Agmt 2004 ABAG Power - Laserfiche WebLink

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ATTACHMENT D CONTINGENT RISKS RISK ANALYSIS Attached as Exhibit A is a table setting forth ABAG POWER's best reasonable effort at estimating the maximum reasonable liability (in total for the Electric Program) for each of the listed contingent liabilities. The table allocates total liability of the program- to individual Members in accordance with the usage ratio, or CTC Reversal ratio, as appropriate. The allocation is for illustrative purposes only. ABAG POWER does not have sufficient information on which to base an estimate of how the entity imposing the liability would allocate the liabilities or how ABAG POWER and the Members ought to react to such allocation, A. UNINVOICED ENERGY CHARGES Description of Risk ABAG POWER is distributing to each of its Electric Program Members a proportionate share of the Working Capital contributions made by Members in response to Working Capital calls by ABAG POWER and residual funds from operating costs paid by Members during the Electric Program (Balancing Account). These funds were held, in part, in reserve for payment of charges for electrical energy consumed by Members of the Electrical Program during aone-week period in August 2001 when ABAG POWER was not purchasing electricity on behalf of the Electric Program (Gap Period). As of February 29, 2004, ABAG POWER has not been invoiced for electricity consumed during the Gap Period. Under the Wind Up Agreement, if ABAG POWER receives such a bill, each Member will be required to pay its proportionate share. Background Under normal operating conditions, ABAG POWER purchased on behalf of the Members of the Electric Program sufficient energy to meet their estimated needs. Purchases were made from a variety of electricity generators and energy remarketers, under various contractual formats (fixed price, indexed price, indexed price with "floors" and/or "ceilings," etc.), and at various prices. In all instances, one significant factor in the price of electricity is the hour in which it is consumed. Energy during certain "peak" periods was priced considerably higher than at other periods. In the summer of 2000, the electric market became highly unstable. ABAG POWER was having a difficult time meeting credit requirements which our scheduling coordinator and electricity sellers were imposing on the marketplace. Consequently, on August 2, 2000 ABAG POWER notified PG&E in writing of.its difficulties, and actions being taken to rectify the situation. PG&E acknowledged that it had received ABAG POWER's notice, and although it believed that ABAG POWER was in default of its ESP Agreement, PG&E would allow ABAG POWER until August 7, 2000 to resolve the situation. Prior to this deadline, ABAG POWER was able to secure scheduling coordination services and contract for electricity at a reasonable price, without the additional credit requirements imposed by other energy providers and remarketers.