Firm Energy
MASTER POWER PURCHASE AND SALE AGREEMENT
CONFIRMATION LETTER
BETWEEN
[COUNTERPARTY]
AND
SOUTHERN CALIFORNIA EDISON COMPANY
This confirmation letter (“Confirmation”) confirms the Transaction between [Counterparty] (“Seller”) and
Southern California Edison Company (“Buyer” or “SCE”) dated as of [Date] (“Confirmation Effective Date”)
regarding the sale and purchase of Firm Energy in accordance with and subject to the terms and
provisions of the EEI Master Power Purchase & Sale Agreement (“Master Agreement”) dated as of [Date]
between the Parties under the following terms and conditions. Capitalized terms used but not defined
herein shall have the meanings ascribed to them in the Master Agreement, including Paragraph 10 to the
Collateral Annex to the EEI Master Power Purchase and Sale Agreement (Paragraph 10 and the
Collateral Annex are both referred to herein as the “Collateral Annex”), and the tariff and protocol
provisions (as amended from time to time, the “Tariff”) of the California Independent System Operator or
any successor control area operator/regional transmission operator (“CAISO”).
ARTICLE 1
TRANSACTION DEFINITIONS
1.1
Seller
[Counterparty].
1.2
Buyer
SCE.
1.3
Term
[Start Date] through [End Date], inclusive (“Term”).
1.4
Product
Firm Energy, as defined below, of the Quantity of Energy supported by Seller’s system, as set forth in the
“Product Table” below. [For CAISO Energy deliveries: Article Four of the Master Agreement shall apply in
the event that Seller fails to schedule and deliver, or Buyer fails to schedule and receive, all or any part of
the applicable Quantity of Firm Energy] [For WSPP Schedule C deliveries: The methodology for
calculating the payments for failure to deliver or receive shall be in accordance with Section 21.3 of the
WSPP Agreement (rather than Article Four of the Master Agreement); provided, that the “Accelerated
Payment of Damages” addressed in Article Four of the Master Agreement shall continue to apply].
PRODUCT TABLE
[Energy Fixed Price: To be completed by SCE if an offer from the Counterparty is awarded in
SCE’s final selection]
ID#
Term
(Inclusive)
ABC -001
[Example to be
deleted]
07/01/2008
–
09/30/2010
Quantity
(in 25 MW
increments)
($/MWh)
75
Energy Fixed
Price
Delivery Period
($/MWh)
$10.00
7x16
non-standard on-peak
Jul–Sep
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Firm Energy
[Gas Index Price: To be completed by SCE if an offer from the Counterparty is awarded in SCE’s
final selection]
ID#
Term
(Inclusive)
ABC -001
[Example to be
deleted]
Quantity
Heat Rate
(in 25 MW
($/MWh)
increments)
(MMBtu/MWh)
($/MWh)
07/01/2008
–
09/30/2010
75
Variable O&M
10.0
Delivery Period
($/MWh)
7x16
non-standard on-peak
Jul–Sep
$10.00
[Power Index Price: To be completed by SCE if an offer from the Counterparty is awarded in SCE’s
final selection]
ID#
Term
(Inclusive)
ABC -001
[Example to be
deleted]
07/01/2008
–
09/30/2010
Quantity
Fixed Price
Adder
(in 25 MW
increments)
($/MWh)
75
Delivery Period
($/MWh)
$0.25
7x16
non-standard on-peak
Jul–Sep
[FOR INSTRUCTIONAL PURPOSES ONLY – These instructions shall be deleted prior to execution.
SCE to complete the applicable “Product Table” above with the awarded Firm Energy Offer from the
selection provided in the attached Excel file (one Confirmation per awarded Offer):
(a)
ID# – SCE will assign the unique ID after an indicative Offer has been submitted in the
attached Excel file;
(b)
Term – Seller shall indicate start date through end date, inclusive;
(c)
Quantity – Seller shall indicate quantity offer, in 25 MW increments;
(d)
Seller shall indicate one of the following pricing methods:
FOR NON SP15 Deliveries:
(i) Energy Fixed Price: expressed in units of $/MWh,
(ii) Gas Index Price: a Product Heat Rate expressed in units of MMBtu/MWh, and a
variable O&M charge expressed in units of $/MWh, or
(iii) Power Index Price: a Fixed Price Adder (positive, negative, or zero expressed in
$/MWh) to the Power Index (as defined below).]
