As part of the Application process, Metropolitan Edison Company (MetEd) and Pennsylvania Electric Company (Penelec) requires a supplier submit with their Application Materials a Credit History Summary form in order to asses creditworthiness,

Credit History Summary Form

As disclosed in the Credit Requirement section of the Electric Generation Supplier Tariff,  MetEd and Penelec will apply on a non-discriminatory and consistent basis reasonable financial standards to assess and examine an supplier’s Creditworthiness. These standards will take into consideration the scope of operations of each supplier. MetEd and Penelec require an initial credit amount of $250,000 and shall adjust the amount commensurate with the financial risks placed on MetEd and Penelec by an supplier, including recognition of a supplier’s performance. The Credit Requirement must be satisfied before the registration is considered complete.  A supplier or its parent (if applicable) shall satisfy its Creditworthiness requirement and receive an unsecured credit limit by demonstrating that it has, 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

MetEd and Penelec 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 credit arrangements in a format acceptable to MetEd and Penelec:

  • A guarantee of payment, satisfactory in form and substance to MetEd and Penelec, from a parent Guarantor deemed to be creditworthy
  • An irrevocable Letter of Credit or Surety Bond, satisfactory in form and substance to MetEd and Penelec, 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 an supplier in demonstrating creditworthiness using an alternative credit arrangement.  MetEd and Penelec request that the supplier use the following files in their substantial form and substance.  

Met-Ed Guaranty of Payment 
Penelec Guaranty of Payment 
Met-Ed & Penelec Guaranty of Payment
Met-Ed Letter of Credit
Penelec Letter of Credit 
Met-Ed & Penelec Letter of Credit
Met-Ed Surety Bond
Penelec Surety Bond
Met-Ed & Penelec Surety Bond
Met-Ed & Penelec Cash Deposit

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 asses credit exposure:

Supplier Exposure Formula Slide

Supplier Support must be informed of the specific alternative credit arrangement that the supplier will use to demonstrate creditworthiness.