annual-report_nord-pool-spot_2011 by Arengufond Energiaühistud

316 000 GWh

316TWh

73% 45.6 TWh

26.0 growth from 2010

the nordic

blueprint

annual report 2011

Nord Pool Spot operates the leading power markets in Europe and oﬀers both dayahead and intraday markets to its members.

316 000GWh

350 companies from 20 countries trade on Nord Pool Spot’s markets. In 2011 Nord Pool Spot had a total turnover of 316 terrawatt hours (TWh) of power.

316TWh

73%

contents 04 07 10 13 14 18 22 24 30 35

Key facts and ﬁgures Highlights cEO's observations management team N2EX: Powering the UK market A blueprint for Europe How does the day-ahead auction work? A day at the trading desk Directors report Financial report

45,6 TWh

26,0 growth from 2010

the nordic blueprint For nearly 20 years we have developed and perfected the delivery of robust, secure and transparent energy trading markets in the nordic countries and beyond.

We are proud to offer efficient, trustworthy, proven and successful energy markets. In recent years we have taken the Nordic day-ahead auction ‘blueprint’ to the Baltic states and to the United Kingdom and are determined to play our part in realising unified energy trading across Europe.

Market share

Total traded volume

73% 316

tWh

including the day-ahead auction at N2EX in the UK

of the total consumption of power in the Nordic market, excluding Estonia.

Key facts and figures

Key facts and ﬁgures elspot and elbas traded volumes in tWh

Members

350

Our power trade growth including both the day-ahead market Elspot in the Nordic countries and Estonia, and intraday market Elbas covering the Nordic countries as well as Estonia and Germany.

companies from 20 countries trade on our markets

300 250 200 150 100 50 0

■ Estonia ■ Germany ■ Denmark ■ Finland ■ Sweden ■ Norway

250 200 150

294.4 305.2 in 2010

100 50 0

2004

2005

2006

2007

2008

2009

2010

elbas turnover per country in tWh

elbas volume 2011

3.0

■ Estonia ■ Norway ■ Germany ■ Denmark ■ Finland ■ Sweden

2.5 2.0 1.5

tWh

The hourly system price is determined at the point where all supply and demand for the entire Nordic region within each hour meet, not taking the trading capacities between the bidding areas into account.

2.7 2.2 TWh in 2010

2000

2001

2002 2003 2004 2005 2006 2007 2008 2009

N2eX share of turnover

■ Day-ahead auction volume 2011: 18.7 TWh

N2eX turnover 2011 in tWh 50 40 30

2007

2008

2009

2010

2011

2010

2011

2010

2011

N2eX volume 2011

45.6 19.6 TWh in 2010

0 2006

2011

0.5

2005

2010

2004

2009

1.0

0.0

2008

■ Prompt and spot volume 2011: 26.9 TWh

tWh

2007

2011

2006

System price average price in eur/MWh

elspot volume 2011

300

2005

nord pool Spot annual report 2011

elspot turnover per country in tWh

2004

tWh

■ Nordic and Baltic market: day-ahead and intraday ■ UK market N2EX: day-ahead and intraday ■ System provider for day-ahead and/or intraday ■ German market: intraday

Finland Helsinki oslo Norway

tallin Estonia stockholm Sweden

February

Nord Pool Spot introduces negative prices on Elbas and reduces gate closure on Elbas in Germany.

Copenhagen Denmark

February

The three power exchanges Nord Pool Spot, APX-ENDEX and Belpex announce the launch of a cross-border intraday market for trading across the Dutch-Belgian border.

January

The NorNed interconnector between Norway and The Netherlands is included in market coupling between the Central Western Europe area and the Nordic countries.

highlights 2011

Highlights 2011

operations by location

May

Launch of a new corporate website providing a more user-friendly presentation of data and information.

london United Kingdom

History

1991: Norwegian power market deregulated

norway was the ﬁrst of the nordic countries to deregulate its power markets. the energy act of 1990 formed the basis for deregulation in the other nordic countries.

1993: Nord Pool established by the

Norwegian Transmission System Operator (TSO) Statnett as ‘Statnett Marked’

1996: Rebranded to Nord Pool

when the Swedish market joins, creating the world’s first international power market

1998: Finland’s market joins Nord

Pool

1999: Elbas becomes the first inter-

national intraday energy market

2000: The Nordic market becomes

fully integrated as Denmark joins 2002: Nord Pool Spot established as a separate company for short-term power trading 2005: The Kontek bidding area in Germany opens for both day-ahead and intraday power trading 2008: The financial market part

of Nord Pool is sold to NASDAQ OMX Commodities

2010: N2EX launched by Nord Pool Spot and NASDAQ OMX Commodities to offer a UK energy market. Nord Pool Spot opens bidding area in Estonia

May

The Nord Pool Spot Regulatory Council is founded to provide a forum for exchange of information and discussion on market development in the Nord Pool Spot market area.

october

The Euro becomes the official trading currency for the Nordic dayahead market Elspot.

July

Nord Pool Spot breaks monthly volume record both in Estonian bidding area (500 GWh) and on the N2EX day-ahead auction (1.1 TWh).

october

SSE announces it intends to trade 100% of its generation and supply volume through the N2EX dayahead auction by the end of March 2012. Effective immediately the company will start to ramp up its volumes.

September

The two power exchanges Nord Pool Spot and Epex Spot sign a Letter of Intent to create a Joint Venture. This will build and operate a joint system platform for power trading.

November

Sweden is divided into four bidding areas, a decision made by Svenska Kraftnät (SvK) after legally binding commitments from SvK to the European Commission.

nord pool Spot annual report 2011

“Today we look across Europe to see the Nordic market ‘blueprint’ at work.“

73%

nord pool Spot annual report 2011

Mikael lundin Ceo

316TWh

45,6 TWh

26,0 growth from 2010

73%

45,6 TWh

26,0 growth from 2010

ceo's observations

Important projects – diverse markets 2011 was a year that saw many of the important projects nord pool spot had initiated in 2010 being adopted by, and incorporated into, the market. Key projects that we had planned on paper began to come alive. continuing to develop and improve our services in a well-functioning market. Today we look across Europe and see the Nordic blueprint at work. Including the Baltics

One of the key areas in which we made major strides during 2011 was the Baltic region. The processes involved in bringing the Baltic countries into the Nordic energy market have been politically initiated and have combined well-coordinated work with enthusiastic involvement and participation at ministerial and transmission system operator levels. Deregulation has been very important for the Baltic region both to secure power supply and in realising the ambition of establishing a credible power index price, which is economically highly important. We work in close cooperation with all Baltic members to improve current and future market conditions and maintain a focus on transparency of all pricerelevant information and in all issues related to market operations. Estonia has been included in the Nordic day-ahead market since 2010. On 18 June 2012 we plan to open a new bidding area in Lithuania. Latvia will follow. At the same time cables are being laid from the Baltic countries to Sweden and Finland, completing the integration of the Nordic and Baltic power markets. N2EX in the UK

A completely different, but equally encouraging, story applies to our market development in the United Kingdom. Here the markets were deregulated at around the same time as in the Nordic region but, unlike in the

nord pool Spot annual report 2011

Clearly these projects are being implemented in very diverse markets. But we find that the Nordic market model – what we refer to as the ‘blueprint’ – can often be successfully applied, while managing to accommodate different national market characteristics and regardless of previous historical developments. We have many years of experience in developing secure, transparent and liquid day-ahead markets, providing an efficient public service for the common good. Encapsulated in our day-ahead auction are tried and tested criteria for an efficient and well-functioning “With many years of market. experience learned from Among these criteria we Nordic developments, place paramount importance on providing accurate we want to play a leading information to the whole role in the accelerating market to ensure transparency. We offer equal access integration of the to market for all our memEuropean energy markets.“ bers to trade power and we are the counterparty for all trades; guaranteeing settlement and delivery, providing a secure market and a credible power index price. We work very closely with members, regulators, transmission system operators and governments to build a trusted power market in order to improve both current and future market conditions. The various energy markets that we are currently developing are in very different phases. In the Baltic region we are in the process of initiating new projects; in the UK we have just completed our first full operational year; while here in the Nordic region we are

ManageMent teaM

Management team

European integration

Although we are, at heart, a Nordic business, at Nord Pool Spot we have a vision that goes beyond country borders. With many years of experience learned from Nordic developments, we want to play a leading role in the accelerating integration of the European energy markets. The continuing integration of energy markets under the auspices of the EU gives us an opportunity to demonstrate that. That said, it is clear that this will be a long-term, complicated process involving many participants. Progress may not be evident for some time.

We remain confident that the Nordic blueprint is the right one to successfully move forward European energy market integration by 2014. In the meantime we have to continue to build understanding and support for the day-ahead auction. In September 2011 we signed a Letter of Intent with Epex Spot, the operator of the day-ahead markets for France, Germany, Austria and Switzerland, in order to create a joint venture to build and operate a joint system platform. We approached this as a strategic alliance to establish common systems and operations for the energy markets in Europe. To us this project is an important step, with substantial resources “We remain conﬁdent that the devoted to the development of a common Nordic blueprint is the right IT solution designed one to successfully move to ensure we improve forward European energy the services we offer to our members. market integration by 2014.“ After some good first steps we have, unfortunately, put this work on hold after an inspection by the EFTA Surveillance Authority and the European Commission, which began in February 2012. We understand that the purpose of the inspection is to investigate possible anticompetitive effects in connection with the planned joint venture with Epex Spot. We have made no secret of our conviction that successful European energy market development and integration is a goal that we share with the EU and one in which we believe we can play a leading role. We look forward to proving that belief. Going forward we anticipate that 2012 will prove to be another exciting and eventful year. European energy market integration is currently developing through the Price Coupling of Regions (PCR) and North West European integration (NWE) projects. With interesting developments in the UK and the Baltic also on the cards, 2012 looks like it will be another year to remember for Nord Pool Spot.

stina Johansen

Hans randen

Stina Johansen leads the department responsible for corporate communications, including strategic communication, media and stakeholder relations, web communication and branding. Stina has broad experience within corporate communication from several companies. She joined Nord Pool Spot in 2010.

Hans randen leads the department responsible for expansion into new markets and new business aﬀairs. Hans worked for Nord Pool ASA from 1993 before joining Nord Pool Spot in 2009, with trading as his main focus area. He holds a master of Science degree in Electrical Engineering and has been Nord Pool Spot’s Director European Integration since 2010.

Mikael lundin

Marianne W. Jenssen

Ulf Kurtén

mikael lundin has extensive and long standing international experience from the energy business. Before taking his position with Nord Pool Spot in 2009 he was President of Vattenfall Power consultant AB, having held several diﬀerent positions in the Vattenfall group. He was educated at Stockholm School of Economics, where he holds a master of Science in Business Administration.

marianne Wergeland Jenssen heads up our department market operations, customer satisfaction, new sales and product development. She has extensive international experience from the commodities business. marianne managed the ﬁnancial markets in Nord Pool ASA before joining Nord Pool Spot in 2010, and holds a master's Degree in Business and Economics.

