LLGM Draft
March 20, 2001

Master Power
Purchase & Sale
Agreement

			                        

MASTER POWER PURCHASE AND SALE AGREEMENT
COVER SHEET
This Master Power Purchase and Sale Agreement (Version 2.1; modified 4/25/00) (“Master Agreement”) is made as of the following date: FebruaryMarch 22,[  ], 2001 (“Effective Date”), and amends and restates in its entirety that certain Master Power Purchase and Sale Agreement dated February 22, 2001 between the Parties.  The Master Agreement, together with the exhibits, schedules and any written supplements hereto, the Party A Tariff, if any, the Party B Tariff, if any, any designated collateral, credit support or margin agreement or similar arrangement between the Parties and all Transactions (including any confirmations accepted in accordance with Section 2.3 hereto) shall be referred to as the “Agreement.”  The Parties to this Master Agreement are the following:
Name: Enron Power Marketing, Inc. (“Party A”)	Name:  Department of Water Resources, with respect to the Department of Water Resources Electric Power Fund separate and apart from its powers and responsibilities with respect to the State Water Resources Development System, a division of the State of California.  (“Counterparty” or “Party B”)	
All Notices:	P.O. Box 4428
	Houston, Texas 77210-4428	All Notices:  	
Street:  1400 Smith Street	Street:   3310 El Camino Avenue, Suite 200	
City:   Houston	Zip: 77002	City:   Sacramento, CA 	Zip:  95821	
Attn: Power Contract Administration 
Phone:  (713) 853-1771
Facsimile: (713) 646-2443
Duns: 848921276
Federal Tax ID Number: 76-0413675	Attn:  Jim Olson, Deputy Controller
Phone:  (916) 574-2661
Facsimile:   (916) 574-2785
Duns: 	
Federal Tax ID Number: 		
Invoices:
Enron Power Marketing, Inc.
1400 Smith 
Houston, Texas  77002-7361
Attn: Power Settlements Manager
Phone: (713) 853-3163
Facsimile: (713) 646-4061	Invoices:

Attn: 	
Phone: 	
Facsimile: 		
Scheduling:
Enron Power Marketing, Inc.
1400 Smith 
Houston, Texas  77002-7361
Attn: Manager of Scheduling
Phone: 	(800) 349-5527 (East) 
	(800) 684-1336 (West)
Facsimile: 	(713) 646-8272 (East) 
	(503) 464-3740 (West)	Scheduling:

Attn: 	
Phone: 	
Facsimile: 		
Payments:
Enron Power Marketing, Inc.
1400 Smith 
Houston, Texas  77002-7361
Attn: Power Settlements Manager
Phone: (713) 853-3163
Facsimile: (713) 646-4061	Payments:

Attn: 						
Phone: 						
Facsimile: 						
Wire Transfer:
BNK: 	Bank of America
	for: Enron Power Marketing, Inc.
ABA: 	Routing # 111000012
ACCT: 	#375 046 9312
Confirmation:  	Enron Power Marketing, Inc.

	             		Credit and Collections

	              		(713) 853-5667	Wire Transfer:

BNK: 	
ABA: 	
ACCT: 		
Credit and Collections:
Enron Power Marketing, Inc.
1400 Smith 
Houston, Texas  77002-7361
Attn: Power Settlements Manager
Phone: (713) 853-3163
Facsimile: (713) 646-4061	Credit and Collections:

Attn: 	
Phone: 	
Facsimile: 		
With additional Notices of an Event of Default or Potential Event of Default to:
Enron Power Marketing, Inc.
1400 Smith Street
Houston, Texas  77002-7361
Attn: Assistant General Counsel, Trading Group
Facsimile: (713) 646-4818	With additional Notices of an Event of Default or Potential Event of Default to:

