FAQs
Credit
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FAQ-294:
Will the Auction Manager review additional proposed modifications to the pre-bid letter of credit during the Part 2 Application window?
Requested modifications to the Pre-Bid Letter of Credit are considered during the Part 1 Application process. During the Part 2 Application window, please kindly refer to the final list of acceptable modifications to the Pre-Bid Security Documents available on the Information - Documents page of the CBP website to check that the modifications to the standard format made by your bank are all on the list of modifications that are acceptable to AEP Ohio.You must either use the standard form of the Pre-Bid Letter of Credit posted to the Information - Documents page or incorporate only those modifications to the Pre-Bid Letter of Credit found acceptable by AEP Ohio and posted to the CBP website. The Pre-Bid Letter of Credit is electronic only. The original pre-bid letter of credit must be sent via electronic means only to the Auction Manager at AEP-CBP@nera.com. No hardcopy original should be sent.
Revised 2/14/2024
02/14/2023 in Credit
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FAQ-293:
Although the pre-bid letter of credit is electronic only, our bank requires a physical address for the beneficiary to be able to issue the pre-bid letter of credit. Can you please provide an address for the beneficiary?
Please see acceptable modification B.5 of the final list of acceptable modifications to the pre-bid letter of credit available here. Acceptable modification B.5 is provided below. Please note that you must either use the standard form of the pre-bid letter of credit or incorporate only those modifications to the pre-bid letter of credit found acceptable by AEP Ohio and posted to the CBP website. The pre-bid letter of credit is electronic only. The original pre-bid letter of credit must be sent via electronic means only to the Auction Manager at AEP-CBP@nera.com. No hardcopy original should be sent.Acceptable Modification B.5:
Letter of Credit No. _______________
To: Ohio Power Company, an Ohio corporation (“AEP Ohio”)
1 Riverside Plaza, 27th Floor
Columbus, Ohio 43215
c/o National Economic Research Associates, Inc. (“NERA”)
Auction Manager
Via email: AEP-CBP@nera.com
02/13/2023 in Credit
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FAQ-289:
When and how are credit-based tranche caps determined and can we provide any updated or additional information after the Part 1 Application deadlines pass to change the credit-based tranche cap assigned to the bidder (or the bidder’s guarantor)?
The Bidding Rules for the Auctions Under the Competitive Bidding Process of Ohio Power Company (“CBP Rules”) govern the application process for the Auctions for SSO Supply held under AEP Ohio’s Electric Security Plan IV. The CBP Rules are available on the Documents page under the heading “Auction Documents”. The credit-based tranche cap is set in accordance with Paragraph IV.1.2 of the CBP Rules, which states that the financial information provided in the Part 1 Application will be used to determine the credit-based tranche cap for the bidder (or the bidder’s guarantor). In particular, the credit-based tranche cap is determined based on the credit ratings available for the bidder (or the bidder’s guarantor) in accordance with Table 2 of the CBP Rules.In the Part 1 Application, an Applicant must select whether the Applicant is relying on its own financial standing or relying on the financial standing of a Guarantor and must provide financial and credit information for the entity selected for purposes of a creditworthiness evaluation. Once the deadlines related to the Part 1 Application have passed this selection can no longer be changed for purposes of the bidding process.
10/18/2022 in Credit
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FAQ-255:
Where should we provide the pre-bid letter of credit?
A Qualified Bidder must provide a pre-bid letter of credit or cash in an amount of $500,000 per tranche of the indicative offer at the maximum starting price. If submitting a pre-bid letter of credit, you must either use the standard form or incorporate only those modifications to the pre-bid letter of credit found acceptable by AEP Ohio and posted to the CBP website. The pre-bid letter of credit is electronic only. The original pre-bid letter of credit must be sent via electronic means only to the Auction Manager at AEP-CBP@nera.com. No hardcopy original should be sent. The electronic PDF file of the Letter of Credit serves as the operative instrument.Alternatively, if submitting cash, you must request instructions from the CBP Auction Manager via email at AEP-CBP@nera.com.
10/12/2021 in Credit
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FAQ-220:
Is the pre-bid security that we provide with the Part 2 Application returned after the auction or is the pre-bid security used as performance assurance under the terms of the Master SSO Supply Agreement?
Any pre-bid letter of credit submitted with the Part 2 Application will be cancelled and cannot be used as performance assurance under the terms of the Master SSO Supply Agreement. If a supplier submits cash as pre-bid security and the supplier wins tranches at the auction, the supplier may make a request to AEP Ohio to use a portion or the entirety of the cash deposit as performance assurance under the terms of the Master SSO Supply Agreement.
02/19/2020 in Credit
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FAQ-219:
Can you explain the pre-bid security requirements for the March 2020 Auction?
