27/05/2009 1

Fortum's energy market reviewKeilaniemi 27 May 2009

Lotta ForssellVice President,CommunicationFortum Portfolio

Management and Trading

Timo LiiriCustomer Manager

Fortum Markets

27/05/2009 2

Background of the energy market review

• The goal of Fortum's energy market review is to give information about the Nordic electricity market and factors behind price development

• Information in this review is based on data from Nord Pool, Nordel, SMHI, Reuters and Fortum's own data

• Similar review is held 2-4 times a year both in Finland and Sweden

27/05/2009 3

• Development of market indicators• Electricity future prices • Economic indicators

• Impact of the global economic crisis on energy markets• Electricity consumption• Fuel price development• Emission allowance price development

• Development of electricity wholesale prices• Fundamentals: hydro reservoirs, production• Spot and future prices

27/05/2009 4

Nordic electricity futures price development 2004-2009

Source: Nord Pool

0

10

20

30

40

50

60

70

1 / 2004 1 / 2005 1 / 2006 1 / 2007 1 / 2008 1 / 2009

Dai

ly c

losi

ng p

rice

EUR

/MW

h

Year 05 Year 06 Year 07 Year 08 Year 09 Year 10 Year 11

Year 12 Year 13 Year 14

27/05/2009 5

Global equity markets getting stronger

• Improved, positive momentum and renewed optimism in the equity markets lately have supported surrounding financial markets

• Global credit market conditions are improving following government stimulus measures and bank stress tests in the US, but remain challenging

• Worldwide governments have decreased benchmark interest rate levels to zero-levels during the first quarter in order to support and improve the difficult financial environment

• Moderate corporate Q1 reports reflecting a weak economic quarter. Mixed corporate outlooks as companies are still struggling with low demand and the outlook remains uncertain

Source: Bloomberg

S&P 500Nord Pool

05

1015202530354045

02.0

1.09

12.0

1.09

20.0

1.09

28.0

1.09

05.0

2.09

13.0

2.09

23.0

2.09

03.0

3.09

11.0

3.09

19.0

3.09

27.0

3.09

06.0

4.09

17.0

4.09

27.0

4.09

06.0

5.09

14.0

5.09

EUR

/MW

h

01002003004005006007008009001000

Inde

x

Nord Pool YR 2010 Frwd contract S&P 500 Index

27/05/2009 6

Industrial production is slowly stabilizing on low levels

• US industrial production fell less than expected in April indicating the recession is loosening in the US

• Eurozone industrial production fell in March as the recession has forced manufacturers to cut output as the recession worsened in Q1 2009

• The US economy is ahead of the Eurozonerecovery as the US economy came in first in the recession

-4

-3

-2

-1

0

1

2

06-0

1-01

06-0

3-01

06-0

5-01

06-0

7-01

06-0

9-01

06-1

1-01

07-0

1-01

07-0

3-01

07-0

5-01

07-0

7-01

07-0

9-01

07-1

1-01

08-0

1-01

08-0

3-01

08-0

5-01

08-0

7-01

08-0

9-01

08-1

1-01

09-0

1-01

US Industrial Production, 2006-2009, mom % change

-4

-3

-2

-1

0

1

2

3

06-0

1-01

06-0

3-01

06-0

5-01

06-0

7-01

06-0

9-01

06-1

1-01

07-0

1-01

07-0

3-01

07-0

5-01

07-0

7-01

07-0

9-01

07-1

1-01

08-0

1-01

08-0

3-01

08-0

5-01

08-0

7-01

08-0

9-01

08-1

1-01

09-0

1-01

EuroZone Industrial Production, 2006-2009, mom % change Source: Bloomberg

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Source: SMHI and Nordel

-25

-20

-15

-10

-5

0

5

10

15

20

25

Week

°C

Warmer than average

Colder than average2009

20082007

Electricity demand in EEA, week 20/2009

0123456789

10

1 5 9 13 17 21 25 29 33 37 41 45 49 53

Wee

kly

Dem

and

(TW

h/w

k)

050100150200250300350400450500

Cum

Dem

and

(TW

h)

2007 2008 2009cum. 2007 cum. 2008 cum. 2009

Temperature and electricity consumption in the Nordic

Nordic average temperatures and historical averages Nordic electricity consumption

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Decrease in electricity consumption continued

• Electricity consumption in the Nordic countries has decreased by almost 5% during the start of this year compared to last year (with temperature correction about 6%).

