Merced Irrigation District v. Barclays Bank PLC – Western Hub Electricity Settlement

Plan of Allocation

If the Settlement described in the Notice is approved by the Court and becomes final (is not appealed or is not overturned on appeal), the Net Settlement Fund ($29 million less Court-approved attorneys’ fees and expenses and incentive award) shall be distributed to members of the Settlement Class, who submit a timely and valid Proof of Claim and Release form (“Claimants”) and who qualify for a payment as described below.

If you are a Claimant, your entitlement to a share of the Net Settlement Fund will depend on the extent to which you were damaged by movements in the Daily Index Prices published by ICE and/or Dow Jones for peak or off-peak power at the four Western United States electricity trading hubs known as Mid-Columbia, Palo Verde, South Path 15 and North Path 15 (“Western Hubs”) allegedly caused by Barclays during the upward and/or downward alleged manipulation periods in the table below (the “Product Manipulation Periods”).

PRODUCT MANIPULATION PERIODS

Western Hub Manipulation Period Product Manipulation Impact on ICE Daily Index Per MWh Manipulation Impact on Dow Jones Daily Index Per MWh
Upward Product Manipulation Periods
Mid-Columbia 3/1/2007 - 6/30/2007 Off-Peak $12.23 $12.97
Mid-Columbia 3/1/2007 - 4/30/2007 Peak $1.66 $1.61
Mid-Columbia 8/1/2008 – 8/31/2008 Peak $1.66 $1.61
North Path 15 4/1/2007 – 6/30/2007 Peak $2.94 $3.11
Palo Verde 11/1/2006 – 11/30/2006 Peak $3.53 $3.37
Palo Verde 1/1/2007 – 2/28/2007 Peak $3.53 $3.37
Palo Verde 4/1/2007 – 5/31/2007 Peak $3.53 $3.37
Palo Verde 7/1/2007 – 5/31/2008 Peak $3.53 $3.37
Palo Verde 12/1/2008 – 12/31/2008 Peak $3.53 $3.37
Downward Product Manipulation Periods
Mid-Columbia 6/1/2007 – 6/30/2007 Peak $9.54 $9.58
Mid-Columbia 5/1/2008 – 6/30/2008 Peak $9.54 $9.58
Mid-Columbia 6/1/2008 – 6/30/2008 Off-Peak $8.26 $7.35
North Path 15 12/1/2006 – 12/31/2006 Off-Peak $3.03 $4.26
South Path 15 2/1/2007 – 3/31/2007 Peak $0.84 $0.11
South Path 15 5/1/2007 – 5/31/2007 Peak $0.84 $0.11 
 

The extent to which you may have been damaged will depend on the amount and nature of your positions in financial and/or physical contracts that were based on the Daily Index Prices during the alleged manipulation periods and the financial impact to the Daily Index Prices as calculated by Plaintiff’s economics expert in the two right-hand columns in the table above.


INFORMATION NEEDED TO DETERMINE INJURED AND BENFITTED VOLUMES

As explained in the Proof of Claim and Release form, each Settlement Class Member seeking to become a Claimant is required to conduct a diligent search for and provide the following information for each Product Manipulation Period identified above.

A. For Each Upward Product Manipulation Period Identified in the Chart Above:

1. Identify

      • (x) the ascertainable physical and financial contract volumes in megawatt-hours (MWh’s) with respect to which the Claimant paid a price set by the ICE or Dow Jones Daily Index Price, respectively, for the indicated hub and product (Peak or Off-Peak) (these will be the “ICE-Based Injured Volumes” and “Dow Jones-Based Injured Volumes” (collectively “Injured Volumes”) for the indicated Upward Product Manipulation Period), and
      • (y) the ascertainable physical and financial contract volumes with respect to which the Claimant received a price set by the ICE or Dow Jones Daily Index Price, respectively, for the indicated hub and product (these will be the “ICE-Based Benefitted Volumes” and the “Dow Jones-Based Benefitted Volumes” (collectively “Benefitted Volumes”) for the indicated Upward Product Manipulation Period).
         2. State (Yes or No)

B. For Each Downward Product Manipulation Period Identified in the Table Above:

1. Identify

        2. State (Yes or No)

In addition to identifying all Injured Volumes for each Product Manipulation Period, a Claimant is required to conduct a diligent search to identify all Benefitted Volumes in each Product Manipulation Period and to (i) enter the volume results thereof on the table in the Proof of Claim and Release form to the extent they are ascertainable and (ii) answer Yes or No as to whether Claimant retained complete records such that it can certify that such volumes represent all Benefitted Volumes that the Claimant had for the corresponding Product Manipulation Period. This amount may be zero for some or all periods.

