| (a) Application. This section applies to any retail electric
provider (REP) or any other entity responsible for billing and collecting
transition charges serving customers in a transmission and distribution utility
(TDU) service area subject to a financing order issued by the commission under
Public Utility Regulatory Act (PURA) §39.303.
(b) Definitions.
(1) Financing order - An order of the commission adopted under
PURA §39.201 or §39.262 approving the issuance of transition bonds
and the creation of transition charges for the recovery of qualified costs.
(2) Indenture trustee - An entity that administers the indenture
related to transition bonds.
(3) Servicer - The entity responsible for carrying out obligations
related to transition bonds under a servicing agreement.
(4) Servicing agreement - The agreement that details the obligations
of the servicer related to the imposition, collection, and remittance of transition
charges.
(5) Special purpose entity (SPE) - An entity formed by an electric
utility, pursuant to a financing order, for the limited purpose of acquiring
transition property, issuing transition bonds, and performing other activities
relating thereto or otherwise authorized by a financing order.
(6) Transition bonds - Bonds, debentures, notes, certificates,
of participation or of beneficial interest, or other evidences of indebtedness
or ownership that are issued by an electric utility, its successors, or an
assignee under a financing order, that have a term not longer than 15 years,
and that are secured or payable from transition property.
(7) Transition charges - Nonbypassable amounts to be charged
for the use or availability of electric services, approved by the commission
under a financing order to recover qualified costs, that shall be collected
by an electric utility, its successors, an assignee, or other collection agents
as provided for in a financing order.
(c) Applicability of REP standards. Beginning on the date of
customer choice for any retail customers, the servicer of the transition bonds
will bill the transition charges for those customers to each retail customer's
REP and the REP will collect transition charges from its retail customers.
The standards in this section are the most stringent that can be imposed on
REPs by any servicer of transition bonds . The standards relate only to the
billing and collection of transition charges authorized by a financing order
and do not apply to the collection of any other non-bypassable charges, or
any other charges. The standards apply to all REPs other than REPs that have
contracted with the transmission and distribution company to bill and collect
transition charges from retail customers. REPs may contract with parties other
than the transmission and distribution company to bill and collect transition
charges from retail customers, but such REPs shall remain subject to the standards
in this section.
(d) REP standards. The REP standards for transition charges
are:
(1) Rating, deposit, and related requirements. A REP that does
not have or maintain the requisite long-term, unsecured credit rating may
select which alternate form of deposit, credit support, or combination thereof
it will utilize, in its sole discretion. The indenture trustee shall be the
beneficiary of any affiliate guarantee, surety bond or letter of credit. The
provider of any affiliate guarantee, surety bond, or letter of credit must
have and maintain a long-term, unsecured credit ratings of not less than "BBB-"
and "Baa3" (or the equivalent) from Standard & Poor's ("S&P") and
Moody's Investors Service ("Moody's"), respectively. Each REP must:
(A) have a long-term, unsecured credit rating of not less than
"BBB-" and "Baa3" (or the equivalent) from S&P and Moody's , respectively;
or
(B) provide:
(i) a deposit of two months' maximum expected transition charge
collections in the form of cash,
(ii) an affiliate guarantee, surety bond, or letter of credit
providing for payment of such amount of transition-charge collections in the
event that the REP defaults in its payment obligations, or
(iii) a combination of clause (i) and (ii) of this subparagraph.
(2) Loss of credit rating. If the long-term, unsecured credit
rating from either S&P or Moody's of a REP that did not previously provide
the alternate form of deposit, credit support, or combination thereof or of
any provider of an affiliate guarantee, surety bond, or letter of credit is
suspended, withdrawn, or downgraded below "BBB-" or "Baa3" (or the equivalent),
the REP must provide the alternate form of deposit, credit support, or combination
thereof, or new forms thereof, in each case from providers with the requisite
ratings, within ten business days following such suspension, withdrawal, or
downgrade. A REP failing to make such provision must comply with the provisions
set forth in paragraph (5) of this subsection.
(3) Computation of deposit. The computation of the size of
a required deposit shall be agreed upon by the servicer and the REP, and reviewed
during the first month of each calendar quarter to ensure that the deposit
accurately reflects two months' maximum collections. If the REP provides a
cash deposit, then within ten business days following such review, the REP
shall remit to the indenture trustee the amount of any shortfall in such required
deposit, or the servicer shall instruct the indenture trustee to remit to
the REP any amount in excess of such required deposit. If the REP provides
security in the form of a letter of credit or surety bond then within ten
business days following such review, the REP shall submit replacement letters
of credit or surety bonds in the amount determined pursuant to the review.
A REP failing to so remit any such shortfall or failing to submit replacement
letters of credit or surety bonds, as applicable, must comply with the provisions
set forth in paragraph (5) of this subsection. REP cash deposits shall be
held by the indenture trustee, as a collateral agent for the REP and the indenture
trustee (in its capacity as indenture trustee) and shall be maintained in
a segregated account which shall not be part of the trust estate, and invested
in short-term high quality investments, as permitted by the rating agencies
rating the transition bonds. Investment earnings on REP cash deposits shall
be considered part of such cash deposits so long as they remain on deposit
with the indenture trustee. At the instruction of the servicer, cash deposits
will be remitted with investment earnings to the REP at the end of the term
of the transition bonds unless otherwise utilized for the payment of the REP's
obligations for transition bond payments. Once the deposit is no longer required,
the servicer shall promptly (but not later than 30 calendar days) instruct
the indenture trustee to remit the amounts in the segregated accounts to the
REP.
