The PSE&G Firm Transmission rate applicable to the 2010 BGS Supplier Master Agreements is $58.14/MW-day, which is equivalent to the $21,221/MW-year rate shown in 15^th Revised Sheet No. 70A of the PSE&G Tariff for Electric Service.  The $21,221/MW-year amount differs from the total transmission rate of $25,919/MW-year posted on the PJM website here.   The $21,221/ MW-year rate is reflective of the transmission costs which are applicable to customers in PSE&G’s service territory, while the $25,919/MW-year rate includes amounts for transmission enhancement charges that are allocated to customers in PSE&G’s service territory, as well amounts that are allocated to customers of EDCs elsewhere in PJM. Details on the development of PSE&G’s firm transmission rate can be found in Attachment 1 of PSE&G’s Formula Rate Update filing, which can be found here.

The BGS FAQ process is only for questions regarding the BGS Auction process. We apologize for not being able to assist you in this matter, as your question is outside the scope of the Auction process.

Once an entity becomes a Qualified Bidder after a successful Part 1 Application, it remains a Qualified Bidder. There is no provision for withdrawing from the list of Qualified Bidders or for a modification of status. In the Part 2 Application, all Qualified Bidders are asked to make certifications with respect to the list of all Qualified Bidders in a given auction. Similarly, once an entity becomes a Registered Bidder after a successful Part 2 Application, it remains a Registered Bidder. There is no provision for withdrawing from the list of Registered Bidders or for a modification of status.

A bidder may, in the first round of the auction, bid any number of tranches up to its initial eligibility. The bidder may bid zero tranches on all EDCs. The bidder may also choose not to submit a bid in the auction, in which case the bidder, in the first round, will be assigned a default bid of zero tranches on all EDCs. In either case (the bidder submitting a bid of zero tranches on all EDCs or a bidder being assigned a default bid of zero tranches on all EDCs), the bidder will be assigned zero eligibility in the next round, and the bidder will lose the ability to bid in the next and in all future rounds. The bidder will lose its access to round results. The bidder's Pre-Auction Security will be held until the Board has decided whether to approve the auction results, which occurs no later than two business days after the close of the last auction.

It is essential that the BGS-CIEP Pre-Auction Letter of Credit be used for the pre-auction security you post to support your indicative offer in the BGS-CIEP Auction, and that the BGS-FP Pre-Auction Letter of Credit be used for the pre-auction security you post to support your indicative offer in the BGS-FP Auction.

There are significant differences between the forms for the two Auctions. While they are similar, in specifying the conditions under which the Electric Distribution Companies (“EDCs”) can make a drawing under the letter of credit, the BGS-CIEP Pre-Auction Letter of Credit refers to the BGS-CIEP Auction Rules, the BGS-CIEP Auction and the BGS-CIEP Supplier Master Agreement, while the BGS-FP Pre-Auction Letter of Credit refers to the BGS-FP Auction Rules, the BGS-FP Auction and the BGS-FP Supplier Master Agreement. Separate Pre-Auction Letters of Credit are required as the BGS-CIEP Auction Rules and the BGS-FP Auction Rules are separate and distinct documents, the BGS-CIEP Auction and the BGS-FP Auction are separate and distinct auctions, and finally, the BGS-CIEP Supplier Master Agreement and the BGS-FP Supplier Master Agreement are separate and distinct documents.

Attachment 2 of your Notification of Qualification, sent to you by fax on December 18, 2009 and delivered by courier on December 21, 2009, contains this information.  You should transpose the exact number from your Notification of Qualification to Table 1.2 of the Part 2 Application Form.  If the Net Amount Granted to Support Indicative Offer in your Notification of Qualification is zero, or if no such field appears in your Notification of Qualification, the Applicant was not granted a Net Amount to Support Indicative Offer and you should enter "0" in Cell (C) of Table 1.2 of the Part 2 Application Form.

The Board expects to render a decision on the results of the Auctions by the end of the second business day after the close of the last Auction. The Board may render a decision on the results of each Auction at different points in time. For example, the Board may render a decision on the first Auction that closes while the second Auction is still in progress. The Board will not meet on Friday February 12 or on Monday February 15 to consider the results of either Auction. If the last Auction ends on Thursday, February 11, the Board would consider the results of that Auction at the earliest on Tuesday February 16.

You may be looking at the Letter of Credit attached to the Supplier Master Agreement rather than the Pre-Auction Letter of Credit (the Pre-Auction Letter of Credit does not have an Annex 6).

