EXHIBIT C-SS
SPECIFIED SOURCE
CONFIRMATION ATTACHMENT1
This Specified Source Confirmation Attachment applies to this Confirmation, and this
Confirmation only, and controls in the event of any inconsistency with the Agreement or master
confirmation agreement, if any.
1.
Specified Source.
a. Source or Sources:
Facilities, generators, units or ACS (“Source”):
[Transalta: if there are multiple sources, should we provide for hierarchy of dispatch?]
Source CARB IDs, if applicable:
California Energy Commission RPS ID, if applicable:
b. Source EFsp:
(Parties may add multiple lines if multiple Sources are contemplated.)
c. Compensation to Purchaser for Seller Failure to Deliver from Specified Source: If
neither are checked, Carbon Payment Adjustment applies.
Carbon Payment Adjustment provided in Section 7 applies.
Carbon Payment Adjustment does not apply; compensation to Purchaser will be as
follows in addition to Purchaser’s remedies in Section 21 of the Agreement:
[e.g., fixed damages of $0, $2, or % of Carbon Payment Adjustment.]
d. EF Indemnity True-Up: If neither are checked, EF True-Up does not apply.[Claire B.
recommends not separating 1.c. and 1.d., rather it is how the calculation of carbon damages would be done.]
Does EF Indemnity True-Up in Section 8 apply?
Yes
No
If “Yes” is checked in the above question, set forth circumstances when applicable:[Claire B:
By laying out specific scenarios under which amounts are paid based on an emission factor true up, this
approach is intended to do away with the need to designate a confirmation as regulatory continuing or not.]
Change in generator operations or fuel
Any other circumstance [Claire B.: Intended
to address situations like variation in an ACS’
source.
Change in law or AB32 [Claire B. Could be emission factor due to weather-related hydro
change in rules governing what power can be variability and corresponding market purchases]
specified, requirements for specification of a
resource, change to what fuels are exempt from
compliance obligation, etc.]
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This is for ANY energy product- this would go on the back of the form of Confirmation that is Exhibit C of the
WSPP Agreement. It is not a “Schedule” or “Schedule C”; rather, it adds further lines for parties to complete to
describe their transaction, such as those in Exhibit C where, e.g., parties can select any of the Service Schedules as
applicable.
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e. RECs Creation and Retirement2: [think this through for daisy chain transactions. Expecting that
CARB may proposes changes to their rules on this in July. Can this retirement, etc., obligation be daisy
chainable? How do we know which RECs are to be retired from ACS resources?]
Are RECs created for the electricity generated by the Source that is sold under this
Confirmation?
Yes
No
If “Yes” is checked in the above question, select the following “Responsible Party” for the
retirement and verification of RECs under the Cap and Trade Regulations3:
Seller
Buyer
Retirement and verification:
By Responsible Party (as selected above) in its Western Renewable Generation
Information System retirement subaccount for the current calendar year and included in its
[report] to CARB for the current calendar year
Other: [Set forth different retirement and verification]
f. Regulatorily Continuing: If neither is checked, “no” applies.[See Claire B. comment below in
def.]
Is this transaction Regulatorily Continuing?
Yes
No
g. E-Tag Scheduling Requirement: If neither is checked, “no” applies.
Is Purchaser responsible for scheduling and populating NERC e-Tag with GHG designation
or as otherwise designated in the Miscellaneous Token Field of the Market Path where the
Seller is listed as the PSE; provided, however, that errors will not give rise to a Carbon
Payment Adjustment or other damages?
Yes- GHG(____)
No
2.
Definitions. Initially capitalized terms used and not otherwise defined herein are
defined in the Cap and Trade Regulations.
a.
“AB32” means the California Global Warming Solutions Act of 2006 and
the Cap and Trade Regulations.
b.
“ACS” means “asset-controlling supplier” as that term is defined in the
Cap and Trade Regulations.
c.
“Cap and Trade Regulations” means the Mandatory Greenhouse Gas
Emissions Reporting and California Cap on Greenhouse Gas Emissions and Market-Based
Compliance Mechanisms regulations (California Code of Regulations Title 17, Subchapter 10,
Articles 2 and 5 respectively) promulgated by CARB pursuant to the California Global Warming
Solutions Act of 2006.
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If any part of this Section is not completed, each Party takes the risk of failing to meet CARB requirements with
respect to RECs retirement and verification.
