TRANSITION PROPERTY SERVICING AGREEMENT (CEC FUNDING, LLC)



  
 Exhibit 10.2.2. 
 EXECUTION COPY 
  
 CEC FUNDING, LLC, 
  
 as Note Issuer 
  
 and 
  
 COMMONWEALTH ELECTRIC COMPANY, 
  
 as Servicer 
  
 TRANSITION PROPERTY SERVICING AGREEMENT 
  
 Dated as of March 1, 2005 
  









  
 TABLE OF CONTENTS 

 

					
	 ARTICLE I.
	  	 DEFINITIONS
	  	1
	 Section 1.01.
	  	 Definitions
	  	1
	 Section 1.02.
	  	 Other Definitional Provisions
	  	6
			
	 ARTICLE II.
	  	 APPOINTMENT AND AUTHORIZATION
	  	7
	 Section 2.01.
	  	 Appointment of Servicer; Acceptance of Appointment
	  	7
	 Section 2.02.
	  	 Authorization
	  	7
	 Section 2.03.
	  	 Dominion and Control Over the Transition Property
	  	7
			
	 ARTICLE III.
	  	 BILLING SERVICES
	  	7
	 Section 3.01.
	  	 Duties of Servicer
	  	7
	 Section 3.02.
	  	 Servicing and Maintenance Standards
	  	8
	 Section 3.03.
	  	 Certificate of Compliance
	  	9
	 Section 3.04.
	  	 Annual Report by Independent Public Accountants
	  	9
			
	 ARTICLE IV.
	  	SERVICES RELATED TO PERIODIC ADJUSTMENTS; REMITTANCES AND RECONCILIATIONS	  	10
	 Section 4.01.
	  	 Periodic Adjustments
	  	10
	 Section 4.02.
	  	 Limitation of Liability
	  	11
	 Section 4.03.
	  	 Remittances; Reconciliations
	  	12
			
	 ARTICLE V.
	  	 THE TRANSITION PROPERTY
	  	13
	 Section 5.01.
	  	 Custody of Transition Property Records
	  	13
	 Section 5.02.
	  	 Duties of Servicer as Custodian
	  	13
	 Section 5.03.
	  	 Instructions; Authority to Act
	  	14
	 Section 5.04.
	  	 Effective Period and Termination
	  	14
	 Section 5.05.
	  	 Monitoring of Third-Party Suppliers
	  	14
	 Section 5.06.
	  	 Monitoring and Collecting Exit Charges
	  	14
			
	 ARTICLE VI.
	  	 THE SERVICER
	  	15
	 Section 6.01.
	  	 Representations and Warranties of Servicer
	  	15
	 Section 6.02.
	  	 Indemnities of Servicer
	  	16
	 Section 6.03.
	  	 Limitation on Liability of Servicer and Others
	  	18
	 Section 6.04.
	  	 Merger or Consolidation of, or Assumption of the Obligations of, Servicer
	  	18
	 Section 6.05.
	  	 Commonwealth Electric Company Not to Resign as Servicer
	  	19
	 Section 6.06.
	  	 Servicing Compensation
	  	19
	 Section 6.07.
	  	 Compliance with Applicable Law
	  	20
	 Section 6.08.
	  	 Access to Certain Records and Information Regarding Transition Property
	  	20
	 Section 6.09.
	  	 Appointments
	  	20
	 Section 6.10.
	  	 No Servicer Advances
	  	21
	 Section 6.11.
	  	 Maintenance of Operations
	  	21
			
	 ARTICLE VII.
	  	 DEFAULT
	  	21
	 Section 7.01.
	  	 Servicer Default
	  	21
	 Section 7.02.
	  	 Appointment of Successor
	  	22
	 Section 7.03.
	  	 Waiver of Past Defaults
	  	23
	 Section 7.04.
	  	 Notice of Servicer Default
	  	23
			
	 ARTICLE VIII.
	  	 MISCELLANEOUS PROVISIONS
	  	23
	 Section 8.01.
	  	 Amendment
	  	23
	 Section 8.02.
	  	 Maintenance of Accounts and Records
	  	24

  










					
	 Section 8.03.
	 	 Notices
	  	24
	 Section 8.04.
	 	 Assignment
	  	26
	 Section 8.05.
	 	 Limitations on Rights of Third Parties
	  	26
	 Section 8.06.
	 	 Severability
	  	26
	 Section 8.07.
	 	 Separate Counterparts
	  	27
	 Section 8.08.
	 	 Headings
	  	27
	 Section 8.09.
	 	 Governing Law
	  	27
	 Section 8.10.
	 	 Assignment to Note Trustee
	  	27
	 Section 8.11.
	 	 Nonpetition Covenants
	  	27

  
 EXHIBITS AND SCHEDULES

  

			
	 Exhibit A
	  	Form of Certificate of Compliance
		
	 Exhibit B
	  	Form of Routine True-Up Letter
		
	 Exhibit C
	  	Form of Monthly Servicer Certificate
		
	 Exhibit D
	  	Form of Semiannual Servicer Certificate
		
	 Exhibit E
	  	Form of Annual Reconciliation
		
	 Schedule 4.01(a)
	  	Expected Amortization Schedule

  
 ANNEXES 
  

			
	 Annex I
	  	Servicing Procedures
		
	 Schedule A to Annex I
	  	Additional Servicing Procedures Applicable to TPSs

  

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 This TRANSITION PROPERTY SERVICING AGREEMENT, dated as of March 1, 2005, is between CEC Funding, LLC, a
Delaware limited liability company (the “Note Issuer”), and Commonwealth Electric Company, a Massachusetts corporation. 
  
 RECITALS 
  
 WHEREAS, pursuant to the Statute and the Financing Order, the Seller and the Note Issuer are concurrently entering into the Sale Agreement pursuant to
which the Seller is selling to the Note Issuer the Seller’s Transition Property created pursuant to the Statute and the Financing Order. 
  
 WHEREAS, in connection with the Note Issuer’s ownership of the Transition Property and in order to collect the RTC Charge, the Note Issuer desires to
engage the Servicer to carry out the functions described herein. The Servicer currently performs similar functions for itself with respect to its own charges to its customers and for others. In addition, the Note Issuer desires to engage the
Servicer to act on its behalf in obtaining Periodic Adjustments from the DTE. The Servicer desires to perform all of these activities on behalf of the Note Issuer. 
  
 NOW, THEREFORE, in consideration of the promises and the mutual covenants herein contained, the parties hereto agree as
follows: 
  
 ARTICLE I. 
 DEFINITIONS 
  
 Section 1.01. Definitions. Whenever used in this Agreement, the following words and phrases shall have the following meanings: 
  
 “Advice Letter” means any filing made with the DTE by the Servicer
on behalf of the Note Issuer to set or adjust the RTC Charge, including the Issuance Advice Letter, a Routine Anniversary True-Up Letter, a Routine True-Up Letter or a Non-Routine True-Up Letter. 
  
 “Agreement” means this Transition Property Servicing Agreement,
together with all Exhibits, Schedules and Annexes hereto, as the same may be amended and supplemented from time to time. 
  
 “Annual Accountant’s Report” has the meaning set forth in Section 3.04. 
  
 “Applicable TPS” means, with respect to each Customer, the TPS, if any, billing the RTC Charge to that Customer.

  
 “Bills” means each of the regular monthly bills,
summary bills and other bills issued to Customers or TPSs by Commonwealth Electric Company on its own behalf and in its capacity as Servicer. 
  
 “Certificate of Compliance” has the meaning set forth in Section 3.03. 
  
 “Closing Date” means March 1, 2005. 
  









 “Customers” means all classes of retail users of the Seller’s distribution system within
its geographic service territory as in effect on July 1, 1997. 
  
 “Declaration of Trust” means the Declaration of Trust dated as of January 26, 2005 by The Bank of New York (Delaware), a Delaware banking corporation, as Delaware Trustee, the Massachusetts Development Finance Agency, which
conducts business as MassDevelopment and the Massachusetts Health and Educational Facilities Authority, as the same may be amended and supplemented from time to time. 
  
 “Deemed RTC Charge Payments” means the payments in respect of the RTC Charge, which are deemed to have been
received by the Servicer, directly or indirectly (including through a TPS), from or on behalf of Customers, calculated in accordance with Annex I hereto. 
  
