MSC: NAESB Gas Contract Force Majeure (20230119)

The following feedback is offered by the Entergy Operating Companies ("EOCs")[1] in response to the request made during the January 19^th 2023, Market Subcommittee (MSC) meeting concerning MISO’s Proposed Ramp Product Enhancements.

Item 1 – We support the edits and would offer the following suggested edits: “(ii) weather related events affecting an entire geographic region which cannot be reasonably mitigated or prevented by Party claiming Force Majeure by taking winterization actions or preventive measures, as requested under Section 11.3(ii) below, and such as low temperatures which cause freezing or failure of wells or lines of pipes”

Item 2(a) – We support but suggest it may be in the wrong place as a party should first try to prevent than remedy. We offer the following edits: “(ii) the party claiming excuse failed to reasonably prevent or remedy the condition and to resume the performance of such covenants or obligations with reasonable dispatch”

Item 2(b) – Putting together the original language and the proposed added item (vi) we have “Neither party shall be entitled to the benefit of the provisions of Force Majeure to the extent performance is affected by any or all of the following circumstances: […] (vi) interruption of specific supply or markets at “pooling points” or “hubs” without the hub or pooling point operator claiming Force Majeure”. Our concern is that the added language may open the door to counterparties wanting to change such language by making use of Special Provisions to broaden the scope and have, for example, FM weather-related claims be tied to operator’s successful claim of FM if in the same geographical region. However it’s likely the benefits outweigh the risks

Item 3 – We support but suggest removing the “but not be limited to” as no party will provide more information as requested, meaning that if a party reasonably believes the list of information included in Section 11.5 is not enough, such party will either add requests through execution of Special Provisions or in each Transaction Confirmation.

The EOCs appreciate the opportunity to comment

IMPA and MPPA support, without reservation (even enthusiastically), MISO endorsing and advocating for SPP’s proposed modifications to the NAESB Base Contract for Natural Gas.

I'd be happy to discuss.

David Sapper

dsapper@ces-ltd.com

MPPA supports, without reservation, MISO endorsing and advocating for SPP’s proposed modifications to the NAESB Base Contract for Natural Gas.

WVPA supports MISO's efforts to file comments based on increasing reliance on natural gas generation.  It is imperative that we move to weatherizing the natural gas infrastructure to ensure fuel can be delivered when most needed during extreme weather events to improve reliability.  

The Missouri Electric Commission (MEC) is in favor of MISO endorsing and advocating for the NAESB Base Contract for Natural Gas Force Majeure modification. MEC fully supports the SPP efforts at NAESB for revisions to the NAESB Base Contract for Sale and Purchase of Natural Gas to improve the clarity associated with the force majeure provisions in the contract. 

MEC urges MISO to take action to support the SPP initiative to modify the Force Majeure provisions at NAESB. 

Xcel Energy recommends that MISO support the SPP modifications of Force Majeure language in the NAESB Base has Contract for Sale and Purchase of Natural Gas.  We also encourage MISO to evaluate the timing of the commitment process for gas units approaching an extreme weather event, especially if the event will occur over a weekend or holiday.

WPPI offers the following responses to the questions posed by MISO re proposed modifications to the NAESB gas contract force majeure provisions:

(1)    Do you want MISO to support this effort? WPPI is not opposed to MISO supporting this effort.

(2)    Do you have any concerns/comments as to whether MISO should support this effort?

• It seems a bit unusual for MISO to get involved given it would never be a party in such a contract. (On the flipside, SPP requested MISO get involved.)
• Are there MISO stakeholders opposed to MISO getting involved?
• Even if the proposed modifications are made to the base contract, the parties to any given contract may revise them.
• What is the logic behind adding as a condition of force majeure: the hub or pooling point operator claiming Force Majeure? (We have some ideas why adding this condition may make sense despite the fact that not all natural gas is taken from a hub or pooling point; however, we would like to hear from the author(s) of the proposal.)