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What are the damages if the Seller fails to meet the minimum REC delivery requirements by the specified delivery dates?
If the Seller fails to meet the minimum REC delivery requirements by the specified dates, ComEd has the right to terminate the contract. If ComEd does not exercise this right, the collateral requirement will increase from 10% of the value undelivered RECs to 30%, 60% or 90%. The amount of the increase will depend upon how many times the Seller has failed to deliver the required REC amounts on time. If the REC Master Agreement is terminated for failure to deliver on time, Section 5.2, reproduced below, details the consequences.
“5.2 Declaration of Early Termination Date and Calculation of Settlement Amounts. If an Event of Default with respect to a Defaulting Party occurs and is continuing, the other Party (the “Non-Defaulting Party”) will have the right (i) to designate a day, no earlier than the day such notice is effective and no later than 20 days after such notice is effective, as an early termination date (“Early Termination Date”) to accelerate all amounts owing between the Parties and to liquidate and terminate all, but not less than all, Transactions (each referred to as a “Terminated Transaction”) between the Parties, (ii) withhold any payments due to the Defaulting Party under this Agreement and (iii) suspend performance. The Non-Defaulting Party will calculate, in a commercially reasonable manner, a Settlement Amount for each such Terminated Transaction as of the Early Termination Date (or, to the extent that in the reasonable opinion of the Non-Defaulting Party certain of such Terminated Transactions are commercially impracticable to liquidate and terminate or may not be liquidated and terminated under applicable law on the Early Termination Date, as soon thereafter as is reasonably practicable).”
Essentially the Settlement Amount is the damages. Please also refer to Section 5.5, which allows the non-defaulting Party to pursue any remedy available to it in law or equity, and to Section 5.7, which provides for limits on liability.
Could you please provide information needed for Paragraph 7 of the Pre-Bid Letter of Credit?
The information is available from the Procurement Administrator upon request.
Is there a minimum amount for the guaranty?
There is no minimum amount for the guaranty per se under the terms of the STP Master Agreement. However, from a practical standpoint, a guaranty of an amount less than $100,000, which is the Minimum Transfer Amount, would mean that the Supplier would be required to post cash or to provide a Letter of Credit following any demand by ComEd for Performance Assurance under the STP Master Agreement.
We currently have outstanding guaranties with ComEd from winning in previous RFPs. What is the process to cancel these previous guaranties?
The guaranties for each contract will not be cancelled. Each guaranty references a specific Master Agreement and specific Transactions under the Master Agreement. The amount of each guaranty for a specific Master Agreement is to satisfy the Collateral Requirement for the specific Transactions under the Master Agreement. There is no provision within the terms of the Master Agreement for the Collateral Requirements under different Master Agreements to be consolidated. Please note that unsecured credit granted to the Guarantor may not exceed the Maximum Collateral Threshold Amount across all Supply Contracts. Thus, while separate guaranties are used to satisfy the Collateral Requirements under different Master Agreements, there is a common limit on the unsecured credit granted, which is the Maximum Collateral Threshold Amount.
Why are the Supplier Fees for the STP RFP much higher this year compared to previous years?
The fact that the energy volumes are much smaller this year accounts for the difference in the Supplier Fees.
If we have a Master Agreement in place from a prior procurement, can we operate under our old Master Agreement or will we be required to execute a new Master Agreement?
The structure of the Master Agreement requires that a Bidder execute a new Master Agreement for each procurement.
In the REC RFP, must all RECs be offered at a single price?
No. At the extreme, a Bidder may specify a different price for each REC, subject to the price being rounded to the second decimal. Practically, the Bidder may specify a Bid (a price per REC) as well as the quantity of RECs to which the Bid applies.
Our bank would like to use Option 2 of Schedule 1A to the Collateral Annex (Post-Bid Letter of Credit) in conjunction with Option 1 for Exhibit A of Schedule 1A to the Collateral Annex (Letter of Full Transfer). Is this acceptable?
The options provided for the Post-Bid Letters of Credit and the options provided for the Letter of Full Transfer are independent. A Supplier may use option 2 of the Post-Bid Letter of Credit with either option 1 or option 2 of the Letter of Full Transfer. Similarly, a Supplier may use option 1 of the Post-Bid Letter of Credit with either option 1 or option 2 of the Letter of Full Transfer.
Do ERCOT Green-e RECs qualify for this RFP? Must RECs be from resources located in Illinois or in the Midwest?
Participation in PJM-EIS GATS, M-RETS, or NARR is a requirement of the RFP and all RECs to be delivered to ComEd under the terms of the REC Master Agreement must be through PJM-EIS GATS, M-RETS, or NARR. Please see Section 2.5 of the REC Master Agreement, which states: “The Seller shall Deliver PJM EIS GATS, NARR and/or M-RETS RECs...”
While RECs must be transferred through PJM-EIS GATS, M-RETS, or NARR, the REC RFP does not require RECs to be from resources located in Illinois or in the Midwest. Specifically, a Product in this RFP is defined by two (2) characteristics: (i) the resource type; and (ii) the location. The location corresponds to whether a REC is produced by either: a renewable energy resource located within Illinois or within a state adjoining Illinois; or: by a renewable energy resource located in another state. Adjoining States to Illinois are Wisconsin, Iowa, Missouri, Kentucky, Indiana and Michigan. Other States are states other than Illinois, Wisconsin, Iowa, Missouri, Kentucky, Indiana, and Michigan. Priority in REC selection is given first to cost effectiveness, second to resource type, then last to resource location. Preference is given to resources in Illinois and adjoining states over resources located in other states.
Have you released a final Budget for the REC procurement yet?
No. We have stated that the cost of procuring the RECs will not exceed a Budget of $17,113,858 on a preliminary basis. The Budget is based upon the rate impact threshold of the Act from which is subtracted the cost of purchases that ComEd will make through contracts from the 2010 long-term RFP over the compliance period. A final Budget will be announced no later than the Part 1 Notification, which will include the purchase price of procuring the RECs and may include other costs incurred in the procurement of these RECs.