The Funds Transfer Agent Agreement (FTAA) is a unique financing agreement that allows Women/Minority-Owned Business Enterprises (WMBEs) to finance natural gas purchases for resale to Local Distribution Companies (LDCs) (of natural gas) without being required to post Letters of Credit. Southern California Gas Co. (SoCalGas), Visage Energy Corp., Union Bank of California, and the Department of Energy (DOE) have all assisted in the formulation and development of the Funds Transfer Agent Agreement (FTAA). The principles of the FTAA have been used successfully to finance hundreds of millions of dollars of natural gas purchases by certified WMBEs.

The Funds Transfer Agent Agreement (FTAA) CD-ROM contains features that provide instruction and aid in using the FTAA.

Rationale for the FTAA
In the past, many WMBEs were unable to finance their natural gas purchases because of their inability to assure the Producer that he/she would be paid for gas sold to the WMBE. Conversely, some LDC Repurchasers were concerned about the level of reliability of delivery of the gas contracted for with WMBEs. Many LDC Repurchasers are of the opinion that diversity of suppliers is an essential and profitable business practice. This practice allows LDC Repurchasers to avoid the potential of being exposed to undue "Market Powers" being excreted by a few large Producer/Suppliers. Consequently, many of these LDC Repurchasers will limit the amount of natural gas purchased from any one of the large Producers, thereby providing opportunities for medium and small companies to market natural gas supplies to the LDC Repurchaser. Additionally, some LDCs have determined that they have been able to lower the average cost of their gas purchases because of the increased number of suppliers from whom they purchased their natural gas.

• Producer: Receives a contract with the FTA Bank that requires the bank to pay the Producer with the funds received from the LDC Repurchaser.
• LDC Repurchaser: Receives gas from a reliable source under a mirror back-to-back supply contract and simply agrees to pay the funds into the Bank Control Account for all gas received in accordance with the terms and conditions of the FTAA.
• WMBE: Obtains the ability to sell gas to the LDC and purchase gas from the Producer without being required to post a letter of credit by being able to utilize the FTAA process.
• FTA Bank: The bank's fiduciary responsibility is to represent to both Producer and the LDC Repurchaser that there are matching deals with a positive spread. The FTA Bank signs contracts agreeing to receive the money from the LDC Repurchaser and pay the Producer on the next business day. The bank does not have any obligation to pay the Producer if the funds are not received; however, there is minimal risk because the LDC Repurchaser always pays for gas it has received. The FTA bank has use of multi-million dollars of FTAA funds for one business day and over the weekend if the funds are received on Friday. Additionally, the bank receives Community Reinvestment Act (CRA) credit for participating in the FTAA program.