Attn: 	
Phone: 	
Facsimile: 		
The Parties hereby agree that the General Terms and Conditions are incorporated herein, and to the following provisions as provided for in the General Terms and Conditions:
Party A Tariff	Tariff  FERC                     		Dated   12/2/93		Docket Number ER94-24-027
Party B Tariff	Tariff 		Dated 		Docket Number 	
Article Two		
Transaction Terms and Conditions	  Optional provision in Section 2.4.   If not checked, inapplicable.	
Article Four		
Remedies for Failure to Deliver or Receive	■  Accelerated Payment of Damages. If not checked, inapplicable.	
Article Five	  Cross Default for Party A:	
Events of Default; Remedies	  Party A:		Cross Default Amount $			
	   Other Entity:. 	Enron Corp.	Cross Default Amount $			
	  Cross Default for Party B:	
	  Party B:		Cross Default Amount $			
	  Other Entity: 		Cross Default Amount $			
	5.6  Closeout Setoff	
		Option A (Applicable if no other selection is made.)	
		Option B - Affiliates shall have the meaning set forth in the Agreement unless otherwise specified as follows:		
	■	Option C (No Setoff)	
Article 8	8.1  Party A Credit Protection:
(a)  Financial Information:
	Option A

	Option B   Specify:  (To be clarified)

■	Option C   Specify:  Annual audit, annual budget and all financial information sent to any seller under a power purchase agreement; Party B shall use reasonable commercial efforts to periodically prepare and make available to all sellers under power sales agreements, but not more frequently than quarterly, financial information reasonably intended to apprise all such sellers of the financial condition of the Fund, including but not limited to, any reports or submissions made to the CPUC concerning or relating to the establishment of Party B’s revenue requirements and/or the calculation of the rates to be set by the CPUC in respect thereof; provided, however, that for the first nine (9) months after the Effective Date, Party B shall furnish such information at least monthly.
	
Credit and Collateral Requirements		
		
	(b)  Credit Assurances: 
■	Not Applicable

	Applicable	

	(c)  Collateral Threshold:
■	Not Applicable

	Applicable

	If applicable, complete the following:	
	Party B Collateral Threshold: $	
	Party B Independent Amount: $		
	Party B Rounding Amount: 		
	(d)  Downgrade Event: 
■	Not Applicable
■	Applicable
If applicable, complete the following:	

		
	■	Other: Other: It shall be a Downgrade Event for Party B if any bonds or other indebtedness issued by or on behalf of Party B pursuant to Sections 80130 et seq. of the Water Code (the “Bonds”) shall at any time during the Term have a Credit Rating below BBB- according to S&P’s or Baa3 according to Moody’s (such minimum ratings, “Investment Grade”), or, in the event that no such Bonds are issued by or on behalf of Party B, and Party B secures a rating for the Fund from both S&P’s and Moody’s with respect to the ability of the Fund to satisfy Party B’s obligations to pay for all power purchased by it pursuant to Sections 80100 et seq. of the Water Code and all other obligations thereof, substantially equivalent to or better than Investment Grade, such rating falls below Investment Grade.	
	(e)  Guarantor for Party B:  Not Applicable	
	Guarantee Amount: $		
	8.2  Party B Credit Protection:
(a)  Financial Information:
	Option A
■	Option B   Specify: Enron Corp.            
	Option C   Specify: 			

	(b)  Credit Assurances:  
■	Not Applicable
	Applicable	
		
	(c)  Collateral Threshold:
■	Not Applicable
	Applicable	
		
	If applicable, complete the following:	
	Party A Collateral Threshold: 	
	Party A Independent Amount: 	
	Party A Rounding Amount: 	
	(d)  Downgrade Event: 
■	Not Applicable
	Applicable
If applicable, complete the following:	

		
		Other: 
Specify:				
	(e)  Guarantor for Party A:	
	Guarantee Amount: $____________						
Article 10		
Confidentiality	■  Confidentiality Applicable	If not checked, inapplicable.	
Schedule M	  Party A is a Governmental Entity or Public Power System	
	■  Party B is a Governmental Entity or Public Power System	
	  Add Section 3.6.  If not checked, inapplicable	
	  Add Section 8.6.  If not checked, inapplicable
	
Other Changes	Specify, if any: Yes, the following changes shall be applicable:	
(a)  Definitions.

(1)  Section 1.11 is amended by adding the following sentence at the end of the current definition:  “The Non-Defaulting Party shall use commercially reasonable efforts to mitigate or eliminate these Costs.”

