RE: Beck Comments

See assignments and comments in red. Reagan/Kayne/Dave/Jeff responses due to Kay by noon today.

1) General comments -
a) We have not seen a draft of the MPPSA or the MGPSA for review and comment. Kay
b) All section references in the draft should be reviewed and checked. The majority of the references checked were incorrect. Kay
c) Since financial security is still an outstanding issue, all comments regarding the provisions in the draft pertaining to that subject have been excluded. Kay
d) The draft contains references throughout to exhibits that will be attached to the agreement that were not included in the draft. See bleow.

2) Article 1, pages 6 and 7 - Profit and Savings: These definitions reference exhibits that were not included in the draft. One of the most significant issues we had with the prior drafts were with the definition for "savings" so it is important to review a draft of these exhibits as soon as possible. Reagan/Kayne/Dave/Jeff to chech with Marvin. He should have forwarded exhibits with everything else. time is running out on them to do anything here. Will report more on this issue.

3) Section 3.1(b): This section obligates EPMI to "Propose" a load projection and stack model. Should this say "Prepare" as opposed to "Propose". "Prepare" is fine.

4) Section 3.1©: First line refers to a "request by Customer". Customer is not defined, is this intended to refer to MDEA? If not, include a definition of Customer. "...upon request by Customer" is not necessary. This has already been done.

5) Section 3.2(a): Provides that EPMI will use "commercially reasonable efforts". The draft does not include a definition for this term. Suggest including a definition since this standard is used throughout the draft. Kay

6) Section 3.2(a): Suggest adding the following phrase in the second line after "schedule Products", "in a manner intended to minimize the cost of serving MDEA's native load". Adding this seems fine; however, are there any legal implications, Kay? If not, add it in.

7) Section 3.2©: Line 3 refers to Cajun and EPI, which are not defined in the draft. Suggest including definitions or inserting the phrase "Existing Contract Resources" in place of "SEPA, Cajun, EPI". The substitution is fine.

8) Section 3.2(h): Line 1 provides "EPMI will optimize scheduling and usage or resale (when appropriate)". Would suggest deleting "when appropriate" and inserting "(in accordance with the terms and conditions of each Existing Contracted Resources contract)". The suggested change is OK.

9) Section 4.1(a): Line 1 requires MDEA to operate and maintain its native load distribution system in accordance with Prudent Operating practices?.". Would suggest deleting the phrase "and the Native Load distribution system". This agreement does not bear on how the cities would operate and maintain their distribution systems. Reagan/Kayne/Dave/Jeff

10) Section 6.4: The fourth sentence states " due to the use of imprecise data such as weather reports, heat rate estimates and the like, it is understood between the Parties that the resulting projections, recommendations and daily plan are consistent with commercially reasonable industry practices". According to this provision, the parties agree in advance that the resulting projections, recommendations and daily plans are consistent with commercially reasonable industry practices. We believe that the "use of that type of data" is consistent with commercially reasonable industry practices, but do not believe that that this automatically translates into the projections themselves being consistent with commercially reasonable industry practices. Text should be changed as appropriate to reflect this change. Reagan/Kayne/Dave/Jeff

11) Section 7.1: Second sentence provides "Risk of loss and all price and unit contingency and transmission risk shall be borne by Customer". Suggest adding the phrase " For Back to Back Transactions" at the beginning of this sentence. MDEA should not be responsible for unit contingency, transmission risk etc. for an EPMI Transaction. Reagan/Kayne/Dave/Jeff

12) Section 10.2(a): Line 3, change " MDA" to "MDEA". Kay

13) Section 14.6: Line 3, change "and the MPPSA" to "the MPPSA and the MGPSA". Kay

14) Section 15.1(d): provides three business days written notice to the defaulting party to cure a Financial Event of Default, otherwise the agreement can be terminated. Three days is too short of a time period for MDEA. Kay/David Hunt/Jeff

15) Section 17.1: Second sentence, provides that an independent auditor reasonably acceptable to EPMI is entitled to audit all books and records of EPMI. However this provision goes on to state that EPMI shall be entitled to audit MDEA's books, not an independent auditor subject to MDEA's approval. Suggest deleting "EPMI shall be entitled to audit" and adding "An independent auditor reasonably acceptable to MDEA". Kay

16) Article 28: As we have previously noted, this section contains language related to conflict of interest issues and the lack of notification related to conflicts of interest that should be read carefully reviewed by MDEA and the Cities. Kay/David Hunt/Jeff