Exhibit 10.25.17
EIGHTY-SEVENTH AGREEMENT AMENDING
NEW ENGLAND POWER POOL AGREEMENT
(FINANCIAL ASSURANCE POLICIES
AND BILLING POLICY)
THIS EIGHTY-SEVENTH AGREEMENT AMENDING NEW ENGLAND POWER POOL AGREEMENT,
dated as of June 21, 2002 ("Eighty-Seventh Agreement"), amends the New England
Power Pool Agreement (the "NEPOOL Agreement"), as amended.
WHEREAS, the NEPOOL Agreement as in effect on December 1, 1996 was amended
and restated by the Thirty-Third Agreement Amending the New England Power Pool
Agreement dated as of December 1, 1996 (the "Thirty-Third Agreement") in the
form of the Restated New England Power Pool Agreement ("Restated NEPOOL
Agreement") attached to the Thirty-Third Agreement as Exhibit A thereto, and
the Thirty-Third Agreement also provided for the NEPOOL Open Access
Transmission Tariff (the "NEPOOL Tariff") which is Attachment B to the Restated
NEPOOL Agreement; and
WHEREAS, the Restated NEPOOL Agreement and the NEPOOL Tariff have
subsequently been amended numerous times, the most recent amendment dated as
of May 9, 2002; and
WHEREAS, the Participants desire to amend the Restated NEPOOL Agreement,
including the NEPOOL Tariff, as heretofore amended, to reflect the revisions
detailed herein.
NOW, THEREFORE, upon approval of this Eighty-Seventh Agreement by the
NEPOOL Participants Committee in accordance with the procedures set forth in
the NEPOOL Agreement, the Participants agree as follows:
SECTION 1
AMENDMENTS TO MEMBER FINANCIAL ASSURANCE POLICY
1.1 Amendment to Section II.A.1 of the Member Financial Assurance Policy.
Section II.A.1 of the Financial Assurance Policy for NEPOOL Members,
included as Attachment L to the NEPOOL Tariff, as amended by the
Eighty-Third Agreement (the "Member Financial Assurance Policy"), is
amended by deleting from the second sentence of the second paragraph the
following text: "as well as a lien search for such Non-Municipal
Applicant."
1.2 Amendment to Section II.A.2 of the Member Financial Assurance Policy.
Section II.A.2 of the Member Policy is amended by deleting the third
sentence.
1.3 Amendment to Section II.B.1.c of the Member Financial Assurance Policy.
Section II.B.1.c of the Member Financial Assurance Policy is amended
to read as follows:
Except as set forth in Part VI below, Governance Only Members and
Non-Municipal Participants with average monthly NEPOOL Charges (as
hereinafter defined) of $15,000 or less shall not be required to provide
a cash deposit, letter of credit, payment bond or guaranty under
this Policy.
1.4 Amendment to Section II.B.2.a of the Member Financial Assurance Policy.
Clause (iii) of the first paragraph of Section II.B.2.a of the Member
Financial Assurance Policy is amended to read as follows:
(iii) 20 percent (20%) of the total amount due and owing at such time
to the System Operator, the Participants, the Non-Participant Transmission
Customers and the Non-Participants that transact in the FTR Auction and/or
Secondary FTR Market ("Non-Participant FTR Customers") by all
Participants, Non-Participant Transmission Customers and Non-Participant
FTR Customers.
1.5 Amendment to Section II.B.2.b of the Member Financial Assurance Policy.
Clause (iii) of the first sentence of Section II.B.2.b of the Member
Financial Assurance Policy is amended to read as follows:
(iii) 20 percent (20%) of the total amount due and owing at such time
to the System Operator, the Participants, the Non-Participant Transmission
Customers and the Non-Participant FTR Customers by all Participants,
Non-Participant Transmission Customers and Non-Participant FTR Customers.
1.6 Amendment to Section II.B.4 of the Member Financial Assurance Policy.
Section II.B.4 of the Member Financial Assurance Policy is amended to
read as follows:
4. Consequences Upon Reaching 80%, 90% and 100% of
Credit Test Amount
When a Non-Municipal Participant's aggregate outstanding obligations
to NEPOOL, the System Operator and the Non-Participant FTR Customers equal
80 percent (80%) of the sum of (i) that Non-Municipal Participant's then-
effective Credit Limit and (ii) the available amount of the additional
financial assurance provided by that Non-Municipal Participant (exclusive
of any Bid Financial Assurance (defined below) provided by that Non-
Municipal Participant for bids in the FTR Auction that have not yet
been accepted or rejected), which available amount of additional financial
assurance shall be divided by three and one-half (3.5) for purposes of
this determination <FN1> (the sum of item (i) and item (ii) being referred
to herein as the "Credit Test Amount"), the System Operator shall issue
notice thereof to such Non-Municipal Participant, such notice to be given
in the manner provided in Section 21 of the Restated NEPOOL Agreement.
