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					SUBMITTER 9

                                                               Confirmation
           Item                        Issue                     Recommendation               Referenced Document         Appendix K
                                                                                                      Changes
Definition of Notional      Definition should reference     Insert “actual metered”         Confirmation                  Compliant
Quantity does not           the data which supports the     before “net output”             p.1, Notional Quantity
reference measurable        values derived
production data
Floating Price at ComEd     The basis differential          Allow Sellers whose             Confirmation                  Compliant
Zone                        between Seller’s                resource is physically within   p.2, Floating Price
                            interconnection point and       the ComEd Zone to set the
                            the ComEd Zone is volatile      Floating Price equal to the
                            and cannot be hedged.           Real-Time LMP at Seller’s
                            Sellers will be forced to       point of interconnection
                            include a risk premium,
                            inflating the Fixed Price.
                            This is unnecessary in the
                            case where the Seller’s
                            interconnection point is
                            within the ComEd Zone.
Settlement Calculation      PJM often will retroactively    Insert language to the          Confirmation                  Compliant
contains no provision for   revise settlement prices.       calculation of Floating Price   p.2, Settlement Calculation
later revision of hourly    Settlement Calculation          to address the situation in
settlement prices by PJM    language under the swap         which PJM revises past
                            should contain language to      settlement LMPs.
                            address this eventuality.
IPA verification of         It is unnecessarily             Delete first reference to IPA   Confirmation                  Compliant
Settlement Calculations     burdensome to require that      verification in Settlement      p.2, Settlement Calculation
                            the IPA verify settlement       Calculation.
                            calculations that have
                            already been verified by
                            Buyer. However, it is
                            reasonable to submit such
                            data to the IPA for review at
                            their discretion.
                          [SUBMITTER 9] Comments and Explanation of Recommended Changes
 ComEd Long-Term Renewable Procurement ISDA Master Agreement, Confirmation, Schedule, Credit Annex and Related Documents

Performance Guarantee at     A large body of statistical     “Annual Contract Quantity”         Confirmation                 Compliant
90% of Annual Contract       and operational evidence        should be defined as the           p.5-6, Part B, Performance
Quantity in any given        from many years now exists      actual amount of production        Guarantee
delivery year for energy     demonstrating the potential     from the facility, provided
and RECs from a wind         annual variability of output    the actual amount is greater
facility.                    from wind facilities due        the 75% and less than 100%
                             solely to meteorological        of the forecast P50
                             variability.                    production amount specified
                                                             by a qualified wind analysis
                                                             report.
Buyer will not pay Seller    By guaranteeing to make up      Buyer should pay Seller the        Confirmation:                Compliant
for replacement RECs, and    any REC or energy               difference between the Fixed       p.6, 4(a), Short-Fall –
will not pay Seller the      production shortfall, Seller    Price for energy and the           Energy
difference between the       is assuring Buyer of receipt    Floating Price for energy, if
Fixed Price for energy and   of the expected RECs and        positive, and Seller should
the Floating Price for       energy. Buyer should pay        pay Buyer the absolute value
energy, if positive, for     for all expected RECs and       of this difference, if negative,
replacement Energy.          energy, whether delivered       for all replacement energy
                             monthly, or as a make-up        produced. Since this
                             due to low wind speeds          payment compensates Seller
                             during the preceding year.      for delivery of both energy
                             If Seller cannot receive        and RECs together, Buyer
                             payment for all expected        does not have to separately
                             RECs and energy delivered,      pay Seller for the associated
                             construction and term           replacement RECs delivered.
                             financing may not be
                             available for the project, or
                             will be priced and limited to
                             a degree that substantially
                             increases the Fixed Price.
Lack of offset between       Inequitable exposure netting    Redefine Exposure as:              Confirmation:                Compliant
exposure of Buyer under      impairs project’s ability to    the net of REC Exposure            p.6, Credit Support
Energy Swap and REC          secure term financing, and      Amount, either Party’s             Obligations, C
delivery, and exposure of    inflates the Fixed Price        Accounts Receivable and
Seller under Energy Swap,    without actually improving      Energy Exposure Amount,
REC delivery and Buyer’s     Buyer’s loss exposure           allowing ECR to be negative
                          [SUBMITTER 9] Comments and Explanation of Recommended Changes
 ComEd Long-Term Renewable Procurement ISDA Master Agreement, Confirmation, Schedule, Credit Annex and Related Documents

