SCHEDULE
TO THE ISDA 2002 MASTER AGREEMENT
dated as of _______, 20__
between
[INSERT NAME]
a _____________ organized under the laws of the State of _______
(“Party A”)
and
POWER AUTHORITY OF THE STATE OF NEW YORK
a corporate municipal instrumentality and political subdivision of the State of New York
(“Party B”)
This Schedule shall amend and supplement the ISDA Master Agreement (2002 Form) dated as of (such Schedule and the ISDA Master Agreement, collectively, the “Master Agreement”).
This Schedule shall apply only to the Transaction (the “Subject Transaction”) described in the Confirmation, attached hereto as Appendix 1. Any other “Specified Transaction” hereafter entered into between one party to the Master Agreement and the other party to the Master Agreement shall be effected under an amendment or supplement to this Schedule or under such other document as the parties may agree.
All references herein to the Master Agreement shall mean the Master Agreement as supplemented and modified by this Schedule. All references to Sections shall be, unless otherwise noted, to Sections of the Master Agreement.
Section 5(a)(v), None.
Section 5(a)(vi), None.
Section 5(a)(vii), None.
Section 5(b)(v), None.
and in relation to Party B for the purpose of—
Section 5(a)(v), None.
Section 5(a)(vi), None.
Section 5(a)(vii), None.
Section 5(b)(v), None.
“(4) or without limiting the foregoing, if X is Party B, an entity such as an organization, board, commission, authority, agency or body succeeds to the principal functions of, or powers and duties granted to, X generally.”
If an Early Termination Date occurs under Section 6(a) as a result of Automatic Early Termination, the Defaulting Party shall fully indemnify the Non-defaulting Party on demand against all expense, loss, damage or liability that the Non-defaulting Party may incur in respect of the Master Agreement and the Subject Transaction as a consequence of movements in commodity, exchange or other relevant prices between the Early Termination Date and the Local Business Day on which the Non-defaulting Party first becomes aware that the Early Termination Date has occurred under Section 6(a).
Additional Termination Event will apply. The following will constitute an Additional Termination Event:
With respect to any party, which shall be the Affected Party, the failure of the Affected Party to deliver to the remaining party, which will be the Non-affected Party, any Letters of Credit required by Sections (i) and (j) of Part 5 of this Schedule within the time periods specified therein.
It is not required by any applicable law, as modified by the practice of any relevant governmental revenue authority, of any Relevant Jurisdiction to make any deduction or withholding for or on account of any Tax from any payment (other than, as may be required by applicable law, interest under Section 9(h)) to be made by it to the other party under the Master Agreement. In making this representation, it may rely on (i) the accuracy of any representations made by the other party pursuant to Section 3(f); (ii) the satisfaction of the agreement of the other party contained in Section 4(a)(i) or 4(a)(iii) and the accuracy and effectiveness of any document provided by the other party pursuant to Section 4(a)(i) or 4(a)(iii); and (iii) the satisfaction of the agreement of the other party contained in Section 4(d), except that it will not be a breach of this representation where reliance is placed on clause (ii) above and the other party does not deliver a form or document under Section 4(a)(iii) by reason of material prejudice to its legal or commercial position.
It is a U.S. _____________ duly organized and incorporated under the laws of the State of ______ and is an exempt recipient under Treasury Regulation Section 1.6049-4(c)(1)(ii).
It is a political subdivision of the State of New York duly formed under the laws of the State of New York.
For the purpose of Sections 4(a)(i) and 4(a)(ii), each party agrees to deliver the following documents, as applicable:
|
Party required |
Form/Document/Certificate |
Date by which to
be |
Covered by |
|
Party A and Party B |
A secretary's certificate as to the incumbency of officers executing the Master Agreement and each Confirmation reasonably satisfactory in form and substance to the other party. |
Upon execution of the Master Agreement and as deemed necessary for any further documentation. |
Yes |
|
Party A and Party B |
Audited financial statements for each fiscal year of such party and any Credit Support Provider with respect to such party, certified by independent certified public accountants and prepared in accordance with U.S. generally accepted accounting principles. |
As soon as practicable after the execution of the Master Agreement and also within 120 days (or as soon as practicable after becoming publicly available) after the end of each of its fiscal years while there are any obligations outstanding under the Master Agreement unless such report is freely available over the internet from sources such as www.sec.gov/edgar. shtml or the party’s website. |
Yes |
|
Party A |
A duly executed Term Letter of Credit. |
Upon execution of the Master Agreement and from time to time as required under the Master Agreement. |
No |
|
Party A and Party B |
Legal opinion covering the Master Agreement reasonably satisfactory to the other party. |
Within 90 days of the execution of the Master Agreement. |
No |
|
Party A and Party B |
Certified copies of the resolutions adopted by Party A and Party B authorizing the execution of the Master Agreement. |
Within two (2) Local Business Days following execution of the Master Agreement and as deemed necessary for further documentation. |
Yes |
|
Party A and Party B |
Such other documents as the other party may reasonably request. |
Upon request. |
No |
Attention:
Facsimile No.:
Telephone No.:
Power Authority of the State of New York
123 Main Street
White Plains, NY 10601
Attention: Senior Vice President ERM
Facsimile No.: 914-287-3890
Attention: Vice President Power Resource Planning & Acquisition
Facsimile No.: 914-390-8156
In addition, for purposes of notices sent pursuant to Part 5:
Attention: Vice President –Energy Risk
Assessment and Control
Facsimile No.: 914-287-3081
and,
Attention: Treasurer
Facsimile No.: 914- 681-6995
Party A does not appoint a Process Agent but designates as a place where service may be made upon it: its offices at _________________.
