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Enron Mail |
Elizabeth Sager, who is responsible for power trading documentation in North
America and was in large part responsible for drafting the Industrial Master several years ago, is reviewing the proposed form. She will have comments for us by Monday morning, Houston time. Martin Rosell 06/22/99 09:04 AM To: Paul Simons/LON/ECT@ECT, Matthew Landy/LON/ECT@ECT, Tomas Valnek/LON/ECT@ECT cc: Edmund Cooper/LON/ECT@ECT, Scott Sefton/LON/ECT@ECT, Justin Boyd/LON/ECT@ECT, Mark Elliott/LON/ECT@ECT, Mark - ECT Legal Taylor/HOU/ECT@ECT, Thor Lien/OSL/ECT@ECT Subject: Draft Nordic Power Master Agreement Please find attached a copy of the above document, marked to show changes from the draft of S&M, together with a clean copy thereof (please disregard any layout or file format deficiencies). Besides further streamlining and refining of the doc, I've also styled it somewhat differently why it, on the face of the mark-ups, may appear even more amended than is the case. I've chosen to call the doc. 'Nordic Power Master Agreement' and inserted the Norwegian name of the Nordic Power Traders Association ("NPTA") in the header (hopefully, NPTA will be prepared to launch and market the doc. in its own name). I've also prepared a brief Schedule addressing the optionality offered by the document. The document is originally based upon ECT's Industrial Master Agreement. In the Industrial Agreement, terms such as "the Contract", "this Contract", "this Agreement" and "the Agreement" are used interchangeably and not always with great preciseness. In the attached document the terms "this Master Agreement" or "this Agreement" are used consistently (the latter to include all Transactions). These are my remarks to the (principal) changes made, and to some issues that the new doc gives rise to: 1. Transactions. I've introduced some ISDA wordings herein (for example, the "Inconsistency" provisions) and deleted text that I find less appropriate or necessary in the current context. 2. Obligations This is a critical Section since it also refers to products for which there currently are no NPTA documentation ("Options" and "Collars"). When I discussed this with the Nordic trading desk it sounded less thrilled about us expanding the current Nordic bilateral power contracts range, and I have therefore left references to options (other than swaptions and Asian options) within square brackets (including related definitions). (Supposedly, this will be something for the Working Group, Reference Group and the NPTA to determine.) I've expanded the text on SWAPs and included a brief reference to ASIAN (options) and also streamlined the Tax clause. 3. Representation Reps are not particularly common in Nordic law contracts. The "No Reliance" reps appear to be typically American and may not be to everyone's taste. Since parties seldom are prepared to give "Payee" reps I've cut out that part and also taken out the "Payer" reps as something that we should be able to do without. I also feel a bit hesitant towards S&M's proposed "Changes in Representation" and therefore rubbed that one out as well (whilst being at it). 4. Market Disruption Since the underlying reference price (Nord Pool's spot price) is quoted on an hourly basis, some wordings have been included to reflect that. 5. Events of Default I'm mostly concerned about the cross-default clause. Insofar as ECTRIC (and its possible Credit Support Provider) is concerned, we may, in this particular context, lose more than we gain from a cross default provision. Also, the cross default also only appears to apply to "borrowed money" (and "such obligation") and not default under any other "specified transactions". It's worth considering making cross default optional and part of the Schedule instead. 6. Remedies As the enforceability of close-out netting in certain jurisdictions may require the automatic termination of all Transactions, it's necessary to offer the parties the choice of "Automatic Early Termination" in the Schedule. 7. Events of Change I've followed the route of the Nordic 'Amendment Agreement' and pulled together "Events of Change" and "Change in Tax Law" and done my best to streamline this sections since it undoubtedly will raise questions from local players in due course. (The former sections 8 (Credit Support), 9 (Set-off) and 10 (Confidentiality) have been edited out. The former because of the streamlining of the credit provisions (and related definitions) and the two latter since those concern issues that rather should be addressed by the parties bilaterally.) 8. Governing Law and Jurisdiction As previously discussed, this part is something for the parties to agree upon in the Schedule. 9. Documents As above under 8. 10. Miscellaneous I've crossed out the former "Currency Provisions" since it won't be enforceable in certain jurisdictions. (Might be something for the Schedule.) 11. Definitions Some of the credit terms have been stricken out. With reference to my earlier comment with respect to the uncertainty relating to the inclusion into the document of further options instruments, the related terms defined are in between square brackets. Some of the defined terms may need to be further refined to better reflect the products, trading routines and settlement mechanisms in the Nordic Electricity market. Exhibit A The relevant details can be found in the Schedule. ---------------------------------------------------- Please return with any comments you may have before close of business on Thursday (Oslo time). Martin
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