Ulf Kurtén is head of the IT department and responsible for all IT services and development within Nord Pool Spot. He has wide experience from ﬁnancial services and the Finnish energy market. Ulf’s most recent position was Director IT Governance for Aktia plc. Prior to this he held several management positions. Ulf started as Director IT in 2011.

HEAD OF cOmmUNIcATIONS

cHIEF EXEcUTIVE OFFIcEr

DIrEcTOr EUrOPEAN INTEGrATION

DIrEcTOr mArKETS AND OPErATIONS

Camilla Berg

GENErAl cOUNSEl AND HEAD OF mArKET SUrVEIllANcE camilla Berg is responsible for all legal matters, regulatory compliance and oversees the market Surveillance department. She has many years of experience from the law ﬁrm Selmer DA, as well as holding the position of general counsel in Think Global AS. camilla is cand.jur. from the University of Oslo and has been our General counsel and Head of market Surveillance since 2009.

DIrEcTOr IT nord pool Spot annual report 2011

Nordic markets, no liquid power market developed. Day-ahead trading has largely been bilateral in nature with brokers acting as middlemen backed by organisations with substantial resources. This has created high barriers to entry for small traders and also resulted in an absence of credible power index prices. The N2EX energy market in the UK was launched in 2010 as a joint offer from Nord Pool Spot and NASDAQ OMX Commodities. The UK energy sector authorities have been pushing for the establishment of a liquid market, and we aim to show that our Nordic blueprint model is more efficient than the bilateral trading which currently dominates. However, this involves making changes to an entire industry sector and that will inevitably take time. Nevertheless some sound work has been carried out and we are seeing good progress being made. During the last quarter of 2011 trading on N2EX increased from a market share of 2-3 per cent to 12-13 per cent. I am pleased to see that we have succeeded in gaining the confidence of members in such a short period. That is a testament to the work of our small, but dedicated, UK market team In order to achieve further growth, an increase in derivatives trading is essential. Increased trading in derivatives will build confidence in day-ahead trading. The two drive each other and will help ensure that trading takes place in an efficient, transparent and secure power market – our ultimate goal wherever we operate.

N2eX:

Powering the uK market

richard Sarti, Business development Manager, N2eX

powering the uK MarKet

“The success of N2EX and our aspirations to assist in closer integration of European power markets show the Nordic market ‘blueprint’ at work in a UK context.“

2011 saw important new achievements in the uK power market driven by an expanded oﬀering from n2eX. our day-ahead auction index was adopted by the wider market, having traded more than 18 tWh by year end. successes like this left the door wide open for 2012. the market would have to establish the day-ahead index price as a robust figure, meaning it would have to focus trading on the auction. These changes in the way the UK market trades electricity are essential if the United Kingdom is to meet its obligations under the 3rd Energy package* and form part of the integrated electricity trading market in Europe, in particular the requirement relating to market coupling. This requires the centralisation of physical trading around a day-ahead index to develop a robust price signal which will determine the direction of flow on the interconnectors between countries. This closely follows the model developed in the Nordic markets to ease congestion on the transmission cables and has been subsequently adopted by the wider European market. The success of N2EX and our aspirations to assist in closer integration of European power markets show the Nordic market ‘blueprint’ at work in a UK context. These significant developments paved the way for the setting of some ambitious targets for N2EX in 2011: • 10 TWh on the day-ahead auction • 25 TWh on the prompt Only time, and some hard work on the part of the N2EX team, would tell if these goals could be realised.

*The European Union’s Third Energy Package is a legislative package for an internal gas and electricity market in the European Union. Its purpose is to further open up the gas and electricity markets in the European Union. The package was proposed by the European commission in September 2007, and adopted by the European Parliament and the European council in July 2009. It entered into force on 3 September 2009

nord pool Spot annual report 2011

N2EX ended 2010 having achieved two extremely positive landmarks in its first year of operation. The fledgling UK power market had brought a very creditable 23 members on board and traded 21 TWh, well above expectations. Our positive growth attracted numerous enquiries for membership and left N2EX with a healthy pipeline of prospective members to continue the market’s growth and development into 2011. In addition to its expanded membership N2EX also saw an encouraging growth in volumes traded. This was undoubtedly motivated by our members gaining confidence in how the market was being operated. As 2010 gave way to 2011 N2EX was starting to see encouraging growth not just in the prompt, but also in the dayahead auction. After much deliberation N2EX identified the auction as the appropriate source from which to produce a day-ahead reference price for power generated within the UK. This was another important landmark for the market because it meant that our partner in N2EX, NASDAQ OMX Commodities, could launch its UK futures contracts benchmarked off the day-ahead index price. This was also an important step for Nord Pool Spot since if there was to be good liquidity in the futures market,

■ Intraday market ■ Prompt market ■ Day-ahead market 8 000

6 000

4 000

2 000

r BE

r m

m VE

TO B

ST SE

GU AU

cH Ar

ry m

Br FE

Ar y

Ground breaking move gives volume boost

With another successful year behind it, N2EX closed 2011 having traded 45.6 TWh, 18.7 TWh on the day-ahead auction and 26.9 TWh on the prompt, with a total of 33 participants trading on the market daily.

2011 started strongly for N2EX; by the end of January NASDAQ OMX Commodities had launched its UK Futures market, benchmarked against the N2EX day-ahead auction. Meanwhile Koch Energy Trading and Vattenfall became the first new N2EX members of 2011, getting the year off to a great start. And what Koch Energy Trading and Vattenfall had started, a number of new members continued throughout the year, culminating in a total of 33 members trading on N2EX by year end. Our new members included a mixture of large European utilities and banks, all trading on the physical market. Intraday market – a major milestone

In April, continuing the goals of innovation and customer service which it had initially set itself, N2EX launched the intraday market, enabling members to balance their positions. This marked the final delivery for Nord Pool Spot and NASDAQ OMX Commodities of the two companies’ commitments set out in the original Request for Proposals submitted by the UK’s Power Trading Forum. This was a major milestone for N2EX, allowing it to deliver a complete offering for trading in the physical UK electricity market; intraday, dayahead auction and prompt. While the N2EX team continued its work to attract volume and member-

“Attracting key new members to N2EX got the year oﬀ to a great start. And that growth in membership continued throughout 2011.“ richard Sarti, Business development Manager

In October we were delighted to welcome a ground breaking move from N2EX member SSE, which entered into this arrangement voluntarily, before Gross Bidding had been formally introduced. This development made national newspaper headlines in the UK. The outcome of this massive vote of confidence in N2EX from one of the UK’s large vertically integrated utilities was a dramatic increase in trading volumes. As a result N2EX started to see weekly volumes on the day-ahead auction escalate, to the point where today the auction alone trades over a TWh a week. Now that Gross Bidding has been delivered by N2EX we have seen both E.ON and Scottish Power enter into similar arrangements as SSE. All these members have committed to trade at least 30% of their annual generation in the market.

nord pool Spot annual report 2011

A benchmark for UK futures

the UK adopts Gross Bidding

powering the uK MarKet

ship to the intraday market, volumes continued to grow. In June, N2EX recorded its first week where trading topped a TWh. In September we discussed with our members the potential of offering a Gross Bidding-type product in the market. Gross Bidding was a concept introduced in the Nordic markets around 2005. It was designed to encourage vertically integrated utilities (those that both produce and consume power) to put 100% of their buy and sell volume into the market. The result was increased trading activity in the market, with the attraction of new members as companies became more confident that electricity was being bought and sold at the market price. The introduction of Gross Bidding saw volumes on Nord Pool Spot increase from 150 TWh in 2006 to 250 TWh in 2007 reaching our highest annual volume to date in 2010 of 307 TWh. Under the N2EX proposal these utilities would commit to putting a certain amount of volume (both buy and sell) into the market. The purpose here being to give greater depth in the market to the bid/offer stacks, thereby bringing confidence to the many smaller participants operating in N2EX, as well as demonstrate to the government and regulator that a robust UK market is evolving.

UK authorities increase interest in N2EX

The N2EX team also increased its engagement with both energy sector regulator OFGEM and the UK government’s Department of Energy and Climate Change (DECC) during 2011. Both of these important bodies have published consultation papers that look at addressing liquidity in the market, identifying investment signals and reducing barriers to entry. Their interest in N2EX stems from the market’s establishment of a robust index price for UK power, combined with its growing membership and volumes. Both OFGEM and DECC are looking for ways to address concerns over liquidity and access to the UK market. Nord Pool Spot has much knowledge and experience to offer in this debate. Two years on from its foundation, N2EX looks forward to the challenges of increasing membership and liquidity in 2012, coupled with the drive for closer links with European markets, with anticipation and confidence.

a blueprint for europe

a blueprint for europe norway was one of the ﬁrst countries in europe to deregulate its power market, stepping away from state control and instead introducing free competition. the norwegian power market was formally opened up to competition when the norwegian energy act came into force on 1 January 1991, and the market started up in 1993.

316 000GWh

“With the European power market landscape changing, 2011 was a year of intense discussions.“ Marie Thuestad, director Sales

45,6 TWh

26,0 growth from 2010

developing the day-ahead auction

316TWh

The Norwegian Water Resources and Energy Directorate (NVE) has authorised Nord Pool Spot to organise and operate the Norwegian power market. NVE is subordinated to the Ministry of Petroleum and Energy, and is responsible for the administration of all Norway´s water and energy resources as well as regulating the power market. These regulations ensure that electricity is transmitted at the right delivery quality and price, and that the network is used and developed in a safe and rational way.

All the Nordic countries deregulated their power markets in the early 1990s and brought them together into a common Nordic market. Estonia and Lithuania deregulated their power markets in the late 2000s. It has taken years to develop the Nordic day-ahead auction into a liquid, transparent and credible market for trading power. A strong belief in this model and close cooperation with all stakeholders through the years has made the Nordic power market a target model for the European Commission’s ongoing integration of Europe’s power markets. Deregulation creates a more efficient market, with exchange of power between countries and improved security of supply. Available power capacity can be used more efficiently in a large region compared to a small one, and integrated markets enhance productivity and improve efficiency.

nord pool Spot annual report 2011

73%

The purpose of the Act was to ensure that the power market is organised in a way that efficiently promotes the interests of society, including any public and private interests affected. In an open power market electricity prices reflect the market situation, providing strong signals about where capacity is needed, where production needs to be built and where consumption increases or decreases. Today three quarters of all power traded in the Nordic region is traded in the open market and the day-ahead auction. All large producers and consumers participate and over the years a robust, efficient and reliable market has developed. Today there is strong trust in the Nordic system price, or the reference index price, and daily prices reflect the market situation. When prices are high in a well-functioning market, the market will adjust according to conditions. People and companies want to be more energy efficient, and new investment will be made as it becomes economically profitable to build power plants and increase production capacity.