Party B does not appoint a Process Agent but designates as a place where service may be made upon it: its offices at 123 Main Street, White Plains, NY 10601.
“Credit Support Provider” means in relation to Party B: Any issuer of any NYPA Letter of Credit provided by Party B as a Credit Support Document pursuant to the Master Agreement.
For the avoidance of doubt, any event or circumstance with respect to an issuer of a Letter of Credit shall not constitute an Event of Default or Additional Termination Event unless the applicable party fails to deliver a replacement Letter of Credit in accordance with Section (i) or (j) of Part 5 of this Schedule, as applicable.
“Each party consents to the exclusive jurisdiction and venue of any state or federal court within or for the City of New York, New York County, New York, for adjudication of any suit, claim, action or other proceeding at law or in equity relating to this Agreement, or to any transaction contemplated hereby. Each party accepts, generally and unconditionally, the exclusive jurisdiction and venue of the aforesaid courts and waives any objection as to venue, and any defense of forum non conveniens. Each party waives any right it may have to a trial by jury in respect of any litigation based on, or arising out of, under, or in connection with this Agreement and any agreement contemplated to be executed in connection herewith, or any course of conduct, course of dealing, statements (whether verbal or written) or actions of any party in connection with such agreements.”
“Specified Entity” means in relation to Party A, none.
“Specified Entity” means in relation to Party B, none.
(n) Recording of Conversations. Each party (i) consents to the recording of telephone conversations between the trading, marketing and other relevant personnel of the parties in connection with the Master Agreement or any potential Transaction, (ii) agrees to obtain any necessary consent of, and give any necessary notice of such recording to, its relevant personnel and (iii) agrees, to the extent permitted by applicable law, that recordings may be submitted in evidence in any proceedings.
“(iii) Each obligation of each party under Section 2(a)(i) is subject to (1) the condition precedent that no Event of Default, Illegality or Potential Event of Default with respect to the other party has occurred and is continuing, (2) the condition precedent that no Early Termination Date in respect of the Subject Transaction has occurred or been effectively designated and (3) each other condition specified in the Master Agreement to be a condition precedent for the purpose of this Section 2(a)(iii).”
“Each party makes the representations set forth below to the other party (which, in the case of the representations in Section 3(a), will be deemed to be repeated at all times until the termination of the Master Agreement). If any “Additional Representation” is specified in the Schedule or the Confirmation as applying, the party or parties specified for such Additional Representation will make and, if applicable, be deemed to repeat such Additional Representation at the time or times specified for such Additional Representation.”
“(ii) Powers and Actions. It has the power to execute the Master Agreement and any other documentation relating to the Master Agreement to which it is a party, to deliver the Master Agreement and any other documentation relating to the Master Agreement that it is required by the Master Agreement to deliver and to perform its obligations under the Master Agreement and has taken all necessary action and has made all necessary determinations and findings to authorize such execution, delivery and performance; the individual(s) executing and delivering the Master Agreement and any other documentation (including any Credit Support Document) relating to the Master Agreement to which it is a party or that is required to deliver are duly empowered and authorized to do so; and it has duly executed and delivered the Master Agreement.”
“(vi) It is an “eligible contract participant” under, and as defined in, Section la(12) of the Commodity Exchange Act, as amended (7 U.S.C. § la(12)).
(vii) It has entered into the Master Agreement (including the Subject Transaction) in conjunction with its line of business or the financing of its business.
(viii) It is entering into the Master Agreement, the Subject Transaction and any other documentation relating to the Master Agreement as principal (and not as agent or in any other capacity, fiduciary or otherwise).