When a Non-Municipal Participant's aggregate outstanding obligations to
NEPOOL, the System Operator and the Non-Participant FTR Customers equal
90 percent (90%) of that Non-Municipal Participant's Credit Test Amount,
(i) the System Operator shall issue notice thereof to such Non-Municipal
Participant, such notice to be given in the manner provided in Section 21
of the Restated NEPOOL Agreement; and (ii) if such condition continues to
exist 10 Business Days after the date of such notice, the System Operator
shall issue notice thereof to all members and alternates of the NEPOOL
Participants Committee.
When a Non-Municipal Participant's aggregate outstanding obligations
to NEPOOL, the System Operator and the Non-Participant FTR Customers equal
100 percent (100%) of that Non-Municipal Participant's Credit Test Amount,
(i) the System Operator shall issue notice thereof to such Non-Municipal
Participant, all members and alternates of the NEPOOL Participants
Committee and the New England governors and utility regulatory agencies,
such notice to be given in the manner provided in Section 21 of the
Restated NEPOOL Agreement, and (ii) such Non-Municipal Participant shall
be suspended from: (a) the NEPOOL Market, as provided in Section II.E
below; (b) receiving transmission service under any existing or pending
arrangements under the Tariff or scheduling any future transmission
service under the Tariff; (c) voting on matters before the Participants
Committee or any Technical Committee; and (d) entering into any future
transactions in the FTR system, in each case until either (x) in the case
of activity in the NEPOOL Market, the scheduling and receipt of
transmission service and entering future transactions in the FTR system,
such Non-Municipal Participant's outstanding obligations to NEPOOL, the
System Operator and the Non-Participant FTR Customers fall below
100 percent (100%) of its Credit Test Amount and, in the case of voting on
matters before the Participants Committee or any Technical Committee, such
Non-Municipal Participant's outstanding obligations to NEPOOL, the System
Operator and the Non-Participant FTR Customers fall and remain below 100
percent (100%) of its Credit Test Amount at least three (3) Business Days
prior to any such vote, or (y) in the case of activity in the NEPOOL
Market, the scheduling and receipt of transmission service and entering
future transactions in the FTR system, such Non-Municipal Participant has
provided additional financial assurance (in addition to any other
financial assurance required of such Non-Municipal Participant hereunder)
equal to three and one-half (3.5) times the amount by which such Non-
Municipal Participant's outstanding obligations to NEPOOL, the System
Operator and the Non-Participant FTR Customers exceed 100 percent (100%)
of its Credit Test Amount (the "Excess Financial Assurance") and, in the
case of voting on matters before the Participants Committee or any
Technical Committee, such Non-Municipal Participant has provided Excess
Financial Assurance at least three (3) Business Days prior to any such
vote; provided, however, (i) any suspension of a Non-Municipal
Participant's authority to vote on matters before the Participants
Committee or any Technical Committee hereunder shall not be effective
while an appeal of such suspension is pending; (ii) if any Non-Municipal
Participant reaches 100 percent (100%) of its Credit Test Amount solely
because its rating, the rating of its outstanding debt or the rating of
its Guarantor (as hereinafter defined) or its Guarantor's outstanding debt
is downgraded by one grade, then (x) for 10 Business Days after such
downgrade, such Non-Municipal Participant's Credit Test Amount shall
remain the same as it was immediately preceding such downgrade and (y)
no notice shall be sent and no suspension shall occur with respect to such
downgrade if such Non-Municipal Participant cures such default within such
10 Business Day period; (iii) if any Non-Municipal Participant reaches
100 percent (100%) of its Credit Test Amount solely because the rating of
the bank issuing a letter of credit on its behalf hereunder is downgraded
below the requisite corporate debt rating, then (x) for 10 Business Days
after such downgrade, such Non-Municipal Participant's Credit Test Amount
shall remain the same as it was immediately preceding such downgrade,
and (y) no notice shall be sent and no suspension shall occur with
respect to such downgrade if such Non-Municipal Participant cures such
default within such 10 Business Day period; and (iv) if any Non-Municipal
Participant reaches 100 percent (100%) of its Credit Test Amount and such
Non-Municipal Participant has not previously received notice from the
System Operator that its aggregate outstanding obligations to NEPOOL, the
System Operator and the Non-Participant FTR Customers equal 80 percent
(80%) or 90 percent (90%) of its Credit Test Amount with respect to that
same event, then the System Operator will inform such Non-Municipal
Participant of its impending suspension by telephone by 10 a.m. on the
day (the "Notice Day") following the day on which its aggregate
outstanding obligations to NEPOOL, the System Operator and the Non-
Participant FTR Customers reached 100 percent (100%) of its Credit Test
Amount, and such Non-Municipal Participant shall not be suspended with
respect to that event only if either (a) its outstanding obligations to
NEPOOL, the System Operator and the Non-Participant FTR Customers fall
below 100 percent (100%) of its Credit Test Amount by 12:00 noon on the
first Business Day immediately following the Notice Day or (b) it provides
the System Operator with the requisite Excess Financial Assurance
required by this Policy by 12:00 noon on the first Business Day
immediately following the Notice Day.