3
This attachment is not intended to enable an RPS transaction, only to provide that electricity is from a specified
source. Therefore, one would add CPUC STCs or other REC transaction provisions in the Confirm if this is part of
an RPS transaction.
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d.
“CARB” means the California Air Resources Board of the California
Environmental Protection Agency.
e.
“EFass” means the emission rate assigned by CARB for energy delivered
under this Confirmation. [This is used in the EF Indemnity True-Up and could be a different emission rate
assigned for delivery from the specified resource, an emission rate for an alternative specified resource that
provides substitute power, or the default emission rate for an unspecified resource. Claire B: In the event of nondelivery, where the power was to have been delivered at a point outside the CAISO, the EF ass would also apply to
power delivered pursuant to Purchaser’s purchase of substitute power.]
f.
“EFsp” means the Source emissions factor specified in Section 1.b.
g.
“EFunsp” means the default emissions factor for unspecified electricity
imports within the meaning of the Cap and Trade Regulations. [ref. 95111(b)]
h.
“GHG Index” is the average California ISO [GHG price index] for the
next succeeding [fifteen] trading days.
i.
“Penalties” means any alternative compliance payments, penalties, fines or
fees imposed or assessed against the performing Party by CARB or a governmental authority on
account of the nonperforming Party’s failure to perform, as determined by the performing Party
in a commercially reasonable manner; provided that any of the same that are imposed or assessed
due to the performing Party’s pre-existing adverse compliance record shall not be included in
such determination, and provided further that performing Party shall provide a statement of
calculation and reasonable supporting documentation[, redacted to comply with any obligations
of confidentiality,] fairly allocating such amounts if the same are imposed or assessed due to the
failure of other persons or entities in addition to the failure of the non-performing Party.
j.
“Regulatorily Continuing” means the transaction [what aspects?] [complies
with AB32 as amended from time to time] as of the [Transaction Date] and the Delivery Date.
[Regulatorily Continuing, if adopted by the Contracts Committee for this document as a concept, means that
whatever compliance is affected by the designation only applies as of the transaction date, the delivery date, and
which other applicable dates, such as reporting and verification dates.] [Claire B.: I would suggest that the
definition of regulatory continuing be limited to requirements around registration of the specified source (which
currently only applies to ACS – otherwise the buyer/importer registers) and requirements for provision of data
necessary for buyer/seller to document and claim a transaction as specified. I think the risks for other changes, and
corresponding implications for carbon costs, are too big for most sellers to be able to accept regulatory continuing.
Thus, I think those issues would be readily handled through optional carbon payment provisions.]
k.
“SEQ” means the quantity of Substitute Energy.
l.
“Specified Source” means “specified source of electricity” or “specified
source” as defined in the Cap and Trade Regulations. [ref. 95102(a)(432).]
m.
“Specified Source Transaction” means agreement between a seller and a
buyer to transact electricity that may be claimed as a specified source under California’s Cap and
Trade Program. [ Claire B.: I think it would be useful to add this definition and refer to the confirmation as a
specified source transaction confirmation, rather than specified source confirmation. My rationale is two fold. First,
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reference to a ‘specified source’ in this confirmation will not make it so in CARB eyes –it’s only one component and
whether or not a CARB verifier recognizes an import pursuant to this confirmation as specified is not determined by
what the confirmation says. Second, I strongly feel that intent is key from CARB’s perspective. An ACS or owner of
a resource has the ability to sell that power as specified or non-specified. CARB is already dealing with parties who
purchased power from a particular ACS or resource and want to claim it as specified, even where the seller did not
intend to sell it as specified. What parties are doing through this confirmation is making their intention to sell power
as specified explicit, and agree to additional provisions to facilitate claiming of the power as specified under
CARB’s rules.]
n.
“Substitute Energy” includes “substitute power” or “substitute electricity”
as defined in the Cap and Trade Regulations [ref. 95102(a)(442)] and any other energy that is not
from the Source delivered or otherwise acquired by Purchaser in the event of Seller’s failure to
deliver electricity from the Source.
o.
“TL” means the transmission loss correction factor, if applicable, = 1.00 or
1.02 (MWh of power delivered to California must include transmission loss factor (*1.02) if not
measured at busbar for a specified source, at first point of receipt within the balancing area of an
ACS, or unspecified or if supplied by ACS). [Loss factor for EFunsp is 1.02 so we need the 2% adder]
p.