Paragraph 8 of the BGS-FP Pre-Auction Letter of Credit and the BGS-CIEP Pre-Auction Letter of Credit state that the Letter of Credit is NOT transferable. The final BGS-FP Pre-Auction Letter of Credit, the final BGS-CIEP Pre-Auction Letter of Credit, along with a list of acceptable modifications and the BGS-FP Letter of Intent to Provide a Guaranty, can be found on the BGS web site under the Bidder Information Contract and Credit page: http://www.bgs-auction.com/bgs.bidinfo.cc.asp.

All Pre-Auction security materials should be sent directly to the BGS Auction Manager along with your Part 2 Application.

Each BGS-FP Qualified Bidder provides a single Pre-Auction Letter of Credit made to the benefit of all four Electric Distribution Companies (“EDCs”). The final BGS-FP Pre-Auction Letter of Credit, along with a list of acceptable modifications and the BGS-FP Letter of Intent to Provide a Guaranty, can be found on the BGS web site under the Bidder Information Contract and Credit page: http://www.bgs-auction.com/bgs.bidinfo.cc.asp.

Please note further that, should you also participate in the BGS-CIEP Auction, you will be required to submit a separate Pre-Auction Letter of Credit with your Part 2 Application for the BGS-CIEP Auction. All Pre-Auction security materials should be sent directly to the BGS Auction Manager along with your Part 2 Application.

The sample Letter of Intent to Provide a Guaranty available on the Application Materials page is acceptable to all the EDCs. Should you submit with your Part 2 Application a Letter of Intent to Provide a Guaranty that does not follow this sample, the Letter of Intent to Provide a Guaranty will be evaluated by the EDCs at the time of your Part 2 Application. If the Letter of Intent to Provide a Guaranty is not acceptable to all EDCs, you will have two business days to amend the Letter of Intent to Provide a Guaranty so that it is acceptable to all EDCs.

If the Board approves the results of the BGS-FP Auction, a winning BGS-FP Supplier has three business days after the Board decision to execute the BGS-FP Supplier Master Agreement ("BGS-FP SMA") and to provide any required security. The BGS-FP Supplier will be responsible for meeting two types of security: security for the Independent Credit Requirement ("ICR") and security for the Total Exposure Amount ("TEA"). Separate instruments must be used to post these two types of security. For more information, please see Section B of the FP Portion of the December bidder information packet for an overview of the credit requirements associated with the BGS-FP Auction. Please also see Section 6 of the BGS-FP SMA, which can be found on the "Contract and Credit" page.

The amount of Pre-Auction Security required with the Part 2 Application for the BGS-FP Auction only relates to the ICR that a winning bidder would need to post upon execution of the BGS-FP SMA. A Notification of Qualification was sent to your Authorized Representative on December 17, 2009. This Notification of Qualification details the Pre-Auction Security required with the Part 2 Application. The instructions include the amount of the Pre-Auction Letter of Credit required and the amount of a Letter of Intent to Provide a Guaranty if one is required. The total amount of Pre-Auction Security that a Qualified Bidder is required to provide with its Part 2 Application is $2.4M per tranche of the indicative offer at the maximum starting price. A bidder for the BGS-FP Auction that has named a Guarantor in the Part 1 Application typically submits a Pre-Auction Letter of Credit in an amount of $0.5M per tranche of the indicative offer at the maximum starting price and a Letter of Intent to Provide a Guaranty in an amount of $1.9M per tranche of the indicative offer at the maximum starting price. Together, these two security instruments provide assurances that the bidder is able to post the ICR of $2.4M ($0.5M + $1.9M) per tranche upon signing the BGS-FP SMA. Please note that this is for a typical situation where the Guarantor meets the minimum rating and has sufficient tangible net worth.

The contact information for the beneficiaries is as follows:

Atlantic City Electric ("ACE")
Tom Shetty
Manager, Investment Management
PHI Service Company
Room 5602
701 9th Street, NW
Washington DC 20068
Phone: (202) 872-3362
Fax: (202) 331-6286

Jersey Central Power & Light Company ("JCP&L")
Marty Massie
Staff Credit Analyst
76 So. Main St.
Akron, OH 44308
Phone: (330) 761-7839
Fax: (330) 255-1662

Public Service Electric and Gas Company ("PSE&G")
Robert Krauss
Manager Credit & Contract Administration
80 Park Plaza, T18A
Newark, NJ 07102-4194
Phone: (973) 430-7203
Fax: (973) 624-2891

Rockland Electric Company ("RECO")
Jonathan Hirst
Project Manager
Consolidated Edison Company of New York, Inc.
111 Broadway
Suite 1601
New York, New York 10006
Phone: (212) 227-4220
Fax: (917) 534-4099

In such a situation, the BGS Supplier would need to consult Article 5 of the SMA and obtain legal advice.  As a general matter a voluntary bankruptcy by the Supplier is considered an event of default that will result in automatic termination of the Supplier Master Agreement.  There would be no ongoing supply obligations or rights in that event, but there could be obligations for damages, settlement amounts and a termination payment. 

