1 661 000 13 000

0 200 000 400 000 600 000 800 000 1 000 000 1 200 000 1 400 000 1 600 000 1 800 000

juil.-10 août-10 sept.-10 oct.-10 nov.-10 déc.-10 janv.-11 fév.-11 mars-11 avril-11 mai-11 juin-11

, , , ,

, ,

Sources: DSO. TSO. Incumbent suppliers – Analysis: CRE

On June 30^th, 2011. approximately 705,000 non residential sites and 1,674,000 residential sites have contracts at market prices.

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C) Market shares on June 30^th, 2011. in number of sites

Share of sites for each type of contract on June 30^th, 2011

12%

5%

93%

82%

95%

8% 5%

0%

6%

7% ~ 0%

1%

95%

85%

All sites (35.2 M sites)

Large non residential sites

(34,000 sites)

Medium non residential sites (429,000 sites)

Small non residential sites

(4.4 M sites)

Residential sites (30.3 M sites)

Contracts under regulated tariffs

Contracts at market prices incumbent suppliers

Contracts at market prices alternative suppliers

On June 30^th, 2011, around 7% of sites have contract at market prices and 6% have chosen an alternative supplier.

D) Market shares on June 30^th 2011. in electricity consumption

Share of consumption for each type of contract on June 30^th 2011

21%

65%

25%

43%

32%

94%

84%

95%

Contracts under regulated tariffs

Contracts at market prices incumbent suppliers

Contracts at market prices alternative suppliers

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E) HHI Index

The Herfindahl-Hirschman Index³ is a measure of market concentration. The figure below shows this index of the level of concentration on the retail electricity market in terms of number of sites and consumption.

Evolution of the HHI index for each type of contract in number of sites and in consumption

0 1 000 2 000 3 000 4 000 5 000 6 000 7 000 8 000 9 000

All sites (35.2 M sites) (437 TWh)

Larges non residential sites (34, 000 sites) (182 TWh)

Medium non residential sites (428 000 sites) (67 TWh)

Small non residential sites (4.4 M sites) (46 TWh)

Residential sites (30.3 M sites) (142 TWh)

number of sites

consumption

Low concentrated market Concentrated market Highly concentrated market

Sources: Analyse CRE

F) Focus on TaRTAM

The 7^th of December 2006 law established the transitory regulated tariff for market adjustment (TaRTAM). This law has been changed several times. The current new law of 7^th of December 2010 modified the previous laws. Clients can benefit TaRTAM tariff if they have subscribed it before 1^st of July 2010 and until the date of implementation of the regulated access to nuclear power (NOME law).

The TaRTAM is equal to the regulated retail tariff exclusive of tax on the 15/08/2008. increased by 23% for green tariffs. 20% for yellow tariffs. and 10% for blue tariffs.

On June 30^th, 2011, around 7, 220 sites which accounts for 1% of non residential sites with contracts at market prices benefit from the TaRTAM. They represent an annual consumption of 75 TWh. i.e.

57% of the consumption of non residential sites with contracts at market prices.

22 suppliers provide TaRTAM sites. 75% of TaRTAM sites representing 52% of TaRTAM consumption have chosen to benefit from the TaRTAM with an alternative supplier.

3The HHI equals the sum of the actors’ market shares squared, and measures market concentration (the higher the index, the more concentrated the market). Generally, a market is considered to be weakly concentrated if its HHI is below 1,000, and highly concentrated if it is over 1,800.

Given the specificities of the gas market, this index should only be used cautiously as an indicator of the competition level.

Indeed, regarding the gas market, concentration and competition are not as directly linked as in most markets.

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Share of TaRTAM sites within non residential sites with contracts at market prices on June 30^th, 2011

98%

52%

~ 2% 2% ~ 1%

48%

~ 99%

~ 98%

All sites with contracts at market price

(705 000)

Large non residential sites with contracts at market price (6 000 sites)

Medium non residential sites with contracts at

market price (23 000 sites)

Small non residential sites with contracts at market price

(676 000)

Other sites with contracts at market price TaRTAM sites

Sources: Suppliers – Analysis: CRE

Note: on June 30^th 2011, among 23,000 medium non residential sites with contracts at market prices.