(2)	Section 1.51, “Replacement Price” shall be amended on the fifth line by deleting the phrase “at Buyer’s option” and inserting the following phrase: “absent a purchase”.

(3)	Section 1.53, “Sales Price” shall be amended on the fifth line of by deleting the phrase “at Seller’s option” and inserting the following phrase: “absent a sale”.

(4)	Section 1.46 “Potential Event of Default” is deleted.

(5) (4) Sections 1.6, 1.24, 1.28, 1.33, 1.34, 1.35, 1.36, 1.43, 1.44, 1.48 and 1.56 are amended by deleting the text in each of such sections and substituting therefor “[Intentionally omitted.]”

(65) Section 1.59 is amended by changing “Section 5.3” to “Section 5.2.”

(76)  Sections 1.62 through 1.691.71 are added to Article One as follows:
1.62 “CDWR Revenue Order” means CPUC Decision D.01-03-009, or any successor thereto.
1.621.63 “Fund” means the Department of Water Resources Electric Power Fund established by Section 80200 of the Water Code.
1.631.64 “Market Quotation Average Price” shall mean the average of the good faith quotations solicited from not less than three (3) Reference Market-makers; provided, however, that the Party soliciting such quotations shall use commercially reasonable efforts to obtain good faith quotations from at least five (5) Reference Market-makers and, if at least five (5) such quotations are obtained, the Market Quotation Average Price shall be determined disregarding the highest and lowest quotations.
1.64   1.65  “Market Value” shall have the meaning set forth in Section 5.3.
1.66 “Material Regulatory Change” means any amendment, modification, nullification, suspension or other change in or affecting applicable [federal], California state or local law (including any law, rule, regulation, ordinance, order (including the CDWR Revenue Order), interpretation, judgment, decree, directive, policy or similar decision of any [federal], California state or local governmental authority), with or without the consent of Party B, or any determination or action by Party B, the CPUC, a court of competent jurisdiction, voter initiative or any [federal], California state or local governmental authority (including, without limitation, any revenue requirement determination or CPUC rate implementation plan relating thereto as contemplated by the Water Code) that results in (i) a material adverse effect upon the ability of Party B to satisfy its obligations to pay for power supplied or to be supplied to Party B under this Agreement or any other power purchase agreement (including any applicable termination payments thereunder) or (ii) the performance by either Party A or Party B of its obligations under this Agreement becoming illegal or unenforceable.  [Need to discuss impact of federal Material Regulatory Change.] 
1.65   1.67  “Per Unit Market Price” means the applicable price per MWh determined in accordance with Section 5.3.
1.66   1.68  “Reference Market-maker” means any marketer, trader or seller of or dealer in firm energy products whose long-term unsecured senior debt (or the debt of its ultimate parent company) is rated BBB or better by Standard S& PoorP’s and Baa2 or better by Moody’s Investor Servicesor that is generally capable of providing credit support substantially equivalent to the foregoing.
1.67   1.69 “Replacement Contract” means a contract having a remaining delivery term, quantity, delivery rate, delivery point and product substantially similar to the remaining TermDelivery Period, quantity, delivery rate, Delivery Point and Product to be provided under this Agreement.
1.681.70  “2001A Transaction” means the Transaction described in the attached Confirmation dated FebruaryMarch 22,[  ], 2001.
1.691.71  “Trust Estate” means all revenues under any obligation entered into, and rights to receive the same, and moneys on deposit in the Fund and income or revenue derived from the investment thereof.
 (b) Transactions.  The Each Transaction shall be in writing and this agreementAgreement may not be orally amended or modified, including by Recording pursuant to Section 2.5.2.5; provided, however, that the Parties may orally agree from time to time to modify matters relating to the delivery and receipt obligations set forth in a Transaction entered into hereunder, provided that any such oral modification shall be made on a recorded line and shall be promptly confirmed in writing.
(c)  Governing Terms.  Section 2.2 is amended by adding the following sentence at the end of the current section:
“Notwithstanding the foregoing, the 2001A Transaction shall be treated as a stand-alone Transaction, and   accordingly, (a) provisions in the Master Agreement referring to offsetting or netting multiple Transactions shall not be applicable to the 2001A Transaction, and (b) an Event of Default or Potential Event of Default with respect to any Transaction other than the 2001A Transaction shall not affect the 2001A Transaction.  Except for the attached Confirmation dated FebruaryMarch 22,[  ], 2001, no provision of any Confirmation entered into pursuant to Section 2.4 shall affect the 2001A Transaction.”
 (d)   Declaration of an Early Termination Date and Calculation of Termination Payment.     