 “DTE” means the Massachusetts Department of Telecommunications and Energy and any successor thereto. 
  
 “DTE Regulations” means all regulations, rules, tariffs and laws
applicable to public utilities or TPSs, as the case may be, and promulgated by, enforced by or otherwise within the jurisdiction of the DTE. 
  
 “Estimated RTC Charge Payments” means the estimated payments in respect of the RTC Charge, which are deemed to have been received by the
Servicer, directly or indirectly (including through a TPS), from or on behalf of Customers, calculated in accordance with Annex I hereto. 
  
 “Expected Amortization Schedule” means Schedule 4.01(a) hereto. 
  
 “Financing Order” means the order of the DTE, DTE 04-70, issued on January 21, 2005. 
  
 “Insolvency Event” means, with respect to a specified Person, (a)
the filing of a decree or order for relief by a court having jurisdiction in the premises in respect of such Person or any substantial part of its property in an involuntary case under any applicable Federal or state bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its property, or ordering the winding-up or liquidation of
such Person’s affairs, and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or (b) the commencement by such Person of a voluntary case under any applicable Federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or the consent by such Person to the entry of an order for relief in an involuntary case under any such law, or the consent by such Person to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its property, or the making by such Person of any general assignment for the benefit of creditors, or the failure by such
Person generally to pay its debts as such debts become due. 
  
 “Issuance Advice Letter” means the initial Issuance Advice Letter, dated February 18, 2005, filed with the DTE pursuant to the Financing Order. 
  
 “Lien” means a security interest, lien, charge, pledge or encumbrance of any kind. 
  

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 “Losses” has the meaning assigned to that term in Section 6.02(b). 
  
 “Monthly Servicer Certificate” has the meaning assigned to that
term in Section 4.01(d)(ii). 
  
 “Non-Routine Periodic
Adjustment” has the meaning set forth in Section 4.01(c)(i). 
  
 “Non-Routine True-Up Letter” means an Advice Letter filed with the DTE in accordance with the Financing Order with respect to any Non-Routine Periodic Adjustment, pursuant to which the related Non-Routine Periodic Adjustment will
become effective within 60 days after filing of the Non-Routine True-Up Letter, subject to the review and approval of the DTE. 
  
 “Note Indenture” means the Note Indenture dated as of March 1, 2005, between the Note Issuer and the Note Trustee, as the same may be amended
and supplemented from time to time. 
  
 “Note Issuer”
has the meaning set forth in the preamble to this Agreement. 
  
 “Officer’s Certificate” means a certificate of the Servicer signed by a Responsible Officer. 
  
 “Opinion of Counsel” means one or more written opinions of counsel who may be an employee of or counsel to the party providing such opinion(s)
of counsel, which counsel shall be reasonably acceptable to the party receiving such opinion(s) of counsel. 
  
 “Periodic Adjustment” means each adjustment to the RTC Charge made pursuant to the terms of the Financing Order and in accordance with Section
4.01 hereof. 
  
 “Principal Balance” means, as of any
Payment Date, the sum of the outstanding principal amount of the Notes. 
  
 “Projected Principal Balance” means, as of any Payment Date, the sum of the projected outstanding principal amount of the Notes for such Payment Date set forth in the Expected Amortization Schedule. 
  
 “Rating Agency” means, collectively, Moody’s and Standard
& Poor’s. If no such organization or successor is any longer in existence, “Rating Agency” shall be a nationally recognized statistical rating organization or other comparable Person designated by the Note Issuer, notice of which
designation shall be given to the Note Trustee, the Certificate Trustee and the Servicer 
  
 “Rating Agency Condition” means with respect to any action, that each Rating Agency shall have been given ten days prior written notice thereof and that each of the Rating Agencies shall have notified the
Servicer, the Note Issuer, the Note Trustee, the Agencies and the Certificate Trustee in writing that such action will not result in a suspension, reduction or withdrawal of the then current rating by such Rating Agency of any Class of the Notes or
any Class of the Certificates. 
  

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 “Reconciliation Period” means the twelve-month period commencing on January 1 of each year and
ending on December 31 of each year; provided, however, that the initial Reconciliation Period shall commence on the Closing Date and end on December 31, 2005. 
  

“Remittance” means each remittance hereunder of Estimated RTC Charge Payments by the Servicer to the Note Trustee. 
  
 “Remittance Date” means each Servicer Business Day on which a
Remittance is to be made by the Servicer pursuant to Section 4.03. 
  
 “Remittance Excess” means the amount, if any, calculated for a particular Reconciliation Period, by which all RTC Charge Collections during such Reconciliation Period exceed Deemed RTC Charge Payments during such Reconciliation
Period. 
  
 “Remittance Period” means the twelve-month
period commencing on March 1 of each year and ending on the last day of February of each year; provided, however, that the initial Remittance Period shall commence on the Closing Date and end on February 28, 2006. 
  
 “Remittance Shortfall” means the amount, if any, calculated for a
particular Reconciliation Period, by which Deemed RTC Charge Payments during such Reconciliation Period exceed RTC Charge Collections during such Reconciliation Period. 
  
 “Required Debt Service” means, for any Remittance Period, the total dollar amount calculated by the Servicer in
accordance with Section 4.01(b)(i) as necessary to be remitted to the Collection Account during such Remittance Period (after giving effect to (a) the allocation and distribution of amounts on deposit in the Reserve Subaccount at the time of
calculation and which are available for payments on the Notes, (b) any shortfalls in Required Debt Service for any prior Remittance Period, (c) the required payment or credit of any Remittance Excess or Remittance Shortfall during such Remittance
Period and (d) any Remittances based upon the RTC Charge in effect in the prior Remittance Period that are expected to be realized in such Remittance Period) in order to ensure that, as of the Payment Date immediately following the end of such
period, (i) all accrued and unpaid interest on the Notes then due shall have been paid in full, (ii) the Principal Balance of the Notes is equal to the Projected Principal Balance of the Notes for that Payment Date, (iii) the balance on deposit in
the Capital Subaccount equals the Required Capital Level, (iv) the balance on deposit in the Overcollateralization Subaccount equals the Required Overcollateralization Level and (v) all other fees, expenses and indemnities due and owing and required
or allowed to be paid under Section 8.02 of the Note Indenture as of such date shall have been paid in full; provided, however, that, with respect to any Periodic Adjustment occurring after the last Scheduled Maturity Date for any Notes, the
Required Debt Service shall be calculated to ensure that sufficient amounts will be collected to retire such Notes in full as of the earlier of (x) the next Payment Date and (y) the Final Maturity Date for such Notes. 
  
 “Responsible Officer” means the chief executive officer, the
president, any vice president, the treasurer, any assistant treasurer, the clerk, any assistant clerk, the controller or the director of corporate finance and cash management of the Servicer. 
  

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 “Retirement of the Notes” means the day on which the final payment is made to the Note Trustee
in respect of the last outstanding Note. 
  
 “Routine
Anniversary True-Up Letter” means a Routine True-Up Letter filed with the DTE on or prior to March 15 in each year in respect of an annual Periodic Adjustment. The Routine Anniversary True-Up Letter will become effective on the first calendar
day of the next succeeding calendar month after filing, or such date as may be specified in such Routine Anniversary True-Up Letter, so long as such effective date is at least 15 days after the filing of such Routine Anniversary True-Up Letter.

  
 “Routine True-Up Letter” means an Advice Letter
filed with the DTE in respect of a Periodic Adjustment, substantially in the form of Exhibit B hereto. The Routine True-Up Letter will become effective on the first calendar day of the next succeeding calendar month after filing, or such date as may
be specified in such Routine True-Up Letter, so long as such effective date is at least 15 days after the filing of such Routine True-Up Letter. 
  
 “RTC Charge” means the portion (which may become all) of the Seller’s Transition Charge designated pursuant to the Financing Order as the
RTC Charge, as the same may be adjusted from time to time as provided in the Financing Order. 
  
 “RTC Charge Collections” means the Estimated RTC Charge Payments remitted to the Collection Account. 
  
 “Sale Agreement” means the Transition Property Sale Agreement dated as of March 1, 2005, between Commonwealth Electric Company, as Seller, and
the Note Issuer, as the same may be amended and supplemented from time to time. 
  
 “Seller” means Commonwealth Electric Company, a Massachusetts corporation, and its permitted successors and assigns under the Sale Agreement. 
  
