Project Finance: Practical Case Studies

the price of electricity at any particular time. The price for all generating units was the mar-
ginal price, determined by the cost of the least efficient unit dispatched. IPPs could use swap
arrangements, known as ‘contracts for difference’, to hedge their exposures to the pool prices.
If the pool price were lower than the contract or index price, the counterparty would pay the
difference to the IPP; if the pool price were higher than the contract price, the IPP would pay

DRAX, UNITED KINGDOM

Exhibit 12.1

Significant project parties^2

NP/RJB Mining/

Third-party

suppliers

Eastern Power

& Energy Trading

NP/EWSR

Third-party

contractors

Pool members

and parties

Gypsum

purchasers

Yorkshire water

NGC

Insurers

National power

Customers of

physical output

National ash

Coal

transportation

Bilateral

PPAs under

the NETA

Pooling and

settlement

agreement

Spares/maintenance

services agreement Transitional services

Water rights

Drax Power Station

Coal sales

agreements

(RJB contract

commences

1 April 2001)

Hedging

agreement

(commenced

1 April 2001) Ash marketingagreement

Gypsum sales

disposal

agreement

Limestone

supply

agreement

MSUCA ancillary

services

agreements Insurance

policies

Limestone

suppliers