(ix) The parties intend that the Master Agreement shall be a “master agreement” for purposes of 11 U.S.C. § 101(53B) and 12 U.S.C. § 1821(e)(8)(d)(vii) or any successor provisions.”
“(b) Absence of Certain Events. No Event of Default, Potential Event of Default or, to its knowledge, Termination Event with respect to it has occurred and is continuing, and no such event or circumstance would occur as a result of its entering into or performing its obligations under the Master Agreement.”
“(6) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets;”
“(viii) Merger Without Assumption. The party or any Credit Support Provider of such party consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets to, another entity (or, without limiting the foregoing, if such party is Party B, an entity such as an organization, board, commission, authority, agency or body succeeds to the principal functions of, or powers and duties granted to, such party) and, at the time of such consolidation, amalgamation, merger, transfer, or succession:
“(iii) “Dealer Fallback” means that, promptly upon becoming aware of the Market Disruption Event or Additional Market Disruption Event, the parties shall expeditiously and jointly agree upon three independent leading dealers in the relevant underlying commodity market selected in good faith (A) from among dealers of good credit standing which satisfy all the criteria that the parties apply generally at the time in deciding whether to offer or to make an extension of credit or to enter into a transaction comparable to the Subject Transaction that is affected by the Market Disruption Event or Additional Market Disruption Event, and (B) to the extent practicable, from among dealers having an office in the same city. Such dealers shall be appointed to make a determination of the Relevant Price taking into consideration the latest available quotation for the relevant Commodity Reference Price and any other information that in good faith it deems relevant. The Relevant Price shall be the arithmetic mean of the three amounts determined to be the Relevant Price by such dealers, in which case such calculation shall be binding and conclusive absent manifest error. If the parties have not agreed upon the appointment of the dealers on or before the sixth Local Business Day following the first Pricing Date on which the Market Disruption Event or Additional Market Disruption Event occurred or existed, or if a determination of the Relevant Price cannot be obtained from at least three dealers, the next applicable Disruption Fallback shall apply to the Subject Transaction.
The following Disruption Fallbacks shall apply to the Subject Transaction in the following order: Negotiated Fallback; with the next applicable Disruption Fallback to be Dealer Fallback; with the next applicable Disruption Fallback to be Fallback Reference Price; and with the next applicable Disruption Fallback to be No Fault Termination.”
“Bankrupt” means with respect to a party or any Credit Support Provider of such party, such Person: (1) is dissolved (other than pursuant to a consolidation, amalgamation or merger); (2) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due; (3) makes a general assignment, arrangement or composition with or for the benefit of its creditors; (4)(A) institutes or has instituted against it, by a regulator, supervisor or any similar official with primary insolvency, rehabilitative or regulatory jurisdiction over it in the jurisdiction of its incorporation or organization or the jurisdiction of its head or home office, a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation by it or such regulator, supervisor or similar official, or (B) has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation, and such proceeding or petition is instituted or presented by a person or entity not described in clause (A) above and either (I) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (II) is not dismissed, discharged, stayed or restrained in each case within sixty (60) days of the institution or presentation thereof; (5) has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger); (6) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets; (7) has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within fifteen (15) days thereafter; (8) causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in clauses (1) to (7) above (inclusive); or (9) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts.
“Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy,” as now or hereafter in effect, or any successor statute.
“Bi-Monthly Letter of Credit” means the Letter of Credit to be provided by Party A pursuant to Part 5, Section (i), of this Schedule for each Bi-Monthly Period.
“Bi-Monthly Period” means a two (2)-month period commencing on January 1, March 1, May 1, July 1, September 1 or November 1 of each year commencing in 20__ through 20__.
“Confirmation” means, with respect to the Subject Transaction, the Confirmation, dated ___________, 20__, between Party A and Party B.
“Credit Rating” means (i) with respect to any entity other than Party B, the rating then assigned to such entity's unsecured, senior long-term debt obligations (not supported by third party credit enhancements) or if such entity does not have a rating for its senior unsecured long-term debt, then the rating then assigned to such entity as an issuer rating by S&P, Moody's, Fitch or any other rating agency agreed by the parties as set forth in this Agreement and (ii) with respect to Party B, the rating then assigned to any NYPA Bonds by S&P, Moody's, or any other nationally recognized credit ratings agency.
“Credit Support Document” means (i) with respect to Party A, each Party A Letter of Credit provided pursuant to this Schedule and any undertaking of any Credit Support Provider, and (ii) with respect to Party B, each NYPA Letter of Credit provided pursuant to this Schedule.