An important role in the power market

Nord Pool Spot functions as the central hub in the power market. Our role in providing liquid, secure and transparent power markets is widely recognised. The years of experience that we have creates a solid ground for developing European power markets to meet future challenges. We are determined to be the driving and transforming force behind the development of an already well-established day-ahead auction model. With transmission capacity in place between the Nordic countries, the European continent and the Baltics, the power market covers large parts of northern Europe. This means that power from many different sources– hydro, thermal, nuclear, wind and solar – enters the grid. That in turn ensures a more ‘liquid’ market, where large volumes are traded daily, and a more secure power supply.

Market development through cooperation

CoopErAtIoN Member of European projects such as Price coupling of regions and integration of North Western Europe by 2014. European market coupling company, Emcc, NordicGerman market coupling. Nord Pool Spot operates the N2EX market in the UK together with NAsAdQ oMX Commodities Operating a cross-border intraday market together with APX-ENDEX and Belpex.

Cross-border regulatory dialogue

Also in 2011 we established a Regulatory Council involving the regulators in the Nordic countries and Estonia. Regulation of the industry is taking place nationally, while at the same time an international dialogue is also happening. “The Regulatory Council serves as an important foundation for our dialogue with national regulators in our domestic area,” says Camilla Berg, General Counsel and Head of Market Surveillance. “Its main role is to exchange information between Nord Pool Spot and the regulators concerning important issues such as analytical work on market behaviour and regulatory changes.” The Council aims to assist national regulators in the performance of obligations to monitor the energy markets which evolve from the EU’s third liberalisation package. In addition, it will help with any new obligations which might result from the expected EU regulation on monitoring, transparency and integrity. Finally, the Council exchanges general information on market surveillance. Improvement through feedback

“It is important that we work to ensure that the dayahead auction becomes understood and is successfully applied in the Baltic area, the UK, and other new markets,” concludes Nord Pool Spot CEO, Mikael Lundin. “The fact that new stakeholders from different regions are actively taking part in our established dialogue is an important contribution to this development. “The Nordic market is established and functioning well, but we still need to contribute continuously towards ensuring that support for the blueprint model is high. We can best do this by always improving the services we provide to our members. That is a commitment that we are determined to maintain.”

MEMBErs

oWNErs

UK market council

Nord Pool Spot is 100 % owned by the Nordic transmission system operators: statnett, svenska Kraftnät, Energinet.dk and Fingrid

customer Advisory Board Product groups

rEGUlAtors

nord pool Spot annual report 2011

Nord Pool Spot has customer boards set up for the Nordic and Baltic countries and for the UK. With these important markets at different stages of development the topics the boards discuss can differ greatly. Top tier management from members and Nord Pool Spot are represented on each board, with emphasis being placed on lifting the dialogue to a strategic level. The Customer Advisory Board is Nord Pool Spot’s high level advisory body comprising power traders and industry representatives. “The Nordic/Baltic Customer Advisory Board is a particularly important tool for improving strategic dialogue with our core members. It has an essential role in developing our offer to members and makes a valuable contribution to our efforts to meet our public service goals,” says Marie Thuestad, Director Sales at Nord Pool Spot. With the European power market landscape changing, 2011 was a year of intense discussions with our Nordic/Baltic Customer Advisory Board. We needed to explore how to preserve the nature of our blueprint model – the day-ahead auction – in the long term and also examine key factors that will impact the market and model as we see it today. In the UK we have established a Market Council for N2EX. This aims to provide greater insight into the future development of our UK operation in discussion with N2EX members. N2EX has only been operating for a little over one year but has already managed to secure a market share of 12-13 per cent of UK dayahead power trading. “There were important debates at our UK Market Council in 2011. These revolved around how to introduce the day-ahead auction model to the UK market and how to increase liquidity and strengthen the credibility of the day-ahead auction market index price,” comments Marie. “Our contribution has been to ensure that those members operating with large production and purchasing portfolios, who are vital to the market, see the benefits of introducing a day-ahead auction market in the UK. “We encouraged their involvement by offering them similar products to those we developed in the Nordic

market, providing incentives for day-ahead auction trading. “We have seen the N2EX market share increase from 2-3 per cent during the summer of 2011 to 12-13 per cent during the final quarter. However, we still need to grow confidence and volumes in our UK market. In 2012 we will be focused on the need to develop and increase awareness of the day-ahead auction. That will help us make a stronger impact on the market and attract new entrants to take part in establishing a transparent index price for UK power.”

a blueprint for europe

With this in mind, we spend a great deal of time developing forums to meet and discuss with stakeholders – providing an extremely valuable contribution to our strategic and future development of the Nordic power market blueprint.

regulated by Norwegian Water resources and Energy directorate (NVE) to organize and operate a market place for trading power regulated by the Norwegian Ministry of petroleum and Energy to facilitate the exchange of energy with foreign countries NordrEG: the organization for Nordic regulatory authorities. regulatory Council with representatives from regulators in the Nord Pool Spot area and Nord Pool Spot executive management

how does the day-ahead auction worK?

How does the day-ahead auction work? the ďŹ gure shows how power is traded in the day-ahead, elspot, market. the power is traded during one day, for delivery on the next day.

12:00-13:00

08:00-12:00

Buyers and sellers enter their bids and oďŹ&#x20AC;ers into the trading system 07:00

08:00

until 10:00

Before 10:00 power transmission capacities are given by the system operators to each bidding area in the market

09:00

10:00

11:00

12:00

03:00 06:00 09:00 12:00 15:00 18:00 21:00 24:00

13:00

14:00

until 12:00 Buyers plan how much power they will need. sellers plan how much power they will produce

15:00

nord pool Spot annual report 2011

Based on orders and transmission capacity the prices are calculated in the trading system. the price is calculated for each hour of the day

12:00 auction closes

12:45

the prices are announced to the market

13:00-15:00 the trades are invoiced between buyers and sellers

nord pool spot’s day-ahead market, elspot, is an auction of power for delivery the following day. this is europe’s most liquid day-ahead power market, producing a robust and credible reference price.

10:00 power transmission

capacities given by the system operators published to the market.

08:00

Frequent orders are coming in to the trading desk.

Senior Trading Advisor Øystein Os. Trading Advisor Ellen charlotte Stavseth.

12:00 Deadline for

08:00-12:00 Controlling transmission capacities and orders

At 10:00 two Trading Advisors are controlling the power transmission capacities given by the system operators to each bidding area in the market. These capacities are then communicated to the wider market. Until noon frequent orders are coming in to the trading desk. All orders are handled electronically, but our Trading Advisors are constantly on the phone, answering different inquiries. “In the early days of Elspot we were on call all night,” comments Øystein Os, Senior Trading Advisor. “Sometimes the phone would ring when I was fast asleep. I’m glad to say that with greater technical sophistication and automation that way of doing business is now history!” “We check hundreds of orders every day. The computer system also warns us if the discrepancy in volumes/prices in an order exceeds a certain percentage from one day to another, this is to make sure all orders are correct,” Trading Advisor Ellen Charlotte Stavseth says. All companies entering orders in the trading system are responsible for the information in their bids being correct. Mistakes can happen when members are entering orders. “An important part of our role is to call and check if something looks wrong,” Ellen adds.

nord pool Spot annual report 2011

There are around 350 buyers and sellers (called ‘members’) on Elspot. Most trade power every day, placing a total of around 2,000 orders for power contracts. In the mature Nordic power market, there is a great deal of public interest in wholesale power prices, but few appreciate the complexity of the process behind the formation of tomorrow’s electricity price. Daily trading is driven by market members’ planning. A buyer, typically a utility, must assess how much energy it will need to meet demand the following day, and how much it is willing to pay for this volume, hour by hour. A seller, for example the owner of a hydroelectric power plant, needs to decide how much he can deliver and at what price, hour by hour. These needs are reflected through orders entered by buyers and sellers into the Elspot trading system. Prices are calculated at noon every day based on supply, demand and transmission capacity (how much power can be moved from one area to another) and trades are agreed. Ensuring the smooth running of the day-ahead market is the job of a dedicated team of specialists at Nord Pool Spot. Their working day is busy, intense and complex – we invite you to follow the process at the trading desk to find out more:

a day at the desK

a day at the desk

submitting orders.

12:05 order book is sent to european Market coupling company.

a day at the desK

12:00 the day-ahead auction closes

Noon is the deadline for submitting orders for power which will be delivered the following day. A file with all orders is sent to the European Market Coupling Company. This is because the Nordic market is connected to Europe and the power flow between these markets has to be decided. It takes up to 20 minutes to complete wholesale power price calculations. All orders and capacities are fed into a specialised computer system which calculates the price, based on an advanced algorithm. Put simply, the wholesale market price is set where sell and buy price meet.

12:45 all prices for the next

day are communicated to the market

13:00 prices are announced to the market

Before 1pm all prices for the next day are communicated to the market. “We publish one price for each hour in the following day,” Ellen explains. “There is one price for each bidding area. All prices are published on our website www.nordpoolspot.com where everyone can track Nordic power prices.” “After the price is published we spend the next hour supporting whatever requests customers have,” adds Øystein. This may involve answering detailed questions about prices and flows, re-sending results and publishing the system price bidding curves. 14:00 trades are settled

12:15

nord pool Spot annual report 2011

At 2pm invoices are prepared and tasks related to the daily operations of the Nord Pool Spot market are completed. Every day about 1 TWh is traded through our trading desk at Lysaker, outside Oslo. When all the Baltic countries are fully integrated into the Nordic energy market, that figure will increase. When our Trading Advisors have completed their daily trading tasks, they bring their expertise to a number of different development projects, customer visits and analysis work. They also closely monitor Nord Pool Spot’s Elbas intraday market, where trading takes place around the clock. Annually energy valued at approximately NOK 140 billion is handled through our trading system. “On the trading desk there is always something to work on!” concludes Øystein.

price calculations

14:00

trades are settled

directors’ report 2011

316 000GWh

350 companies from 20 countries trade on Nord Pool Spot’s markets

directors’ report Financial report 35 36 37 38 39

Proﬁt and loss account Balance sheet Balance cash ﬂow analysis Notes to the accounts nord pool Spot annual report 2011

73%

45,6 TWh

26,0 growth from 2010

316TWh

chairman of the Board Executive Vice President commercial Division, Statnett SF

directors’ report 2011

the nord pool spot Group organises physical trading of power, oﬀering day-ahead and intraday markets to its members in all nordic countries, estonia and in the uK. the intraday market also includes Germany. it went from a rather strained situation on the supply side during the first quarter, to a significantly wet summer and autumn with surplus in the hydropower reservoirs, and lower power prices. Nord Pool Spot holds a strong position in the Nordic market with a total turnover in Elspot and Elbas of 297.1TWh, including the Estonian bidding area in which the turnover was 4.6 TWh, an increase of 1.8 TWh compared to 2010.

