As part of the Application process, Pennsylvania Electric Company (Penelec) requires a supplier submit with their Application Materials a Credit History Summary form in order to asses creditworthiness,
As noted in the Penelec Energy Service Company Coordination Manual, Rider D, an supplier or its Guarantor is deemed creditworthy if they carry a minimum senior unsecured debt rating (or, if unavailable, corporate issuer debt rating discounted one notch) of at least “BBB” from S&P, “Baa2” from Moody’s, or “BBB” from Fitch. If a supplier does not meet creditworthiness standards on its own merit, it must provide an alternative credit arrangement:
- A guarantee of payment, satisfactory in form and substance to the Company, from a parent Guarantor deemed by to be creditworthy
- An irrevocable Letter of Credit or Surety Bond, satisfactory in form and substance to the Company, issued by a bank or other financial institution with a minimum “A” senior unsecured debt rating
- A Cash Deposit
The following files are available to assist supplier’s in demonstrating creditworthiness using an alternative credit arrangement. The Company request that the supplier use the following files in their substantial form and substance:
As disclosed in the Energy Service Company Coordination Manual, Rider D, a supplier has the option of submitting to Penelec an estimate of ninety (90) days of total Supplier Customer usage in the summer season derived from load profiles. After power has flowed for thirty (30) days, the credit exposure will be recalculated. If the Adjusted Exposure exceeds the alternative security posted, the Company will notify the supplier and request that the supplier provide additional security. If the supplier is not able submit an estimate at time of application, then Penelec request an initial credit amount of $250,000.
Supplier Support must be informed of the specific alternative credit arrangement that the supplier will use to demonstrate creditworthiness.