CRE 00001

Question: Please advise when the Word documents for the Pre-Bid letter of credit and for the Supplier letter of credit will be added to your Website, so we may contact our banks.

Answer: The Word documents for the Pre-Bid Letter of Credit and the post-auction Supplier Letter of Credit (Attachment E, Appendix D to the Master SSO Supply Agreement) have been posted to the Supplier Documents page of the Information Website.

CRE 00002

Question: Where can Appendix B with the alternate guaranty rules be found?

Answer: "Appendix B - Alternate Guaranty Forms" is on page 32 of the Part 1 Application: http://www.firstenergycbp.com/Portals/0/SupplierDocuments/Part_1_Application.pdf

CRE 00003

Question: If a foreign guarantee is rated by one or more rating agencies do you still need a legal opinion with respect to a foreign guarantee?

Answer: Yes. Pursuant to the Part 1 Application language, even if a Guarantor that is incorporated in a foreign jurisdiction is rated by one or more rating agencies, a legal opinion still is needed with respect to the Guaranty.

CRE 00004

Question: May we place an evergreen clause in the Pre-Bid Letter of Credit (LC) so we can issue the LC for future procurements and adjust the amounts between auctions?

Answer: The evergreen clause is not applicable for the Pre-Bid Letter of Credit due to the limited timeframe that the LOC is in place.

CRE 00005

Question: If three products are in the auction: In the Part 2 Application, a bidder needs to specify, at the Maximum Starting Prices, its indicative offer for each of the three products and a total number of tranches summed across products. Which tranche number should a bidder use to calculate the amount of the Pre-Bid Security and additional Pre-Bid Security?

Answer: If three products are in the auction, the tranche number that a bidder should use to calculate the amount of the Pre-Bid Security and additional Pre-Bid Security is the total number of tranches in the bidder’s indicative offer summed across all three products at the Maximum Starting Prices.

CRE 00006

Question: The following paragraph appears in the Letter of Intent to Provide a Guarantee: "Should there be no material change in affairs, we would consider providing a financial guaranty on behalf of Bidder, such that our liability does not exceed $____________[amount]. We understand that this amount would be in excess of the amount of any guaranty that we have provided on behalf of Bidder. This letter, however, should not and cannot be taken as an indication of financing commitment of any kind whatsoever, or an absolute commitment to provide a financial guaranty." Can you explain the meaning of the sentence: "We understand that this amount would be in excess of the amount of any guaranty that we have provided on behalf of Bidder."

Answer: The sentence "We understand that this amount would be in excess of the amount of any guaranty that we have provided on behalf of Bidder" means that the amount that is stated in this letter is the highest amount that the Guarantor would issue in the guaranty, but is not necessarily the actual amount of the guaranty issued.

CRE 00007

Question: If I am a winning bidder, will I be required to post any collateral against my supply obligation?

Answer: The winning bidders will be subjected to the credit requirements as set forth in Article 6 - Creditworthiness; Performance Assurance in the Master SSO Supply Agreeement.  Depending on the creditworthiness of the bidder, the winning bidder may be required to post collateral in the form acceptable to the Companies. 

CRE 00008

Question: Assuming the Part 1 Applicant is not rated by a rating agency and did identify a Guarantor, please confirm that the following options are available to this Qualified Bidder: 1) Guarantor may provide the required bid security on behalf of the Part 1 Applicant in the form of cash or a letter of credit. 2) Guarantor will agree to or sign FirstEnergy Ohio Utilities' Letter of Intent to Provide a Guaranty, but then replace that guaranty with the required Master SSO Supply Agreement security in the form of cash or a letter of credit at or before the time of execution of the Master SSO Supply Agreement.

Answer: Both options are available.

CRE 00009

Question: When will my pre-bid security be returned to me?

Answer: Considerations related to pre-bid security are outlined in Section 4.2.2 of the Bidding Rules for the FirstEnergy Ohio Utilities' CBP Auctions: Letters of credit and additional security (if required) will remain in full force, at a minimum, until the fifth calendar day after the conclusion of the auction. Subsequently, a bidder’s financial guaranty will be marked cancelled and returned: (a) as soon as practicable if the bidder has won no tranches or (b) after the bidder has signed the Master SSO Supply Agreement and has complied with all creditworthiness requirements of the Master SSO Supply Agreement for the tranches that it has won. The FirstEnergy Ohio Utilities can collect on the financial guarantees of bidders that win tranches but that fail to sign the Master SSO Supply Agreement or fail to comply with the creditworthiness requirements immediately following the close of the auction.

CRE 00010

Question: Can you clarify the Independent Credit Requirement (ICR) for the October 2011 and January 2012 auctions?

Answer: Since the October 2011 and January 2012 procurements are for 24-month delivery periods, the ICR starting amount is $1.5 million and will decline over the 24-month term.

CRE 00011

Question: In the definition of Total Exposure Amount in the Master SSO Supply Agreement, is the intention that each of clauses (ii) and (iii) be without duplication to each other (e.g., that a “credit exposure” not include any “mark-to-market exposure amount”)?

Answer: Yes, clauses (ii) and (iii) in the defintion of Total Exposure Amount do not duplicate each other. Clause (ii) includes only the mark-to-market exposure amount under any Other SSO Supply Agreement.  Clause (iii) includes the payable from the Companies to the SSO Supplier under any Other SSO Supply Agreement.

CRE 00013

Question: Can we keep our Pre-bid Letter of Credit in force (at some nominal amount) between auctions so the language does not need to be reviewed and approaved for each CBP Auction?

Answer: FEOU can accept a Pre-bid Letter of Credit that would remain in force (at some nominal amount) between auctions as long as the expiration date is updated for the next CBP auction.

CRE 00014

Question: The Ohio Letter of Intent to Provide a Guaranty contains the following: "We understand that this amount would be in excess of the amount of any guaranty that we have provided on behalf of Bidder." This sentence is not included in the Pennsylvania Letter of Intent to Provide a Guaranty. Our maximum credit limit for both procurements is 16% of total net worth. Do we need to provide two different guarantees not to exceed the Credit Limit in aggregate?

Answer: The sentence "We understand that this amount would be in excess of the amount of any guaranty that we have provided on behalf of Bidder" means that the amount that is stated in this letter is the highest amount that the Guarantor would issue in the guaranty, but is not necessarily the actual amount of the guaranty issued.

CRE 00015

Question: In the Part I Application, Section 1.7, Financial and Credit Information for the Applicant, if the Applicant is relying on a Guarantor, is it okay to simply skip (a)-(f)?

Answer: Applicants relying on a Guarantor do not need to complete Section 1.7 (a) to (f) of the Part 1 Application.  Applicants relying on a Guarantor will need to complete everything in Section 1.8 of the Part 1 Application.

CRE 00016

Question: Our president executed the Part I Application, but he may not be available to execute the Letter of Intent to Provide a Guaranty on behalf of the Bidder. Do the Companies require an officer of the Bidder to execute this form, or can the Bidder's Authorized Representative make this attestation on behalf of the Bidder? Is a new Part I Application required if a different officer executes the LIPG on behalf of the Bidder?

Answer: Either the officer of the Bidder specified in the Part 1 Application or the Bidder's Authorized Representative can execute the LIPG, i.e., make the attestation on behalf of the Bidder.  A new Part I application is required if a different officer executes the LIPG on behalf of the Bidder.