Fwd: Independent Amount

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---------------------- Forwarded by Elizabeth Sager/HOU/ECT on 03/02/2000
02:20 PM ---------------------------

"Andy Katz" <AKatz@eei.org< on 03/02/2000 09:03:29 AM
To: Elizabeth Sager/HOU/ECT@ECT
cc:
Subject: Fwd: Independent Amount

As per our discussion. Patty is expecting us to conference when fax
arrives. Also, would it possible for you to mark up and FAX back the
attached power point slides on the into product to reflect changes to
definition. Thanks.

Andrew S. Katz, Director Industry Legal Affairs
Edison Electric Institute
701 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
Voice: 202-508-5616
Fax: 202-508-5673
e-mail: akatz@eei.org

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To: "Andy Katz" <AKatz@eei.org<, "William F Henze"
<William_F_Henze@jonesday.com<
cc: drusso@reliantenergy.com
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Date: Wed, 1 Mar 2000 17:51:53 -0600
Subject: Independent Amount
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Andy / Fritz:
*Please forward this e-mail to Patty Dondanville as I did not have her e-mail
address* THANKS!

DeDe and I spoke this afternoon regarding the "Independent Amount" term in the
EEI Agreement.

Just to provide some feedback from a "users" perspective, the "Independent
Amount" concept was something that Elizabeth Sager suggested we use as a proxy
for bilateral margining which I introduced at the Sept. EEI meeting in D.C.
This term was literally "borrowed" from the ISDA Agreement.

The definition used in the ISDA Credit Support Annex is as follows:
"Independent Amount" means, with respect to a party, the amount specified as
such for that party in Paragraph 13; if no amount is specified, zero.
(The ISDA Paragraph 13 is synonymous with the EEI Cover Sheet)

There isn't a "definition" per se. The term comes into play in 8.3 as it is
added to the Termination Payment and compared to the Collateral Threshold. To
put it in another way, it acts as "buffer" Termination Payment to handle
additional potential credit exposure created by transactions valued against
extremely volatile price indices.

Please call me in Houston should you have additional questions (713) 207-1211.

Thanks,
Randy

- intoproduct2.ppt
- examples.ppt