(1)   The last sentence of Section 5.2 is replaced in its entirety by the following:  “The Non-Defaulting Party shall be entitled to a payment upon termination of this Agreement and all Transactions hereunder as the result of an Event of Default (the “Termination Payment”) which shall be the aggregate of the Market Value and Costs calculated in accordance with Sections 5.3(a), (b) and (c), or the Non-Defaulting Party’s economic loss (including Costs) if Section 5.3(d) shall be applicable, and which shall be paid no later than one hundred and eighty (180) days after receipt of written notice of an Early Termination Date; provided, however, that interest shall accrue at the Interest Rate from and including the effective date of receipt of the notice of the Termination Payment to but excluding the date paid.  Prior to receipt of such notice of termination by the Defaulting Party, the Non-Defaulting Party may exercise any remedies available to it at law or otherwise, including, but not limited to, the right to or seek injunctive relief to prevent irreparable injury to the Non-Defaulting Party.”

(2)  The following shall be added to the end of Section 5.2 (as amended by clause (1) immediately above):  “Notwithstanding the other provisions of this Agreement, if the Non-Defaulting Party has the right to liquidate or terminate all obligations arising under this Agreement under the provisions of this Article 5 because the Defaulting Party either (a) is the subject of a bankruptcy, insolvency, or similar proceeding, or (b) applies for, seeks, consents to, or acquiesces in the appointment of a receiver, custodian, trustee, liquidator, or similar official for all or a substantial portion of its assets, then this Agreement and the Transaction shall automatically terminate, without notice, as if the Early Termination Date was the day immediately preceding the events listed in Section 5.1.”
(3(2)  Section 5.3 is replaced in its entirety by the following:
“5.3.   Termination Payment Calculations.  The Non-Defaulting Party shall calculate the Termination Payment as follows:

(a)	Market Value shall be (i) in the case Party B is the Non-Defaulting Party, the present value of the positive difference, if any, of (A) payments under a Replacement Contract based on the Per Unit Market Price, and (B) payments under this Agreement, or (ii) in the case Party A is the Non-Defaulting Party, the present value of the positive difference, if any, of (A) payments under this Agreement, and (B) payments under a Replacement Contract based on the Per Unit Market Price, in each case using the Present Value Rate as of the time of termination (to take account of the period between the time notice of termination was effective and when such amount would have otherwise been due pursuant to the relevant transaction).  The “Present Value Rate” shall mean the sum of 0.50% plus the yield reported on page “USD” of the Bloomberg Financial Markets Services Screen (or, if not available, any other nationally recognized trading screen reporting on-line intraday trading in United States government securities) at 11:00 a.m. (New York City, New York time) for the United States government securities having a maturity that matches the average remaining term of this Agreement. It is expressly agreed that the Non-Defaulting Party shall not be required to enter into a Replacement Contract in order to determine the Termination Payment.
(b)	To ascertain the Per Unit Market Price of a Replacement Contract with a remaining delivery term of less than one year, the Non-Defaulting Party may consider, among other valuations, quotations from leading dealers in energy contracts, the settlement prices on established, actively traded power exchanges, other bona fide third party offers and other commercially reasonable market information.   
(c)	To ascertain the Per Unit Market Price of a Replacement Contract with a remaining delivery term of one year or more, the Non-Defaulting Party shall use the Market Quotation Average Price; provided, however, that if there is an actively traded market for such Replacement Contract or if, despite using commercially reasonable efforts to do so, the Non-Defaulting Party is unable to obtain reliable quotations from at least three (3) Reference Market-makers, the Non-Defaulting Party shall usecalculate the Termination Payment using the methodology set forth in paragraph (b).d) below.
(d)	Notwithstanding Sections 5.3(a), (b) and (c) above, in the event that the Non-Defaulting Party is unable to determine the Per Unit Market Price using the methodologies described in (b) and (c) above, the Termination Payment shall be an amount equal to the present value of the economic loss to the Non-Defaulting Party, if any (including Costs), resulting from the termination of this Agreement and all Transactions hereunder, determined by the Non-Defaulting Party in a commercially reasonable manner.  
(e)	(d)	In no event, however, shall a partyParty’s Market Value or Costs include any penalties, ratcheted demand charges or similar charges imposed by the Non-Defaulting Party.
As soon as practicable after notice of an Early Termination Date has been delivered, and in no event later than 15 Business Days thereafter, the Non-Defaulting Party shall notify the Defaulting Party of the amount of the Termination Payment, including a written statement explaining in reasonable detail the calculation of such amount.  If the Defaulting Party disagrees with the calculation of the Termination Payment and the partiesParties cannot otherwise resolve their differences, the Defaulting Party shall pay the full amount of the Termination Payment calculated by the Non-Defaulting Party no later than one hundred and eighty (180) days after receipt of written notice of an Early Termination Date, and the dispute shall be resolved pursuant to arbitration in accordance with Section 10.13 hereof.”

