PECO Procurement For Default Supply

FAQs

Credit

FAQ-74:
Please provide the bank information for Paragraph 7 of the pre-bid letter of credit for the March 2025 Solicitation.

This information will be provided to all RFP Bidders that submit a Part 1 Proposal on the Part 1 Date. This information will be provided to an RFP Bidder earlier upon request if the RFP Bidder has submitted a Part 1 Proposal.

02/24/2025 in Credit
FAQ-64:
Is there a dispute right under the Uniform SMA related to posting performance assurance?

The calculation of Buyer’s Exposure is available to the Default Supplier in Appendix B. Appendix B explains the methodology and data sources that the Buyer will use to calculate the MtM Exposure Amount and Total Exposure Amount along with a numerical example. A Default Supplier will be provided the Total Exposure Amount when a margin call request is made.

Article 6 outlines the timelines and requirements related to posting performance assurance when a Margin call request is made. The Company will not unreasonably deny a request for a one-day extension for posting performance assurance; however, there is no specific dispute right under the Uniform SMA as it relates to the posting of performance assurance. In the event that the Default Supplier fails to post performance assurance collateral to cover Margin when due in accordance with this Section 6.5, then an Event of Default under Article 5 of this Agreement will be deemed to have occurred and the Company will be entitled to the remedies set forth in Article 5 of this Agreement. Please refer to the Uniform SMA for more information; each Default Supplier is responsible for reviewing and understanding the Uniform SMA.

01/28/2025 in Credit
FAQ-61:
What is the timeframe for the return of performance assurance collateral under the Uniform SMA?

Please see Section 6.5(b) of the Uniform SMA which states, “Surplus Margin being held by the Company that is not needed to satisfy the Total Exposure Amount, as determined above, will be returned to the DS Supplier upon receipt of a written request by the DS Supplier. Surplus Margin means cash or a letter of credit posted by the DS Supplier as a result of a request by the Company pursuant to Section 6.5(a) that exceeds the Total Exposure Amount less the DS Supplier’s or the Guarantor’s credit limit (rounded by the Rounding Amount). If the resulting surplus Margin amount is more than the Minimum Transfer Amount, it will be returned to the DS Supplier. If the DS Supplier posted cash and notice is received by 1:00 p.m. New York time on a Business Day, the surplus Margin will be returned by the next following Business Day and if the DS Supplier posted cash and notice is received by the Company after 1:00 p.m. New York time on a Business Day, the surplus Margin shall be returned by the second Business Day following the date of notice, unless the DS Supplier agrees in writing to extend the period to return the surplus Margin. If the DS Supplier posted a letter of credit, the surplus Margin shall be returned on the next Business Day following the Business Day on which the amendment to the letter of credit is received from the issuing bank, unless the DS Supplier agrees in writing to extend the period to return the surplus Margin. The DS Supplier will not unreasonably deny a request for a one-day extension of such period. In the event that the Company fails to return the surplus Margin when due in accordance with this Article, then an Event of Default under Article 5 of this Agreement will be deemed to have occurred and the DS Supplier will be entitled to the remedies set forth in Article 5 of this Agreement.”

01/23/2025 in Credit
FAQ-58:
Will the Independent Evaluator retain a Pre-Bid Letter of Credit between solicitations if requested by an RFP Bidder?

The Independent Evaluator will retain a Pre-Bid Letter of Credit between solicitations if requested by an RFP Bidder.

12/16/2024 in Credit
FAQ-56:
Can you please provide a physical address for PECO for the purposes of issuing the pre-bid letter of credit?

If a physical address is required strictly for purposes of identifying the Beneficiary, it is acceptable to use PECO’s address below the beneficiary name. Please see the acceptable modification to the header to include PECO’s address in the list of acceptable modifications to the Pre-Bid Letter of Credit posted on the Supplier Documents page. The pre-bid letter of credit must be submitted as an electronic PDF file via electronic means only to the Independent Evaluator. A hardcopy version should not be delivered to this address.

12/16/2024 in Credit
FAQ-55:
We do not have an RFP Guarantor that meets the creditworthiness requirements under the Uniform SMA. Does this mean that we cannot participate in the RFP?

An unrated entity or an entity with a credit rating below BBB- for S&P and/or Fitch or below Baa3 from Moody’s would not be granted any Unsecured Credit and cannot serve as an RFP Guarantor under the terms of the Uniform SMA (see Appendix A). It is not a requirement for an RFP Bidder to be rated or to rely on the financial standing of a Guarantor that meets the creditworthiness requirements in order to participate in the PECO RFP. In this case, the RFP Bidder would not be granted any Unsecured Credit and must post any required performance assurance collateral in the form of cash or a letter of credit.

12/16/2024 in Credit
FAQ-53:
Is it acceptable to rely on the financial standing of a Foreign Guarantor?

Yes, RFP Bidders may rely on the financial standing of a Foreign Guarantor. Please see Paragraphs IV.5. and V.5. of the RFP Rules for additional requirements applicable to RFP Bidders with Foreign Guarantors. The RFP Rules are available on the Supplier Documents page of the RFP website.

12/16/2024 in Credit
FAQ-21:
Is there a credit-based tranche cap in the PECO RFP?

No, there is no cap on the number of tranches for which an RFP Bidder can bid on based on the credit assessment for the entity on which that RFP Bidder is relying. There are, however, load caps for the Residential and Small Commercial Classes that are set so that the Default Service customers of these Classes have no more than a 50% exposure to any one Default Supplier at any given time. There is a load cap for the Consolidated Large Commercial and Industrial Class that is set so that the Default Service customers of that Class have no more than a 75% exposure to any one Default Supplier at any given time.

12/16/2024 in Credit
FAQ-8:
Does PECO provide Default Suppliers with a daily exposure calculation?

PECO does not provide Default Suppliers with a daily exposure calculation. A Default Supplier will be provided the Total Exposure Amount when a margin call request is made. As detailed in Section 6.5 of the Uniform SMA, “If at any time and from time to time during the term of Transaction(s) under this Agreement, the Total Exposure Amount, rounded by the Rounding Amount, exceeds the DS Supplier’s or the Guarantor’s credit limit by the Minimum Transfer Amount, then the Company on any Business Day, may request that the DS Supplier provide cash or a letter of credit in an acceptable form as defined in Section 6.7(b) of this Agreement (see standard format in Appendix F), in an amount equal to the Margin (less any performance assurance collateral for Margin posted by the DS Supplier and held by the Company pursuant to this Agreement or any other agreement(s) between the Company and the DS Supplier for the provision of DS Supply).”

12/06/2024 in Credit