The suspension of a Non-Municipal Participant, and any resulting
annulment, termination or removal of OASIS reservations, removal from the
settlement system and the FTR system and forfeiture of FTRs, shall not
limit, in any way, NEPOOL's or the System Operator's right to invoice or
collect payment for any amounts owed (whether such amounts are due or
becoming due) by such suspended Non-Municipal Participant under the
Agreement, the Tariff or the System Operator's tariff.
In addition to the notices provided herein, the System Operator will
provide any additional information required under the Information Policy.
Each notice issued by the System Operator when a Non-Municipal
Participant's aggregate outstanding obligations to NEPOOL, the System
Operator and the Non-Participant FTR Customers equal 90 percent (90%) and
100 percent (100%) of that Non-Municipal Participant's Credit Test Amount
shall indicate whether such Non-Municipal Participant has a registered
load asset. If the System Operator has issued a notice that a Non-
Municipal Participant's aggregate outstanding obligations to NEPOOL and
the System Operator equal 90 percent (90%) or 100 percent (100%) of
that Non-Municipal Participant's Credit Test Amount and subsequently
such Non-Municipal Participant's aggregate outstanding obligations fall
below the applicable percentage of its Credit Test Amount, such Non-
Municipal Participant may request the System Operator to issue a notice
stating such fact; provided, however, that the System Operator shall not
be obligated to issue such notice unless, in its sole discretion, the
System Operator concludes that such Non-Municipal Participant's aggregate
outstanding obligations have in fact fallen below the applicable
percentage of its Credit Test Amount.
1.7 Amendment to Section II.D of the Member Financial Assurance Policy.
The first paragraph of Section II.D of the Member Financial Assurance
Policy is amended to read as follows:
All Non-Municipal Applicants and Non-Municipal Participants that
must provide (or choose to provide) additional financial assurance
pursuant to this Section II, must provide NEPOOL with financial
assurance in the form and in the amount described in Sections II,
IV and VI hereof. Each financial assurance for monthly charges,
unless replaced in accordance with the terms hereof or no longer
required pursuant to the terms hereof, shall remain in effect until the
later of (a) 120 days after termination of the Non-Municipal Participant's
membership or (b) the end date of all FTRs awarded to the Non-Municipal
Participant and the final satisfaction of all obligations of the Non-
Municipal Participant providing that financial assurance; provided,
however that financial assurances required by this Policy related to
potential billing adjustments chargeable to a terminated Non-Municipal
Participant shall remain in effect until such billing adjustment request
is finally resolved in accordance with the provisions of the NEPOOL
Billing Policy.
1.8 Amendment to Section II.D of the Member Financial Assurance Policy.
The following is added after the third paragraph of Section II.D of
the Member Financial Assurance Policy:
Furthermore and without limiting the generality of the foregoing,
any Non-Municipal Participant that is so required under Section VI of
this Policy shall provide additional financial assurance in connection
with FTR transactions, as set forth in such Section VI.
1.9 Amendment to Section II.E of the Member Financial Assurance Policy.
The following is added at the end of Section II.E of the Member Financial
Assurance Policy:
If a Non-Municipal Participant is suspended from entering into future
transactions in the FTR system and such suspension occurs at any time
during an ongoing FTR Auction, then unless such Non-Municipal Participant
cures the default(s) providing the basis for such suspension prior to
4:00 p.m. on the Business Day immediately preceding the close of the next
FTR Auction, all FTRs held by such Non-Municipal Participant (the "Default
FTRs") shall be offered in the next FTR Auction, with an offer price
of $0. If a Non-Municipal Participant is suspended from entering into
future transactions in the FTR System and such suspension occurs at any
time other than during an ongoing FTR Auction, then unless such Non-
Municipal Participant cures the default(s) providing the basis for such
suspension prior to 4:00 p.m. on the Business Day immediately preceding
the close of the next FTR Auction, all Default FTRs held by such
Non-Municipal Participant shall be offered in that next FTR Auction, with
an offer price of $0. All Default FTRs that are offered in an FTR Auction
and have a positive value in that FTR Auction shall be forfeited by such
Non-Municipal Participant and will be sold at the applicable clearing
price in that FTR Auction. The proceeds from the sale of those Default
FTRs will first be used to satisfy all obligations of such Non-Municipal
Participant to NEPOOL, the System Operator and the Non-Participant FTR
Customers, and any amount remaining after all such obligations have been
satisfied shall be paid over to such Non-Municipal Participant that
formerly owned such Default FTRs. All Default FTRs that are offered in
an FTR Auction and have a negative value in that FTR Auction will be
retained by such Non-Municipal Participant, and such Non-Municipal
Participant will remain subject to all of the requirements, including the
requirements hereunder, with respect to such Default FTRs retained by it.
