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Standard Standard Wholesale Power Wholesale Power
ContractsContractsProgress 2000Progress 2000
Christopher J. BernardChristopher J. BernardGeneral CounselGeneral Counsel
Entergy Power Marketing CorpEntergy Power Marketing Corp
Co-Chair NEM CommitteeCo-Chair NEM Committee
Working Group EEIWorking Group EEI
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WHAT WE HADWHAT WE HAD
UTILITY INTERCHANGE AGREEMENTSUTILITY INTERCHANGE AGREEMENTS TARIFFSTARIFFS ““POWER GAS” TRADING POWER GAS” TRADING
AGREEMENTSAGREEMENTS CONFIRMATION SHEETSCONFIRMATION SHEETS BABY ISDAsBABY ISDAs NO CREDIT - NO PROBLEMNO CREDIT - NO PROBLEM
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1998 WAKE UP CALL !!!!1998 WAKE UP CALL !!!!
POWER COMPANY OF AMERICAPOWER COMPANY OF AMERICA FEDERAL ENERGYFEDERAL ENERGY CITY OF SPRINGFIELDCITY OF SPRINGFIELD $10,000 MEGAWATT HOURS$10,000 MEGAWATT HOURS
– 40X EXPOSURE IN 2 DAYS40X EXPOSURE IN 2 DAYS
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WHAT WAS MISSING ?WHAT WAS MISSING ?
COUNTERPARTY COUNTERPARTY CREDITWORTHINESSCREDITWORTHINESS
BILLING, PAYMENT, NETTINGBILLING, PAYMENT, NETTING DEFAULT TRIGGERS AND DEFAULT TRIGGERS AND
REMEDIESREMEDIES BANKRUPTCY BANKRUPTCY
– SETOFF, FORWARD CONTRACT SETOFF, FORWARD CONTRACT LANGUAGE, NETTINGLANGUAGE, NETTING
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CONTRACT PROTECTIONSCONTRACT PROTECTIONS1999 REACTION1999 REACTION
““BANDAIDS” BANDAIDS” COMPREHENSIVE ”NETTING AGREEMENTS”COMPREHENSIVE ”NETTING AGREEMENTS” INCLUDED TERMS BORROWED FROM INCLUDED TERMS BORROWED FROM
NATURAL GAS INDUSTRY & ISDANATURAL GAS INDUSTRY & ISDA AGGRESSIVE PUSH TO EXECUTE THESE AGGRESSIVE PUSH TO EXECUTE THESE
“AMENDMENTS”“AMENDMENTS”
STANDARDIZED CONTRACTS STANDARDIZED CONTRACTS MOVEMENTMOVEMENT
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““STANDARD” FORMSSTANDARD” FORMS
WSPPWSPP– PHYSICAL NOT FINANCIALPHYSICAL NOT FINANCIAL– DOMESTIC & GEOGRAPHICALDOMESTIC & GEOGRAPHICAL
ERCOTERCOT– PHYSICALPHYSICAL– GEOGRAPHICALLY LIMITEDGEOGRAPHICALLY LIMITED
EEI/NEMEEI/NEM– PHYSICAL & FINANCIALPHYSICAL & FINANCIAL– DOMESTICDOMESTIC
ISDAISDA– FINANCIAL NOT PHYSICALFINANCIAL NOT PHYSICAL– DOMESTIC & INTERNATIONALDOMESTIC & INTERNATIONAL
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STANDARDIZED STANDARDIZED CONTRACT EFFORTSCONTRACT EFFORTS
– EEI/NEMEEI/NEM NATIONAL ENERGY MARKETERS NATIONAL ENERGY MARKETERS ASSOC.ASSOC.
EDISON ELECTRIC INSTITUTEEDISON ELECTRIC INSTITUTE– WSPPWSPP
MORE MARKET DRIVEN PROVISIONSMORE MARKET DRIVEN PROVISIONS– ERCOTERCOT
ELECTRIC RELIABILITY COUNCIL OF ELECTRIC RELIABILITY COUNCIL OF TEXASTEXAS
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WHAT ARE WE TRYING TO WHAT ARE WE TRYING TO ADDRESS ?ADDRESS ?
CREDIT ASSURANCESCREDIT ASSURANCES COLLATERALCOLLATERAL DEFAULTS & REMEDIESDEFAULTS & REMEDIES BANKRUPTCYBANKRUPTCY MUNICIPAL AUTHORITYMUNICIPAL AUTHORITY
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– MAJOR PARTICIPANTSMAJOR PARTICIPANTS 50 COMPANIES THROUGH NEM50 COMPANIES THROUGH NEM 30- 45 COMPANIES THROUGH EEI30- 45 COMPANIES THROUGH EEI ENRON, NYMEX & OTHERSENRON, NYMEX & OTHERS
– STRENGTHENED RELATIONSHIPS STRENGTHENED RELATIONSHIPS THROUGHOUT THE INDUSTRYTHROUGHOUT THE INDUSTRY
– CROSS POLLINATION OF INDUSTRY CROSS POLLINATION OF INDUSTRY TALENTTALENT
– DEFINITIONS & STANDARDIZED DEFINITIONS & STANDARDIZED LANGUAGELANGUAGE
STANDARDIZED STANDARDIZED CONTRACT EFFORTSCONTRACT EFFORTS
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CONTRACT REFERENCECONTRACT REFERENCE GENERAL AND CONTRACT INFORMATIONGENERAL AND CONTRACT INFORMATION
– NATIONAL ENERGY MARKETERS NATIONAL ENERGY MARKETERS WWW.ENERGYMARKETERS.COMWWW.ENERGYMARKETERS.COM
– EDISON ELECTRIC INSTITUTEEDISON ELECTRIC INSTITUTE WWW.EEI.ORGWWW.EEI.ORG
– WESTERN SYSTEM POWER POOLWESTERN SYSTEM POWER POOL WWW.WSPP.ORGWWW.WSPP.ORG
– ELECTRIC RELIABILITY COUNCIL OF TEXASELECTRIC RELIABILITY COUNCIL OF TEXAS WWW.ERCOT.COMWWW.ERCOT.COM
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CURRENT ISSUES TO CURRENT ISSUES TO WATCHWATCH
REVISIONS IN GAS CONTRACTSREVISIONS IN GAS CONTRACTS CROSS COMMODITY AGREEMENTSCROSS COMMODITY AGREEMENTS E-TRADING AGREEMENTSE-TRADING AGREEMENTS INCREASED DEMAND FOR CREDIT INCREASED DEMAND FOR CREDIT
ASSURANCE DOCUMENTATIONASSURANCE DOCUMENTATION NETTING AGREEMENTSNETTING AGREEMENTS CROSS COMMODITY NETTINGCROSS COMMODITY NETTING PARENTAL GUARANTEESPARENTAL GUARANTEES CREATIVE CREDIT ASSURANCE ARRANGEMENTSCREATIVE CREDIT ASSURANCE ARRANGEMENTS
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Standard Standard Wholesale Power Wholesale Power
ContractsContractsProgress 2000Progress 2000
Christopher J. BernardChristopher J. BernardGeneral CounselGeneral Counsel
Entergy Power Marketing CorpEntergy Power Marketing Corp
Co-Chair NEM CommitteeCo-Chair NEM Committee
Working Group EEIWorking Group EEI