FOR SP15 Deliveries (only fixed price):
(i) Energy Fixed Price: expressed in units of $/MWh,
1.5
Delivery Period
The Delivery Period shall be defined as follows [For each Product in the “Product Table”, Seller shall
indicate one of the following Delivery Periods:]
[___]
7x8 super-peak: HE13-HE20 for each day of the Term, including NERC Holidays.
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Firm Energy
[___] 7x16 non-standard on-peak:
Holidays.
[___] 6x8 super-peak:
NERC Holidays.
HE7-HE22, for each day of the Term, including NERC
HE13-HE20 Monday through Saturday during the Term, excluding
[___] 6x16 non-standard on-peak: [one of the following: HE8-HE23 or HE9-HE24], Monday
through Saturday during the Term, excluding NERC Holidays.
[___] 6x16 standard on-peak:
excluding NERC Holidays.
1.6
HE7-HE22 Monday through Saturday during the Term,
Delivery Point
[For SP15 deliveries: The Delivery Point for Energy shall be the SP15 Zone; provided, however, if the
CAISO implements trading hubs under a locational marginal pricing design during the Term, the Delivery
Point shall be the Existing Zone Generation SP15 Trading Hub (“SP15 EZ Gen Hub”), as such trading
hub is contemplated by the CAISO in its filing made to the FERC dated March 15, 2005 (“Comprehensive
Design Proposal for Inter-Scheduling Coordinator Trades Under the CAISO Corporation’s Market
Redesign and Technology Upgrade, Docket No. ER02-1656-025”) and approved in principle by FERC
pursuant to an Order issued June 10, 2005; provided further, if the SP15 EZ Gen Hub (under any name)
is not established as part of a market redesign that is implemented during the Term, the Parties agree to
promptly work together in good faith to designate an alternate Delivery Point to reasonably approximate
the characteristics of the SP15 Zone.]
[For non-SP15 deliveries: The Delivery Point for Energy shall be [one of the following: COB, NOB, Palo
Verde, Mead, Four Corners, or Victorville (LADWP – LA4) to be negotiated.]
1.7
Scheduling
For each day during the Delivery Period, Seller shall deliver and schedule the Quantity of Firm Energy, in
accordance with the “Product Table” in Section 1.4, to SCE [for SP15 deliveries: as an Inter-Scheduling
Coordinator Energy Trade (“SC Trade”), pursuant to the provisions of the Tariff] [for non-SP15 deliveries:
pursuant to the provisions of the applicable Transmission Owner tariff]. Seller is responsible for all
charges and penalties related to transmission of Energy up to and including the Delivery Point, including
imbalance energy and penalties assessed by the applicable Transmission Owner or any other control
area operator. SCE will be responsible for all charges and penalties related to transmission of Energy
from the Delivery Point.
1.8
Definitions
For purposes of this Confirmation, the following definitions apply:
“NERC Holidays” shall be the holidays as set forth or described on the NERC website at
http://www.nerc.com.
“Pacific Prevailing Time” or “PPT” shall mean Pacific Daylight Time when California observes
Daylight Savings Time and Pacific Standard Time otherwise.
“CAISO Energy” means a Product under which the Seller shall sell and the Buyer shall purchase
a quantity of energy equal to the hourly quantity without Ancillary Services (as defined in the
Tariff) that is or will be scheduled as a schedule coordinator to schedule coordinator transaction
pursuant to the Tariff for which the only excuse for failure to deliver or receive is an
Uncontrollable Force (as defined in the Tariff).
“Firm Energy” means (a) for SP15 deliveries, CAISO Energy as defined below; or (b) for nonSP15 deliveries, WSPP Schedule C as defined within this Confirmation.
“Governmental Authority” means any federal, state, local, municipal, or other governmental,
executive, administrative, judicial, or regulatory entity, and the CAISO or any other transmission
authority, having or asserting jurisdiction over a Party, this Confirmation or the Master Agreement.
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Firm Energy
“Resource Adequacy” has the meaning as set forth in the Resource Adequacy Rulings.
“Resource Adequacy Benefits” means the rights and privileges attached to any generating
resource that satisfy any entity’s Resource Adequacy obligations under any Resource Adequacy
Rulings.
“Resource Adequacy Rulings” means CPUC Decisions 04-01-050, 04-10-035, 05-10-042, 06-04040, 06-06-064, and 06-07-031 and/or any subsequent CPUC ruling or decision, or any other
Resource Adequacy laws, rules or regulations enacted, adopted or promulgated by any
applicable Governmental Authority, as such decisions, rulings, laws, rules or regulations may be
amended or modified from time to time during the Term.
