Current through Register Vol. 48, No. 38, September 20, 2024
An applicant shall be deemed to possess sufficient financial
resources to be certified as an AGS able to serve available residential or small
commercial customers if it meets any of the following criteria:
a) The applicant provides a copy of a Dun &
Bradstreet Business Information Report that demonstrates, at a minimum, that the
applicant has a Composite Credit Appraisal of "3" or lower and a PAYDEX score of
"70" or higher. If the applicant does not have a Dun & Bradstreet Composite
Credit Appraisal, the applicant provides a copy of an Experian Small Business
Intelliscore report that demonstrates, at a minimum, that the applicant has an
Intelliscore of "63" or higher. At the time of application for certification, the
report shall be no more than 30 days old.
b) The applicant maintains at least one of the
following short-term credit ratings: A-2 or higher from Standard & Poor's or its
successor, P-2 or higher from Moody's Investors Service or its successor, or F-2 or
higher from Fitch Ratings or its successor; or at least one of the following
long-term credit ratings: BBB- or higher from Standard & Poor's or its
successor, Baa3 or higher from Moody's Investors Service or its successor, or BBB-
or higher from Fitch Ratings or its successor. The applicant shall provide with its
application a copy of the ratings agency reports that present the ratings of the
applicant.
c) The applicant maintains a
borrowing agreement with an affiliate.
1) The
affiliate must have at least one of the following short-term credit ratings: A-2 or
higher from Standard & Poor's or its successor, P-2 or higher from Moody's
Investors Service or its successor, or F-2 or higher from Fitch Ratings or its
successor; or at least one of the following long-term credit ratings: BBB- or higher
from Standard & Poor's or its successor, Baa3 or higher from Moody's Investors
Service or its successor, or BBB- or higher from Fitch Ratings or its
successor.
2) The amount of credit
available to the applicant under the borrowing agreement shall be no less than the
greater of $500,000 or 5% of the amount of the applicant's revenue for its most
recently completed fiscal year adjusted for any amount of revenue expected from
customer accounts purchased or under contract to be purchased from another AGS. The
amount of revenue for the applicant's most recently completed fiscal year must
appear in the applicant's certified financial statements, or those of the
applicant's parent, that have received an accountant's report that certifies those
financial statements to be free of material misstatement. If the applicant is using
the certified financial statements of its parent, the amount of credit available
under the borrowing agreement shall be determined using the applicable revenue
amount from the segment information section of the certified financial statements of
the applicant's parent.
A) If the applicant is
listed separately in the segment information section, the applicant's revenue shall
be used.
B) If the segment information
section is broken down by operation, or other means, the revenue for the entire
segment of which the applicant is part shall be used, unless a certified breakdown
of the segment by company is provided.
3) The borrowing agreement shall be valid for a
period of not less than one year.
4) The
applicant shall provide a copy of the following:
A) The ratings agency reports that present the
ratings of the affiliate with which the applicant maintains the borrowing
agreement;
B) The borrowing
agreement;
C) The applicant's certified
financial statements, or those of the applicant's parent, as applicable;
D) The accountant's report for the applicant's
certified financial statements or those of the applicant's parent, as applicable;
and
E) Documents supporting any estimate
of revenue from customer accounts purchased or under contract to be purchased from
another AGS.
d)
The obligations of the applicant to unaffiliated companies arising from the
acquisition of natural gas that can be delivered to residential or small commercial
customers in the State of Illinois, for sale or lease or in exchange for other value
received are covered under a guarantee, payment bond, or letter of credit.
1) This option is only available to an applicant
that will engage in activities that could result in the applicant holding an
ownership interest in or taking title to natural gas for the purpose of sale or
resale to Illinois residential or small commercial customers.
2) The guarantee, payment bond, or letter of
credit shall be in an amount that is no less than the greater of $500,000 or 5% of
the amount of the applicant's revenue from the sale of natural gas for the most
recently completed fiscal year adjusted for any amount of revenue expected from
customer accounts purchased or under contract to be purchased from another AGS. The
amount of revenue for the applicant's most recently completed fiscal year must
appear in the applicant's certified financial statements, or those of the
applicant's parent, that have received an accountant's report that certifies those
financial statements to be free of material misstatement. If the applicant is using
the certified financial statements of its parent, the amount of credit available
under the borrowing agreement shall be determined using the applicable revenue
amount from the segment information section of the certified financial statements of
the applicant's parent.