Rules of Interpretation. Unless otherwise required by the context in which
any term appears, (i) the singular includes the plural and vice versa; (ii) all references to a
particular entity include a reference to such entity’s successors and permitted assigns; and (iii)
the word “or” is not necessarily exclusive.
3.
Specified Source Transaction. [Claire B.: I strongly feel that intent is key from CARB’s
perspective. An ACS or owner of a resource has the ability to sell that power as specified or non-specified. CARB is
already dealing with parties who purchased power from a particular ACS or resource and want to claim it as
specified, even where the seller did not intend to sell it as specified. What parties are doing through this
confirmation is making their intention to sell power as specified explicit, and agree to additional provisions to
facilitate claiming of the power as specified under CARB’s rules.] This is a transaction for the purchase and
sale of generation from a particular resource or ACS with the intent that the buyer or downstream
purchaser may claim any energy delivered from this generation into California as being from a
Specified Source. Seller agrees to provide the electric energy from the designated Source set
forth in Section 1 above and not to provide Substitute Energy instead unless required in order to
[comply with the service schedule]. [refs. 95111(a)(4); 95102(a)(351)] Purchaser may disclose
to any potential purchasers from it of all or any part of [Product] that it has engaged in this
transaction for a Specified Source from Seller, but any such disclosure shall redact price terms.
This right of disclosure is transferrable by Purchaser or any purchaser from Purchaser. Seller
agrees to provide to Purchaser, within a reasonable time after request, (a) proof that it either
owns the Source or has the right to sell the energy and capacity sold in this Confirmation as
energy and capacity from the Source as a Specified Source or ACS, and (b) unless Seller is an
ACS, Source meter data or its equivalent. [Claire B.: meter data or equivalent is not required for specified
ACS sales. The ‘equivalent’ part is meant to encompass the MID-C hourly allocations.’] [What happens if Lehman
is in the chain? Claire B.: The provision of meter data on a monthly basis, and a Confirmation of Disclosure would
protect downstream buyers from a Lehman situation. Ultimate source is designated in 1.a., but what if ultimate
source is not in privity with the entity being audited by CARB? Claire B.: Unless source is an ACS, source will not
be audited by CARB. CARB will only audit the importer. If importer does not have records documenting source
generation and contract terms, importer may lose right to claim import as specified.]
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4.
Representations. Seller warrants and represents: (a) EFsp is the Source’s
emissions factor assigned by CARB as reported by CARB of the date hereof; provided however,
that for a non-ACS Source, such emissions factor will be based on last year’s emissions
characteristics and is not necessarily the actual factor that CARB will assign in the future; and
provided further than if an emissions factor is not assigned by CARB, EFsp is estimated by Seller
in good faith; (b) it is the ACS, the owner or operator of the Source or is selling or remarketing
electricity procured pursuant to a Specified Source Transaction [ref. 95111(a)(4)] ; and (c) if this
transaction is for a resale of electricity by Seller, Seller warrants and represents that the energy it
is reselling herein was procured pursuant to a transaction that both parties thereto agreed was a
Specified Source Transaction and in which the seller agreed to provide data to facilitate reporting
and auditing.4 [Claire B.: A reseller cannot warrant that its original contract is in contract is in accordance with
the cap and trade regulation – it can only warrant that it has done the best it can. I therefore think that what we
need here is warranty that a resellers upstream contract meets the same conditions as this contract, i.e. both buyer
and seller agreed that it was a specified source transaction and seller agreed to provide data to facilitate reporting
and auditing..]
5.
Service Schedules Unchanged. Nothing in this Specified Source Confirmation
Attachment limits the obligation of either Party to deliver or receive energy as provided in the
Confirmation. [Claire B:. The concept for schedule C specified, is that if the power delivered is not from the
designated source, 1.c./1.d. is needed.]
6.
Further Covenants.
a.
Seller shall maintain its records and data and make the same reasonably
available to Purchaser or Purchaser’s verifier in connection with any present or future reporting,
verification, transfer, registration, or retirement requirements associated with this transaction.
Nothing herein limits or waives any obligations of Seller or Purchaser to keep records or provide
attestations provided in AB32 to the extent such requirements are binding on such party. Nothing
in this Confirmation limits the rights or obligations of either party under Section 9.6 of the
Agreement.
b.
[should or can there be notice of changes to the Source that may cause the
current or estimated EFsp in the current year to be meaningfully different in the future?]
