V4.0 exta
Connection Offer Credit Terms Standard
This document forms part of the UK Power Networks Integrated Management System and compliance with its requirements is mandatory.
Contents
1.0 Scope 3
2.0 References 3
3.0 Definitions 3
4.0 Records 4
5.0 General Requirements 4
5.1 Acceptable Credit Rating Criteria 6
5.2 Review of Credit Status 7
6.0 Distribution Licence Obligations 7
7.0 Appendices 8
7.1 Decision Flow Diagram for the Provision of Credit Terms 8
7.2 Credit Rating Standards 9
1.0 Scope
This Standard applies to all regulated metered and unmetered Connection Offers that are issued by Highway Services, D&SME, Projects, Major Connections and Competition in Connections functions at all voltage levels. However, transactional charges for services that do not incur a direct cost e.g. Design Approval charges are outside the scope of this standard. Any charges made for New Roads and Streets Works Act 1991 (NRSWA) purposes are also excluded from the scope of this Standard. Such charges relate to diversionary works for road, bridge, and transport authorities and are covered by Statutory Instrument, the Street Works (Sharing of Costs of Works) (England) Regulations 2002.
2.0 References
CON 00 001 / Connections PolicyElectricity Act 1989 as amended by Utilities Act 2000 and Energy Act 2004
New Roads and Streets Works Act 1991
3.0 Definitions
Term / Definition /Acceptable Credit Rating Criteria / Has the meaning given to it at clause 6.1 of this Standard
Acceptable Payment History / Payment of at least 75% of invoices by value and number, on time, in full on first presentation of cheque during the previous rolling 12 month period
Charity / As defined by the Charities Act 2006
Corporate Entity / Any entity that is not a natural person
Connection Offer / An offer for the connection to or modification of UK Power Networks’ distribution system pursuant to a request under section 16A (1)
Credit Terms / Payment after goods and/or services has been supplied.
Customer / The party entitled under the licence to accept the Connection Offer
Distributed Generation / Distributed Generation (DG) is also known as embedded or dispersed generation. This term includes all types of electricity generating plant connected to the UK Power Networks’ distribution system
Graydon / Means ‘Graydon UK Limited’ (Company number 00363849) whose registered office is at; Hygeia Building, 66 College Road, Harrow, Middlesex HA1 1BE
ICM / The Institute of Credit Management (ICM)
Individual / A natural person requesting a connection
Payment Bond / A sum of money specified by UK Power Networks, deposited by the customer in a bank acceptable to UK Power Networks on account, calculated by UK Power Networks to be greater than the value of work in progress and unpaid invoices at any given point of time.
Payment History / The number of invoices paid during the previous 12 months and the average time from the issuing of an invoice to full settlement
Partnership / Bears the meaning given to that term by the Partnership Act 1890
Sole Trader / An individual carrying on business on their own account;
Street Lighting & Furniture / Unmetered connections in or near to a street as defined in Section 48(1) NRSWA 1991
UK Power Networks / Means, as the case shall require: Eastern Power Networks Limited (Company Number 2366906), London Power Networks Limited (Company Number 3929195); and South Eastern Power Networks Limited (Company Number 3043097)
Work in Progress (WIP) / The price of works carrying on its principal business in England and Wales undertaken by UK Power Networks prior to the invoice submitted to the Customer having been paid.
4.0 Records
Completed Credit Application Forms CON 00 025a will be kept for a minimum of five years following the last invoice
5.0 General Requirements
Individuals, partnerships, sole traders, unincorporated bodies and charities will not be offered any Credit Terms. Payment will be required from them in advance of project commencement.
No UK Power Networks entity holds a Consumer Credit Act licence and there is no intention that any one of them shall hold such a licence. Entry into an agreement that is regulated under the Consumer Credit Act without the UK Power Networks lender holding a Consumer Credit Act licence is a criminal offence, therefore no such agreement shall be entered into under any circumstances.
For the purposes of assessing credit terms, UK Power Networks operates in three distinct markets; Unmetered Street Lighting & Furniture, Metered connections and Distributed Generation (DG) connections.
