As part of the Application process, The Ohio Utilities (Ohio Edison Company, Cleveland Electric Illuminating Company and The Toledo Edison Company) require a supplier submit a Credit History Summary form with their Application Materials in order to assess such supplier’s creditworthiness.
As disclosed in the Credit Requirement section of the Ohio Utilities Electric Generation Supplier Coordination Tariff, The Ohio Utilities will apply, on a non-discriminatory and consistent basis, reasonable financial standards to assess and examine a supplier’s creditworthiness. These standards take into consideration the scope of operations of each supplier and the level of risk to placed on The Ohio Utilities by a supplier. The Ohio Utilities require an initial credit amount of $250,000 and shall adjust the amount commensurate with the financial risks placed on The Ohio Utilities by a supplier, including recognition of a supplier’s performance. The Credit Requirement must be satisfied before the registration is considered complete. A supplier shall satisfy the creditworthiness requirement by demonstrating that it (or its parent, if applicable) has received, and maintains, investment grade long-term senior unsecured bond ratings from any two of the following four rating agencies:
|AGENCY||SENIOR SECURITIES RATING (BONDS)|
|Standard & Poor’s||BBB- or higher|
|Moody's Investors' Services||Baa3 or higher|
|Fitch IBCA||BBB- or higher|
|Duff & Phelps Credit Rating Company||BBB- or higher|
The Ohio Utilities shall make reasonable alternative credit arrangements with a supplier that is unable to meet the aforementioned criteria. The supplier may choose from any of the following alternative credit arrangements:
- A guarantee of payment, satisfactory in form and substance to The Ohio Utilities, from a parent Guarantor deemed to be creditworthy by The Ohio Utilities
- An irrevocable Letter of Credit or Surety Bond, satisfactory in form and substance to The Ohio Utilities, 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 a supplier in demonstrating creditworthiness using an alternative credit arrangement. The Ohio Utilities request that the supplier use the following files in their substantial form and substance.
Once the initial Credit Requirement is satisfied, the supplier will not be required to post additional credit until the customer load responsibility served by the supplier requires such an increase. The Company will use the following example as one of the tools to assess credit exposure:
Supplier Support must be informed of the specific alternative credit arrangement that the supplier will use to demonstrate creditworthiness.