Memorandum

To:	Standard Contract Working Group	
From:	Andrew S. Katz	Date:	February 8, 2000	
Subject:	Meeting With FERC Staff	

On Tuesday, February 1, 2000, representatives of the EEI-NEM Standard Master Contract Working Group met with the several high level members of the FERC’s Office of Markets, Tariffs and Rates and Office of General Counsel to give an overview and discuss the industry and regulatory implementation of the Master Contract.  (See attachment).  We explained that many companies are evaluating how to implement the Master Contract under FERC’s market-based regulatory requirements.  We also discussed the possible universe of documentation for transactions under the Master Contract would include a market-based tariff, the cover sheet, the general terms and conditions, and the confirmation letter.

The result of these discussions was very positive for our efforts to promote the use of the Master Contract. The staff’s expectation and preference is to avoid the repetitive filing of lengthy terms and conditions for market-based transactions.  The staff would be comfortable if traditional (generation owning) utilities with market-based authority filed a streamlined market-based tariff to implement the Master Contract. The streamlined tariff could coexist with more detailed tariffs already on file.  The staff indicated that the detailed tariffs could later be withdrawn if the transactions under them expire or are transferred by agreement of the parties to the governing terms of a streamlined tariff and Master contract. The staff indicated that they understood that many filings may occur this spring and indicated that they would facilitate and not delay their effectiveness.

In addition to the streamlined tariff, staff would require traditional utilities entering into “short term” transactions of one year or less to submit some form of simple acknowledgement of any counterparties with whom they are conducting transactions  under the Master Contract within 30-days of commencement of service.  This requirement could be met with a simple one page service agreement (i.e. in OATT format) that identifies the counterparties which would be executed and filed with the FERC.  The Drafting Committee is preparing and will distribute a model streamlined tariff and service agreement that can be used by utilities.  Finally, traditional utilities would include particular short term transactions in the quarterly reports submitted to the FERC. 
 
Under current policy, traditional utilities are required to file all documents, for  each “long term” transaction of over one year.  Thus for each long term transaction the utility would file the executed cover sheet, general terms and conditions and the confirmation letter related to the transaction.  The staff assumes that the majority of market-based transactions are short term. They acknowledged that as more long term transactions occur the filing process might be streamlined by submitting the Master’s general terms and conditions only once.  Utilities would also include particular long term transactions in the quarterly reports submitted to the FERC. Marketers would only need to report their transactions under the Master Contract (long and short term) in the quarterly report, just as they are required today.

The staff has given indications that the filing of long-term transactions should not preclude a single timely liquidation and termination under the procedures specified in the Master Contract upon an event of default.  We will follow up on this and report the results of our discussions promptly. 

Agenda
Standard Master Contract
Federal Energy Regulatory Commission
February 1, 2000

Overview of  EEI-NEMA Standard Power Contract

•	Need for Standard Contract
•	Promotes liquidity and reliability by  creating common terms & conditions for electricity trading
•	Provides for netting and comprehensive reciprocal credit protection     
•	Elements of Standard Contract
•	Bilateral contract 
•	Clear delineation of buyer’s and seller’s rights and obligations
•	Effectuates trading of standardized and customized products
•	Assures necessary terms do not vary ( i.e. force majeure, definition of “Into” )
•	Standard Documentation:  tariff; cover sheet & contract ; transaction confirmation 
•	 Parties may supplement to address issues
•	Alternative dispute resolution methods
•	New taxes
•	Other

Discussion of Industry and Regulatory Implementation 
•	Puts all industry participants on an equal contractual footing 
•	Reduces need for filing lengthy service agreements
•	Removes the need for netting agreements
•	Process for accommodating  filing requirements
•	Similar to bilateral contracts included in marketer quarterly reports
•	Implementation of  “short form” market-based tariffs and service agreements for utilities 
•	Dovetail with Service Agreement or use as Service Agreement by Utilities  
•	Treatment of existing service agreements
•	Utilities can file transaction confirmations of more than a year
•	Termination/Liquidation of transactions only for events of default

Industry Representatives
Sam Behrends, Partner, LeBouef, Lamb, Greene & MacRae
Christopher Bernard, General Counsel, Entergy Power Marketing Corp.
Patricia Dondanville, Partner, Schiff Hardin & Waite
Kevin Duffy and F. Mitchell Dutton, Senior Rate Counsel, American Electric Power
Craig Goodman, President, National Energy Marketers Association
Andrew Katz, Senior Attorney, Edison Electric Institute
Allen Mosher, American Public Power Association
David Perlman, Vice-President & General Counsel, Constellation Power Source, Inc.
David Yafee, Partner, Van Ness Feldman