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Creditworthiness Procedures

Implementing new creditworthiness procedures in electric service contracts to minimize risk and ensure financial stability for Western, with provisions, clauses, and collateral requirements outlined for future transactions.

sybill-velasquez
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Creditworthiness Procedures

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  1. Creditworthiness Procedures

  2. Background • Firm Electric Service Contracts • Minimal risk to Western historically • OATT Provisions for Creditworthiness • Attachment Q • Changing industry standards

  3. Creditworthiness • Western’s regions are implementing • Language added to new FES contracts under marketing plan extensions • Multi-Year Implementation Across Western • Cover 70% of revenue sources within 3 years • SLCA/IP Contracts – Amendment needed

  4. SLCA/IP Contract Implementation • Address only Creditworthiness Issue • Language will be adopted from that currently used in other Western regions • Consistent with Western’s policies, but adjusted for any SLCA/IP considerations • Draft language will be shared with customers before any implementation

  5. Provisions of Creditworthiness • Notify Western of Adverse Change in Condition • (Credit Downgrade, Resignations, Default, Bankruptcy) • FES Customer Considered Creditworthy, provided: • Payments are current to Western • Credit rating is better than investor grade (BB) • No bankruptcy • Rates can be set to recover costs • If there is a risk, credit limits will be set. • (e.g., 5 months worth of estimated charges.)

  6. Provisions of Creditworthiness • Collateral May be Required – Based on Risk • Pre-payment of future charges • Irrevocable Letter of Credit, Corporate Guaranty • Failure to Provide Collateral • Western will suspend contract, after notice period • Suspension only as long as circumstances persist • Customer May Contest Any Determination by Western

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