ISO New England to Require Market Participants to Demonstrate $1 Million in Tangible Net Worth

Market participants in ISO New England would be required to have an investment grade credit rating, maintain a minimum tangible net worth of $1 million, or maintain a minimum of $10 million in total assets under proposed new minimum participation requirements proposed by ISO-NE.

The minimum participation requirements, applicable to all market participants, are required under FERC's RTO credit market "reforms" order (Order 741).

Specifically, investment grade credit rating would be defined as BBB-/Baa3 or higher.

Market participants, who are not engaged in the Financial Transmission Rights market, and who do not meet any of these three minimum capitalization standards would be subject to an additional amount of financial assurance based upon the level of its otherwise required total financial assurance.

The additional amount of financial assurance required for market participants failing the minimum capitalization test would be as follows:

*Excluding FTR Financial Assurance Requirements and any additional financial assurance required to meet the capitalization requirement.

ISO-NE requested an October 1, 2011 effective date for the minimum capitalization standards.

ISO-NE's proposal would also revise the current definition of a material adverse change, which may prompt additional collateral requirements, to include the sanctioning of the Market Participant or Non-Market Participant Transmission Customer or any of its principals by FERC, the Securities and Exchange Commission, the Commodity Futures Trading Commission, any exchange monitored by the National Futures Association, or any entity responsible for regulating activity in energy markets. Additionally, a material adverse change would also include a significant change in the Market Participant's or Non-Market Participant Transmission Customer's market capitalization.

Furthermore, ISO-NE will require market participants to report annually (i) a list of principals; (ii) a list of any material criminal or civil litigation involving the customer or applicant or any of the principals of the customer or applicant arising out of participation in any U.S. wholesale or retail energy market in the past five years; (iii) a list of sanctions involving the customer or applicant imposed by FERC, the Securities and Exchange Commission, the Commodity Futures Trading Commission, any exchange monitored by the National Futures Association, or any state entity responsible for regulating activity in energy markets where such sanctions were either imposed in the past five years or, if imposed prior to that, are still in effect; (iv) a written summary of any bankruptcy, dissolution, merger or acquisition of the customer or applicant in the preceding five years; and (v) a list of current retail and wholesale electricity markets-related operations in the United States, other than in the New England Markets.

ISO-NE will also require market participants to annually file a certificate stating that the participant (i) has either established or contracted for risk management procedures that are applicable to participation in the New England Markets; and (ii) has established or contracted for appropriate training of relevant personnel that is applicable to its participation in the New England Markets.

Total Financial Assurance Requirement*	Additional Financial Assurance Required to Meet Capitalization Requirement
< $100,000	$0
$100,000.00 to $249,999.99	$25,000
$250,000.00 to $499,999.99	$50,000
$500,000.00 to $999,999.99	$100,000
$1,000,000.00 to $9,999,999.99	$200,000
$10,000,000.00 or greater	$500,000