Exhibit 10.23.7
ISO NEW ENGLAND INC.
FERC TARIFF FOR TRANSMISSION DISPATCH AND
POWER ADMINISTRATION SERVICES
TABLE OF CONTENTS
PAGE
1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . 5
1.1 Automatic Generation Control Market. . . . . . . . . . 5
1.2 Calendar Year. . . . . . . . . . . . . . . . . . . . . 5
1.3 Commission . . . . . . . . . . . . . . . . . . . . . . 5
1.4 Customer . . . . . . . . . . . . . . . . . . . . . . . 5
1.5 Designated Agent . . . . . . . . . . . . . . . . . . . 5
1.6 Effective Date . . . . . . . . . . . . . . . . . . . . 5
1.7 Energy . . . . . . . . . . . . . . . . . . . . . . . . 5
1.8 Energy Administration Service (or "EAS") . . . . . . . 5
1.9 Energy Market. . . . . . . . . . . . . . . . . . . . . 6
1.10 Financial Assurance Policy. . . . . . . . . . . . . . 6
1.11 Force Majeure . . . . . . . . . . . . . . . . . . . . 6
1.12 Installed Capability Market . . . . . . . . . . . . . 6
1.13 Interest. . . . . . . . . . . . . . . . . . . . . . . 6
1.14 ISO . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.15 ISO Agreement . . . . . . . . . . . . . . . . . . . . 7
1.16 Markets . . . . . . . . . . . . . . . . . . . . . . . 7
1.17 Monthly RAS Expenses. . . . . . . . . . . . . . . . . 7
1.18 NEPOOL. . . . . . . . . . . . . . . . . . . . . . . . 7
1.19 NEPOOL Agreement. . . . . . . . . . . . . . . . . . . 7
1.20 NEPOOL Control Area . . . . . . . . . . . . . . . . . 7
1.21 NEPOOL Tariff . . . . . . . . . . . . . . . . . . . . 7
1.22 Network Customer. . . . . . . . . . . . . . . . . . . 7
1.23 Operable Capability Market. . . . . . . . . . . . . . 7
1.24 Operating Reserve Markets . . . . . . . . . . . . . . 8
1.25 Participant Share . . . . . . . . . . . . . . . . . . 8
1.26 Parties . . . . . . . . . . . . . . . . . . . . . . .11
1.27 Policy Statement. . . . . . . . . . . . . . . . . . .11
1.28 RAS Fee . . . . . . . . . . . . . . . . . . . . . . .11
1.29 Reliability Administration Service (or "RAS") . . . .11
1.30 Reliability Markets . . . . . . . . . . . . . . . . .11
1.31 Sanctions Rule. . . . . . . . . . . . . . . . . . . .11
1.32 Scheduling, System Control and Dispatch Service (or
"Scheduling Service") . . . . . . . . . . . . . . . .11
1.33 Service Agreement . . . . . . . . . . . . . . . . . .12
1.34 Services. . . . . . . . . . . . . . . . . . . . . . .12
1.35 System Operator . . . . . . . . . . . . . . . . . . .12
1.36 Transmission Service Agreement. . . . . . . . . . . .12
2 Purpose of This Tariff . . . . . . . . . . . . . . . . . .12
3 Billing and Payment. . . . . . . . . . . . . . . . . . . .14
3.1 Billing Procedure. . . . . . . . . . . . . . . . . . .14
3.2 Interest on Unpaid Balances. . . . . . . . . . . . . .15
3.3 Late Payment Charge. . . . . . . . . . . . . . . . . .15
3.4 Customer Default . . . . . . . . . . . . . . . . . . .15
4 Regulatory Filings . . . . . . . . . . . . . . . . . . . .16
5 Force Majeure and Indemnification. . . . . . . . . . . . .17
5.1 Force Majeure. . . . . . . . . . . . . . . . . . . . .17
5.2 Liability. . . . . . . . . . . . . . . . . . . . . . .17
5.3 Indemnification. . . . . . . . . . . . . . . . . . . .18
6 Creditworthiness . . . . . . . . . . . . . . . . . . . . .19
7 Dispute Resolution Procedures. . . . . . . . . . . . . . .19
7.1 Dispute Resolution Procedures. . . . . . . . . . . . .19
7.2 Mediation. . . . . . . . . . . . . . . . . . . . . . .20
7.3 Selection of Arbitrator. . . . . . . . . . . . . . . .20
7.4 Costs. . . . . . . . . . . . . . . . . . . . . . . . .21
7.5 Hearing Location . . . . . . . . . . . . . . . . . . .21
7.6 Rules and Procedures . . . . . . . . . . . . . . . . .21
8 Direct Billing; Sanctions. . . . . . . . . . . . . . . . .24
8.1 Transmission Studies . . . . . . . . . . . . . . . . .24
8.2 Information Requests . . . . . . . . . . . . . . . . .24
8.3 Sanctions Rule . . . . . . . . . . . . . . . . . . . .24
9 Metering . . . . . . . . . . . . . . . . . . . . . . . . .25
9.1 Customer Obligations . . . . . . . . . . . . . . . . .25
9.2 ISO Access to Metering Data. . . . . . . . . . . . . .25
Schedule 1
Scheduling, System Control and Dispatch Service. . . . . .26
Schedule 2
Energy Administration Service. . . . . . . . . . . . . . .29
Schedule 3
Reliability Administration Service . . . . . . . . . . . .32
ATTACHMENT A
Form of Service Agreement. . . . . . . . . . . . . . . . .35
ATTACHMENT B
Definitions and Provisions Extracted From NEPOOL
Agreement and NEPOOL Tariff. . . . . . . . . . . . . . . .37
ATTACHMENT C
Financial Assurance Policy . . . . . . . . . . . . . . . .49
ATTACHMENT D
RULE 13
Imposition of Sanctions by the ISO . . . . . . . . . . . .58
ATTACHMENT E
Policy Statement . . . . . . . . . . . . . . . . . . . . 101
1 Definitions
Whenever used in this Tariff, in either the singular or
plural number, capitalized terms shall have the meanings
specified in Sections 1.1 to 1.36 of this Tariff or in Attachment
B hereto. Attachment B consists of definitions and provisions
extracted from the NEPOOL Agreement and/or the NEPOOL Tariff.
1.1 Automatic Generation Control Market: The market for
Automatic Generation Control ("AGC") administered by the ISO
in accordance with the NEPOOL Agreement.
1.2 Calendar Year: A period of 365 or 366 days, whichever is
appropriate, commencing on January 1.
1.3 Commission: The Federal Energy Regulatory Commission.
1.4 Customer: Any Entity taking any of the Services provided
under this Tariff.
1.5 Designated Agent: Any Entity that performs actions or
functions required under this Tariff on behalf of a
Customer.
1.6 Effective Date: January 1, 1999.
1.7 Energy: Power produced in the form of electricity,
measured in kilowatthours or megawatthours.
1.8 Energy Administration Service (or "EAS"): The service
provided by the ISO, as described in Schedule 2 of this
Tariff, in order to facilitate: (1) bilateral Energy
transactions; (2) self-scheduling of Energy; (3) Interchange
Transactions in the Energy Market; and (4) Energy Imbalance
Service under the NEPOOL Tariff.
1.9 Energy Market: The NEPOOL market for Energy administered
by the ISO.
1.10 Financial Assurance Policy: The "Financial Assurance
Policy for NEPOOL Members" adopted by the Participants on
May 1, 1998, provided as Attachment C hereto, as utilized by
the ISO, as modified and amended from time to time.
1.11 Force Majeure: An event of Force Majeure means any act
of God, labor disturbance, act of the public enemy, war,
insurrection, riot, fire, storm or flood, explosion,
breakage or accident to machinery or equipment, any
Curtailment, order, regulation or restriction imposed by a
court or governmental military or lawfully established
civilian authorities, or any other cause beyond a Party's
control. A Force Majeure event does not include an act of
negligence or intentional wrongdoing.
1.12 Installed Capability Market: The NEPOOL market for
Installed Capability administered by the ISO.
1.13 Interest: Interest calculated in the manner specified in
Section 3.2 hereof.
1.14 ISO: ISO New England Inc., the non-profit independent
system operator that, pursuant to the ISO Agreement and the
authorization of the Commission: (i) operates the NEPOOL
Control Area consistent with proper standards of
reliability; (ii) administers the NEPOOL Tariff; and (iii)
administers a power exchange consisting of several markets
and provides support for bilateral and self-scheduled
transactions.
1.15 ISO Agreement: The Interim Independent System Operator
Agreement made and entered into as of July 1, 1997, as
modified from time to time, between the ISO and the
Participants, acting by and through the NEPOOL Management
Committee, or any successor agreement thereto.
1.16 Markets: Collectively, the Energy Market and the
Reliability Markets.
1.17 Monthly RAS Expenses: For a month, the expenses incurred
by the ISO during that month for providing RAS, less RAS
Fees received during that month.
1.18 NEPOOL: The New England Power Pool, the power pool
created under and governed by the NEPOOL Agreement, and the
Entities collectively participating in the New England Power
Pool.
1.19 NEPOOL Agreement: The New England Power Pool Agreement
dated as of September 1, 1971, as amended and restated from
time to time.
1.20 NEPOOL Control Area: The Control Area for NEPOOL.
1.21 NEPOOL Tariff: The Restated NEPOOL Open Access
Transmission Tariff and accompanying schedules and
attachments, as modified and amended from time to time.
1.22 Network Customer: An Entity receiving transmission
service pursuant to the terms of Part II and Part VI of the
NEPOOL Tariff.
1.23 Operable Capability Market: The NEPOOL market for
Operable Capability administered by the ISO.
1.24 Operating Reserve Markets: Collectively, the NEPOOL
markets for Operating Reserve administered by the ISO, and
pending the initiation of the market for 10-Minute Spinning
Reserve, the activities of the ISO supporting the provision
of such reserve.
1.25 Participant Share: Each Participant shall have a
Participant Share in any month which shall be determined in
accordance with the following formula:
P E C X M R Y
S=.15833(--)+.15833(--)+.15833(--)+.15833(--)+.15833(--)+.15833(--)+.05(--)
1 1 1 1 1 1 1
P E C X M R Y
in which
S = the Participant Share as a percentage of the aggregate
Participant Shares of all Participants;
P = the average for each of the most recently completed
twelve months of the Participant's maximum Load during
any clock hour in a month;
P{1} = the average of the sums for each of the most recently
completed twelve months of the noncoincidental maximum Load
during any clock hour in a month of all Participants;
E = the average for the most recently completed twelve
months of the sum for each month of the Participant's
Load for each hour of the month PLUS any kilowatthours
delivered during the month to loads classified as
interruptible under market operation rules approved by
the NEPOOL Regional Market Operations Committee;
E{1} = the average for the most recently completed twelve months
of the sum for each month of the Loads of all Participants
for each hour of the month PLUS any kilowatthours delivered
during the month to loads classified as interruptible under
market operation rules approved by the NEPOOL Regional
Market Operations Committee.
C = the average in megawatts for the most recently
completed twelve months of the sum for each month of
the Generation Ownership Shares of the Participant;
C{1} = the average in megawatts for the most recently completed
twelve months of the sum for each month of the Generation
Ownership Shares of all Participants;
X = the average for the most recently completed twelve
months of the sum for each month of (i) a number of
kilowatthours EQUAL TO the Kilowatts of the
Participant's Generation Ownership Shares, TIMES the
number of hours in the month, PLUS (ii) the number of
kilowatthours that the Participant was entitled to
receive in each hour with respect to its Energy
Entitlements under Unit Contracts or System Contracts
TIMES, in the case of each contract, the number of
hours the contract was in effect in the month, as
computed without giving effect to any resale in whole
or part of any such Energy Entitlement;
X{1} = the average for the most recently completed twelve months
of the sum for each month of (i) a number of kilowatthours
EQUAL TO the Kilowatts of the Generation Ownership Shares of
all Participants, TIMES the number of hours in the month,
PLUS (ii) the number of kilowatthours that all Participants
were entitled to receive in each hour with respect to their
Energy Entitlements under Unit Contracts or System Contracts
TIMES, in the case of each contract, the number of hours the
contract was in effect in the month, as computed without
giving effect to any resale in whole or part of any such
Energy Entitlement;
M = the circuit miles of the Participant's Transmission
Ownership Shares of PTF transmission lines TIMES, in
the case of each line, the nominal operating voltage of
the line;
M{1} = the aggregate of the circuit miles of the Transmission
Ownership Shares of PTF transmission lines of all
Participants TIMES, in the case of each line, the nominal
operating voltage of the line;
R = the Annual Transmission Revenue Requirements of the
Participant's PTF as of the beginning of the current
calendar year as determined in accordance with
Attachment F to the NEPOOL Tariff except that 1) such
Revenue Requirements shall not be reduced by the
transmission support revenue received as described in
Section I of that Attachment and 2) such Revenue
Requirements shall not include transmission support
payments as described in Section J of that Attachment
for support arrangements which were entered into after
December 31, 1996;
R{1} = the aggregate Annual Transmission Revenue Requirements of
the PTF of all Participants as of the beginning of the
current calendar year as determined in accordance with
Attachment F to the NEPOOL Tariff, except that 1) such
Revenue Requirements shall not be reduced by the
transmission support revenue received as described in
Section I of that Attachment and 2) such Revenue
Requirements shall not include transmission support payments
as described in Section J of that Attachment for support
arrangements which were entered into after December 31,
1996;
Y = 1; and
Y{1} = the number of NEPOOL Participants at the beginning of the
month;
PROVIDED, HOWEVER, that a Participant and its Related
Persons may not have aggregate Participant Shares exceeding
25% of the aggregate Participant Shares of all Participants.
If the aggregate Participant Shares of a Participant and
its Related Persons would be in excess of 25% if it were not
for this limitation, the remaining Participant Shares which
would otherwise be allocated to such Participant and its
Related Persons shall be allocated to the other Participants
on a pro rata basis.
For purposes of the preceding formula (i) if an Entity has
been a Participant for less than twelve months, the amounts
to be taken into account for purposes of "P", "E", "C" and
"X" in the formula shall be for the period during which the
Entity has been a Participant; (ii) for purposes of "X" and
"X{1}" in the formula, the number of kilowatthours to be
taken into account with respect to the HQ Phase II Firm
Energy Contract for each Participant which has a share in
the HQ Phase II Firm Energy Contract shall be computed on
the basis of the number of Kilowatts of its HQ
Interconnection Capability Credit, if any, for the month as
calculated pursuant to the NEPOOL Agreement; and (iii) for
purposes of "X" and "X{1}" in the formula, the number of
kilowatthours to be taken into account with respect to an
Energy Entitlement under a Unit Contract or System Contract,
other than the HQ Phase II Firm Energy Contract, under which
a Participant is entitled to receive Energy from outside the
NEPOOL Control Area shall be computed on the basis of the
number of Kilowatts of Installed Capability credit, or
Monthly Peak reduction, for which the Participant is given
credit in determining whether it has satisfied its Installed
Capability Responsibility pursuant to Section 12 of the
NEPOOL Agreement.
1.26 Parties: Collectively, the ISO and the Customers; individually,
a "Party."
1.27 Policy Statement: The "Policy Statement for the
Financial Assurance Requirements and Administration Thereof
for NEPOOL Open Access Tariff," included as Attachment E to
this Tariff, as modified from time to time.
1.28 RAS Fee: The fee payable pursuant to Schedule 3 hereto
by Transmission Customers that are not Participants.
1.29 Reliability Administration Service (or "RAS"): The
service provided by the ISO, as described in Schedule 3 of
this Tariff, in order to administer the Reliability Markets
and provide other reliability-related and informational
functions.
1.30 Reliability Markets: Collectively, the Automatic
Generation Control Market, Installed Capability Market, the
Operable Capability Market, and the Operating Reserve
Markets.
1.31 Sanctions Rule: "Imposition of Sanctions by the ISO," a
rule administered by the ISO, and included as Attachment D
to this Tariff.
1.32 Scheduling, System Control and Dispatch Service (or
"Scheduling Service"): The service described in Schedule 1
of this Tariff.
1.33 Service Agreement: An agreement between the ISO and a
Customer in the form provided in Attachment A hereto.
1.34 Services: Collectively, the Scheduling Service, EAS and
RAS; individually, a "Service."
1.35 System Operator: ISO New England Inc.
1.36 Transmission Service Agreement: The initial agreement
and any amendments or supplements thereto entered into by
the Transmission Customer and the ISO on behalf of the
Participants (or filed in unexecuted form), for service
under the NEPOOL Tariff.
2 Purpose of This Tariff
This Tariff is the means by which the ISO collects the
revenues necessary to carry out its functions. This Tariff
contains rates, charges, terms and conditions for the following
Services, which together encompass the functions carried out by
the ISO: (1) Scheduling, System Control and Dispatch Service
(Schedule 1 hereto); (2) Energy Administration Service (Schedule
2 hereto); and (3) Reliability Administration Service (Schedule 3
hereto).
The rates and charges for each Service during a Calendar
Year are based on the allocated portion of that year's budgeted
total expense (the "Budget Amount"), as adjusted by true-ups
described herein. The portion of the Budget Amount allocated to
a Service consists of: (1) the direct (E.G., personnel, software
and equipment) costs of performing the Service; plus (2) in
general, the percentage of the ISO's general and administrative
costs determined by dividing the direct costs of providing that
Service by the direct costs of providing all Services.
By way of example, the Budget Amount for Calendar Year 1999
for all Services is $38,415,141. If the ISO determines during
Calendar Year 1999 that collections under this Tariff (for all
Services) will exceed 105 percent of the Budget Amount for 1999,
the ISO will file with the Commission an amended or superseding
tariff or rate schedule.
For the Services described in Schedules 1 and 2, deviations
between collections under the Tariff and the ISO's actual
expenses will be reconciled through a year-to-year, prospective
true-up. For example, before the close of Calendar Year 1999,
the ISO will compute the total actual-to-date and projected-to-
year-end expenses of providing each of those Services, and
compare these totals with the total charges actually collected
(and projected to be collected through 1999) under this Tariff
for each Service during Calendar Year 1999. Based on these
comparisons, the ISO will adjust the otherwise-projected revenue
requirement for Calendar Year 2000 (I.E., the Calendar Year 2000
Budget Amount) for either or both Services, as needed, downward
or upward to reflect the expected Calendar Year 1999 surplus or
deficit, respectively, while preserving a reasonable amount of
cash working capital. From these figures the ISO will calculate
rates for Calendar Year 2000, and make a rate change filing for
Calendar Year 2000 and succeeding years, as required, to reflect
the Budget Amount for the applicable Calendar Year and the true-
ups calculated by means of the foregoing analysis and
adjustments. Any deviation between projected and actual true-up
amounts for Calendar Year 1999 will be reflected in the rate
changes for Calendar Year 2001. The ISO will also analyze, as
necessary, the need for any adjustments to allocation methodology
or rate design.
The charges for Schedule 3 consist of actual monthly
expenses for RAS, and thus are not subject to true-up. The
provision noted above limiting total annual collections to 105
percent of the pertinent Budget Amount (for all Services)
effectively limits the amounts collected for RAS under Schedule
3.
The revenues collected through this Tariff are not
recovering funding and reimbursement of NEPOOL restructuring
costs, including the costs relating to the separation of NEPOOL
staff and costs associated with the design, installation and
implementation of the Markets, which are to be recovered by the
NEPOOL Participants through contractual arrangements. Budget
Amounts also do not reflect any amounts received by the ISO due
to indemnification payments.
