Wspp Agreement Members

If a party has a reasonable basis for challenging the solvency or capacity of the other party, that party may require the other party to provide a letter of credit, advance cash payment, guarantee or guarantee, guarantee agreement or any other mutually appropriate method of ensuring performance. The second party has three working days to give such assurances; Failure to make such statements will be considered a default resulting in the termination and liquidation of all WSPP transactions between the parties. The obligations of the second party to provide a letter of credit, deposits, etc. are limited to the amount of damages that the party would be liable for non-performance; that is, the coverage. The Agreement also lists certain events that would provide reasonable security, including (1) knowing that a party is not providing under other contracts; (2) a party that exceeds a credit or trading limit; (3) downgrading debt securities to investment grade; and (4) material changes in market prices that have a material impact on a party`s performance. In general, the parties guarantee that they have the necessary authority to carry out the transactions and execute the terms of the agreements. Each party also declares that it is solvent and that this representation will be maintained until otherwise is communicated. Members may sell at market prices if they have received market authorization from FERC or if they are not regulated by FERC. For members who are not eligible to sell at market prices, the WSPP agreement includes price caps set on the seller`s additional costs plus up to 21.11 mills/kWh. Default events are defined in the agreement to (1) include non-payment (if the payment date has been missed) within two business days of notification of payment; (2) failure to provide clear and good title or to have made accurate representations and warranties; (3) the opening of bankruptcy or insolvency proceedings; (4) Failure to give sufficient assurances of solvency within three working days of the request for such insurance.

In the event of default, the non-defaulting party may terminate all WSPP transactions between the parties as long as it exercises this right of termination within 30 days (or longer if the parties agree to an extension). .

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