Unmetered Street Lighting and Furniture Customers
The legal owner of the Unmetered Street Lighting & Furniture, upon application may be offered 30 day credit providing they satisfy the Acceptable Credit Rating Criteria (see below). If responsibility for the Street Lighting & Furniture has been passed over to an agent (or contractor) appointed by the legal owner, then upon application, 30 day credit may be afforded to the agent (or contractor) provided that the debt is guaranteed by the legal owner.
If no such guarantee is forthcoming, a Payment Bond can be agreed and deposited allowing for work orders to progress prior to payment. In circumstances where the value of work in progress and unpaid invoices is likely to exceed the value of the Payment Bond deposited, the Payment Bond must be increased or unpaid invoices settled early in order for works to continue.
Once credit terms have been granted, compliance will be reviewed on a regular basis and for those customers not meeting the Acceptable Payment History definition, credit may be withdrawn by UK Power Networks.
Metered Connection Customers
Corporate Entities requiring a metered connection on Credit Terms may be offered credit upon completing a credit application form (see appendix 3), satisfying the Acceptable Credit Rating Criteria (detailed below) and subsequently being approved.
Corporate Entities who do not have Credit Terms who wish to accept a UK Power Networks quote with a value that exceeds £250k (two hundred and fifty thousand pounds) excluding Value Added Tax at the rate from time to time prevailing may be offered the choice of making payment by instalments. Each instalment related to a defined phase of work being received by UK Power Networks in cleared funds before the commencement of the phase to which such instalment relates.
Corporate Entities that do not have Credit Terms and wish to accept a UK Power Networks quote with a value of less than £250k (two hundred and fifty thousand pounds) excluding Value Added Tax at the rate from time to time prevailing, must pay in full prior to works commencing.
Distributed Generation Customers - Staged Payment Terms
This Standard makes a distinction between demand and DG connections; this is in recognition of Government, DECC and Ofgem policies aimed at promoting the development of the low carbon economy.
· For Distributed Generation (DG) Connection Offers only:
o where the connection charge is less than £250k and requires network construction UK Power Networks will offer the applicant a staged payment option allowing the applicant to make full payment of the quotation in two stages:
§ Initial Payment: A deposit of the lesser of £50k or the total Connection Charge, however only the A&D charge plus the legal costs of obtaining wayleaves, leases and the easements element of the works will be non-refundable.
§ Final Payment: The payment in full of the Connection Charge balance (i.e. less an Initial Payment) within 12 months from date of Initial Payment
o The Final Payment must be received in cleared funds at least 3 calendar months prior to any agreed commencement date for the construction works
Revised Validity Period
o The Final Payment must be received within 12 months of the date of receipt of the Initial Payment
o If the Final Payment is not received within 12 months of the date of receipt of the Initial Payment the quotation is deemed to have expired, the customer entitlement to any Allocated Capacity is lost
o Where applicable a refund should be made to the customer for the balance of the Initial Payment deposit minus a deduction for the A&D Charges and any legal costs incurred by UK Power Networks in the course of obtaining any wayleaves, leases or easements
Mixed DG and Demand Project Enquiries
For applications received containing both DG and Demand type connections, DG Staged Payments will only be offered where the costs associated with the DG aspects of the connection are greater than for the demand aspects of the connection and the primary purpose of any new connection to be installed is to allow the export of electricity.
5.1 Acceptable Credit Rating Criteria
An organisation may be granted credit provided they meet the Acceptable Credit Rating Criteria of either an Incorporated Firm attributed with a credit rating score of ‘1A’ as defined by Graydon UK Ltd credit check for Limited Companies, or ‘F1A’ for Non-incorporated Firms at the time credit is requested.
and either;
5.1.1 request new or modified connections to unmetered connections in or near to a street as defined in Section 48(1) NRSWA 1991 and can demonstrate through their previous trading history with UK Power Networks or by providing evidence of expected future trading, that the volume of work will be greater than 100 new or modified connections in the next 12 months
or
5.1.2 request new or modified connections to metered connections where the value of turnover (Excl. of VAT) will be greater than £250k in the next 12 months,
and
· are members of or have applied for membership of the ICM Prompt Payment Code (PPC), and
· can demonstrate full compliance with the PPC requirements
Please refer to the Decision Flow Diagram for Credit Terms and Credit Rating Standards table in the appendices.