“Credit Support Provider” means (i) with respect to Party A, any issuer of any Party A Letter of Credit or entity who commits to provide any Party A Letter of Credit, and (ii) with respect to Party B, any issuer of any NYPA Letter of Credit.
“Credit Support Termination Date” means the ninety-eighth (98th) day following the Final Payment Date applicable to the relevant party.
“Default Rate” as defined in Section 14 is hereby amended to read in its entirety:
“Default Rate” means the lesser of (i) the highest rate allowed by law or (ii) a rate per annum equal to the prime rate as listed in the Money Rates section of the Wall Street Journal on the date of determination (or if not published on such day, the most recent preceding day on which published) plus 2%.
“Downgrade Event” means (i) with respect to Party A, the suspension or withdrawal of Party A's Credit Rating by S&P or Moody's, or downgrade of Party A's Credit Rating below BBB by S&P, Baa2 by Moody's or an equivalent Credit Rating by any other nationally recognized rating agency, (ii) with respect to Party B, the suspension or withdrawal of the Credit Rating on the NYPA Bonds by S&P or Moody's, or the downgrade of the Credit Rating on the NYPA Bonds below BBB by S&P, Baa2 by Moody's or an equivalent Credit Rating by any other nationally recognized rating agency, and (iii) with respect to any Qualified Issuer, the suspension or withdrawal of such entity's Credit Rating by S&P or Moody's, or the downgrade of such entity's Credit Rating below A by S&P, A2 by Moody's or an equivalent rating by any other nationally recognized rating agency.
“Final Payment Date” means, as to a party, the final date on which all outstanding payment obligations of such party to the other party under this Agreement have been fully liquidated and satisfied in full. In the event any payment due under this Agreement becomes the subject of a dispute, the Final Payment Date with respect to the party owing the disputed amount shall not occur until such dispute is finally resolved and the amount owed as determined upon resolution of such dispute, if any, is paid in full.
“Interest Rate” means the lesser of (i) the highest rate allowed by law or (ii) a rate per annum equal to the prime rate as listed in the Money Rates section of the Wall Street Journal under “Money Rates” on the date of determination (or if not published on such day the most recent preceding day on which published) plus two percent (2%).
“Letter of Credit” means an irrevocable, transferable, multiple-draw standby letter of credit, issued by a Qualified Issuer, the cost of which shall be borne by the applicant therefor.
“Moody's” means Moody's Investor Services, Inc.
“NYPA Bonds” means the bonds issued by Party B under the General Resolution Authorizing Revenue Obligations, adopted February 24, 1998, as amended and supplemented, but excluding those bonds which are covered by a municipal bond insurance policy.
“NYPA Letter of Credit” means the Letter of Credit to be provided by Party B pursuant to Part 5, Section (j), of this Schedule.
“NYPA Performance Assurance Amount” means the amount of the NYPA Letter of Credit to be provided by Party B, calculated pursuant to Exhibit 1.
“Party A Letter of Credit” means the Bi-Monthly Letter of Credit or the Semi-Annual Letter of Credit.
“Party A Performance Assurance Amount” means the amount of the Semi-Annual Letter of Credit or Bi-Monthly Letter of Credit to be provided by Party A, calculated pursuant to Exhibit 1.
“Product” means either or both of (i) unforced capacity as defined in applicable NYISO manuals, or (ii) electric energy, as applicable pursuant to Attachment 2 of the Subject Transaction Confirmation.
“Qualified Issuer” means a commercial bank organized under the laws of the United States or any state, having an issuer unsecured senior long-term debt rating of A or higher by S&P, A2 or higher by Moody's, or an equivalent rating by any other nationally recognized rating agency.
“S&P” means Standard & Poor's Ratings Group, a division of the McGraw-Hill, Inc.
“Semi-Annual Letter of Credit” means the letter of credit to be provided by Party A pursuant to Part 5, Section (i), of this Schedule for each Semi-Annual Period.
“Semi-Annual Period” means each six-month period beginning January 1 and July 1 of each year, commencing January 20__ and ending _______.
“Term Letter of Credit” means the Letter of Credit to be provided by Party A pursuant to Part 5, Section (i), of this Schedule.
“Term Letter of Credit Amount” means $___________. [requirement is $10 million per 100 MW energy supplied and $1,000 per MW-month of unforced rest-of-state capacity supplied.]
The Confirmation with its Attachment, attached hereto as Appendix 1, forms a part of this Master Agreement.
[signatures on next page]
IN WITNESS WHEREOF, the parties have executed this Schedule to the ISDA Master Agreement by their duly authorized officers as of the date hereof.
