Development of Common Baltic EnergyMarket

Uldis Bariss, CFO of Latvenergo

Agenda

n Brief introduction of Latvenergo

n Latvenergo in Lithuania

n Shaping Baltic market – where we stand

n Price expectations in 2011

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3

Latvenergo Group in brief

Financial

Customers

General

Technological

§ Fully owned by the Republic of Latvia§ Integrated energy utility engaged in

§ Generation§ Transmission§ Distribution§ Supply§ Telecommunications & IT

§ Around 5000 employees

§ Installed electricity generation capacities:§ Hydro – 1526.7 MW

§ Thermal – 806 MW

§ Length of power lines§ Transmission – 5,235 km

§ Distribution – 100,333 km

§ Energy produced (2009)§ Electricity– 487 127 8 MWh§ Thermal – 237 215 1 MWh

§ About 1 million customers connected

(M EUR) 2006 2007 2008 2009

Sales 415 515 677 712

Assets 923 1872 2391 2417

Investments 176 315 280 149

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Generation&sourcing

n Latvenergo Group is one of leadingelectricity and thermalenergy generating utilities in Baltics

n More than 75% of electricity isgenerated in the power plants ofLatvenergo Group:n Daugava HPP’s 1527 MWn Riga CHPP’s 806 MW

n Latvenergo Group trades with Estonia,Russia and Finland

n The diverse energy sources ensurecontinuous supply of electricity

Latvenergo in Lithuania

n Latvenergo represented by Latvenergo Prekyba UAB

n Turnover: >40M EUR (2010 estimate)n Share capital: 98 500 EURn HQ location: Vilnius

n Electricity sold: >500 GWh (2010 estimate)n Customers served: >130 (actual)n Market share: 5,2% (jan-jul, actual)

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Continuous customer base growth

0%

1%

2%

3%

4%

5%

6%

7%

8%

0

20

40

60

80

100

120

140

Jan Feb Mar Apr Mai Jun Jul Aug Sep

Customers Market share

6

Some of our customers

7

Fragmented market limits NPS participation

8

§ Limited EE-LVtransmission capacity

§ Limited generation inLT/LV

§ EE-LV ATC congested insummer months

Unbalanced generation creates congestionsduring summer

9

Deficit

Congestion

60%

Surplus40%

Baltic region electricity prices

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

Jan Feb Mar Apr Mai Jūn Jūl Aug Sep

EUR/

MW

h

Electricity prices, 2010

Nord Pool Finland Nord Pool Estlink (Estonia)* Baltpool (Lithuania)

*Price without peak on 24.08.2010 (averageday price 462 EUR/MWh)

Prices from 01.04.2010-30.09.2010

44.7 EUR/MWh

~ -3 EUR/MWh*

~ +4 EUR/MWh

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Global trends affect electricity price

50

70

90

110

130

150

170

20

25

30

35

40

45

50

55

60

65

70

02.01.2007 02.07.2007 02.01.2008 02.07.2008 02.01.2009 02.07.2009 02.01.2010 02.07.2010

USD

/bar

rel

EUR/

MW

h

Oil and electricity prices

Nord Pool System 2011, EUR/MWh NYMEX Brent Jan 2011, USD/barell

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

02.01.2007 02.07.2007 02.01.2008 02.07.2008 02.01.2009 02.07.2009 02.01.2010 02.07.2010

EUR

/t

EUA, Dec 2011

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Electricity price forecast on Nord Pool and BaltPool

30.0

35.0

40.0

45.0

50.0

55.0

60.0

65.0

70.0

Jan

Feb

Mar

Apr

Mai

Jūn Jūl

Aug

Sep

Okt

Nov

Dec

Jan

Feb

Mar

Apr

Mai

Jūn Jūl

Aug

Sep

Okt

Nov

Dec

2010 2011

EUR/

MW

h

Nord Pool Finland forward Baltpool (Lithuania) statistical

Baltpool (Lithuania) forecast

48 EUR/MWh

52 EUR/MWh

Nord Pool System, EUR/MWh 46.0Nord Pool CfD Finland, EUR/MWh 2.0

Nord pool Finland, EUR/MWh 48.0

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BEMIP

n Abolish regulated prices to 35% of customer marketsof 3 Baltic states (done)

n Public use of Estlink (done)n Nord Pool Spot Estonia price area (done)

Next goalsn Pan-Baltic day-ahead and intra-day market (2011-

2013)n Full opening of the retail market (2013-2015)

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Ačiū už dėmesį!