 “Semiannual Servicer Certificate” has the meaning assigned to that term in Section 4.01(d)(iii). 
  
 “Servicer” means Commonwealth Electric Company, as the servicer of
the Transition Property, or each successor (in the same capacity) pursuant to Section 6.04 or 7.02. 
  
 “Servicer Business Day” means any Business Day on which the Servicer’s offices in the Commonwealth of Massachusetts are open for business.

  
 “Servicer Default” means an event specified in
Section 7.01. 
  
 “Servicing Fee” has the meaning set
forth in Section 6.06(a). 
  
 “Statute” means Chapter
164 of the Massachusetts Acts of 1997, entitled an Act Relative to Restructuring the Electric Utility Industry in the Commonwealth, Regulating the Provision of Electricity and Other Services, and Promoting Enhanced Consumer Protections Therein.

  
 “Termination Notice” has the meaning assigned to
that term in Section 7.01. 
  

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 “TPS” means a third party supplier of energy who has entered into a TPS Service Agreement with
the Servicer. 
  
 “TPS Service Agreement” means an
agreement between a third party supplier of energy and the Servicer pursuant to which such third party supplier of energy bills and collects the RTC Charge to and from Customers in accordance with DTE Regulations, the Financing Order and the
guidelines described in Schedule A to Annex I. 
  
 “Transition Charge” means the “access charge” as defined in Commonwealth Electric Company’s Restructuring Settlement Agreement, D.P.U. Docket Nos. 97-111 and 97-111-A and subsequent filings with the DTE pursuant
thereto. 
  
 “Transition Property” means the transition
property that exists under Order 6 of the Financing Order and is sold by the Seller to the Note Issuer under the Sale Agreement. 
  
 “Transition Property Records” has the meaning assigned to that term in Section 5.01. 
  
 “Weighted Average Days Outstanding” means the weighted average
number of days Commonwealth Electric Company’s monthly retail customer bills remain outstanding during the calendar year immediately preceding the calculation thereof pursuant to Section 4.01(b)(i). For all purposes of this Agreement, the
calculation of Weighted Average Days Outstanding pursuant to Section 4.01(b)(i) shall become effective on April 1 of each year. The initial Weighted Average Days Outstanding shall be 35 days until updated pursuant to Section 4.01(b)(i) of this
Agreement. 
  
 Section 1.02. Other Definitional Provisions.

  
 (a) Capitalized terms used herein and not otherwise defined
herein have the meanings assigned to them in the Note Indenture. 
  
 (b) All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein. 
  
 (c) The words “hereof,” “herein,” “hereunder”
and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; Section, Schedule, Exhibit and Annex references contained in this Agreement are references to
Sections, Schedules, Exhibits and Annexes in or to this Agreement unless otherwise specified; and the term “including” shall mean “including without limitation.” 
  
 (d) The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and
to the masculine as well as to the feminine and neuter forms of such terms. 
  

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 ARTICLE II. 
 APPOINTMENT AND AUTHORIZATION 
  
 Section 2.01. Appointment of Servicer; Acceptance of Appointment. Subject to Section 6.05 and Article 7, the Note Issuer hereby appoints the
Servicer, and the Servicer hereby accepts such appointment, to perform the Servicer’s obligations pursuant to this Agreement on behalf of and for the benefit of the Note Issuer or any assignee thereof in accordance with the terms of this
Agreement and applicable law. This appointment and the Servicer’s acceptance thereof may not be revoked except in accordance with the express terms of this Agreement. 
  
 Section 2.02. Authorization. With respect to all or any portion of the Transition Property, the Servicer is
authorized and empowered by the Note Issuer to (a) execute and deliver, on behalf of itself and/or the Note Issuer, as the case may be, any and all instruments, documents or notices, and (b) on behalf of itself and/or the Note Issuer, as the case
may be, make any filing and participate in proceedings of any kind with any governmental authorities, including with the DTE. The Note Issuer shall execute and/or furnish the Servicer such documents as have been prepared by the Servicer for
execution by the Note Issuer, and with such other documents as may be in the Note Issuer’s possession, as the Servicer may determine to be necessary or appropriate to enable it to carry out its servicing and administrative duties hereunder.
Upon the Servicer’s written request, the Note Issuer shall furnish the Servicer with any powers of attorney or other documents necessary or appropriate to enable the Servicer to carry out its duties hereunder. 
  
 Section 2.03. Dominion and Control Over the Transition Property.
Notwithstanding any other provision herein, the Note Issuer shall have dominion and control over the Transition Property, and the Servicer, in accordance with the terms hereof, is acting solely as the servicing agent and custodian for the Note
Issuer with respect to the Transition Property and the Transition Property Records. The Servicer shall not take any action that is not authorized by this Agreement or that shall impair the rights of the Note Issuer or the Note Trustee in the
Transition Property, in each case unless such action is required by applicable law. 
  
 ARTICLE III. 
 BILLING SERVICES 
  
 Section 3.01. Duties of Servicer. The Servicer, as agent for the Note Issuer, shall have the following duties:

  
 (a) Duties of Servicer Generally. 
  
 (i) General Duties. The Servicer’s duties in
general shall include management, servicing and administration of the Transition Property; obtaining meter reads, calculating electricity usage (including usage by Customers of any TPS), billing, collection and posting of all payments in respect of
the Transition Property; responding to inquiries by Customers, the DTE, or any federal, local or other state governmental authorities with respect to the Transition Property; delivering Bills to Customers and TPSs, investigating and handling
delinquencies, processing and depositing collections and making periodic remittances; furnishing periodic reports to the Note Issuer, the Note Trustee, the Certificate Trustee and the Rating Agencies; and taking all necessary action in connection
with Periodic Adjustments as set forth 

  

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herein. To the extent allowed by law and DTE Regulations, certain of the duties set forth above may be performed by TPSs pursuant to TPS Service Agreements.
Without limiting the generality of this Section 3.01(a)(i), in furtherance of the foregoing, the Servicer hereby agrees that it shall also have, and shall comply with, the duties and responsibilities relating to data acquisition, usage and bill
calculation, billing, customer service functions, collection, payment processing and remittance set forth in Annex I hereto. 
  
 (ii) DTE Regulations Control. Notwithstanding anything to the contrary in this Agreement, the duties of the Servicer set forth in
this Agreement shall be qualified in their entirety by any DTE Regulations as in effect at the time such duties are to be performed. 
  
 (b) Reporting Functions. 
  
 (i) Annual Reconciliation Report. The Servicer shall deliver an annual written reconciliation report substantially in the form of
Exhibit E hereto as required by Section 4.03(b) hereof. 
  
 (ii) Notification of Laws and Regulations. The Servicer shall promptly notify the Note Issuer, the Note Trustee, the Certificate Trustee and the Rating Agencies in writing of any laws or DTE Regulations
hereafter promulgated that have a material adverse effect on the Servicer’s ability to perform its duties under this Agreement. 
  
 (iii) Other Information. Upon the reasonable request of the Note Issuer, the Note Trustee, the Certificate Trustee, or any Rating
Agency, the Servicer shall provide to such Note Issuer, Note Trustee, Certificate Trustee, or the Rating Agencies, as the case may be, any public financial information in respect of the Servicer, or any material information regarding the Transition
Property to the extent it is reasonably available to the Servicer, as may be reasonably necessary and permitted by law, including all applicable DTE Regulations and guidelines, for the Note Issuer, the Note Trustee, the Certificate Trustee, or the
Rating Agencies to monitor the Servicer’s performance hereunder. 
  
 (iv) Preparation of Reports to be Filed with the SEC. The Servicer shall prepare any reports required to be filed by the Note Issuer or the Certificate Issuer under the securities laws, including, if so
required, a copy of each Semiannual Servicer Certificate described in Section 4.01(d)(iii), the annual Certificate of Compliance described in Section 3.03, the Annual Accountant’s Report described in Section 3.04, and any certification required
by Section 302 of the Sarbanes-Oxley Act of 2002 and Item 601 of Regulation S-K under the Securities Exchange Act of 1934, as amended. 
  
