Section 340.20  Definitions

 

"Affiliate" has the same meaning as the phrase affiliated interests as defined in Section 7-101(2)(ii) [220 ILCS 5/7-101(2)(ii)].

 

"Cash management" means aggregating customer receipts and paying all vendors and other operating requirements.

 

"Credit rating agency" means Standard & Poor's or its successor, Moody's Investors Service or its successor, or Fitch Ratings or its successor.

 

"Financial Institution" means a bank, savings and loan, savings bank, credit union, insurance company, or other institution that collects funds from the public to place in financial assets such as stocks, bonds, money market instruments, bank deposits or loans.

 

"High-grade credit issuer" means a company that has the following credit ratings from at least two of the following three major credit rating agencies and a higher, equivalent or no credit rating from the third credit rating agency: A- or above by Standard & Poor's or its successor; A3 or above by Moody's Investors Service or its successor; or A- or above by Fitch Ratings or its successor.

 

"High-grade committed credit facility" means credit lines that permit the person to draw funds from financial institutions that are high-grade credit issuers.

 

"Issuance costs" means any interest, premiums, discounts, commissions, or fees paid in connection with any loans to a party to the money pool agreement.

 

"Large utility" means a utility that has $50,000,000 or more in total capitalization as reported in the annual report the utility files with the Chief Clerk of the Commission.

 

"Medium-grade credit issuer" means a company that has the following issuer credit ratings from at least two of the following three major credit rating agencies and a higher, equivalent or no credit rating from the third credit rating agency: BBB or above by Standard & Poor's or its successor; Baa2 or above by Moody's Investors Service or its successor; or BBB or above by Fitch Ratings or its successor.

 

"Medium-term note" means a note with a maturity of greater than one but no more than ten years.

 

"Money pool agreement" means any agreement that provides a mechanism for borrowing or lending monies among affiliates repayable on demand or for original terms to maturity of 365 days or less, but excluding routine bank transactions as defined in 83 Ill. Adm. Code 105.10.

 

"Parent company" means every company owning or holding, directly or indirectly, 10% or more of the voting capital stock of a utility or every company in any chain of successive ownership of 10% or more of voting capital stock.

 

"Service company" means a mutual or subsidiary service company approved by the Securities and Exchange Commission pursuant to 17 CFR 250.88 or a company providing services to utilities pursuant to an agreement that has been approved by the Commission under Section 7-101 or 7-102 of the Act.

 

"Short-term" means one year or less.

 

"Small utility" means a utility that has less than $50,000,000 in total capitalization as reported in the annual report the utility files with the Chief Clerk of the Commission.

 

"Surplus funds" means funds that are not needed for the immediate short-term cash requirements of the utility.

 

"Total capitalization" means the sum of short-term debt, long-term debt, preferred stock and common equity for the entire company.

 

"Utility" means public utilities as defined in Section 3-105 of the Act, incumbent local exchange carriers that provide noncompetitive services as defined in Section 13-202.5 of the Act, and electing providers as defined in Section 13-506.2 of the Act, but excluding local exchange telecommunications carriers with no more than 35,000 subscriber access lines pursuant to Section 13-504(d) of the Act that are not electing providers as defined in Section 13-506.2 of the Act.

 

(Source:  Amended at 36 Ill. Reg. 3884, effective March 1, 2012)

 

Section 340.30  Minimum Requirements for Short-Term Loans from Affiliates to Utilities

 

Incumbent local exchange carriers shall not be subject to the requirements of this Section pursuant to Section 13-601 of the Act [220 ILCS 5/13-601].  Electing providers shall not be subject to the requirements of this Section pursuant to Section 13-506.2(j) of the Act.  Utilities may borrow funds on a day-to-day basis from affiliates subject to the following restrictions:

 

a)         The money pool agreement shall set forth a form of promissory note to be used for loans to the utility or shall itself set out the terms of the loans.  All short-term loans may be prepaid by the utility without premium or penalty.