(43)  Sections 5.4, 5.5, 5.6, 6.7 and 6.8 are amended by deleting the text in each of such sections and substituting therefor “[Intentionally omitted.]”
(4)  Section 5.7 is amended by deleting the phrase “ten (10) NERC Business Days” and replacing it with the phrase “sixty (60) NERC Business Days”.
(5)  A new Section 5.8 is added as follows:  
	“5.8 Party A Termination Right upon a Material Regulatory Change.  Notwithstanding any other provision of this Agreement or any Transaction to the contrary, in the event that a Material Regulatory Change shall have occurred and be continuing, Party A shall have the right, but not the obligation, exercisable upon not less than 10 days prior notice to Party B, to terminate this Agreement and all Transactions hereunder.  In the event of any such termination, the provisions of Article 5 shall govern with respect to, among other things, the designation of an Early Termination Date, the calculation and payment of a Termination Payment, if any, triggered by such termination, the furnishing of any related notices and conduct of any related disputes and the exercise of rights with respect to amounts due and owing hereunder, with the same effect, for purposes of the aforesaid provisions only, as if a Material Regulatory Change constituted an Event of Default on the part of Party B.  Party B expressly acknowledges that this provision is an essential part of the consideration to Party A for entering into this Agreement and any Transactions hereunder and that without this provision Party A would not have entered into this Agreement or any Transaction hereunder.
(e)  Party A Credit Protection.  Section 8.1(d) is replaced in its entirety by the following:
	“(d)	Downgrade Event.  Notwithstanding any other any other provision of this Agreement or any Transaction to the contrary, in the event that a Downgrade Event shall have occurred and be continuing with respect to Party B, Party A shall have the right, but not the obligation, exercisable upon not less than 10 days prior notice to Party B, to terminate this Agreement and all Transactions hereunder; provided, however, that Party A shall not be entitled to a Termination Payment in the event that this Agreement is so terminated unless an Event of Default with respect to Party B separately entitles Party A to terminate this Agreement and to receive a Termination Payment.  In addition, in the event that a Downgrade Event shall have occurred and be continuing, then, notwithstanding the provisions of Sections 6.1 and 6.2, for so long as such Downgrade Event continues Party B shall be obligated to pay Party A on a rolling seven-day cycle, commencing on the seventh day following such Downgrade Event.”
 (e)   Term of Master Agreement(f)  Governmental Charges.  Add the following sentence to Section 10.1: “The 2001A Transaction shall terminate on the day following the last day of the Delivery Period, unless terminated sooner pursuant to the express provisions of this Agreement or as a result of an Event of Default”.after the first two sentences of Section 9.2:  “Notwithstanding the foregoing, Party B shall be responsible for and shall pay, or shall promptly reimburse Party A for if Party A has paid, any tax or other imposition enacted by any California state or local governmental authority after the Effective Date that is not of general applicability and is instead directed at or applicable to the generation, sale, purchase, ownership and/or transmission of electric power, natural gas and/or other utility or energy goods and services.”
 (fg)  Representations and Warranties.   Party B shall not be deemed to make the representations set forth in clauses (ix) and (xi) of  Section 10.2. 
(gh)   Indemnity.  The phrase “To the extent permitted by law” is added at the beginning of the first two sentences of Section 10.4.
 (hi)   Assignment. 