3 Billing and Payment
3.1 Billing Procedure: By the 15th day of each month, the ISO
shall submit an invoice to each Customer for the charges for
all Services furnished under this Tariff during the
preceding month. The invoice shall be paid by the Customer
by 10:00 a.m. Eastern Time on the first business day after
the 19th day of the calendar month. All payments shall be
made by electronic funds transfer to a bank account
designated by the ISO. The ISO may bill Participants more
frequently than monthly, in accordance with the Financial
Assurance Policy.
3.2 Interest on Unpaid Balances: Interest on any unpaid
amounts (including amounts placed in escrow due to a payment
dispute as described in Section 3.3 below) shall be
calculated and payable to the ISO in accordance with the
methodology specified for interest on refunds in the
Commission's regulations at 18 C.F.R. <section>
35.19a(a)(2)(iii); PROVIDED, HOWEVER, that interest due on
amounts placed in escrow shall be limited to the interest
actually earned on those amounts while in escrow. Interest
on delinquent amounts will be calculated from the due date
of the bill to the date of payment.
3.3 Late Payment Charge: In order to cover ISO expenses
occasioned by Customers' late payments, if a Customer is
delinquent two or more times within any period of twelve
months in paying on time amounts owed to the ISO, the
Customer shall pay, in addition to interest on each late
payment, a late payment charge for its second failure to pay
on time, and for each subsequent failure to pay on time,
within the same twelve-month period, in an amount equal to
the greater of (i) two percent (2%) of the total amount of
such late payment and (ii) $250.00. Late payment charges
collected by the ISO will be credited proportionately to the
revenue requirement for each Service.
3.4 Customer Default: In the event a Customer fails, for any
reason other than a billing dispute as described below, to
make payment to the ISO on or before the due date as
described above, and such failure of payment is not
corrected within thirty (30) calendar days after the ISO
notifies the Customer to cure such failure, a default by the
Customer will be deemed to exist. Upon the occurrence of a
default, the ISO and NEPOOL may jointly initiate a
proceeding with the Commission to terminate the Service and
service under the NEPOOL Agreement and/or NEPOOL Tariff (as
applicable) but shall not terminate the Service until the
Commission approves such termination. In the event of a
billing dispute between the ISO and the Customer, the
Service will continue to be provided under the Service
Agreement as long as the Customer (i) continues to make all
payments not in dispute, and (ii) pays as of the bill due
date into an independent escrow account the portion of the
invoice in dispute, pending resolution of such dispute. If
the Customer fails to meet these two requirements for
continuation of the Service, then the ISO and NEPOOL may
jointly provide notice to the Customer of their intention to
suspend service in sixty (60) days or such longer period as
is provided for in the NEPOOL Agreement, in accordance with
Commission rules and regulations, and may proceed with such
suspension.
4 Regulatory Filings
Nothing contained in this Tariff or any Service Agreement
shall be construed as affecting in any way the right of the ISO
to file with the Commission under Section 205 of the Federal
Power Act and pursuant to the Commission's rules and regulations
promulgated thereunder for a change in any rates, terms and
conditions, charges, classification of service, Service
Agreement, rule or regulation.
Nothing contained in this Tariff or any Service Agreement
shall be construed as affecting in any way the ability of any
Customer receiving a Service under this Tariff to exercise its
rights under the Federal Power Act and pursuant to the
Commission's rules and regulations promulgated thereunder.
5 Force Majeure and Indemnification
5.1 Force Majeure: Neither the ISO nor a Customer will be
considered in default as to any obligation under this Tariff
if prevented from fulfilling the obligation due to an event
of Force Majeure; provided that no event of Force Majeure
affecting any Entity shall excuse that Entity from making
any payment that it is obligated to make hereunder or under
a Service Agreement. However, an Entity whose performance
under this Tariff is hindered by an event of Force Majeure
shall make all reasonable efforts to perform its obligations
under this Tariff, and shall promptly notify the ISO or the
Customer, whichever is appropriate, of the commencement and
end of each event of Force Majeure .
5.2 Liability: The ISO shall not be liable for money damages
or other compensation to the Customer for actions or
omissions by the ISO in performing its obligations under
this Tariff or Service Agreement thereunder, provided it has
not willfully breached this Tariff or a Service Agreement or
engaged in willful misconduct. To the extent the Customer
has claims against the ISO, the Customer may only look to
the assets of the ISO for the enforcement of such claims and
may not seek to enforce any claims against the directors,
members, officers, employees or agents of the ISO who, the
Customer acknowledges and agrees, have no personal liability
for obligations of the ISO by reason of their status as
directors, members, officers, employees or agents of the
ISO. In no event shall either the ISO or any Customer be
liable for any incidental, consequential, multiple or
punitive damages, loss of revenues or profits, attorneys
fees or costs arising out of, or connected in any way with
the performance or non-performance of this Tariff, any
Service Agreement thereunder or the ISO Agreement.
5.3 Indemnification: Each Customer shall at all times
indemnify, defend, and save harmless the ISO and its
directors, officers, members, employees and agents from any
and all damages, losses, claims and liabilities by or to
third parties arising out of or resulting from the
performance by the ISO under this Tariff or Service
Agreement thereunder, any bankruptcy filings made by a
Customer, or the actions or omissions of the Customer in
connection with this Tariff or Service Agreement thereunder,
except in cases of gross negligence or willful misconduct by
the ISO or its directors, officers, members, employees or
agents. The amount of any indemnity payment hereunder shall
be reduced (including, without limitation, retroactively) by
any insurance proceeds or other amounts actually recovered
by the indemnified party in respect of the indemnified
action, claim, demand, cost, damage or liability. The
obligations of each Customer to indemnify the ISO shall be
several, and not joint or joint and several. A Customer's
obligation to contribute to any indemnity payment hereunder
shall be limited to a percentage thereof equal to the
Customer's payments under this Tariff over the twelve (12)
calendar months preceding the date of payment divided by the
total payments of all Customers under this Tariff over the
same period.
6 Creditworthiness
For the purpose of determining the ability of a Customer to
meet its obligations related to a Service hereunder, the ISO will
apply the Financial Assurance Policy (Attachment C hereto) to
Participants and the Policy Statement (Attachment E hereto) to
non-Participant Transmission Customers. The Customer shall
comply with the requirements of the Financial Assurance Policy or
Policy Statement, as applicable.
7 Dispute Resolution Procedures
7.1 Dispute Resolution Procedures: Any dispute between a
Customer and the ISO involving Service provided under this
Tariff (excluding applications for rate changes or other
changes to this Tariff, or to any Service Agreement entered
into under this Tariff, which shall be presented directly to
the Commission for resolution) shall be referred to a
designated senior representative of the Customer and a
senior representative of the ISO for resolution on an
informal basis as promptly as practicable. In the event the
designated representatives are unable to resolve the dispute
within thirty (30) days or such other period as the Parties
may fix by mutual agreement, a Party may invoke arbitration
by notice to the other Party and may also (with the
agreement of the other Party) submit such dispute to
mediation for resolution in accordance with the procedures
set forth below. The arbitration procedure shall not exceed
90 calendar days from the date of the notice by the Party
invoking arbitration (the "Aggrieved Party") to the
arbitrator's decision unless the Parties agree upon a longer
or shorter time. All agreements by the ISO and Customer to
use mediation shall establish a schedule which will control
unless later changed by mutual agreement.
7.2 Mediation: All mediation proceedings are confidential and
shall be treated as compromise and settlement negotiations
for purposes of applicable rules of evidence.
Notwithstanding the initiation of mediation, the arbitration
proceeding shall proceed concurrently with the selection of
the arbitrator pursuant to Section 7.3 hereof.
7.3 Selection of Arbitrator: The Parties shall attempt to
choose by mutual agreement a single neutral arbitrator to
hear the dispute. If the Parties fail to agree upon a
single arbitrator within ten calendar days of the giving of
notice of arbitration, the American Arbitration Association
shall be asked to appoint an arbitrator. In either case,
the arbitrator shall be knowledgeable in matters involving
the electric power industry, including the operation of
control areas and bulk power systems, and shall not have any
substantial business or financial relationships with the
ISO, NEPOOL or its Participants, or the Customer (other than
previous experience as an arbitrator) unless otherwise
mutually agreed by the Parties.
7.4 Costs: Each Party shall be responsible for the following
arbitration costs, if applicable:
(i) its own costs incurred during the arbitration process;
plus
(ii) One half of the common costs of the arbitration
including, but not limited to, the arbitrator's fee and
expenses, the rental charge for a hearing room and, if
both Parties agree to the necessity therefor, the cost
of a court reporter and transcript.
7.5 Hearing Location: Unless otherwise mutually agreed, the
site for all arbitration hearings shall be Springfield,
Massachusetts.
7.6 Rules and Procedures:
(1) PROCEDURE AND DISCOVERY: The procedural rules (if
any), the conduct of the arbitration and the
availability, extent and duration of pre-hearing
discovery (if any), which shall be limited to the
minimum necessary to resolve the matters in dispute,
shall be determined by the arbitrator in his/her sole
discretion at or prior to the initial hearing. The
arbitrator shall provide each of the Parties an
opportunity to be heard and, except as otherwise
provided herein, shall generally conduct the
arbitration in accordance with the COMMERCIAL
ARBITRATION RULES OF THE AMERICAN ARBITRATION
ASSOCIATION. In addition, each Party shall designate
one or more individuals to be available to answer
questions the arbitrator may have on the documents or
other materials submitted by that Party. The answers
to all such questions shall be reduced to writing by
the Party providing the answer and a copy shall be
furnished to the other Party.
(2) PRE-HEARING SUBMISSIONS: The Aggrieved Party shall
provide the arbitrator with a brief written statement
of its complaint and a statement of the remedy or
remedies it seeks, accompanied by copies of any
documents or other materials it wishes the arbitrator
to review.
(3) INITIAL HEARING: An initial hearing will be held no
later than 10 days after the selection of the
arbitrator and shall be limited to issues raised in the
pre-hearing filings. The scheduling of further
hearings at the request of either Party or on the
arbitrator's own motion shall be within the sole
discretion of the arbitrator.
(4) DECISION: The arbitrator's decision shall be due,
unless the deadline is extended by mutual agreement of
the Parties, within thirty days of the initial hearing
or within ninety days of the Aggrieved Party's
initiation of arbitration, whichever occurs first. The
arbitrator shall be authorized only to interpret and
apply the provisions of this Tariff or Service
Agreement thereunder (or, to the extent applicable, the
NEPOOL Agreement, NEPOOL Tariff or ISO Agreement) and
the arbitrator shall have no power to modify or change
this Tariff or Service Agreement (or, to the extent
applicable, the NEPOOL Agreement, NEPOOL Tariff or ISO
Agreement) thereunder in any manner. The arbitrator's
decision shall be in writing and shall state the basis
for the decision.
(5) EFFECT OF ARBITRATION DECISION: The decision of the
arbitrator will be conclusive in a subsequent
regulatory or legal proceeding as to the facts
determined by the arbitrator but will not be conclusive
as to the law or constitute precedent on issues of law
in any subsequent regulatory or legal proceedings.
An Aggrieved Party may initiate a proceeding with
a court or with the Commission with respect to the
arbitration or arbitrator's decision only:
o if the arbitration process does not result in a
decision within the time period specified and the
proceeding is initiated within thirty days after
the expiration of such time period; or
o on the grounds specified in Sections 10 and 11
of Title 9 of the United States Code for judicial
vacation or modification of an arbitration award
and the proceeding is initiated within thirty days
of the issuance of the arbitrator's decision.
8 Direct Billing; Sanctions
8.1 Transmission Studies: The ISO will conduct and coordinate
certain System Impact Studies pursuant to, and in accordance
with, the NEPOOL Tariff and the NEPOOL Agreement. In
addition, the ISO will conduct and coordinate certain
Facilities Studies pursuant to, and in accordance with, the
NEPOOL Tariff and the NEPOOL Agreement. The costs of System
Impact Studies and Facilities Studies will be charged
directly to the pertinent Eligible Customers or
interconnection applicants. The ISO will include in a
separate operating revenue account or subaccount any
revenues received for System Impact Studies or Facilities
Studies (excluding the costs of study contractors which are
directly charged to study requestors) which represent costs
for ISO staff or related overhead, and these revenues and
any other miscellaneous revenues will be credited to revenue
requirements for the Scheduling Service.
8.2 Information Requests: In fulfilling information requests
of a significant and non-routine nature, the ISO will charge
its associated direct and indirect costs to the requestor.
Revenue from these charges will be credited to revenue
requirements for the Service to which the information
request is most closely related.
8.3 Sanctions Rule: Amounts collected by the ISO during a
month from Participants pursuant to the Sanctions Rule shall
be a credit to that month's Monthly RAS Expenses; provided,
however, that a sanctioned Participant shall receive no part
of such credit attributable to a payment made by such
sanctioned Participant. The part of such credit
attributable to the sanctioned Participant's payment shall
be allocated among the Participants (excluding the
sanctioned Participant) on the basis of a recalculation of
Voting Share (determined in accordance with the NEPOOL
Agreement) excluding the factors associated with the
sanctioned Customer.
9 Metering
9.1 Customer Obligations: The Customer shall be responsible
for compliance with metering requirements under the NEPOOL
Tariff and any applicable local transmission provider's
tariff and to communicate the metering information to the
ISO.
9.2 ISO Access to Metering Data: The ISO will have access to
such metering data as may reasonably be required to
facilitate measurements and billing under this Tariff and
Service Agreement, the NEPOOL Agreement, the NEPOOL Tariff,
or other arrangements for which the ISO is required to bill.
Schedule 1
Scheduling, System Control and Dispatch Service
Scheduling, System Control and Dispatch Service ("Scheduling
Service") is the service required to schedule at the pool level the
movement of power through, out of, within, or into the NEPOOL Control
Area. It is anticipated that local level service would be provided
under the Local Network Service tariffs of the individual Transmission
Providers. For Transmission Service under the NEPOOL Tariff,
Scheduling Service is an Ancillary Service that can be provided only
by the ISO and all Transmission Customers must be Customers under this
Tariff and purchase this Service from the ISO. Customers must enter
into a Service Agreement of the type specified in Attachment A hereto.
The ISO's charges stated herein for Scheduling Service are based on
the expenses incurred by the ISO in providing this Service. In
addition, the ISO acts as a billing agent for the operators of the
NEPOOL satellite dispatch centers and certain Participants in order to
collect their expenses incurred in providing this service pursuant to
Schedule 1 of the NEPOOL Tariff.
The ISO's expenses are based on the functions required to provide
this Service and include, but are not limited to:
o Processing and implementation of requests for
Transmission Service, including support of the NEPOOL OASIS
node;
o Coordination of transmission system operation (including
administration of reactive power requirements under Schedule
2 of the NEPOOL Tariff) and implementation of necessary
control actions by the ISO and support for these functions;
o Billing associated with transmission services provided
under the NEPOOL Tariff;
o Transmission system planning which supports this Service;
and
o Administrative costs associated with the aforementioned
functions.
The satellite dispatch center expenses and the Participant
expenses collected pursuant to Schedule 1 of the NEPOOL Tariff are in
each case an allocated portion of dispatch center expense for the PTF
dispatch functions performed.
For the ISO's expenses in providing transmission-related Scheduling
Service, each Customer that is obligated to pay the Regional Network
Service rate shall pay each month an amount equal to the product of
$0.0420 per kilowatt times its Monthly Network Load for that month;
the annual charge per kilowatt is $0.5036. Each Customer that is a
Transmission Customer receiving Point-to-Point Transmission Service
shall pay each month an amount equal to the product of the
Transmission Customer's highest amount of Reserved Capacity (expressed
in kilowatts) for each transaction scheduled to occur during the month
as Point-to-Point Transmission Service times:
(1) for each month of firm annual or monthly service, $0.0420;
(2) for each week of firm weekly service, $0.0097;
(3) for each day of firm daily service, $0.0019, but the rate
for 5 to 7 consecutive days may not exceed the per-week
rate;
(4) for each month of non-firm annual or monthly service,
$0.0420;
(5) for each week of non-firm weekly service, $0.0097;
(6) for each day of non-firm daily service, $0.0014; and
(7) for each hour of non-firm hourly service, $0.0006.
The ISO shall also collect from each Customer, as billing agent,
the charges specified in Schedule 1 of the NEPOOL Tariff.
All general terms and conditions of this Tariff apply to this
Service.
Schedule 2
Energy Administration Service
Energy Administration Service ("EAS") is the Service provided by
the ISO to administer the Energy Market and facilitate Interchange
Transactions, bilateral transactions and self-scheduling in accordance
with the NEPOOL Agreement and the corresponding rules promulgated
thereunder. Each Participant that buys, sells, or produces Energy
utilizes EAS (even when utilizing bilateral transactions or self-
scheduling, because the ISO must account for these activities and
implement them) and must purchase EAS as a Customer hereunder. Each
non-Participant Transmission Customer that receives Energy pursuant to
Schedule 4 of the NEPOOL Tariff (I.E., Energy Imbalance Service)
utilizes EAS and must purchase EAS as a Customer hereunder. Each
Customer must enter into a Service Agreement of the type specified in
Attachment A hereto.
The ISO's expenses are based on the functions required to provide
this Service and include, but are not limited to:
o Core operation of the Energy Market;
o Generation dispatch related to the Energy Market;
o Energy accounting;
o Loss determination and allocation;
o Billing preparation;
o Administration of the Energy Imbalance Service under
Schedule 4 of the NEPOOL Tariff;
o Market power monitoring and mitigation for the Energy
Market;
o Sanctions activities;
o Market assessment and reports; and
o Formulation of additional market rules and proposals to
modify existing rules.
For EAS, each Participant shall pay each month in arrears: (1)
an amount equal to the product of $0.0000698 per kilowatt-hour times
the Customer's total Electrical Load for all hours in that month; and
(2) an amount equal to the product of $0.0000263 per kilowatt-hour
times the sum of: (a) a number of kilowatt-hours equal to the
kilowatts of the Customer's Generation Ownership Shares for that
month, times the number of hours in the month, plus (b) the total
number of kilowatt-hours that the Customer was entitled to receive
during that month with respect to its Energy Entitlements under Unit
Contracts or System Contracts (taking into account, in the case of
each contract, the number of hours the contract was in effect in the
month), as computed without giving effect to any resale in whole or
part of any such Energy Entitlement; plus (c) the absolute value of
the sum of the kilowatt-hours of the Customer's ANI in the hours of
that month in which the Customer's ANI is a negative number; provided
that if a Participant has both a Generation Ownership Share in a
generating unit as the result of its Related Person affiliation with
the owner of the generating unit and an Energy Entitlement as the
result of its purchase of Energy from the same generating unit, the
Participant's Energy Entitlement with respect to such purchase shall
be excluded from consideration under Part (b) of the formula. For
purposes of this paragraph, a Customer's Electrical Load, Generation
Ownership Shares and Energy Entitlements shall be calculated subject
to the provisions of NEPOOL Agreement Section 3.2.
For EAS, a Customer that is not a Participant shall pay each
month in arrears an amount equal to the product of $0.0000263 per
kilowatt-hour times the number of kilowatt-hours of Energy Imbalance
Service taken by the Customer during that month.
All general terms and conditions of this Tariff apply to this
Service.