 Section 3.02. Servicing and Maintenance Standards. On behalf of the Note Issuer, the Servicer shall (a) manage, service, administer and make
collections in respect of the Transition Property with reasonable care and in accordance with applicable law, including all applicable DTE Regulations and guidelines, using the same degree of care and diligence that the Servicer exercises with
respect to similar assets for its own account and, if applicable, for others; (b) follow customary standards, policies and procedures for the industry in performing its duties as Servicer; (c) use all reasonable efforts, consistent with its
customary servicing procedures, to bill and collect the RTC Charge; (d) file all filings under the applicable Uniform Commercial Code 

  

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or the Statute necessary or desirable to maintain the first priority perfected security interest of the Note Trustee in the Transition Property and (e)
comply in all material respects with all laws and regulations applicable to and binding on it relating to the Transition Property. The Servicer shall follow such customary and usual practices and procedures as it shall deem necessary or advisable in
its servicing of all or any portion of the Transition Property, which, in the Servicer’s judgment, may include the taking of legal action, at the Note Issuer’s expense. 
  
 Section 3.03. Certificate of Compliance. The Servicer shall deliver to the Note Issuer, the Note Trustee, the
Certificate Trustee and the Rating Agencies on or before March 31 of each year, commencing March 31, 2006 to and including the March 31 succeeding the Retirement of the Notes, an Officer’s Certificate substantially in the form of Exhibit A
hereto (a “Certificate of Compliance”), stating that: (i) a review of the activities of the Servicer during the twelve months ended the preceding December 31 (or, in the case of the first Certificate of Compliance to be delivered on or
before March 31, 2006, the period of time from the date of this Agreement until December 31, 2005) and of its performance under this Agreement has been made under such Responsible Officer’s supervision, and (ii) to the best of such Responsible
Officer’s knowledge, based on such review, the Servicer has fulfilled all of its obligations under this Agreement in all material respects throughout such twelve months (or, in the case of the Certificate of Compliance to be delivered on or
before March 31, 2006, the period of time from the date of this Agreement until December 31, 2005), or, if there has been a failure to fulfill any such obligation in any material respect, specifying each such failure known to such Responsible
Officer and the nature and status thereof. 
  
 Section 3.04.
Annual Report by Independent Public Accountants. 
  
 (a)
The Servicer, at the Note Issuer’s expense, shall cause a firm of independent certified public accountants (which may provide other services to the Servicer) to prepare, and the Servicer shall deliver to the Note Issuer, the Note Trustee, the
Certificate Trustee and the Rating Agencies, a report addressed to the Servicer (the “Annual Accountant’s Report”), which may be included as part of the Servicer’s customary auditing activities, for the information and use of the
Note Issuer, the Note Trustee, the Certificate Trustee and the Rating Agencies, on or before March 31 each year, beginning March 31, 2006 to and including the March 31 succeeding the Retirement of the Notes, to the effect that such firm has
performed certain procedures, agreed between the Servicer and such accountants, in connection with the Servicer’s compliance with its obligations under this Agreement during the preceding twelve months ended December 31 (or, in the case of the
first Annual Accountant’s Report to be delivered on or before March 31, 2006, the period of time from the date of this Agreement until December 31, 2005), identifying the results of such procedures and including any exceptions noted.

  
 (b) The Annual Accountant’s Report shall also indicate
that the accounting firm providing such report is independent of the Servicer within the meaning of Rule 101 of the Code of Professional Conduct of the American Institute of Certified Public Accountants or any superceding or amended standard adopted
by the Public Company Accounting Oversight Board. 
  

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 ARTICLE IV. 
 SERVICES RELATED TO PERIODIC ADJUSTMENTS; REMITTANCES AND 
 RECONCILIATIONS 
  
 Section 4.01.
Periodic Adjustments. From time to time, until the Retirement of the Notes, the Servicer shall identify the need for Periodic Adjustments and shall take all reasonable action to obtain and implement such Periodic Adjustments, all in
accordance with the following: 
  
 (a) Expected Amortization
Schedule. The Expected Amortization Schedule is attached hereto as Schedule 4.01(a). 
  
 (b) Routine Periodic Adjustments and Yearly Filings. 
  
 (i) Routine Anniversary Periodic Adjustments and Filings. For the purpose of preparing a Routine Anniversary True-Up Letter, the
Servicer shall: (A) update the assumptions underlying the calculation of the RTC Charge, including energy usage volume, the rate of charge-offs and estimated expenses and fees of the Note Issuer and the Certificate Issuer to the extent not fixed, in
each case for the Remittance Period beginning on March 1 of such year; (B) update the calculation of Weighted Average Days Outstanding; (C) determine the Required Debt Service for such Remittance Period based upon such updated assumptions; and (D)
determine the RTC Charge to be charged during such Remittance Period based upon such Required Debt Service. The Servicer shall file a Routine Anniversary True-Up Letter with the DTE no later than March 15 of each year (no later than March 15, 2006
for the first Routine Anniversary True-Up Letter). 
  
 (ii) Routine Periodic Adjustments. The Servicer shall file a Routine True-Up Letter at least 15 days before the end of any calendar quarter or Payment Date at such times as it may reasonably determine to meet the Required Debt
Service for the then current Remittance Period, provided, however, that the Servicer shall promptly file a Routine True-Up Letter not later than September 15 of each year (A) in the event that the amount on deposit in the Note Issuer’s
Overcollateralization Subaccount and Capital Subaccount has been, or will be, reduced to zero on any Payment Date, and (B) in any event, commencing September 15, 2013, until the Retirement of the Notes. 
  
 (iii) Periodic Adjustments. The Servicer shall take
all reasonable actions and make all reasonable efforts to secure any Periodic Adjustments. 
  
 (c) Non-Routine Periodic Adjustments. 
  
 (i) Whenever the Servicer determines that the existing model for calculating the RTC Charge should be amended or revised, subject to the consent of the Note Issuer under the conditions set forth in Section 3.18 of the
Note Indenture, the Servicer shall file a Non-Routine True-Up Letter with the DTE designating the adjustments to such model and any corresponding adjustments to the RTC Charge (collectively, a “Non-Routine Periodic Adjustment”), subject to
the review and approval of the DTE pursuant to the Financing Order. 
  
 (ii) The Servicer shall take all reasonable actions and make all reasonable efforts to secure any Non-Routine Periodic Adjustments. 
  

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 (iii) The Servicer shall implement any resulting adjustments to the model and any
resulting revised RTC Charge as of the effective date of the Non-Routine True-Up Letter. 
  
 (d) Reports. 
  
 (i) Notification of Advice Letter Filings and Periodic Adjustments. Whenever the Servicer files an Advice Letter with the DTE, the Servicer shall send a copy of such filing to the Note Issuer, the Note Trustee, the Certificate
Trustee and the Rating Agencies concurrently therewith. If any Periodic Adjustment requested in any such Advice Letter filing does not become effective on the applicable date as provided by the Financing Order, the Servicer shall notify the Note
Issuer, the Note Trustee, the Certificate Trustee and the Rating Agencies by the end of the second Servicer Business Day after such applicable date. 
  
 (ii) Monthly Servicer Certificate. So long as any Notes are outstanding, not later than fifteen (15) days after the end of each
month after the Certificates are issued (excluding March, 2005), or if such day is not a Servicer Business Day, the next succeeding Servicer Business Day, the Servicer shall deliver a written report substantially in the form of Exhibit C hereto (the
“Monthly Servicer Certificate”) to the Note Issuer, the Note Trustee, the Certificate Trustee and the Rating Agencies. 
  
 (iii) Semiannual Servicer Certificate. So long as any Notes are outstanding, not later than the Servicer Business Day immediately
preceding each Payment Date, the Servicer shall deliver a written report substantially in the form of Exhibit D hereto (the “Semiannual Servicer Certificate”) to the Note Issuer, the Note Trustee, the Certificate Trustee and the Rating
Agencies. 
  
 (iv) TPS Reports. The
Servicer shall provide to the Rating Agencies, upon request, any publicly available reports filed by the Servicer with the DTE (or otherwise made publicly available by the Servicer) relating to TPSs and any other non-confidential and non-proprietary
information relating to TPSs reasonably requested by the Rating Agencies. 
  
 Section 4.02. Limitation of Liability. 
  
 (a) The Note Issuer and the Servicer expressly agree and acknowledge that: 
  
 (i) In connection with any Periodic Adjustment, the Servicer is acting solely in its capacity as the servicing agent hereunder.