“West Firm” or “WSPP Schedule C” means with respect to a Transaction, a Product that is or will
be scheduled as firm energy and consistent with the most recent rules adopted by the Western
Electricity Coordinating Council (“WECC”) for which the only excuses for failure to deliver or
receive are if an interruption is (i) due to an Uncontrollable Force as provided in Section 10 of the
Western Systems Power Pool Agreement (the “WSPP Agreement”, as amended from time to
time); or (ii) where applicable, to meet Seller’s public utility or statutory obligations to its
customers. Notwithstanding any other provision in this Master Agreement, if Seller exercises its
right to interrupt to meet its public utility or statutory obligations, Seller shall be responsible for
payment of damages for failure to deliver firm energy as provided in Article Four of this Master
Agreement.
ARTICLE 2
COMPENSATION
2.1
Contract Price
[Select the applicable Contract Price:]
[Indexed to SoCalGas or any other negotiated gas index – ONLY FOR NON-S15 PRODUCTS]]
For each day during the delivery Period, the Contract Price shall be the sum of:
(a)
the Product Heat Rate multiplied by the Gas Index (as defined below) for that day; and
(b)
the Variable Charge, if applicable.
The “Product Heat Rate” is specified in the “Product Table” in Section 1.4 and the “Gas Index” shall be
[Seller to select either: monthly index price (expressed in $/MMBtu) for the applicable month as reported
by NGI’s Bidweek Survey Supplement to NGI’s Weekly Gas Price Index published by Natural Gas
Intelligence in the table for Gas Traded for Baseload Delivery under sub-table for “California” under the
listing for “Southern Cal. Bdr. Avg.”] [or the index price (expressed in $/MMBtu) for the applicable flow
date published by Platts Gas Daily (in the internet publication currently accessed through
www.platts.com) in the table entitled “Daily Price Survey” under the heading “Midpoint” for SoCalGas] [or
any other gas index negotiated between Seller and SCE].
Gas Index Restructuring. Notwithstanding anything in Section 3.4 of the Master Agreement, if, for any
reason (including the restructuring of the gas industry resulting from the implementation of any
recommendations that may result from the application of the Southern California Gas Company
(“SoCalGas”) that was directed to be submitted to the CPUC under Rulemaking 04-01-025 dated
September 2, 2004 or SoCalGas Application 04-12-004 dated December 2, 2004), the Gas Index ceases
to be published, or either Party reasonably believes that the Gas Index is substantially changed so that it
does not adequately reflect the aggregate market price of gas at various receipt points on the SoCalGas
system, then either Party may provide the other with notice to such effect and the Parties shall negotiate
in good faith to determine an alternative method or methods for determining the Gas Index in order to
maintain the balance of economic benefits and burdens that the Parties agreed to with respect to the Gas
Index as of the Confirmation Effective Date. Any substitute index or indices must be recognized in the
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Firm Energy
industry as a measure of aggregate daily prices for gas delivered to the various receipt points on the
SoCalGas system. If the Parties are unable to agree on a successor market, index, or methodology
within thirty (30) days of the date of the notice, the dispute resolution procedures of the Master
Agreement shall apply.
[or Energy Fixed Price – option available for either SP15 and non-SP15 products]
The Contract Price shall be the Energy Fixed Price as set forth in the “Product Table” in Section 1.4.
[or indexed to Megawatt Daily or any other negotiated power index – ONLY FOR NON-SP15
PRODUCTS]
For each day during the Delivery Period, the Contract Price shall be the sum of:
(a)
the Power Index (as defined below) for that day; and
(b)
the Fixed Price Adder as set forth in the “Product Table” in Section 1.4., if applicable.
The “Power Index” for the applicable delivery day shall be the price calculated as follows [or any other
power index negotiated between Seller and SCE]:
Using the day-ahead SP15 on-peak index (“On-Peak Index”) and the day-ahead SP15 off-peak
index (“Off-Peak Index”) published daily in Platts Megawatt Daily for a particular energy delivery
day (“d”), the Power Index shall be derived in the following manner:
Power Indexd = Off-Peak Indexd
when d = any Sunday or any NERC Holiday;
or
Power Indexd = {[(On-Peak Indexd) x 16] + [(Off-Peak Indexd) x 8]} ÷ 24
when d = any applicable delivery day other than Sunday or NERC Holiday.