2% has chosen to benefit from the TaRTAM.

Share of TaRTAM consumption within non residential sites with contracts at market prices on June 30^th, 2011

77%

23%

56%

~ 2%

60%

~ 98%

44% 40%

All sites with contracts at market price

(134 TWh)

Large non residential sites with contracts at market price

(123 TWh)

Medium non residential sites with contracts at market price

(4 TWh)

Small non residential sites with contracts at market price

(7 TWh)

Other sites with contracts at market price

TaRTAM sites

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G) Active suppliers on June 30^th, 2011

List of national active suppliers declared at CRE⁴ on June 30^th, 2011

Suppliers. trademark(s)

Large non residential sites

Medium non residential sites

Small non residential sites

Residential sites

Alternative suppliers⁵

Atel Energie

Direct Energie

Edenkia

E.ON Energie

Enercoop

EGL

Endesa Energia

Enel France

Energem

GDF Suez

Lampiris

HEW Energies

4 The list of suppliers and trademarks is an extract from CRE’s suppliers list updated on August 19^th 2011.

5 See electricity glossary for alternative supplier definition.

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Suppliers, trademark(s) Large non residential sites

Medium non residential sites

Small non residential sites

Residential sites

Iberdrola

Oddo Power

Planète UI

Poweo

SNET

Incumbent suppliers⁶

Alterna

EDF

GEG Source

d’Energies

Sources: DSO. TSO. energie-info – Analysis: CRE

The table lists suppliers who. in the last day of the quarter of the observatory and for each segment of customers:

• are registered in the search engine of suppliers by zip code. online on the website www.energie-info.fr ⁷

• are national i.e. they did declare offering contracts in at least 90% of the French cities connected to the electricity network (excluding Corsica);

• are actives if they fulfil at least one of these conditions:

- they supply at least one site with integrated contract.

- they are a balancing responsible entity of at least one site with a transmission contract/distribution contract.

- they are a balancing responsible entity and they delivered part of a site consumption during the last quarter.

Suppliers who did not wish to appear in the suppliers lists or did not declare offering contracts in more than 90% of the French cities for at least a segment of customers are not quoted.

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4. Dynamic analysis: 2^nd Quarter of 2011

A) Summary table for the last two quarters

The gross sales per month are equal to the number of sites which have signed a contract within the given month (sites which have been connected or sites which have switched to another supplier). The gross sales at market prices or regulated tariffs are a relevant indicator for measuring the commercial competitiveness of the different suppliers. in terms of acquisition of new sites.

Residential sites Non residential sites

During quarter (number of sites)

2^nd Quarter 2011

1^st Quarter 2011

2^nd Quarter 2011

1^st Quarter 2011

Total gross sales, including : 1 294 000 982 000 163 000 116 000

o Incumbent suppliers 1 146 000 849 000 154 000 101 000

o Alternative suppliers 148 000 133 000 9 000 15 000

Alternative suppliers’ market share within

total gross sales 11.4% 13.5% 5.5% 12.9%

Sources: DSO, TSO, Incumbent suppliers – Analysis: CRE

Technical information: gross sales data are rounded, but alternative supplier’s market are calculated from real figures.

B) Gross sales for the last semester

Decomposition of monthly gross sales

58 000 435 000

0 100 000 200 000 300 000 400 000 500 000

janv-11 févr-11 mars-11 avr-11 mai-11 juin-11

58 000 435 000

0 100 000 200 000 300 000 400 000 500 000

58 000 435 000

0 100 000 200 000 300 000 400 000 500 000

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Decomposition of gross sales by provider type during the 2^nd quarter of 2011

91%

21%

9%

79%

Connections (total 1,199,000)

Suppliers switch (total 257,000)

Note: During the 2^nd quarter of 2011, 9% of 1,199,000 connections originated from alternative suppliers.

