 |
D.C. Municipal Regulations (Last Updated: September 13, 2017) |
 |
Title 15. PUBLIC UTILITIES AND CABLE TELEVISION |
|
Chapter 15-41. THE DISTRICT OF COLUMBIA STANDARD OFFER SERVICE RULES |
Section 15-4106. FINANCIAL CAPABILITY REQUIREMENTS
-
4106.1Financial capability requirements shall be imposed on Wholesale SOS Providers and shall be consistent with provisions established herein.
4106.2Each Wholesale SOS Provider shall obtain and file with the Commission a bond,
a letter of credit, or a corporate guarantee that will provide assurances of financial integrity and funding for replacement service in the event that the Wholesale SOS Provider fails to provide for uninterrupted service. If a corporate guarantee is obtained, it must conform to the Commission-approved form.
4106.3The amount of the financial capability requirement for the Wholesale SOS Provider in the Electric Company’s service territory shall be equal to fifteen (15) percent of the Wholesale SOS Provider’s bid obligation for the SOS class(es) the provider is awarded, and expected to serve, in the Electric Company’s service territory.
4106.4The amount of the financial capability requirement shall be commensurate with the remaining outstanding bid obligation of the Wholesale SOS Provider throughout the term of the Wholesale SOS Provider’s awarded contract period, and reduced annually from the initial amount determined at the beginning of the term of the Wholesale SOS Provider’s service.
4106.5The proceeds of the bond, or letter of credit, or corporate guarantee, as necessary, shall be payable to the SOS Administrator to whom the wholesale bidder is obligated to provide service. The proceeds of the bond, letter of credit, or corporate guarantee shall be used only to defray the additional costs of replacement SOS in the event of interrupted service. For purposes of this provision, additional costs are all costs that are incurred or will be incurred to acquire replacement SOS, including supply and administrative costs, through the remaining SOS term that exceed the amounts paid or to be paid by SOS customers at the SOS rates in effect at the time of the Commission’s declaration of a Wholesale SOS Provider’s default.
4106.6A corporate guarantee permitted by Subsections 4106.2, 4106.3, and 4106.4, may be issued by an affiliate of the Wholesale SOS Provider or a third party that meets the financial credit requirements set forth in Subsections 4106.2, 4106.3, and 4106.4.
(a) The corporate guarantee must meet all of the requirements of Subsections 4106.2, 4106.3, and 4106.4, and shall be unconditional and irrevocable and provide for payment within five (5) business days for the period of the standard offer term.
(b) A corporate guarantee may be used to satisfy the requirement of Subsections 4106.2, 4106.3, and 4106.4, if the corporate guarantor meets the following financial qualifications and capabilities:
(1) The senior unsecured debt obligations of the guarantor are publicly rated, at a minimum, "BBB-" from S&P or Fitch, or "Baa3" from Moody's;
(2) The total assets of the guarantor are at least 5.0 times the amount of the corporate guarantee amount required by Subsections 4106.2, 4106.3, and 4106.4; and
(3) The total common equity of the guarantor is at least 2.5 times the amount of the corporate guarantee amount required by Subsections 4106.2, 4106.3, and 4106.4.
(c) If a corporate guarantor's senior unsecured debt obligations are rated by: (i) two of the agencies listed in Subsection 4106.6(b)(1), the guarantor's rating will be determined by the lower assigned rating; or (ii) all three of the agencies listed in Subsection 4106.6(b)(1), two of those agencies must have assigned ratings equal to or higher than the required ratings described above.
(d) If, at any time, the senior unsecured debt obligations of the corporate guarantor fail to meet the requirements of Subsection 4106.6(b), the corporate guarantor or the Wholesale SOS Provider shall immediately notify the Commission in writing.
(e) If the corporate guarantor fails to meet any of the financial capability requirements, the Commission may, at its option, require the Wholesale SOS Provider to post a bond or file a letter of credit as described in Subsections 4106.2, 4106.3, and 4106.4.
4106.7If at any time during the term of the supplier agreement between the Wholesale SOS Provider and the SOS Administrator, the SOS Administrator’s credit rating is downgraded below investment grade, as defined in Section 4199, the Wholesale SOS Provider has the right to require the SOS Administrator to make payments to the Wholesale SOS Provider on an accelerated basis during the downgrade period. Payments made under the acceleration clause may be made on a weekly basis.