cash settlement delay       profile.                      for the purposes of the
rights.                                                   Exposure calculation.
No cap on Seller’s Credit   Open-ended collateral         Replace open-ended              Confirmation:                    Compliant
Support Obligation.         liability prevents Seller     collateral liability with       p.6, Credit Support
                            from obtaining construction   standard approach used by       Obligations, C
                            or term finance. Without      banks providing financial
                            debt finance, new projects    energy swaps to wind            also see -
                            are uneconomic at any         facilities: maximum $25         Schedule 2 to the Credit
                            reasonable Fixed Price        million collateral amount       Support Annex:
                            level.                        combined with Buyer             p.1, Definition of ECR
                                                          holding a second lien (behind
                                                          only lenders’ first lien) on
                                                          facility assets.




                                          Paragraph 13 of the Credit Support Annex
           Item                        Issue                   Recommendation               Referenced Document           Appendix K
                                                                                                     Changes
Lack of investment-grade    Requiring well-rated          Add investment-grade            Paragraph 13 to the Credit       Compliant
Corporate Guarantee as      project owners to post cash   Corporate Guarantee as          Support Annex to the
Other Eligible Support.     or Letters of Credit adds     Eligible Support, insert        Master Agreement:
                            unnecessary expense and       “Schedule 3” as form of         p.2, (b)(iii), Other Eligible
                            inflates the Fixed Price      guarantee                       Support
                            without improving Buyer’s                                     p.5,(j)(i), Value
                            loss exposure profile.                                        p.6, (n), Secured Party
                                                                                          Rights and Remedies
                                                                                          p.8, (o) Additional
                                                                                          Definitions
                                                                                          p.9, (p) Other Provisions


                                               Schedule 2 to the Credit Support Annex
          Item                         Issue                   Recommendation               Referenced Document           Appendix K
                                                                                                  Changes
                          [SUBMITTER 9] Comments and Explanation of Recommended Changes
 ComEd Long-Term Renewable Procurement ISDA Master Agreement, Confirmation, Schedule, Credit Annex and Related Documents

ECR, as defined, cannot   The transaction sets a single    ECR, must be allowed to         Schedule 2 to the Credit   Compliant
fall below zero           Fixed Price for both energy      assume negative values, and     Support Annex:
                          and RECs, and their              in so doing, offset the         p.1, Definition of ECR
                          delivery is part of an           contribution of the REC
                          economic whole. The              credit requirement to Buyer’s
                          Buyer’s exposures to non-        Exposure
                          delivery of energy or RECs
                          are physically linked by the
                          requirement that all RECs
                          created by virtue of energy
                          production from Seller’s
                          facility must be delivered as
                          part of the transaction. It is
                          appropriate to separately
                          calculate the value
                          contributed by energy and
                          by RECs to Buyer’s
                          Exposure under the
                          transaction. However, it is
                          inappropriate to separately
                          fund the exposure values
                          when posting collateral, as
                          there is no scenario in
                          which Buyer’s actual
                          Exposure is driven by one
                          value element and not the
                          other. The two value
                          elements are inextricably
                          linked by theory,
                          operational reality and the
                          termination provisions of
                          the documents.

                          Requiring separate funding
                          of Energy and REC credit
                          requirements is inequitable,
                         [SUBMITTER 9] Comments and Explanation of Recommended Changes
ComEd Long-Term Renewable Procurement ISDA Master Agreement, Confirmation, Schedule, Credit Annex and Related Documents

                      and inflates the Fixed Price
                      without improving Buyer’s
                      loss exposure profile.

				
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posted:8/22/2011
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