Schedule 3
Reliability Administration Service
Reliability Administration Service ("RAS") is the Service
provided by the ISO to administer the Reliability Markets (and
facilitate reliability-associated transactions and arrangements) in
accordance with the NEPOOL Agreement and the corresponding rules
promulgated thereunder, and to provide other reliability and
informational services. Each Participant (and each Transmission
Customer that is not a Participant) benefits (as do their respective
customers) from the reliability ensured by the administration of the
Reliability Markets and associated services, and therefore must
purchase RAS as a Customer hereunder. The Reliability Markets are
also a means by which certain Ancillary Services are obtained under
the NEPOOL Tariff. Each Customer must enter into a Service Agreement
of the type specified in Attachment A hereto.
The ISO's administrative expenses are based on the functions
required to provide this Service and include, but are not limited to:
o Generation dispatch associated with Reliability Markets;
o Reliability Markets accounting;
o Billing preparation;
o NEPOOL generation emissions analysis;
o Risk profile updates;
o Triennial review of resource adequacy;
o Preparation of regional reports and load forecasts and
profiles (CELT, EIA, NERC);
o Support of power supply, environmental and market
reliability planning activities;
o Reliability Markets: market power monitoring, mitigation
and assessment; and
o Formulation of additional Market rules and proposals to
modify existing rules.
For RAS: (1) Each Transmission Customer that is not a
Participant shall pay each month, in arrears, a RAS Fee (corresponding
to the Transmission Service taken in that month) in the following
amounts:
(a) Entities required to make a payment for Regional Network
Service in a month, $500 (whether firm or non-firm);
(b) for each month of annual or monthly Point-to-Point
Transmission Service received, $500;
(c) for each week of weekly Point-to-Point Transmission Service
received (whether firm or non-firm), $115.38;
(d) for each day of firm daily Point-to-Point Transmission
Service received, $23.07, provided that the rate for 5 to 7
consecutive days may not exceed the "per week" rate;
(e) for each day of non-firm daily Point-to-Point Transmission
Service received, $16.48; and
(f) for each hour of non-firm hourly Point-to-Point Transmission
Service received, $0.69;
and (2) each Customer that is a Participant shall pay each month in
arrears, an amount equal to the product of its Participant Share as of
the end of that month and the Monthly RAS Expenses.
RAS does not include any amounts paid by the ISO on behalf of the
Participants to purchase emergency power. If one or more states
requires Participants to undertake disclosure or tracking obligations
that result in the ISO incurring expenses, the ISO will segregate the
expenses associated with such obligations.
All general terms and conditions of this Tariff apply to this
Service.
ATTACHMENT A
Form of Service Agreement
1.0 This Service Agreement, dated as of __________ , is entered
into, by and between ISO New England Inc. __________________ (the
"ISO") and __________ ("Customer") pursuant to the ISO's Tariff
for Transmission Dispatch and Power Administration Services (the
"Tariff").
2.0 Service under this Service Agreement shall commence on the later
of (1) the requested service commencement date or (2) such other
date as it is permitted to become effective by the Commission.
Service under this Service Agreement shall terminate on such date
as is mutually agreed upon by the parties, except as otherwise
provided under the Tariff.
3.0 The ISO agrees to provide, and the Customer agrees to take and
pay for, Services indicated below in accordance with the
provisions of the Tariff and this Service Agreement:
Scheduling, System Control and Dispatch Service (Schedule 1)
Energy Administration Service (Schedule 2)
Reliability Administration Service (Schedule 3)
4.0 Any notice or request made to or by either party regarding this
Service Agreement shall be made to the representative of the
other party as indicated below.
ISO:
[Title]
ISO New England Inc.
One Sullivan Road
Holyoke, MA 01040-2841
CUSTOMER:
___________________________
___________________________
___________________________
___________________________
___________________________
5.0 The Tariff is incorporated in this Service Agreement and made a
part hereof.
IN WITNESS WHEREOF, the Parties have caused this Service Agreement to
be executed by their respective authorized officials.
ISO NEW ENGLAND INC.:
By:___________________ __________ _____________
Name Title Date
CUSTOMER:
By:___________________ __________ _____________
Name Title Date
ATTACHMENT B
Definitions and Provisions Extracted From
NEPOOL Agreement and NEPOOL Tariff
Adjusted Net Interchange (or "ANI"): The Adjusted Net
Interchange of a Participant for an hour is (a) the kilowatts produced
by or delivered to the Participant from its Energy Entitlements or
pursuant to arrangements entered into under Section 14.6 of the NEPOOL
Agreement as adjusted in accordance with uniform market operation
rules approved by NEPOOL's Regional Market Operations Committee to
take account of losses, as appropriate, MINUS (b) the sum of (i) the
Electrical Load of the Participant for the hour, and (ii) the
kilowatt-hours delivered by such Participant to other Participants
pursuant to Firm Contracts or System Contracts in accordance with the
treatment agreed to by the parties thereto and reported to the ISO,
together with any associated electrical losses.
Ancillary Services: Those services that are necessary to support the
transmission of electric capacity and energy from resources to loads
while maintaining reliable operation of the NEPOOL Transmission System
in accordance with Good Utility Practice.
Automatic Generation Control (or "AGC"): A measure of the ability of
a generating unit or portion thereof to respond automatically within a
specified time to a remote direction from the ISO to increase or
decrease the level of output in order to control frequency and to
maintain currently proper power flows into and out of the NEPOOL
Control Area.
Control Area: An electric power system or combination of electric
power systems to which a common automatic generation control scheme is
applied in order to:
(1) match, at all times, the power output of the generators
within the electric power system(s) and capacity and energy
purchased from entities outside the electric power
system(s), with the load within the electric power
system(s);
(2) maintain scheduled interchange with other Control Areas,
within the limits of Good Utility Practice;
(3) maintain the frequency of the electric power system(s)
within reasonable limits in accordance with Good Utility
Practice and the criteria of the applicable regional
reliability council or the North American Electric
Reliability Council; and
(4) provide sufficient generating capacity to maintain operating
reserves in accordance with Good Utility Practice.
Curtailment: A reduction in firm or non-firm transmission
service in response to a transmission capacity shortage as a result of
system reliability conditions.
Electrical Load: Electrical Load (in kilowatts) of a Participant
during any particular hour is the total during such hour (eliminating
any distortion arising out of (i) Interchange Transactions, or (ii)
transactions across the system of such Participant, or (iii)
deliveries between Entities constituting a single Participant, or (iv)
other electrical losses, if and as appropriate), of
(a) kilowatt-hours provided by such Participant to its retail
customers for consumption, PLUS
(b) kilowatt-hours of use by such Participant, PLUS
(c) kilowatt-hours of electrical losses and unaccounted for use
by the Participant on its system, PLUS
(d) kilowatt-hours used by such Participant for pumping Energy
for its Entitlements in pumped storage hydroelectric
generating facilities, PLUS
(e) kilowatt-hours delivered by such Participant to Non-
Participants.
The Electrical Load of a Participant may be calculated in any
reasonable manner which substantially complies with this definition.
Eligible Customer: (i) Any Participant that is engaged, or
proposes to engage, in the wholesale or retail electric power business
is an Eligible Customer under the NEPOOL Tariff. (ii) Any electric
utility (including any power marketer), Federal power marketing
agency, or any other entity generating electric energy for sale for
resale is an Eligible Customer under the NEPOOL Tariff. Electric
energy sold or produced by such entity may be electric energy produced
in the United States, Canada or Mexico. However, with respect to
transmission service that the Commission is prohibited from ordering
by Section 212(h) of the Federal Power Act, such entity is eligible
only if the service is provided pursuant to a state requirement that
the Transmission Provider with which the entity is directly
interconnected offer the unbundled transmission service, or pursuant
to a voluntary offer of such service by the Transmission Provider with
which the entity is directly interconnected. (iii) Any end user
taking or eligible to take unbundled transmission service pursuant to
a state requirement that the Transmission Provider with which that end
user is directly interconnected offer the transmission service, or
pursuant to a voluntary offer of such service by the Transmission
Provider with which that entity is directly interconnected, is an
Eligible Customer under the NEPOOL Tariff.
Energy Entitlement: An Energy Entitlement is (i) a right to
receive Energy under a System Contract or a Firm Contract, or (ii) a
right to receive all or a portion of the electric output of a
generating unit or units to which an Entity is entitled as an owner
(either sole or in common) or as a purchaser pursuant to a Unit
Contract, REDUCED BY (iii) any portion thereof which such Entity is
selling pursuant to a Unit Contract. An Energy Entitlement in a
generating unit or units may, but need not, be combined with any other
Entitlements relating to such generating unit or units and may be
transferred separately from the related Installed Capability
Entitlement, Operable Capability Entitlement, Operating Reserve
Entitlements, or AGC Entitlement.
Entitlement: An Installed Capability Entitlement, Operable
Capability Entitlement, Energy Entitlement, Operating Reserve
Entitlement, or AGC Entitlement. When used in the plural form, it may
be any or all such Entitlements or combinations thereof, as the
context requires.
Entity: Any person or organization whether in the United States of
America or Canada or a state or province or a political subdivision
thereof or a duly established agency of any of them, a private
corporation, a partnership, an individual, an electric cooperative or
any other person or organization recognized in law as capable of
owning property and contracting with respect thereto that is either:
(a) engaged in the electric power business (the
generation and/or transmission and/or distribution
of electricity for consumption by the public or
the purchase, as a principal or broker, of
Installed Capability, Operable Capability, Energy,
Operating Reserve, and/or AGC for resale); or
(b) an end user of electricity that is taking or eligible to
take unbundled transmission service pursuant to an effective
state requirement that the Participant that is the
Transmission Provider with which that end user is directly
interconnected offer the transmission service, or pursuant
to a voluntary offer of unbundled transmission service to
that end user by the Participant that is the Transmission
Provider with which that end user is directly
interconnected.
Facilities Study: An engineering study conducted pursuant to the
NEPOOL Agreement or the NEPOOL Tariff by the ISO and/or one or more
affected Participants to determine the required modifications to the
NEPOOL Transmission System, including the cost and scheduled
completion date for such modifications, that will be required to
provide a requested transmission service or interconnection.
Firm Contract: Any contract, other than a Unit Contract, for the
purchase of Installed Capability, Operable Capability, Energy,
Operating Reserves, and/or AGC, pursuant to which the purchaser's
right to receive such Installed Capability, Operable Capability,
Energy, Operating Reserves, and/or AGC is subject only to the
supplier's inability to make deliveries thereunder as the result of
events beyond the supplier's reasonable control.
Generator Owner: The owner, in whole or part, of a generating
unit whether located within or outside of the NEPOOL Control Area.
Generation Ownership Shares: The Generation Ownership Shares of a
Customer means and includes:
(a) the direct ownership interest which the Customer has as a
sole or joint owner in the Installed Capability of a
generating unit which is subject to NEPOOL central dispatch;
(b) the indirect ownership interest which the Customer has, as a
shareholder in Vermont Yankee Nuclear Power Corporation or a
similar corporation, or as a general or limited partner in
Ocean State Power or a similar partnership, in the Installed
Capability of a generating unit which is subject to NEPOOL
central dispatch, provided the corporation or partnership is
itself not a Participant;
(c) any other interest which the Customer has in the Installed
Capability of a generating unit which is subject to NEPOOL
central dispatch, under a lease or other contractual
arrangement, provided the other party to the arrangement is
itself not a Participant and the NEPOOL Management Committee
determines, at the request of the affected Customer, that
the Customer has benefits and rights, and assumes risks,
under the arrangement with respect to the unit which are
substantially equivalent to the benefits, rights and risks
of an owner; and
(d) an interest which the Customer shall be deemed to have in
the direct ownership interest, or the indirect ownership
interest as a shareholder or general or limited partner, of
a Related Person of the Customer in the Installed Capability
of a generating unit which is subject to NEPOOL central
dispatch, provided the Related Person is itself not a
Participant.
Good Utility Practice: Any of the practices, methods and acts
engaged in or approved by a significant portion of the electric
utility industry during the relevant time period, or any of the
practices, methods and acts which, in the exercise of reasonable
judgment in light of the facts known at the time the decision was
made, could have been expected to accomplish the desired result at a
reasonable cost consistent with good business practices, reliability,
safety and expedition. Good Utility Practice is not intended to be
limited to the optimum practice, method, or act to the exclusion of
all others, but rather includes all acceptable practices, methods, or
acts generally accepted in the region.
HQ Phase II Firm Energy Contract: The Firm Energy Contract dated
as of October 14, 1985 between Hydro-Quebec and certain of the
Participants, as it may be amended from time to time.
Installed Capability: The Installed Capability of an electric
generating unit or combination of units during the Winter Period is
the Winter Capability of such unit or units and during the Summer
Period is the Summer Capability of such unit or units.
Interchange Transactions: Transactions deemed to be effected under
Section 12 of the Prior NEPOOL Agreement (that is, the agreement as in
effect on December 1, 1996) prior to the Second Effective Date, and
transactions deemed to be effected under Section 14 of the NEPOOL
Agreement on and after the Second Effective Date.
Internal Point-to-Point Service: Point-to-Point Transmission
Service with respect to a transaction where the Point of Receipt is at
the boundary of or within the NEPOOL Transmission System and the Point
of Delivery is within the NEPOOL Transmission System.
Load: (in Kilowatts) of a Participant during any particular hour
is the total during such hour (eliminating any distortion arising out
of (i) Interchange Transactions, or (ii) transactions across the
system of such Participant, or (iii) deliveries between Entities
constituting a single Participant, or (iv) other electrical losses, if
and as appropriate) of
(a) kilowatthours provided by such Participant to its retail
customers for consumption (excluding any kilowatthours which
may be classified as interruptible under market operation
rules approved by the NEPOOL Regional Market Operations
Committee), PLUS
(b) kilowatthours delivered by such Participant pursuant to Firm
Contracts to its wholesale customers for resale, PLUS
(c) kilowatthours of use by such Participant, exclusive of use
by such Participant for the operation and maintenance of its
generating unit or units, PLUS
(d) kilowatthours of electrical losses and unaccounted for use
by the Participant on its system.
The Load of a Participant may be calculated in any reasonable manner
which substantially complies with this definition.
For the purposes of calculating a Participant's Monthly Peak, the
Load of a Participant shall be adjusted to eliminate any distortions
resulting from voltage reductions. In addition, upon the request of
any Participant, the NEPOOL Regional Market Operations Committee shall
make, or supervise the making of, appropriate adjustments in the
computation of Load for the purposes of calculating any Participant's
Annual Peak, Adjusted Monthly Peak, Adjusted Annual Peak and Monthly
Peak to eliminate any distortions resulting from emergency load
curtailments which would significantly affect the Load of any
Participant.
The definition of the term "Load" is modified as follows when a
Participant purchases a portion of its requirements of electricity
from another Participant pursuant to a Firm Contract:
(a) If the Firm Contract limits deliveries to a specifically
stated number of Kilowatts and requires payment of a demand
charge thereon (thus placing the responsibility for meeting
additional demands on the purchasing Participant):
(1) in computing the ADJUSTED LOAD of the purchasing
Participant, the Kilowatts received pursuant to such
Firm Contract shall be deemed to be the number of
Kilowatts specified in the Firm Contract; and
(2) in computing the LOAD of the supplying Participant, the
Kilowatts delivered pursuant to such Firm Contract
shall be deemed to be the number of Kilowatts specified
in the Firm Contract.
(b) If the Firm Contract does not limit deliveries to a
specifically stated number of Kilowatts, but entitles the
Participant to receive such amounts of electricity as it may
require to supply its electric needs (thus placing the
responsibility for meeting additional demands on the
supplying Participant):
(1) the INSTALLED CAPABILITY RESPONSIBILITY of the
purchasing Participant shall be EQUAL TO the amount of
its Installed Capability Entitlements;
(2) in computing the ADJUSTED LOAD of the purchasing
Participant, the Kilowatts received pursuant to such
Firm Contract shall be deemed to be a quantity R{l};
and
(3) in computing the LOAD of the supplying Participant, the
Kilowatts delivered pursuant to such Firm Contract
shall be deemed to be a quantity R{l}.
The quantity R{l} equals (i) the Load of the purchasing
Participant less (ii) the amount of the purchasing
Participant's Installed Capability Entitlements multiplied
by a fraction X wherein:
---
Y
X is the maximum Load of the purchasing Participant in
the month, and
Y is the NEPOOL Installed Capability Responsibility
multiplied by the purchasing Participant's fraction P
determined pursuant to Section 12.2(a)(1) of the NEPOOL
Agreement, computed as if the Firm Contract did not
exist.
Local Network: The transmission facilities, constituting a local
network, of the following companies: (i) Bangor Hydro-Electric
Company; (ii) Boston Edison Company; (iii) Central Maine Power
Company; (iv) the Commonwealth Energy System companies; (v) the
Eastern Utility Associates companies; (vi) the New England Electric
System companies; (vii) the Northeast Utilities companies; (viii) The
United Illuminating Company; and (ix) Vermont Electric Power Company
and the entities which are grouped with it as a single Participant and
any other local network or change in the designation of a Local
Network which the NEPOOL Management Committee may designate or approve
from time to time. The NEPOOL Management Committee may not
unreasonably withhold approval of a request by a Participant that it
effect such a change or designation.
Local Network Service: Local Network Service is the service
provided, under a separate tariff or contract, by a Participant that
is a Transmission Provider to another Participant, or other Entity
connected to the Transmission Provider's Local Network to permit the
other Participant or Entity to efficiently and economically utilize
its resources to serve its load.
Monthly Network Load: A Customer's hourly load (including its
designated Network Load not physically interconnected with the
Transmission Provider under Section 43.3 of the NEPOOL Tariff)
coincident with the coincident aggregate load of the Participants and
other Network Customers served in each Local Network in the hour in
which the coincident load is at its maximum for the month ("Monthly
Peak").
NEPOOL Agreement Section 3.2: Subject to the reciprocity
requirements of the NEPOOL Tariff, if a Participant serves a Load, or
has rights in supply or demand-side resources or owns transmission
and/or distribution facilities, located outside of the NEPOOL Control
Area, such Load and resources shall not be included for purposes of
determining the Participant's rights, responsibilities and obligations
under the NEPOOL Agreement, except that the Participant's Entitlements
in facilities or its rights in demand side-resources outside the
NEPOOL Control Area shall be included in such determinations if, to
the extent, and while such Entitlements are used for retail or
wholesale sales within the NEPOOL Control Area or such Entitlements or
rights are designated by a Participant for purposes of meeting its
obligations under Section 12 of the NEPOOL Agreement.
NEPOOL Management Committee: The committee established pursuant
to Section 6 of the NEPOOL Agreement.
NEPOOL Transmission System: The PTF transmission facilities.
Network Integration Transmission Service: Regional Network
Service which may be used with respect to Network Resources or Network
Load not physically interconnected with the NEPOOL Transmission
System.
Network Load: The load that a Network Customer designates for
Network Integration Transmission Service under Part II and Part VI of
the NEPOOL Tariff. The Network Customer's Network Load shall include
all load designated by the Network Customer (including losses) and
shall not be credited or reduced for any behind-the-meter generation.
A Network Customer may elect to designate less than its total load as
Network Load but may not designate only part of the load at a discrete
Point of Delivery. Where an Eligible Customer has elected not to
designate a particular load at discrete Points of Delivery as Network
Load, the Eligible Customer is responsible for making separate
arrangements under Part III and Part V of the NEPOOL Tariff for any
Point-to-Point Transmission Service that may be necessary for such
non-designated load.
