NAC538.744. Determination of creditworthiness; requirements for collateral.

     1. During October in each operating year, and at any other time it deems necessary, the Commission will conduct a review to determine the creditworthiness of each of its contractors, except:

     (a) A federal or state agency or political subdivision; and

     (b) The Nevada Power Company and any other entity regularly engaged in the business of buying and selling electric power.

     2. After a review conducted pursuant to subsection 1, the Commission will establish the amount and prescribe the manner in which the contractor is required to furnish collateral pursuant to its contracts with the Commission. In no case will the amount of collateral established by the Commission be less than one-fourth of the contractor’s gross annual purchases.

     3. If a contractor does not provide and maintain the full amount of the collateral required, the Commission may, in addition to its other remedies and in the course of its normal invoicing, bill the contractor for an amount necessary to furnish a cash collateral within a period established by the Commission, but not to exceed 6 months.

     4. Notwithstanding any other provision of NAC 538.340 to 538.746, inclusive, the Commission may at any time require a contractor to furnish collateral in an amount that is greater than the minimum amount set forth in subsection 2, as may be necessary to protect the State of Nevada from any loss that it might suffer as a result of the contractor’s breach of any covenant or condition of any contract with the Commission. That amount of the collateral which is greater than the minimum amount set forth in subsection 2 will be calculated on any rational and appropriate basis as determined by the Commission.

     5. As used in this section:

     (a) “Date of review” means the date in any operating year on which the Commission establishes the amount of collateral a contractor must furnish pursuant to its contracts with the Commission.

     (b) “Gross annual purchases” means the total amount of a contractor’s actual purchases of power, transmission and other related services, if any, under all its contracts with the Commission, invoiced by the Commission during the test period.

     (c) “Test period” means the 12 consecutive months immediately preceding the month containing the date of review.

     (Added to NAC by Colorado River Comm’n by R112-02, eff. 9-20-2002)