(1) In Section 10.5, the phrase “either Party may, without the consent of the other Party (and without relieving itself from liability hereunder)” shall be replaced with “Party A (or, with respect to clause (i) or (iv), Party B) may, without the consent of the other Party” and add the following clause (iv) in the first proviso in Section 10.5: “or (iv) transfer and assign all of its right, title and interest to this Agreement and the Fund to another California governmental entity created or designated by law to carry out the rights, powers, duties and obligations of theParty DepartmentB under the Act, provided that no such transfer or assignment pursuant to this (iv) shall be permitted unless the CDWR Revenue Order and all related revenue and financing orders, or substantially equivalent substitutes therefor, remain or shall be in full force and effect, are made applicable to the proposed California governmental entity assignee and such proposed assignee's creditworthiness is equal to or higher than that of Party B;” 
(2)  Add the following proviso to the end of Section 10.5: “;provided, further, however, that in the event this Agreement is pledged or assigned to a bond trustee pursuant to clause (i) as collateral for bonds issued by Party B, such bond trusteepledgee or assignee shall not be required to agree in writing to be bound by the terms and conditions hereof.”
(ij)   Governing Law. In Section 10.6, “New York” shall be replaced with “California.”
(j)   Confidentiality.  The following proviso is added to the end of the first sentence in Section 10.11: “provided, further, that either Party may publicly disclose the type and quantity of Product(s), the pricing of such Product(s) and the term of the Agreement or any Transaction.”
(k)  General.  The phrase “Except to the extent herein provided for,” shall be deleted from the fourth sentence of Section 10.8, and the phrase “and this agreement may not be orally amended or modified, including by Recording pursuant to Section 2.5” shall be added to the end of such fourth sentence.
(l)(k)   Additional Provisions.  New Section 10.12 isSections 10.12, 10.13 and 10.14 are added to Article 10Ten as follows:	
	“10.12.	No Retail Services; No Agency.  (a) Nothing contained in this Agreement shall grant any rights to or obligate Party A to provide any services hereunder directly to or for retail customers of any person.
	(b) In performing their respective obligations hereunder, neither Party is acting, or is authorized to act, as agent of the other Party.”

	10.13.  Arbitration.  Any claim, counterclaim, demand, cause of action, dispute or controversy arising out of or relating to this Agreement or the relationship established by this Agreement, any provision hereof, the alleged breach thereof, or in any way relating to the subject matter of this Agreement, involving the Parties and/or their respective representatives, at law or in equity, under state or federal law, whether provided by statute or the common law, for damages or any other relief, (for purposes of this Section 10.13 only, collectively “Claims”), other than Claims that sound in tort or are of an extra-contractual nature, shall be resolved by binding arbitration.  Arbitration shall be conducted in accordance with the rules of arbitration of the Federal Arbitration Act and, to the extent an issue is not addressed by the federal law on arbitration, by the Commercial Arbitration Rules of the American Arbitration Association.  The validity, construction, and interpretation of this agreement to arbitrate, and all procedural aspects of the arbitration conducted pursuant hereto shall be decided by the arbitrators.  In deciding the substance of the Parties’ Claims, the arbitrators shall refer to the governing law.  It is agreed that the arbitrators shall have no authority to award treble, exemplary or punitive damages of any type under any circumstances, whether or not such damages may be available under state or federal law, or under the Federal Arbitration Act, or under the Commercial Arbitration Rules of the American Arbitration Association, the Parties hereby waiving their right, if any, to recover any such damages.  The arbitration proceeding shall be conducted in [New York, New York].  Within thirty (30) days of the notice of initiation of the arbitration procedure, each Party shall select one arbitrator.  The two (2) arbitrators shall promptly select a third arbitrator.  Each arbitrator shall be a person who has over eight years professional experience in electrical energy-related transactions and who has not previously been employed by either Party and does not have a direct or indirect interest in either Party or the subject matter of the arbitration.  Each arbitrator shall be neutral.  To the fullest extent permitted by law, any arbitration proceeding and the arbitrators’ award shall be maintained in confidence by the Parties.  The arbitrators’ award may be confirmed in, and judgment upon the award entered by, any federal or state court having jurisdiction over the Parties.

