Subject: Illinois - Credit Worthiness requirements
From: [email-masked]
To: [email-masked], [email-masked]
Cc: [email-masked], [email-masked], [email-masked], [email-masked]
Date: Fri, 2 Nov 2001 09:45:01 -0800 (PST)

Gloria, Harry:

Slightly more complex than usual, but here are the credit/financial guarantees requirements in Illinois for single billing service, and for providing nonresidential customers with 1 MW or more.  I also included the requirements for billing, collection, and remittances for IFC charges.  Please advise if you want the conditions for greater than 15 MWh customers, all retail customers excluding residential.  

It is noteworthy that there is an obligation that within 15 days of downgrade of the agent, creditors, affiliates, or guarantors to a rating below A-1 or A-, if issued from S&P or, P-1 or A3, if issued from Moody's, D-2 or A-, if issued from Duff & Phelps, or F-1 or A-, if issued from Fitch IBCA . Within 30 days after a downgrade the agent shall submit a report that identifies the subsection under which it is seeking to demonstrate that its financial resources remain sufficient for providing the services for which it has received a certificate of service authority and includes the information and documents that subsection requires.  See Illinois Administrative Code, Art. 451.740.  

Please let me know if you have any question.

Brgrds 

AI

Billing, collection and Remittance Procedures for IFC Charges	Single Billing Service	Nonresidential Customers with 1MW, or More	
Billing Option Agreement   RES shall remit IFC payment within 7 days of receipt of each IFC payment from customer. 6.8.1   If elected by RES, it shall remit to DSP the amount of IFC charges within 15 days after receipt of calculated charges from DSP, regardless of whether RES has collected from customer.  6.8.2   If RES electing this option-which shall remain effective for a year-- does not have an unsecured debt rating of BBB- or better, it shall deposit a security deposit equal to one month's estimated IFC charges.  This deposit is determined based on monthly kWh usage of customers.  6.8.3	83 Illinois Admin. Code  Art. 451.510 The applicant for single billing services may demonstrate this credit-worthiness in one of four ways:  a) The applicant may undertake a bond issued by a qualifying financial institution. The bond shall be equal to 15% of a good faith estimate of the total amount that the applicant's obligation to the utility under single billing during the next twelve months.  b) The applicant may deliver an irrevocable letter of credit from an institution with a long-term obligation rating of A- or higher from S&P or A3 or higher from Moody's, A- or higher from Duff & Phelps, or A- or higher from Fitch IBCA.  c) The applicant maintains at least 2 of the following commercial paper ratings: A-2 or higher from S&P, P-2 or higher from Moody's, D-2 from Duff & Phelps, or F-2 from Fitch IBCA or at least two of the following long-term credit ratings: BBB- or higher from S&P, Baa3 or higher from Moody's, BBB- or higher from Duff & Phelps, or BBB- from Fitch IBCA.  d)  All obligations of the applicant to Illinois utilities are unconditionally guar-anteed by an affiliate of the applicant that maintains at least 2 of the fol-lowing commercial paper ratings: A-2 or higher from S&P, P-2 or higher from Moody's, D-2 from Duff & Phelps  or F-2 from Fitch IBCA; or at least two of the following long-term credit ratings: BBB- or higher from Standard & Poor's, Baa3 or higher from Moody's or, BBB- or higher from Duff & Phelps, or BBB- or higher from Fitch IBCA.  	83 Illinois Admin. Code  Art. 451.110 An applicant shall be deemed to possess sufficient financial capabilities to serve non-residential retail customers with maximum electrical demand of 1MWone megawatt or more if the applicant meets any of the following criteria:  1) The applicant maintains at least one of the following commercial paper ratings: A-  from S&P,  P-  from Moody's, ,  D-  from Duff & Phelps , or F  from Fitch IBCA or its successor; or at least one of the following long-term credit ratings: BBB-  from S&P,  Baa3  from Moody's, ,  BBB-  from Duff & Phelps , or BBB-  from Fitch IBCA or its successor. The applicant shall provide with its application a copy of the ratings agency reports that present the ratings of the applicant.  2) The applicant maintains a borrowing agreement with an affiliate with: A-2  from S&P,  P-2 from Moody's, ,  D-2 from Duff & Phelps , or F-2  from Fitch IBCA; or at least one of the following long-term credit ratings: BBB-  from S&P,  Baa3  from Moody's, ,  BBB-  from Duff & Phelps , or BBB-  from Fitch IBCA. The amount of credit available to the applicant is no less than the greater of $500,000 or 5% of the amount of the applicant's revenue for its most recently completed fiscal year.   3) The obligations of the applicant arising from the acquisition of elec-tric energy are covered under an unconditional guarantee is no less than the greater of $500,000 or 5% of the amount of the applicant's revenue from the sale of electric energy for the most recently com-pleted fiscal year.   4) The applicant certifies that it will offer to reimburse its Illinois retail customers for the additional costs those customers incur to acquire electric energy as a result of the applicant's failure to comply with a contractual obligation to supply such energy. The applicant's pro-spective obligation to reimburse Illinois retail customers shall be covered by an unconditional guarantee, payment bond, or letter of credit.   5) The applicant maintains a line of credit or revolving credit agree-ment from a financial institution with a long-term obligation rating of A-  from S&P,  A3  from Moody's, ,  A-  from Duff & Phelps , or A-  from Fitch IBCA or its successor.   6) The applicant earns 12 points on the financial ratios set forth in the code	

Please advise.

Brgrds 

AI