  
 (ii) Neither the Servicer nor the Note Issuer
shall be responsible in any manner for, and shall have no liability whatsoever as a result of, any action, decision, ruling or other determination made or not made, or any delay (other than any delay resulting from the Servicer’s failure to
file the applications required by Section 4.01 in a timely and correct manner or other material breach by the Servicer of its duties under this Agreement that materially and adversely affects the Periodic Adjustments), by the DTE in any way related
to the Transition Property or in connection with any Periodic Adjustment or Non-Routine Periodic Adjustment, the subject of any filings under Section 4.01, any proposed Periodic Adjustment or Non-Routine Periodic Adjustment, or the approval of the
RTC Charge and the adjustments thereto. 
  

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 (iii) The Servicer shall have no liability whatsoever relating to the calculation of the
RTC Charge and the adjustments thereto (including any Non-Routine Periodic Adjustment), including as a result of any inaccuracy of any of the assumptions made in such calculation regarding expected energy usage volume, the rate of charge-offs,
estimated expenses and fees of the Note Issuer and the Certificate Issuer, so long as the Servicer has not acted in a grossly negligent manner in connection therewith, nor shall the Servicer have any liability whatsoever as a result of any Person,
including the Noteholders or the Certificateholders, not receiving any payment, amount or return anticipated or expected in respect of any Note or Certificate generally, except only to the extent that the Servicer is liable under Section 6.02 of
this Agreement. 
  
 (b) Notwithstanding the foregoing, this
Section 4.02 shall not relieve the Servicer of any liability under Section 6.02 for any misrepresentation by the Servicer under Section 6.01 or for any breach by the Servicer of its obligations under this Agreement. 
  
 Section 4.03. Remittances; Reconciliations. 
  
 (a) Subject to Section 4.03(b) below, on each Servicer Business Day
commencing [45] days after the date of this Agreement, the Servicer shall cause to be made within two (2) Servicer Business Days of deemed receipt a wire transfer of immediately available funds to the General Subaccount of the Collection Account in
an amount equal to the Estimated RTC Charge Payments (as calculated in accordance with Annex I hereto) received on such day and on any prior day that was not a Servicer Business Day for which a Remittance has not previously been made (taking into
account the Weighted Average Days Outstanding in effect from time to time). Prior to or simultaneous with each Remittance to the General Subaccount of the Collection Account pursuant to this Section, the Servicer shall provide written notice to the
Note Trustee of each such Remittance (including the exact dollar amount to be remitted). 
  
 (b) On or before each March 1, the Servicer shall calculate the amount of any Remittance Shortfall or Remittance Excess attributable to the prior Reconciliation Period and (A) if a Remittance Shortfall exists, the
Servicer shall make a supplemental wire transfer of immediately available funds to the General Subaccount of the Collection Account on the next Servicer Business Day following such calculation in the amount of such Remittance Shortfall, or (B) if a
Remittance Excess exists, the Servicer may reduce the amount of Remittances to be made to the Note Issuer on succeeding Servicer Business Days in an amount equal to the amount of such Remittance Excess until the balance of the Remittance Excess has
been reduced to zero. The Servicer shall deliver a written report setting forth in reasonable detail the calculation of any Remittance Excess or Remittance Shortfall to the Note Issuer, the Note Trustee, the Certificate Trustee and the Rating
Agencies. 
  
 (c) The Servicer agrees and acknowledges that it
will remit Estimated RTC Charge Payments in accordance with this Section 4.03 without any surcharge, fee, offset, charge or other deduction except (i) as set forth in Section 4.03(b) above and (ii) for late fees permitted by Section 6.06.

  

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 ARTICLE V. 
 THE TRANSITION PROPERTY 
  
 Section 5.01. Custody of Transition Property Records. To assure uniform quality in servicing the Transition Property and to reduce administrative
costs, the Note Issuer hereby revocably appoints the Servicer, and the Servicer hereby accepts such appointment, to act as the agent of the Note Issuer and the Note Trustee as custodian of any and all documents and records that the Servicer shall
keep on file, in accordance with its customary procedures, relating to the Transition Property, including copies of the Financing Order and Advice Letters relating thereto and all documents filed with the DTE in connection with any Periodic
Adjustment or Non-Routine Periodic Adjustment and computational records relating thereto (collectively, the “Transition Property Records”), which are hereby constructively delivered to the Note Trustee, as pledgee of the Note Issuer with
respect to all Transition Property. 
  
 Section 5.02. Duties of
Servicer as Custodian. 
  
 (a) Safekeeping. The
Servicer shall hold the Transition Property Records on behalf of the Note Issuer and the Note Trustee and maintain such accurate and complete accounts, records and computer systems pertaining to the Transition Property Records on behalf of the Note
Issuer and the Note Trustee as shall enable the Note Issuer to comply with this Agreement and the Note Indenture. In performing its duties as custodian the Servicer shall act with reasonable care, using that degree of care and diligence that the
Servicer exercises with respect to comparable assets that the Servicer services for itself or, if applicable, for others. The Servicer shall promptly report to the Note Issuer and the Note Trustee any failure on its part to hold the Transition
Property Records and maintain its accounts, records and computer systems as herein provided and promptly take appropriate action to remedy any such failure. Nothing herein shall be deemed to require an initial review or any periodic review by the
Note Issuer or the Note Trustee of the Transition Property Records. The Servicer’s duties to hold the Transition Property Records on behalf of the Note Issuer set forth in this Section 5.02, to the extent such Transition Property Records have
not been previously transferred to a successor Servicer pursuant to Article VII, shall terminate one year and one day after the earlier of the date on which (i) the Servicer is succeeded by a successor Servicer in accordance with Article VII hereof
and (ii) no Notes are outstanding. 
  
 (b) Maintenance of and
Access to Records. The Servicer shall maintain at all times records and accounts that permit the Servicer to identify RTC Charges billed. The Servicer shall maintain the Transition Property Records in Westwood, Massachusetts or at such other
office as shall be specified to the Note Issuer and the Note Trustee by written notice at least 30 days prior to any change in location. The Servicer shall make available for inspection to the Note Issuer and the Note Trustee or their respective
duly authorized representatives, attorneys or auditors the Transition Property Records at such times during normal business hours as the Note Issuer or the Note Trustee shall reasonably request and which do not unreasonably interfere with the
Servicer’s normal operations. Nothing in this Section 5.02(b) shall affect the obligation of the Servicer to observe any applicable law (including any DTE Regulations) prohibiting disclosure of information regarding the Customers, and the
failure of the Servicer to provide access to such information as a result of such obligation shall not constitute a breach of this Section 5.02(b). 
  

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 (c) Release of Documents. Upon instruction from the Note Trustee in accordance with the Note
Indenture, the Servicer shall release any Transition Property Records to the Note Trustee, the Note Trustee’s agent or the Note Trustee’s designee, as the case may be, at such place or places as the Note Trustee may designate, as soon as
practicable. 
  
 (d) Defending Transition Property Against
Claims. The Servicer, on behalf of the Noteholders and the Certificateholders, shall institute any action or proceeding necessary to compel performance by the DTE or The Commonwealth of Massachusetts of any of their obligations or duties under
the Statute, the Financing Order or any Advice Letter, and the Servicer agrees to take such legal or administrative actions, including defending against or instituting and pursuing legal actions and appearing or testifying at hearings or similar
proceedings, as may be reasonably necessary to block or overturn any attempts to cause a repeal of, modification of or supplement to the Statute or the Financing Order or the rights of holders of Transition Property by legislative enactment, voter
initiative or constitutional amendment that would be adverse to the Noteholders, the Note Issuer, the Note Trustee, the Delaware Trustee, the Certificate Trustee or the Certificateholders. The costs of any such action shall be payable from RTC
Charge Collections as an Operating Expense in accordance with the priorities set forth in Section 8.02(d) of the Note Indenture. The Servicer’s obligations pursuant to this Section 5.02 shall survive and continue notwithstanding the fact that
the payment of Operating Expenses pursuant to Section 8.02(d) of the Note Indenture may be delayed (it being understood that the Servicer may be required to advance its own funds to satisfy its obligations hereunder). 
  
 Section 5.03. Instructions; Authority to Act. For so long as any Notes
remain outstanding, the Servicer shall be deemed to have received proper instructions with respect to the Transition Property Records upon its receipt of written instructions signed by a Responsible Officer (as defined in the Note Indenture) of the
Note Trustee. 
  