For the March 2020 Auction, the amount of pre-bid security required is $800,000 per tranche. As stated in Paragraph IV.2.9. of the CBP Rules:- Each bidder must post a pre-bid letter of credit or cash in an amount of $500,000 per tranche of the bidder’s indicative offer at the maximum starting price;
- A bidder that relies on the financial standing of a guarantor must, in addition to a pre-bid letter of credit or cash, provide a “letter of intent to provide a guaranty” in an amount of an additional $300,000 per tranche of the bidder’s indicative offer at the maximum starting price; and
- A bidder that relies on its own financial standing and that does not have sufficient unsecured credit must submit a letter of reference in an amount of an additional $300,000 per tranche of the bidder’s indicative offer at the maximum starting price.
The form of pre-bid security required is provided to each bidder in Attachment 2 of the bidder’s Part 1 Notification. A bidder always has the option of increasing the amount of the pre-bid letter of credit or cash to $800,000 per tranche rather than providing a letter of intent to provide a guaranty or a letter of reference.
02/19/2020 in Credit
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FAQ-218:
Why are there two letters of credit?
There is a single pre-bid letter of credit, posted under the “Pre-Bid Credit Document” section on the Information – Documents page. In the Part 2 Application, each Qualified Bidder is required to post pre-bid security in an amount of $500,000 per tranche of the indicative offer at the maximum starting price using this pre-bid letter of credit or in the form of cash. Bidders may be required to provide additional pre-bid security. Please refer to Section IV.2.9 of the CPB Rules for more information regarding the pre-bid security requirement.Additionally, there is a letter of credit that can be used to post collateral under the terms of the Master SSO Supply Agreement Documents . This letter of credit, the SSO Supplier Letter of Credit, is posted under the “Master SSO Supply Agreement Documents” section on the Information – Documents page. Please refer to Article 5 of the Master SSO Supply Agreement for details.
02/10/2020 in Credit
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FAQ-217:
We do not qualify for an unsecured credit line. If we win at the auction, what financial guarantees are required upon signing the Master SSO Supply Agreement?
The Independent Credit Requirement (ICR) per tranche is provided in Attachment C-1 of the Master SSO Supply Agreement and is $800,000 per tranche of the two-year product and $400,000 per tranche of the one-year product. A “market value” for each tranche will be determined at the close of the Auction based on the prevailing market prices, as described further in Attachment C-2 of the Master SSO Supply Agreement. The mark-to-market exposure is zero at the close of the Auction but this exposure may lead to a margin call during the term of the Master SSO Supply Agreement.Please see Article V of the Master SSO Supply Agreement for details.
10/31/2019 in Credit
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FAQ-215:
We are a bidder relying on the financial standing of a guarantor. When we participated in both the November 2018 and the March 2019 Auctions, the pre-bid security requirement for us was always $500,000/tranche. For the November 2019 Auction, we were required to provide an additional $300,000/tranche in the form of letter of intent to provide a guaranty , or in addition to a pre-bid letter of credit or cash. Can you explain the pre-bid security requirement for the November 2019 Auction?
For both the November 2018 and the March 2019 Auctions, the amount of pre-bid security required was $500,000 per tranche because there was a single product with a 12-month supply period. No additional pre-bid security was required for any bidder. For the November 2019 Auction, the amount of pre-bid security required is $800,000 per tranche because the auction includes multiple products including a product with a 24-month supply period. As stated in Paragraph IV.2.9. of the CBP Rules:- Each bidder must post a pre-bid letter of credit or cash in an amount of $500,000 per tranche of the bidder’s indicative offer at the maximum starting price;
- A bidder that relies on the financial standing of a guarantor must, in addition to a pre-bid letter of credit or cash, provide a “letter of intent to provide a guaranty” in an amount of an additional $300,000 per tranche of the bidder’s indicative offer at the maximum starting price; and
- A bidder that relies on its own financial standing and that does not have sufficient unsecured credit must submit a letter of reference in an amount of an additional $300,000 per tranche of the bidder’s indicative offer at the maximum starting price.
The form of pre-bid security required is provided to each bidder in Attachment 2 of the bidder’s Part 1 Notification. A bidder always has the option of increasing the amount of the pre-bid letter of credit or cash to $800,000 per tranche rather than providing a letter of intent to provide a guaranty or a letter of reference.
10/22/2019 in Credit
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FAQ-198:
For the November 2018 Auction, if a bidder is relying on the financial standing of a guarantor, can the bidder submit a “letter of intent to provide a guaranty” to meet the additional pre-bid security requirement?
For the November 2018 Auction, the amount of pre-bid security required is $500,000 per tranche. No additional pre-bid security is required for any bidder. As stated in Paragraph IV.2.9. of the CBP Rules, a bidder that relies on the financial standing of a guarantor may submit a “letter of intent to provide a guaranty” to meet the additional pre-bid security requirement when the maximum amount of pre-bid security required per tranche exceeds $500,000. This is not applicable to the November 2018 Auction.
10/29/2018 in Credit
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