CRE 00001

Question: Please advise when the Word documents for the Pre-Bid letter of credit and for the Supplier letter of credit will be added to your Website, so we may contact our banks.

Answer: The Word documents for the Pre-Bid Letter of Credit and the post-auction Supplier Letter of Credit (Attachment F, Appendix D to the Master SSO Supply Agreement) have been posted to the Supplier Documents page of the Information Website.

CRE 00002

Question: Where can Appendix B with the alternate guaranty rules be found?

Answer: "Appendix B - Alternate Guaranty Forms" is on page 33 of the Part 1 Application posted on www.firstenergycbp.com/Documents/SupplierDocuments.aspx.

CRE 00003

Question: If a foreign guarantee is rated by one or more rating agencies do you still need a legal opinion with respect to a foreign guarantee?

Answer: Yes. Pursuant to the Part 1 Application language, even if a Guarantor that is incorporated in a foreign jurisdiction is rated by one or more rating agencies, a legal opinion still is needed with respect to the Guaranty.

CRE 00004

Question: May we place an evergreen clause in the Pre-Bid Letter of Credit (LC) so we can issue the LC for future procurements and adjust the amounts between auctions?

Answer: An evergreen clause can be applied to a Pre-Bid Letter of Credit (LC). The bidder will need to work with the Auction Manager during the application process to amend the LC to the appropriate amount and at the appropriate time for each auction.

CRE 00005

Question: If three products are in the auction: In the Part 2 Application, a bidder needs to specify, at the Maximum Starting Prices, its indicative offer for each of the three products and a total number of tranches summed across products. Which tranche number should a bidder use to calculate the amount of the Pre-Bid Security and additional Pre-Bid Security?

Answer: If three products are in the auction, the tranche number that a bidder should use to calculate the amount of the Pre-Bid Security and additional Pre-Bid Security is the total number of tranches in the bidder’s indicative offer summed across all three products at the Maximum Starting Prices.

CRE 00007

Question: If I am a winning bidder, will I be required to post any collateral against my supply obligation?

Answer: The winning bidders will be subjected to the credit requirements as set forth in Article 6 - Creditworthiness; Performance Assurance in the Master SSO Supply Agreement.  Depending on the creditworthiness of the bidder, the winning bidder may be required to post collateral in the form acceptable to the Companies. 

CRE 00008

Question: Assuming the Part 1 Applicant is not rated by a rating agency and did identify a Guarantor, please confirm that the following options are available to this Qualified Bidder: 1) Guarantor may provide the required bid security on behalf of the Part 1 Applicant in the form of cash or a letter of credit. 2) Guarantor will provide the required Master SSO Supply Agreement security in the form of cash or a letter of credit at or before the time of execution of the Master SSO Supply Agreement.

Answer: Both options are available.

CRE 00009

Question: When will my pre-bid security be returned to me?

Answer: Considerations related to pre-bid security are outlined in Section 4.2.2 of the Bidding Rules for the FirstEnergy Ohio Utilities' CBP Auctions: Pre-bid security will remain in full force, at a minimum, until five (5) calendar days after the conclusion of the auction. Subsequently, a bidder’s pre-bid security will be cancelled and returned as follows: (a) as soon as practicable if the bidder has won no tranches or (b) after the bidder has signed the Master SSO Supply Agreement and has complied with all creditworthiness requirements of the Master SSO Supply Agreement for the tranches that it has won. The FirstEnergy Ohio Utilities can collect on the financial guarantees of bidders that win tranches but that fail to sign the Master SSO Supply Agreement or fail to comply with the creditworthiness requirements immediately following the close of the auction.

CRE 00011

Question: In the definition of Total Exposure Amount in the Master SSO Supply Agreement, is the intent that each of clauses (ii) and (iii) be without duplication to each other (e.g., that a “credit exposure” not include any “mark-to-market exposure amount”)?

Answer: Yes, clauses (ii) and (iii) in the definition of Total Exposure Amount do not duplicate each other. Clause (ii) includes only the mark-to-market exposure amount under any Other SSO Supply Agreement.  Clause (iii) includes the payable from the Companies to the SSO Supplier under any Other SSO Supply Agreement.

CRE 00013

Question: Can we keep our Pre-bid Letter of Credit in force (at some nominal amount) between auctions so the language does not need to be reviewed and approved for each CBP Auction?

Answer: See the related question above (CRE 00004).

CRE 00015

Question: In the Part 1 Application, Section 1.7, Financial and Credit Information for the Applicant, if the Applicant is relying on a Guarantor, is it okay to simply skip (a)-(f)?

Answer: Applicants relying on a Guarantor do not need to complete Section 1.7 (a) to (f) of the Part 1 Application.  Applicants relying on a Guarantor will need to complete everything in Section 1.8 of the Part 1 Application.

CRE 00020

Question: Please confirm that the Credit-Based Tranche Cap applies to the auction only. Specifically, please confirm that if a bidder is awarded six (6) tranches in the auction, the same bidder can be awarded another six (6) tranches in the next auction which is for the same 12-month term.

Answer: There is a credit-based tranche cap for every auction. The credit-based tranche cap is applied on an auction specific basis and it is not adjusted for tranches currently supplied by the bidder.

In addition, a Qualified Bidder will be subject to a load cap that limits the number of tranches the bidder can bid on and win. The load cap will be 80 percent on an aggregated load basis across all auction products for each auction date such that no bidder may bid on and win more tranches than the load cap. The load cap will be implemented by ensuring that each bidder’s initial eligibility does not exceed the load cap in an auction.

Also, please refer to the Master SSO Supply Agreement Section 6.3 to see more about the Independent Credit Requirement per Tranche that will also be applied.

CRE 00021

Question: Will Credit and Parent Guaranties need to be posted on an EDC by EDC basis? Will the bidder be required to post their MCL for each of the 3 companies in the FEOH Auction for a total of three times the MCL? Or does the MCL cover all tranches and companies?

Answer: Credit is managed in aggregate across all three FirstEnergy Ohio utilities.  Suppliers need to post a single guaranty and the MCL covers all tranches and companies.