Network Resource: (1) With respect to Participants, (a) any
generating resource located in the NEPOOL Control Area which has been
placed in service prior to October 1, 1998 (including a unit that has
lost its capacity value when its capacity value is restored and a
deactivated unit which may be reactivated without satisfying the
requirements of Section 49 of the NEPOOL Tariff in accordance with the
provisions thereof) until retired; (b) any generating resource located
in the NEPOOL Control Area which is placed in service after October 1,
1998 until retired, provided that (i) the Generator Owner has complied
with the requirements of Section 49 of the NEPOOL Tariff, and (ii) the
output of the unit shall be limited in accordance with Section 49, if
required; and (c) any generating resource or combination of resources
(including bilateral purchases) located outside the NEPOOL Control
Area for so long as any Participant has an Entitlement in the resource
or resources which is being delivered to it in the NEPOOL Control Area
to serve Network Load located in the NEPOOL Control Area or other
designated Network Loads contemplated by Section 43.3 of the NEPOOL
Tariff taking Regional Network Service. (2) With respect to Non-
Participant Network Customers, any generating resource owned,
purchased or leased by the Network Customer which it designates to
serve Network Load.
Open Access Same-Time Information System (OASIS): The NEPOOL
information system and standards of conduct responding to requirements
of 18 C.F.R. <section>37 of the Commission's regulations and all
additional requirements implemented by subsequent Commission orders
dealing with OASIS.
Operable Capability: Operable Capability of an electric
generating unit or units in any hour is the portion of the Installed
Capability of the unit or units which is operating or available to
respond within an appropriate period (as identified in market
operation rules approved by the Regional Market Operations Committee)
to the ISO's call to meet the Energy and/or Operating Reserve and/or
AGC requirements of the NEPOOL Control Area during a Scheduled
Dispatch Period or is available to respond within an appropriate
period to a schedule submitted by a Participant for the hour in
accordance with market operation rules approved by the Regional Market
Operations Committee.
Operating Reserve: Any or a combination of 10-Minute Spinning
Reserve, 10-Minute Non-Spinning Reserve, and 30-Minute Operating
Reserve, as the context requires.
Participant: A Participant is an eligible Entity (or group of
Entities which has elected to be treated as a single Participant)
which is a signatory to the NEPOOL Agreement and has become a
Participant in accordance therewith until such time as such Entity's
status as a Participant terminates.
Point-to-Point Transmission Service: The transmission of capacity
and/or energy on either a firm or non-firm basis from the Point(s) of
Receipt to the Point(s) of Delivery under the NEPOOL Tariff. NEPOOL
Point-to-Point Transmission Service includes both Internal Point-to-
Point Service and Through or Out Service.
Pool Transmission Facilities (or "PTF"): The transmission facilities
owned by the Participants and their Related Persons which constitute
PTF pursuant to the NEPOOL Agreement.
Power Year: The period of twelve months commencing on November 1.
Regional Market Operations Committee: The committee established
pursuant to Section 10 of the NEPOOL Agreement.
Regional Network Service: Transmission service provided by the
Participants pursuant to Part II and Part IV of the NEPOOL Tariff.
Related Persons: With respect to a Customer, either (i) a
corporation, partnership, business trust or other business
organization 10% or more of the stock or equity interest in which is
owned directly or indirectly by, or is under common control with, the
Customer, or (ii) a corporation, partnership, business trust or other
business organization which owns directly or indirectly 10% or more of
the stock or other equity interest in the Customer, or (iii) a
corporation, partnership, business trust or other business
organization 10% or more of the stock or other equity interest in
which is owned, directly or indirectly by a corporation, partnership,
business trust or other business organization which also owns 10% or
more of the stock or other equity interest in the Customer.
Reserved Capacity: The maximum amount of capacity and energy
that is committed to the Transmission Customer for transmission over
the NEPOOL Transmission System between the Point(s) of Receipt and the
Point(s) of Delivery under Part V of the NEPOOL Tariff. Reserved
Capacity shall be expressed in terms of whole kilowatts on a sixty-
minute interval (commencing on the clock hour) basis.
Scheduled Dispatch Period: The shortest period for which the ISO
performs and publishes a projected dispatch schedule.
Second Effective Date: The date on which the provisions of Part
Three of the NEPOOL Agreement (other than those relating to the
Installed Capability Market) shall become effective and shall be such
date as the Commission may fix on its own or pursuant to a request of
the NEPOOL Management Committee.
System Contract: Any contract for the purchase of Installed
Capability, Operable Capability, Energy, Operating Reserves and/or
AGC, other than a Unit Contract or Firm Contract, pursuant to which
the purchaser is entitled to a specifically determined or determinable
amount of such Installed Capability, Operable Capability, Energy,
Operating Reserves and/or AGC.
Summer Capability: Summer Capability of an electric generating
unit or combination of units is the maximum dependable load carrying
ability in Kilowatts of such unit or units (exclusive of capacity
required for station use) during the Summer Period, as determined by
the NEPOOL Regional Market Operations Committee.
Summer Period: Summer Period in each Power Year is the four-
month period from June through September.
System Impact Study: An assessment of: (i) the adequacy of the
NEPOOL Transmission System to accommodate a request for the
interconnection of a new or materially changed generating unit or a
new or materially changed interconnection to another Control Area or
new Regional Network Service, internal Point-to-Point Service or
Through or Out Service, and (ii) whether any additional costs may be
required to be incurred in order to provide the interconnection or
transmission service.
Through or Out Service: Point-to-Point Transmission Service provided
by NEPOOL pursuant to Part III of the NEPOOL Tariff with respect to a
transaction which requires the use of PTF and which goes through the
NEPOOL Control Area, as, for example, from the Maine Electric Power
Company line or New Brunswick to New York, or from one point on the
NEPOOL Control Area boundary with New York to another point on the
Control Area boundary with New York, or with respect to a transaction
which goes out of the NEPOOL Control Area from a point in the NEPOOL
Control Area, as, for example, from Boston to New York.
Transmission Customer: Any Eligible Customer that (i) is a
Participant which is not required to sign a Transmission Service
Agreement with respect to a service to be furnished to it in
accordance with Section 48 of the NEPOOL Tariff, or (ii) executes, on
its own behalf or through its Designated Agent, a Transmission Service
Agreement, or (iii) requests in writing, on its own behalf or through
its Designated Agent, that NEPOOL file with the Commission, a proposed
unexecuted Transmission Service Agreement in order that the Eligible
Customer may receive transmission service under the NEPOOL Tariff.
This term is used in Part I of the NEPOOL Tariff to include customers
receiving transmission service under the NEPOOL Tariff.
Transmission Ownership Shares: The Transmission Ownership Shares
of a Participant means and includes:
(A) the direct ownership interest which the Participant has as a
sole or joint owner of PTF;
(B) the indirect ownership interest which the Participant has,
as a shareholder in a corporation, or as a general or
limited partner in a partnership, in PTF owned by such
corporation or partnership, provided the corporation or
partnership is not itself a Participant;
(C) any other interest which the Participant has in PTF under a
lease or other contractual arrangement, provided the other
party to the arrangement is not itself a Participant and the
NEPOOL Management Committee determines, at the request of
the affected Participant, that the Participant has benefits
and rights, and assumes risks, under the arrangement with
respect to the PTF which are substantially equivalent to the
benefits, rights and risks of an owner; and
(D) an interest which the Participant shall be deemed to have in
the direct ownership interest, or the indirect ownership
interest as a shareholder or general or limited partner, of
a Related Person of the Participant in PTF, provided the
Related Person is itself not a Participant.
Transmission Provider: The Participants, collectively, which own
PTF and are in the business of providing transmission service or
provide service under a local open access transmission tariff, or in
the case of a state or municipal or cooperatively-owned Participant,
would be required to do so if requested pursuant to the reciprocity
requirements specified in the NEPOOL Tariff, or an individual such
Participant, whichever is appropriate.
Unit Contract: A purchase contract pursuant to which the
purchaser is in effect currently entitled either (i) to a specifically
determined or determinable portion of the Installed Capability of a
specific electric generating unit or units, or (ii) to a specifically
determined or determinable amount of Operable Capability, Energy,
Operating Reserve and/or AGC if, or to the extent that, a specific
electric generating unit or units is or can be operated.
Winter Capability: Winter Capability of an electric generating
unit or combination of units is the maximum dependable load carrying
ability in Kilowatts of such unit or units (exclusive of capacity
required for station use) during the Winter Period, as determined by
the NEPOOL Regional Market Operations Committee.
Winter Period: Winter Period in each Power Year is the seven-
month period from November through May and the month of October.
ATTACHMENT C
Financial Assurance Policy
FINANCIAL ASSURANCE POLICY FOR NEPOOL MEMBERS
This Financial Assurance Policy for NEPOOL Members ("Policy") shall
become effective on the Second Effective Date.
The purpose of this Policy is (i) to establish a financial assurance
policy for NEPOOL members ("Participants") that includes commercially
reasonable credit review procedures to assess the financial ability of
an applicant for membership in NEPOOL ("Applicant") or of a
Participant to pay for service transactions under the Restated NEPOOL
Agreement and the NEPOOL Open Access Transmission Tariff (the
"Tariff") and to pay its share of NEPOOL expenses, including amounts
owed to ISO New England Inc. under its tariff, (ii) to set forth
requirements for alternative forms of security that will be deemed
acceptable to NEPOOL and consistent with commercial practices
established by the Uniform Commercial Code that protects the
Participants against the risk of non-payment by other, defaulting
Participants, (iii) to set forth the conditions under which NEPOOL
will conduct business so as to avoid the possibility of failure of
payment for services rendered under the Tariff or the Restated NEPOOL
Agreement, and (iv) to collect amounts past due, make up shortfalls in
payments, and terminate membership of defaulting Participants.
In accordance with Sections 3.5 and 6.14 of the Restated NEPOOL
Agreement, NEPOOL requires the following procedures and requirements
to apply to all Applicants and Participants. Generally, any Applicant
or Participant that does not have an investment grade rating by either
Standard & Poor's, Moody's, Duff & Phelps, or Fitch will be required
to provide financial assurances, as described in detail below.
GENERAL REQUIREMENTS
Each Applicant or Participant must comply with the following general
requirements.
In the case of a group of members that are treated as a single
Participant pursuant to Section 4.1 of the Restated NEPOOL Agreement,
the group members shall be deemed to have elected to be jointly and
severally liable for all debts to NEPOOL of any of the group members
unless (i) charges of an individual member can be tracked and
allocated to the member incurring such charges by the System Operator
{1} utilizing all information available to the System Operator
determined by it to be reliable, including information from
Participants or from a single Participant's representative, (ii) an
alternate form of financial assurance is provided as set forth below,
(iii) the group members agree to allocate amongst themselves
responsibility for payment of group member charges on a percentage
basis in a manner acceptable to NEPOOL, with additional financial
assurance to be provided by those members, if any, that do not satisfy
the minimum corporate debt rating, or (iv) the group members when
evaluated as a whole (at their expense by one of the above rating
agencies) satisfy the minimum corporate debt rating requirement set
forth above and, in addition, provide a corporate guaranty from a
parent or other responsible affiliate, which parent or affiliate
satisfies the minimum corporate debt rating. For the fourth type of
consolidated Participant, NEPOOL will conduct a financial assurances
review based on the credit rating of only the rated members of the
group.
For the purposes of these financial assurance provisions, the term
"Participant" shall, in the case of a group of members that are
treated as a single Participant pursuant to Section 4.1 of the
Restated NEPOOL Agreement, be deemed to refer to the group of members
as a whole unless the group members have affirmatively indicated to
NEPOOL, and NEPOOL has agreed, that they are to be treated pursuant to
options (i) or (iii) above, in which case the term "Participant" shall
be deemed to refer to each individual group member and not to the
aggregate of such group; and the terms "charges" and fees" shall,
likewise, be deemed to refer to the charges and fees allocable to the
individual group member as opposed to the aggregate of such group.
PROOF OF FINANCIAL VIABILITY
Each Applicant must with its application submit proof of financial
viability, as described below, satisfying NEPOOL requirements to
demonstrate the Applicant's ability to meet its obligations, or must
provide prior to its membership becoming effective financial assurance
in the form of a cash deposit, letter of credit or performance bond as
set forth below. An Applicant that chooses to provide a cash deposit,
letter of credit or performance bond will not be required to provide
financial information to NEPOOL.
Generally, each Applicant must submit a current rating agency report,
which report must indicate an investment grade rating by either
Standard & Poor's, Moody's, Duff & Phelps, or Fitch for the Applicant
to be considered as a candidate for NEPOOL membership without
furnishing additional financial assurances as described below.
Current Participants must also provide a current rating agency report
by the Second Effective Date, as well as any of the financial
statements and information set forth below if and as requested by
NEPOOL within ten (10) days of such request. Those Participants that
do not satisfy the rating requirement as set forth above must provide
instead on the Second Effective Date one form of the financial
assurances set forth below. A Participant's failure to meet these
requirements may result in termination proceedings by NEPOOL.
FINANCIAL STATEMENTS
Each Applicant must submit, if and as requested by NEPOOL and within
ten (10) days of such request, audited financial statements for at
least the immediately preceding three years, or the period of its
existence, if shorter, including, but not limited to, the following
information:
Balance Sheets
Income Statements
Statements of Cash Flows
Notes to Financial Statements
Additionally, the following information for at least the immediately
preceding three years, if available, must be submitted if and as
requested by NEPOOL and within ten (10) days of such request:
Annual and Quarterly Reports
10-K, 10-Q and 8-K Reports
Where the above financial statements are available on the Internet,
the Applicant may provide instead a letter to NEPOOL stating where
such statements may be located and retrieved by NEPOOL.
Each Applicant may also be required to provide at least one bank
reference and three (3) Utility credit references. In those cases
where an Applicant does not have three (3) Utility credit references,
three (3) trade payable vendor references may be substituted.
Each Applicant may also be required to include information as to any
known or anticipated material lawsuits, as well as any prior
bankruptcy declarations by the Applicant, or by its predecessor(s), if
any.
In the case of certain Applicants, some of the above financial
submittals may not be applicable, and alternate requirements may be
specified by NEPOOL.
ONGOING FINANCIAL REVIEW
Each Participant that has not provided a cash deposit, letter of
credit, performance bond, or corporate guaranty must submit at least
annually its current rating agency report promptly upon its issuance,
and 8-K Reports promptly upon their issuance.
In addition, each Participant is responsible for informing NEPOOL in
writing within ten (10) business days of any material change in its
financial status. A material change in financial status includes, but
is not limited to, the following: a downgrade of long or short term
debt rating by a major rating agency, being placed on credit watch
with negative implication by a major rating agency, a bankruptcy
filing, insolvency, a report of a significant quarterly loss or
decline of earnings, the resignation of key officer(s), and/or the
filing of a material lawsuit that could materially adversely impact
current or future financial results. A Participant's failure to
provide this information may result in termination proceedings by
NEPOOL.
If there is a material adverse change in the financial condition of
the Participant, NEPOOL may require the Participant to provide one of
the forms of other financial assurances set forth below. If the
Participant fails to do so, NEPOOL may initiate termination
proceedings in accordance with the procedure set forth in Section
21.2(d) of the Restated NEPOOL Agreement.
OTHER FINANCIAL ASSURANCES
Applicants or Participants that do not satisfy the rating requirement
or NEPOOL's credit review process must submit instead one of the
following additional financial assurances, depending on the type of
transactions they anticipate engaging in as Participants.
In general, Participants must provide additional financial assurance
in the following amounts, based on their average or expected monthly
charges for interchange and transmission service under the Tariff
(which would include charges for Regional Network Service or Through
or Out Service) and the Restated NEPOOL Agreement (which would include
energy and other services received through NEPOOL) and NEPOOL expenses
for services, including amounts owed to ISO New England Inc. under its
tariff (collectively the "NEPOOL Charges"):
MONTHLY NEPOOL CHARGES FINANCIAL ASSURANCE REQUIREMENT
$0 - $15,000 0 months' NEPOOL Charges
$15,001 - $30,000 1 month's NEPOOL Charges
$30,001 - $50,000 2 months' NEPOOL Charges
$50,001 or more 3 1/2 months' NEPOOL Charges
The three and one-half months is based on the time required for a FERC
filing made by NEPOOL to suspend service to be effective.
Therefore, a Participant with $32,000 in monthly NEPOOL Charges that
does not satisfy the rating requirement or NEPOOL credit review
process must provide additional financial assurances in the amount of
$64,000 to NEPOOL.
In the case of new Participants, the additional financial assurance
requirement will be based on estimated monthly NEPOOL Charges, which
estimate NEPOOL has the right to adjust in light of subsequent
experience as to actual monthly NEPOOL Charges.
CASH DEPOSIT
A cash deposit for the full value of the Financial Assurance
Requirement based on actual or anticipated NEPOOL Charges, as
determined by NEPOOL, provides an acceptable form of financial
assurance to NEPOOL.
If it is necessary to use all or a portion of the deposit to pay the
Participant's obligation, the deposit must be promptly replenished to
the required level; otherwise, termination proceedings may be
initiated. In the event that actual NEPOOL Charges exceed those
anticipated, the anticipated charges will be increased accordingly and
the Participant must augment its cash deposit to reach the required
level.
The cash deposit will be invested by NEPOOL in investments as may be
designated by the Participant in direct obligations of the United
States or its agencies and interest earned will be paid to the
Participant. NEPOOL may sell or otherwise liquidate such investments
at its discretion to meet the Participant's obligations to NEPOOL.
The requirement to continue the deposit may be reviewed by NEPOOL
after one year. Consideration will be given to replacing the cash
deposit with a corporate guaranty if certain conditions are met, as
discussed below in the Corporate Guaranty section.
LETTER OF CREDIT
An unconditional and irrevocable standby letter of credit for the full
value of the Financial Assurance Requirement based on actual or
anticipated NEPOOL Charges, as determined by NEPOOL, provides an
acceptable form of financial assurance to NEPOOL. The letter of
credit will renew automatically unless the issuing bank provides
notice to NEPOOL at least ninety (90) days prior to the letter of
credit's expiration of the bank's decision not to renew the letter of
credit.
If the letter of credit amount falls below the required level because
of a drawing, it must be replenished immediately; otherwise,
termination proceedings may be initiated by NEPOOL. If actual NEPOOL
Charges exceed those anticipated, the Participant must obtain a
substitute letter of credit that equals the actual NEPOOL Charges.
The form, substance, and provider of the letter of credit must all be
acceptable to NEPOOL. The letter of credit should clearly state the
full names of the "Issuer," "Account Party" and "Beneficiary"
(NEPOOL), the dollar amount available for drawings, and should include
a statement required on the drawing certificate and other terms and
conditions that should apply. It should also specify that funds will
be disbursed, in accordance with the instructions, within one (1)
business day after due presentation of the drawing certificate. The
bank issuing the letter of credit must have a minimum corporate debt
rating of an "A-" by Standard & Poor's, or "A3" by Moody's, or "A-" by
Duff & Phelps, or "A-" by Fitch, or an equivalent short term debt
rating by one of these agencies.
Please refer to Attachment 1, which provides an example of a generally
acceptable sample "clean" letter of credit. All costs associated with
obtaining financial security and meeting the Policy provisions are the
responsibility of the Applicant or Participant.