1.10 Amendment to Section III.D of the Member Financial Assurance Policy.
The second sentence of Section III.D of the Member Financial Assurance
Policy is amended to read as follows:
Each financial assurance for NEPOOL Charges, unless replaced in accordance
with the terms hereof or no longer required pursuant to the terms hereof,
shall remain in effect until the later of (a) 120 days after termination
of the Municipal Participant's membership or (b) the end date of all FTRs
awarded to the Municipal Participant and the final satisfaction of all
obligations of the Municipal Participant providing that financial
assurance; provided, however that financial assurances required by this
Policy related to potential billing adjustments chargeable to a terminated
Municipal Participant shall remain in effect until such billing adjustment
request is finally resolved in accordance with the provisions of the
NEPOOL Billing Policy.
1.11 Amendment to Section III.D of the Member Financial Assurance Policy. The
following is inserted after the fourth sentence (which is in parentheses)
of the third paragraph of Section III.D of the Member Financial Assurance
Policy:
Furthermore and without limiting the generality of the foregoing, any
Municipal Participant that is so required under Section VI of this Policy
shall provide additional financial assurance in connection with FTR
transactions, as set forth in such Section VI.
1.12 Amendment to Section III.D of the Member Financial Assurance Policy.
Clause (ii) of the third paragraph of Section III.D of the Member
Financial Assurance Policy is amended to read as follows:
(ii) 20 percent (20%) of the total amount due and owing at such time to
the System Operator, the Participants, the Non-Participant Transmission
Customers and the Non-Participant FTR Customers by all Participants,
Non-Participant Transmission Customers and Non-Participant FTR Customers.
1.13 Amendment to Section IV.D of the Member Financial Assurance Policy.
Clause (ii) of the first paragraph of Section IV.D of the Member
Financial Assurance Policy is amended to read as follows:
(ii) 20 percent (20%) of the total amount due and owing at such time to
the System Operator, the Participants, the Non-Participant Transmission
Customers and the Non-Participant FTR Customers by all Participants,
Non-Participant Transmission Customers and Non-Participant FTR Customers.
1.14 Amendment to Section V.E of the Member Financial Assurance Policy.
Section V.E of the Member Financial Assurance Policy is amended to
read as follows:
Upon termination of membership in NEPOOL, a Participant must provide
financial assurance in the amount of all potential billing adjustments
chargeable to such Participant for all unresolved billing disputes in
existence on the date of termination of such Participant's membership and
the amount required with respect to any FTRs awarded to such Participant
and any other remaining obligations of such Participant. Such financial
assurance must be in the form of a cash deposit, letter of credit, payment
bond or Corporate Guaranty meeting the requirements of this Policy. The
amount of such financial assurance shall be reduced to the extent any
billing dispute is resolved and the former Participant pays the billing
adjustments or no billing adjustment is chargeable to the former
Participant, to the extent that any FTR awarded to such Participant
expires and to the extent that any remaining obligations of such
Participant are otherwise satisfied.
1.15 Addition of Section VI to the Member Financial Assurance Policy.
Section VI is added to the Member Financial Assurance Policy, immediately
after Section V and before the attachments to the Member Financial
Assurance Policy, reading as follows:
VI. ADDITIONAL FINANCIAL ASSURANCE PROVISIONS FOR FTR TRANSACTIONS
This Section VI of this Policy contains the financial assurance
requirements and procedures for Non-Municipal Participants and Municipal
Participants that transact in the FTR Auction and/or Secondary FTR Market
(collectively, the "FTR Markets"). In addition to the other financial
assurance requirements found in this Policy, Participants transacting
in the FTR Markets which, after taking such FTR transactions into account,
must provide NEPOOL with additional financial assurance hereunder, shall
provide such additional financial assurance as described in this Section
VI. Governance Only Members transacting in the FTR Markets are required
to comply with the requirements of this Section VI and to provide
additional financial assurance in the amounts required for Non-Municipal
Participants or Municipal Participants, as applicable, to the extent that
such transactions cause their average monthly NEPOOL Charges to
exceed $15,000.
A. FTR Applicants
Each Participant that is otherwise required to provide additional
financial assurance under this Policy must have provided to the System
Operator at the time of its application for FTR system access, financial
assurance, in the form and amount required by this Policy; provided,
however, in order to obtain access to the FTR system, such a Participant
shall have provided at least $500,000 of cumulative financial assurance
with its application for FTR system access. For purposes of determining
whether an applicant for access to the FTR system has provided at least
$500,000 of cumulative financial assurance, the System Operator shall
include in such calculation the amount of any financial assurance provided
by such applicant pursuant to any other provision of this Policy.
