www rbsmarkets com A Mutual Energy Company Working

www. rbsmarkets. com A Mutual Energy Company Working for Consumers France, UK, Ireland Regional Initiative Stakeholders Meeting 3 rd December 2008 Trading across the Moyle Interconnector Paddy Larkin

Moyle Governance A mutual company: ¢ Set up to reduce cost of energy in Northern Ireland bring energy infrastructure back into local ownership ¢ No shareholders • ¢ All profits and savings are for long term benefit of NI customers 100% debt financed at a very low cost of finance • • Cash is king and reserves to cover debt repayments must be held • ¢ Financiers have a major say in operation of business Stable, enabling regulatory regime is required A separate business – not a branch of DETI or NIAUR…or NIE • Regulatory oversight enshrined in our licences Moyle Interconnector (Financing) plc

Corporate Structure Interconnector Services Ltd Moyle Interconnector (Financing) plc Moyle Energy Investments Ltd Northern Ireland Gas Transmission Holdings Moyle Interconnector Holdings Ltd Belfast Gas Transmission Holdings Limited Premier Transmission Holdings Limited Moyle Interconnector Financing plc Belfast Gas Transmission Financing plc Premier Transmission Financing plc Moyle Interconnector Ltd Belfast Gas Transmission Limited Premier Transmission Limited

The companies Company Activity Mutuali Bond sed Term Moyle Interconnector 500 megawatt DC link Scotland to NI 2003 £ 135 m 30 year 2. 94% Premier Transmission Scotland to Northern Ireland gas pipeline 2005 £ 107 m 25 year 2. 46% Belfast Gas Transmission Phoenix transmission gas pipeline Islandmagee to Belfast 2008 £ 109 m 40 year 2. 21% Also Interconnector Services Limited (joint tendering for common services) Moyle Energy Investments Limited (Investment vehicle – e. g. EREF) Moyle Interconnector (Financing) plc Rate real

Moyle Revenues based on regulatory framework “Top-up” collected from all suppliers via NIE’s T&D charges Auction income from Capacity Holders Moyle Bond Servicing O&M Costs Collection Agency Agreement with SONI Distribution of Surplus Revenues back to Customers CLG Costs Moyle Interconnector (Financing) plc Repairs and Maintenance Converter Station Rates SP Connection Charges Maintenance Management Insurance General Administration

• • Moyle Vital Statistics Commercial Operations April 2002 Capacities – Technical 500 MW each way – Commercial / available to users • 450 MW Scotland to NI winter • 410 MW Scotland to NI summer • 80 MW NI to Scotland • • • Bipole (i. e. 2 x 250 MW – unusual for full plant failure) HVDC (i. e. can force flows independent of voltages/ frequencies) Integrated Return Conductor (i. e. only 2 subsea cables instead of 4) Light triggered thyristor technology (i. e. more reliable than wired) Availability typically >99% (limited flow impact) but exposed to single circuit overhead line in Scotland Losses typically 2. 2% (commercially set at 1. 9%) Moyle Interconnector (Financing) plc

Moyle Interconnector (Financing) plc

Ballycronan More Converter Station Moyle Interconnector (Financing) plc

Direct-light-triggered Thyristors Moyle Interconnector (Financing) plc

Coylton - Auchencrosh 275 k. V Line Moyle Interconnector (Financing) plc

Moyle Capacity Allocations • • All commercial capacity auctioned (pay as bid) in 5 MW blocks Allocation process approved by NIAUR (updated annually) – Maximum reserve price – Minimum quantities for various products – Auction and auction notification timing boundaries 1, 2 and 3 year standard products (normally Oct – Sep) Monthly standard product Monthly non-standard product Standard product carries a standard reserve price (currently £ 2078/MW/month) and no restriction on usage Non standard product carries a reduced equivalent reserve price (has been as low as £ 100/MW/month) and usage over a certain level attracts a further charge (typically over 30% utilisation factor) Moyle Interconnector (Financing) plc

Moyle Auction process • • All auctions carried out by SONI as Moyle’s agent and overseen by NIAUR • No need to register to bid – but bidders must be eligible for bids to be accepted (entered into MICFA – Moyle Interconnector capacity Framework Agreement) Typically 3 auctions for longer term capacity aligned with directed and non directed auction process and customer contracting timetable Monthly capacity typically auctioned 5 days in advance Sealed bid manual auction format Unsold monthly capacity may be sold bi-laterally within month Intention to move to more granularity but will require automated auction system Add on border to system being developed for IFA appears best option (standardisation, linking of auctions, Betta compliant) – interested in views • • • Invitation to bid issued in advance (approx 1 month for long term and 1 week for monthly) – available on SONI website – www. soni. ltd. uk Moyle Interconnector (Financing) plc

Moyle Interconnector (Financing) plc

If it is commercially viable to flow from GB to SEM in a particular hour why does the interconnector not fill up in that period? Moyle Interconnector (Financing) plc

Moyle Interconnector (Financing) plc Existing Moyle Users • • • Bord Gáis Éireann ESB Independent Energy Scottish and Southern Energy Scottish Power SONI (System Operator Northern Ireland) Viridian

Trading across Moyle - General • • • Must be registered in SEM and BETTA to use the capacity SONI will (if desired) submit PN’s to BETTA Moyle requires 3 months credit cover for capacity sales No TNUo. S on interconnector flows in SEM Betta TNUo. S passed through to capacity holders (fixed monthly for generation; estimated demand TNUo. S on capacity held during Triad months – reconciled later) Capacity holdings and final nominations entered on MITS (Moyle interconnector trading sytem) – part of SEM systems IU’s allowed 10 PQ bids for each half hour period at 10: 00 D-1 Accepted bids are modified to take account of interconnector deadband (+/15 MW) and ramping (10 MW/min) before final nominations are determined Final nominations are only revised if Moyle availability changes All quantities quoted at Scotland side of the interconnector Moyle Interconnector (Financing) plc

Potential barriers to trade • • • Risk appetite of Interconnector users Uncertainty of SMP D-1 Lack of liquidity in Betta Lack of half hourly pricing in Betta at D-1 TNUo. S / BSUo. S uncertainty Capacity payment uncertainty Cost of interconnector capacity Competition/ lack of arbitrage traders Manual auction system/ lack of granularity Moyle Interconnector (Financing) plc

Further information available on: www. nienergyholdings. com Moyle Interconnector (Financing) plc www. soni. ltd. uk

Moyle Interconnector (Financing) plc Questions?