	10.14.  Certain Covenants.  

		(a)	Party B covenants and agrees to establish revenue requirements sufficient to permit it to recover amounts necessary to satisfy its payment obligations, including its obligations under (A) this Agreement (including any Termination Payment), (B) other agreements for power purchased by Party B pursuant to the Water Code (including any termination payments thereunder) and (C) the Bonds.  Party B shall furnish such revenue requirements to the CPUC no less frequently than annually, and more frequently as may be required, so that the CPUC can establish rates sufficient to permit the full and timely recovery by Party B of such revenue requirements, including (except to the extent limited by Section 80110 of the Water Code in the case of certain residential customers, as provided therein) setting rates for customers that may if needed exceed the applicable tariff rates for customers (including any surcharges) in effect as of the Effective Date.

		(b)	In the event that the Bonds are not issued by or on behalf of Party B, Party B covenants and agrees to use reasonable commercial efforts to secure a rating for the Fund from both S&P’s and Moody’s with respect to the ability of the Fund to satisfy Party B’s obligations to pay for all power purchased by it pursuant to Sections 80100 et seq. of the Water Code and all other obligations thereof, substantially equivalent to or better than Investment Grade. 

		(c)	Party B covenants and agrees that, as regards Party A and other suppliers of electricity to Party B, Party B shall not discriminate (based upon price, other contractual terms and conditions or otherwise) against Party A with respect to the performance and administration by it of this Agreement.

(m(l) Schedule M. Schedule M shall be amended as follows:

(1)	In Section A, “Act” will mean Sections 80000, 80002, 80002.5, 80003, 80004, 80010, 80012, 80014, 80016, 80100, 80102, 80104, 80106, 80108, 80110, 80112, 80114, 80116, 80120, 80122, 80130, 80132, 80134, 80200, 80250, 80260 and 80270 of the Water Code.

	(2)   “Special Fund” will mean the Fund.

(3)  In Section A, the defined term “Governmental Entity or Public Power System” shall be replaced with the term “Governmental Entity” using the following definition “‘Governmental Entity’ means the State of California Department of Water Resources separate and apart from its powers and responsibilities with respect to the State Water Resources Development System”; and all references to (A) “Governmental Entity or Public Power System” (and cognates) and (B) “Public Power System” (and cognates) in Schedule M shall be replaced with the new defined term “Governmental Entity” (using the applicable cognate).

(4)  In Section C, the following subclauses are added to the end of Section C:  “(viii) CDWR is entitled to recover, as a revenue requirement, amounts necessary to satisfy its payment obligations under (A) this Agreement, including any Termination Payment,  (B) other agreements for power purchased by CDWR pursuant to Section 80100 et seq. of the Water Code and (C) the Bonds; and (ix) provided that CDWR satisfies its obligations to furnish its revenue requirements to the CPUC from time to time, the CPUC is required under the CDWR Revenue Order to approve and impose, either as part of the California Procurement Adjustment or as additional rates, rates sufficient to recover CDWR’s revenue requirements on a timely basis.”
(4(5)  In Section D, delete Section 3.5 and replace it with the following:
3.5  No Immunity Claim.  California law authorizes suits based on contract against the State or its agencies, and Party B agrees that it will not assert any immunity it may have as a state agency against such lawsuits filed in state court.

(56)   In Section G, specify that the laws of the State of California will apply.