B. Bidding into the FTR Auction
If a Participant that is required to provide additional financial
assurance under this Policy submits a bid into an FTR Auction, that
Participant must provide, in addition to all other financial assurance
required hereunder, additional financial assurance, in the form required
by this Policy and in an amount that is at least equal to the total dollar
amount of the bids submitted by such Participant in such FTR Auction at
the time such FTR Auction closes (the "Bid Financial Assurance").
Moreover, a Participant that is required to provide financial assurance
under this Policy must maintain, at all times, in addition to the
financial assurance otherwise required hereunder, financial assurance,
in the form required hereunder, in an amount that is at least equal to
the total dollar amount of any awarded bids in any FTR Auctions (the
"Award Financial Assurance"). Once a bid in an FTR Auction is awarded,
the Bid Financial Assurance that relates to such bid will be converted to
the Award Financial Assurance relating to such awarded bid. The
required amount of the Award Financial Assurance will be based on the
amount of the awarded bid, not the amount initially bid.
If a Participant does not have the total amount of required
additional financial assurance in place at the time an FTR Auction into
which it has bid closes, then, in addition to the other consequences
described in this Policy, all bids submitted by that Participant for that
FTR Auction will be rejected. The Participant will be allowed to
participate in the next FTR Auction held provided it meets all
requirements for such participation, including without limitation those
set forth herein. Each Participant must maintain the requisite additional
financial assurance for the duration of the FTRs awarded to it. The
amount of any additional financial assurance provided by a Participant
in connection with an unsuccessful bid which, as a result of such bid
being unsuccessful, is in excess of the total amount of additional
financial assurance required from such Participant under this Policy will
be held by the System Operator and will be applied against future bids and
awards by that Participant unless that Participant requests in
writing to have such excess financial assurance returned to
it. Prior to returning any financial assurance to a Participant, the
System Operator shall use such financial assurance to satisfy any overdue
obligations of that Participant. The System Operator shall only return to
that Participant the balance of such financial assurance after
all such overdue obligations have been satisfied.
SECTION 2
AMENDMENTS TO NON-MEMBER FINANCIAL ASSURANCE POLICY
2.1 Amendment to Section I.A.1 of the Non-Member Financial Assurance Policy.
Section I.A.1 of the Financial Assurance Policy for NEPOOL Non-Participant
Transmission Customers, included as Attachment M to the NEPOOL Tariff, as
amended by the Eighty-Third Agreement (the "Non-Member Financial Assurance
Policy"), is amended by deleting from the second sentence of the second
paragraph the following text: "as well as a lien search for such
Non-Participant Applicant."
2.2 Amendment to Section I.A.2 of the Non-Member Financial Assurance Policy.
Section I.A.2 of the Non-Member Policy is amended by deleting the third
sentence.
SECTION 3
AMENDMENTS TO BILLING POLICY
3.1 Change to References in Billing Policy. In the New England Power Pool
Billing Policy, included as Attachment N to the NEPOOL Tariff, as amended
by the Eighty-Third Agreement (the "Billing Policy"), the reference in
Section 1.1 to "NEPOOL Participants and Non-Participant Transmission
Customers" is changed to "NEPOOL Participants, Non-Participant
Transmission Customers and Non-Participants that transact in the FTR
Auction and/or Secondary FTR Market ("Non-Participant FTR Customers")."
Except as noted herein, each subsequent reference to "Participants and
Non-Participant Transmission Customers" is changed to "Participants, Non-
Participant Transmission Customers and Non-Participant FTR Customers;"
each reference to "each Participant and Non-Participant Transmission
Customer" is changed to "each Participant, Non-Participant Transmission
Customer and Non-Participant FTR Customer;" each reference to "Participant
or Non-Participant Transmission Customer" is changed to "Participant,
Non-Participant Transmission Customer or Non-Participant FTR Customer;"
each reference to "Participants or Non-Participant Transmission Customers"
is changed to "Participants, Non-Participant Transmission Customers or
Non-Participant FTR Customers;" and each reference to "Participant's or
Non-Participant Transmission Customer's" is changed to "Participant's,
Non-Participant Transmission Customer's or Non-Participant FTR
Customer's." None of such reference changes shall be made to Section 4
of the Billing Policy.
