How does the Collateral Threshold in Table A of Section 7.1 impact the Performance Assurance Amount for a utility-scale solar project under the Indexed REC Contract?

If you bid and win in the RFP, the RECs from your winning Project will be allocated by the Procurement Administrator to the Companies in pre-specified proportions (27.793% to AIC, 71.925% to ComEd, and 0.282% to MEC). As such, it is contemplated that you will sign three contracts, one with each of AIC, ComEd and MEC.

Each Indexed REC Contract is administered separately and independently by each of Companies (each is the Buyer under each such Indexed REC Contract). As such, the Collateral Threshold amount determined in accordance with Table A in Section 7.1 of the Indexed REC Contract, and the Performance Assurance Amount, applies to each of AIC, ComEd, and MEC independently. However, if the Seller or Seller’s Guarantor is a party to one or more additional REC purchase agreements with a Buyer, then the Seller or Seller’s Guarantor will be granted a single Collateral Threshold to be applied in aggregate to all such REC purchase agreements entered into with such Buyer.

The amount of a Seller’s Performance Assurance is equal to the positive difference, if any, between: (a) the Collateral Requirement (or Increased Collateral Requirement, if applicable); and (b) the Collateral Threshold, rounded up to the nearest $10,000, as estimated by Buyer (“Performance Assurance Amount”). If the Seller is relying on a Guarantor and Seller’s Guarantor has provided a Guaranty, the Collateral Threshold shall be the lesser of the Collateral Threshold as determined by (i) the table in Section 7.1 or (ii) the amount of such Guaranty.

For example, if the Annual Quantity allocated to the Indexed REC Contract for with ComEd is 300,000 RECs, and the Seller’s Guarantor is investment grade and has provided a Guaranty in an amount equal to the Collateral Threshold of $2,500,000, then the required Performance Assurance Amount to be posted with ComEd is $500,000 ($10 x 300,000 -$2,500,000). A similar calculation would be performed to calculate the required Performance Assurance Amount to be posted separately with each of AIC and MEC. This example assumes that the Seller is party to only one REC purchase agreement with each utility and the Seller is not posting the Increased Collateral Requirement.

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Indexed REC-51: How does the Collateral Threshold in Table A of Section 7.1 impact the Performance Assurance Amount for a utility-scale solar project under the Indexed REC Contract?