C) Switching rate

According to ERGEG’s definition, switching supplier is defined as "the action through which a customer changes supplier". More detailed: A switch is essentially seen as the free (by choice) movement of a customer (defined in terms of an overall relationship or the supply points and quantity of electricity or gas associated with the relationship) from one supplier to another. Switching activity is defined as the number of switches in a given period of time.

Switching and moving: When a customer moves, a switch should only be recorded if a customer switches to a supplier other than the supplier which is incumbent in the area where he/she is moving to.

Changes of tariffs: A change of tariff with the same retailer is not equivalent to a switch (this exclusion extends to: changing to a new tariff; changing from a regulated to a non-regulated tariff with the same supplier or a subsidiary of the same supplier).

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Switching rate evolution for each type of contract

0,00%

0,20%

0,40%

0,60%

0,80%

1,00%

1,20%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2008 2009 2010 2011

Households Industrial sites All sites combined

Note: During the second quarter of 2011, 1% of the residential sites either:

- changed supplier

- was connected by choosing an alternative supplier

- was connected by choosing an incumbent suppliers other than the supplier which is incumbent in the area where he/she is moving to.

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5. Electricity retail prices

A) Regulated tariffs costs covered by a bill as of June 30th 2011

Green A** tariff-type of client Ig*

20,7%

65,8%

1,1%

0,8%

11,7%

Yellow tariff-type of client Ib*

7,5%

3%

4,1%

41,7%

43,7%

Blue tariff type of client Dc*

5,4%

6,4%

2,3%

38,9%

32,0%

14,9%

Network (TURPE 3) Supply

CTA Local taxes CSPE VAT

20,7%

65,8%

1,1%

0,8%

11,7%

Green A** tariff-type of client IE*

20,7%

65,7%

1,1%

0,8%

11,7%

7,5%

3%

4,1%

41,7%

43,7%

Yellow tariff-type of client IB *

7,5%

3%

4,1%

41,7%

43,7%

5,4%

6,4%

2,3%

38,9%

32,0%

14,9%

CTA Local taxes CSPE VAT Blue tariff type of client DC*

5,4%

6,4%

2,3%

38,9%

32,0%

14,9%

Network(TURPE3) Supply

20,7%

65,8%

1,1%

0,8%

11,7%

20,7%

65,8%

1,1%

0,8%

11,7%

7,5%

3%

4,1%

41,7%

43,7%

7,5%

3%

4,1%

41,7%

43,7%

5,4%

6,4%

2,3%

38,9%

32,0%

14,9%

CTA Local taxes CSPE VAT Blue tariff type of client Dc*

5,4%

6,4%

2,3%

38,9%

32,0%

14,9%

20,7%

65,8%

1,1%

0,8%

11,7%

Green A** tariff-type of client IE*

20,7%

65,7%

1,1%

0,8%

11,7%

7,5%

3%

4,1%

41,7%

43,7%

Yellow tariff-type of client IB *

7,5%

3%

4,1%

41,7%

43,7%

5,4%

6,4%

2,3%

38,9%

32,0%

14,9%

CTA Local taxes CSPE VAT Blue tariff type of client DC*

5,4%

6,4%

2,3%

38,9%

32,0%

14,9%

Network(TURPE3) Supply

* According to the Eurostat definitions on types of clients:

DC : Household client with consumption of 2500-5000 MWh Ib : Industrial client with consumption of 20-500 MWh Ig : Industrial client with consumption of 20 000-70 000 MWh

**Note: VAT is excluded from the costs for the yellow tariffs and green A tariffs.

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B) Electricity retail regulated tariffs evolution

Evolution du tarif réglementé de vente d'électricité moyen*

en € constants 2010, hors taxes (taxes locales, CSPE, TVA)

* sur la base du portefeuille de clients EDF à fin 2009

40 50 60 70 80 90 100 110 120 130 140

15 août 1996 15 août 1998 15 août 2000 15 août 2002 15 août 2004 15 août 2006 15 août 2008 15 août 2010