3.2 Amendment to Section 1.3 of the Billing Policy. Clause (i) of Section 1.3
of the Billing Policy is amended to read as follows:
(i) Participants and Non-Participant Transmission Customers who have
requested and received a weekly billing schedule in accordance with the
Financial Assurance Policy for NEPOOL Members and the Financial
Assurance Policy for NEPOOL Non-Participant Transmission Customers
(collectively, together with the Financial Assurance Policy for Non-
Participant FTR Customers, the "Financial Assurance Policies") and
3.3 Amendment to Section 3.1(d) of the Billing Policy. The third and fourth
sentences of the second paragraph of Section 3.1(d) of the Billing Policy
is amended to read as follows:
To the extent that the amount in dispute would be payable to one or more
identifiable Participants or Non-Participant FTR Customers (but not to
the ISO), then the amount due to each such Participant or Non-Participant
FTR Customer in the billing period to which such dispute relates shall be
reduced by the portion of the total amount in dispute that would be
payable to such Participant or Non-Participant FTR Customer, subject to
payment with interest accrued thereon if and when the dispute is resolved
in favor of such Participant(s) or Non-Participant FTR Customer(s). To
the extent that amount in dispute would be payable to the ISO,
or the specific Participant(s) or Non-Participant FTR Customer(s) to which
such amount would be payable cannot be identified, then the shortfall of
funds available to pay Remittance Advices resulting from the amount in
dispute being held in an escrow account shall be allocated among the
Participants and Non-Participant FTR Customers according to the two-step
allocation process described in Section 3.3.(f) below, subject to payment
to all Participants and Non-Participant FTR Customers being allocated a
portion of the shortfall, with applicable interest (if any), once the
dispute is resolved with the funds in such escrow account or with other
amounts provided by the Participant or Non-Participant Transmission
Customer losing such dispute.
3.4 Amendment to Section 3.3(e) of the Billing Policy. The second and third
sentences of Section 3.3(e) of the Billing Policy is amended to read as
follows:
Amounts withdrawn from the Late Payment Account and applied toward any
shortfall resulting from the Default Amount shall not relieve the
defaulting Participant, defaulting Non-Participant Transmission Customer
or defaulting Non-Participant FTR Customer of its obligation to pay such
Default Amount. If and to the extent that such Default Amount, interest
thereon and/or late charges with respect thereto are subsequently
collected (including as a result of the use of a financial assurance under
the Financial Assurance Policies or through actions or proceedings against
the defaulting Participant, Non-Participant Transmission Customer or Non-
Participant FTR Customer), such amounts shall first be used to pay
Participants and Non-Participant FTR Customers for the amount of such
Default Amount allocated to them under clause (f) below, with interest
thereon, and then, after all such amounts have been paid to the
Participants and Non-Participant FTR Customers, such Default Amount,
interest and/or late charges shall be deposited into the Late Payment
Account in accordance with the provisions of the Financial Assurance
Policy for NEPOOL Members that are applicable to late payment charges.
3.5 Amendment to Section 3.3(f) of the Billing Policy. Section 3.3(f) of the
Billing Policy is amended to read as follows:
f) Reduction of Payments and Increases in Charges. (i) If and to the
extent that the procedures described in clauses (b), (c), (d) and (e)
above do not yield sufficient funds to pay all Remittance Advice amounts
in full (after payment of amounts due to the ISO and to the entity or
entities that develop, administer, operate and maintain the GIS for those
services, in accordance with clause (a) above) on the date such Payments
are due, the ISO shall reduce Payments to those Participants and Non-
Participant FTR Customers owed monies for that billing period (the
"Default Period"), pro rata based on the amounts owed to such Participants
and Non-Participant FTR Customers, to the extent necessary to clear its
accounts by the close of banking business on the date such Payments are
due. As funds attributable to a Default Amount are received by the
ISO (including amounts received through financial assurances provided
under the Financial Assurance Policies or through actions or proceedings
commenced against the defaulting Participant, Non-Participant Transmission
Customer or Non-Participant FTR Customer) prior to the next billing
period's Statements being distributed, such funds, together with any
interest and late charges collected on the applicable Default Amount,
shall be distributed pro rata to the Participants and Non-Participant
FTR Customers that did not receive the full amount of their Payments as
a result of such Default Amount not being paid, up to the full amount
that such Participants and Non-Participant FTR Customers did not receive
as a result of such Default Amount not being paid, with interest thereon.