Nord Pool Spot AS has its main office in Lysaker, subsidiaries in Helsinki and Stockholm and branch offices in London, Copenhagen and Tallinn. Nord Pool Gas A/S is located in shared offices with Nord Pool Spot in Copenhagen.

Nord Pool Spot’s turnover fluctuates with variations in underlying consumption. In 2011, turnover in the Elspot market was nearly 3.5 per cent lower than in in 2010, mostly because of lower consumption in the Nordic area. The market share of Nordic consumption, adjusted for export out from the Nordic area, was 73.1 per cent (preliminary) in 2011 compared to 74.4 per cent in 2010.

Nord Pool Spot AS is licensed by the Norwegian Water Resources and Energy Directorate (NVE) to organise and operate a marketplace for trade in power and by the Norwegian Ministry of Petroleum and Energy to facilitate the exchange of energy between Norway and other countries. In addition, Nord Pool Spot communicates with regulators in all Nordic countries, the Baltics, UK and with the Agency for Cooperation of Energy Regulators (ACER), on topics that concern facilitation and development of the power market according to governmental requirements. Nord Pool Spot AS is owned by the transmission system operators Energinet.dk (20%), Fingrid Oy (20%), Statnett SF (30%) and Svenska Kraftnät (30%). Nordic market Elspot and Elbas

2011 was a special year for the Nordic power market as

The traded volume in Elbas was 2.7 TWh in 2011 compared to 2.2 TWh in 2010. Statistics Elspot turnover Elspot as share of consumption Elbas turnover

2010

2011

305.2 TWh

294.4 TWh

74.4%

73.1%

2.2 TWh

2.7 TWh

2011 proved to be a significantly different year from 2010, with temperature and water inflow to the reservoirs being the fundamental difference. The filling season started out with record low reservoir levels, but a milder and earlier spring coupled with heavier rainfall later in the season helped replenish these levels from an average of 20% below the median value by the end of

Board member

Bente Hagem was elected substitute to the board in 2002 and member of the board in 2007.

Executive Vice President, Fingrid Oyj

Bo Krantz

søren dupont Kristensen

Senior Executive Vice President and cAO, Svenska Kraftnät

Vice President Electricity market, Energinet.dk

Bo Krantz was elected member of the Nord pool Spot board in 2002.

Søren Dupont Kristensen was elected member of the board in 2011.

Board member

March to 2% above the median value in early June. In addition a milder autumn resulted in lower consumption throughout the whole of the Nordic area, leaving reservoir levels exceeding the previous maximum curve from the period 1990-2006.

Juha Kekkonen has been a member of the Nord Pool Spot board since 2002.

Board member

• Total inflow to Nordic reservoirs was as much as 242 TWh in 2011 while in 2010 it was 175 TWh. • By the end of the year the filling level in the hydro reservoirs was 78.6% compared to 45.0% in 2010. The median level is 70.1 %.

From 1 November 2011 Sweden was divided into 4 bidding areas: SE1 (Luleå), SE2 (Sundsvall), SE3 (Stockholm) and SE4 (Malmö). The implementation of 4 bidding areas in Sweden was a resource demanding project for Nord Pool Spot, which required a high level of coordination both towards transmission system operators and members. A thorough project planning and system testing phase prior to launch secured the implementation of 4 bidding areas in Sweden to our members’ satisfaction.

• The Nordic region had a net import in 2011 of 5.3 TWh while in 2010 the net import was 19 TWh.

The average Elspot system price was 47.05 €/MWh in 2011 compared to 53.06 €/MWh in 2010. The number of hours with common price in Elspot for the whole Nordic region was 15% of all hours in 2011 compared to 11% in 2010.

During 2011, Nord Pool Spot acquired 35 new members in the day-ahead market Elspot and 9 new members in the intraday market Elbas. In total, Nord Pool Spot had 338 members at the end of year 2011.

Based on Nord Pool Spot’s statistics for the weeks 1-52 in 2011, compared to the same period in 2010, we can make the following statements regarding the Nordic power market: • Both consumption (-4.8 %) and generation (-1.1 %) were reduced in the Nordic region in 2011 compared to 2010. • Nordic hydro power generation was approximately 203 TWh in 2011 compared to 194 TWh in 2010.

The Elspot area prices were on average considerably lower in 2011 compared to 2010. The highest monthly system price was 69.62 €/MWh in January and the lowest system price was 27.96 €/MWh in October. The highest monthly area price was 72.35 €/MWh in NO5 (western part of Norway) for February and the lowest monthly area price was 22.36 €/MWh for September, also in NO5.

A new Sales Manager was hired in Finland to facilitate for an even closer cooperation with Finnish members, new sales in Finland and to secure that the needs of our Finnish members are taken into consideration in further development of the Nordic market. Nord Pool Spot has a Customer Advisory Board which in 2011 contributed feedback and advice on Nord Pool Spot’s strategic and operational activities. The Customer Advisory Board is chaired by the CEO of Nord Pool Spot. Three meetings were held in 2011.

nord pool Spot annual report 2011

The Nord Pool Spot Group comprises Nord Pool Spot AS, the 100% owned subsidiaries Nord Pool Spot AB and Nord Pool Finland Oy, as well as Nord Pool Gas A/S, which is owned jointly 50/50 with Energinet.dk. Since early 2010 Nord Pool Spot has, together with its partner Nasdaq OMX Commodities, operated the power market N2EX, which today is the leading power market in the UK.

Juha Kekkonen

directors report 2011

Bente Hagem

submitting gross volumes in 2012. The total volume traded on N2EX increased from 19.6 TWh in 2010 to 45.6 TWh in 2011. Statistics

2010

2011

Auction market

2.6 TWh

18.7 TWh

Prompt market

17.0 TWh

26.9 TWh

11.0 GWh

19.6 TWh

45.6 TWh

Spot market

transparency

Transparency of market data is an important criterion for a well-functioning and efficient power market. It is important that relevant information is available to the members so that they can efficiently evaluate their options and have trust in the price formation. Equal access to relevant market information levels the playing field for market members and leads to a more efficient market. Nord Pool Spot strives to operate the Nordic electricity market as efficiently as possible. In order to make market and power system data more accessible, Nord Pool Spot launched a new website on 15 August 2011.

UK Market N2EX

2011 has been an exciting year for Nord Pool Spot’s establishment of N2EX, the UK power market. N2EX, which is a partnership between Nord Pool Spot and Nasdaq OMX Commodities, was launched 12 January 2010, thus 2011 was its first full year of operation. N2EX offers its members trading in a day-ahead market, which is based on the Nordic market model, covering the 24 hours of the following day and intraday trading in a prompt and spot market. The prompt market is a continuous market with trading of blocks up to 6 days in the future, while the spot market in addition offers continuous trading of half hourly and hourly contracts for the next 48 hours. The spot market was implemented in April 2011. N2EX has during the course of 2011 established itself as the most important power market in the UK. A model for submitting gross volume in the auction was introduced late in 2011 and a majority of the major UK utilities have indicated that they are considering

By the end of 2011, 34 members were registered for trading in the N2EX market, and there is a large interest from new members in joining the N2EX market. The result from our member survey in the UK shows that we are off to a good start in the market and that our members are satisfied with the service that we provide. On 22 September 2011, Nord Pool Spot and EPEX Spot, the German-French spot power exchange, signed a Letter of Intent to create a Joint Venture company to build a common systems platform and later operate the systems. Annual accounts 2011

The operating profit was NOK 14.8 million (2010: NOK 11.1 million) for Nord Pool Spot AS and NOK 14.1 million (2010: NOK 12.7 million) for the Group. The increase in the operating profit is mainly due to higher revenues from changes in the fee structure in the Elspot market and higher volume fee revenues from the UK market (N2EX), due to higher traded volume. Net income amounted to NOK 24.8 million (2010: NOK 14.2 million) for Nord Pool Spot AS and NOK 16.4 million (2010: NOK 14.3 million) for the Group. The main reason for the higher net income for Nord Pool Spot AS was an extraordinary dividend of €1 million from the subsidiary Nord Pool Finland Oy, which is neutralised in the consolidation of the Nord Pool Spot Group. By the end of 2011 the total capital of the group was NOK 746 million (2010: NOK 2,649 million). The changes in the total capital are mainly a result of the price level being lower than last year at the end of December and lower traded volume due to milder weather compared with winter 2010. The equity of Nord Pool Spot AS per 31 December 2011 was NOK 141.2 million (2010: NOK 166.4 million). Free equity as per 31 December 2011 after allocated dividends is NOK 65.8 million. The Board of Directors considers the equity to be adequate in relation to the company’s exposure and the collateral

The annual accounts are prepared based on the assumption of a going concern, and the Board of Directors confirms that this assumption exists. No events of significance for the 2011 annual accounts had occurred up to the date they were presented. liquidity

Group cash and cash equivalents decreased from NOK 1,925.2 mill at the end of 2010 to NOK 423.2 mill at the end of 2011. The main reason for the NOK 1,503.1 mill reduction in liquid funds is lower net cash from operating activities due to lower prices and lower traded volume at the end of December 2011 in comparison with one year earlier. In addition, a reduction in number of settlement days for seller with one day, purchases of intangible assets and a repayment of a loan to Nord Pool Gas A/S have impacted the liquid funds.

trade. The collateral requirement equals the sum of the participants’ net purchases the last seven days including VAT. Accounts receivable amounted to NOK 255 million at the end of 2011 (2010: NOK 645 million) for Nord Pool Spot AS. The collateral posted by the participants as per 31 December 2011 was NOK 1,037 million (2010: NOK 3,264 million). The underlying reason for the reduction in collaterals was the lower prices and volumes at the end of December compared to the previous year. The counterparty risk for Nord Pool Spot is regarded as low. There is no debtor loss registered for 2011. liquidity risk

Purchases of intangible assets are mainly investments in our trading systems for the power markets.

The company’s liquidity position is regarded as sound with a relative high net cash position due to the settlement cycle (buyer debited on T+1, seller credited on T+2). In 2011 the number of settlement days for sellers was reduced from T+3 to T+2. This has reduced the company’s net cash position, but the liquidity position is still deemed to be adequate for the company. The company also holds an overdraft account amounting to NOK 100 million which is not utilised as per 31 December 2011.

research and development

risk capital

For the Group, the book value related to software development and licenses in the balance sheet statement at the end of 2011 is NOK 25.2 mill and of this NOK 8.8 mill was investments in 2011.

organisation and working environment

The Group has software systems developed for trading and settlement in Nord Pool Spot AS and in Nord Pool Finland Oy. The trading system in Nord Pool Spot AS is used in the Elspot electricity market. The trading system for Elbas is developed by Nord Pool Finland Oy. The settlement system in Nord Pool Spot AS is used for Elspot, Elbas and Nord Pool Gas.