(4) Payment of transition charges. Payments of transition charges
less the charge-off allowance described in paragraph (9) of this subsection
are due 35 calendar days following each billing by the servicer to the REP,
without regard to whether or when the REP receives payment from its retail
customers. The servicer shall accept payment by electronic funds transfer,
wire transfer, and/or check. Payment will be considered received the date
the electronic funds transfer or wire transfer is received by the servicer,
or the date the check clears. A 5.0% penalty is to be charged on amounts received
after 35 calendar days; however, a ten calendar-day grace period will be allowed
before the REP is considered to be in default. A REP in default must comply
with the provisions set forth in paragraph (5) of this subsection. The 5.0%
penalty will be a one-time assessment measured against the current amount
overdue from the REP to the servicer. The "current amount" consists of the
total unpaid transition charges existing on the 36th calendar day after billing
by the servicer. Any and all such penalty payments will be made to the indenture
trustee to be applied against transition charge obligations. A REP shall not
be obligated to pay the overdue transition charges of another REP. If a REP
agrees to assume the responsibility for the payment of overdue transition
charges as a condition of receiving the customers of another REP that has
decided to terminate service to those customers for any reason, the new REP
shall not be assessed the 5.0% penalty upon such transition charges; however,
the prior REP shall not be relieved of the previously-assessed penalties.
(5) Remedies upon default. After the ten calendar-day grace
period (the 45th calendar day after the billing date) referred to in paragraph
(4) of this subsection, the servicer shall have the option to seek recourse
against any cash deposit, affiliate guarantee, surety bond, letter of credit,
or combination thereof provided by the REP, and to avail itself of such legal
remedies as may be appropriate to collect any remaining unpaid transition
charges and associated penalties due the servicer after the application of
the REP's deposit or alternate form of credit support. In addition, a REP
that is in default with respect to the requirements set forth in paragraphs
(2), (3), or (4) of this subsection shall select and implement one of the
options listed in subparagraphs (A), (B), or (C) of this paragraph. If a REP
that is in default fails to immediately select and implement one of these
options or, after so selecting one of the options, fails to adequately meet
its responsibilities thereunder, then the servicer shall immediately implement
the option in subparagraph (A) of this paragraph. Upon re-establishment of
compliance with the requirements set forth in paragraphs (2), (3), or (4)
of this subsection, and the payment of all past-due amounts and associated
penalties, the REP will no longer be required to comply with this paragraph.
(A) Allow the Provider of Last Resort ("POLR") or a qualified
REP of the customer's choosing to immediately assume the responsibility for
the billing and collection of transition charges.
(B) Immediately implement other mutually suitable and agreeable
arrangements with the servicer. It is expressly understood that the servicer's
ability to agree to any other arrangements will be limited by the terms of
the securitization Servicing Agreement and requirements of each of the rating
agencies that have rated the transition bonds necessary to avoid a suspension,
withdrawal, or downgrade of the ratings on the transition bonds.
(C) Arrange that all amounts owed by retail customers for services
rendered by the REP be timely billed and will immediately be paid directly
into a lock-box controlled by the servicer with such amounts to be applied
first to pay transition charges and other non-bypassable delivery charges
before the remaining amounts are released to the REP. All costs associated
with this mechanism will be borne solely by the REP.
(6) Billing by providers of last resort. The initial POLR appointed
by the commission, or any commission-appointed successor to the POLR, must
meet the minimum credit rating or deposit/credit support requirements described
in paragraph (1) of this subsection in addition to any other standards that
may be adopted by the commission. If the POLR defaults or is not eligible
to provide such services, responsibility for billing and collection of transition
charges will immediately be transferred to and assumed by the servicer until
a new POLR can be named by the commission or the customer requests the services
of a certified REP. If the POLR or a qualified REP assumes responsibility
for billing and collecting transition charges under paragraph (5) of this
subsection or servicer assumes such responsibility under this paragraph, the
POLR, replacement REP, or servicer, as applicable shall bill all transition
charges which have not been billed as of the date it assumes such responsibility
and shall be subject to the provisions of the financing order. (For example,
if a REP which bills on a calendar month basis goes into default and is replaced
by the POLR on April 20, the initial transition charge bill rendered by the
POLR would cover all transition charges attributable to periods since March
31, the last date for which the original REP had rendered bills). Retail customers
may never be re-billed by the successor REP, the POLR, or the servicer for
any amount of transition charges they have paid their REP (although future
transition charges shall reflect REP and other system-wide charge-offs). Additionally,
if the amount of the penalty detailed in paragraph (4) of this subsection
is the sole remaining past-due amount after the 45th calendar day, the REP
shall not be required to comply with paragraph (5)(A), (B) or (C) of this
subsection, unless the penalty is not paid within an additional 30 calendar
days.
(7) Dispute resolution. In the event that a REP disputes any
amount of billed transition charges, the REP shall pay the disputed amount
under protest according to the timelines detailed in paragraph (4) of this
subsection. The REP and servicer shall first attempt to informally resolve
the dispute, but if they fail to do so within 30 calendar days, either party
may file a complaint with the commission. If the REP is successful in the
dispute process (informal or formal), the REP shall be entitled to interest
on the disputed amount paid to the servicer at the commission-approved interest
rate. Disputes about the date of receipt of transition charge payments (and
penalties arising thereof) or the size of a required REP deposit will be handled
in a like manner. It is expressly intended that any interest paid by the servicer
on disputed amounts shall not be recovered through transition charges if it
is determined that the servicer's claim to the funds is clearly unfounded.
No interest shall be paid by the servicer if it is determined that the servicer
has received inaccurate metering data from another entity providing competitive
metering services pursuant to PURA §39.107.
Cont'd... |
