| application.
(A) Investment-grade credit ratings must be documented
by reports from a credit reporting agency. The report the applicant
provides must be the most recently released report by the credit reporting
agency.
(B) Tangible net worth, current ratio, and debt to
capitalization ratio calculations must be supported by a signed, notarized
affidavit from an executive officer of the guarantor that attests
to the accuracy of the calculations and be documented by audited or
unaudited financial statements of the guarantor for the most recently
completed quarter.
(i) Audited financial statements must include the independent
auditor's report and accompanying notes.
(ii) Unaudited financial statements must include a
signed, notarized affidavit, in addition to any other provided affidavits,
which attests to the accuracy, in all material respects, of the information
provided in the unaudited financial statements.
(iii) Three consecutive months of monthly statements
may be submitted in lieu of quarterly statements, if quarterly statements
are not available.
(iv) The requirement for financial statements may be
satisfied by filing a copy of, or providing an electronic link, to
the guarantor's most recent financial statements filed with any agency
of the federal government, including the U.S. Securities and Exchange
Commission.
(C) Shareholders' equity must be documented by the
audited or unaudited financial statements of the applicant for the
most recently completed quarter.
(i) Audited financial statements must include the independent
auditor's report and accompanying notes.
(ii) Unaudited financial statements must include a
signed, notarized affidavit, in addition to any other provided affidavits,
which attests to the accuracy, in all material respects, of the information
provided in the unaudited financial statements.
(iii) Three consecutive months of monthly statements
may be submitted in lieu of quarterly statements, if quarterly statements
are not available.
(iv) The requirement for financial statements may be
satisfied by filing a copy of, or providing an electronic link, to
the REP's most recent financial statements filed with any agency of
the federal government, including the U.S. Securities and Exchange
Commission.
(D) Segregated cash accounts must be documented by
a current account statement and the executed agreement with an unaffiliated
person that controls the segregated cash account.
(i) The account statement must clearly identify:
(I) the name of the financial institution where the
applicant has established the account;
(II) the account number; and
(III) the account name, which must clearly indicate
the account is designated for containing only customer deposits, prepayments,
or both.
(ii) The account must be maintained at a financial
institution that is supervised or examined by the Board of Governors
of the Federal Reserve System, the Office of the Comptroller of the
Currency, or a state banking department and is a:
(I) U.S. domestic bank; or
(II) a domestic office of a foreign bank with an investment-grade
credit rating.
(iii) A REP must provide an executed agreement with
a provider of credit that governs the control and management of the
account. The provider of credit must not be affiliated with the applicant
or the applicant's corporate parent. If the segregated cash account
contains customer deposits, the agreement must specify that the customer
deposits are not the property of the REP or in the REP's control,
unless, if allowed by the REP's terms of service, the customer deposits
are applied to a final bill or to satisfy unpaid amounts.
(E) Escrow accounts must be documented by a current
account statement and the executed escrow account agreement.
(i) The account statement must clearly identify:
(I) the name of the financial institution where the
applicant has established the account;
(II) the account number; and
(III) the account name, which must clearly indicate
the account is designated for containing only customer deposits, prepayments,
or both.
(ii) The account must be maintained at a financial
institution that is supervised or examined by the Board of Governors
of the Federal Reserve System, the Office of the Comptroller of the
Currency, or a state banking department and is a:
(I) U.S. domestic bank; or
(II) a domestic office of a foreign bank with an investment-grade
credit rating.
(iii) The escrow account agreement must provide that
the account holds only customer deposits, prepayments, or both, and
that the customer deposits will be held in trust by the escrow agent
and will not be the property of the REP or in the REP's control, unless,
if allowed by the REP's terms of service, the customer deposits are
applied to a final bill or to satisfy unpaid amounts.
(F) Irrevocable stand-by letters of credit provided
under paragraphs (1) and (2) of this subsection must use the standard
form irrevocable stand-by letter of credit template approved by the
commission. The original document of the irrevocable stand-by letter
of credit must be provided in a manner established by the commission.
(i) The irrevocable stand-by letter of credit must
be maintained at a financial institution that is supervised or examined
by the Board of Governors of the Federal Reserve System, the Office
of the Comptroller of the Currency, or a state banking department
and is a:
(I) U.S. domestic bank; or
(II) a domestic office of a foreign bank with an investment-grade
credit rating.
(ii) The irrevocable stand-by letter of credit must:
(I) be irrevocable for a period not less than twelve
months;
(II) automatically renew, and only expire if prior
notice is provided to the commission at least 90 days before the expiration
and commission staff signs the notice of non-renewal to acknowledge
that the notice was received 90 days before the expiration;
(III) be payable to the commission;
(IV) permit a draw to be made in part or in full;
(V) permit a draw to be made with the return of the
original document or a photocopy;
(VI) permit a draw to be made, among other ways, through
over-night mail;
(VII) permit the commission's executive director or
the executive director's designee to draw on the irrevocable stand-by
letter of credit; and
(VIII) require commission staff approve all amendment
requests to decrease the value of the irrevocable stand-by letter
of credit prior the value of the irrevocable stand-by letter of credit
decreasing. Amendments to decrease the value of the irrevocable stand-by
letter of credit must be accompanied by a notarized affidavit signed
by an executive officer of the REP and include, as applicable, the
current number of ESI IDs the REP serves, the value of customer deposits
and prepayments the REP is liable for.
(G) Irrevocable guaranty agreements must be executed
on the commission approved standard form irrevocable guaranty agreement
and must obligate the guarantor to meet commission's demands on behalf
of the applicant. A copy of the executed irrevocable guaranty agreement
must be provided in the manner established by the commission.
(i) The guarantor's obligation to satisfy a commission
demand for payment must be in an amount not less than $1,500,000 and
must be absolute, and the guarantor may not avoid its obligation for
any reason.
(ii) The irrevocable guaranty agreement must automatically
renew and only expire if prior notice is provided to the commission
at least 90 days before expiration. Commission staff must sign a notice
of non-renewal to acknowledge that the notice was received at least
90 days prior to the date of expiration. Any notices or amendments
must be provided to the commission in a commission approved method.
Until the 90 days advance notice has elapsed or until an amendment
to the REP's financial qualifications is approved, whichever occurs
first, the guarantor must remain completely and absolutely liable
to the extent provided by the terms of the agreement.
(H) A power purchase agreement must be documented by
providing a copy of the executed agreement between the applicant and
the guarantor.
(5) Commission draw on financial instruments. The commission
may seek full or partial funds from a REP's financial resources in
any of the following circumstances:
(A) An applicable independent organization performs
a mass transition of a REP's customers under §25.43 of this title;
(B) The commission issues an order revoking a REP's
certificate;
Cont'd... |