€/ MWh

Tarif bleu résidentiel (petits sites)

Tarif jaune (sites moyens)

Tarif vert A (sites moyens et grands sites reliés au réseau de distribution) Tarif bleu professionnel (petits sites)

Source EDF Calculs CRE 2010

40 50 60 70 80 90 100 110 120 130 140

€/ MWh

40 50 60 70 80 90 100 110 120 130 140

€/ MWh

Tarif vert A (sites moyens et grands sites reliés au réseau de distribution) Tarif bleu professionnel (petits sites)

Source EDF Calculs CRE 2010

Date Blue tariffs Yellow tariffs Green tariffs

16th August 2008 + 2% + 6% + 8%

15th August 2009 * + 1,9% + 4% + 5%

15th August 2010 * + 3,2% + 4,5% + 5,5%

*Average increase taking into account the structural tariffs’ movement.

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C) Evolution of a regulated tariff annual bill

The annual bill is given for an average consumer at Blue tariff Base for 6kVA power level subscribed (2 400 KWh of consumption, and for an average consumer at Blue tariff Peak/Off Peak for 9 kVA power level subscribed (8 500 KWh consumption, 54% Peak and 46% Off Peak). The bill covers the regulated tariff, the CSPE, the CTA, the local taxes and the VAT.

Evolution of an annual electricity bill for an average consumer at tariff Base 6 kVA

0 50 100 150 200 250 300 350 400

15/08/2006 15/08/2007 15/08/2008 15/08/2009 15/08/2010 01/01/2011

Evolution of an annual electricity bill for an average consumer at tarif Peak/OffPeak 9 kVA

0 200 400 600 800 1000 1200

15/08/2006 15/08/2007 15/08/2008 15/08/2009 15/08/2010 01/01/2011 Evolution of an annual electricity bill for an average consumer at

tarif Peak/OffPeak 9 kVA

0 200 400 600 800 1000 1200

15/08/2006 15/08/2007 15/08/2008 15/08/2009 15/08/2010 01/01/2011

€ TTC/an

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D) Price comparison as of August 24^th 2011

There are 2 types of offers that exist on the market:

- Regulated tariffs

- Market prices, either indexed to the regulated tariffs, either fixed prices independent from the regulated tariffs.

Price comparison for a 6kVA Base consumer

Comparaison for a household customer with the following characteristics :

• Power level of 6 kVA,

• Annual consumption of 2 400 KWh Base

• Based in Paris

Bill VAT included, discounts excluded. Source: Comparateur d’offres energie-info

Supplier’s logo:

Name of offer: Regulated price Price difference

to the regulated prices Regulated price Annual bill estimation 362€/year

Source: Comparateur d’offres énergie-info

- 5%

Domelia Base

350 €/year

- 4%

Offre Directe

357€/year

- 3%

Objectif élec Domestique

362 €/year Tarif règlementé

362€/year

*Dolce Vita Prix fixe 1 an ou 2 ans

0% + 3,3%

374 €/year

+ 4,4%

378 €/year 390 €/year

+ 7,7%

***Mon contrat Electricité 2011

408 €/year

+ 12,7%

- 3,3%

347 €/year

**Offre Electerocolo de Planète Oui

- 1,4%

Planet Elec

Regulated price

100% Energie Verte

*AlpEnergie prix fixe 1 an ou 2

ans Idea Vert

360 €/year

- 0,5%

Offre 100%

Pur Jus

Domelia Alpenergie 26 %

20 %

100 %

9 %

100 % 100 % 100 % 21 %

100 %

9 %

- 4,2%

% of green energy _{100 %} Comparaison for a household customer with the

following characteristics :

• Power level of 6 kVA,

• Annual consumption of 2 400 KWh Base

• Based in Paris

Bill VAT included, discounts excluded. Source: Comparateur d’offres energie-info

Supplier’s logo:

Name of offer: Regulated price Price difference

to the regulated prices Regulated price Annual bill estimation 362€/year

Source: Comparateur d’offres énergie-info

- 5%

Domelia Base

350 €/year

- 4%

Offre Directe

357€/year

- 3%

Objectif élec Domestique

362€/year

*Dolce Vita Prix fixe 1 an ou 2 ans

0% + 3,3%

374 €/year

+ 4,4%

378 €/year 390 €/year

+ 7,7%

***Mon contrat Electricité 2011

408 €/year

+ 12,7%

- 3,3%

347 €/year

**Offre Electerocolo de Planète Oui

- 1,4%

Planet Elec

Regulated price

100% Energie Verte

*AlpEnergie prix fixe 1 an ou 2

ans Idea Vert

360 €/year

- 0,5%

Offre 100%

Pur Jus

Domelia Alpenergie 26 %

20 %

100 %

9 %

100 % 100 % 100 % 21 %

100 %

9 %

- 4,2%

% of green energy _{100 %}

*Fixed price offers for the validity period of the contract and revised once the contract expired.

** Prices indexed to the regulated tariffs, except the Off Peak.

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Price comparison for a 9kVA Peak/Off Peak consumer

- 5,0%

Domelia HC

1022 €/year

- 4,1%

Offre Directe HP/HC

1012 €/year 1049 €/year

**Offre Electrecolo de Planète OUI HP/HC

- 1,6%

Objectif élec Domestique Class.+double tarif

Regulated tariff

1066 €/year

*Dolce Vita Prix fixe 1 an ou 2 ans HP/HC

100% Energie Verte HP/HC

0% + 3,7%

AlpEnergie HP/HC

1106 €/year

Idea Vert HC

+ 5,3%

1123 €/year 1160 €/year

+ 8,8%

***Mon contrat Electricité 2011 HC

1178 €/year

+ 10,5%

Comparaison for a household customer with the following characteristics:

• Powel level of 9 kVA,

• Annual consumption of 8 500 KWh Peak/OffPeak

• Based in Paris

Bill VAT included, discounts excluded Source: Comparateur d’offres énergie-info

Offre 100%

Pur jus HP/HC

Planet Elec HP/HC

*AlpEnergie prix Fixe HP/HC 1 an ou 2 ans

+ 5,6%

1126 €/year

20 % 26 % 100 % 9 %

100 % 100 %

100 % 21 %

100 %

100 % 9 %

Supplier’s logo:

Name of offer: Regulated tariffs Price difference to the

regulated tariff Regulated tariff Annual bill estimation 1066€/year

- 5,0%

Domelia HC

1022 €/year

- 4,1%

Offre Directe HP/HC

1012 €/year 1049 €/year

- 1,6%

1066 €/year

0% + 3,7%

AlpEnergie HP/HC

1106 €/year

Idea Vert HC

+ 5,3%

1123 €/year 1160 €/year

+ 8,8%

1178 €/year

+ 10,5%

• Based in Paris

Offre 100%

Pur jus HP/HC

Planet Elec HP/HC

+ 5,6%

1126 €/year

20 % 26 % 100 % 9 %

100 % 100 %

100 % 21 %

100 %

100 % 9 %

Supplier’s logo:

- 5,0%

Domelia HC

1022 €/year

- 4,1%

Offre Directe HP/HC

1012 €/year 1049 €/year

- 1,6%

1066 €/year

0% + 3,7%

AlpEnergie HP/HC

1106 €/year

Idea Vert HC

+ 5,3%

1123 €/year 1160 €/year

+ 8,8%

1178 €/year

+ 10,5%

• Based in Paris

Offre 100%

Pur jus HP/HC

Planet Elec HP/HC

+ 5,6%

1126 €/year

20 % 26 % 100 % 9 %

100 % 100 %

100 % 21 %

100 %

100 % 9 %

Supplier’s logo:

*Fixed price offers for the validity period of the contract and revised once the contract expired.

