Miscellaneous Provisions for Use with the EEI Master Contract

California Resource Adequacy Confirmation

The EEI Contract Drafting Committee (“CDC”) is pleased to announce a new confirmation for the California Resource Adequacy (“RA”) product. In June 2018, the California Public Utilities Commission issued final rules for the procurement of Resource Adequacy by Load Serving Entities.  These new rules took effect for the 2019 RA procurement cycle.  Due to the significant changes, the CDC (with significant input from RA market participants) developed a new RA confirmation for use by RA market participants.  The new confirmation is available for use now. 

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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.

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Errata

This Errata includes typographical errors to the EEI Master Power Purchase and Sale Agreement and the Collateral Annex.

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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.

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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.

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Agency Provision

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.

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Market Disruption

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 Word | PDF

UPDATED MARKET DISRUPTION Provision language Version 2.0 Word | PDF

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.

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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.

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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.

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Confidentiality

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.

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Mobile Sierra

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.

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Disclaimer: The documents and descriptions on this page are provided for informational purposes only and do not constitute legal advice. Consult with legal counsel before using the information and documents provided on this page.