The requirement to continue to provide a letter of credit may be
reviewed by NEPOOL after one year. Consideration will be given to
replacing the letter of credit with a corporate guaranty if certain
conditions are met, as discussed below in the Corporate Guaranty
section.
PERFORMANCE BOND
A performance bond complying with the requirements set forth herein
provides an acceptable form of financial assurance to NEPOOL. The
penal sum of such performance bond shall be in an amount equal to the
full value of the Financial Assurance Requirement based on actual or
anticipated NEPOOL charges, as determined by NEPOOL, and shall
automatically be adjusted to reflect any adjustment in such Financial
Assurance Requirement. The bond shall permit suit thereunder until
two years after the date that all of the Applicant's or Participant's
obligations to NEPOOL expire.
If the amount of penal sum of the performance bond available to NEPOOL
falls below the required level because of a payment thereon, it must
be increased to the required level immediately; otherwise, termination
proceedings may be initiated by NEPOOL. If actual NEPOOL Charges
exceed those anticipated, the Participant must either cause the penal
sum of such performance bond to be increased accordingly or must
obtain a substitute performance bond in the appropriate amount.
The form, substance and provider of the performance bond must be
acceptable to NEPOOL. The performance bond should clearly state the
full names of the "Principal," the "Surety" and the "Obligee" (NEPOOL)
and the penal sum and should include a clear statement that the surety
will promptly and faithfully perform the Participant's obligations to
NEPOOL if the Participant fails to do so. The insurance company
issuing the performance bond must be rated "A" or better by A.M. Best
& Co.
Please refer to Attachment 2, which provides an example of a generally
acceptable sample performance bond. All costs associated with
obtaining financial security and meeting the Policy provisions,
including without limitation the cost of the premiums for such
performance bond, are the responsibility of the Applicant or
Participant.
The requirement to continue to provide a performance bond may be
reviewed by NEPOOL after one year. Consideration will given to
replacing the performance bond with a corporate guaranty if certain
conditions are met, as discussed below in the Corporate Guaranty
section.
WEEKLY PAYMENTS
A Participant that does not satisfy the rating requirement may request
that, in lieu of providing one of the additional financial assurances
set forth above, a weekly billing schedule be implemented for it.
NEPOOL may, in its discretion, agree to such a request.
If NEPOOL agrees to implement a weekly billing schedule for a
Participant, the Participant shall be billed weekly in arrears on an
estimated basis for all amounts owed to NEPOOL and the System Operator
for the week, with an adjustment for each month as part of the regular
NEPOOL monthly billing to reflect any under or over collection for the
month. The Participant shall be obligated to pay each such weekly
bill within five business days after it is received.
If a weekly billing schedule is implemented for a Participant in lieu
of requiring the Participant to provide an additional financial
assurance, the Participant may be required to provide an additional
financial assurance at any time if the Participant fails to pay when
due any weekly bill.
USE OF TRANSACTION SETOFFS
Under certain conditions, NEPOOL may be obligated to make payments to
a Participant. In this event, the amount of the cash deposit, letter
of credit or performance bond required for financial assurance for the
contemplated transactions may be reduced ("setoff") by an amount equal
to NEPOOL's unpaid balance or expected billing under the other
transactions. The terms and the amount of the setoff must be approved
by NEPOOL.
CORPORATE GUARANTY
An unconditional and irrevocable corporate guaranty obtained from a
Participant's affiliated company ("Guarantor") for the full value of
the Financial Assurance Requirement based on actual or anticipated
NEPOOL Charges, as determined by NEPOOL, may provide an acceptable
form of financial assurance to NEPOOL.
If actual NEPOOL Charges exceed those anticipated, the Participant
must provide a substitute corporate guaranty that equals the actual
NEPOOL Charges.
A Participant for which a letter of credit, performance bond or cash
deposit was initially required may have the opportunity to substitute
a corporate guaranty if the following conditions are met:
1. NEPOOL determines that the Participant has satisfactorily met its
payment obligations in NEPOOL for at least one-year, which one-year
period may in whole or in part pre-date the Second Effective Date;
2. NEPOOL determines that the financial condition of the Guarantor
meets the requirements of this Policy; and
3. The form and substance of the corporate guaranty are acceptable to
NEPOOL.
Upon NEPOOL's written authorization, the Participant may substitute a
corporate guaranty that is issued by the Guarantor for a cash deposit, bank
letter of credit or performance bond when it has satisfied the conditions
stipulated above. The corporate guaranty is considered to be a lesser form
of financial assurance than a cash deposit, letter of credit or performance
bond, and therefore is allowed as an acceptable form of financial assurance
only to those Participants that have satisfied their payment obligations to
NEPOOL in a timely manner for at least one year.
The corporate guaranty may only be used if the Participant is affiliated
with a Guarantor that has greater financial assets, a strong balance sheet
and income statements, and at minimum an investment grade rating by either
Standard & Poor's, Moody's, Duff & Phelps, or Fitch.
The corporate guaranty should clearly state the identities of the
"Guarantor," "Beneficiary" and "Obligor," and the relationship between the
Guarantor and the Participant Obligor. The corporate guaranty must be duly
authorized by the Guarantor, must be signed by an officer of the Guarantor,
and must be furnished with either an opinion satisfactory to NEPOOL of the
Guarantor's counsel with respect to the enforceability of the guaranty or
accompanied by a certificate of corporate guarantee that includes a seal of
the corporation with signature of the corporate secretary. Additionally,
adequate documentation regarding the signature authority of the person
signing the corporate guaranty must be provided with the corporate
guaranty.
A corporate guaranty must also obligate the Guarantor to submit at least
annually a current rating agency report promptly upon its issuance, to
submit 8-K Reports promptly upon their issuance, to submit financial
reports if and as requested by NEPOOL within ten (10) days of such request,
and to inform NEPOOL in writing within ten (10) business days of any
material change in its financial status. A material change in financial
status includes, but is not limited to, the following: a downgrade of long
or short term debt by a major rating agency, being placed on credit watch
with negative implication by a major rating agency, a bankruptcy filing,
insolvency, a report of a significant quarterly loss or decline of
earnings, the resignation of key officer(s), and/or the filing of a
material lawsuit that could materially adversely impact current or future
financial results. A Guarantor's failure to provide this information may
result in proceedings by NEPOOL to terminate the Participant Obligor. If
there is a material adverse change in the financial condition of the
Guarantor, NEPOOL may require the Participant Obligor to provide another
form of financial assurance, either a cash deposit or a letter of credit or
a performance bond.
NON-PAYMENT OF AMOUNTS DUE
If a Participant does not pay amounts billed when due and as a result a
letter of credit or cash deposit is drawn down or a performance bond is
paid on, then the Participant must immediately replenish the letter of
credit or cash deposit to the required amount or cause the penal sum of the
performance bond to be increased to equal the required amount plus all
amounts paid thereunder. If a Participant fails to do so, NEPOOL may
initiate termination proceedings against the Participant in accordance with
the procedure set forth in Section 21.2(d) of the Restated NEPOOL
Agreement.
In order to encourage prompt payment by Participants of amounts owed to
NEPOOL and the ISO, if a Participant is delinquent two or more times within
any period of twelve months in paying on time its NEPOOL Charges, the
Participant shall pay, in addition to interest on each late payment, a late
payment charge for its second failure to pay on time, and for each
subsequent failure to pay on time, within the same twelve-month period, in
an amount equal to the greater of (i) two percent (2%) of the total amount
of such late payment and (ii) $250.00.
In the case of a former Participant that applies again for membership in
NEPOOL, a determination of delinquency shall be based on the Participant's
history of payment of its NEPOOL Charges in its last twelve (12) months of
membership.
**FOOTNOTES**
1 The System Operator will act as NEPOOL's agent in managing and
enforcing this Policy with the exception of termination of membership
issues, which are specifically reserved to the NEPOOL Participants and will
be addressed by the NEPOOL Executive Committee Membership Subcommittee,
subject to appeal to the Management Committee. Accordingly, all financial
information required pursuant to this Policy is to be provided to the
System Operator, which will keep all such information confidential in
accordance with the provisions of Section 2 of NEPOOL Criteria, Rules and
Standards No. 45.
ATTACHMENT D
RULE 13
Imposition of Sanctions by the ISO
13.1 Purpose.
(a) This Rule sets forth the procedures and standards under which the
ISO can impose sanctions for certain violations of Participants'
obligations under the NEPOOL Agreement, the Interim Independent System
Operator Agreement dated July 1, 1997 between the Participants and the ISO
(as amended and supplemented, the "ISO Agreement"), the NEPOOL Tariff and
NEPOOL Rules (collectively, "Participant Obligations"). The NEPOOL Rules
embody procedures and standards of conduct that are intended to assure
Short-Term Reliability and the competitiveness and efficiency of the
markets. The ISO's ability to impose sanctions under this rule is intended
to deter noncompliance by Participants with Participant Obligations that
(i) materially impairs or threatens to materially impair Short-Term
Reliability, (ii) materially impairs or threatens to materially impair the
competitiveness or efficiency of the markets, (iii) involves unexcused
failure to follow certain ISO instructions, or (iv) involves unexcused
failure to provide to the ISO in certain circumstances accurate and timely
information required and requested by the ISO.
(b) When in the course of the conduct of system operations or its
normal monitoring of the competitiveness and efficiency of the markets, the
ISO identifies potentially Sanctionable Behavior, the ISO will make inquiry
of the Participant, express the ISO's concerns and allow the Participant to
explain its actions and the circumstances. If, following its inquiry, the
ISO reasonably concludes that the actions constitute Sanctionable Behavior,
it may (but is not required to) impose sanctions pursuant to this Rule.
(c) If the NEPOOL Rules are inadequate to assure Short-Term
Reliability and the efficiency and competitiveness of markets, the ISO is
authorized, with the Regional Market Operations Committee or unilaterally
to the extent permitted under the ISO Agreement, to promulgate new or
changed rules to address the problem. The sanctions set forth in this Rule
are intended to assure compliance by the Participants with NEPOOL Rules
from time to time in effect, and are not a substitute for the appropriate
modification of NEPOOL Rules. Where a NEPOOL Rule is ambiguous, it is
expected that the ISO will seek clarification of the rule, and will not
impose sanctions on behavior that a Participant could reasonably believe
was in compliance with Participant Obligations. Behavior not constituting
a violation by a Participant of its Participant Obligations, and not
otherwise specifically made subject to sanction by another rule, is not
Sanctionable Behavior under this Rule.
(d) It is an objective of the NEPOOL Agreement to provide for
equitable sharing of the responsibilities, benefits and costs resulting
from the establishment of markets and the maintenance of proper standards
of reliability for the NEPOOL Control Area. Each Participant is entitled
to expect performance by other Participants of their Participant
Obligations. Pursuant to the ISO Agreement, and with the approval of the
FERC, the Participants have delegated to the ISO certain authority to
interpret and implement the NEPOOL Rules on behalf of the Participants.
This Rule is intended to create an efficient deterrent to noncompliance by
Participants of their Participant Obligations. The ISO will not impose
sanctions if it believes that the consequences of Sanctionable Behavior in
the markets are a sufficient deterrent.
(e) In order for this Rule to be an effective deterrent, the
application by the ISO of this Rule must be consistent and non-
discriminatory.
(f) This Rule is not intended to sanction any failure by a
Participant to perform any Participant Obligation which occurs
notwithstanding the good faith efforts of the Participants to perform.
Neither this Rule nor the ISO's failure to impose sanctions is intended to
excuse performance by Participants of Participant Obligations.
(g) The remaining provisions of this Rule shall be interpreted and
applied consistently with this Section 13.l.
13.2 Definitions.
13.2.1 Each of the following capitalized terms used in this Rule has
the meaning given to it in Section 1.1 of Market Rule 1 (Market Information):
Automatic Low Limit
Desired Dispatch Point
Dispatchable Load
Generator
High Operating Limit
Installed Capability
Load Available for Interruption
NEPOOL Control Area
Operable Capability
Operable Capability Entitlement
Operating Reserve
Participant
Redeclaration
Scheduled Dispatch Period
Settlement
Settlement Period
TMSR or Ten-Minute Spinning Reserve
TMNSR or Ten-Minute Non-Spinning Reserve
TMOR or Thirty-Minute Operating Reserve
13.2.2 Each of the following capitalized terms used in this Rule is
defined as set forth below:
(a) ADR and alternate dispute resolution means the dispute
resolution process described in Section 13.7 or a substitute
process referred to in Section 13.7.7.
(b) ADR Neutral means a person selected and serving pursuant to
Subsection 13.7.6.3.
(c) Administrative Sanction has the meaning set forth in
paragraph 13.5.1(b).
(d) Affiliate means, with respect to any person or entity, a
person or entity that controls, is controlled by, or is
under common control with such person or entity.
(e) Bid has the meaning set forth in Market Rule 3 (Bidding
Process) or any successor Rule thereto.
(f) Bid Parameter has the meaning set forth in Market Rule 14
(Resource Performance Monitoring) and any successor Rule
thereto.
(g) FERC means the Federal Energy Regulatory Commission.
(h) Force Majeure means any act of God, labor disturbance, act
of the public enemy, war, insurrection, riot, fire, storm or
flood, explosion, breakage or accident to machinery or
equipment not due to lack of proper care or maintenance, any
order, regulation or restriction imposed by a court or
governmental military or lawfully established civilian
authorities, or any other cause or condition beyond a
party's reasonable control.
(i) Formal Warning has the meaning set forth in paragraph
13.5.l(a).
(j) Formula-Based Sanctions has the meaning set forth in
paragraph 13.5.l(c).
(k) Good Utility Practice means any practice, method, or act
engaged in or approved by a significant portion of the
electric utility industry during the relevant time period,
or any practice, method, or act which, in the exercise of
reasonable judgment in light of the facts known at the time
the decision was made, could have been expected to
accomplish the desired result at a reasonable cost
consistent with good business practices, reliability, safety
and expedition. Good Utility Practice is not limited to a
single, optimum practice, method or act to the exclusion of
others, but rather is intended to include acceptable
practices, methods, or acts generally accepted in the
region.
(l) ISO Tariff means the ISO New England Inc. FERC Tariff for
Transmission Dispatch and Power Administration Service.
(m) NEPOOL Agreement means the Restated New England Power Pool
Agreement as restated as of December 1, 1996 among the
Participants, as amended from time to time.
(n) Market Rule means any one of the Market Rules & Procedures
adopted by NEPOOL to govern the operation of the NEPOOL
markets for energy, reserves and capability, as amended from
time to time.
(o) NEPOOL Rules and Rules mean all NEPOOL rules, including the
Market Rules and the System Rules and Procedures (as defined
in the ISO Agreement).
(p) NEPOOL Tariff means the NEPOOL Open Access Transmission
Tariff, as amended from time to time.
(q) Participant Obligations has the meaning set forth in
paragraph 13.l(a).
(r) Resource has the meaning set forth in Market Rule 14
(Resource Performance Monitoring) or any successor Rule
thereto.
(s) Sanctionable Behavior has the meaning set forth in Section
13.4.
(t) Short-Term Reliability means real-time preservation of
system security of the NEPOOL Control Area while minimizing
involuntary load shedding for the current Scheduled Dispatch
Period or at any time during the next two weeks.
(u) System Emergency means any period (i) during which the ISO
is taking actions to preserve Short-Term Reliability under
NEPEX Operating Procedure No. 4 (Action During a Capacity
Deficiency) (actions 9 through 15), or NEPEX Operating
Procedure No. 7 (Action in an Emergency), or NEPEX Operating
Procedure No. 14 (Action During Extremely Light Load
Conditions) or to preserve transmission security under
emergency conditions pursuant to CRS 19 (Transmission
Operations) or any successor Rules thereto or any new
emergency Rule whether the NEPOOL emergency condition is a
result of a response to conditions in the NEPOOL Control
Area or another control area. When the need to take
emergency action is confined to a portion of the NEPOOL
Control Area, and there is no system-wide emergency,
behavior of a Participant with respect to Resources located
in the affected area will be considered as occurring during
a System Emergency.
(v) Voting Shares has the meaning set forth in the NEPOOL
Agreement.
13.3 Application of Sanctions.
13.3.1 General Rule.
The ISO may impose sanctions on any Participant that directly
engages in Sanctionable Behavior.
13.3.2 Control of Resources.
With respect to a Resource, sanctions may be imposed on the
Participant with operating control of the Resource or Bid authority for the
Resource, as appropriate. A Participant that has Bid authority with
respect to a Resource as to which its non-Participant Affiliate has
operating control will be deemed to have operating control of such Resource
for purposes of this rule. An Entitlement that does not provide a right to
operating control or Bid authority for a Resource shall not serve as a
basis for imposition of sanctions except as set forth in Section 13.3.3.
13.3.3 Special Rule for Contract Rights.
With respect to (i) a Resource that is a contract
Entitlement for a Generator or Type 3 or 4 Dispatchable Load within the
NEPOOL Control Area that is not subject to the operating control of a
Participant or (ii) a Resource that is an External Contract:
(a) The Participant with Bid authority for such a
Resource is entitled to rely in good faith on Bid Parameters and
information as to Resource availability, capability and operating
conditions supplied by the person with operating control of the Resource
unless the Participant knew, or would have known if it had exercised the
degree of diligence required by Good Utility Practice, that such Bid
Parameters or information as to Resource availability, capability and
operating condition were inaccurate.
(b) A Participant that, 30 days or more after this
Rule is submitted to the FERC, enters into a contract or new transaction
under an existing service agreement which is structured in a way that
provides such Participant Bid authority for such a Resource shall include
in such contract or a supplement thereto the language with respect to
contracts of the type entered into set forth in Appendix B to this Rule.
(c) The Participant with Bid authority for such a
Resource shall use its reasonable efforts to ensure operation of such
Resource in accordance with NEPOOL Rules, consistent with its rights under
its contract. The Participant with Bid authority shall be subject to
sanction as if it were the Participant with operating control of such
Resource if (i) the person with operating control is not a Participant and
engages in conduct that would be sanctionable if such person were a
Participant and (ii) the Participant with Bid authority fails to use
reasonable efforts, consistent with its rights under its contract, to
prevent operation that would otherwise be sanctionable.
13.3.4 Transmission Facilities.
To the extent identified in this Rule, a Participant with
operating control of transmission facilities may be subject to sanction
with respect to operation of such facilities.
13.4 Sanctionable Behavior.
An act or omission described in any of Sections 13.4.l.1 through
13.4.1.3, 13.4.2.1 through 13.4.2.3, 13.4.3.1 through 13.4.4.5 and 13.4.5
(any such act or omission being referred to as "Sanctionable Behavior") is
subject to sanction under this Rule pursuant to the process and subject to
the standards, exclusions and evaluative factors set forth in Sections 13.4
through 13.6.
13.4.1 Failure to Perform in Markets.
13.4.1.1 Failure to Provide Energy.
Failure to provide Energy means (i) a shortfall, by
more than the permitted deviation provided for in Appendix 14-A
to Market Rule 14, in attaining within the time intervals
provided in Appendix 14-A to Market Rule 14, in response to
instructions from the ISO, a Generator's High Operating Limit Bid
Parameter, or (ii) a shortfall, as measured in a manner
consistent with Appendix 14-K to Market Rule 14, by more than the
permitted deviation provided for in Appendix 14-K to Market Rule
14, in attaining, in response to instruction from the ISO, a Type
3 or 4 Dispatchable Load's Load Available for Interruption Bid
Parameter that, in either case, is intentional and is not excused
under the provisions of Subsection 13.4.1.4 or 13.4.1.5 or
Section 13.4.6.
