Creditworthiness
As part of the Application process, Potomac Edison Company requires a supplier to submit with their Application Materials a Credit History Summary form in order to asses creditworthiness.
A Supplier 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 |
Potomac Edison 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 Potomac Edison:
- A guarantee of payment, satisfactory in form and substance to the Company, from a parent Guarantor deemed 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
In the event the supplier does not qualify for unsecured credit, the Company will require an initial credit amount of $25,000 and shall adjust the amount commensurate with the financial risks placed on Potomac Edison by a supplier, including recognition of a supplier’s performance. This Credit Requirement must be satisfied before the registration will be considered complete.
The following files are available to assist a supplier in demonstrating creditworthiness using an alternative credit arrangement. Potomac Edison requests that the supplier use the following files in their substantial form and substance.
Guaranty of Payment
Letter of Credit
Surety Bond
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. Potomac Edison will use the following example as one of the tools to assist credit exposure:
Supplier Support must be informed of the specific alternative credit arrangement that the supplier will use to demonstrate creditworthiness.