Financial risks market risk

The company is exposed to changes in exchange rates since the power trade is settled in multiple currencies. The company continuously hedges settlement of trades in foreign currency, and VAT, through spot contracts. Revenues in foreign currency are settled weekly by using currency spot contracts. credit risk

All Nord Pool Spot trades are settled on a daily basis; invoices and credit notes are dispatched every afternoon for automatic bank settlement of the next day’s delivery of energy. Participants post collateral for their

The company holds a risk capital of NOK 14 million, out of which half is covered through ordinary working capital and the other half through a dedicated credit facility. The concession granted to Nord Pool Spot from the Norwegian Water and Energy Directorate (NVE), requires that the company holds a risk capital and that the size of this is reviewed regularly. The Nord Pool Spot group had 58 employees at 31 December 2011, including 35 in Norway, 7 in Sweden, 10 in Finland, 2 in Denmark, 3 in the UK and 1 in Estonia (41 employees in Nord Pool Spot AS). 18 of the Nord Pool Spot AS employees are women and 23 men. There are female employees at all Nord Pool Spot offices. Nord Pool Spot’s Board of Directors contains one woman and three men. The Chairman of the Board is female. The corporate management team consists of three women and four men. Health related absence during the year was 1.58 per cent. No lost-time accidents or personal injuries were suffered in 2011.

nord pool Spot annual report 2011

Nord Pool Spot works to increase the amount of market and power system data that is available to the market through different services. During 2011 the Power Data Service department published new data related to the four bidding areas in Sweden, Estonian power system data and Interim Tight Volume Coupling (ITVC) capacities and flows.

Total

posted by the participants.

directors report 2011

In 2011, Nord Pool Spot established a Nordic Regulatory Council composed of the Nordic and Estonian regulators. The council contributes to the exchange of information, is a forum for discussing market development and assists the national regulatory authorities in their work with transparency, integrity and governance of the market. Two meetings were held in 2011.

The company wishes to encourage employees of both genders to establish solutions which make it easier to combine work and family life. One employee was on maternity leave on 31 December, when the company also had one part-time employee. Both of these were women. Nord Pool Spot’s operations have no noticeable impact on the natural environment. No part of its business is regulated by environmental permits or enforcement notices. Market surveillance

Allocation of proﬁt

The Board is proposing a dividend of NOK 50.0 million to be paid out for the 2011 accounting year for Nord Pool Spot AS, out of which NOK 24.8 million comes from the net profit of the year and NOK 25.2 million will be transferred from the equity capital. outlook for 2012

The Nord Pool Spot Group will continue efforts to maintain and further develop the power market in the Nordic and Baltic region according to regulatory requirements, development of member needs as well as our target to be a leading and innovative market place for power. Short term this will mean a clear focus on efficient trading through development of IT platforms, product development, coupling of markets and a continued close dialogue with our members. In March 2012, the NorNed cable between Norway and the Netherlands is integrated into the Nordic Intraday trading market Elbas. Nord Pool Spot is also on track for opening a new bidding area in Lithuania in 2012 and in Latvia thereafter.

Much work will be dedicated to the integration of the European power market, in which Nord Pool Spot has an active role. An important milestone will be the coupling of North West Europe in one price algorithm, which requires close cooperation between transmission system operators and exchanges in all coupled countries. On 7 February 2012, Nord Pool Spot had an inspection by the EU Surveillance Authority (ESA) and the European Commission competition authorities concerning suspicion of market segregation in Europe. The company is cooperating fully with the competition authorities in its investigations. The timing of the results from the inspection is not yet known to Nord Pool Spot. In the UK, Nord Pool Spot will continue the expansion, which will include further development of the market model that we believe is a major prerequisite for the UK’s wish to develop a liquid and transparent power market, close cooperation with market members and coupling of the UK and mainland Europe.

Proﬁt and loss account Nord Pool SPoT aS 2011 21 734 107 155 9 808 138 697 417

Nord Pool SPoT GrouP 2010 Amounts in NOK 1000

Note

21 201 Fixed fee revenues 86 543 Volume dependent fees 11 447 Other operating income 119 191 TOTAl OPErATING INcOmE

22 566

21 886

107 923

87 496

13 526

14 301

144 015

123 683

417

762

8,9

14 250

12 590

42 630

36 320 Payroll expenses

5,17

57 464

50 522

68 985

60 419 Other operating expenses

5,6

57 758

47 073

129 889

110 947

14 126

12 736

9 399

7 849

23 525

20 585

7 095

6 245

16 430

14 340

123 902

108 069 TOTAl OPErATING EXPENSES

14 795

11 122 OPErATING PrOFIT

16 929

8 654 NET FINANcIAl ITEmS

31 724

19 776 PrOFIT BEFOrE TAXES

6 884

2010

10 568 Depreciation

11 870

762 Services purchased

2011

5 591 Taxes

The profit for 2012 is expected to give a reasonable return on invested capital.

24 840

14 185 NET INcOmE

Gardermoen, 21 march 2012

50 000

8 000 Dividend

-25 160

6 185 Disposal to/from other equity

INForMaTIoN alloCaTIoNS

nord pool Spot annual report 2011

The Nord Pool Spot Market Surveillance plays an important role in establishing and maintaining market confidence and integrity by having a strong and visible presence in the market. The Market Surveillance continuously monitors trading activities and price formation in the spot and derivatives markets and conducts investigations of possible breaches of laws and regulations.

Longer term we will emphasise the importance of alignment with a changing power market, development in accordance with new EU requirements, structural changes and thereby new wishes from our members through changing needs.

financial report 2011

Nord Pool Spot’s human resources policy is based on equal pay for equal work, meaning that women and men in the same position receive the same pay, provided that they possess comparable expertise and experience. Pay figures for 2011 show that the annual pay of male employees was on average 19.4 per cent higher than for the company’s female staff.

Bente Hagem chairman of the Board 35

Søren Dupont Kristensen Board member

Juha Kekkonen Board member

Bo Krantz Board member

mikael lundin cEO

Balance

Assets

Equity and liabilities

Nord Pool SPoT aS 31.12.11

Nord Pool SPoT GrouP 31.12.10 Amounts in NOK 1000

NOTE

31.12.11

Nord Pool SPoT aS

31.12.10

31.12.11

4 631 25 991 3 592

eQuITY aNd lIaBIlITIeS

FIXed aSSeTS

eQuITY

24 674 Intangible assets 4 052 Deferred tax beneﬁt

25 181

29 529

50 400

4 631

4 052

10 681

10 681 Share premium reserve

29 812

33 581

61 081

61 081 TOTAIl PAID-IN-EqUITy

4 081

2 574

28 726 Total intangibles 1 913 Tangible ﬁxed assets

8 211 1 939 27 977

Investments in associated companies and joint 8 211 ventures 9 953 loan to associated company

203

35 991 Total ﬁnancial assets 66 630 TOTAl FIXED ASSETS

1 939

9 953

2 142

9 953

36 035

23 343

6 649 Other receivables

309 283 375 413 098

15,16

50 400

10 681

61 081

80 126

105 285 TOTAl EArNED EqUITy

64 917

98 127

64 917

98 127

141 207

125 998

159 208

16 312

14 319

16 312

14 319

166 366 TOTAl EqUITy lIaBIlITIeS Allocations for liabilities

46 108

16 312

14 319 Pension liabilities

16 312

14 319 TOTAl AllOcATION FOr lIABIlITIES

Current liabilities 12,13

0 Group receivalbles 655 787 Total receivables 1 903 581 Bank deposits

31.12.10

Earned equity 105 285 Other equity

receivables 649 138 Accounts receivables

50 400 Share capital

80 126

CurreNT aSSeTS 259 723

31.12.11

260 485

656 469

25 876

21 492

286 361

677 961

423 189

1 925 164

696 473

2 559 368 TOTAl cUrrENT ASSETS

709 550

2 603 125

754 033

2 625 998 TOTAl ASSETS

745 585

2 649 233

0 523 989 7 462 2 655 50 000 12 408

28 Derivatives 2 295 058 Accounts payable 5 982 Tax payable

13,18

524 634

2 310 818

7 602

6 546

3 558

124 361

123 697 Fees to authorities 8 000 Dividend

12 548 Other current liabilities

50 000

8 000

17 481

25 953

596 514

2 445 313 TOTAl cUrrENT lIABIlITIES

603 275

2 475 706

612 826

2 459 632 TOTAl lIABIlITIES

619 587

2 490 025

754 033

2 625 998 TOTAl EqUITy AND lIABIlITIES

745 585

2 649 233

Gardermoen, 21 march 2012

Bente Hagem

Juha Kekkonen

søren dupont Kristensen

Bo Krantz

chairman of the Board

Boardmember

Mikael lundin cEO

nord pool Spot annual report 2011

57 560

17 827 Investment in subsidiaries

NOTE

Paid-in-equity 8

Financial assets 17 827

31.12.10 Amounts in NOK 1000

aSSeTS Intangibles 21 360

Nord Pool SPoT GrouP

financial report 2011

Balance sheet

Nord Pool SPoT aS 2011

Accounting principles

Nord Pool SPoT GrouP 2010 Amounts in NOK 1000

2011

2010

14 185 Net income

16 430

14 340

10 568 Ordinary depreciation

14 250

12 590

434

395 984

-272 927

-1 786 184

66 008

Cash ﬂow from operating activities 24 840 11 870 434 389 415 -1 771 069 1 993

0 Gain/loss on sale of operating assets -268 995 change in accounts receivable 57 872 change in accounts payable

1 993

1 203

-137 297

178 684 change in other current receivables and liabilities

1 203 change in pension liabilities

-132 636

184 909

-1 479 814

-6 483 NET cASH FlOW FrOm OPErATING AcTIVITIES

-1 489 729

6 123

Cash ﬂow from investment activities 8 000

-492 Payment for purchase of tangible ﬁxed assets

-3 489

-561

-7 382

-8 756 Payment for purchase of intangible ﬁxed assets

-8 757

-9 785

-8 000

-4 246

-18 346

-2 669

-8 000 Payment for loan to associated company, Joint Venture -17 248 NET cASH FlOW FrOm INVESTmENT AcTIVITIES Cash ﬂow from ﬁnancing activities

