Annex Provisions for Use with the EEI Master Contract
AB32 Products Annex
The EEI AB32 Products Annex to the EEI Master Power Purchase and Sale Agreement is designed to enable trading between EEI counterparties in compliance products issued or approved by the California Air Resources Board pursuant to the cap and trade regulations under California’s 2006 Global Warming Solutions Act.
The EEI Renewable Energy Certificates (RECs) Annex to the EEI Master Power Purchase and Sale Agreement is designed to enable RECs trading between EEI counterparties. This annex has been in development for several years, as the subcommittee studied and responded to market developments and the needs of EEI Master Agreement party RECs market participants. It has been streamlined to remove certain features that market developments have not required, while adding and enhancing other features in order to maximize utility for potential users.
The Collateral Annex sets forth detailed procedures under which each party will provide security under Article 8 of the Master Contract. Specifically, the Collateral Annex describes the conditions under which a party will be required to Transfer Performance Assurance in the form of Cash, a Letter of Credit or other property, as well as the conditions under which a party administers and releases Performance Assurance. When the Collateral Annex is used, it supercedes and replaces Sections 8.1(c), 8.2(c) and 8.3 of the Master Contract. The Collateral Annex has its own Cover Sheet to make various elections, including the Collateral Threshold, Independent Amount, Minimum Transfer Amount, and Rounding Amount that apply to the counterparties to the Master Contract.
Gas Annex Version 1.1
Parties may wish to consider using the EEI Gas Annex Version 1.1 to be able to trade physically settled natural gas under the EEI Master Contract. The EEI Gas Annex is modeled from the NAESB Base Contract for Sale and Purchase of Natural Gas, NAESB Standard 6.3.1, dated April 19, 2002, and attempts to incorporate the key gas-specific provisions from such agreement.
Since the publication of the EEI Gas Annex, NAESB published a revised version of the NAESB Base Contract for Sale and Purchase of Natural Gas dated September 5, 2006. The EEI Drafting Committee considered whether EEI should publish an additional, revised EEI Gas Annex to reflect the changes made in the 2006 version of the NAESB.
A decision was made not to publish a revised EEI Gas Annex since (i) the majority of the changes to the 2006 version of the NAESB were to add non-product specific, general trading and credit terms which are for the most part already reflected in the base EEI Master Contract. The intent of the EEI Drafting Committee was that the EEI Gas Annex incorporate only the natural gas product specific terms and the EEI Master Contract provide the general trading and credit terms and (ii) the few provisions that could be considered to impact products under the 2006 version of the NAESB were not significantly material to warrant a rewriting of the EEI Gas Annex.
Coal Annex Version 1.0
This provision provides a standard platform for market participants to purchase and sell coal on the wholesale market, joining already-existing provisions for trading electricity and natural gas.
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