** Prices indexed to the regulated tariffs, except the Off Peak.

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The wholesale electricity market

1. Introduction

A) Main steps in the French wholesale electricity market

- November 2000: CRE validated the initial version of the Balancing Responsible Entity (BR) contract

- Early 2001: first purchases of losses on the market by RTE

- May 2001: first OTC quotations published regarding the French electricity market - September 2001: first virtual power plant auctions set up by EDF (VPP)

- November 2001: launch of the Powernext Day-ahead market - June 2004: launch of the Powernext Futures market

- July 2004: first purchases of losses on the market by the distribution system operator (ERDF) - January 2006: implementation of explicit capacity auctions on interconnections (except for

Switzerland)

- November 2006: launch of the market coupling between France, Belgium and the Netherlands

- July 2007: launch of Powernext Intraday and Continuous markets

- March 2009: a sixth broker active on the French electricity wholesale market

- April 2009: Merger of Powernext and EEX - launch of EPEX Spot and EPD for futures contracts

- November 2010: Market coupling with France, Belgium, Netherlands, Luxembourg and Germany.

B) Balance of the French wholesale market

The graph below shows energy flows between the different upstream and downstream segments of the French wholesale market in the second quarter 2011. It shows flows injected and delivered as well as the transactions on the intermediated French wholesale market.

Source : RTE – data [Q1] and Q2 2011 - Analysis : CRE NB: due to rounding, numbers may not match totals

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2. Wholesale market activity in France

A) Activity in the over-the-counter market (OTC)

A great part of the wholesale activity in the electricity market takes place over-the-counter (OTC), through direct transactions or through intermediaries (brokers and trading platforms). The total volume of OTC transactions is not public. CRE issues aggregated volumes on transactions through intermediaries (see: Electricity indicators).

The following graph shows block exchange nominations of companies to RTE. These numbers do not represent the volume of transactions during the period, but net physical deliveries between companies resulting from transactions in the OTC market.

Volume of net deliveries resulting from OTC transactions

0 2 4 6 8 10 12 14 16 18 20 22 24 26

Jan-02 Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11

TWh

Sources: TSO – Analysis: CRE

Volumes of block exchange nominations resulting from OTC transactions were of 69.5 TWh in 2011 Q2, a 7% decrease compared with the previous quarter and a 15% increase compared with the same quarter last year. These volumes represented about 67% of national consumption in the second quarter 2011, against 52% in the first quarter 2011 and 55% during the same period last year.

B) Trading trends on the French intermediated market

The French intermediated market covers trading executed on organised markets and brokerage venues (intermediated OTC). Trends commented below can be observed in the section Development of trading in France of the indicators published by CRE.

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Overview of trading in the second quarter 2011 Spot products

19.7 TWh were exchanged on the spot market during the 2^nd quarter 2011 through around 16,620 transactions. Trading decreased compared with the previous quarter in terms of volumes (-7%) but in terms of number of trades increased significantly (+19%). Compared to 2010 in the same period, spot products increased sharply: +17% in volumes and +12% in liquidity.

The number of transactions increased most on the intraday market, parallel to a sharp increase in volumes: 0.24 TWh were traded in the second quarter of 2011 against 0.19 TWh in the previous quarter. The intraday market represents only 1% of total traded volumes on the spot.

On the day-ahead market volumes decreased compared with the previous quarter (-7%) but increased by 17% compared to 2010 in the same period. This is the result of a sharp drop in volumes traded on the exchange (-14% compared to 2011 Q1) combined to a sharp increase in volumes traded through brokers (+18%).

As a consequence, there was a decrease in the share of spot volumes traded on the exchange from 78% in 2011 Q1 to 72% in 2011 Q2.

Futures and forwards⁹

During the 2nd quarter 2011, 122 TWh of futures products10 were traded, a decrease of 18%

compared to the previous quarter and of 10% compared to the same period in the previous year.

Compared to the previous quarter, liquidity for these products also decreased by 11% but increased by 7% over the same period in 2010.

Almost all trading is done on brokerage venues since EPD France only represents 9% of volumes (9%

of transactions). The decline in trading was driven by a decrease on brokerage venues (-21% in terms of volume and -14% in terms of number of transactions) whilst it increased on the organised market (respectively +15% and +35%).

