Appendix "D-1" -  Procurement Protocol

PART 1:  GENERAL

1. General

(a) Procurement under the EPSP will be carried out in accordance with the provisions of this Procurement Protocol.  Capitalized terms used in this Procurement Protocol and not otherwise defined herein have the meaning ascribed to those terms in Appendix "D-3" attached hereto.

(b) This Procurement Protocol will be used to acquire products for the period from July 1, 2006 through June 30, 2010.  For this period, the energy supply for the Town of Fort Macleod RRT will be made up of both Other Procurement Arrangements (procured in accordance with Part 2 of the Procurement Protocol) and New RRO Arrangements (procured in accordance with Part 3 of the Procurement Protocol) in the following proportions:

(i) for each Month in the period July 1, 2006 to June 30, 2007, a minimum of 20% of the Monthly volumes of electric energy will be made up of New RRO Arrangements, and a maximum of 80% of the Monthly volumes of electric energy will be made up of Other Procurement Arrangements;

(ii) for each Month in the period July 1, 2007 to June 30, 2008, a minimum of 40% of the Monthly volumes of electric energy will be made up of New RRO Arrangements, and a maximum of 60% of the Monthly volumes of electric energy will be made up of Other Procurement Arrangements;

(iii) for each Month in the period July 1, 2008 to June 30, 2009, a minimum of 60% of the Monthly volumes of electric energy will be made up of New RRO Arrangements, and a maximum of 40% of the Monthly volumes of electric energy will be made up of Other Procurement Arrangements; and

(iv) for each Month in the period July 1, 2009 to June 30, 2010, a minimum of 80% of the Monthly volumes of electric energy will be made up of New RRO Arrangements, and a maximum of 20% of the Monthly volumes of electric energy will be made up of Other Procurement Arrangements.

PART 2:  OTHER PROCUREMENT ARRANGEMENTS

2. General

(a) The Other Procurement Arrangements shall be comprised of base hedges procured through a Competitive Procurement Process, conducted by EEC ("Base Hedges"). 

(b) Base Hedges will be composed of 7x24 Products, the volumes and the procurement timing of which will be determined and agreed upon by both Parties, and must not to exceed or  fall short of the parameters identified in section 1(b).

3. Competitive Procurement Process

EEC will be responsible for developing and carrying out a Competitive Procurement Process in order to fulfill the Other Procurement Arrangements as set out in Part 2 of the Procurement Protocol.  The Competitive Procurement Process will include but is not limited to: determining supplier credit prequalification requirements; Procurement timing; minimum and maximum offer size; and the process for opening, reviewing and accepting offers. 

PART 3:  NEW RRO ARRANGEMENTS

4. General

The New RRO Arrangements will comprise the electric energy supplied by EEC at the Monthly Energy Price determined in accordance with this Part.    For any period, the volume to be procured through New RRO Arrangements will be a volume that, in conjunction with the Base Hedges acquired under Part 2 of this EPSP, is forecast by EEC to be sufficient to serve all Eligible Customers.

5. Establishment of a New RRO Price

The New RRO Price will be based on volumes procured to supply the New RRO Arrangements.  New RRO Price will be established through a process, which may include, but is not limited to the use of a Monthly Index Price, or Monthly Hedges.

6. Establishment of a Monthly Index and Monthly Index Price

Monthly Index
The Monthly Index, when it is used to establish the New RRO Price, will be  based on the NGX transactions for the Prompt Month, set during the period starting 45 days prior to the Prompt Month and ending 10 days prior to the Prompt Month inclusive.

Monthly Index Price
The Monthly Index Price will be determined based on the arithmetic volume weighted average of the Daily Indexing Offers for the period starting 45 days prior to the Prompt Month and ending 10 days prior to the Prompt Month inclusive.  Once the Monthly Index Price has been determined, it may, with agreement of both parties, represent the New RRO Price component in the Monthly Energy Price formula in section 1 of Appendix "D-2".

7. Monthly Hedges

In the period starting 45 days prior to the Prompt Month and ending 10 days prior to the Prompt Month, EEC may conduct a monthly Competitive Procurement Process to procure Monthly Hedges for the Prompt Month.  Through the Competitive Procurement Process EEC will procure a 7 x 24 Product to meet the forecast volume requirements for Eligible Customers, in conjunction with the Base Hedges procured under Part 2 of this Procurement Protocol.   

The Monthly Hedges may, with the agreement of both Parties, be used to represent the New RRO Price component of the Monthly Energy Price.

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