www.pwc.com/jp
                                     Electricity trading and
                                     risk managementin
                                     liberalised market
               February2015          PricewaterhouseCoopers
        Agenda                                                      Page
            1  Current electricity trading in Japan                   1
            2  Evolution of trading in a deregulated market           5
            3  Fundamentals of trading                               16
            4  Operating model considerations for a trading          24
               function
            5  Comparison of trading systems                         32
            6  Casestudies:Approach to trading                       54
                CurrentelectricitytradinginJapan
                Electricity trading and risk management in liberalised market • Latest trends and experiences from European markets               February 2015
                PwC                                                                                                                                            1
                Section 1 – Current electricity trading in Japan
                Current tradingmarketinJapan
               ■OverviewofJapanElectricPowerExchange(JEPX)                                                     ■Tradingvolumebreakdown*
                                                                                                                     JEPX          Others
                JEPX                  •   Established in 2003, JEPX is the only                                     (0.5%)         (1.4%)
                                          electricity trading market in Japan                                                                      Intraday
                                      •   Accountsforlessthan1%ofthetotal                                                                            trade
                                          electricity sold                                                                                          (20.1%)
                    Spot              •   Accountsforapprox.99%ofJEPXtrading
                    trading           •   48productsin30-minblocks
                                      •   Blind single-price auction
                                      •   Minimumvolume:1MW                                                           Other          Spot
                    Forward           •   Accountsforabout1%ofJEPXtrading                                            (99.5%)         trade         Forward
                    trading           •   Bothbilateral and spot-based                                                              (98.6%)          trade
                                      •   1 year ahead products by weekly or monthly                                                                (79.9%)
                                          blocks
                                      •   Continuouspricing
                                      •   Minimumvolume:500kW
                    Intraday          •   Accountsforlessthan1%ofJEPXtrading
                    trading           •   4-houraheadproductsfor8hor32hsupply                                        Japan          JEPX           JEPX
                                      •   Blind single-price auction                                                 Total          Total        non-spot
                                                                                                                    (874B           (4.7 B         (60M
                                      •   Minimumvolume:1MW                                                          kWh)           kWh)           kWh)
                                                                                                                  * As of FY2010
                Electricity trading and risk management in liberalised market • Latest trends and experiences from European markets              February 2015
                PwC                                                                                                                                           2