Other instances of bankruptcy are also considered events of default, but do not result in automatic termination.  There is a cure period associated with involuntary bankruptcy.  If not cured per the applicable cure period, the non-defaulting party is provided the right to declare an early termination date.  From date of termination there would be no ongoing supply obligations on the part of the BGS Supplier and no ongoing obligation for the EDCs’ to accept and pay for supply, but there could be obligations for damages, settlement amounts and a termination payment.  In the event that the non-defaulting party does not declare an early termination date, the contract would remain in force, subject to oversight by applicable legal authorities.  The EDCs can not speculate as to what may happen to the obligations of the parties if left in force under the supervision of the bankruptcy court and possibly the FERC.

To choose to opt-in to BGS-CIEP, non-residential BGS-FP customers must notify the EDC by January 5, 2010.  By mid-January 2010, the BGS Auction Manager will post data regarding the customers that chose to opt in to BGS-CIEP.

Appropriately metered commercial or industrial BGS-FP customers may opt-in to BGS-CIEP subject to the following two conditions. First, the customer must notify the EDC no later than January 5, 2010 that the customer wishes to take BGS on a CIEP tariff. Second, the decision is irrevocable for the term of the BGS-CIEP contract, such that a customer who chooses to take BGS on a CIEP tariff as of June 1, 2010 cannot take BGS on an FP tariff before June 1, 2011.

Neither the BGS Auction Manager nor the EDCs can provide a comprehensive list of situations under which the BGS Supplier would be obligated under the terms of the Supplier Master Agreement ("SMA") to promptly notify the EDC of a change in financial condition.  However, such changes would include (i) any change that would vary the EDC's assessment of the creditworthiness of the BGS Supplier or its Guarantor under the terms of Article 6 of the SMA; and (ii) any change in financial condition that would trigger a requirement to file a current report with the Securities and Exchange Commission ("SEC"); or (iii) any change that could reasonably be expected to have a material adverse impact on the supplier's financial condition or ability to perform its obligations under the SMA.

Under PJM's current Reliability Pricing Model ("RPM"), Load Serving Entities ("LSEs") in general, and BGS Suppliers in particular, pay PJM for their UCAP Obligations at the capacity clearing price for the zone that they serve.  BGS Suppliers are not required to enter into bilateral transactions for capacity or to participate in the auctions under the RPM (although BGS Suppliers may choose to do so).  PJM, through the auctions under the RPM, essentially procures capacity on behalf of all LSEs. Under RPM, LSE UCAP obligations become RPM obligations.

The auction clearing price and price paid to BGS Suppliers does not include sales and use tax.  The price is based on volumes at the wholesale level, which are energy volumes equivalent to those for which PJM holds the supplier responsible at the zone bus.  Payment volumes applicable to BGS-FP Suppliers are also not reduced by distribution losses to reflect volumes at the retail meter.  All volumes and prices are at the wholesale level.  Sales and use tax is therefore clearly excluded from the price paid to BGS-FP Suppliers.  Retail BGS-FP tariffs, however, do reflect adjustments for both sales and use tax as well as distribution losses.

No, a signature is not required.  The Applicant should type its name at the top of each page.  The “manually” refers to the fact that entering the name of the Applicant once will NOT automatically propagate to the other pages of the Part 1 Application.

TrAILCo charges are not included in the base transmission rate and as such are eligible to be reimbursed to BGS Suppliers as an increment to the auction clearing price according to Section 15.9 of the BGS Supplier Master Agreements.

JCP&L accounts for transmission cost by applying the applicable tariff by rate class on a cents/kWh basis.  The other EDCs apply a constant rate to the transmission obligation.  JCP&L does not charge for transmission separately from the BGS-FP rate and transmission charges are included in the BGS-FP price. 

Please see JCP&L's Company-Specific Addendum available here:
http://www.bgs-auction.com/bgs.auction.regproc.asp

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