 Section 5.04. Effective Period and
Termination. The Servicer’s appointment as custodian shall become effective as of the Closing Date and shall continue in full force and effect until terminated pursuant to this Section 5.04. If any Servicer shall resign as Servicer in
accordance with the provisions of this Agreement or if all of the rights and obligations of any Servicer shall have been terminated under Section 7.01, the appointment of such Servicer as custodian shall terminate upon appointment of a successor
Servicer, subject to the approval of the DTE, and acceptance by such successor Servicer of such appointment. 
  
 Section 5.05. Monitoring of Third-Party Suppliers. From time to time, until the Retirement of the Notes, the Servicer shall, using the same degree
of care and diligence that it exercises with respect to payments owed to it for its own account, implement such procedures and policies as are necessary to properly enforce the obligations of each TPS to remit RTC Charges, in accordance with the
terms and provisions of the Financing Order, the TPS Service Agreement and Schedule A to Annex I hereto. 
  
 Section 5.06. Monitoring and Collecting Exit Charges. The Servicer shall, using the same degree of care and diligence that it exercises with
respect to payments owed to it for its own account, bill and collect any exit charges to which it may be entitled pursuant to Section 1G(g) of Chapter 164 of the Massachusetts General Laws, and shall remit that portion of the exit 

  

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charges representing (or allocable to) the RTC Charge together with the Estimated RTC Charge Payments for a particular billing date. 
  
 ARTICLE VI. 
 THE SERVICER 
  
 Section 6.01. Representations and Warranties of Servicer. The Servicer makes the following representations and warranties, as of the Closing Date, on which the Note Issuer is deemed to have relied in entering into this Agreement
relating to the servicing of the Transition Property. 
  
 (a)
Organization and Good Standing. The Servicer is duly organized and validly existing as a corporation in good standing under the laws of The Commonwealth of Massachusetts, with the requisite corporate power and authority to own its properties
as such properties are currently owned and to conduct its business as such business is now conducted by it, and has the requisite corporate power and authority to service the Transition Property and to hold the Transition Property Records as
custodian. 
  
 (b) Due Qualification. The Servicer is duly
qualified to do business as a foreign corporation in good standing, and has obtained all necessary licenses and approvals, in all jurisdictions in which the ownership or lease of property or the conduct of its business (including the servicing of
the Transition Property as required by this Agreement) shall require such qualifications, licenses or approvals (except where the failure to so qualify or obtain such licenses and approvals would not be reasonably likely to have a material adverse
effect on the Servicer’s business, operations, assets, revenues or properties or adversely affect the servicing of the Transition Property). 
  
 (c) Power and Authority. The Servicer has the requisite corporate power and authority to execute and deliver this Agreement and to carry out its
terms; and the execution, delivery and performance of this Agreement have been duly authorized by all necessary corporate action on the part of the Servicer. 
  
 (d) Binding Obligation. This Agreement constitutes a legal, valid and binding obligation of the Servicer enforceable against it in accordance with
its terms, subject to applicable insolvency, reorganization, moratorium, fraudulent transfer and other laws relating to or affecting creditors’ rights generally from time to time in effect and to general principles of equity (including concepts
of materiality, reasonableness, good faith and fair dealing), regardless of whether considered in a proceeding in equity or at law. 
  
 (e) No Violation. The consummation of the transactions contemplated by this Agreement and the fulfillment of the terms hereof do not: (i) conflict
with or result in any breach of any of the terms and provisions of, nor constitute (with or without notice or lapse of time) a default under, the articles of organization or by-laws of the Servicer, or any material indenture, agreement or other
instrument to which the Servicer is a party or by which it is bound; (ii) result in the creation or imposition of any Lien upon any of the Servicer’s properties pursuant to the terms of any such indenture, agreement or other instrument; nor
violate any existing law or any existing order, rule or regulation applicable to the Servicer of any court or of any federal or state 

  

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regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Servicer or its properties, so as to adversely
affect the Servicer, the Noteholders or the Certificateholders. 
  
 (f) No Proceedings. There are no proceedings pending and, to the Servicer’s knowledge, there are no proceedings threatened and, to the Servicer’s knowledge, there are no investigations pending or threatened, before any
court, federal or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Servicer or its properties involving or relating to the Servicer or the Note Issuer or, to the Servicer’s
knowledge, any other Person: (i) asserting the invalidity of this Agreement; (ii) seeking to prevent the consummation of any of the transactions contemplated by this Agreement; or (iii) seeking any determination or ruling that might materially and
adversely affect the performance by the Servicer of its obligations under, or the validity or enforceability of, this Agreement. 
  
 (g) Approvals. No approval, authorization, consent, order or other action of, or filing with, any court, federal or state regulatory body,
administrative agency or other governmental instrumentality is required in connection with the execution and delivery by the Servicer of this Agreement, the performance by the Servicer of the transactions contemplated hereby or the fulfillment by
the Servicer of the terms hereof, except those that have been obtained or made and those that the Servicer is required to make in the future pursuant to Article III or IV hereof. 
  
 Section 6.02. Indemnities of Servicer. 
  
 (a) The Servicer shall be liable in accordance herewith only to the extent of the obligations specifically undertaken by the
Servicer and as expressly provided under this Section 6.02. 
  
 (b) The Servicer shall indemnify the Note Issuer, the Noteholders and the Certificateholders for, and defend and hold harmless each such Person from and against, any and all liabilities, obligations, losses, damages, payments, claims, costs
or expenses of any kind whatsoever (collectively, “Losses”) that may be imposed on, incurred by or asserted against any such Person as a result of (i) the Servicer’s willful misconduct or gross negligence in the performance of its
duties or observance of its covenants under this Agreement (including the Servicer’s willful misconduct or gross negligence relating to the maintenance and custody by the Servicer, as custodian, of the Transition Property Records) or (ii) the
Servicer’s breach in any material respect of any of its representations or warranties in this Agreement; provided, however, that the Servicer shall not be liable for any Losses resulting from the willful misconduct or gross negligence of any
such indemnified person; and, provided, further, that the Noteholders and the Certificateholders shall be entitled to enforce their rights and remedies against the Servicer under this Section 6.02(b) solely through a cause of action brought for
their benefit by the Note Trustee or the Certificate Trustee, as the case may be; and; provided, further, that the Servicer shall not be liable for any Losses, regardless of when incurred, after the Notes and the Certificates have been paid in full,
except as provided in Section 6.02(c). 
  
 (c) The Servicer shall
indemnify and hold harmless the Note Trustee, the Delaware Trustee, the Certificate Trustee, the Certificate Issuer and the Agencies and any of their 

  

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respective affiliates, officials, officers, directors, employees and agents (each an “Indemnified Person”) for, and defend and hold harmless each
such Person from and against, any and all Losses imposed on, incurred by or asserted against any of such Indemnified Persons as a result of: (i) the Servicer’s willful misconduct or gross negligence in the performance of its duties or
observance of its covenants under this Agreement (including the Servicer’s willful misconduct or gross negligence relating to the maintenance and custody by the Servicer, as custodian, of the Transition Property Records) or (ii) the
Servicer’s breach in any material respect of any of its representations or warranties in this Agreement; provided, however, that the Servicer shall not be liable for any Losses resulting from the willful misconduct or gross negligence of such
Indemnified Person or resulting from a breach of a representation or warranty made by such Indemnified Person in any of the Basic Documents that gives rise to the Servicer’s breach. The Servicer shall not be required to indemnify an Indemnified
Person for any amount paid or payable by such Indemnified Person in the settlement of any action, proceeding or investigation without the written consent of the Servicer, which consent shall not be unreasonably withheld. Promptly after receipt by an
Indemnified Person of notice of its involvement in any action, proceeding or investigation, such Indemnified Person shall, if a claim for indemnification in respect thereof is to be made against the Servicer under this Section 6.02(c), notify the
Servicer in writing of such involvement. Failure by an Indemnified Person to so notify the Servicer shall relieve the Servicer from the obligation to indemnify and hold harmless such Indemnified Person under this Section 6.02(c) only to the extent
that the Servicer suffers actual prejudice as a result of such failure. With respect to any action, proceeding or investigation brought by a third party for which indemnification may be sought under this Section 6.02(c), the Servicer shall be
entitled to assume the defense of any such action, proceeding or investigation. Upon assumption by the Servicer of the defense of any such action, proceeding or investigation, the Indemnified Person shall have the right to participate in such action
or proceeding and to retain its own counsel. The Servicer shall be entitled to appoint counsel of the Servicer’s choice at the Servicer’s expense to represent the Indemnified Person in any action, proceeding or investigation for which a
claim of indemnification is made against the Servicer under this Section 6.02(c) (in which case the Servicer shall not thereafter be responsible for the fees and expenses of any separate counsel retained by the Indemnified Person except as set forth
below); provided, however, that such counsel shall be reasonably satisfactory to the Indemnified Person. Notwithstanding the Servicer’s election to appoint counsel to represent the Indemnified Person in an action, proceeding or investigation,
the Indemnified Person shall have the right to employ separate counsel (including local counsel), and the Servicer shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by the Servicer to
represent the Indemnified Person would present such counsel with a conflict of interest, (ii) the actual or potential defendants in, or targets of, any such action include both the Indemnified Person and the Servicer and the Indemnified Person shall
have reasonably concluded that there may be legal defenses available to it that are different from or additional to those available to the Servicer, (iii) the Servicer shall not have employed counsel reasonably satisfactory to the Indemnified Person
to represent the Indemnified Person within a reasonable time after notice of the institution of such action or (iv) the Servicer shall authorize the Indemnified Person to employ separate counsel at the expense of the Servicer. Notwithstanding the
foregoing, the Servicer shall not be obligated to pay for the fees, costs and expenses of more than one separate counsel for the Indemnified Persons other than local counsel. The Servicer will not, without the prior written consent of the
Indemnified Person, settle or compromise or consent to the entry of any judgment 

