Current through Register Vol. 41, No. 3, September 23, 2024
A. An operator
and/or guarantor may satisfy the requirements of
9VAC25-640-50
by passing a financial test as specified in this section. To pass the financial
test of self-insurance, the operator and/or guarantor shall meet the
requirements of subsection B or C and subsection D of this section based on
year-end financial statements for the latest completed financial reporting
year.
B.
1. The operator and/or guarantor shall have a
tangible net worth at least equal to the total of the applicable amount
required by
9VAC25-640-50
for which a financial test is used to demonstrate financial
responsibility.
2. The operator
and/or guarantor shall comply with either subdivision a or b below:
a.
(1) The
financial reporting year-end financial statements of the operator and/or
guarantor shall be examined by an independent certified public accountant and
be accompanied by the accountant's report of the examination; and
(2) The financial reporting year-end
financial statements of the operator and/or guarantor cannot include an adverse
auditor's opinion, a disclaimer of opinion, or a "going concern"
qualification.
b.
(1)
(a)
File financial statements annually with the U.S. Securities and Exchange
Commission, the Energy Information Administration, or the Rural Utilities
Service; or
(b) Report annually the
tangible net worth of the operator and/or guarantor to Dun and Bradstreet, and
Dun and Bradstreet must have assigned a financial strength rating which at
least equals the amount of financial responsibility required by the operator in
9VAC25-640-50.
(2) The financial reporting
year-end financial statements of the operator and/or guarantor, if
independently audited, cannot include an adverse auditor's opinion, a
disclaimer of opinion, or a "going concern" qualification.
3. The operator and/or guarantor
shall have a letter signed by the chief financial officer worded identically as
specified in Appendix I/Alternative I.
C.
1. The
operator and/or guarantor shall have a tangible net worth at least equal to the
total of the applicable amount required by
9VAC25-640-50
for which a financial test is used to demonstrate financial
responsibility.
2. The financial
reporting year-end financial statements of the operator and/or guarantor shall
be examined by an independent certified public accountant and be accompanied by
the accountant's report of the examination.
3. The financial reporting year-end financial
statements cannot include an adverse auditor's opinion, a disclaimer of
opinion, or a "going concern" qualification.
4. If the financial statements of the
operator and/or guarantor are not submitted annually to the U.S. Securities and
Exchange Commission, the Energy Information Administration or the Rural
Utilities Service, the operator and/or guarantor shall obtain a special report
by an independent certified public accountant stating that:
a. The accountant has compared the data that
the letter from the chief financial officer specified as having been derived
from the latest financial reporting year-end financial statements of the
operator and/or guarantor with the amounts in such financial statements;
and
b. In connection with that
comparison, no matters came to the accountant's attention that caused him to
believe that the specified data should be adjusted.
5. The operator and/or guarantor shall have a
letter signed by the chief financial officer, worded identically as specified
in Appendix I/Alternative II.
D. To meet the financial demonstration test
under subsections B or C of this section, the chief financial officer of the
operator and/or guarantor shall sign, within 120 days of the close of each
financial reporting year, as defined by the 12-month period for which financial
statements used to support the financial test are prepared, a letter worded
identically as specified in Appendix I with the appropriate alternative, except
that the instructions in brackets are to be replaced by the relevant
information and the brackets deleted.
E. If an operator using the test to provide
financial assurance finds that he no longer meets the requirements of the
financial test based on the financial reporting year-end financial statements,
the operator shall obtain alternative coverage and submit to the department the
appropriate original forms listed in
9VAC25-640-170 B
within 150 days of the end of the year for which financial statements have been
prepared.
F. The department may
require reports of financial condition at any time from the operator and/or
guarantor. If the department finds, on the basis of such reports or other
information, that the operator and/or guarantor no longer meets the financial
test requirements of subsection B or C and D of this section, the operator
shall obtain alternate coverage and submit to the department the appropriate
original forms listed in
9VAC25-640-170 B
within 30 days after notification of such finding.
G. If the operator fails to obtain alternate
assurance within 150 days of finding that he no longer meets the requirements
of the financial test based on the financial reporting year-end financial
statements, or within 30 days of notification by the department that he no
longer meets the requirements of the financial test, the operator shall notify
the department of such failure within 10 days.
Statutory Authority: §§ 62.1-44.15 and
62.1-44.34:16 of the Code of Virginia.
