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Enron Mail |
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Carol St. Clair EB 4539 713-853-3989 (phone) 713-646-8537 (fax) 281-382-1943 (cell phone) 8774545506 (pager) 281-890-8862 (home fax) carol.st.clair@enron.com -----Original Message----- From: =09Harris, Molly =20 Sent:=09Tuesday, November 20, 2001 3:41 PM To:=09St. Clair, Carol Subject:=09FW: NIMO/Notice RE: Posting of Additional Security FYI - Let's discuss. Thanks Molly -----Original Message----- From: =09Castano, Marianne =20 Sent:=09Tuesday, November 20, 2001 11:16 AM To:=09Harris, Molly Cc:=09Keller, James; Smith, Mike Subject:=09NIMO/Notice RE: Posting of Additional Security =09Molly: =09Per your request, we did a bit of research regarding whether NIMO, pursu= ant to its gas tariff, can request additional security from us in light of = the recent credit downgrades experienced by Enron Corp. Under NIMO's "Supplier Select" program, credit appraisals and security requ= irements are reviewed by NIMO annually and adjusted "as financial evaluatio= ns dictate". See PSC No. 218 - Gas, Leaf No. 186, Revision 3, effective Aug= ust 1, 2000. NIMO may require a supplier to post security for the full amo= unt of the supplier's credit exposure if (i) the supplier or its guarantor = is at the minimum rating (listed as "BBB" from S&P or Fitch or "Baa2" from = Moody's) and is placed on credit watch with negative implications by S&P, F= itch or Moody's or NIMO receives information that the supplier or its guara= ntor's credit rating could be downgraded below such minimum rating; or (ii)= the supplier's status as a billing agent is terminated by another New York= utility for failing to render timely bills to customers or to make timely = payments to the utility. If in (i) the supplier's or guarantor's credit ra= ting is not downgraded during the next 60 days, the security requirement wi= ll be lifted. See PSC No. 218 - Gas, Leaf No. 186.2. =20 =09In the event of (i) or (ii) above, the supplier may satisfy its security= requirement by providing one of the following forms of security, as mutual= ly agreed by NIMO and the supplier: (i) prepayment or an advance cash depos= it which will accumulate interest at the applicable rate per annum approved= by the NYPSC; (ii) a stand-by irrevocable letter of credit or surety bond = issued by a financial institution with at least an "A" bond rating; (iii) a= security interest in collateral found to be satisfactory to NIMO; (iv) a g= uarantee, acceptable to NIMO, by another party with a satisfactory credit r= ating of at least "BBB" by S&P or Fitch or "Baa2" by Moody's; (v) payments = made by the supplier into a lockbox administered by a third party (which wi= ll reduce any security requirements to 50% of what would otherwise be requi= red); or (vi) other mutually agreed means of providing or establishing adeq= uate security. See PSC No. 218 - Gas, Leaf No. 186.4. For your informatio= n, NIMO may only call on the posted security in the following events: (i) a= fter providing 5 day's notice to the supplier whenever the supplier fails t= o pay NIMO charges when due, unless the supplier makes full payment within = the 5-day notice period; or (ii) if supplier files a petition in bankruptcy= (or the equivalent, including an involuntary petition against the supplier= ) or if for any reason the supplier ceases to provide service to its custom= ers under NIMO's Supplier Select program. See PSC No. 218 - Gas, Leaf No. = 186.7. No prior notice is required under (ii). =09Please call me re: the above if you have questions/need additional info= rmation. =09MLC
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