 

b)         No utility shall borrow through or from an affiliate if the utility determines that it can borrow at lower cost directly from banks or other financial institutions or through the sale of its own commercial paper.

 

c)         Interest.  The interest rate on borrowings made by the utility from the affiliate shall not exceed the affiliate’s actual interest cost, including issuance costs, for the funds obtained or used to provide the funds borrowed by the utility.

 

(Source:  Amended at 36 Ill. Reg. 3884, effective March 1, 2012)

 

Section 340.40  Minimum Requirements for Short-Term Loans from Utilities to Affiliates

 

a)         A utility may borrow from outside the money pool agreement in order to make loans to an affiliate that is a public utility under applicable State law.  A utility may not borrow from outside the money pool agreement in order to make loans to non-utility affiliates, except for loans to service companies and subsidiaries of the utility.

 

b)         An affiliate shall be eligible for borrowing from the utility if the affiliate meets one of the following seven requirements:

 

1)         The affiliate maintains the following commercial paper ratings from at least two of the following three major credit rating agencies and a higher, equivalent, or no credit rating from the third credit rating agency: A-1 or above from Standard & Poor's or its successor; P-1 or above from Moody's Investors Service or its successor; and F-1 or above from Fitch Ratings or its successor;

 

2)         The aggregate amount of outstanding short-term indebtedness of the affiliate, including amounts to be borrowed from the utility, excluding amounts drawn on the committed credit facility, does not exceed the unused balance of funds available to the affiliate under high-grade committed credit facilities at any time plus the amount of funds the affiliate invests in the short-term securities described in Section 340.50(a)(1) and (2);

 

3)         The affiliate is a high-grade credit issuer;

 

4)         The aggregate amount of funds the affiliate borrows is guaranteed by an affiliate of the utility that meets the requirements set forth in subsection (b)(1);

 

5)         The aggregate amount of funds the affiliate borrows is guaranteed by an affiliate with a high-grade committed credit facility that meets the requirements set forth in subsection (b)(2);

 

6)         The affiliate is a utility; or

 

7)         The affiliate provides the utility cash management services through a Commission-approved agreement and the utility does not issue bonds, notes or other forms of indebtedness to persons or entities that are not affiliates of the utility; and

 

A)        The utility is a small utility; or

 

B)        The utility demonstrates that any benefits from relying on an affiliate to provide all the utility’s capital exceed the risks associated with a decrease in the utility’s financial independence provided that the affiliate is a medium-grade credit issuer.

 

c)         The affiliate receiving the loan shall repay the principal amount of the loan, together with all accrued interest, on demand of the utility.

 

d)         The utility may lend funds to an affiliate only if the utility cannot earn a higher rate of return on investments of similar risk in the open market, or the utility will earn no less than the rate the utility would have earned on investments in existing short-term investment accounts maintained by the utility during the period in question.

 

e)         Interest.  Each affiliate receiving a loan shall accrue interest monthly on the unpaid principal amount of the loan from the date of such loan until the principal amount shall be paid in full.

 

f)         Event of default.  If an affiliate shall generally not pay its debts as the debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors, or any proceeding shall be instituted by or against an affiliate seeking to adjudicate it as bankrupt or insolvent, then the unpaid principal amount of any loans to such affiliate and all accrued interest shall become immediately due and payable to the utility.

 

g)         A utility shall neither lend additional funds nor extend the term of existing loans to any affiliate that no longer meets any of the eligibility criteria of subsection (b). An affiliate that exceeds its borrowing limit shall have 90 days to repay sufficient principal and accrued interest to bring that affiliate back into compliance with subsection (b) or, alternatively, to repay all outstanding loans from the utility and accrued interest.