Details of Incorporated and Non-incorporated Firms membership status of the PPC can be accessed by pressing the control key whilst clicking on the following hyperlink;
http://212.36.97.6/ppc/signatory_paged.a4d
For customers granted Credit Terms subject to the Acceptable Credit Rating Criteria, the following will apply:
1. For projects values quoted up to £100k Excl VAT, the invoice will be raised on completion of work and is then due for payment within 30 days. If the customer delays the energisation process following substantial completion of works, UK Power Networks reserves the right to invoice and request full settlement within 30 days.
2. For projects values quoted above £100k Excl VAT and the duration of the project is less than 6 months from start to finish, the invoice will be raised on completion of work and is due for payment within 30 days.
3. For projects values quoted above £100k Excl VAT and the duration of the project is greater than 6 months from start to finish, milestone stage payments may be agreed in advance. Once the agreed milestone is reached, the invoice will be raised and is due for payment within 30 days.
When calculating milestone stage payments, consideration will be given to the maximum credit available on each customer account to cover Work in Progress and unpaid invoices at any given point in time.
If an incorporated company fails to meet the Acceptable Credit Rating Criteria or fails to provide suitable evidence of quantity of future work or value of turnover, UK Power Networks will require payment in advance of work commencing. However, with prior agreement, a Payment Bond may be obtained to cover the value of Work in Progress and any unpaid invoices.
Failure to comply with the Credit Terms prescribed by this Standard may result in Credit Terms being withdrawn.
5.2 Review of Credit Status
Once Credit Terms have been granted, an evaluation of Acceptable Payment History and credit risk will be reviewed every 3 (three) months and for those customers no longer meeting the Acceptable Credit Rating Criteria, Credit Terms will be withdrawn.
6.0 Distribution Licence Obligations
Any request for Credit Terms made by the customer will not adversely impact the issuing of a Connection Offer within the timescales required by LC12, LC15 or LC15A as appropriate.
7.0 Appendices
7.1 Decision Flow Diagram for the Provision of Credit Terms
7.2 Credit Rating Standards
Overall Credit RatingA / B / C / D
Limited Companies / Excellent / Good / Fair / Poor
Rating / Financial Strength £ / £000’s / £000’s / £000’s / £000’s
1 / 50m plus / 1000 / 750 / 300 / 125
2 / 20m-49m / 400 / 250 / 150 / 75
3 / 6m-19m / 200 / 100 / 70 / 40
4 / 1m-5m / 100 / 70 / 40 / 20
5 / 500k-999k / 70 / 50 / 30 / 15
6 / 250k-499k / 40 / 30 / 20 / 10
7 / 100k-249k / 20 / 15 / 10 / 5
8 / 50k-99k / 10 / 7.5 / 5 / 2.5
9 / 25k-49k / 5 / 3.75 / 2.5 / 1.25
10 / 1-24k / 2.5 / 1.75 / 1.25 / 0.75
Overall Credit Rating
A / B / C / D
Non-incorporated Firms / Excellent / Good / Fair / Poor
F1 / N/A / 75 / 50 / 37.5 / 5
F2 / N/A / 50 / 37.5 / 25 / 3.75
F3 / N/A / 25 / 18.75 / 12.5 / 2.5
F4 / N/A / 10 / 7.5 / 5 / 0
F5 / N/A / 5 / 3.75 / 2.5 / 0
The above figures give an indication of the recommended monthly credit limits based upon the Graydon credit rating standards. The financial strength indicator is based upon the number of employees and age of establishment.
This printed document is valid at 09/12/15, check after this date for validity.
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