PARTY A
By:
Name:
Title:
Date:
POWER AUTHORITY OF THE
STATE OF NEW YORK
By:
Name:
Title:
Date:
List of Exhibits and Appendices
Exhibit Title
1. Procedure for Computation of Performance Assurance Amounts
2. Form of Letter of Credit
Appendix Title
1. Subject Transaction Confirmation
Exhibit 1
Procedure for Computation of Performance Assurance Amounts
I. Performance Assurance Requirements for Energy Transactions - Background
During the term of the Subject Transaction, forward energy prices for various future periods are required to be calculated for use in semi-annual or bi-monthly computations (“Computations”), as applicable, to determine the Party A Performance Assurance Amount and Party B Performance Assurance Amount periodically under the ISDA Master Agreement (the “Master Agreement”). These prices hereinafter will be referred to as the “Forward Energy Prices.”
This Exhibit establishes a methodology to determine the Forward Energy Prices.
The general methodology in establishing the Forward Energy Prices is based on quotes from published third party information, specifically the “Platts M2M Power” 20-year forward peak and off-peak benchmarks for NYISO Zone G, derived from historical data. The peak period covers hour-beginning 7:00 A.M. through hour-ending 11:00 P.M. during non-holiday weekdays. Off-peak hours cover the entire set of hours within the month that are not classified as peak. Holidays are defined based on the rules for "additional off-peak hours" specified by the North American Electric Reliability Council (NERC). The time-weighted average of the corresponding zonal peak and off-peak published Platts forward price benchmarks, weighted by the number of hours in each of those two respective monthly price blocks, will be used to establish the Forward Energy Prices for a particular month.
In the absence of the Platts M2M Power 20-year forward peak and off-peak benchmarks, the parties agree to use the weighted average of the peak and off-peak NYISO Zone G forward prices published by the New York Mercantile Exchange (“NYMEX”) and/or NYMEX Clearport to establish Forward Energy Prices. Where such prices are not available for the duration of the Subject Transaction, the parties will mutually agree on the methodology and thresholds to be employed, using the best available forward price data then available in the marketplace, to estimate the NYISO Zone G forward price values relating to the specified pricing block, for the remainder of the designated time horizon. In the absence of both the Platts M2M Power 20-year forward peak and off-peak benchmarks and the prices published by NYMEX and NYMEX Clearport, the parties will agree to use an equivalent price benchmark for these Computations.
Once the Forward Energy Price for a particular month is determined, it will be compared with the fixed price for Energy (the “Fixed Price”) under the Master Agreement applicable for that month, and the difference calculated (the “MTM Difference”). The MTM Difference will be multiplied by the applicable amount of megawatt hours in such month (the result hereinafter referred to as the “MTM Difference Amount”). The sum of the net present values of the MTM Difference Amounts will then be calculated in accordance with Generally Accepted Accounting Principles, consistently applied, using the discount rate set forth in Section IV below. If such sum of net present values is a positive number, then that positive number will be used to develop the Party A Performance Assurance Amount. If such sum of net present values is negative, such amount will be the Party B Performance Assurance Amount.
II. Forward Energy Price Calculation Periods:
Set forth below in Table 1 are the periods for which Forward Energy Prices shall be calculated for the purpose of performing the Computations.
|
Table 1 Semi-Annual Computations |
Peak Contracts |
Off-Peak Contracts |
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On or within five (5) Business Days preceding [insert applicable calculation date – which shall be Nov. 17 for a Semi-Annual Period commencing the following January 1, and May 17 for a Semi-Annual Period commencing the following July 1 ] |
[insert applicable time periods] |
[insert applicable time periods] |
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On or within five (5) Business Days preceding [insert applicable calculation date – which shall be Nov. 17 for a Semi-Annual Period commencing the following January 1, and May 17 for a Semi-Annual Period commencing the following July 1 ] |
[insert applicable time periods] |
[insert applicable time periods] |
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On or within five (5) Business Days preceding [insert applicable calculation date – which shall be Nov. 17 for a Semi-Annual Period commencing the following January 1, and May 17 for a Semi-Annual Period commencing the following July 1 ] |
[insert applicable time periods] |
[insert applicable time periods] |
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[Table to be expanded to cover all relevant calculation dates and time periods.]
III. Determining Forward Energy Prices:
Five (5) Business Days prior to each Computation date, the parties will communicate and will jointly determine the Forward Energy Prices following the procedure set forth in Section II above.
IV. Discount Rate
The parties agree that the discount rate to be used in the net present value computation described herein shall be determined as of 10:00 AM New York Time on the day of calculation [see Table 1 above] by reference to the yields of those United States Treasury Strip securities which have maturity dates most closely following the period for which the applicable Forward Energy Prices are to be determined. The price or yield of such strips will be taken from Bloomberg page PXS (or if not available, any other similar page to which the parties mutually agree) based upon the average of the bid and offered price or yield of the securities.
