WSPP CONTRACT COMMITTEE 3-2-05 SUMMARY OF MEETING

  1. Confirmation-Clarification to 32.4 re oral agreements. Substantial support for restructuring 32.4 as proposed to break it up into three sub-sections. With regard to the proposed 32.4.2, do not want to require a recording; use the existing language “any oral agreement.” Members present were willing to consider adding at end of 32.4.1 language to the effect that the Confirmation is final absent manifest error. Before agreeing to that language, members wanted a legal memo detailing what is meant by manifest error. Did not address the split of 32.1.
  2. Forward Contract Merchant-There was no support expressed at the meeting to add language to Section 35 (“to the extent permitted by law” was proposed). The view was that if a Party has a problem with the language, it should take care of it in the confirmation process.
  3. Suspension of Performance in the Event of Default-There was consensus for moving ahead with the proposed language subject to certain revisions or clarifications: (1) most were in favor of requiring that suspension be of all WSPP transactions; i.e. no cherry picking; (2) the language needed to be clarified so that the 10 day suspension period does not affect the 30 day termination period; (3) language needed to be clarified so that it is clearer that the suspension does not impact termination rights; and (4) delete the provision (ii) on additional remedies as they are dealt with elsewhere in the agreement. A member requested legal advice on whether allowing suspension of only part of the transactions would affect integrated contract argument at bankruptcy court.
  4. Agreed to the new first sentence of the second paragraph of 22.2 which made clear that once you terminate, you terminate all WSPP transactions at the same time. With regard to liquidation, agreed that there was no need to require liquidation at the same time and left in place the as soon as possible language.
  5. Security interest language-Tabled the discussion of this section after it was determined that the collateral was cash or the proceeds from a letter of credit. Members requested research into the question as to whether you need a security interest in cash or with regard to proceeds from a letter of credit before debating issue further.
  6. UCC-Members decided that it would be best to have a smaller group evaluate the WSPP versus the UCC on a provision by provision basis to see what if any issues arise.
  7. Service Schedule C and Service Schedule B-There was a lengthy discussion on the issues. At the end a straw poll was taken, with 13 wanting operating reserves out of SSC and 17 wanting operating reserves in SSC. After those votes, the members agreed to pursue creating to separate products, with the new product a separate schedule (probably D). WSPP counsel will take first shot at drafting. The following is the list of issues identified: SSC (1) reserves in or out; (2) cost responsibility associated with reserves; (3) damages for failure to have operating reserves; and (4) transmission/unscheduled flow mitigation. SSB (1) reserves; and (2) curtailment standardization.
  8. Future procedures-(1) Develop language revisions on Suspension Language and on Confirmation together with legal memos and set up conference call to get matter resolved before April 13 OC meeting; (2) Develop revised SSC and SSB language as well as language for new SSD and set up meeting to address; and (3) prepare the memo’s discussed above.

Mike Small 3-4-05