• Industrial electricity consumption decreed by about 17% during the fist quarter compared to the previous year.

• Consumption decrease accelerated in April – partly due to warmer than normal weather and Easter.

-10 %

-8 %

-6 %

-4 %

-2 %

0 %

2 %Sweden Norway Finland Denmark Nordic

2008 vs. 2007 Q4 2008 vs Q4 2007Q1 2009 vs Q1 2008 1-4 2009 vs. 1-4 2008

Electricity consumption development (*

*) Partly based on preliminary statistics

27/05/2009 9

Oil and coal price development

Soure: ICE

; market prices 26 May 2009; 2009-2010 future quotations

Crude oil price (ICE Brent)

020406080

100120140160

USD

/ bbl

2006 2007 20102008 2009

Coal price (ICE API2)

04080

120160200240

USD

/ t

2006 2007 20102008 2009

Brent Crude USD / bbl

35

40

45

50

55

60

65

26/02/2009 26/03/2009 26/04/2009 26/05/2009

Rotterdam Coal USD / t

50

55

60

65

70

75

80

26/02/2009 26/03/2009 26/04/2009 26/05/2009

27/05/2009 10

CO2 Emission allowance price development

2007 2008 2009Source: Nord Pool

0

5

10

15

20

25

30

35

€/t C

O2

2007 2009 2009 CER

27/05/2009 11

Nordic water reservoirs close to normal levels – snow situation weaker than normally

0

20

40

60

80

100

120

1 5 9 13 17 21 25 29 33 37 41 45 49 53week

rese

rvoi

r con

tent

(TW

h)

2000 2003 20062007 2008 2009reference level

Source: Nord Pool

27/05/2009 12

Spot-price development

Source: Nord Pool

0

10

20

30

40

50

60

70

80

90

1.1. 1.2. 1.3. 1.4. 1.5. 1.6. 1.7. 1.8. 1.9. 1.10. 1.11. 1.12.

Day

Avg

Pric

e EU

R / M

Wh

2005 2006 2007 2008 2009

27/05/2009 13

Common market price in Nord Pool – No significant area price differences

Source: Nord Pool

System and area price development in the Nordic market

0

10

20

30

40

50

60

70

80

90

2006 2007 2008 2009

EUR

/ M

Wh

system Oslo Stockholm Helsinki Odense Copenhagen

27/05/2009 14

Continental and Nordic spot prices on same level – large difference in future prices

EUR/MWh Spot prices Forward prices

Dutch

German

Nordic

Russian*

0

10

20

30

40

50

60

70

80

90

100

110

2005 2006 2007 2008 2009 2010 2011 * Including capacity tariff estimate. E.g 2009 11 €/MWh

25 May 2009

Source: , ATS

27/05/2009 15

Nordic price history and future quotations until 2014

Source: Nord Pool, Future prices 25.5.2009

0

10

20

30

40

50

60

70

80

90

100

110

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013

EUR

/MW

h

27/05/2009 16

Energy market review, 27 May 2009

Fortum publishes a current energy market review two to four times a year. Topics covered in the review include fuel price development, electricity price development on the Nordic power market and factors influencing the development.

Summary:• Oil prices have increased the past months. Coal prices have remained on low levels. • Nordic electricity consumption has continued to decrease. During this year the

consumption has decreased by almost 5% compared to same time last year. • There are positive signals in economic indicators. • Nordic electricity future prices have turned upwards during the past months. Physical

spot-prices have been above the prices seen at the same time the past two years.• The Nordic water reservoirs are at the long term average levels, but the spring floods

have been small due to low snow accumulation and low precipitation.• Spot prices in Continental Europe and Nordic are on the same level, but future

quotations are 10-20 €/MWh higher in the Continental Europe compared to Nordic.

Further information:Lotta Forssell, +358 50 45 36128, lotta.forssell@fortum.com

27/05/2009 17