13.4.1.2 Failure to Provide Services.
Failure to provide services means a failure, in
response to instructions from the ISO (i) to begin to move a
Resource that is on line and operating at or above its Low
Operating Limit to a new Desired Dispatch Point within the time
limit specified in Appendix 14-I to Market Rule 14, or (ii) to
provide AGC by failing, by more than the permitted deviation
provided for in Appendix 14-C to Market Rule 14, to attain within
the intervals provided for in Appendix 14-C to Market Rule 14, a
Resource's Automatic Low Limit or its Automatic High Limit in
response to AGC signals or by failing to provide AGC Services in
response to AGC signals at the Automatic Response Rate by more
than the permitted deviation and within the intervals provided
for in Appendix 14-D to Market Rule 14 that, in either case, is
intentional and is not excused under the provisions of Subsection
13.4.1.4 or 13.4.1.5 or Section 13.4.6.
13.4.1.3 Failure to Respond to Dispatch Instructions.
Failure to Respond to Dispatch Instructions means a
departure, by more than the permitted deviation provided for in
the applicable Appendix to Rule 14, in meeting, in response to
instructions from the ISO, the operating response Bid Parameter
time for a Resource (i) in starting up a Generator, (ii) in
shutting down a Generator, (iii) in interrupting a Type 3 or 4
Dispatchable Load or (iv) in turning on a Type 3 or 4
Dispatchable Load that, in each case, is intentional and is not
excused under the provisions of Subsection 13.4.1.4 or 13.4.1.5
or Section 13.4.6.
13.4.1.4 Relationship to Rule 14.
(a) Failure to perform in markets may be determined
based on Market Rule 14 audits or on other suitable information
available to the ISO.
(b) Failure to perform in markets is not subject to
sanction if a Participant makes a timely Redeclaration as
permitted under Market Rule 14 and performs in accordance with
such Redeclaration, but if a Participant's Redeclaration
constitutes a misrepresentation of a Resource's ability to
perform, this may be subject to sanction under Section 13.4.2.
13.4.1.5 Other Facility Failures Excluded.
Failure to perform in markets does not include the
effect of any failure or other unavailability of transmission,
distribution or communications facilities so long as such failure
or other unavailability is outside the reasonable control of the
Participant.
13.4.2 Inaccurate Bid or Operating Information.
13.4.2.1 Understatement of High Operating Limit.
(a) Understatement of High Operating Limit means the
submission of a High Operating Limit Bid Parameter, including any
Redeclaration of the High Operating Limit, in circumstances where
the Participant knew or should have known that the Resource could
currently attain a High Operating Limit consistent with Good
Utility Practice that is at least five percent (or 25 MW,
whichever is less) greater than the High Operating Limit Bid
Parameter submitted by the Participant, and which submission is
not excused under the provisions of paragraph (b) of this
Subsection or Subsection 13.4.2.4 or 13.4.2.5 or Section 13.4.6.
(b) The ability of a Resource to perform for short
periods during System Emergencies may vary from the long-run
performance to be expected in accordance with Good Utility
Practice. The demonstration that a Resource is capable of
higher output on a short-term basis during System Emergencies
shall not be evidence of the Resource's long-run performance.
13.4.2.2 Misrepresentation Regarding Operating Conditions.
A misrepresentation regarding operating conditions
means the making by a Participant of any statement to the ISO
regarding inability or restricted ability of its Resource to
perform, or the unavailability or restricted availability of its
transmission facilities, including any statement as to the
existence of a forced outage, Force Majeure or System Emergency
affecting its facilities, in circumstances where the Participant
knew or should have known the statement to be materially
inaccurate and such misrepresentation is not excused under the
provisions of Subsection 13.4.2.4 or 13.4.2.5 or Section 13.4.6.
13.4.2.3 Misrepresentation of Resource Availability.
Misrepresentation with respect to Resource availability
means (i) a failure by a Participant to advise the ISO as soon as
reasonably practical that a Resource or Type 3 or 4 Dispatchable
Load which the Participant has Bid for Operating Reserve could
not respond upon request in accordance with the Bid Parameters
submitted by the Participant for TMSR, TMNSR, or TMOR, in
circumstances where the Participant knew or should have known
such Resource's inability to respond, unless such failure is
excused under the provisions of Subsection 13.4.2.4 or 13.4.2.5
or Section 13.4.6, or (ii) a failure by a Participant to advise
the ISO as soon as reasonably practical that one or more of its
Resources for which the Participant will receive credit or a
payment for an hour is not available, in whole or in part, and
therefore does not meet the criteria for an Operable Capability
Entitlement in circumstances where the Participant knew or should
have known that such Resource or Resources fail to meet Operable
Capability criteria unless such failure to meet Operable
Capability criteria is excused under the provisions of Subsection
13.4.2.4 or 13.4.2.5 or Section 13.4.6.
13.4.2.4 Excuse for Good Faith Description.
(a) Resource performance and availability are subject
to, among other factors, climatic variations and emissions,
license and other limitations. A good faith effort to describe
in a Bid the technical abilities of equipment in expected
operating conditions is not subject to sanction if actual
operating conditions vary. However, a Participant is still
expected to provide an appropriate Redeclaration if operating
conditions vary materially from an applicable Bid.
(b) A Participant shall be deemed to have satisfied its
obligation to deliver accurate information as to operating
conditions or Resource availability if it had made a good faith
effort to supply accurate, responsive information; inadvertent
errors or omissions shall not be Sanctionable Behavior.
13.4.2.5 Certain Economic Decisions Excused.
Participants may make decisions affecting the
availability of a Resource for reasons relating to the economics
of operating that Resource. Such decisions may include, but are
not limited to, sale of gas available to the Participant as fuel
for such Resource, reducing output temporarily to defer
maintenance in response to unanticipated operating difficulties
or refueling, or shutting down a Resource during a period when
the Participant does not reasonably expect the Resource-specific
NEPOOL market revenues to justify operation of the Resource in
that period. For such decisions, the Participant shall not be
subject to sanction under Subsection 13.4.2.1 or 13.4.2.2 so long
as it provides to the ISO timely information that accurately
describes the nature of the Participant's decision and result of
such decision on the performance of such Resource and otherwise
acts in accordance with the applicable provisions of NEPOOL
Operating Procedure 5 (Unit Outages) or any other rule that
provides for the coordination required to minimize the impact of
Resource unavailability on Short-Term Reliability, including
obtaining permission to the extent required by Operating
Procedure 5 or such other rule. It is not the intent of this
Subsection's reference to Operating Procedure 5 or other rules to
require a Participant to provide services from all or a portion
of a Resource where the Resource-specific NEPOOL market revenues
derived from the provision of such service do not justify the
associated operating costs or lost opportunity costs of providing
such service from such Resource. It is also not the intent of
this Subsection to provide a basis for a Participant to
circumvent the Market Power Mitigation Rule or any other NEPOOL
Rule.
13.4.3 Failure to Follow ISO Instructions.
13.4.3.1 Failure to Follow Scheduling Procedures.
Failure to comply with applicable NEPOOL Rules for
scheduling or rescheduling Resource maintenance, including
failure to follow an established schedule without rescheduling,
which failure is intentional on the part of the Participant and
is not excused under the provisions of Section 13.4.6.
13.4.3.2 Failure to Follow Transmission Instructions.
Failure to follow transmission instructions means (i)
failure to follow routine ISO transmission dispatch instructions,
or (ii) failure to follow ISO operating instructions during a
System Emergency with respect to transmission facilities or (iii)
failure to comply with applicable NEPOOL Rules for scheduling or
rescheduling transmission maintenance, including failure to
follow an established schedule without rescheduling, which
failure, in any such case, is intentional on the part of the
Participant and is not excused under the provisions of Section
13.4.6.
13.4.4 Failure to Provide Information.
13.4.4.1 Routine Reports.
Failure to provide timely, accurate routine scheduled
reports, which is not excused by Subsection 13.4.4.6 or Section
13.4.6.
13.4.4.2 Emergencies or System Disturbances.
Failure to provide timely, accurate information in
response to ISO inquiries about System Emergencies or
disturbances in the NEPOOL Control Area, which is not excused by
Subsection 13.4.4.6(b) or Section 13.4.6.
13.4.4.3 Special Information Requests.
Failure by a Participant to meet an agreed schedule to
provide information that the ISO needs to perform its obligations
under the ISO Agreement, for purposes other than current
operations, that is not contained in routine scheduled reports,
or to work in good faith to establish such a schedule that is
reasonable based on the complexity of the information request and
the urgency of the ISO's need for the information that, in either
case, is not excused by Subsection 13.4.4.6 or Section 13.4.6.
13.4.4.4 Market Settlement Information.
Failure to provide timely or accurate billing or
metering information or similar information used in Settlement,
which is not excused by Subsection 13.4.4.6(b) or Section 13.4.6.
13.4.4.5 Resource Information
Failure to provide, in response to an ISO inquiry,
pertinent information that a Participant knew or should have
known about the ability of its Resource to perform, which failure
is not excused under the provisions of Subsection 13.4.4.6(b) or
Section 13.4.6.
13.4.4.6 Timeliness and Accuracy.
(a) If a Participant, for good cause, requests an
extension of time to deliver information subject to a routine
scheduled report or a special information request, the ISO shall
grant a reasonable extension, and failure to provide information
by the original delivery date shall not be Sanctionable Behavior.
(b) A Participant shall be deemed to have satisfied its
obligation to deliver accurate information if it has made a good
faith effort to supply accurate, responsive information;
inadvertent errors or omissions shall not be Sanctionable
Behavior.
13.4.5 Relationship with and Failure to Comply with Market Mitigation
Rule
(a) Certain Participant conduct may be both Sanctionable
Behavior and among the Participant actions identified by the ISO as a basis
for imposing a mitigation remedy under the Market Power Mitigation Rule.
Provided that the ISO makes the necessary findings and follows the
applicable procedures under this Rule, the ISO may impose sanctions under
this Rule for Sanctionable Behavior without regard to whether the ISO also
imposes or seeks to impose any mitigation remedy on the Participant for the
same conduct under the Market Power Mitigation Rule. In addition, provided
that the ISO makes the necessary findings and follows the applicable
procedures under the Market Power Mitigation Rule, the ISO may impose one
or more mitigation remedies under the Market Power Mitigation Rule without
regard to whether the ISO seeks to impose or imposes sanctions under this
Rule for Sanctionable Behavior that forms the basis for a mitigation
remedy.
(b) To the extent that compliance with a Market Power
Mitigation Rule remedy requires specific actions by a Participant, and such
mitigation remedy is not currently the subject of ADR review under that
Rule and has not been removed as the result of ADR review, the ISO may
sanction a Participant under this Rule for a failure by that Participant to
comply with such mitigation remedy whether or not such failure is
intentional, unless such failure is excused under the provisions of Section
13.4.6.
13.4.6 Certain Behavior Excused.
13.4.6.1 Force Majeure.
No failure by a Participant to perform Participant
Obligations shall be Sanctionable Behavior to the extent and for
the period that the Participant's inability to perform is caused
by an event or condition of Force Majeure affecting the
Participant; provided that the Participant gives notice to the
ISO of the event or condition as promptly as possible after it
knows of the event or condition and makes all reasonable efforts
to cure, mitigate or remedy the effects of the Force Majeure
event or condition.
13.4.6.2 Safety, Licensing or Other Requirements.
No failure by a Participant to perform Participant
Obligations shall be Sanctionable Behavior if the Participant is
acting in good faith to preserve the safety of persons or the
safety or integrity of equipment subject to Dispatch Instructions
or to comply with facility licensing, environmental or other
requirements of law.
13.4.6.3 Emergencies.
No failure by a Participant to perform Participant
Obligations shall be Sanctionable Behavior if the Participant is
acting in good faith and consistent with Good Utility Practice to
preserve system reliability in a System Emergency or other system
disturbance; provided that a Participant shall not override
direct ISO instructions except in cases described in Subsection
13.4.6.2.
13.4.6.4 Conflicting Directives.
To the extent that any action or omission by a
Participant is specifically required by the NEPOOL Rules or by
ISO instructions, such action or omission shall not be
Sanctionable Behavior.
13.4.6.5 Time Limitation.
No failure by a Participant to perform Participant
Obligations shall be subject to sanction if the Participant's
failure occurred more than six months prior to the ISO providing
written notice to the Participant pursuant to Section 13.6.1 of
the ISO's belief that such failure may constitute Sanctionable
Behavior.
13.4.7 Interpretation.
13.4.7.1 Intent.
Where any subsection of Section 13.4 requires that
behavior be intentional to constitute Sanctionable Behavior, the
ISO may make a finding that behavior is intentional if it finds
(i) direct evidence of intent, (ii) evidence of reckless
endangerment of Short-Term Reliability or (iii) evidence of a
pattern of unexcused behavior or circumstances from which the ISO
may reasonably infer that the behavior was intentional. In
making an inference as to intent pursuant to clause (iii) above,
the ISO shall consider the financial benefits or detriments to
the Participant of its behavior and the adequacy of any
alternative explanation provided by the Participant for its
behavior. Actions taken by a Participant in good faith shall not
be viewed as part of a pattern of unexcused behavior or otherwise
serve as the basis of a finding of intent. The ISO shall also
consider the degree to which the Participant's behavior
materially impaired or threatened to materially impair Short-Term
Reliability or the competitiveness or efficiency of the markets
and shall not infer intent pursuant to clause (iii) above unless
the ISO finds that the Participant's behavior materially impaired
or threatened to materially impair Short-Term Reliability or the
competitiveness or efficiency of the markets. Small variations
from permitted deviations or specified time limits provided in
the applicable Appendices to Rule 14 shall be presumed to be
inadvertent unless there is specific evidence to the contrary.
Behavior that would materially impair Short-Term Reliability or
the competitiveness or efficiency of the markets if it were
engaged in on a widespread basis by other Participants to the
same degree and at the same time as by the Participant engaging
in the behavior, shall be deemed to threaten to materially impair
Short-Term Reliability or the competitiveness or efficiency of
the markets, as the case may be.
13.4.7.2 Knowledge.
Where any subsection of Section 13.4 requires that the
ISO determine that a Participant "knew or should have known"
particular information as an element of a determination that
Sanctionable Behavior has occurred, the ISO may only make a
finding based on evidence that the Participant's operating
personnel, other persons responsible for communicating such
information to the ISO, or management personnel supervising such
persons (i) knew the relevant information, (ii) had the relevant
information readily available to them in normal control room
displays or operating records or (iii) failed to obtain the
relevant information, and such information was readily available
to them from third parties, but only to the extent that failure
to obtain such third-party information constitutes reckless
endangerment of Short-Term Reliability. Failure of a Resource to
attain one or more Bid Parameters on one or more occasions does
not constitute evidence that a Participant knew or should have
known that the Resource could not subsequently attain such Bid
Parameters. The ISO may consider a Participant's efforts (or
lack of efforts) to investigate a Resource's failure to perform,
its efforts to correct any deficiencies and the Participant's
conclusions as to whether they have been corrected. Failure to
obtain information that is readily available as described in
clauses (ii) or (iii) above is excused during the continuance of
the circumstances described in Sections 13.4.6.1 through
13.4.6.3.
13.5 Sanctions.
13.5.1 Amount and Nature.
Appendix A to this Rule sets forth the maximum applicable
sanctions with respect to each category of Sanctionable Behavior set forth
in Section 13.4 subject to potential increase under Section 13.5.3 in
certain circumstances. In most cases the ISO may impose three categories
of sanctions:
(a) FORMAL WARNING. A Formal Warning consists of written
notification from the ISO to a Participant stating that Sanctionable
Behavior has occurred and directing the Participant not to engage in
further Sanctionable Behavior.
(b) ADMINISTRATIVE SANCTIONS. Administrative Sanctions consist
of fixed, per-event monetary charges set forth in Appendix A imposed on
Sanctionable Behavior.
(c) FORMULA-BASED SANCTIONS. Formula-Based Sanctions are
monetary charges determined by a formula set forth in Appendix A imposed on
Sanctionable Behavior.
In imposing an Administrative Sanction or a Formula-Based
Sanction, the ISO may impose the sanction in a lesser amount than that
specified in Appendix A if it determines that the lesser amount will have a
sufficient deterrent effect.
13.5.2 Cumulative Effect.
(a) Sanctions imposed under this Rule are in addition to (i) any
consequences for Settlement set forth in Rule 14 and (ii) any mitigation
remedies available to the ISO under the Market Power Mitigation Rule.
(b) The ISO may impose both an Administrative Sanction and a
Formula-Based Sanction with respect to the same Sanctionable Behavior if it
believes both sanctions are necessary for appropriate deterrence.
(c) If a single event is sanctionable under two different
sections or subsections of this Rule, the ISO may only impose a sanction
under one of such sections or subsections; provided that if an event is
sanctionable under one or more sections or subsections and is also
sanctionable under Section 13.4.5, the ISO may impose Administrative
Sanctions under Section 13.4.5 and a sanction under one other section or
subsection. For purposes of this Rule an "event" means the facts and
circumstances constituting a single occurrence of behavior, or multiple
occurrences of the same sanctionable behavior within a day, sanctionable
under this rule. While the ISO may review a pattern of behavior, for
example, to make a finding of intent under Subsection 13.4.7.1, the pattern
of behavior may consist of multiple events, each one of which is subject to
sanction once a finding of intent is made. With respect to operating
behavior, an event relates to a single operating action. For example, if
the ISO gives an instruction to ramp up a Resource and the Participant
fails to ramp up, that failure is a single event even if it continues over
several hours and despite repeated instructions. However, providing
inaccurate information about the Resource to the ISO in response to
questions about the failure to ramp up is a separate event as is failure of
the same Resource to ramp down later in the day. Failure to provide
information relates to a particular report or a particular request for
information, and separate inaccuracies in the same report or in response to
the same information request are not separate events.
13.5.3 Increased Sanctions.
The ISO may increase Administrative Sanctions and Formula-
Based Sanctions to an amount up to triple the base amount of the sanction
in the following circumstances:
(a) If Sanctionable Behavior occurs during a System Emergency; or
(b) If the ISO determines that the Sanctionable Behavior is part
of a continuing pattern of Sanctionable Behavior for which one or more
monetary sanctions have previously been imposed upon the Participant; or
(c) If the Sanctionable Behavior is a failure by a Participant
to comply with any market mitigation remedy the ISO has imposed on such
Participant pursuant to the Market Power Mitigation Rule that is not
currently the subject of ADR review under that Rule and has not been
removed as the result of such ADR review.
13.5.4 Costs.
In addition to applicable sanctions, if a monetary sanction
is imposed, the ISO may charge to the sanctioned Participant the reasonable
costs of the ISO's investigation of the Sanctionable Behavior. Such costs
will be payable after the deadline for requesting ADR has passed and any
requested ADR proceedings are complete and the ADR decision in any such
proceeding sustains the imposition of a monetary sanction.