From one year to another, traded volumes on EPD France increased by about a third whilst on brokerage venues volumes fell by 12%. Liquidity of futures products was up 5% on the brokerage market segment and 38% on the exchange.

9 All trends described in the comments are related to futures and forwards of the “Développement du négoce en France” section of the indicators of wholesale electricity markets.

10Futures products with delivery period further than or equal to a month (monthly, quarterly or annual products).

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Traded volumes by product on the French wholesale electricity markets

0 100 200 300 400 500 600 700 800

2008 2009 2010 S1 2010 S1 2011

Volumes in TWh

Intraday Day-ahead Week-end Weekly Monthly Quarterly Yearly Others 696 TWh

750 TWh

656 TWh

365 TWh 358 TWh

Q1: 197 TWh Q2: 168 TWh

Q1: 195 TWh Q2: 163 TWh

Sources: brokers, EPEX Spot France, EPD France; Analysis: CRE

Monthly products:

Liquidity in the second quarter was steady whilst traded volumes were slightly higher: 2,481 transactions monthly, representing 27.3 TWh, took place in the second quarter (respectively -1% and +7% over the quarter earlier). Trading volumes are much higher than in 2010 in the same period, as well as number of transactions (respectively +24% and +27%).

Volumes for M+1 products, that account for 65% of volumes of traded monthly products, remained steady although the number of trades increased compared to the previous quarter (6%). Trading volumes for M+2 experienced a decrease in the 2^nd quarter of 2011, both in terms of volume (-14%) and liquidity (-17%), this decrease was offset by the sharp increase in M+3 products (+68% in volume and +35% in number of transactions).

Compared to the previous year, trading volumes monthly increased by 5.2 TWh: this increase is primarily due to increase of M+2 products (38%) and M+3 products (+58%) whilst trading volumes for M+1 products increased by 14%. At the same time, liquidity increased for all products: about a third for M+1 and M+3 products, and 10% for M+2 products.

Quarterly products:

Trading in quarterly products in the second quarter of 2011 decreased as a whole. Volumes amounted to 50.4 TWh through 2,518, a decreased by 9.8 TWh (16%) compared to the previous quarter but

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Comparatively to the same period a year earlier, both volumes and trades also rose by 84% and 52%

respectively.

Besides the Q+2 products, Q+1 products were the most traded. With 17.3 TWh traded through 977 transactions, Q+1 products decreased compared to the previous quarter in terms of volume (-16%) and in terms of number of trades (-4%). However, these figures are higher than those observed in the same period in 2010 (+8% and +14% respectively).

Q+3 and Q+4 products amounted 6.9 TWh and 2,6 TWh in the second quarter of 2011, a decrease of 68% and 36% over the previous quarter. These volumes represent 305 and 112 traded contracts respectively, against 984 and 180 in the first quarter of 2011. Compared to 2010, trading volumes on these two products have increased sharply, 74% and 66% respectively. Liquidity increases by 93% for both products.

Yearly products:

Like the quarterly products, trading in calendar products decreased by one-third in the second quarter of 2011: 44.4 TWh were traded through 895 transactions against 64.0 TWh through 1,267 transactions in the 1^st quarter of 2011. Compared to the previous year, trading volumes on these products were down 34.2 TWh (-43%), with a parallel decrease by 48% for liquidity.

Compared to the previous quarter, the decrease in trading has affected all products: volumes were down by one-quarter for Y+1 and Y+3 products and by nearly half for Y+2 products. The number of transactions followed a similar trend for Y+1 and Y+2 products whilst for Y+3 products liquidity increased slightly (+2%).

Compared to the 2nd quarter of 2010, volumes on all calendar products decreased significantly: by 25% for Y+1 products, by 74% for Y+2 products and by 58% for Y+3 products. Liquidity was down by 37%, 72% and 37% respectively.

