1.                  General Information:

This provision is applicable to any customer taking service under ISO New England Inc., FERC Electric Tariff No. 3, Section II - Open Access Transmission Tariff Schedule 21-CV  and Schedule 20A-CV of the OATT for CVPS (referred to as “Service” or “Services”).  The creditworthiness of each customer must be established prior to receiving transmission service from CVPS.  A customer will be evaluated at the time its application for transmission service is provided to CVPS.  A credit review shall be conducted for each transmission customer not less than annually or upon reasonable request by the transmission customer.  This Creditworthiness Policy (“Policy”), when updated, will be done so in accordance with Section 7 of this Policy and as posted on CVPS ‘s OASIS website at http://oasis.iso-ne.com/OASIS/CVPS.

The information requested in this Policy should be forwarded to:

Roslyn D. Cook
Assistant Treasurer

Central Vermont Public Service Corp.
77 Grove Street
Rutland, VT 05701
Phone : 802-747-5418


Upon receipt of a customer’s information, CVPS will review it for completeness and will notify the customer if additional information is required.  Upon completion of an evaluation of a customer under this Policy, CVPS will forward a written evaluation if the customer is required to provide Financial Assurance. 

2.                  Financial Information:

Customers requesting transmission service or requesting interconnection service must submit, if available, the following:

·                    All current rating agency reports of the customer issued by Standard and Poor’s (“S&P”), Moody’s and/or Fitch Ratings.

·                    Audited financial statements provided by a registered independent auditor for the two most recent years, on an annual and quarterly basis if available, or the period of its existence, if shorter than two years, for the customer.

3.                  Creditworthiness Requirements

A.        To qualify for unsecured credit, the customer must meet at least one of the following criteria:

a)         If rated, the customer’s lowest senior unsecured long-term debt rating from the three named rating agencies (or if the customer does not have a senior unsecured long-term debt rating,  then one rating notch below the issuer and/or corporate credit rating) of: 

·                    Standard and Poor’s or Fitch rating of at least a BBB+, or

·                    Moody’s rating of at least a Baa1.

b)         If un-rated or if rated below BBB+/Baa1, as stated in a), the customer must meet all of the following for the last 4 quarters, or the last 2 years if quarterly information is not available:

·    A Current Ratio of at least 2.0 times (current assets divided by all current liabilities);

·    A Total Capitalization Ratio of less that 55% debt, defined as total debt (including all capitalized leases and all short-term borrowings) divided by the sum of total shareholders’ equity plus total debt;

·    EBITDA-to-Fixed Charge Ratio of at least 3.0 times, defined as Earnings before interest, taxes, depreciation and amortization divided by fixed charges (interest on debt as defined in Total Capitalization Ratio above plus preferred dividends on any outstanding preferred equity); and

·    Unqualified audit opinions in audited financial statements provided.

c)         If the customer relies on the creditworthiness of a parent company or other party reasonably acceptable to CVPS, the customer’s parent company or such other party must meet the criteria set out in (a) or (b) above, and must provide to CVPS a written guarantee that it will be unconditionally responsible for all financial obligations associated with the customer’s receipt of transmission service from CVPS.

4.                  Financial Assurance:

If the customer does not meet the applicable requirements for Creditworthiness set out in Section 3, then the customer must either:

·                    Pay in advance for service an amount equal to the lesser of the total charge for Transmission Service or the charge for three months of Transmission Service not less than 10 business days in advance of the commencement of service.  If the customer pays for service in advance, CVPS will pay to the customer interest on the amounts not yet due to CVPS, computed in accordance with the Commission's regulations at 18 CFR  35.19a(a)(2)(iii).; or

·                    Obtain Financial Assurance in the form of a letter of credit or corporate guarantee from a parent or other party reasonably acceptable to CVPS with an issuer and/or corporate credit rating no lower than investment grade from Standard and Poor’s and/or Fitch Ratings and/or Moody’s in an amount equal to the equivalent of 3 months of Transmission Service charges at least one day prior to receiving service.

o       Letter of credit means one or more irrevocable, transferable standby letters of credit issued by a U.S. commercial bank or a U.S. branch of a foreign bank provided that such customer is not an affiliate of such bank, and provided that such bank has an issuer and/or corporate credit rating of at least A2 from Moody’s or A from Standard and Poor’s or Fitch Ratings.  In the event of different ratings from the rating agencies, the lowest rating shall apply.

o       Costs of a letter of credit shall be borne by the customer.

o       If the credit rating of the bank issuing the letter of credit falls below the specified rating, the customer shall notify CVPS in writing within five business days of such event and shall have two business days following written notice to provide other appropriate financial assurance.