13.5.5 Disclosure.
Except as provided in this Section 13.5.5, the ISO will not
disclose the imposition of particular sanctions on a particular
Participant, but will make periodic reports of sanctions imposed and the
Sanctionable Behavior upon which such sanctions were imposed that do not
identify Participants by name or provide a basis for identifying such
Participants. However, the ISO may make disclosure of monetary sanctions
imposed on a particular Participant if in the ISO's judgment such
disclosure is warranted by the nature of the Sanctionable Behavior and
monetary sanctions previously imposed on the Participant have been
unsuccessful in deterring repeated Sanctionable Behavior. The ISO shall
notify the Participant before making disclosure, and the Participant shall
be entitled to obtain ADR review of the proposed disclosure. No disclosure
of a monetary sanction will be made until after the deadlines for
requesting ADR with respect to the sanction and proposed disclosure have
passed and any requested ADR proceedings are complete and the ADR decision
sustains the ISO's actions.
13.6 Process for Imposing Sanctions.
13.6.1 Observation and Communication.
If, in the conduct of system operations or Settlement, in
auditing Resource performance under Rule 14, in making inquiry of
Participants about operating problems, in monitoring the competitiveness
and efficiency of the markets, or otherwise in the receipt of information
relevant to the performance of its duties, the ISO discovers behavior that
it believes may constitute Sanctionable Behavior, the ISO shall:
(a) make a record of the information leading to ISO's belief
that Sanctionable Behavior may have occurred; and
(b) contact the Participant whose behavior is in question,
inform the Participant of the information leading to the ISO's belief that
Sanctionable Behavior may have occurred, and provide the Participant the
opportunity to discuss the behavior observed or documented by the ISO and
to offer additional facts or explanation of circumstances (i) that tend to
show that no Sanctionable Behavior occurred or (ii) that should be weighed
in determining whether to impose a sanction and, if so, what level of
sanction to impose.
The ISO may make use of information provided by third parties in
forming the basis for an inquiry to a Participant about possible
Sanctionable Behavior, and is not required to reveal the identity or
existence of such third parties. However, unsubstantiated statements by
third parties may not serve as the basis for the imposition of sanctions.
13.6.2 Consideration by ISO.
13.6.2.1 Occurrence of Sanctionable Behavior.
Based upon information in its possession and
information provided by the Participant, the ISO shall first
determine if Sanctionable Behavior has occurred. To conclude
that Sanctionable Behavior has occurred under any specific
subsection of Section 13.4, the ISO must make (i) a written
finding with respect to each element of such Sanctionable
Behavior, as set forth in the relevant subsection, including the
basis of any finding as to intent or state of knowledge under
Section 13.4.7, (ii) a written finding with respect to the
duration of the Sanctionable Behavior and (iii) a written finding
that the Sanctionable Behavior is not excused by any specific
provision of Section 13.4;
13.6.2.2 Level of Sanction.
(a) If the ISO determines that Sanctionable Behavior
has occurred, the ISO may impose a sanction under Section 13.5.
In determining which sanction or sanctions to apply, the ISO
shall consider:
o The nature of the Sanctionable Behavior and the degree of
impact on Short-Term Reliability or the competitiveness and
efficiency of markets;
o The Participant's past history of Sanctionable Behavior
and the nature of sanctions previously imposed; and
o The promptness and effectiveness of the Participant's
response in correcting the Sanctionable Behavior.
(b) Ordinarily, the ISO will issue a Formal Warning
before imposing a monetary sanction for similar behavior.
However, in cases of Sanctionable Behavior that materially
impairs Short-Term Reliability or the competitiveness or
efficiency of markets, or reflects the sanctioned Participant's
unexcused failure to obey ISO instructions, the ISO may directly
impose a monetary sanction. The ISO has no obligation to
consider a Formal Warning with respect to sanctions imposed under
Section 13.4.5. The ISO will select the level of sanction based
on its determination of the need for effective deterrence and
consistency with sanctions imposed in similar circumstances.
(c) The ISO shall make (i) a written finding with
respect to the level of sanction imposed and the factors
considered by it pursuant to Subsection 13.6.2.2(a), (ii) a
written finding with respect to the basis of any increased
sanction pursuant to Section 13.5.3, (iii) a calculation of the
amount of any monetary sanction, and (iv), if disclosure of a
sanction is proposed, a written finding as to why disclosure of
the sanction is appropriate.
13.6.3 Notice and Payments.
The ISO shall give written notice to the Participant of the
imposition of any sanction, together with its written findings as required
under Section 13.6.1 and 13.6.2. The ISO's invoice for the amount of a
sanction will be sent to the sanctioned Participant with the notice of the
sanction. Payments of sanctions received shall be reflected as a credit to
Schedule 3 charges under the ISO Tariff (allocated on a Voting Share basis)
for Participants other than the sanctioned Participant. The Participant
shall pay the amount of the sanction to the ISO or post a bond for the
amount of the sanction if the Participant is seeking review of such
sanction under the ADR process of Section 13.7 within 30 days of the date
of the ISO's invoice.
13.6.4 No Limitations on Other Rights of the ISO.
Nothing contained in this Rule shall limit the ability of
the ISO to collect information from Participants or to institute new rules
pursuant to Section 6.17 of the ISO Agreement.
13.7 ADR Review of Sanctions.
13.7.1 Actions That Can Be Reviewed.
(a) A Participant may obtain prompt ADR review of any
sanction (other than a formal warning) imposed by the ISO on that
Participant and any proposed disclosure of a sanction. Actions subject to
review are:
o Imposition of a sanction;
o Level of sanction imposed;
o Increase of a sanction under Section 13.5.3;
o Basis of calculation of a Formula-Based Sanction; and
o Proposed disclosure of a sanction.
The Participant must make a written request for ADR review
within 30 days of the delivery of the ISO's notice of imposition of the
sanction and a bill for the amount of the sanction, or the delivery of the
ISO's notice of proposed disclosure of a sanction, if the Participant
proposes to seek ADR review.
(b) A Participant may not obtain ADR review of the issuance of a
Formal Warning. It may, however, deliver to the ISO within 30 days of the
issuance of the Formal Warning a written statement of its reasons for
disputing the imposition of the Formal Warning. The ISO shall retain any
such written statement with its record of the imposition of the Formal
Warning. If the ISO relies on its prior imposition of the Formal Warning
as a basis for imposing a more severe sanction for subsequent Sanctionable
Behavior, the written statement shall also be made part of the record in
any ADR proceeding relating to the subsequent Sanctionable Behavior. The
ISO may, but is not obligated to, reconsider its decision to issue the
Formal Warning upon receipt of the written statement. If the ISO
determines to withdraw the Formal Warning, it shall so notify the
Participant in writing, and the Formal Warning shall not be referred to in
any subsequent proceeding or report or made the basis for any subsequent
action.
(c) A Participant may seek ADR review of the actions described
in Section 13.7.1(a), and any request for ADR review will be deemed to be
properly and timely made, if the Participant (i) timely pays the full
amount of the sanction imposed or (ii) timely posts a bond with the ISO
assuring payment in full of the sanction. Unless such timely payment or
posting of a bond occurs, the Participant may not obtain ADR review of the
imposition of a monetary sanction. If the Participant makes payment in
full of the sanction amount, it may, by notice accompanying its payment,
state that it is paying subject to the outcome of the ADR review. The ISO
will hold in escrow and invest any payment accompanied by such a notice
pending the outcome of the ADR process, and will refund any amount by which
the sanction is reduced or refund the entire amount if the sanction is
removed, in either case, together with interest at the rate specified in
the NEPOOL Tariff, within 30 days of the decision rendered by the ADR
Neutral.
13.7.2 Factual Basis for ADR Review; Preliminary Meeting.
(a) In connection with its request for ADR review, the
Participant shall deliver to the ISO any information that it believes is
pertinent to the ISO's decision that it wishes to submit to the ADR
Neutral. The ISO will deliver to the Participant within ten business days
thereafter a listing of all information on which it relied in making its
decision and any other information that it intends to provide to the ADR
Neutral, together with copies of any of such information not previously
supplied to the Participant. The ISO shall provide, together with its
listing of information, a notice setting a date not sooner than five
working days after the date of the notice, for a meeting between the
Participant and the ISO to discuss their differences. The Participant may
supply prior to the date of the meeting additional information in response
to any new information delivered by the ISO. If the parties are unable to
resolve their differences at the meeting, an ADR Neutral shall be selected
as provided in Section 13.7.6.3 and the written information from both
parties shall be forwarded to the ADR Neutral.
(b) The written record for the ADR review will consist of (i)
all information provided by the Participant to the ISO up to the date of
the meeting held pursuant to paragraph (a) above and identified by the
Participant as relevant to the action of the ISO under review, and (ii) all
information furnished by the ISO to the Participant that supports its prior
written determination, and (iii) position statements by the Participant and
the ISO. The Participant's statement of position shall include a brief
written statement of its disagreement with the determination of the ISO and
the specific relief that it requests. The ISO's statement of position may
supplement its written notice given pursuant to Section 13.6.3 and may
specify any change in its position from that notice. Each party shall
provide the other with copies of all material submitted by it to the ADR
Neutral.
13.7.3 Nature of Review.
On the basis of the written record and the presentations of
the ISO and the Participant, the ADR Neutral shall review the facts and
circumstances which relate to the ISO decision and the sanction imposed by
the ISO including any proposed disclosure. The ADR Neutral shall remove or
reduce the ISO's sanction or prohibit the disclosure if it concludes that
the ISO could not reasonably make its findings with respect to the
occurrence of Sanctionable Behavior pursuant to Section 13.6.2.1 or the
level of the sanction and the appropriateness of a proposed disclosure
pursuant to Section 13.6.2.2 in light of the entire factual record
presented to the ADR Neutral and applicable law. The ADR Neutral shall
separately consider the ISO's findings as to (i) the occurrence and
duration of the Sanctionable Behavior, (ii) the level of the sanction
imposed, (iii) the basis for an increased sanction imposed pursuant to
Section 13.5.3, (iv) the basis of calculation of any monetary sanction and
(v) the appropriateness of disclosure.
13.7.4 Parties to ADR Review.
The ADR review is confidential. The only parties to an ADR
review are the ISO and the Participant or Participants upon whom the
disputed sanction is imposed. The ADR review and any record are not open
to nonparties.
13.7.5 Remedies and Standard of Review.
(a) The ADR Neutral shall either affirm, reduce or remove a
sanction and affirm or prohibit disclosure of a sanction. The ADR Neutral
shall remove the ISO's sanction or prohibit the disclosure if it concludes
that the ISO could not reasonably make its findings with respect to the
occurrence of the Sanctionable Behavior pursuant to Section 13.6.2.1(i) or
(ii) or the appropriateness of a proposed disclosure pursuant to Section
13.5.5 in light of the entire factual record presented to the ADR Neutral
and applicable law. The ADR Neutral shall reduce a sanction if it
concludes that the ISO could not reasonably make its findings in light of
the entire factual record presented to the ADR Neutral and applicable law
with respect to (i) the duration of the Sanctionable Behavior pursuant to
Section 13.6.2.1(ii), or (ii) the level of the sanction imposed pursuant to
Section 13.6.2.2, or (iii) the basis of any increased sanction pursuant to
Section 13.5.3, or (iv) the calculation of a monetary sanction. The ADR
Neutral may not compromise or reduce a sanction without a specific
determination respecting one of the four factors above, and any reduction
in the sanction shall specifically identify each finding that could not
reasonably be made in light of the entire factual record presented to the
ADR Neutral and applicable law. In reaching its decision, the ADR Neutral
shall be entitled to consider the level of sanctions imposed in similar
circumstances as set forth in the ISO's periodic reports.
(b) The decision of the ADR Neutral shall be included as a part
of any file or record the ISO maintains concerning the imposition of a
sanction or the disclosure of a sanction for so long as the ISO maintains
such file or record.
13.7.6 Procedure.
13.7.6.1 Object.
It is the intent of the ADR process that disputes be
resolved as expeditiously as possible.
13.7.6.2 Confidentiality.
All information disclosed in the course of ADR review
shall be subject to confidentiality protections that satisfy the
requirements of the NEPOOL Information Policy.
13.7.6.3 Selection and Compensation of Neutrals.
(a) NEPOOL and the ISO shall identify not fewer than
three persons who they mutually agree would be appropriate to
serve as ADR Neutral under this Rule and shall obtain the advance
consent of such persons to serve as ADR Neutrals for the ADR
procedure described in this Section. An appropriate retainer may
be paid to such persons in return for their agreement to serve,
which retainer shall be made a part of the ISO's budget. The ISO
and NEPOOL may from time to time mutually select additional
persons to fill vacancies or expand the roster of ADR Neutrals as
needed. Each ADR Neutral shall enter into a confidentiality
agreement with NEPOOL and the ISO.
(b) When an ADR Neutral is to be selected from the
roster pursuant to Section 13.7.2(a), such selection shall be
made within five business days using the following procedure:
o Except as otherwise provided for in Section 13.7.6.7
below, ADR processes shall be assigned to the ADR Neutral
whose most recent ADR process handled under this Section
13.7 was longest ago.
o If the schedule of such member of the roster does not
permit meeting the required schedule for the ADR process,
that ADR process shall be assigned to the member whose most
recent ADR process was next longest ago and so forth.
o If two or more members of the roster have not handled at
least one ADR process or handled ADR processes as to which
hearings were held on the same day, the ADR process shall be
assigned among such members by lot.
The ADR Neutral shall have no financial interest in the
proceeding and no affiliation with any party that would tend to
create a conflict of interest.
13.7.6.4 Hearing.
(a) The ADR Neutral who is assigned to an ADR process
shall receive the complete written record at the time of
assignment. The ADR Neutral, in consultation with the parties,
shall schedule a hearing to be held not later than ten business
days after the ADR Neutral is selected. The schedule may be
altered either by consent of all parties or, if it is clearly not
possible to provide a fair review within the schedule given the
complexity of the record, at the direction of the ADR Neutral.
(b) After reviewing the written record, the ADR Neutral
may pose questions in writing or in a conference call with
representatives of both parties that he or she would like to have
addressed at the hearing. All parties shall be copied on any
written communications between the ADR Neutral and any other
party. There shall be no oral communications between the ADR
Neutral and any party unless all parties have been given notice
and an opportunity to participate, other than as necessary for
administrative purposes.
(c) At the hearing, each party will have up to four
hours to present its views regarding the written record and
applicable law. A party may, subject to such limitations as the
ADR Neutral may impose, pose questions to the other party;
provided that the time spent in responding to questions shall be
counted against the time limit of the party asking the question.
A party may reserve time for rebuttal. There will be no
witnesses or cross examination, but a party may choose to have
experts or counsel make all or a portion of its presentation.
The ADR Neutral is free to question any presenter.
(d) The hearing shall be held in Springfield,
Massachusetts, or such other location as the parties and the ADR
Neutral may agree.
13.7.6.5 Decision.
The ADR Neutral shall render a reasoned decision in
writing, stating whether the sanction is affirmed, reduced or
removed or the proposed disclosure may be made and setting forth
a statement of reasons for the decision, within five business
days of the hearing. Any party may request a meeting with the
ADR Neutral to discuss the ADR Neutral's decision.
13.7.6.6 Costs.
The costs of the ADR process (including any fees for
the participation of the ADR Neutral in the specific proceeding
but not including any retainer for the ADR Neutral) shall be
assessed to the Participant if the sanction is affirmed, to the
ISO if the sanction is removed, and apportioned by the ADR
Neutral among the parties if the sanction is reduced. Costs
assessed to the ISO shall be automatically included in the ISO's
budget.
13.7.6.7 Related ADR Review.
ADR reviews involving the same Resource or Resources or
Participant or Participants may be determined by the same ADR
Neutral and may, in appropriate cases, with the consent of all
parties, be consolidated subject to appropriate confidentiality
requirements.
13.7.6.8 Effect of ADR Process, Other Proceedings.
The decision of the ADR Neutral is binding on the ISO
and the Participant except as specifically provided in this
Section 13.7.6.8. The ISO may appeal the removal or reduction of
a sanction to the FERC. A Participant may appeal the imposition
of a sanction to the FERC whether or not it has requested an ADR
process. Except for this ADR process, a Participant may not seek
removal or reduction of the sanction in any forum other than the
FERC. The ISO may not contest the removal or reduction of a
sanction in any forum other than the FERC.
13.7.7 Superseding Agreement.
The provisions of Section 13.7 of this Rule shall cease to
be in effect at such time as the ISO and the Participants have in effect an
amendment to the ISO Agreement, or an agreement which replaces the ISO
Agreement, which includes ADR provisions and provides that those provisions
are to supersede Section 13.7.
APPENDIX A
SANCTIONABLE EVENTS
Sanctionable Event Administrative Formula-Based Sanction*
Sanction
- ---------------------------------------------------------------------------------------------------------------------------------
I. Failure to Perform in Markets as Defined in Section 13.4.1:
A. Failure to Provide Energy as defined in Subsection 13.4.1.1:
Attain High Operating Limit $1000/Event MW Dev. * 1/2 ECP * Hrs.
Attain Loan Available for Interruption $1000/Event MW Dev. * 1/2 ECP * Hrs.
B. Failure to Provide Services as defined in Subsection 13.4.1.2:
Failure to Move to Desired Dispatch Point $1000/Event MW Dev. * 1/2 ECP * Hrs.
Activate Operating Reserve $1500/Event MW Dev. * TMNSR CP * Hrs.
AGC: $500/Event
- Automatic High Limit MW Dev. * 1/2 ECP * Hrs.
- Automatic Low Limit -----
- Automatic Response Rate Reg. Dev. * AGC CP * Hrs.
C. Failure to Respond to Dispatch Instructions as defined in
Subsection 13.4.1.3:
Start-up Generator $500/Event MW Dev. * TMNSR CP * Hrs.
Shut-down Generator $500/Event -----
Interrupt Dispatchable Load $500/Event MW Dev. * TMNSR CP * Hrs.
Turn-On Dispatchable Load $500/Event MW Dev. * TMNSR CP * Hrs.
APPENDIX A
SANCTIONABLE EVENTS
Sanctionable Event Administrative Formula-Based Sanction*
Sanction
- ---------------------------------------------------------------------------------------------------------------------------------
II. Inaccurate Bid or Operating Information as Defined in
Section 13.4.2:
A. Understatement of High Operating Limit as defined in
Subsection 13.4.2.1:
On Bid $1000/Event MW Dev. * 1/2 ECP * Hrs.
On Redeclaration $2000/Event MW Dev. * 1/2 ECP * Hrs.
B. Misrepresentation of Operating Conditions as defined in
Subsection 13.4.2.2: $5000/Event MW Dev. * 1/2 ECP * Hrs.
C. Misrepresentation of Resource Availability as defined in
Subsection 13.4.2.3: $1000/Event MW Dev. * 1/2 CP * Hrs.
