Late Payment Enforcement Provisions Update and Suggestions
Explore the recent changes in late payment enforcement provisions, potential conflicts with the Standard Form Agreement, and proposed solutions. Consider adjustments to Level III Enforcement for a more balanced approach and effective management of late payments.
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Presentation Transcript
Late Payment Enforcement Provisions CWG / MCWG ERCOT Public June 17, 2020
Late Payment Enforcement Provisions Late Current Payment # Enforcement Provisions 1 Review, or Level I Enforcement Increase to or provide 110% collateral for min 60 days 2 Level I Enforcement, or Level II Enforcement 110% collateral in cash or LC for 60 days 3 Level II Enforcement, or Level III Enforcement Warning or terminate SFA 4 Terminate SFA Note that a third late payment with Level III Enforcement can lead to termination of the Standard Form Agreement. This could conflict with the SFA: Section 8. Default A. Event of Default (1)..Provided further that if such a material breach, regardless of whether the breaching Party cures the breach within the allotted time after notice of the material breach, occurs more than three (3) times in a 12-month period, the fourth such breach shall constitute a Default. 2 PUBLIC
Late Payment Enforcement Provisions The potential conflict with the SFA could be addressed by: Removing the termination option for Level III Enforcement Providing graduated penalties for Level III Enforcement This also eliminates the do nothing option for the first late payment. Late Pmt. Existing Enforcement Provisions Proposed Enforcement Provisions 1 Review, or Level I Enforcement Increase to or provide 110% collateral for min. 60 days Level I Enforcement Increase to or provide 110% collateral for min. 60 days 2 Level I Enforcement, or Level II Enforcement 110% collateral in cash or LC for 60 days Level II Enforcement 110% collateral in cash or LC for 60 days 3 Level II Enforcement, or Level III Enforcement Warning or terminate SFA Level III Enforcement 120% collateral in cash for 90 days 4 Terminate SFA Terminate SFA 3 PUBLIC
Late Payment Enforcement Provisions Questions 4 PUBLIC