V. REFERENCE SHEETS: Process Steps
Table A
Fixed Price(s)(per the Agreement)
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Peak
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Off-Peak
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7x24 Price/Full Time Period |
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Table B
Third- Party Published Forward Energy Prices
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Year/Month |
Peak* (0.476) |
Off-Peak* (0.524) |
7x24 Price/Full Time Period |
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“Peak” shall be defined as five (5) days by sixteen (16) peak hrs/day [ 5 x 16], “Off-Peak” shall be defined as all other hrs except peak hours: In the event a “peak” or an “off-peak” price, respectively, is quoted in a third party publication source, but a corresponding “off-peak” or “peak” price, respectively, is not quoted, the corresponding “peak” or “off-peak” price for the most recent (historical) comparable time period shall be used in order to estimate a projected 7x24/Full Time period price. Within the context of a 7x24 price, the peak price (5x16) shall be weighted at 0.476 and the off-peak price shall be weighted at 0.524 (all hrs except peak hrs) to arrive at a 7x24 price. The source of such (historical) comparable time period price(s), to the extent such are needed, shall be the settled LBMP prices posted by the NYISO for the relevant NYISO zone.
Table C
NYMEX Forward Energy Prices
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Peak (0.476) |
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7x24 Price/Full Time Period |
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Table D
Forward Energy Price Table
Record prices from Table B for those months and years where third party price quotes are available. Remaining months and years will be recorded from Table C.
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Year/Month
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Forward Energy Price
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Table E
Mark-To-Market Values/Valuation
For each month common to Table A and Table D subtract the Table A values from the Table D values and arrive at a Mark-To-Market (MTM) Difference for such month. The values arrived at shall be multiplied by the appropriate number of megawatt hours in the month, and net present value of the resulting figures shall be calculated utilizing the discount rate specified in Section IV hereof, and the sum of such net present values shall be determined.
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Year/Month |
MTM Difference |
Megawatt Hours |
MTM Difference Amount |
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Sum of MTM Difference Amounts>>> |
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>> |
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NPV of MTM Difference Amounts>>> |
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If the above sum is positive, it shall constitute the Party A Performance Assurance Amount; if negative, it shall constitute the Party B Performance Assurance Amount. A negative sum shall not release Party A from its obligation to maintain a Term Letter of Credit.
Party A shall be the calculation agent for initially calculating each proposed Party B Performance Assurance Amount required under the Agreement, and Party B shall be the calculating agent for initially calculating each proposed Party A Performance Assurance Amount required under the Agreement. Following such initial calculations, the calculating agent shall present the other party with its proposed amount and details as to how its calculation was prepared, not later than fifteen (15) Business Days prior to the date that the applicable Letter of Credit is due. If following such presentation the parties fail to reach agreement on the determination of the Party A Performance Assurance Amount or Party B Performance Assurance Amount, as applicable (each a “Mark to Market Amount”), then the non-calculating party shall provide the calculating party with a detailed computation of its estimate of the applicable Mark to Market Amount to no later than ten (10) Business Days prior to the date that the applicable Letter of Credit is due to be delivered. In all such cases, the parties shall promptly consult with each other after delivery of the estimates discussed above and make a good faith effort to reconcile the two conflicting amounts. If the parties have not been able to resolve their dispute on or before the third Business Day prior to the required delivery date of the applicable Letter of Credit, then the applicable Mark to Market amount shall be (i) in the case of a Party A Performance Assurance Amount, the Mark to Market Amount determined by Party B, such determination to be made in good faith and in accordance with this Exhibit 1, and (ii) in the case of the Party B Performance Assurance Amount, the Mark to Market Amount determined by Party A, such determination to made in good faith and in accordance with this Exhibit 1. Following the delivery of such Letter of Credit, the parties shall resolve the dispute in accordance with Part 5, Section (k) of the Master Agreement. The applicable Letter of Credit shall thereupon be provided, returned, or reduced, if necessary, on the next Business Day in accordance with the results of such recalculation.
Exhibit 2
Form of Letter of Credit
IRREVOCABLE STANDBY LETTER OF CREDIT FORMAT
Beneficiary: Power Authority of the
State of New York
123 Main Street
White Plains, NY 10601
Date of Issuance: _________________
We hereby establish our Irrevocable Standby Letter of Credit number _______ in favor of the Power Authority of the State of New York (“Beneficiary”) on behalf of _______ (“Seller”) available by draft(s) at sight for a maximum of US $_______ (_______ United States Dollars) against any one or more documents presented in the following form:
1) A Beneficiary's signed certificate stating:
(“Party A”), the issuer of this letter of credit, and/or the issuer of another letter of credit provided by Party A to Beneficiary pursuant to the ISDA Master Agreement by and between Beneficiary and Party A dated _______, as the same may have been amended (the “Agreement”) has become Bankrupt as defined in such Agreement.
