February 2006 Market Clearing in the Energy Industry 73 © Copyright 2006, CCRO. All rights reserved. NCC/ North American Energy Credit and Clearing Corp (“NECC”) New York Mercantile Exchange (“NYMEX”) ICE/LCH Clearnet Virtual Markets Assurance Corporation (“VMAC”) Natural Gas Exchange quo for buyers (no intermediaries, standard payment date, credit support at no cost) and accelerated payment to sellers while removing the pooled risk at RTO/ISOs. NCC intends that little if any modifications will be required to the ISO/RTO systems to implement its solution. can clear ICE OTC trades. ICE Block and WebICE platforms are readily available to all energy market participants and some 6000 terminals are connected to ICE. cross-section of the North American energy industry Cost of Service Transaction Fees: NCC fee structure is transactional with no fixed or up front obligations. For OTC markets fees are assessed separately for power and gas and for initial transaction and ultimate net delivery. There are no additional FCM charges. Volumetric Clearing Fees: 0.03% for power and 0.01% for gas based on notional contract value and assessed to both buyer and to seller Volumetric Delivery Fees: 0.02% for power and 0.01% for gas based on notional delivered and assessed to both buyer and to seller Individual costs will vary, based on the participant’s current infrastructure and existing capabilities. NYMEX estimates clearing fees of 0.01/MW/side, plus FCM charges. Costs associated with a cost benefit analysis of using NYMEX clearing solution include Cash impact of reduction in collateral requirements, cash impact from elimination in monthly billing cycle, impact of NYMEX fees and impact of default risk shifted from RTO/ISO mutualization to Clearing House CE fees vary across products and are identical whether the trade is cleared or is executed as a bilateral trade. LCH fees also vary across products. There will also be a charge for FCM services and this is subject to negotiation between the customer and the FCM Margins, based on risk or product VMAC expects its fees to be comparable to fees charged by NYMEX for its Clearport product, including FCM costs. The fees are on a transactional basis and are fixed cost per notional quantity. The fee varies based on the type of swap and the commodity and market. Subscription fee of $1,500/month per legal entity. Fees of 0.00075/MMBt u for physical and 0.0005 MMBtu for financial trades.