Based on the Dow Jones and/or ICE based Injured Volumes and Benefitted Volumes information provided by Claimants as described above in A.1. and B.1 (as adjusted for any incomplete Benefitted Volumes as described below), and the manipulation impact monetary amounts in the above table, the amount of a Claimant’s claim (before any pro rata adjustments) (“Eligible Claim Amount”) will be calculated as follows:

 

FOR CLAIMANTS HAVING COMPLETE INFORMATION REGARDING THEIR BENEFITTED VOLUMES1

For each Product Manipulation Period in which the Claimant held a contract that settled on the ICE Daily Index and/or Dow Jones Daily Index during the manipulation period for the indicated product, the amount by which the Claimant was damaged or benefitted by Barclays' alleged manipulation for such period and product will be calculated as follows:

Step 1: Subtract (x) the Benefitted Volumes from (y) the Injured Volumes to determine the “Net Injured/Benefitted Volumes” separately for each ICE and Dow Jones daily index based product during each Product Manipulation Period (the resulting numbers may be negative).
Step 2: Multiply (x) the Net Injured/Benefitted Volumes for each ICE and Dow Jones daily index based product by (y) the corresponding applicable “Dollar Amount per MWh Manipulation Impact on ICE Daily Index” or “Dollar Amount per MWh Manipulation Impact on Dow Jones Daily Index,” to calculate the “Net Injury/Benefit” separately for the ICE daily index based products and the Dow Jones daily index based products in each Product Manipulation Period, and then sum the two numbers to determine the “Net Injury/Benefit” for the Product Manipulation Period (the resulting numbers may be negative).
Step 3: Then add the Net Injury/Benefits for all of the Product Manipulation Periods above. If the resulting sum is positive, that amount shall be the Claimant’s Eligible Claim Amount. If the resulting sum is zero or negative, the Claimant’s Eligible Claim Amount will be 0.

1 This formula applies to all Claimants who enter "Yes" in all rows in the "ICE-Based and Dow Jones-Based Benefitted Volumes Complete?" column on the Claim Form Table. For Claimants who enter "No" one or more times in the Claim Form Table, this formula will apply but as modified in accordance with the section immediately below entitled "For Claimants Unable to Provide Complete Information Regarding Their Benefitted Volumes."

EXAMPLE OF CALCULATION OF ELIGIBLE CLAIM AMOUNT - COMPLETE BENEFITTED VOLUME INFORMATION

For example, if a Claimant had complete information for the positions identified below during the indicated Product Manipulation Periods, the Claimant’s Eligible Claim Amount would be calculated as follows:

Western Hub, Product, and Manipulation Period  ICE /DJ Injured Volumes  Benefitted Volumes  Net Injured or (Net Benefitted) Volumes  Price Impact  Net Dollar Injury or (Benefit) 
Mid-Columbia Peak
03/01/07 – 04/30/07
ICE 50,000 4,000 46,000 $1.66 $76,360
DJ -0-  -0-       
Mid-Columbia Peak
08/01/08 – 08/31/08
ICE 75,000 -0-  75,000 $1.66 $124,500
DJ 75,000 -0-  75,000 $1.61 $120,750
North Path 15 Peak
04/01/07-06/31/07 
ICE -0-  -0-       
DJ 150,000 70,000 80,000 $3.11 $248,800
Mid-Columbia Peak
06/01/07 – 06/30/07
ICE 25,000 20,000 5,000 $9.54 $47,700
DJ -0-  -0-       
Palo Verde Peak
05/01/07 – 05/31/07
ICE 8,000 12,000 (4,000) $3.53 ($3,360)
DJ -0-  -0-       
ELIGIBLE CLAIM AMOUNT $614,750


FOR CLAIMANTS UNABLE TO PROVIDE COMPLETE INFORMATION REGARDING THEIR BENEFITTED VOLUMES

For any Product Manipulation Period in which the Claimant is unable to certify that it has complete records necessary to determine the full extent to which it had ICE and Dow Jones-based Benefitted Volumes,2 the “Net Injured or Net Benefitted Volumes” for each of the ICE and Dow Jones categories in such Product Manipulation Period will in each case be the lesser of

(i) The Claimant’s “Net Injured/Benefitted Volumes” for such category in such Product Manipulation Period calculated in Step 1 of the above calculation (under the preceding section entitled “For Claimants Having Complete Information Regarding Their Benefitted Volumes”), or

(ii) 10% of the Claimant’s “Injured Volumes” for such category in such Product Manipulation Period.

By way of further explanation, and without limiting the foregoing, the “Net Injured/Benefitted Volumes,” so calculated for each of the ICE-Based and Dow Jones-Based categories in such Product Manipulation Period in accordance with the formula in the immediately foregoing sentence, shall then be multiplied by the corresponding applicable “Dollar Amount per MWh Manipulation Impact on ICE Daily Index” or “Dollar Amount per MWh Manipulation Impact on Dow Jones Daily Index,” to determine the “Net Injury/Benefit” for each ICE-Based and Dow Jones-Based category in such Product Manipulation Period.