Wade McCartney: discussion … should emphasize that a Schedule S must be fully functional for resale
transactions. The working illustration for the discussion should be some sort of daisy chain transaction involving at
least one specified or ACS source, one marketer, and a first deliverer as the importer like an LSE, where Marketer
#1 contracts with the Specified Source for Specified Source power. Marketer #1 then resells the specified source
power to an LSE who then imports the power to California. In this resale transaction, Marketer #1 represented the
product for sale as specified source power which was verbally confirmed with the LSE, where the LSE has assumed
that Marketer #1 did in fact properly contract with the generator for specified source power. Marketer #1 needs to
bring (or should be prepared to bring) some written document to the table that unequivocally shows that it has the
right to resell the specified source power in question. For this daisy chain transaction, how will [the document]
ensure that Marketer #1 has in fact secured the right to resell specified source power to the LSE? Does [the
document] rely only on documentary writing (possible verbal only) to establish the claim that Marketer #1 has the
authority to resell specified source power? It seems that a new paragraph should be added … whereby the seller
warrants that they are in fact re-marketing specified source power that was acquired in conformance with ARB
rules. --Wade
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c.
[should parties agree to procedure of notifying each other of delivery of
Substitute Energy? Claire B.: I think this is covered by provision for sharing of meter data or
equivalent.]
d.
Seller is under no obligation to attribute or include a value on account of
EFsp in determining Replacement Price.
e.
For any RECs created for the electricity generated by the Source that is
sold under this Confirmation Seller represents and covenants that it has not sold and will not sell
any such RECs to any person or entity other than Purchaser unless otherwise specifically
provided herein. If a Party has failed to retire or verify RECs in the manner it has agreed in this
Confirmation, it shall pay the other Party that Party’s direct actual damages, as reasonably
determined by such other Party.
f.
If Seller or Purchaser has intentionally provided written false information
to the other Party or CARB with respect to any the Source or deliveries under the Confirmation,
such Party shall pay the other any Penalties it thereby incurs. [very unpopular with group. what are the
scenarios that could in fact give rise to penalties? Selling as specified when you know it’s unspecified? Middleman
could be unregulated by carb and not incur any penalties. So can that be daisy chained? Members may not like
concept of penalties at all in the WSPP agreement.]
7.
Carbon Payment Adjustment. If Carbon Payment Adjustment applies, without
limiting Purchaser’s remedies for Seller’s failure to deliver pursuant to Section 21 of the
Agreement:
a.
If Purchaser has purchased substitute energy or capacity outside [of
California, [because the price of the energy would cover this if purchased within CA] Seller shall pay
Purchaser for failure to deliver any part of the energy to Buyer from the Source, or failing to
provide the records and data it has agreed hereunder to provide even if delivery has been from
the Source and failure to provide such records or data is reasonably anticipated by Purchaser to
prevent Purchaser from being able to claim the Source’s EFsp, even if any such failure is on
account of an Uncontrollable Force or the requirements of [the Product], a payment equal to:
SEQ * TL * (EFunsp 5- EFsp) * GHG Index.
b.
“Economic benefit” and “economic loss” as those terms are used in
Section 22.3(g)(i) and 22.3(g)(ii) of the Agreement include consideration of anticipated Carbon
Payment Adjustment as if the Terminated Transaction will be replaced with one for Substitute
Energy with EFunsp.
8.
EF Indemnity True Up. Without limiting Purchaser’s other remedies under the
Agreement or this Confirmation, if EF Indemnity True-Up applies, Seller shall pay Purchaser,
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Prior draft provided for the greater of specified source or unspecified, this has been deleted in this draft for
discussion purposes on the assumption that purchaser should be able to mitigate through purchase of unspecified
power if there is a non-delivery. Is there a risk that should be addressed of a GPE “putting” high factor specified
source power to purchaser?
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without excuse for Uncontrollable Force or meeting the requirements of [the Product], for the
circumstances indicated in Section 1.d. above:
[SEQ *TL *] (EFass - EFsp)*GHG Index
provided, however, that if in such case EFass is less than EFsp, then Purchaser shall pay Seller:
[SEQ *TL *] (EFsp - EFass)*GHG Index
9.
Choice of Law. Notwithstanding Section 24 of the Agreement, the construction
and interpretation of AB32 shall be determined in accordance with the laws of the State of
California. [need to verify application under Utah conflicts of laws law.]
___________________________
Purchaser
___________________________
Seller
___________________________
Authorized Signature for Purchaser
___________________________
Authorized Signature for Seller
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