C) Activity on organised markets and international comparison

Volumes exchanged on EPEX Spot decreased in the 2^nd quarter of 2011 compared with the previous quarter: average monthly trading was 4.7 TWh, higher than in the 2^nd quarter of 2010. On EPD France, average monthly volumes remained steady compared to the previous quarter (-0.4%) but remained higher than the same period in 2010 (+27%).

Average monthly volumes of transactions on organised markets in France (all maturities combined)

0 1 2 3 4 5 6

Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011

TWh

EPEX Spot France EPD France

Source: EPEX Spot, EPD France

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French exchanges are in second position compared to other European marketplaces but remain far behind German exchanges.

Average monthly volumes of transactions on main European power exchanges (excluding obligatory or quasi-obligatory markets)

– Second quarter 2011 –

0 10 20 30 40 50 60

TWh

Futures 3,7 34,8 1,0 1,1

Day-ahead 4,7 17,9 0,9 2,9 0,8

France (EPEX Spot / EPD)

Germany (EPEX Spot / EPD)

Belgium Belpex/Endex

Netherlands APX/Endex

UK APX UK

Sources: EPEX Spot, EPD France, Belpex, Endex, APX

3. Prices on the French wholesale market and European comparison

This section covers power prices settled on European power exchanges and from specialized press for British prices. Comments on trends can be observed in the section Evolutions of electricity prices of the indicators published by CRE.

A major nuclear accident happened in Japan following an earthquake and a tsunami on Firday 11 March. German government then announced, on Monday 14 March, it suspended its previous decision to extend the lives of the country’s nuclear reactors. This decision has been confirmed on Saturday 21 Mai, putting definitively offline 7 nuclear reactors and announcing the end of nuclear energy in Germany by 2022. Depending on the market segment, this decision had various impacts on electricity prices, mainly in France and Germany.

A) Day-ahead prices

Baseload day-ahead prices on EPEX Spot averaged € 49.0/MWh and peakload prices averaged

€ 61.2/MWh during the second quarter 2011, down 8% and 3% respectively compared to the previous quarter. Prices were however higher than during the same quarter last year: +16% for baseload prices and +15% for peakload prices. Therefore the peakload/baseload ratio decreased again year on year.

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Day-ahead prices on EPEX Spot – weekly averages –

0 20 40 60 80 100 120 140 160 180 200

Jan-04 Jul-04

Jan-05 Jul-05

Jan-06 Jul-06

Jan-07 Jul-07

Jan-08 Jul-08

Jan-09 Jul-09

Jan-10 Jul-10

Jan-11 Jul-11

Baseload Peakload

265 221

€/MWh

296

Sources: EPEX Spot – Analysis: CRE

There haven’t been any price spikes over the second quarter 2011.

On the German market, the Spot prices have remained steady: +2,5% for baseload prices (€ 53.6/MWh) and +1% for peakload prices (€ 62.5/MWh). But they have been much higher compared to the same period last year, baseload and peakload respectively increasing by 29% and 21%. French and German prices were exactly the same for 58% of hours for 2011 Q2, versus 72% over the previous quarter (and 51% between when the market coupling started on 9 November and end 2010).

The France-Germany price spreads have reversed and widened during the second quarter, both for baseload (€ -4.64/MWh) and for peakload (€ -1.26/MWh), in comparison to the levels observed during the first quarter 2011 (€ 1.14/MWh and € 0.91/MWh respectively); French prices remained on average slightly higher. French prices, which averaged just above on the first quarter of 2011, have become much lower than German prices during the second half. The same trend is visible facing 2010 Q2, where baseload and peakload average price spreads between France and Germany were

€ 0.70/MWh and € 1.82/MWh high.

The evolution of the spread between France and Germany was favourable to France in the second quarter of 2011. The differences between French and German prices have particularly increased during the month of June: while France and Germany baseload spread was € -2.54/MWh between March 15 and May 21, it moved to € -8,89/MWh in June 2011. However, this change is to put into perspective with a context of mild temperatures in France, and especially with a particularly good nuclear availability (see paragraph 4 below).