  

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with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification may be sought under this Section 6.02(c)
(whether or not the Indemnified Person is an actual or potential party to such claim or action) unless such settlement, compromise or consent includes an unconditional release of the Indemnified Person from all liability arising out of such claim,
action, suit or proceeding. 
  
 (d) Indemnification under Sections
6.02(b) and 6.02(c) shall include reasonable fees and out-of-pocket expenses of investigation and litigation (including reasonable attorneys’ fees and expenses), except as otherwise provided in this Agreement. 
  
 (e) For purposes of Section 6.02(b) and 6.02(c), in the event of the
termination of the rights and obligations of Commonwealth Electric Company (or any successor thereto pursuant to Section 6.04) as Servicer pursuant to Section 7.01, or a resignation by such Servicer pursuant to this Agreement, such Servicer shall be
deemed to be the Servicer pending appointment of a successor Servicer pursuant to Section 7.02. 
  
 (f) The indemnities contained in this Section 6.02 shall survive the registration or termination of the Note Trustee, the Certificate Trustee or the
Delaware Trustee or the termination of this Agreement. 
  
 Section
6.03. Limitation on Liability of Servicer and Others. Except as otherwise provided under this Agreement, neither the Servicer nor any of the directors, officers, employees or agents of the Servicer shall be liable to the Note Issuer or any
other Person for any action taken or for refraining from the taking of any action pursuant to this Agreement or for errors in judgment; provided, however, that this provision shall not protect the Servicer or any director, officer, employee or agent
of the Servicer against any liability that would otherwise be imposed by reason of willful misconduct or gross negligence in the performance of duties under this Agreement. The Servicer and any director, officer, employee or agent of the Servicer
may rely in good faith on the advice of counsel reasonably acceptable to the Note Trustee or on any document of any kind, prima facie properly executed and submitted by any Person, respecting any matters arising under this Agreement. 
  
 Except as provided in this Agreement, the Servicer shall not be under any
obligation to appear in, prosecute or defend any legal action relating to the Transition Property. 
  
 Section 6.04. Merger or Consolidation of, or Assumption of the Obligations of, Servicer. Any Person (a) into which the Servicer may be merged or
consolidated, (b) which may result from any merger or consolidation to which the Servicer shall be a party or (c) which may succeed to the properties and assets of the Servicer substantially as a whole, which Person in any of the foregoing cases
executes an agreement of assumption to perform every obligation of the Servicer hereunder, shall be the successor to the Servicer under this Agreement without further act on the part of any of the parties to this Agreement; provided, however, that
(i) immediately after giving effect to such transaction, no Servicer Default and no event which, after notice or lapse of time, or both, would become a Servicer Default shall have occurred and be continuing, (ii) the Servicer shall have delivered to
the Note Issuer and the Note Trustee an Officers’ Certificate stating that such consolidation, merger or succession and such agreement of assumption comply with this Section and that all conditions precedent provided for in this 

  

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Agreement relating to such transaction have been complied with, (iii) the Servicer shall have delivered to the Note Issuer and the Note Trustee an Opinion of
Counsel either (A) stating that, in the opinion of such counsel, all statutory filings to be made by the Servicer, including filings with the DTE pursuant to the Statute and filings under the applicable UCC, have been executed and filed that are
necessary to preserve and protect fully the interests of the Note Issuer and the Note Trustee in the Transition Property and reciting the details of such filings or (B) stating that, in the opinion of such counsel, no such action shall be necessary
to preserve and protect such interests and (iv) the Rating Agencies shall have received prior written notice of such transaction. When any Person acquires the properties and assets of the Servicer substantially as a whole and becomes the successor
to the Servicer in accordance with the terms of this Section 6.04, then upon satisfaction of all of the other conditions of this Section 6.04, the Servicer shall automatically and without further notice be released from all its obligations
hereunder. 
  
 Section 6.05. Commonwealth Electric Company Not
to Resign as Servicer. Subject to the provisions of Section 6.04, Commonwealth Electric Company shall not resign from the obligations and duties hereby imposed on it as Servicer under this Agreement except upon either (a) a determination by
Commonwealth Electric that the performance of its duties under this Agreement shall no longer be permissible under applicable law or (b) satisfaction of the following: (i) the Rating Agency Condition shall have been satisfied (except that with
respect to Moody’s it shall be sufficient to provide ten days prior notice) and (ii) the DTE shall have approved such resignation. Notice of any such determination permitting the resignation of Commonwealth Electric Company shall be
communicated to the Note Issuer, the Note Trustee, the Certificate Trustee and the Rating Agencies at the earliest practicable time (and, if such communication is not in writing, shall be confirmed in writing at the earliest practicable time) and
any such determination that the performance of Commonwealth Electric Company’s duties under this Agreement shall no longer be permissible under applicable law shall be evidenced by an Opinion of Counsel to such effect delivered by Commonwealth
Electric Company to the Note Issuer, the Note Trustee and the Certificate Trustee concurrently with or promptly after such notice. No such resignation shall become effective until a successor Servicer shall have assumed the responsibilities and
obligations of Commonwealth Electric Company in accordance with Section 7.02. 
  
 Section 6.06. Servicing Compensation. 
  
 (a) In consideration for its services hereunder, until the Retirement of the Notes, the Servicer shall receive an annual fee (the “Servicing Fee”) in an amount equal to (i) five one-hundredth of one percent
(0.05%) of the initial principal balance of the Notes for so long as Commonwealth Electric Company or any successor Servicer bills the RTC Charge concurrently with other charges for services or (ii) up to one and one-quarter percent (1.25%) of the
initial principal balance of the Notes if the RTC Charge is being billed separately to Customers (which amount shall be determined by a separate agreement between the Note Issuer and the Servicer). The Servicing Fee shall be payable in semiannual
installments on each Payment Date. The Servicer also shall be entitled to retain as additional compensation (i) any interest earnings on Estimated RTC Charge Payments deemed received by the Servicer and invested by the Servicer pursuant to Section
6(c) of Annex I hereto prior to remittance to the Collection Account and (ii) all late payment charges, if any, collected from Customers or TPSs. 
  

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 (b) The Servicing Fee set forth in Section 6.06(a) above and expenses provided for in Section 6.06(c)
below shall be paid to the Servicer by the Note Trustee, on each Payment Date in accordance with the priorities set forth in Section 8.02(d) of the Note Indenture, by wire transfer of immediately available funds from the Collection Account to an
account designated by the Servicer. Any portion of the Servicing Fee not paid on such date shall be added to the Servicing Fee payable on the subsequent Payment Date. 
  
 (c) The Note Issuer shall pay all expenses incurred by the Servicer in connection with its activities hereunder (including
any fees to and disbursements by accountants, counsel, or any other Person, any taxes imposed on the Servicer (other than taxes based on the Servicer’s net income) and any expenses incurred in connection with reports to Noteholders and
Certificateholders, subject to the priorities set forth in Section 8.02(d) of the Note Indenture). 
  
