Contract Actions for Specified
Source Transactions
The WSPP Contract Subcommittee
Operating Committee Meeting
March 6, 2013 Lake Tahoe
What is a Specified Source?
• “Specified Source” defined
Specified Source of Electricity"
Electricity or "Specified
Specified
"Specified
Source" means a facility or unit which is permitted
to be claimed as the source of electricityy delivered.
The reporting entity must have either full or partial
ownership in the facility/unit or a written power
contract as defined in MRR section 95102(a) to
procure electricity generated by that facility/unit. . .
. . Specified source also means electricity
procured from an asset-controlling supplier
recognized by ARB.
2
Why Would We Care?
• Because that Specified Source has a GHG
emissions rate less than the default rate (the
standard rate of GHG emissions CARB assigns
to any generation unless a Specified Source has
a lower rate
3
How Is Specified Source
Transacted?
• With a “power contract”
"Power contract"
"P
t t" or "written
" itt power contract,"
t t " as used
d for
f
the purposes of documenting specified versus unspecified
sources of imported and exported electricity, means a
written document, including associated verbal or electronic
records if included as part of the written power contract,
arranging for the procurement of electricity
electricity. . . . A power
contract for a specified source is a contract that is
contingent upon delivery of power from a particular facility,
unit,
it or asset-controlling
t
t lli supplier's
li ' system
t
th
thatt iis
designated at the time the transaction is executed.
4
And some CARG Guidance on
power contract
contract”
“power
“Acceptable
Acceptable forms of a specified contract may
include, but are not limited to, modified versions of
either the Western Systems Power Pool (WSPP)
Agreement Schedule B (Unit Commitment
Service) or Schedule C (Firm Capacity/Energy
S l or E
Sale
Exchange
h
S
Service)
i ) th
thatt specify
if th
the power
is from the ACS system.”
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What do we need to modify?
• Possibly WSPP provisions that electronically
recorded oral conversations are tantamount to
written
• The power contract must permit the specified
source “to
“t b
be claimed
l i d as th
the source off electricity
l t i it
delivered.” The source must be adequately
specified in the contract documents
documents.
• The power contract for a specified source must
be “contingent
contingent upon delivery of power from”
from that
source, meaning that failure to deliver from the
specified
p
source is non-performance.
p
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What do we need to modify?
• Damages
– WSPP provides for liquidated (formulaic) damages.
– LDs are imperfect, but parties transacting in bulk
energy have preferred the LD approach to the risk of
litigation over actual damages
damages. I
– We may want optionality to address some variables
that are not present in pure energy transactions, for
example, in energy transactions, replacement or
redirection occurs instantaneously with nonperformance, but with emissions, the cost of
replacement allowances may depend on different
timing
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What do we need to modify?
• Other provisions to discuss
– Allocation of risk of change in law
– Obligations
g
to p
provide documentary
yp
proof of
generation
– Warranties of accurate reporting
– Provision
P i i off ttagging
i iinformation
f
ti tto titie th
the d
delivery
li
off
energy to a tag and other notifications
8
What do we need to modify?
• Other CARB regulatory considerations to take
into contract language
g g
–
–
–
–
definition of “Continuous physical transmission path”
“Direct delivery of electricity”
“Substitute Power”
criteria stated in § 95852(b)(3) of the cap and trade
regulations and § 95111(a)(4) and (5)
(5), and (f) and (g)
of the Mandatory Reporting Regulations for electricity
importers to claim a compliance obligation for delivery
f
from
a specified
f
source
– Many of these requirements pertain to tagging,
reporting and documentation.
reporting,
documentation
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