(67)  Add a new Section H, which shall read as follows:

“3.7. Payments Under Agreement an Operating Expense. Payments under this Agreement shall constitute an operating expense of the Fund payable prior to all bondbonds, notes or other indebtedness secured by a pledge or assignment of the Trust Estate or payments to the general fund, including any Bonds.”
(78)  Add a new Section I, which shall read as follows:
“3.8. Rate Covenant; No Impairment.  In accordance with Section 80134 of the Water Code, Party B covenants that it will, at least annually, and more frequently as required, establish and revise revenue requirements sufficient, together with any moneys on deposit in the Fund, to provide for the timely payment of all obligations which it has incurred, including any payments required to be made by Party B pursuant to this Agreement. AsIn addition to any rights and protections afforded Party A in the event of a Material Regulatory Change, Party B represents and warrants, as provided in Section 80200 of the Water Code, that while any obligations of Party B pursuant this Agreement remain outstanding and not fully performed or discharged, the rights, powers, duties and existence of Party B and the Public Utilities CommissionCPUC shall not be diminished or impaired in any manner that will affect adversely the interests and rights of theParty SellerA under this Agreement.”

(89)  Add a new Section J, which shall read as follows:

“3.9.  No More Favorable Terms. Party B shall not provide in any power purchase agreement payable from the Trust Estate for (i) collateral or other security or credit support with respect thereto, (ii) a pledge or assignment of the Trust Estate for the payment thereof, or (iii) payment priority with respect thereto superior to that of Party A, without in each case offering such arrangements to Party A.”
(910)  Add a new Section K, which shall read as follows:
“3.10.   Sources of Payment; No Debt of State.  Party B’s obligation to make payments hereunder shall be limited solely to the Fund.  Any liability of Party B arising in connection with this Agreement or any claim based thereon or with respect thereto, including, but not limited to, any Termination Payment arising as the result of any breach or Potential Event of Default or Event of Default under this Agreement, and any other payment obligation or liability of or judgment against Party B hereunder, shall be satisfied solely from the Fund. NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF CALIFORNIA ARE OR MAY BE PLEDGED FOR ANY PAYMENT UNDER THIS AGREEMENT. Revenues and assets of the State Water Resources Development System shall not be liable for or available to make any payments or satisfy any obligation arising under this Agreement.”

(1011)  Add a new Section L, which shall read as follows:

“3.11. Application of Government Code and the Public Contracts Code. Party A has stated that, because of the administrative burden and delays associated with such requirements, it would not enter into this Agreement if the provisions of the Government Code and the Public Contracts Code applicable to state contracts, including, but not limited to, advertising and competitive bidding requirements and prompt payment requirements would apply to or be required to be incorporated in this Agreement.  Accordingly, pursuant to Section 80014(b) of the Water Code, Party B has determined that it would be detrimental to accomplishing the purposes of Division 27 (commencing with Section 80000) of the Water Code to make such provisions applicable to this Agreement and that such provisions and requirements are therefore not applicable to or incorporated in this Agreement.”

IN WITNESS WHEREOF, the Parties have caused this Master Agreement to be duly executed as of the date first above written.

Party A – Enron Power Marketing, Inc.

By:  	
Name:  	
Title:  	

Party B – Department of Water Resources, with respect to 		the department of water resources electric power fundBy:  			 separate and apart from its powers and responsibilitiesName:  			 with respect to the state water resources development Title:  	system, a division of the State of California

By: 	
Name: 	By:
Title: 	
		Name: 	
		Title: 	

DISCLAIMER:  This Master Power Purchase and Sale Agreement was prepared by a committee of representatives of Edison Electric Institute (“EEI”) and National Energy Marketers Association (“NEM”) member companies to facilitate orderly trading in and development of wholesale power markets.  Neither EEI nor NEM nor any member company nor any of their agents, representatives or attorneys shall be responsible for its use, or any damages resulting therefrom.  By providing this Agreement EEI and NEM do not offer legal advice and all users are urged to consult their own legal counsel to ensure that their commercial objectives will be achieved and their legal interests are adequately protected.

Document comparison done by DeltaView on Tuesday, March 20, 2001 10:36:45
Input:	
Document 1	pcdocs://NYC/371355/1 	
Document 2	pcdocs://NYC/371355/5 	
Rendering set	MD standard	

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Statistics:	
	Count	% of content	
Insertions	109	36.92%	
Deletions	84	6.20%	
Moves	0	0.00%	
Matched	96	56.88%	
Format changed	0	0.00%