5.                  Credit Levels

If the Customer meets the applicable criteria outlined in Section 3, that Customer may receive unsecured credit equivalent to 3 months of transmission charges or, for interconnections, the credit equivalent of 3 months of the annual facilities charges and other ongoing charges.


6.                  Contesting Creditworthiness Determination.

The customer may contest CVPS’s determination of creditworthiness by submitting a written request for re-evaluation within 20 calendar days of  notification of the creditworthiness determination.  Such request should provide information supporting the basis for a request to re-evaluate a customer’s creditworthiness.  CVPS will review and respond to the request within 20 calendar days.

7.                  Process for Changing Credit Requirements.

In the event that CVPS plans to revise its credit level or collateral requirements, as detailed in this Creditworthiness Policy, the following process shall be followed:


A.     General Notification Process


·   A redlined document containing revised change(s) to the Creditworthiness Policy shall be available for downloading from the “Changes to Credit Policy” table.

·   The “Changes to Credit Policy” table will indicate the date when such changes will be come effective. 

·   Upon the effective date, the Company’s Creditworthiness Policy will be updated and posted on the Company’s OASIS and Web sites.


B.     Transmission Customer Responsibility


When there is a change in requirements, it is the responsibility of the customer to forward updated financial information to CVPS, to the address noted above, and indicate whether the change affects the customer’s ability to meet the requirements of the Creditworthiness Policy.  In such cases where the customer’s status has changed, the Customer must take the necessary steps to comply with the revised requirements of the Creditworthiness Policy by the effective date of the change.


C.     Notification for Active Customers


·   Active Customers are defined as any current Transmission Customer that has reserved transmission service within the last 3 months.

·   All Active Customers will be notified via either e-mail or U.S. mail that the above posting has been made and must follow the steps outlined in this procedure.


8.                  Posting Collateral Requirements

A.     Changes in Customer’s Financial Condition:

Each customer must inform CVPS, in writing, within five (5) business days of any material change in its financial condition or the financial condition of a parent providing a guarantee.  A material change in financial condition may include, but is not limited to, the following:

·                    Change in ownership by way of a merger, acquisition or substantial sale of assets;

·                    A downgrade of long- or short-term debt rating by a major rating agency;

·                    Being placed on a credit watch with negative implications by a major rating agency;

·                    A bankruptcy filing;

·                    Any action requiring filing of a Form 8-K;

·                    A declaration of or acknowledgement of insolvency;

·                    A report of a significant quarterly loss or decline in earnings;

·                    The resignation of key officer(s);

·                    The issuance of a regulatory order and/or the filing of a lawsuit that could materially adversely impact current or future financial results.

B.     Change in Creditworthiness Status:

A customer who has been extended unsecured credit under this policy must comply with the terms of Financial Assurance in item 4 if one or more of the following conditions apply:

·                    The customer no longer meets the applicable criteria for Creditworthiness in item 3 ;

·                    The customer exceeds the amount of unsecured credit extended by CVPS, in which case Financial Assurance equal to the amount of excess must be provided within 5 business days; or

·                    The customer has missed two or more payments for any of the Services offered by CVPS in the last 12 months.


9.                  Ongoing Financial Review:

Each customer is required to submit to CVPS annually or when issued, as applicable:

·                    Current rating agency report;

·                    Audited financial statements from a registered independent auditor; and

·                    10-Ks, 10-Q’s and 8-Ks, promptly upon their issuance.


10.              Suspension of Service:

CVPS may immediately suspend service (with notification to Commission) to a customer, and may initiate proceedings with Commission to terminate service, if the customer does not meet the terms described in items 3 through 8 at any time during the term of service or if the customer’s payment obligations to CVPS exceed the amount of unsecured or secured credit to which it is entitled under this Policy.  A customer is not obligated to pay for Transmission Service that is not provided as a result of a suspension of service.