2) A Beneficiary's signed certificate stating:
An Event of Default as defined in the ISDA Master Agreement by and between Beneficiary and _______ (“Party A”) dated _______, as the same may have been amended (the “Agreement”), has occurred with respect to Party A and is still continuing. Party A has failed to pay Beneficiary in accordance with the terms and provisions of the Agreement, and the amount drawn represents an amount due and owing by Party A to Beneficiary.
3) A Beneficiary's signed certificate stating:
This letter of credit will expire in accordance with its terms within three (3) Local Business Days following the date hereof and _______ (“Party A”) has failed to provide a replacement letter of credit to Beneficiary in the form required under the ISDA Master Agreement by and between Beneficiary and Party A dated _______, as the same may have been amended.
4) A Beneficiary's signed certificate stating:
(“Party A”) has failed to provide within thirty (30) days prior to expiry of this letter of credit, either (i) written confirmation that this letter of credit will be renewed, or (ii) written confirmation from a Qualified Issuer, as defined in the ISDA Master Agreement by and between Beneficiary and Party A dated _______, as the same may have been amended (the “Agreement”), that a replacement letter of credit issued in the form required under the Agreement will be delivered to Beneficiary no later than three (3) Local Business Days prior to expiry of this letter of credit.
5) A Beneficiary's signed certificate stating:
The credit rating of the issuer of this letter of credit has been downgraded below A by Standard & Poor's or A2 by Moody's and _______ (“Party A”) has failed to deliver to Beneficiary a replacement letter of credit issued by a Qualified Issuer as defined in the ISDA Master Agreement by and between Beneficiary and Party A dated _______, as the same may have been amended (the “Agreement”), in the form required under the Agreement, within five (5) Local Business Days of notification of such event.
Special Conditions:
-- Multiple partial drawings permitted, not to exceed the maximum credit available hereunder in the aggregate.
-- Documents must be presented at our servicer's counter located at _________ New York, Attention Standby Unit, no later than _______, 20__ [expiry date].
-- Documents may be presented by overnight courier delivery in lieu of presentation in person by Beneficiary's representative.
We hereby engage with you that all drafts drawn under and in compliance with the terms of this credit will be duly honored if drawn and presented for payment on or before the expiry date of this credit.
Except as otherwise expressly stated herein, this credit is subject to the International Standby Practices 1998, International Chamber of Commerce No. 590 (“ISP98”), and as to matters not addressed by the ISP98 shall be governed and construed in accordance with the laws of the State of New York, without regard to any applicable conflicts of laws principles thereof, and applicable U.S. Federal law. Notwithstanding Section 3.12(a) of ISP98, we agree that a lost original credit shall be replaced by us with a new original credit upon your presentation of an affidavit of lost original and execution of a form of indemnification satisfactory to us.
Appendix 1
SUBJECT TRANSACTION CONFIRMATION
[Bidder should provide a Subject Transaction Confirmation for UCAP and if a swap for Associated Energy is also offered, as separate Subject Transaction Confirmation for such Associated Energy.]
__________, 20__
[Name and Address]
Attention:
Ladies and Gentlemen:
The purpose of this letter agreement (the “Confirmation”) is to confirm the terms and conditions of the Transaction entered into between [Name of Counterparty] (“Party A”) and the Power Authority of the State of New York (the “Authority”) on the date hereof specified below (the “Subject Transaction”). This Confirmation constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below.
This Confirmation supplements, forms part of, and is subject to the ISDA Master Agreement dated as of ____________, 20__, as amended and supplemented by a Schedule dated the date hereof (the “Schedule”) (collectively, as amended or supplemented from time-to-time, the “Agreement”) between the Authority and Party A. All provisions contained in the Agreement govern this Confirmation except as expressly modified below.
I. TERM
This Confirmation is effective as of __________, 20__. The obligations set forth in Section III shall commence at 12:00 a.m. on __________ (the “Effective Time”) and end at 11:59:59 p.m. on __________ (the “Term”).
II. DEFINITIONS; INTERPRETATION
The times set forth in this Confirmation are by reference to eastern prevailing time. This Confirmation shall be governed by the terms defined in Section 14 of the Agreement, the Schedule to the Agreement, and the following:
Authority Payment has the meaning set forth in Section III.A.1 of this Confirmation.
