Miscellaneous Provisions for Use with the EEI Master Contract
Uniform Commercial Code Waiver
This optional provision allows parties to clarify their intent that the credit assurances provisions set forth in the contract reflect the entirety of the parties contractual, legal, and/or equitable rights to call for financial assurances, including collateral or other credit support, and that neither party may rely on or use law external to the contract, including any implied right arising from Section 2-609 of the Uniform Commercial Code or similar legal doctrines, as a way to require further financial assurances from a party already complying with the express provisions of the contract.
This Errata includes typographical errors to the EEI Master Power Purchase and Sale Agreement and the Collateral Annex.
Unilateral Transaction ("Sell Only")
This language makes the Master Agreement "Unilateral", i.e., only covering sales from Party A to Party B. It may be useful if the parties do not intend to have bilateral purchase and sale obligations under the Master Agreement.
Incorporation of Existing Transactions
This provision causes prior transactions to be governed by the Master Agreement. It may be useful if the parties desire that the Master Agreement govern power transactions entered into by the parties prior to execution of the Master Agreement.
This provision is used for a Master Agreement that is entered into by an agent (such as a service company affiliate) on behalf of a party (such as a utility operating company). It may be appropriate if the Master Agreement or Transaction Confirmations are contemplated to be signed by an Agent on behalf of a party.
This provision, used for transactions with Index-based pricing, addresses the possibility that an Index is altered or is no longer available. It may be appropriate if Transactions with index-based pricing are envisioned, and the parties desire to provide for an alternative basis for determining the Contract Price should the relevant index be substantially altered or no longer published.
- UPDATED MARKET DISRUPTION Discussion of Revised Market Disruption Provision Version 2.0
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- UPDATED MARKET DISRUPTION Provision language Version 2.0
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- PREVIOUS MARKET DISRUPTION Version 1.0
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Bankruptcy - Acknowledgements
In light of the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”), EEI Contract users asked the EEI Master Contract Drafting Committee to develop a enhanced alternative version of Section 10.10. After consideration of the request, including a assessment of the parties’ legal ability by contract to compel a particular judicial interpretation of the agreement or payments pursuant thereto, and of potential unintended consequences of such a provision when drafted otherwise than as a statement of intent, the EEI Master Contract Drafting Committee suggests this provision for users seeking a provision that reflects passage of BAPCPA.
Bankruptcy - Utility Clause
When added to Section 10.10, this provision confirms the parties' agreement that neither party is a "utility" as that term is used in 11 U.S.C. Section 366 of the Code nor a provider of last resort, and that neither will make an assertion to the contrary in any bankruptcy proceeding, regardless of the legal and/or equitable rights it may have. This provision is intended to protect the non-debtor party from being declared a utility in a Day -1 Bankruptcy Court Order pursuant to a "Utility Motion", which would prevent the non-debtor party from exercising its right to terminate forward contracts with the debtor party and thereby obligate the non-debtor party to continue to perform under such contracts as post-petition "utility services" to the debtor party.
Commodity Exchange Act Representations Version 1.1
Shortly after the EEI Master Agreement was published in 2000, the Commodity Futures Modernization Act (the "CFMA") was enacted. The CFMA clarified the legal and regulatory status of certain over-the-counter commodity and derivative transactions by amending the Commodity Exchange Act to clearly exempt them from regulation under the Act. As a result, the EEI Working Group published the following language so that parties can make representations that meet the requirements of those of the new exemptions that are likely to apply to transactions conducted under the EEI Master Agreement.
This sentence, to be added at the end of Section 10.11, allows Parties to report commercial terms of transactions for price reporting and price index purposes without such reporting being a breach of confidentiality obligations.
Parties may consider using this optional provision to document their intent to waive or limit the ability of regulators to modify the rates or terms and conditions of wholesale power transactions. The issues are complex and evolving, and consultation with counsel on the appropriate use of this provision is advised.
This version is modified from that previously posted in two ways. First, the Supreme Court in Morgan Stanley Capital Group, Inc. v. Public Util. Dist. No. 1 of Snohomish, ruled that there is a single statutory standard of FERC review- the "just and reasonable" standard, which permits contract abrogation by FERC only in "those extraordinary circumstances where the public will be severely harmed," and not two standards from which parties may select by agreement. Second, a referenced FERC policy statement on the subject of its standard of review has since been terminated.
Master MRTU Amendment
This amendment is intended to address changes that entities may want to consider arising from the implementation of the Market Redesign and Technology Upgrade ("MRTU") program by the California Independent System Operator ("CAISO"). The CAISO will commence reporting, among other things, day ahead hourly locational marginal pricing information ("Day-Ahead LMP Price") for various P-nodes and aggregation and hub points. Furthermore, the former zonal regions in the CAISO known as SP15 ("SP15 Zone") and NP15 ("NP15 Zone") will no longer exist and will be replaced with Existing Zone Generation Trading Hubs known as the SP15 EZ Gen Hub ("SP15 EZ Gen Hub") and the NP15 EZ Gen Hub ("NP15 EZ Gen Hub").
Historical index or swap transactions, however, typically referenced the day-ahead peak or off-peak weighted average index price ("ICE Day-Ahead Power Price") as published in the Day Ahead Power Price Report by the IntercontinentalExchange, Inc ("ICE") for the SP15 Zone and/or the NP15 Zone, as applicable, for purposes of determining either the contract price (or other similar reference) for physical delivery of power or the relevant index price (or other similar reference) for financially-settled power. Post MRTU, the reference to this ICE Day-Ahead Power Price may not be preferable. Similarly references to the SP15/NP15 Zones may be considered inappropriate since they have been replaced by the EZ Gen Hubs. Therefore, this amendment is intended to allow parties to revise the terms of each impacted transaction on a global basis in order to substitute the Day-Ahead LMP Prices at the SP15 EZ Gen Hub and/or the NP15 EZ Gen Hub, as applicable, for the ICE Day-Ahead Power Price for the SP15 Zone and/or the NP15 Zone, as applicable and to revise the references to the SP15/NP 15 Zones the corresponding EZ Gen Hubs.
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