-8 000

0 Payment of dividend

-8 000

0 NET cASH FlOW FrOm FINANcING AcTIVITIES

-8 000

-1 490 483

-23 731 Net change in liquid assets

-1 501 975

-12 223

1 903 581

1 927 312 liquid assets as of 1 January

1 925 164

1 937 387

423 189

1 925 164

413 098

1 903 581 lIqUID ASSETS AS OF 31 DEcEmBEr

Consolidation principles

The Group accounts include the parent company, Nord Pool Spot AS, and the subsidiaries Nord Pool Finland Oy, Nord Pool Spot AB and the 50% owned joint venture Nord Pool Gas A/S. The Group accounts have been prepared as if the Group were a single financial entity. Intercompany transactions and balances have been eliminated. The Group accounts have been prepared on the basis of similar principles, the subsidiary applying the same accounting principles as the parent company. A purchased subsidiary is recorded in the Group accounts based on the parent company’s acquisition cost. The acquisition cost is based on identifiable assets and liabilities of the subsidiary, which are recorded in the Group accounts at market value at the time of purchase. If the acquisition price exceeds (or is less than) amounts attributable to identifiable assets and liabilities, the excess is recorded in the balance sheet as goodwill (or negative goodwill) and amortized on a straight-line basis over the expected useful lives of the purchased assets. Associated companies are valued in the Group accounts in accordance with the equity method. The allocated proportion of the profit of the associated company is based on the after tax results of the associated company, after deducting any internal gains and any depreciation on any excess value caused by a higher acquisition price of the shares than the acquired part of equity recorded in the balance sheet. The allocated proportion of the profits is recorded in the profit and loss accounts as “Income from associated companies”. The exchange rate of 31 December has been applied for consolidation of branch accounts in local currencies. subsidiary

The company’s subsidiary is valued according to the cost method in the company accounts. Investments are valued at acquisition cost for the shares unless a write-down has been necessary. Investments are written

down to market value if the decline in value is viewed as non-transitory in nature and it is deemed necessary according to generally accepted accounting principles. Write-downs are reversed if the conditions for the writedown are no longer present. Joint Venture

With a Joint Venture enterprise the definition is that this is a Group company who together with one or more companies, together controls the enterprise. A part of assets, liabilities, revenues and expenses in the Joint Venture are consolidated based on the gross method according to the preliminary Norwegian standard on participating in a Joint Venture enterprise. power turnover

Purchases and sales of electrical power and gas are settled at the same price. Consequently, the monetary value of trading has no effect on the profit level of the Nord Pool Spot Group. Income from fees

The income base of the Nord Pool Spot Group consists of: • annual fees • volume-dependent fees • FX fees Volumes fees in the physical market relate to power traded (MWh) and are invoiced together with the power following delivery. FX fees were introduced in 2011 and becomes for customers buying or selling of electricity in other currencies than EUR. It is calculated as a % of invoice value. Classiﬁcation and valuation of balance sheet items

Current assets and short-term liabilities include items that fall due within one year of the acquisition date. Other items are classified as fixed assets/long-term liabilities.

Current assets are valued at the lower of acquisition cost and market value. Short-term liabilities are recorded in the balance sheet at face value at the time of recording. Fixed assets are recorded at acquisition cost, but are

nord pool Spot annual report 2011

8 000

-3 287 0

0 Income payment of loan from associated company

The annual accounts have been prepared in accordance with the Norwegian Accounting Act of 1998 and generally accepted accounting principles.

notes

Notes to the annual accounts

Cash ﬂow analysis

receivables

Accounts receivable and other receivables are recorded in the balance sheet at face value after provision for bad debts. Provisions for bad debts are based on an assessment of individual accounts. In addition, a general provision for bad debts is made covering assumed losses for other accounts receivable. Foreign currency

Accounts receivable and accounts payable in foreign currencies are valued at the year-end exchange rate on 31 December 2011. Financial instruments

tangible ﬁxed assets

Tangible fixed assets are recorded in the balance sheet and linearly depreciated over the expected useful lives of the assets. Direct maintenance costs related to tangible fixed assets are currently expensed as operating expenses, whereas upgrades and improvements are added to the cost base of the operating assets and depreciated at the same rate as the assets to which they refer. Intangible assets

Intangible assets are recorded in the balance sheet to the extent a future financial benefit relating to the intangible asset can be identified. If such benefits cannot be identified, the expenses are recorded as costs on a current basis. pension costs and liabilities

Nord Pool Spot AS has pension plans which provide the employees with the right to defined future pension

Nord Pool Spot books pensions in accordance with the international Accounting Standard (IAS) 19. Accrued pension rights are primarily secured through pension plans with Statnett SF’s pension fund. In addition, Nord Pool Spot AS has an early retirement plan (AFP), which is financed by operations. Contributions to the pension fund are made in accordance with the actuarial method of calculation. Pension assets in the pension fund are primarily invested in securities. Pension liabilities are calculated in accordance with the Norwegian accounting standard (NRS) for pension costs. Pension obligations are valued at the present value of future pension liabilities earned as at the balance sheet date, which are to be paid through the company’s own pension fund or financed by operations. Net pension liabilities in the balance sheet are shown after adjustments for postponed P&L recognition of changes in estimates and pension plans as well as the difference between actual and expected returns on the pension plans investment assets that have as yet not been recognized in the P&L. Net pension liabilities are shown as an allocated liability. Pension schemes that are in a surplus of funds where the funds cannot be transferred to schemes that are in deficit of funds are shown as fixed assets. The Group applies the principle of corridor reporting in respect of changes in pension liabilities. Changes in liabilities and pension assets arising from changes to and variances in assumptions applied to calculations (changes in estimates) are distributed over the remaining expected average earnings period if the variances 1 January exceed 10 per cent of whichever is greater of gross pension liabilities and pension assets.

are treated as investments in pension funds. taxes

Tax expenses in the profit and loss account consist of tax payable for the period and changes in deferred tax. Deferred tax is calculated at a rate of 28 per cent on the basis of the temporary differences between accounting and tax values, as well as the tax deficit at the end of the year to be carried forward. Tax-increasing and taxdecreasing temporary differences, which are reversed or reversible in the same period, have been eliminated. Any net deferred tax benefits are recorded in the balance sheet to the extent they are expected to be utilized.

As of 31 December 2011, net negative temporary differences between accounting and tax values have been recorded by the Group. The associated deferred tax benefit is recorded in the balance sheet under assets. Cash ﬂow

The cash flow analysis has been prepared using the indirect method. The model is based on an adjustment of the after-tax net income resulting in the net cash flow from operating activities. Cash flows from investment and financing activities are presented as gross figures.

Note 1: CollaTeralS physical trade

Participants are obliged to post appropriate collateral for their spot market trade in accordance with the Rulebook for the Physical Markets. The security requirement included in the section ”Clearing Rules Appendix” of the rulebook reflects Nord Pool Spot’s settlement risk and is calculated on an ongoing basis as the last seven days of the participant’s daily net purchase in Elspot inclusive of VAT. Variation in days can occur. Collateral for Elbas market follows the same security requirements as for Elspot. For customers in Elspot acting in Elbas the security requirement of Elbas is netted into Elspot collateral.

The Group has in addition a contribution-based pension plan for employees, where the current year’s pension costs correspond to the current year’s premium payment.

The minimum trading requirement is a collateral base of NOK/SEK/DKK 240,000 or EUR 30,000. The collateral must be registered with Nord Pool Spot before any trade is initiated.

Net pension costs for the year are included as a salary expense in the profit and loss account. Premiums paid

Collateral can be posted as an on-demand bank guarantee, as cash in an escrow bank account or in another

way accepted by Nord Pool Spot in accordance with the Rulebook for the Physical Markets. As of 31 December 2011, outstanding balances in the physical market totaled NOK 255.4 million, while the collateral requirement in respect of participants totaled NOK 1,037 million. At the end of the year, all participants in the physical market had posted satisfactory collateral in accordance with the Settlement regulations. Settlement and collateral in the UK for N2EX is carried out by NASDAQ OMX which also acts as the counterpart. Nord Pool Spot also carries out settlement and collateral call for the VPP market (Virtual Power Plant) in Denmark and the gas market of Nord Pool Gas A/S. For the VPP market, the customers have to establish bank guarantee for assigned volume current quarter. For the gas market the members provide collateral by the means of an on-demand guarantee. Base collateral determined by Nord Pool Spot must be established and met prior to the commencement of trading. The base collateral shall cover sum collateral call for the instruments traded, but not yet settled. Security requirements for Elspot/Elbas, VPP, and the gas market are not netted.

nord pool Spot annual report 2011

Nord Pool Spot uses financial instruments to manage foreign exchange exposure. Spot exchange contracts are used solely to hedge currency exposures incurred in connection with the settlement of physical trading. Gains and losses on spot exchange contracts are reported and evaluated in tandem with the hedged item. Gains and losses on hedging instruments rolled over prior to their expiry are recognised in the balance sheet and income statement over time along with the hedged item. Financial derivatives are booked at market value.

benefits (defined benefit plans). Benefits are based on the number of years of employment and salary at retirement age.

notes

written down to market value in the event of a decline in value, which cannot be expected to be transitory in nature. Long-term liabilities are recorded in the balance sheet at face value at the time of assuming such liabilities.

Amounts in NOK 1000 Geographical distribution - power sales

Note 4: CloSelY relaTed ParTIeS Nord Pool Spot aS

All transactions with Nord Pool Spot AS owners are conducted at market value.

Nord Pool Spot Group

2011

2010

2011

2010

Norway

30 516 763

40 197 039

30 516 763

40 197 039

Sweden

49 146 970

64 772 108

49 146 970

64 772 108

Denmark

14 273 792

14 630 820

14 440 038

14 917 559

Finland

18 441 993

22 804 243

18 441 993

22 804 243

Germany Estonia TOTAl

365 469

224 056

365 469

224 056

1 567 043

1 099 559

1 567 043

1 099 559

114 312 029

143 727 825

114 478 274

144 014 564

Nord Pool Spot aS Geographical distribution - power purchases

2011

2010

2011

2010

30 249 544

37 837 312

30 249 544

37 837 312

Sweden

50 643 788

63 217 543

50 643 788

63 217 543

Denmark

13 349 163

17 075 339

13 515 409

17 362 077

Finland

17 785 389

23 968 792

17 785 389

23 968 792

284 259

190 956

284 259

190 956

Estonia TOTAl

1 999 886

1 437 883

1 999 886

1 437 884

114 312 029

143 727 825

114 478 274

144 014 564

Nord Pool Finland Oy supplies marketing and consultancy services to the Nord Pool Spot Group. The total income for 2011 amounts to NOK 14.2 million against NOK 14.3 million in 2010.

Nord Pool Spot AB provides marketing, market data- and consultancy services to the Nord Pool Spot Group. The total income for 2011 amounts to NOK 9.6 million, against NOK 8.7 million in 2010.

services and tasks performed by statnett sF for Nord pool spot As Pension plan

Nord Pool Spot AS is a member of Statnett SF’s pension fund and thus assumes certain pension liabilities. In addition, Statnett SF’s pension fund acts as the depositary of the pension funds. See the section on pension costs and liabilities under accounting principles.