The Claimant’s Eligible Claim Amount will in all other respects be determined in accordance with the formula in the preceding section entitled “For Claimants Having Complete Information Regarding Their Benefitted Volumes.”

This potential downward adjustment to the “Net Injured/Benefitted Volumes” pursuant to the first paragraph of this page is intended to allow a Claimant who has reported net Injured Volumes during a Product Manipulation Period, but is unable to certify that it has retained the records necessary to determine the full extent to which it also had ICE or Dow Jones benefitted volumes during that Product Manipulation Period, to nevertheless submit an eligible claim for net injured volumes for that Product Manipulation Period, although in a potentially reduced amount in light of hedging practices of market participants. The adjustment assures that the net claims for the given Product Manipulation Period where the full amount of benefitted volumes is not ascertainable by the Claimant does not exceed 10% of the relevant gross Injured Volumes reported by the Claimant for that Period.

2 And the Claimant is therefore required to answer “No” in the “ICE-Based Benefitted Volumes and Dow Jones-Based Benefitted Volumes Complete?” column in the Claim Form Table for such Product Manipulation Period.


EXAMPLE OF CALCULATION OF ELIGIBLE CLAIM AMOUNT - INCOMPLETE BENEFITTED VOLUME INFORMATION

For example, in several of the Product Manipulation Periods below the Claimant has partial or otherwise incomplete records to determine the full extent to which it had ICE [and] or Dow Jones based Benefitted Volumes in such Product Manipulation Period (and therefore is required to enter “No” in the “ICE-Based Benefitted Volumes and Dow Jones-Based Benefitted Volumes Complete?” column in the Claim Form Table for such Product Manipulation Period). The Claimant’s Eligible Claim Amount would be calculated as follows:

Western Hub, Product, and Manipulation Period ICE
/ DJ
Injured Volumes Benefitted Volumes Net Injured or
(Net Benefitted) Volumes
Price Impact Net Dollar Injury or (Benefit)
Palo Verde Peak
01/01/07 – 02/28/07
ICE 100,000 -0- Incomplete Information ** 

10,000**
Downward adjustment to 10% of Injured Volumes

$3.53 $35,300
DJ -0-    -0-       
South Path 15 Peak
02/01/07 – 03/31/07
ICE 7,500 10,000 Incomplete Information** (2,500)**
No downward adjustment made because 10% of Injured Volumes cap not exceeded.
$0.84  
DJ  -0-         
Mid-Columbia Peak
03/01/07 – 04/30/07
ICE 300,000 50,000 250,000 $1.66 $415,000
DJ  -0-  -0-        
Mid-Columbia Peak
05/01/08 – 06/30/08
ICE -0-   500
Incomplete Information**
(500)**
No downward adjustment made because 10% of Injured Volumes cap not exceeded.
$9.54  
DJ 10,000 2,000 1,000**
Downward adjustment to 1,000 made because 10% of Injured Volumes cap exceeded for this category, and ICE-based Benefitted Volumes Information (above) is incomplete for this Manipulation Period.
$9.58 $9,580
ELIGIBLE CLAIM AMOUNT $453,010

** In each of these Product Manipulation Periods the Claimant has (as indicated with an **) incomplete records to determine the full extent to which it had ICE and/or Dow Jones based Benefitted Volumes in such Product Manipulation Period (and therefore is required to enter “No” in the “ICE-Based Benefitted Volumes and Dow Jones-Based Benefitted Volumes Complete?” column in the Claim Form Table for such Product Manipulation Period). As set forth above, in such cases the “Net Injured/Benefitted Volumes” for both the ICE and Dow Jones categories in such Product Manipulation Period shall be the lesser of (i) the corresponding Injured Volumes minus the corresponding reported ascertainable Benefitted Volumes for such category in that Product Manipulation Period reported by Claimant, or (ii) 10% of the corresponding Injured Volumes reported for such category in that Product Manipulation Period.


DETERMINATION OF THE AMOUNT OF PAYMENTS TO EACH CLAIMANT THAT HAS BEEN DAMAGED ON A NET BASIS

Calculation of Payment to each Claimant with a positive Eligible Claim Amount:

Payment = Eligible Claim Amount x (Net Settlement Fund / Total Eligible Claims*)

* Total Eligible Claims is defined as the total of all Eligible Claim Amounts submitted by all Claimants.

No Claimant, however, will be entitled to receive an amount equal to more than three times its positive Eligible Claim Amount. Any amount remaining in the Net Settlement Fund, after all of the above distributions, shall be distributed to a 501(c) charitable organization with a goal that relates to or addresses the types of harms arising from the conduct alleged in the Action, to be designated by the Merced Irrigation District and as approved by the Court.

As further described here, if a Settlement Class Member excludes itself from the Settlement Class, it will not be able to share in the distribution from the Settlement Fund.