 

h)         When petitioning for approval of an affiliate to borrow from the utility under one of the eligibility requirements of subsection (b), a utility shall provide the following as part of its petition:

 

1)         A utility seeking to meet the eligibility requirements of subsection (b)(1) shall provide reports from the two or, if available, three credit rating agencies presenting the commercial paper ratings for all affiliates that will borrow from the utility;

 

2)         A utility seeking to meet the eligibility requirements of subsection (b)(2) shall provide:

 

A)        Documentation from the financial institutions evidencing the line of credit available to the affiliate and the unused balance of funds available to each affiliate that will borrow from the utility; and

 

B)        The credit ratings from the two or, if available, three credit rating agencies for all of the financial institutions that are extending credit lines to the affiliates;

 

3)         A utility seeking to meet the eligibility requirements of subsection (b)(3) shall provide reports from the two or, if available, three credit rating agencies presenting the credit ratings for all affiliates that will borrow from the utility;

 

4)         A utility seeking to meet the eligibility requirements of subsection (b)(4) shall provide:

 

A)        A copy of the guarantee; and

 

B)        Reports from the two or, if available, three credit rating agencies presenting commercial paper ratings for the affiliate of the utility that will guarantee repayment of funds borrowed from the utility;

 

5)         A utility seeking to meet the eligibility requirements of subsection (b)(5) shall provide:

 

A)        A copy of the guarantee;

 

B)       Documentation from the financial institutions evidencing the line of credit available to the affiliate and the unused balance of funds available to the affiliate that will guarantee repayment of funds borrowed from the utility; and

 

C)       The credit ratings from the two or, if available, three credit rating agencies for all of the financial institutions that are extending credit lines to the affiliate;

 

6)         A utility seeking to meet the eligibility requirements of subsection (b)(6) shall provide certification from the chief accounting officer of the affiliate utility that the affiliate is authorized to operate as a utility;

 

7)         A utility seeking to meet the eligibility requirements of subsection (b)(7) shall provide:

 

A)        The docket number of the Commission proceeding in which the cash management agreement was approved;

 

B)        A copy of the agreement; and

 

C)        Either:

 

i)         Certification from the chief accounting officer of the utility that the utility is a small utility, including the total capitalization of the utility as reported in the last annual report filed with the Chief Clerk of the Commission; or

 

ii)        Reports from the two or, if available, three credit rating agencies presenting the credit ratings for all affiliates that will borrow from the utility. 

 

The information required by this subsection (h) does not bind the Commission to a decision based solely on the data provided pursuant to this subsection.

 

Section 340.50  Investment of Money Pool Funds

 

a)         Investment of money pool funds not lent to affiliates that meet the eligibility requirements of Section 340.40(b) shall be restricted to one or more of the following short-term investments:

 

1)         Interest-bearing accounts with banks;

 

2)         Obligations issued or guaranteed by the U.S. government or its agencies and instrumentalities, including obligations under repurchase agreements;

 

3)         Obligations issued or guaranteed by any state or political subdivision, provided that these obligations are rated not less than A by Standard & Poor's or its successor, Moody's Investors Service or its successor, or Fitch Ratings or its successor;

 

4)         Commercial paper rated not less than A-1 by Standard & Poor's or its successor, P-1 by Moody's Investors Service or its successor, or F-1 by Fitch Ratings or its successor;

 

5)         Money market funds;

 

6)         Bank certificates of deposit and bankers acceptances;

 

7)         Eurodollar certificates of deposits or time deposits;

 

8)         Medium-term notes, variable rate demand notes and variable rate preferred stock rated A- or above by Standard & Poor's or its successor, A3 or above by Moody's Investors Service or its successor, or A- or above by Fitch Ratings or its successor;

 

9)         Short-term securities rated AA or above by Standard & Poor's or its successor, Aa or above by Moody's Investors Service or its successor, or AA or above by Fitch Ratings or its successor;

 

10)         Short-term securities issued or guaranteed by an entity rated AA or above by Standard & Poor's or its successor, Aa or above by Moody's Investors Service or its successor, or AA or above by Fitch Ratings or its successor; or

 

11)         Repurchase agreements with financial institutions rated AA or above by Standard & Poor's or its successor, Aa or above by Moody's Investors Service or its successor, or AA or above by Fitch Ratings or its successor with a minimum of 102% over collateralization.