Nord Pool Spot aS

Nord Pool Gas A/S supplies administrative services and letting of premises. The agreement on letting of premises and administrative services remains in force until terminated by either party. Total expenses for 2011 amount to NOK 0.4 mill against NOK 0.3 million in 2010.

Nord Pool Spot Group

2011

2010

2011

2010

Norway

42 482

41 562

42 482

41 562

Sweden

34 927

25 886

35 589

26 549

Denmark

18 019

19 526

19 917

21 306

Finland

21 001

18 320

23 760

20 369

Germany

services and tasks performed by Nord pool Finland oy for the Nord pool spot Group Marketing services

nord pool Spot annual report 2011

Geographical distribution

Nord Pool Spot AS provides no administrative services for Nord Pool Gas A/S.

services and tasks performed by Nord pool Gas A/s for Nord pool spot As Administrative services

Note 3: oPeraTING reveNueS Amounts in NOK 1000

services and tasks performed by Nord pool spot As for Nord pool Gas A/s Administrative services

services and tasks performed by Nord pool spot AB for Nord pool spot Group Marketing services

Nord Pool Spot Group

Norway

Germany

notes

Note 2: Power TurNover

1 522

3 150

1 522

3 150

11 638

3 640

11 638

3 640

Estonia

3 492

2 324

3 492

2 324

lithuania

4 774

4 783

4 774

4 783

France

843

TOTAl

138 697

119 191

144 015

123 683

Note 5: PaYroll eXPeNSeS, NuMBer oF eMPloYeeS, reIMBurSMeNTS, eMPloYee loaNS eTC. Amounts in NOK 1000 Payroll expenses

Nord Pool Spot aS

Nord Pool Spot Group

2011

2010

2011

2010

31 621

27 599

43 117

38 920

Social security contribution

4 901

4 071

6 622

5 629

Pension expenses

5 300

4 145

5 300

4 145

808

505

2 425

1 828

42 630

36 320

57 464

50 522

Salaries

Other beneﬁts TOTAl

During the financial year, Nord Pool Spot AS has had an average of 38 employees (38 man-years) against 34 employees (33.7 man-years) in 2010. The Nord Pool Spot Group had an average of 58 employees (57.8 man-years) against 47 employees (46.8 man-years) in 2010. remuneration of excecutives

Ceo

Salary

1 307

Other remuneration

466

Accrued pension

Board of directors

No loans or collaterals have been granted to the CEO, the Chairman of the Board of Directors or other related parties. No individual loan or collateral exceeding 5 per cent of the equity of the Group companies has been granted. Directors’ fees are only paid to external board members. Board members who are employed by the owners of Nord Pool Spot or in the Nord Pool Spot Group do not receive any remuneration. Bonus

Nord Pool Spot AS has a bonus scheme for the employees with bonuses being paid on the basis of different parameters such as profits. The maximum bonus per year corresponds to 15 per cent of the annual pay. The average bonus obtained for 2011 amounted to 11.25 per cent.

Amounts in NOK 1000 Financial income revenues related companies Dividend subsidiary Interest revenue

Compulsory auditing for the parent company amounts to NOK 200,000, other certification services NOK 2,550, tax and VAT consultancy NOK 49,168 and other services NOK 49,155. Compulsory auditing for the Group amounts to NOK 262,021, other certification services NOK 2,550, tax and VAT consultancy NOK 85,538 and other services NOK 54,583. The amounts are exclusive of VAT.

Nord Pool Spot aS

Nord Pool Spot Group

2011

2010

2011

2010

310

7 774

10 600

10 641

10 699

10 852

Other ﬁnancial revenues (agio)

TOTAl FINANcIAl rEVENUES

18 421

10 641

11 056

10 852

Nord Pool Spot aS Financial expenses

Auditors

notes

Note 7: NeT FINaNCIal ITeMS

The CEO form 1.12.2009 is covered by the Swedish pension plan.

Expenses related companies Interest expenses Other ﬁnancial expenses (disagio) TOTAl FINANcIAl EXPENSES NET FINANcIAl ITEmS

Nord Pool Spot Group

2011

2010

2011

2010 751

1 492

1 699

1 657

1 965

287

1 492

1 986

1 657

3 003

16 929

8 654

9 399

7 849

Note 6: oTHer oPeraTING eXPeNSeS Amounts in NOK 1000

Nord Pool Spot aS

Note 8: INTaNGIBle aSSeTS

Nord Pool Spot Group 2010

2011

2010

28 976

11 098

6 484

21 512

19 168

23 154

23 620

miscellaneous administrative expenses

13 766

12 275

23 506

16 969

Additions

TOTAl OTHEr OPErATING EXPENSES

68 985

60 419

57 758

47 073

Acquisition cost as of 31.12.2011

Operation and maintenance of software

The group has entered into a tenancy agreement on rental of office facilities at Granfoss Næringspark, Lysaker. The agreement was entered into on 1 July 2011 and will terminate on 31 March 2019. The yearly rent for 2011 amounts to NOK 2.1 mill. The rent is adjusted on a yearly basis in accordance with the development in the CPI.

Amounts in NOK 1000 Nord Pool Spot Acquisition cost as of 01.01.2011

Accumulated depreciation as of 31.12.2011

Trade systems

Total

62 814

7 382

70 197

-48 836

BOOK VAlUE AS OF 31.12.2011

21 360

The year’s depreciation

10 696

Nord Pool Spot Group Acquisition cost as of 01.01.2011 Translation diﬀerences Additions Acquisition cost as of 31.12.2011

Trade systems

Total

73 854

380

8 757

82 991

-57 810

BOOK VAlUE AS OF 31.12.2011

25 181

The year’s depreciation

12 706

Accumulated depreciation as of 31.12.2011

Both the parent company and the group make use of straight-line depreciation for all intangible assets. The useful lives of the intangible fixed assets are estimated as follows: • Computer software: 5 years

nord pool Spot annual report 2011

2011 33 707

Outsourced services

Nord Pool Spot Group

Amounts in NOK 1000

notes

Note 9: TaNGIBle FIXed aSSeTS

european Market Coupling Company GmbH

Investments valued in accordance with the equity method

Nord Pool Spot aS

vehicles

Aquisition cost as of 01.01.2011 Additions Acquisition cost as of 31.12.2011 Accumulated depreciation as of 31.12.2011 BOOK VAlUE AS OF 31.12.2011

edP and oﬃce equipment

Total

Amounts in NOK 1000 calculated share of net proﬁt

416

5 346

5 762

3 287

Share of net proﬁt

310

416

7 846

8 262

SHArE OF NET PrOFIT

310

-229

-4 441

-4 670

187

3 405

3 592

Book value at 31 dec 2011 is calculated as follows: Opening balance of 1 Jan 11

This year’s depreciation

Nord Pool Spot Group

1 091

1 174

vehicles

edP and oﬃce equipment

Total

416

9 758

10 173

Acquisition cost as of 01.01.2011

reclassiﬁed from 1 Jan 11

This years part of proﬁt

310

clOSING BAlANcE OF 31 DEc 11

203

Translation diﬀerences

Additions

3 489

416

12 403

12 818

-229

-8 509

-8 738

187

3 894

4 081

Nord Pool Spot Group

1 461

1 544

Operating income

Acquisition cost as of 31.12.2011 Accumulated depreciation as of 31.12.2011 BOOK VAlUE AS OF 31.12.11

-107

capital contribution

The following amounts are included in the Groups profit and loss account and balance sheet from joint ventures who are incorporated with pro rata consolidation: Nord Pool Gas a/S 2011

This year’s depreciation

1 781

Operating expenses

-2 933

-2 617

Operating proﬁt

-1 035

-836

PrOFIT BEFOrE TAXES

-1 140

-906

Fixed assets

Note 10: SuBSIdIarIeS, aSSoCIaTed CoMPaNIeS aNd JoINT veNTureS

currents assets

4 285

27 984

Total assets

4 295

28 026

Total alloccation for liabilities

118

487

3 023

25 697

TOTAl lIABIlITIES

3 141

26 184

Equity

1 154

1 842

4 295

28 026

currents liabilities Amounts in NOK 1 000 Company

acquisition date

Headquarters

ownership

Share of voting rights

Nord Pool Finland Oy

01.07.02

Helsinki

100 %

Nord Pool Spot AB

18.12.07

Stockholm

100 %

Nord Pool Gas A/S

01.12.07

Brøndby

50 %

29.08.08

Hamburg

20 %

European market coupling company Gmbh

TOTAl EqUITy AND lIABIlITIES

Note 11: loNG-TerM reCeIvaBleS The long-term receivables refers to a loan to European Market Coupling Company GmbH on EUR 250 000.

Investments valued in accordance with the cost method Company

The conditions for this loan are an annual rate of interest on 8% of the loan amount outstanding at any time.

Total share capital

Shares owned

Total par value

acquisition cost

Book value

Nord Pool Finland Oy

01.07.02

4 978

40 000

4 978 000

17 742 240

Nord Pool Spot AB

18.12.07

100 000

SEK 100.000

84 670

01.12.07

DKK 10.000

10 000

2 000

5 386 500

Joint venture Nord Pool Gas A/S

The borrower is entitled to repay the loan amount at any time in whole or in part without premium or penalty by giving five days notice.

associated companies European market coupling company Gmbh

The loan amount is due and payable without any requirement for the lender to give notice on March 31, 2011, in an amount of 20 % of the retained profit of the Borrower for the financial year 2010, in any, and on March 31, 2012, in an amount of 20 per cent of the retained profit of the Borrower for the financial year 2011, if any. The remaining loan amount is payable sixty days after the lenders written request, but not before the 2nd of January 2013.

28.01.09

€ 1 600 000

2 824 760

nord pool Spot annual report 2011

The useful life of tangible fixed assets is estimated as follows: • EDP and office equipment: 2-10 years • Vehicles: 5 years

2010

1 898

The credit facility is based on the requirements of the licensing conditions set by NVE regarding regulatory capital related to the licensed business. Regulatory capital is estimated at NOK 14 million and according to the licensing conditions to an amount equivalent to at least half of the subordinated capital consist of deposits or unconditional drawing rights in a credit institution.

Note 12: aCCouNTS reCeIvaBle Amounts in NOK 1000

Nord Pool Spot aS

Power sales Other accounts receivable BOOK VAlUE

Nord Pool Spot Group

2011

2010

2011

2010

255 413

644 947

255 413

651 982

4 311

4 191

5 072

4 487

259 723

649 138

260 485

656 469

Accounts receivable have been recorded at face value as of 31.12.2011.

Note 15: SHare CaPITal aNd SHareHolder INForMaTIoN Amounts in NOK 1000 Nord Pool Spot aS Number of shares

Par value

Book value

A-shares

The share capital comprises

14 400

3 500

50 400 000

TOTAl

14 400

Foreign curency risks

Shareholders overview as of 31.12.2011

The development in currency rates imposes both a direct and an indirect financial risk for the Nord Pool Spot Group. Hedging of currency income and assets denominated in foreign currency is done using hedging instruments, such as foreign exchange forward contracts.