(ii) To the extent that any amount remains unpaid to Participants and Non-
Participant FTR Customers on the date that Statements are distributed to
Participants and Non-Participant FTR Customers in the billing period
immediately following the Default Period, the Default Amount remaining
unpaid shall be reallocated among all of the Participants and Non-
Participant FTR Customers receiving Statements for the Default Period
(other than the Participant, Non-Participant Transmission Customer or
Non-Participant FTR Customer defaulting on its payment obligations),
pro rata based, for each Participant and Non-Participant FTR Customer
being allocated a share of the Default Amount remaining unpaid, on the
sum of (i) all Charges due from such Participant or Non-Participant FTR
Customer that are reflected on its Statement for the Default Period and
(ii) all Payments due to such Participant or Non-Participant FTR
Customer that are reflected on its Statement for the Default Period,
without giving any effect to the process of netting Charges against
Payments on each Statement that is the result of the ISO's single billing
system. Thus, by way of example, a Participant or Non-Participant FTR
Customer with $2,000 of Charges and no Payments on its Statement for the
Default Period and a Participant or Non-Participant FTR Customer with
$1,000 of Charges and $1,000 of Payments on its Statement for the Default
Period would be allocated an equal share of the unpaid Default Amount
under this clause (f)(ii). Each Participant and Non-Participant FTR
Customer that received a Statement for the Default Period shall have
the amount of its Invoice or Remittance Advice in the billing period
immediately following the Default Period adjusted as necessary to reflect
its obligation for the Default Amount remaining unpaid under this clause
(f)(ii). As funds attributable to a Default Amount are received by
the ISO (including amounts received through financial assurances provided
under the Financial Assurance Policies or through actions or proceedings
commenced against the defaulting Participant, Non-Participant Transmission
Customer or Non-Participant FTR Customer) after such adjusted Statements
are distributed, such funds, together with any interest and late charges
collected on the applicable Default Amount, shall be distributed to the
Participants and Non-Participant FTR Customers pro rata based on their
allocation of the Default Amount under this clause (f)(ii), up to the
full amount of such Default Amount allocated to each such Participant or
Non-Participant FTR Customer, with interest thereon.
3.6 Amendment to Section 3.3(j) of the Billing Policy. Section 3.3(j) of the
Billing Policy is amended to read as follows:
j) Notice and Suspension. Without limiting any of the other remedies
described above, in the event that the ISO, in its reasonable opinion,
believes that all or any part of any amount due to be paid by any
Participant, any Non-Participant Transmission Customer or any Non-
Participant FTR Customer will not be or has not been paid when due (a
"Payment Default"), the ISO (on its own behalf or on behalf of NEPOOL)
may (but shall not be required to) notify such Participant, Non-
Participant Transmission Customer or Non-Participant FTR Customer in
writing, electronically and by first class mail sent in each case to
such Participant's member or alternate on the Participants Committee
or billing contact (it being understood that the ISO will use
reasonable efforts to contact all three) or such Non-Participant
Transmission Customer's or Non-Participant FTR Customer's billing
contact, of such Payment Default. If a Payment Default is not cured
within five days after when such payment was originally due, the ISO
shall notify each member and alternate on the NEPOOL Participants
Committee, each Participant's billing contact and each of the New
England governors and utility regulatory agencies of (i) the identity
of the Participant, Non-Participant Transmission Customer or Non-
Participant FTR Customer receiving such notice, (ii) whether such
notice relates to a Payment Default, (iii) whether the defaulting
Participant has a registered load asset, and (iv) the actions the ISO
plans to take and/or has taken in response to such Payment Default.
In addition, the ISO will provide any additional information with respect
to such Payment Default as may be required under the Information Policy.
If a Payment Default is not cured within ten days after when such payment
was originally due, the defaulting Participant, Non-Participant
Transmission Customer or Non-Participant FTR Customer shall be suspended
(if applicable) from: (a) the NEPOOL Market; (b) receiving transmission
service under any existing or pending arrangement under the Tariff or
scheduling any future transmission service under the Tariff; (c) voting
on matters before the Participants Committee or any Technical Committee;
and (d) entering into any future transactions in the FTR system, in each
case until (x) in the case of activity in the NEPOOL Market, the
scheduling and receipt of transmission services and entering future
transactions in the FTR system, such Payment Default has been cured
in full, and (y) in the case of voting on matters before the
Participants Committee or any Technical Committee, such Payment Default
has been cured in full at least three Business Days prior to such vote;
provided, however, that any suspension of a Participant's authority to
vote on matters before the Participants Committee or any Technical
Committee hereunder shall not be effective while an appeal of such
suspension is pending. The suspension of a Participant, a Non-
Participant Transmission Customer or a Non-Participant FTR Customer,
and any resulting annulment, termination or removal of OASIS reservations,
removal from the settlement system and the FTR system and forfeiture of
FTRs, shall not limit, in any way, NEPOOL's or the ISO's right to invoice
or collect payment for any amounts owed (whether such amounts are due
or becoming due) by such Participant, Non-Participant Transmission
Customer or Non-Participant FTR Customer under the Documents. If the ISO
has issued a notice that a Participant, a Non-Participant Transmission
Customer or a Non-Participant FTR Customer has defaulted on a payment
obligation and that Participant, Non-Participant Transmission Customer
or Non-Participant FTR Customer subsequently cures that Payment Default,
such Participant, Non-Participant Transmission Customer or Non-
Participant FTR Customer may request the ISO to issue a notice stating
such fact; provided, however, that the ISO shall not be required to issue
that notice unless, in its sole discretion, the ISO determines that such
Payment Default has been cured. If a Participant, a Non-Participant
Transmission Customer or a Non-Participant FTR Customer is suspended in
accordance with this Section 3.3(j), the provisions of this Section 3.3(j)
shall control notwithstanding any other provision of the Market Rules, the
NEPOOL Agreement or the NEPOOL Tariff to the contrary.
