Risk Factors in Power Contracts

Executive Summary

1: Introduction to Strategy and Risk Concerns

Strategies

Categories of risk

2: The Background to Power Markets

EU Directives

Energy Charter Treaty

3: European Power Markets - Legislative and Regulatory

Developments

Power systems in EU countries

Power systems in other European countries

Power systems in Australasia

4: Power Pool Systems and Exchanges

The UK electricity pool

The Nord Pool

Southern African Power Pool

The Californian Power System

Other pools and exchanges

5: The Power Contracting Regime

EPC contract

O&M contract

Fuel supply agreement

Power purchase agreement

Connection and use-of-system agreement

50 key risk questions

6: Additional Power Contracting Issues

Ancillary services

Insurance

Indemnities

Project finance

7: Electricity Trading

Types of supply contract

Provisions of supply contracts

Hedging

Derivatives

Contracts for differences

Trading of derivatives

Electricity forward agreements

ISDA documentation

Energy derivatives

Weather derivatives

Arbitrage

Emissions trading

Derivatives risk management

Settlement risk

Other legal risks

Conclusion

Appendix 1: Power Contracts - Part 1

Confidentiality agreement

Feasibility study

Consultancy agreement

Project development agreement

Consortium agreement

Corporate structure

Land and planning issues

Some aspects of competition law

Appendix 2: Power Contracts - Part 2

EPC contract

O&M contract

Appendix 3: Hypothetical Power Trading Example

Example

Conclusion

Appendix 4: Power Web Sites

Appendix 5: Abbreviations and Acronyms