A) If the applicant is
listed separately in the segment information section, the applicant's revenue shall
be used.
B) If the segment information
section is broken down by operation, or other means, the revenue for the entire
segment of which the applicant is part shall be used, unless a certified breakdown
of the segment by company is provided.
3) The guarantee, payment bond, or letter of
credit shall be valid for a period of not less than one year.
4) Guarantee. The guarantor shall be an affiliate
of the applicant that maintains at least one of the following short-term credit
ratings: A-2 or higher from Standard & Poor's or its successor, P-2 or higher
from Moody's Investors Service or its successor, or F-2 or higher from Fitch Ratings
or its successor; or at least one of the following long-term credit ratings: BBB- or
higher from Standard & Poor's or its successor, Baa3 or higher from Moody's
Investors Service or its successor, or BBB- or higher from Fitch Ratings or its
successor. The guarantee shall obligate the guarantor to make contractually required
payment, net of set-offs for any amounts owed to the applicant, to the supplier for
services rendered or gas supplied in the event the applicant defaults. The applicant
shall provide a copy of the following:
A) The
ratings agency reports that present the ratings of the affiliate that is the
guarantor;
B) The guarantee;
C) The applicant's certified financial statements,
or those of the applicant's parent, as applicable, including the accountant's
report. If the amount of the guarantee is without dollar limitation, neither the
applicant's certified financial statements, nor those of the applicant's parent, are
required; and
D) Documents supporting
any estimate of revenue from customer accounts purchased or under contract to be
purchased from another AGS.
5) Payment Bond. An applicant using a payment bond
or payment bonds shall provide a copy of the following:
A) The payment bonds;
B) The certified financial statements of the
applicant or those of the applicant's parent, as applicable;
C) The accountant's report for the certified
financial statements of the applicant or those of the applicant's parent, as
applicable; and
D) Documents supporting
any estimate of revenue from customer accounts purchased or under contract to be
purchased from another AGS.
6) Letter of Credit. The letter of credit shall be
irrevocable and issued by a financial institution with a long-term obligation rating
of A- or higher from Standard & Poor's or its successor, A3 or higher from
Moody's Investors Service or its successor, or A- or higher from Fitch Ratings or
its successor. The applicant shall provide a copy of the following:
A) The letter of credit;
B) The ratings agency report that presents the
long-term obligation rating of the financial institution extending the
credit;
C) The certified financial
statements of the applicant or those of the applicant's parent, as
applicable;
D) The accountant's report
for the certified financial statements of the applicant or those of the applicant's
parent, as applicable; and
E) Documents
supporting any estimate of revenue from customer accounts purchased or under contact
to be purchased from another AGS.
e) The applicant certifies that it will offer to
reimburse its Illinois residential and small commercial customers for the additional
costs those customers incur to acquire natural gas as a result of the applicant's
failure to comply with a contractual obligation to supply such energy. The
applicant's prospective obligation to reimburse Illinois residential and small
commercial customers shall be covered by an unconditional guarantee or payment bond.
Any dollar limitation on the unconditional guarantee or payment bond shall equal not
less than an estimate of the maximum monthly number of Mcf of natural gas the
applicant expects to schedule over the next 12 months times the 12-month average of
the "Average City Gate Price, by State" for Illinois, as disclosed for the most
recent 12-month period in the Energy Information Administration's (EIA) "Natural Gas
Monthly". The most recent 12 months of data is available on the EIA's internet
website (www.eia.doe.gov). The Average City Gate Price used shall be from not more
than 28 days prior to the date of the application. The unconditional guarantee or
payment bond shall be valid for a period of not less than one year.
1) Unconditional Guarantee. The guarantor shall be
an affiliate of the applicant that maintains at least one of the following
short-term credit ratings: A-2 or higher from Standard & Poor's or its
successor, P-2 or higher from Moody's Investors Service or its successor, or F-2 or
higher from Fitch Ratings or its successor; or at least one of the following
long-term credit ratings: BBB- or higher from Standard & Poor's or its
successor, Baa3 or higher from Moody's Investors Service or its successor, or BBB-
or higher from Fitch Ratings or its successor. The applicant shall provide a copy of
the following:
A) The ratings agency reports that
present the ratings of the affiliate that is the guarantor;
B) The unconditional guarantee; and
C) A good faith estimate of the maximum daily
amount of natural gas in dekatherms the applicant will schedule during the remainder
of the current calendar year.