Power Index Restructuring. Notwithstanding Section 3.4 of the Master Agreement, if, for any reason
Platts Megawatt Daily ceases to publish the On-Peak Index and Off-Peak Index, then the On-Peak Index
and Off-Peak Index will be obtained from The Wall Street Journal’s Dow Jones Electricity Price Indexes
publication. If neither publication reports the On-Peak Index or Off-Peak Index, then the Parties shall
negotiate in good faith to determine an alternative source for determining the Power Index. Any
substitute index or indices must be recognized in the industry as a measure of aggregate daily prices for
Energy. If the Parties are unable to agree on a successor market, index, or methodology within thirty (30)
days of the date that the On-Peak Index or Off-Peak Index cease to be published, then the dispute
resolution procedures of Section 10.6(b) of the Master Agreement shall apply.
2.2
Energy Payment
For each day that [CAISO Energy or WSPP Schedule C Energy] is scheduled and received for the
Product specified in the “Product Table” in Section 1.4, SCE shall pay to Seller, in accordance with
Section 6.1 of the Master Agreement, the product of:
(a)
the Contract Price for the Product for that day; and
(b)
the amount of [CAISO Energy or WSPP Schedule C Energy] scheduled and received for
that Product during such day.
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Firm Energy
ARTICLE 3
SPECIAL TERMS AND CONDITIONS
3.1
California Climate Action Registry
In accordance with CPUC Rulemaking 06-04-009, upon modification of the protocols of the California
Climate Action Registry to allow generation facility-specific registration, Seller shall promptly (i) register
with the California Climate Action Registry and (ii) send SCE Notice of such registration.
3.2
Resource Adequacy Benefits
[ONLY FOR NON-SP15 PRODUCTS]
Seller grants, pledges, assigns, and otherwise commits to SCE the full Quantity of the Product in order for
SCE to meet its Resource Adequacy Requirement (“RAR”) under any Resource Adequacy Rulings.
Seller represents, warrants, and covenants to SCE that Seller (a) has not used, granted, pledged,
assigned, or otherwise committed, and (b) will not use, grant, pledge, assign, or otherwise commit any
portion of the Quantity of the Product to meet the RAR of, or confer Resource Adequacy Benefits upon,
any entity other than SCE during the Term. The Parties shall take all actions (including amending this
Agreement and complying with all current and future Tariff provisions and decisions of the CPUC and/or
any other Governmental Authority that address Resource Adequacy performance obligations and
penalties) and execute all documents or instruments necessary to effect the use of the Resource
Adequacy Benefits of the Quantity of the Product for SCE’s sole benefit throughout the Term.
3.3
Mark-to-Market
[For Products using Heat Rate pricing]
Notwithstanding anything in Sections 8.1(c) or 8.2(c) of the Master Agreement or in Paragraphs 1 and 3
of the Collateral Annex to the contrary, for purposes of determining Exposure, the Parties shall calculate
the Current Mark-to-Market Value of this Transaction using the following methodology (unless otherwise
defined, capitalized terms in this Mark-to-Market section are used with the meanings ascribed to them in
the Collateral Annex):
On any Calculation Date, the Current Mark-to-Market Value will be calculated by taking
the sum of the present values for each remaining full or partial month in the Term using
the equation below:
n
Current Mark-to-Market Value =

MVt,i - MVo,i
i
Where:
MVt,i = [(Pt,i - Gt,i x HRi) x Qi] x CFt
MVo,i = [(Po,i - Go,i x HRi) x Qi] x CFo - 7 days
And:
Variable
n
Description
The number of forward months included in the mark-to-market
calculation.
Units
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Firm Energy
i
Pt,i
Po,i
Gt,i
Go,i
HRi
Qi
CFt
A forward month. For the balance of the month of the
Calculation Date, i=0. For the month following the month of the
Calculation Date, i=1, etc.
The midpoint from a Forward Price Assessment for SP15 onpeak for the relevant forward month i on the Calculation Date.
If the product being valued is a super-peak product, then the
on-peak price will be multiplied by 1.20. In the event a Forward
Price Assessment cannot be obtained for a forward period on
the Calculation Date, then the prices for all forward periods for
which there are no Forward Price Assessments shall be set
equal to the Forward Price Assessment for the last available
year.
The midpoint from a Forward Price Assessment for SP15 onpeak for the relevant forward month i on the Confirmation
Effective Date. If the product being valued is a super-peak
product, then the on-peak price will be multiplied by 1.20. In the
event a Forward Price Assessment cannot be obtained for a
forward period on the Confirmation Effective Date, then the
prices for all forward periods for which there are no Forward
Price Assessments shall be set equal to the Forward Price
Assessment for the last available year.