30,0 %

Market value derivatives in NoK

currency

30,0 %

Svenska kraftnät

4 320

30,0 %

Fingrid Oyj

2 880

20,0 %

100,0 %

Note 16: eQuITY Amounts in NOK 1000 Nord Pool Spot aS Equity as of 01.01.2011

DKK

-12 984

14 491

1 507

Dividend

SEK

-24 119

28 435

4 316

-1

EqUITy AS OF 31.12 2011

EUr

363

-105

258

-1

Share capital

Share premium reserve

other equity

Total equity

50 400

10 681

105 286

166 367

2 915

Nord Pool Spot as a bank guarantee have above “DNB Næringseiendom” on NOK 1.5 million with expiration date September 30, 2019. Nord Pool Spot has a credit facility of NOK 7 million in Nordea. The credit facility is not utilized as of December 31, 2011.

-50 000

80 126

141 207

Nord Pool Spot Group

Share capital

Share premium reserve

other equity

Total equity

Equity as of 01.01 2011

50 400

10 681

98 127

159 208

Net income Nord Pool Spot Group

24 840

-50 000 10 681

Translation diﬀerences

Nord Pool Spot aS

24 840 50 400

Note 14: BaNK dePoSITS restricted funds for tax withholdings

2 880 14 400

Net income

SUm

Shares of voting rights

Dividend EqUITy AS OF 31.12 2011

50 400

10 681

360

16 430

-50 000

64 917

125 998

nord pool Spot annual report 2011

Balance sheet exposure

Net foreign exchange position

ownership

4 320

TOTAl NUmBEr OF SHArES

Forward exchange contracts are used solely to hedge currency exposures incurred in connection with the settlement of physical trading. The table set out below shows the currency exposures and the market value of the forward positions. oﬀ-balance sheet exposure

Number of shares held

Statnett SF

Energinet.dk

Nord Pool Spot AS maintains spot market accounts receivable and accounts payable in SEK, DKK, EUR and NOK. These are secured continuously using hedging instruments, such as foreign exchange forward contracts. Accounts receivable and payable in foreign currencies are valued at the year-end exchange rate on 31 December 2011.

Amounts in NOK 1000

50 400 000

NOrD POOl SPOT AS HAD 4 SHArEHOlDErS AS OF 31.12.2011. All SHArE HAVE EqUAl rIGHTS.

Note 13: ForeIGN CurreNCY

amounts in NoK 1000

notes

In addition, it provided a loan to Nord Pool Gas A/S for a total of NOK 8,000,000. It was first granted a loan of NOK 2,600,000 16 April 2010 to 3.48% interest rate that is 27 September was increased by NOK 5.4 million to 3.9% interest rate. The loan was repaid by Nord Pool Gas A/S on 14 January 2011.

Nord Pool Spot Group

The company has pension plans covering a total of 29 persons. The plans entitle the beneficiaries to defined future benefits. On the whole, benefits depend on the length of employment, salary level at achieved pension age, and pension paid by the National Insurance Fund. The pension plans are statutory. The plans comply with the provisions of the law. The former CEO’s of Nord Pool Spot is entitled to a supplementary pension scheme. The pensionable age of the supplementary scheme is 62 years. From the age of 62 up to and including 74 years the CEO is entitled to a supplementary yearly payment equivalent to NOK 400,000 (2008 value) in addition to the general scheme. The supplementary scheme is indexed to the average increase in the wages of the company both during the period of employment as well as after the pensionable age has been attained. The rest of the executive management is covered by Nord Pool Spot’s group pension plan, and have no rights beyond those associated with that plan. Allocations for pension liabilities are based on estimated pension liabilities as of 31 December 2011. The actuarial assumptions are based on common actuarial principles and demographic factors. The company is taking part in an early retirement pension agreement through Spekter. This agreement implies that all employees have the possibility to choose an early retirement pension from the age of 62. The early retirement pension agreement through Spekter was decided to be phased out based on a new pension reform from the Norwegian authority from 1 January 2011. It was only possible to retire according to this early retirement agreement until 31 December 2010. The gain on the termination of the arrangement is recognized in 2010, and presented as a reduction in labor costs. There is a remaining appropriation of company’s liabilities as per 31st of December 2010 which regards persons already engaged in the old early retirement pension plan.

2011

2010

4 960

3 844

Interest cost for pension liabilities

1 417

1 510

yield on pension funds

-979

-768

changes on estimates and deviations recorded in the proﬁt and loss account

-98

2 488

-2 929

5 300

4 145

Shortening NET PENSION EXPENSES (NET INcOmE)

2011

2010

Insured

unsecured

Insured

unsecured

Estimated pension liabilities as of 31.12.

44 626

4 770

29 336

4 927

Estimated pension funds as of 31.12.

-18 370

-16 900

Eﬀect of changes in estimates and deviations not recorded in the proﬁt and loss account

-608

Nord Pool Spot aS

-18 457

-632

-4 884

Social security contribution

3 702

673

1 753

695

NET PENSION lIABIlITIES

11 502

4 810

9 305

5 014

2011

2010

Insured

unsecured

Insured

unsecured

Estimated pension liabilities as of 31.12.

44 626

4 770

29 336

4 927

Estimated pension funds as of 31.12.

-18 370

-16 900

Eﬀect of changes in estimates and deviations not recorded in the proﬁt and loss account

-608

Nord Pool Spot Group

-18 457

-632

-4 884

Social security contribution

3 702

673

1 753

695

NET PENSION lIABIlITIES

11 502

4 810

9 305

5 014

Employees in Denmark have a contribution based pension plan. This pension plan comprises three employees and pension costs for the year equal 12.5 % of gross salaries per employee.

Financial assumptions

Employees in Finland have a contribution based pension plan. This pension plan comprises eight employees and pension costs for the year equal 17.1 % of gross salaries per employee.

Expected growth in salaries

3,50 %

4,00 %

Expected growth of social security base amount

3,25 %

3,75 %

Nord Pool Spot aS

current value of this year’s pension earnings

Nord Pool Spot aS

2011

2010

4 960

3 844

Interest cost for pension liabilities

1 417

1 510

yield on pension funds

-979

-768

-98

2 488

-2 929

5 300

4 145

changes on estimates and deviations recorded in the proﬁt and loss account Shortening NET PENSION EXPENSES (NET INcOmE)

Discount rate

2011

2010

2,60 %

4,00 %

Expected growth in pensions

3,25 %

3,75 %

Expected yield on pension funds

4,10 %

5,40 %

Average social security payment

14,10 %

Note 18: aCCouNTS PaYaBle Amounts in NOK 1000

Nord Pool Spot aS 2011

2010

2011

2010

Power purchases

512 639

2 293 241

512 639

2 307 963

Other accounts payable BOOK VAlUE

nord pool Spot annual report 2011

The group has a contribution-based pension plan for employees in Sweden. This pension plan comprises five employees. The pension costs for the year for employees in Sweden total NOK 1.0 million.

current value of this year's pension earnings

Nord Pool Spot Group

notes

Note 17: PeNSIoNS

Nord Pool Spot Group

11 350

1 817

11 995

2 855

523 989

2 295 058

524 634

2 310 818

Amounts in NOK 1000 Taxes for the year are distributed as follows: Taxes payable

Nord Pool Spot aS

Nord Pool Spot Group

2011

2010

2011

2010

7 462

5 982

7 674

6 636

change in deferred tax

-578

-391

-578

-391

TOTAl TAX EXPENSES

6 884

5 591

7 096

6 245

Pre-tax proﬁt

31 724

19 776

23 525

20 640

Dividend from Subsidiary

-7 774

233

24 183

19 776

23 525

20 640

401

192

401

192

2 065

1 395

2 065

1 395

26 649

21 363

25 991

22 227

auditor’s report

Note 19: TaXeS

Calculated payable tax basis for the year:

Other items Total profit before tax Permanent differences *) change in temporary differences BASIS TAXES PAyABlE FOr THE yEAr overview temporary differences: Fixed assets Allocations in accordance with generally accepted accounting principles

Nord Pool Spot aS -225

Nord Pool Spot Group -126

-225

-126

-28

-1

-28

-16 312

-14 319

-16 312

-14 319

TOTAl

-16 538

-14 473

-16 538

-14 473

-4 631

-4 052

-4 631

-4 052

28 % deferred tax beneﬁt

explanation why tax for the year does not constitute 28% of the pre-tax profit: Nord Pool Spot aS 28 % tax on pre-tax profit Permanent differences (28%)

6 771 112

calculated tax expense

6 884

Nominal taxation rate **)

28,5 %

nord pool Spot annual report 2011

-1

Pensions

*) Not including non-deductible expenses, such as entertainment. **) Tax cost as a percentage of pre-tax proﬁt. 53

Nord Pool SPoT'S valueS together We enjoy working together and have a high team spirit that keeps us energized and motivated to deliver results. We develop solutions in close cooperation with our customers. We achieve success together.

With integrity Our integrity is founded on a sense of high ethical and moral values which we regard to be the core of our business. We act with quality, intuition, honesty and truthfulness. People trust us, because they know we act with integrity.

towards excellence Excellence is not a state, it is a dynamic goal. We are bold when faced with challenges and humble when successful. We aim to have a broad competence level in order to meet the needs of our customers. We work together to achieve excellence every day.

Norway

Nord Pool Spot AS P.O. Box 121 NO - 1325 lysaker Tel +47 67 10 91 00 Fax +47 67 10 91 01 E-mail: norway@npspot.com

sweden

Nord Pool Spot AB Gustavslundsvägen 141 B SE - 167 51 Bromma Tel: +46 (0)8 555 166 00 Fax: +46 (0)8 555 166 02 E-mail: sweden@npspot.com

Finland

Nord Pool Finland Oy ruoholahdenkatu 8 FI - 00180 Helsinki Tel: +358 9 6840 480 Fax: +358 9 6840 4860 E-mail: so@npspot.com

denmark

Nord Pool Spot AS Industrivej 9-11 DK - 2605 Brøndby Tel: +45 29 46 37 78 E-mail: denmark@npspot.com

Nord Pool Spot AS Tornimäe 5 Petrasol Business center EE - 10145 Tallinn Tel: +372 50 40 273 E-mail: estonia@npspot.com

Nord Pool Spot AS Tel +44 (0) 7825 3000 98 E-mail: rs@npspot.com www.N2EX.com

DESIGN AND cONcEPT: rEDINK, www.redink.no PHOTO: Tine Poppe, caroline roka IllUSTrATION : Terje Tønnesen PrINT: rK Grafisk

www.NordPoolSPoT.CoM

Estonia