III. Failure to Follow ISO Instructions as Defined in Section 13.4.3:
A. Failure to Follow Scheduling Procedures as defined in
Subsection 13.4.3.1:
Maintenance Scheduling Procedures $1000/Event -----
B. Failure to Follow Transmission Instructions as defined in
Subsection 13.4.3.2:
Routine Dispatch $1000/Event -----
During System Emergency $5000/Event -----
Maintenance Scheduling Procedures $1000/Event -----
APPENDIX A
SANCTIONABLE EVENTS
Sanctionable Event Administrative Formula-Based Sanction*
Sanction
- ---------------------------------------------------------------------------------------------------------------------------------
IV. Failure to Provide Information as Defined in Section 13.4.4: N/A
A. Routine, Scheduled Reports as defined in Subsection 13.4.4.1:
Late $500/Event
Inaccurate $1000/Event
B. Emergencies or System Disturbances as defined in Subsection
13.4.4.2: $2000/Event
C. Special Information Requests as defined in Subsection 13.4.4.3: $1000/Event
D. Market Settlement Information as defined in Subsection 13.4.4.4:
Late $2000/day
Inaccurate $2000/Event
E. Resource Information as defined in Section 13.4.4.5 $1500/Event
V. Disregard of Mitigation Remedies as Defined in Section 13.4.5 $1500/day
* As used in this Appendix A, capitalized terms that are defined in Section
1.1 of Rule 1 (Market Information) are used as defined therein. The following
capitalized terms or abbreviations used in this Appendix are defined as set
forth below:
MW DEV. - (i) for purposes of Section 13.4.1, the difference in megawatts
between the value fixed by the Participant's Bid for the applicable Resource
and the comparable value actually achieved by the Resource in response to ISO
instructions; (ii) for the purposes of Subsection 13.4.2.1, the difference in
megawatts between the value fixed by a Participant's Bid for the High Operating
Limit of a Resource and the actual High Operating Limit; (iii) for purposes of
Subsection 13.4.2.3, clause (i), the difference in megawatts between the Bid
Parameter fixed by a Participant's Bid for TMSR, TMNSR or TMOR for a Resource
and the actual amount of TMSR, TMNSR or TMOR which the Resource can provide;
and (iv) for purposes of Subsection 13.4.2.3, clause (ii), the number of
megawatts of Operable Capability claimed for an Operable Capability Entitlement
which cannot meet the criteria for an Operable Capability Entitlement.
REG. DEV. - the difference in Reg (a quantity used to represent a Generator's
regulating capability) between the value fixed by the Participant's Bid for the
applicable Resource to provide Automatic Generation Control (AGC) and the
comparable value actually achieved by the Resource.
ECP - the Energy Clearing Price during the hour in which the Sanctionable
Behavior occurs.
CP - the Clearing Price for the applicable market, other than Energy, during
the hour in which the Sanctionable Behavior occurs.
TMNSR CP - the Clearing Price for 10-Minute Non-Spinning Reserve during the
hour in which Sanctionable Behavior occurs.
AGC CP - the Clearing Price for AGC during the hour in which the Sanctionable
Behavior occurs.
HRS. - the number of hours (or fraction thereof) during which Sanctionable
Behavior occurs over a period not earlier than six months prior to the date the
ISO provides written notice to the Participant pursuant to Section 6.1(b).
EVENT - has the meaning specified in Subsection 5.2(c).
APPENDIX B
Participants shall include language substantially as follows in contracts
for services from entities who are not NEPOOL participants:
"Article X. Compliance with NEPOOL Market Rules
Seller agrees that it is familiar with the applicable NEPOOL Market Rules
relating to the bidding of its resources into the NEPOOL markets. Seller
further agrees to comply in all respects with these Rules, and to exercise
the degree of diligence required by Good Utility Practice to assure that
Bid Parameters or information provided to Buyer as to Resource
availability, capability and operating conditions are accurate. Seller
acknowledges that market settlement consequences and sanctions may be
imposed on Buyer by ISO New England for Seller's failure to meet Bid
Parameters or to respond to operating instructions in accordance with
Section 14 of the market Rules and for Seller's actions that would
constitute Sanctionable Behavior, as defined in Section 13 of the Market
Rules, respectively. Seller agrees to comply with NEPOOL dispatch
instructions and to provide such information as ISO New England reasonably
requests in order for ISO New England to maintain Short Term Reliability
and determine whether Seller's resource is in compliance with its bid
parameters or whether a Sanctionable Behavior has occurred.
ATTACHMENT E
Policy Statement
POLICY STATEMENT FOR THE FINANCIAL ASSURANCE REQUIREMENTS AND
ADMINISTRATION THEREOF FOR NEPOOL OPEN ACCESS TARIFF:
Section 11 of the above Tariff provides that each Transmission Customer
which is not a signatory of the NEPOOL Agreement ("NON-PARTICIPANT") may be
subject to a reasonable credit review by NEPOOL to assure that it has the
financial ability to pay for services provided under the Tariff. In
addition, Section 31.3 of the Tariff sets forth SPECIFIC REQUIREMENTS FOR
DEPOSITS FOR FIRM POINT-TO-POINT TRANSMISSION SERVICE to be provided at the
time of application regardless of an entity's demonstration to NEPOOL of
its financial ability to pay for services under the Tariff.
The purpose of this policy is (i) to establish for NEPOOL commercially
reasonable credit review procedures to assess the financial ability of a
Non-Participant to pay for services under the Tariff (ii) to set forth
requirements for alternative forms of security that will be deemed
acceptable to NEPOOL and consistent with commercial practices established
by the Uniform Commercial Code that protects the Participants against the
risk of non-payment by Non-Participants, and (iii) to set forth the
conditions under which NEPOOL will conduct business so as to avoid the
possibility of failure of payment for services rendered under the Tariff.
The following procedures and requirements will apply to all Non-
Participants. Generally, any such Non-Participant whose long-term debt is
not rated at least "A-" or its equivalent by Standard & Poor's (or, if such
debt is not rated by Standard & Poor's, by another nationally recognized
credit rating agency acceptable to NEPOOL), will be required to provide
additional financial assurances, which additional financial assurances may
be in the form of prepayments, cash deposits, letters of credit and
corporate guaranties, as described in detail below. The requirement to
continue the prepayment, cash deposit or letter or credit may be reviewed
by NEPOOL after one year of providing service to such Non-Participant.
FINANCIAL STATEMENTS
Each Non-Participant applicant for service under the Tariff should submit
proof of financial viability to NEPOOL's satisfaction with its application
to demonstrate the applicant's ability to meet its obligations.
Applicants for Tariffs or their parent company (if applicable) should
submit audited financial statements for at least the immediately preceding
three years including, but not limited to, the following information:
Balance Sheets
Income Statements
Statements of Cash Flows
Notes to Financial Statements
Additionally, the following information for at least the immediately
preceding three years, if available, should be included in the application:
Annual and Quarterly Reports
10-K, 10-Q, and 8-K Reports
Non-Participants should also include at least one back reference and three
(3) Utility credit references. In those cases where a Non-Participant does
not have three (3) Utility credit references, up to three (3) trade payable
vendor references may be substituted.
Non-Participants must also include any information as to any known or
anticipated material lawsuits, as well as any prior bankruptcy declarations
by the Non-Participant, or by its predecessor(s), if any.
In the case of certain municipals, public power entities or privately owned
companies, some of the above financial submittals may not be applicable.
CHANGE OF FINANCIAL STATUS
Each Non-Participant receiving service under the Tariff is responsible for
informing NEPOOL in writing, within ten (10) business days, of any material
change in its financial status during the period that the Tariff is in
effect. A material change in financial status includes, but it not limited
to the following: a downgrade of long or short term debt by a major rating
agency, a bankruptcy filing, insolvency, a report of a significant
quarterly loss or decline of earnings, the resignation of key officer(s),
and/or the filing of a material lawsuit that could materially impact
current or future financial results. NEPOOL will use this information to
evaluate whether a change to the financial assurance requirements is
necessary.
PREPAYMENT
For the Tariff listed above, prepayment of anticipated Tariff charges
provides an acceptable form of financial assurance to NEPOOL. The
prepayment must be wire transferred to the account of NEPOOL prior to the
start of the transaction. No interest will be credited by NEPOOL on the
prepayment and any overpayment in excess of the actual billed amount will
be returned. In the absence of a prepayment, service under the Tariff will
be suspended unless another acceptable form of financial assurance is
provided, as described below.
CASH DEPOSIT
For the Tariff listed above, a cash deposit provides an acceptable form of
financial assurance to NEPOOL. If the transaction is for three (3) months
or less, the amount of the deposit should equal the contemplated charges
for the transaction. If the transaction is for greater than three (3)
months, the amount of the deposit must equal at least three and one-half
consecutive months of contemplated charges. The three and one-half months
is based on the time lag between when service is initially provided and
when NEPOOL can prepare the required FERC filing to suspend service. If
the deposit amount falls below the required level, it must be replenished;
otherwise, service under the Tariff will be suspended. For a long-term
contract (greater than one year), the minimum length of time that the
deposit will be required is one year plus three and one-half months
following the effective date of the Tariff agreement. The requirement to
continue the deposit may be reviewed by NEPOOL after one year of providing
service. Consideration will be given to replacing the cash deposit with a
corporate guaranty if certain conditions are met, as discussed below in the
Corporate Guaranty section.
LETTER OF CREDIT
An unconditional and irrevocable standby letter of credit may be provided
in lieu of a prepayment or cash deposit for receipt of service under the
Tariff, but is subject to the same conditions as stated above in the
paragraph addressing cash deposits. A single letter of credit may be
established to provide financial assurance for a customer under multiple
tariffs that are in effect.
Depending on the conditions of the transaction, the duration of the letter
of credit may vary. For transactions of relatively short duration (i.e., 3
months or less), a separate renewable letter of credit may be prepared for
each transaction. For transactions of longer duration, the letter of
credit must equal at least three and one-half consecutive months of
anticipated charges for the transaction (for the same reasons stated above
under "Cash Deposit"). In either case, the letter of credit will expire
only when full payment has been received by NEPOOL and NEPOOL has provided
a written release to the financial institution that issued the letter of
credit. Consideration will be given to replacing the letter of credit with
a corporate guaranty if certain conditions are met, as discussed below in
the Corporate Guaranty section.
The form, substance, and provider of the letter of credit must all be
acceptable to NEPOOL. The letter of credit should clearly state the full
names of the "Issuer," "Account Party" and "Beneficiary" (NEPOOL), the
dollar amount available for drawings, and should include a statement
required on the drawing certificate and other terms and conditions that
should apply. It should also specify that funds will be disbursed, in
accordance with the instructions, within one (1) business day after due
presentation of the drawing certificate. The financial institution issuing
the letter of credit must have a minimum of an "A-" by Standard and Poor's
or equivalent long-term debt rating by either Moody's or one other
nationally recognized rating agency. Additionally, adequate documentation
regarding the signature authority of the person signing the letter of
credit.
Please refer to Attachment 1, which provides a generally acceptable sample
Letter of Credit.
USE OF TRANSACTION SETOFFS
Under certain conditions, NEPOOL may be involved in other transactions with
a wheeling customer in which NEPOOL is the buyer. In this event, the
amount of the prepayment, cash deposit or letter of credit required for
financial assurance for the contemplated tariff transactions may be reduced
("setoff") by an amount equal to NEPOOL's unpaid balance or expected
billing under the other transaction. The terms and the amount of the
setoff must be approved by the Tariff Account Administrator. The Tariff
Account Administrator handling the tariff transaction is responsible for
monitoring the status of the setoff and ensuring that an adequate financial
assurance balance is maintained at all times until the transaction is
settle.
CORPORATE GUARANTY
A corporate guaranty as a form of financial assurance may be appropriate
for Non-Participants who are owned by a parent company ("Guarantor"). A
company for which a letter of credit, prepayment or cash deposit was
initially required may have the opportunity to substitute to a corporate
guaranty if the following conditions are met:
1. NEPOOL determines that the Non-Participant has satisfactorily met
its payment obligations for service rendered under the Tariff for
at least one-year;
2. NEPOOL determines that there has been no deterioration of the
financial condition of either the Non-Participant or its
Guarantor, based on audited financial statements; and
3. The form of the corporate guaranty is acceptable to NEPOOL.
Upon NEPOOL's written authorization, the Non-Participant may substitute a
corporate guaranty that is issued by the Guarantor for a cash deposit or
bank letter of credit when it has satisfied the conditions stipulated
above. The corporate guaranty is considered to be a lesser form of
financial assurance than a cash deposit or letter of credit, and therefore
is allowed as an acceptable form of financial assurance only to those
customers which have satisfied their payment obligations to NEPOOL in a
timely manner for at least one year.
The corporate guaranty may only be used if the customer is a direct or
indirect subsidiary of a larger corporate entity that has greater financial
assets, a strong balance sheet and income statement, and an investment
grade long-term debt rating (Standard & Poor's "A-" or better). If the
long term credit rating of the Guarantor is not considered to be at least
investment grade, the corporate guaranty may not be used to replace the
Non-Participant's required prepayment cash, deposit or letter of credit.
The corporate guaranty should clearly state the identities of the
"Guarantor," "Beneficiary," and "Obligor," and the relationship between the
Guarantor and the Non-Participant Obligor. Additionally, it should specify
the term of the guaranty and the conditions under which payment to the
Beneficiary will be made. The corporate guaranty must be signed by an
officer of the Guarantor. Additionally, adequate documentation regarding
the signature authority of the person signing the corporate guaranty must
be provided with the corporate guaranty.
SAMPLE LETTER OF CREDIT
Three Riverway, Suite 1700
Houston, Texas 77056
Tel: (713) 629-8666
Fax: (713) 629-7533 April 6, 1995
Telex: 6868916, 794538, 794505
Swift: ABNAUS4H
IRREVOCABLE STANDBY LETTER OF CREDIT NO.
EXPIRY: 15IAN96 AT OUR COUNTERS
WE DO HEREBY ISSUE AN IRREVOCABLE NON-TRANSFERABLE STANDBY LETTER OF CREDIT
BY ORDER OF AND FOR THE ACCOUNT OF ON BEHALF OF
IN FAVOR OF SERVICE COMPANY ("NUSCO") IN AN AMOUNT
NOT EXCEEDING US$400,000.00 (UNITED STATES DOLLARS FOUR HUNDRED THOUSAND
AND 00/100) AGAINST PRESENTATION TO US OF A DRAWING CERTIFICATE SIGNED BY A
PURPORTED OFFICER OR AUTHORIZED AGENT OF NUSCO AND DATED THE DATE OF
PRESENTATION CONTAINING THE FOLLOWING STATEMENT:
"THE UNDERSIGNED HEREBY CERTIFIES TO ABN AMRO BANK N.V., HOUSTON
AGENCY ("BANK"), WITH REFERENCE TO IRREVOCABLE NON-TRANSFERABLE
STANDBY LETTER OF CREDIT NO. ISSUED BY ABN AMRO BANK N.V.,
HOUSTON AGENCY IN FAVOR OF
THAT HAS FAILED TO PAY
NUSCO IN ACCORDANCE WITH THE TERMS AND PROVISIONS OF THE 1995 POWER
PURCHASE AGREEMENT BETWEEN AND , AND THUS IS
DRAWING UPON THE LETTER OF CREDIT IN AN AMOUNT EQUAL TO $__________"
IF PRESENTATION OF ANY DRAWING CERTIFICATE IS MADE ON A BUSINESS DAY AND
SUCH PRESENTATION IS MADE ON OR BEFORE 10:00 A.M. HOUSTON TIME, THE BANK
SHALL SATISFY SUCH DRAWING REQUEST ON THE SAME BUSINESS DAY. IF THE
DRAWING CERTIFICATE IS RECEIVED AFTER 10:00 A.M. HOUSTON TIME, THE BANK
WILL SATISFY SUCH DRAWING REQUEST ON THE NEXT BUSINESS DAY. FOR THE
PURPOSES OF THIS SECTION, A BUSINESS DAY MEANS A DAY, OTHER THAN A SATURDAY
OR SUNDAY, ON WHICH COMMERCIAL BANKS ARE NOT AUTHORIZED OR REQUIRED TO BE
CLOSED IN NEW YORK, NEW YORK.
DISBURSEMENTS SHALL BE IN ACCORDANCE WITH THE INSTRUCTIONS OF
THE FOLLOWING TERMS AND CONDITIONS APPLY:
THIS LETTER OF CREDIT SHALL EXPIRE AT THE CLOSE OF BUSINESS JANUARY
15, 1996.
THE AMOUNT WHICH MAY BE DRAWN BY YOU UNDER THIS LETTER OF CREDIT SHALL
BE AUTOMATICALLY REDUCED BY THE AMOUNT OF ANY DRAWINGS HEREUNDER. ANY
NUMBER OF PARTIAL DRAWINGS ARE PERMITTED FROM TIME TO TIME HEREUNDER.
ALL COMMISSIONS AND CHARGES WILL BE BORNE BY
THIS LETTER OF CREDIT IS NOT TRANSFERABLE OR ASSIGNABLE.
THIS LETTER OF CREDIT DOES NOT INCORPORATE AND SHALL NOT BE DEEMED
MODIFIED, AMENDED OR AMPLIFIED BY REFERENCE TO ANY DOCUMENT,
INSTRUMENT OR AGREEMENT (A) THAT IS REFERRED TO HEREIN (EXCEPT FOR THE
UCP, AS DEFINED BELOW) OR (B) IN WHICH THIS LETTER OF CREDIT IS
REFERRED TO OR TO WHICH THIS LETTER OF CREDIT RELATES.
THIS LETTER OF CREDIT SHALL BE GOVERNED BY THE UNIFORM CUSTOMS AND
PRACTICE FOR DOCUMENTARY CREDITS, 1993 REVISION, INTERNATIONAL CHAMBER
OF COMMERCE PUBLICATION NO. 500 (THE "UCP"), EXCEPT TO THE EXTENT THAT
TERMS HEREOF ARE INCONSISTENT WITH THE PROVISIONS OF THE UCP,
INCLUDING BUT NOT LIMITED TO ARTICLES 13(b) AND 17 OF THE UCP, IN
WHICH CASE THE TERMS OF THE LETTER OF CREDIT SHALL GOVERN.
THIS LETTER OF CREDIT MAY NOT BE AMENDED, CHANGED OR MODIFIED WITHOUT
THE EXPRESS WRITTEN CONSENT OF NUSCO, AND ABN
AMRO BANK N.V., HOUSTON AGENCY.
WE HEREBY ENGAGE WITH YOU THAT DOCUMENTS DRAWN UNDER AND IN COMPLIANCE WITH
THE TERMS OF THIS LETTER OF CREDIT SHALL BE DULY HONORED UPON PRESENTATION
AS SPECIFIED.
PRESENTATION OF ANY DRAWING CERTIFICATE UNDER THE STANDBY LETTER OF CREDIT
MAY BE SENT TO ABN AMRO BANK BY COURIER, CERTIFIED MAIL, REGISTERED MAIL,
TELEGRAM, TELEX TO THE ADDRESS SET FORTH BELOW, OR SUCH OTHER ADDRESS AS
MAY HEREAFTER BE FURNISHED BY ABN AMRO BANK. OTHER NOTICES CONCERNING THIS
STANDBY LETTER OF CREDIT MAY BE SENT BY FACSIMILE OR SIMILAR COMMUNICATIONS
FACILITY TO ITS RESPECTIVE ADDRESS SET FORTH BELOW. ALL SUCH NOTICES AND
COMMUNICATIONS SHALL BE EFFECTIVE WHEN ACTUALLY RECEIVED BY THE INTENDED
RECIPIENT PARTY.
IF TO THE BENEFICIARY OF THIS LETTER OF CREDIT:
IF TO THE ACCOUNT PARTY:
IF TO ABN AMRO BANK N.V., HOUSTON AGENCY:
ABN AMRO BANK N.V.
THREE RIVERWAY, SUITE 1700
HOUSTON, TEXAS 77056
ATTN: LETTERS OF CREDIT DEPARTMENT
FAX: (713) 629-7533
TELEX: 794538, 794505, OR 6868916
_____________________________ _____________________________
C.A. ISELT S.J. JEBAMONY
TRADE SERVICES MANAGER TRADE SERVICES MANAGER