The above-mentioned ECA should be distinguished from contracts for the receipt of electricity in a deregulated electricity market, which are generally power purchase agreements with a private producer whose plant is already in existence or where the plant is built at the initiative of the private producer. For examples of this type of ECA, click on the following links: Edison Electric Institute Master Power Purchase & Sale Agreement (PDF) (4/25/2000) and Tri-State AA. For a more detailed analysis of the problems associated with IPRs of this type, see the IFC Guide on Electricity Capture Contracts (1996) – see Annex 2 (page 160) of the World Bank Concessions Toolkit (pdf). Power Purchase Agreement (AAE) for medium to large oil plants (Example 5) – A long-term standard power purchase agreement for oil-fired power plants in developing countries. Created by an international law firm for the World Bank for an overview of the provisions usually found in electricity capture contracts in international private power plants. In some legal systems, including the United Kingdom, these provisions will also include obligations to supply or acquire certain measurement and regulatory activities that can only be implemented by authorised electricity suppliers. Therefore, the buyer of the company in these countries must enter into a back-to-back agreement with a licensed supplier, under which the licensed supplier undertakes to assume these obligations. The ECA is often seen as the central document for the development of independent power generation facilities (power plants). Since it defines the project`s turnover conditions and credit quality, it is the key to obtaining non-recourse project financing. The Iberdrola Group has extensive experience in this sector in countries such as the United States, Mexico and Spain. As part of a virtual AAA, the generator and decoder can be in different energy markets.
ECA payments are linked to the price of electricity on the generator market. If the wholesale price in the generator market and the retail price in the supplier market do not vary, there is imperfect coverage and the buyer remains exposed to retail price volatility. In this case, the correlations between the two markets should therefore be carefully taken into account. As a financial instrument, it is also necessary to analyse the regulatory and accounting requirements applicable to financial services in their respective legal systems.