FAQ  >  Credit

CREDIT 00001

Question: How will "Mark-to-Market" be determined, i.e., using a bid, ask or mid price?

Answer: The “Mark-to-Market ” will be determined daily by the Seller upon execution of the Sales Agreement by Buyer, at which the Mark-to-Market Amount for the Allowances shall be equal to zero and  thereafter, the differences between the prevailing Forward Market Prices on a valuation date and the Purchase Price for Allowances under Section 2.1 of the Sales Agreement.

CREDIT 00002

Question: Is there pre-bid collateral? If so, when is it due and when will it be returned?

Answer: Yes, for each auction there is pre-bid collateral, which is set to $500 per allowance of initial eligibility for the auction.  Initial eligibility is the maximum number of allowances the bidder would like to be able to bid on.  If the bidder wants to be able to bid on up to 900 SO2 allowances and on up to 700 NOx allowances, then its initial eligibility for the SO2 auction is 900 allowances and its initial eligibility for the NOx auction is 700 allowances, and its required pre-bid collateral is 1,600 x $500 = $800,000.

The pre-bid security in the form of either cash or letter of credit is due by Monday, November 14, 2011.  The pre-bid security will be returned after the auction once the credit requirements have been met and the contract has been executed.  If the bidder did not win any allowances, the pre-bid security will be returned after the auction results are finalized.

CREDIT 00003

Question: Other than a Letter of Credit or cash to cover the inital eligibility, is any other form of additional pre-bid security required or acceptable in this Auction?

Answer: The only forms of pre-bid security required and acceptable are the Letter of Credit or cash.

CREDIT 00004

Question: Do you have a cash collateralization document similar to your Letter of Credit document? When are the credit documents and pre-bid security due?

Answer: There is not a cash collateralization document similar to the Letter of Credit document. If posting cash for pre-bid security, FES wiring instructions will be made available upon request. The Bidder Application and the credit documents are due November 10. The pre-bid security is due November 14. In the event you are a winning bidder, the terms and conditions for cash collateral and collateral interest are addressed in Exhibit A of the Sales Agreement.

CREDIT 00005

Question: What is the day and time of the deadline to submit pre-bid secutity?

Answer: Pre-bid security is due at the close of business on Monday, November 14, 2011.

CREDIT 00006

Question: Is the letter of credit format negotiable?

Answer: FES will consider changes to the Letter of Credit.  Requested changes are to be submitted with the Bidder Application.  Applicants will be notified if their requested changes to the Letter of Credit are acceptable concurrent with their notification of becoming a successful Qualified Bidder.

CREDIT 00007

Question: How will FirstEnergy calculate collateral posting requirements for bidders that do not have a credit rating?

Answer: In the event that an entity is unrated, and does not have a Parent Guarantor that is rated, no unsecured credit will be granted.  Collateral requirements will be based on the MtM exposure, determined daily by seller, and will be the difference between the prevailing market prices on any valuation date and the purchase price for the Allowances. 

CREDIT 00008

Question: Will you send or post wire instructions for pre bid collateral?

Answer: The wire instructions will be sent to interested parties upon request.

FAQs Disclaimer

The information presented and distributed in the Frequently Asked Questions (FAQs) may be subject to modifications and/or amendments and is provided for informational purposes only. The information provided in the course of the Auction, or on the Auction Information Website, has been prepared to assist bidders in evaluating the Auction. It does not purport to contain all the information that may be relevant to a bidder in satisfying its due diligence efforts. Neither FirstEnergy Solutions nor the Auction Manager make any representation or warranty, expressed or implied, as to the accuracy or completeness of the information, and shall not, either individually or as a corporation, be liable for any representation expressed or implied in the Auction or any omissions from the Auction, or any information provided to a bidder by any other source. A bidder should check the Auction Information Website frequently to ensure it has the latest documentation and information. Neither FirstEnergy Solutions, nor the Auction Manager, nor any of their representatives, shall be liable to a bidder or any of its representatives for any consequences relating to or arising from the bidder’s use of outdated information. The information is not intended to form any part of the basis of any investment decision, valuation or any bid that may be submitted during the Auction process. Each recipient should not rely solely on this information and should make its own independent assessment of the potential value of the CSAPR emission allowances in the Auction after making all investigations it deems necessary.

Copyright © 2016 CRA International, Inc.   |  Privacy Statement  |  Terms Of Use