A suspended Participant shall have no ability so long as it is suspended
to be reflected in the ISO's settlement system as either a purchaser or a
seller of any Market Products under any Bilateral Transactions. Any
Bilateral Transactions with a suspended Participant shall be deemed to
be terminated for purposes of the ISO's settlement system. If a suspended
Participant has the obligation under applicable Market Rules to bid any of
its Entitlements to provide Market Products under the NEPOOL Agreement,
that obligation shall continue notwithstanding the Participant's
suspension and any transfers of Market Products occurring under the NEPOOL
Agreement as a result of any such bid shall be effective. If a
suspended Participant or Non-Participant Transmission Customer is
receiving transmission or ancillary services under the NEPOOL Tariff, all
such services shall be terminated as of the date of the suspension, except
to the extent required (if at all) for the Interchange Transactions
resulting from the bids of the suspended Participant. Except to the
extent required (if at all) for the Interchange Transactions resulting
from the bids of the suspended Participant, any approved reservations
reflected in OASIS shall be annulled, any pending reservations shall
be retracted, and the suspended Participant or Non-Participant
Transmission Customer shall have no ability so long as it is suspended
to make new reservations on OASIS. If a Participant or a Non-Participant
FTR Customer is suspended from entering into future transactions in the
FTR system and such suspension occurs at any time during an on-
going FTR Auction, then unless such Participant or Non-Participant FTR
Customer cures the default(s) providing the basis for such suspension
prior to 4:00 p.m. on the Business Day immediately preceding the close
of the next FTR Auction, all FTRs held by such Participant or Non-
Participant FTR Customer (the "Default FTRs") shall be offered in the next
FTR Auction, with an offer price of $0. If a Participant or Non-
Participant FTR Customer is suspended from entering into future
transactions in the FTR system and such suspension occurs at any time
other than during an ongoing FTR Auction, then unless such Participant or
Non-Participant FTR Customer cures the default(s) providing the basis for
such suspension prior to 4:00 p.m. on the Business Day immediately
preceding the close of the next FTR Auction, all Default FTRs held by
such Participant or Non-Participant FTR Customer shall be offered in that
next FTR Auction, with an offer price of $0. All Default FTRs that are
offered in an FTR Auction and have a positive value in that FTR Auction
shall be forfeited by such Participant or Non-Participant FTR Customer and
will be sold at the applicable clearing price in that FTR Auction. The
proceeds from the sale of those Default FTRs will first be used to satisfy
all obligations of such Participant or Non-Participant FTR Customer to
NEPOOL, the System Operator and the Non-Participant FTR Customers, and any
amount remaining after all such obligations have been satisfied shall be
paid over to such Participant or Non-Participant FTR Customer that
formerly owned such Default FTRs. All Default FTRs that are offered in an
FTR Auction and have a negative value in that FTR Auction will be retained
by such Participant or Non-Participant FTR Customer, and such
Participant or Non-Participant FTR Customer will remain subject to all of
the requirements, including the requirements hereunder, with respect to
such Default FTRs retained by it.
3.7 Addition of Section 4.5 to the Billing Policy. The following new section
is added to the end of Section 4 of the Billing Policy:
Section 4.5 - Non-Participant FTR Customers. Non-Participant FTR
Customers are not eligible for weekly billing arrangements.
3.8 Amendment to Section 5.5(c) of the Billing Policy. In the first sentence
of Section 5.5(c) of the Billing Policy, the reference to "Participants,
Non-Participant Transmission Customers" is changed to "Participants,
Non-Participant Transmission Customers, Non-Participant FTR Customers."
SECTION 4
MISCELLANEOUS
4.1 This Eighty-Seventh Agreement shall become effective on September 16,
2002, or on such other date as the Commission shall provide that the
amendments reflected herein shall become effective.
4.2 Terms used in this Eighty-Seventh Agreement that are not defined herein
shall have the meanings ascribed to them in the NEPOOL Agreement.
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<FN>
<FN1> For purposes of the amount in clause (ii) for any Corporate
Guaranty, such amount shall be the lesser of the unused portion of
any stated limit in such Corporate Guaranty (where such a limit is
stated) divided by three and one-half (3.5) or the Guarantor's Credit
Limit or Guaranty Limit (each as defined below), as applicable, which
Credit Limit or Guaranty Limit shall not be divided by three and
one-half (3.5).
</FN>
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