arnold podgorsky wright & talisman pc [email protected] 202.393.1200 february 3, 2011
TRANSCRIPT
REC Service Schedule would be part of the WSPP Agreement, not a separate contract
REC is sold and administered by the specified, applicable certification program
REC can be bundled with energy or unbundled (a tradable REC or T-REC. Bundled would have both Energy Confirm and REC Confirm.
REC can be Firm or Unit Commitment REC can be for all, some, or none of the
Environmental Attributes (the REC Product as stated in the Confirm)
2
Seller’s representation/warranty (“R/W”)that the REC complies with the Applicable Program is subject to a Change in Law. Once Seller’s R/W kicks in, Seller does not warrant against change in Law.
Other reps and warranties, as customary. Remedies: Failure to pay can be a material
breach resulting in liquidation. Failure to deliver (unexcused non-performance) yields damages.
Definitions are in the back Now let’s get specific
3
R-1.1 Provides for bundled and unbundled REC Transactions
R-1.2 Two types RECs: Firm and Unit Commitment. Failures under UC must be allocated proportionately among all UC purchasers from the facility.
4
The WSPP Agreement applies to REC Transactions, but if Agreement provisions conflict with Schedule R provisions, then R prevails.
Following contract documents form a REC Transaction:◦ WSPP Agreement◦ Service Schedule R◦ Confirmations(s):
For unbundled, the written (no oral) REC Transaction Confirmation
For bundled, an energy Confirmation and a written REC Transaction Confirmation
5
Definitions are in Annex 1 to Service Schedule R. We felt that breaking them out helped readability of the document.
6
Confirmation form in Annex 2; any form the parties want will suffice. Modifications of Agreement or Service Schedule R must be stated in the Confirmation.
We probably need a separate name for the REC Transaction Confirmation to differentiate from the energy Confirmation? Probably REC Confirmation and Energy Confirmation (which would be defined to include capacity)
7
Section 28 netting applies, if applicable to the parties.
Agreement 9.1 inapplicable (1 month accounting period)
Agreement 9.2 inapplicable (pay on later of 10 days after invoice receipt or on 20th day of month). Instead, pay on later of 15 Business Days after receipt of invoice or 15 Business Days after Certification Authority certifies delivery. If no certification, then Seller’s attestation suffices.
8
It’s up to you◦ It’s up to you
It’s up to you… Do we want (can we agree) something
more?
9
In addition to Agreement 33.3, Seller R/W:◦ REC Transaction and REC Product comply with
Applicable Program, subject to Change in Law◦ Seller has title to REC Product, etc., free and
clear, and has not committed it elsewhere◦ REC and REC Product conform to the
specifications of Service Schedule R and the Confirmation
◦ Unless otherwise specified, the REC is unbundled (not include the energy from the facility)
◦ Seller has and will maintain Certification from the applicable Certification Authority
10
Throughout the REC Transaction, each Party is an “eligible commercial entity” and “eligible contract participant” under the Commodity Exchange Act 1a(11) and 1a(12)
The parties individually negotiated the terms and conditions of the REC Transaction (this is not a formatted product like a future)
11
Parties elect and allocate Change in Law risk in the Confirmation, except a CiL to which R-9.2 applies (CiLs with nullifying effect)
Parties may elect Seller’s warranty kick-in date as of Effective Date of REC Transaction, Delivery Date, or otherwise.◦ Text of R-9.1 needs tightening
Important: if a Change of Law nullifies the REC, the Purchaser is entitled to a refund proportionate to the term, or the impacted REC Products.
Applicable law is the law of the Applicable Program
12
Parties shall inform each other of certification problems and cooperate in resolving same.
Throughout the REC Transaction, upon request, Party provides records needed for Certification Authority to perform its function of certifying any details; billing disparities shall be corrected, with interest per Agreement 9.3. Purchaser can disclose information to prove regulatory compliance.
R-10.3, inspection right goes up the chain. Resale of RECs permitted
13
Purchaser has right to inspect and audit Seller’s records to assure itself and Certification Authority that Seller’s provision of REC Product complies with the Applicable Program. Five business day notice.
14
Uncontrollable Force is expanded to include failure or disruption in deliveries caused by a Certification Authority, not due to the fault of the asserting party
R-12.2 Unlike Agreement, injunctive relief permitted. Narrow to seller? Other than paying, does Purchaser have any performance obligation, eg, obligation to receive? Seems not, as this is not energy with resulting reliability concerns of overinjection.
15
Damages under Agreement 21.3(a)(1) for any period for which injunction not obtained. Hourly references are dropped.
Failure of Purchaser to pay is Event of Default under Agreement 22.
R-12.4 Damages also include penalties assessed against Purchaser.
R-12.5 Arbitration (?) R-12.6 Added transmission costs of
Agreement 21.3(a)(3) are inapplicable.
16
Annex 1: Definitions Annex 2: REC Transaction Confirmation Exhibit A: Form of Attestation (by renewable
energy facility) California Provisions
17