The midpoint from a Forward Price Assessment for Southern
California Border natural gas (i.e., closing price for NYMEX
Henry Hub + Henry Hub to SoCal Border Basis) for the relevant
forward month i on the Calculation Date. In the event a
Forward Price Assessment cannot be obtained for a forward
period on the Calculation Date, then the prices for all forward
periods for which there are no Forward Price Assessments
shall be set equal to the Forward Price Assessment for the last
available year.
The midpoint from a Forward Price Assessment for Southern
California Border natural gas (i.e., closing price for NYMEX
Henry Hub + Henry Hub to SoCal Border Basis) for the relevant
forward month i on the Confirmation Effective Date. In the
event a Forward Price Assessment cannot be obtained for a
forward period on the Confirmation Effective Date, then the
prices for all forward periods for which there are no Forward
Price Assessments shall be set equal to the Forward Price
Assessment for the last available year.
The Strike Heat Rate specified in the “Product Table” above for
the relevant forward month
The Quantity specified in the “Product Table” above multiplied
by the hours remaining under the Transaction for the relevant
forward month
The capacity factor on the Calculation Date, determined by
dividing the power price (Pt,i) by the natural gas price (Gt,i) for
the relevant forward months, to generate a market heat rate
(“MHR”) curve and calculating what percent of the relevant
forward months the Strike Heat Rate (“SHR”) is below the
MHR. This is formulaically equal to the quotient of (a) the
number of months SHR<MHR and (b) the total remaining
months subject to the mark-to-market calculation. At no time
shall the CF be below 25%.
$/MWh
$/MWh
$/MMBtu
$/MMBtu
MMBtu/MWh
MW * Hours
%
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Firm Energy
CFo – 7 days
The capacity factor on December 6, 2006, determined by
dividing the power price (Po – 7 days,i) by the natural gas price
(Go – 7 days,i) for the relevant forward months, to generate a
market heat rate (“MHR”) curve and calculating what percent of
the relevant forward months the Strike Heat Rate (“SHR”) is
below the MHR. This is formulaically equal to the quotient of
(a) the number of months SHR<MHR and (b) the total
remaining months subject to the mark-to-market calculation. At
no time shall the CF be below 25%.
%
For present value purposes, the discount rate should use the appropriate yield curve using U.S. Treasury
constant maturities securities as posted by the Federal Reserve in their H.15 daily update at the following
address: http://www.ustreas.gov/offices/domestic-finance/debt-management/interest-rate/yield.html.
A positive Current Mark-to-Market Value implies SCE has the potential for realization of market gains and
thus has Exposure to Seller’s default or non-performance. Notwithstanding anything to the contrary
contained in the Collateral Annex or this Confirmation, the Parties shall determine the Settlement Amount
for this Transaction in accordance with Section 5.2 of the Master Agreement.
[For power indexed and energy fixed price Transactions]
[TO BE NEGOTIATED]
3.4
Credit Terms
The credit terms in the Master Agreement and the Collateral Annex shall govern this Transaction;
provided, however, that for purposes of calculating a Party's Collateral Requirement pursuant to
Paragraph 3 of the Collateral Annex, if Seller has Exposure to SCE in respect of the Transaction, then the
amount of Exposure for this Transaction is deemed to be zero dollars ($0).
ARTICLE 4
MISCELLANEOUS
4.1
Contact Information
SELLER
Phone/Fax
BUYER
Phone/Fax
Day Ahead Trading:
[xxx-xxx-xxxx / xxx-xxx-xxxx]
626-307-4487 / 626-307-4430
Real Time Trading:
[xxx-xxx-xxxx / xxx-xxx-xxxx]
626-307-4453 / 626-307-4416
Day Ahead Scheduling:
[xxx-xxx-xxxx / xxx-xxx-xxxx]
626-307-4425 / 626-307-4413
Real Time Scheduling:
[xxx-xxx-xxxx / xxx-xxx-xxxx]
626-307-4405 / 626-307-4416
Settlements:
[xxx-xxx-xxxx / xxx-xxx-xxxx]
626-302-3277 / 626-302-3276
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Firm Energy
ACKNOWLEDGED AND AGREED TO AS OF [Date]:
[Counterparty]
Southern California Edison Company
By:
By:
Name:
Name:
Title:
Title:
Date:
Date:
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