S.C. Code Regs. § § 61-63.I.RHB 1.18

Current through Register Vol. 48, No. 10, October 25, 2024

Section 61-63.I.RHB 1.18 - [Appendix B] Criteria Relating to Use of Financial Tests and Self Guarantees for Providing Reasonable Assurance of Funds for Decommissioning

I. INTRODUCTION

An applicant or licensee may provide reasonable assurance of the availability of funds for decommissioning based on furnishing its own guarantee that funds will be available for decommissioning costs and on a demonstration that the company passes the financial test of Section II of this appendix. The terms of the self-guarantee are Section III of this appendix. This appendix establishes criteria for passing the financial test for the self guarantee and establishes the terms for a self-guarantee.

II. FINANCIAL TEST

A. To pass the financial test, a company must meet all of the following criteria:

1. Tangible net worth at least 10 times the total current decommissioning cost estimate (or the current amount required if certification is used) for all decommissioning activities for which the company is responsible as self-guaranteeing licensee and as parent-guarantor.

2. Assets located in the United States amounting to at least 90 percent of total assets or at least 10 times the total current decommissioning cost estimate (or the current amount required if certification is used) for all decommissioning activities for which the company is responsible as self-guaranteeing licensee and as parent-guarantor.

3. A current rating for its most recent bond issuance of AAA, AA, A as issued by Standard and Poors (S&P), or Aaa, Aa, or A as issued by Moodys.

B. To pass the financial test, a company must meet all of the following additional requirements:

1. The company must have at least one class of equity securities registered under the Securities Exchange Act of 1934.

2. The company's independent certified public accountant must have compared the data used by the company in the financial test which is derived from the independently audited, year end financial statements for the latest fiscal year, with the amounts in such financial statement. In connection with that procedure, the licensee shall notify the Department within 90 days of any matters coming to the attention of the auditor that cause the auditor to believe that the data specified in the financial test should be adjusted and that the company no longer passes the test.

3. After the initial financial test, the company must repeat passage of the test within 90 days after the close of each succeeding fiscal year.

C. If the licensee no longer meets the requirements of Section II.A, of this appendix, the licensee must send immediate notice to the Department of its intent to establish alternate financial assurance as specified in the Department's regulations within 120 days of such notice.

III. COMPANY SELF-GUARANTEE

The terms of a self-guarantee which as applicant or licensee furnishes must provide that:

A. The guarantee will remain in force unless the licensee sends notice of cancellation by certified mail to the Department. Cancellation may not occur, however, during the 120 days beginning on the date of receipt of the notice of cancellation by the Department, as evidenced by the return receipt.

B. The licensee shall provide alternative financial assurance as specified in the Department's regulations within 90 days following receipt by the Department of a notice of cancellation of the guarantee.

C. The guarantee and financial test provisions must remain in effect until the Department has terminated the license or until another financial assurance method acceptable to the Department has been put in effect by the licensee.

D. The licensee will promptly forward to the Department and the licensee's independent auditor all reports covering the latest fiscal year filed by the licensee with the Securities and Exchange Commission pursuant to the requirements of section13 of the Securities And Exchange Act of 1934.

E. If at any time, the licensee's most recent bond issuance ceases to be rated in any category of "A" or above by either Standard and Poors or Moodys, the licensee will provide notice in writing of such fact to the Department within 20 days after publication of the change by the rating service. If the licensee's most recent bond issuance ceases to be rated in any category of A or above by both Standard and Poors and Moodys, the licensee no longer meets the requirements of Section II.A, of this appendix.

F. The applicant or licensee must provide to the Department a written guarantee (a written commitment by a corporate officer) which states that the licensee will fund and carry out the required decommissioning activities or, upon issuance of an order by the Department, the licensee will set up and fund a trust in the amount of the current cost estimate for decommissioning.

S.C. Code Regs. § 61-63.I.RHB 1.18