Contract Price means $___________[state price per kW/month].
Contract Quantity means _________[state quantity in MWh for applicable period].
Interval means each ____________.
Market Payment has the meaning set forth in Section III.A.2 of this Confirmation.
Notice has the meaning set forth in Section III.B of this Confirmation.
NYISO means the New York Independent System Operator or any successor thereto including, but not limited to, any independent system operator, transmission company or regional transmission organization approved by the Federal Energy Regulatory Commission.
NYISO Price means: [Define NYISO price for the applicable Product; if for Associated Energy: the Day Ahead Market Locational Based Marginal Price (DAM LBMP) NYISO Zone G final corrected values as posted by the NYISO or if such price is not applicable, any day ahead energy price applicable to Zone G
Product means [specify UCAP or Associated Energy]
Settlement Date means the last day of each calendar month during the Term of this Confirmation.
Settlement Period means a calendar month. The first Settlement Period commences at the Effective Time and continues to 11:59:59 p.m. of the last day of the calendar month. Subsequent Settlement Periods begin at 12:00 a.m. on the first day of the calendar month and continue to 11:59:59 p.m. of the last day of the calendar month.
III. PAYMENT OBLIGATIONS
The obligations incurred pursuant to this Confirmation shall require cash payments and shall in no event be interpreted to require performance in the form of the purchase or sale of electric capacity, electricity or ancillary services.
A. Settlement Date: During the Term and subject to Section III.D of this Confirmation, on each Settlement Date one party shall be obligated to the other party on a net basis pursuant to Section 2(c) of the Agreement:
1. The Authority shall be obligated to Party A for the accrued and unpaid Authority Payment for the Settlement Period. The Authority Energy Payment shall be the sum in the Settlement Period of the Products for each Interval of (i) the applicable Contract Quantity, and (ii) the associated Contract Price applicable to such Contract Quantity.
2. Party A shall be obligated to the Authority for the accrued and unpaid Market Payment for the Settlement Period. The Market Payment shall be the sum in the Settlement Period of the Products for each Interval of (i) the applicable Contract Quantity and (ii) the associated NYISO Price for such Contract Quantity.
B. Payment Notice. After calculating the payments owing pursuant to Section III.A above, the Calculation Agent shall provide the Authority with notice (each, a “Notice”) of any net payment obligation resulting therefrom on or before the fifth Local Business Day of the first calendar month following the Settlement Date.
C. Payment Date. A party shall pay the amount owed pursuant to a Notice within five (5) Local Business Days after the date the Notice was issued (“Payment Date”). Section 2(e) of the Agreement shall apply to late payments. All payments shall be made by wire transfer to the following accounts:
1. If payment is to the Authority:
New York Power Authority
Operating Fund
________________________ [Bank]
ABA No.: _______________
Account No.: ______________
2. If payment is to Party A:
Bank:
D. Payment Dispute Mechanism. If a party, in good faith, disputes any part of a net payment obligation under a Notice, such party shall provide a written explanation of the basis of such dispute and the undisputed portion of the net payment obligations set forth in such Notice shall be paid by the party obligated to pay such amounts no later than the applicable Payment Date. Any underpayment or overpayment under this Section III.D shall bear interest at the Default Rate set forth in the Agreement. If the parties are unable to resolve a payment dispute within thirty (30) days, such dispute shall be settled by an independent nationally recognized public accounting firm mutually selected by the parties, whose determination shall be final and binding on the parties hereto and whose fees and expenses shall be borne by the party found to be at substantial fault by such independent accounting firm. No Notice (or payment obligation thereunder) shall be subject to this Section III.D unless a notice of dispute is given with respect thereto within one year after the Payment Date applicable to such notice. For the avoidance of doubt, disputes to be resolved pursuant to this section shall be limited to actual calculations of amounts owed, and not the applicable NYISO Price or any applicable successor Commodity Reference Price.
E. Market Disruption Events. The following Market Disruption Events shall apply: Price Source Disruption; Trading Suspension; Disappearance of Commodity Reference Price; Material Change in Formula; and Material Change in Content.
F. Commodity Reference Price. The Commodity Reference Price shall be the NYISO Price.
G. Trade Date. ____________, 20__.
H. Rounding. Four decimal places.
Please confirm that the foregoing correctly sets forth the terms of our agreement by executing the copy of this Confirmation enclosed for that purpose and returning it to us.
Sincerely,
POWER AUTHORITY OF THE
STATE OF NEW YORK
By:_____________________________
Name:
Title:
Confirmed as of the date first written above:
[ ]
By: __________________________________
Name:
Title: # 4844718_v10