2) Payment Bond. The payment bond or payment bonds
shall be issued by a qualifying surety authorized to transact business in the State
of Illinois or by a surety whose Best's rating is A- or better and whose Best's
financial size category is VII or larger, and whose contract of insurance is issued
pursuant to Section 445 or 445a of the Illinois Insurance Code [215 ILCS 5/445 or
445 a] and countersigned by the Surplus Line Association of Illinois or its
successor. The applicant shall provide a copy of the following:
A) The payment bonds or the contract of insurance
with the countersignature of the Surplus Line Association of Illinois or its
successor as applicable; and
B) A good
faith estimate of the maximum daily amount of natural gas in dekatherms the
applicant will schedule during the remainder of the current calendar year for
residential and small commercial customers.
f) The applicant maintains a line of credit or
revolving credit agreement.
1) The line of credit
or revolving credit agreement must be from a financial institution with a long-term
obligation rating of A- or higher from Standard & Poor's or its successor, A3 or
higher from Moody's Investors Service or its successor, or A- or higher from Fitch
Ratings or its successor.
2) The amount
of the line of credit or revolving credit agreement shall be no less than the
greater of $500,000 or 5% of the amount of the applicant's revenue for the most
recently completed fiscal year adjusted for any amount of revenue expected from
customer accounts purchased or under contract to be purchased from another AGS. The
amount of revenue for the applicant's most recently completed fiscal year must
appear in the applicant's certified financial statements, or those of the
applicant's parent, that have received an accountant's report that certifies those
financial statements to be free of material misstatement. If the applicant is using
the certified financial statements of its parent, the amount of credit available
under the borrowing agreement shall be determined using the applicable revenue
amount from the segment information section of the certified financial statements of
the applicant's parent.
A) If the applicant is
listed separately in the segment information section, the applicant's revenue shall
be used.
B) If the segment information
section is broken down by operation, or other means, the revenue for the entire
segment of which the applicant is part shall be used, unless a certified breakdown
of the segment by company is provided.
3) The line of credit or revolving credit
agreement shall be valid for a period of not less than one year.
4) The applicant shall provide a copy of the
following:
A) The line of credit or revolving
credit agreement;
B) The ratings agency
report that presents the long-term obligation rating of the financial institution
extending the credit;
C) The applicant's
certified financial statements, or those of the applicant's parent, as
applicable;
D) The accountant's report
for the applicant's certified financial statements, or those of the applicant's
parent, as applicable; and
E) Documents
supporting any estimate of revenue from customer accounts purchased or under
contract to be purchased from another AGS.
g) The applicant earns 12 points on the financial
ratios set forth in subsection (g)(1):
1)
Financial Ratios
A) Pre-Tax Interest Coverage
(rounded to the nearest 0.1)
4.4 or above: 5 points
3.9 to
4.3: 4 points
3.4 to 3.8: 3 points
2.9 to 3.3: 2 points
2.4 to 2.8: 1 point
2.3 or below: 0 points
B) Funds from Operations Interest Coverage
(rounded to the nearest 0.1)
4.9 or above: 5 points
4.4 to
4.8: 4
points
3.9 to 4.3: 3 points
3.4 to 3.8: 2 points
2.9 to 3.3: 1 point
2.8 or below: 0 points
C) Funds from Operations to Average Total Debt
(rounded to the nearest 1%)
38% or above: 5 points
33% to 37%: 4 points
28% to 32%: 3 points
23% to 27%: 2 points
18% to 22%: 1 point
17% or below: 0 points
D) Total Debt to Total Capitalization (rounded to
the nearest 1%)
50% or below: 5 points
51% to 53%: 4 points
54% to 56%: 3 points
57% to 59%: 2 points
60% to 62%: 1 point
63% or above: 0 points
2) The applicant shall provide the following:
A) The applicant's certified financial statements
for its most recently completed fiscal year;
B) The accountant's report for the applicant's
certified financial statements; and
C) A
schedule showing the calculation of each financial ratio with a reference to the
applicant's certified financial statements provided for each input of the
calculation.
