BEC-15: How are the Mark-to-Market Value and the collateral requirement calculated?

Please note that the information provided here is a simplification of the process and information related to performance assurance and each supplier is responsible to understand the terms of the applicable contract, including but not limited to Section 4 and Section 10 of the Collateral Annex as amended by the contract (in the case of AIC and MEC) or the Coversheet of the applicable contract (in the case of ComEd).

First, for calculating the mark-to-market value, initial marks are calculated using price quotes dated with the Bid Date. Marks will be calculated each business day beginning the day after the initial marks are provided and continuing until the final deliveries have been made. The Current Mark-to-Market Value will be computed by multiplying the appropriate energy volumes by the difference between the initial marks and the updated marks derived from updated price quotes.

Second, a Company’s total credit exposure to the supplier is calculated on an aggregate basis and includes credit exposure calculated under the applicable energy contract as well as credit exposure under any other supply contracts as set forth in Section I, Subsection A of Paragraph 10 to the Collateral Annex as amended by the applicable contract or coversheet of the contract. In the event the total exposure amount for any day is a negative number, the total exposure amount shall be deemed to be zero for such day.

If on any day, the collateral requirement (which is the total exposure amount less any unsecured credit granted or any performance assurance posted) after rounding up to the nearest $10,000 exceeds the Minimum Transfer Amount of $100,000, then a Company may require the supplier to post margin to cover the exposure in the form of a letter of credit or cash. The Companies will notify the supplier in the morning on any day that the supplier will be required to post margin to cover additional exposure.

Please note that for ComEd contact information is provided for Credit and Collateral questions regarding initial collateral requirements as part of the (ComEd) Master Agreement execution process.