 

b)         Where money pool funds of a utility are commingled with funds of one or more affiliates under an approved money pool agreement, interest income and other investment income earned on the pool of funds shall be allocated to the participants that provided funds for the money pool in proportion to the aggregate balance of the pool of funds that each such participant contributed.

 

Section 340.60  Required Filings and Procedures

 

a)         This Section does not apply to small utilities or electing providers.

 

b)         All filings required by this Section shall be signed and verified under oath by an executive officer having knowledge of the facts and filed with the Office of the Chief Clerk of the Commission in duplicate with a copy provided to the Manager of the Finance Department.  Each filing shall state on its face the Docket number of the proceeding authorizing the utility's participation in the money pool agreement.

 

c)         Documentation of transactions.  Utilities are required to file a quarterly report documenting all daily deposits, borrowings, interest income, and interest expense relating to transactions with affiliates.  The first report shall be filed within 30 days after the end of the applicable calendar or fiscal quarter in which the order authorizing the agreement is entered or by August 14, 2004 for filings made pursuant to an agreement entered into before June 15, 2004.  Thereafter, reports shall be filed covering the transactions during each successive calendar or fiscal quarter, each report to be filed within 30 days after the end of each quarter.  The written documentation shall include the following:

 

1)         Utilities subject to the requirements of Section 340.30 shall provide the daily balances of loans outstanding from an affiliate to the utility for each day of the calendar or fiscal quarter.

 

2)         Utilities subject to the requirements of Section 340.40 shall provide:

 

A)        The daily net balances of transactions that increase the loan balances;

 

B)        The daily net balances of transactions that decrease the loan balances;

 

C)        Total accrued interest for the applicable quarter;

 

D)        The applicable interest rate for each day of the quarter;

 

E)        The maturity date of each loan and any renewal dates;

 

F)         The qualification of affiliates to borrow from a utility pursuant to Section 340.40(b);

 

G)        For borrowers meeting the requirements of Section 340.40(b)(2) or (b)(5), the report shall provide detailed statements documenting the unused amount of the borrower's or its guarantors' high-grade committed credit facility, the amount of funds invested in the securities described in Section 340.50(a)(1) and (2), the balance of funds invested in each of the investments available under Section 340.50(a), exclusive of the amount invested in the securities described in Section 340.50(a)(1) and (2), and the total amount the utility loaned to affiliates as of the end of the applicable quarter; and

 

H)        For borrowers meeting the requirements of Section 340.40(b)(1), (b)(3) or (b)(4), the report shall provide the credit ratings of the applicable affiliates.

 

d)         The utility shall file a report listing all of the affiliates with which it can participate in the money pool agreement.  An update of the report shall be filed as a part of the quarterly report described in subsection (b).  An additional update shall be filed within 10 days after an affiliate that has a direct borrowing relationship with the utility is added to the money pool agreement. The updated reports shall contain a list of all companies involved and indicate which companies have been added and the date those companies entered into the money pool agreement.

 

e)         Any credit rating downgrades to any affiliate that has a direct borrowing relationship with the utility by a credit ratings agency, which results in the affiliate no longer being a high-grade credit issuer, shall be reported to the utility and the Manager of the Commission's Finance Department within 10 days after any such downgrade.  Each filing shall state on its face the Docket number of the proceeding authorizing the utility's participation in the money pool agreement.

 

f)         Confidential Treatment of Filings Made Pursuant to this Section

 

1)         For filings made pursuant to a proceeding authorizing the utility's participation in the money pool agreement in which the petition was filed after June 15, 2004, the filing entity shall include in its petition a request for confidential treatment for any documents for which it desires confidential treatment after the filing of the documents.

 

2)         For filings made pursuant to a money pool agreement entered into before June 15, 2004, a filing utility seeking confidential treatment of these documents shall file a petition pursuant to 83 Ill. Adm. Code 200.

 

(Source:  Amended at 41 Ill. Reg. 15718, effective December 15, 2017)