 Section 6.07. Compliance with Applicable Law. The Servicer covenants and agrees, in servicing the Transition Property, to comply in all material
respects with all laws applicable to, and binding upon, the Servicer and relating to such Transition Property the noncompliance with which would have a material adverse effect on the value of the Transition Property; provided, however, that the
foregoing is not intended to, and shall not, impose any liability on the Servicer for noncompliance with any law that the Servicer is contesting in good faith in accordance with its customary standards and procedures. 
  
 Section 6.08. Access to Certain Records and Information Regarding
Transition Property. The Servicer shall provide to the Noteholders, the Note Trustee and the Certificate Trustee access to the Transition Property Records in such cases where the Noteholders, the Note Trustee and the Certificate Trustee shall be
required by applicable law to be provided access to such records. Access shall be afforded without charge, but only upon reasonable request and during normal business hours at the respective offices of the Servicer. Nothing in this Section shall
affect the obligation of the Servicer to observe any applicable law (including any DTE Regulation) prohibiting disclosure of information regarding the Customers, and the failure of the Servicer to provide access to such information as a result of
such obligation shall not constitute a breach of this Section. 
  
 Section 6.09. Appointments. The Servicer may at any time appoint any Person to perform all or any portion of its obligations as Servicer hereunder; provided, however, that the Rating Agency Condition shall have been satisfied in
connection therewith (except that with respect to Moody’s it shall be sufficient to provide ten days prior notice); and, provided, further, that the Servicer shall remain obligated and be liable under this Agreement for the servicing and
administering of the Transition Property in accordance with the provisions hereof without diminution of such obligation and liability by virtue of the appointment of such Person and to the same extent and under the same terms and conditions as if
the Servicer alone were servicing and administering the Transition Property; and, provided, further, however, that nothing herein (including the Rating Agency Condition) shall preclude the execution by the Servicer of a TPS Service Agreement with
any TPS pursuant to applicable law and DTE Regulations. Notwithstanding anything to the contrary in this Agreement, the parties hereto acknowledge and agree that the initial Servicer has appointed Mellon Financial Corporation to process U.S. mail
payments from Customers and that such appointment is hereby permitted hereunder. The fees and expenses of any such Person shall be as agreed between the Servicer and such Person from 

  

 -20- 








 
time to time and none of the Note Issuer, the Note Trustee, the Noteholders or any other Person shall have any responsibility therefor or right or claim
thereto. Any such appointment shall not constitute a Servicer resignation under Section 6.05. 
  
 Section 6.10. No Servicer Advances. Except with respect to Remittances of Estimated RTC Charge Payments, the Servicer shall not make any advances of interest on or principal of the Notes or the Certificates.

  
 Section 6.11. Maintenance of Operations. The Servicer
agrees to continue to operate its distribution system to provide service to its customers so long as it is acting as the Servicer under this Agreement. 
  
 ARTICLE VII. 
 DEFAULT 
  
 Section 7.01. Servicer Default. If any one of the following events
(each a “Servicer Default”) shall occur and be continuing: 
  
 (a) any failure by the Servicer to remit to the Collection Account on behalf of the Note Issuer any required Remittance that shall continue unremedied for a period of five (5) Servicer Business Days after written notice of such failure is
received by the Servicer from the Note Issuer or the Note Trustee; or 
  
 (b) any failure on the part of the Servicer duly to observe or to perform in any material respect any other covenants or agreements of the Servicer set forth in this Agreement, which failure shall (a) materially and adversely affect the
rights of the Noteholders or Certificateholders and (ii) continue unremedied for a period of 60 days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given (A) to the Servicer by the Note
Issuer or (B) to the Servicer by the Note Trustee or by the Holders of Notes evidencing not less than 25 percent of the Outstanding Amount of the Notes; or 
  
 (c) any representation or warranty made by the Servicer in this Agreement shall prove to have been incorrect in any material respect when made, which has
a material adverse effect on the Noteholders or Certificateholders and which material adverse effect continues unremedied for a period of 60 days after written notice of such failure is received by the Servicer from the Note Issuer or the Note
Trustee; or 
  
 (d) an Insolvency Event occurs with respect to the
Servicer; 
  
 then, and in each and every case, so long as the Servicer Default
shall not have been remedied, either the Note Trustee, or the Holders of Notes evidencing not less than 25 percent of the Outstanding Amount of the Notes, by notice then given in writing to the Servicer (and to the Note Trustee if given by the
Noteholders) (a “Termination Notice”) may terminate all the rights and obligations (other than the obligations set forth in Section 6.02 hereof) of the Servicer under this Agreement. In addition, upon a Servicer Default described in
Section 7.01(a), each of the following shall be entitled to apply to the DTE for sequestration and payment of revenues arising with respect to the Transition Property: (1) the Noteholders, Certificateholders, Note Trustees and the Certificate
Trustee as beneficiary of any statutory lien permitted by the Statute; (2) the 

  

 -21- 








 
Note Issuer or its assignees; (3) the Certificate Issuer or (4) pledgees or transferees, including transferees under Section 1H(f) of the Statute, of the
Transition Property. On or after the receipt by the Servicer of a Termination Notice, and subject to the approval of the DTE, all authority and power of the Servicer under this Agreement, whether with respect to the Notes, the Transition Property,
the RTC Charge or otherwise, shall, without further action, pass to and be vested in such successor Servicer as may be appointed under Section 7.02; and, without limitation, the Note Trustee is hereby authorized and empowered to execute and deliver,
on behalf of the predecessor Servicer, as attorney-in-fact or otherwise, any and all documents and other instruments, and to do or accomplish all other acts or things necessary or appropriate to effect the purposes of such Termination Notice,
whether to complete the transfer of the Transition Property Records and related documents, or otherwise. The predecessor Servicer shall cooperate with the successor Servicer, the Note Issuer and the Note Trustee in effecting the termination of the
responsibilities and rights of the predecessor Servicer under this Agreement, including the transfer to the successor Servicer for administration by it of all cash amounts that shall at the time be held by the predecessor Servicer for remittance, or
shall thereafter be received by it with respect to the Transition Property or the RTC Charge. In case a successor Servicer is appointed as a result of a Servicer Default, all reasonable costs and expenses (including reasonable attorneys’ fees
and expenses) incurred in connection with transferring the Transition Property Records to the successor Servicer and amending this Agreement to reflect such succession as Servicer pursuant to this Section shall be paid by the predecessor Servicer
upon presentation of reasonable documentation of such costs and expenses. 
  
 Section 7.02. Appointment of Successor. 
  
 (a) Upon the Servicer’s receipt of a Termination Notice pursuant to Section 7.01 or the Servicer’s resignation or removal in accordance with the terms of this Agreement, the predecessor Servicer shall
continue to perform its functions as Servicer under this Agreement, and shall be entitled to receive the requisite portion of the Servicing Fee and reimbursement of expenses as provided herein, until a successor Servicer shall have assumed in
writing the obligations of the Servicer hereunder as described below. In the event of the Servicer’s termination hereunder, the Note Issuer shall appoint, subject to the approval of the DTE, a successor Servicer with the Note Trustee’s
prior written consent thereto (which consent shall not be unreasonably withheld), and the successor Servicer shall accept its appointment by a written assumption in form reasonably acceptable to the Note Issuer and the Note Trustee. If within 30
days after the delivery of the Termination Notice, the Note Issuer shall not have obtained such a new Servicer, the Note Trustee may petition the DTE or a court of competent jurisdiction to appoint a successor Servicer under this Agreement. A Person
shall qualify as a successor Servicer only if (i) such Person is permitted under DTE Regulations to perform the duties of the Servicer, (ii) the Rating Agency Condition shall have been satisfied and (iii) such Person enters into a servicing
agreement with the Note Issuer having substantially the same provisions as this Agreement. 
  
 (b) Upon appointment, the successor Servicer shall be the successor in all respects to the predecessor Servicer and shall be subject to all the responsibilities, duties and liabilities arising thereafter relating
thereto placed on the predecessor Servicer and shall be entitled to the Servicing Fee and all the rights granted to the predecessor Servicer by the terms and provisions of this Agreement. 
  

 -22- 








 Section 7.03. Waiver of Past Defaults. The Holders of Notes evidencing not less than a majority of
the Outstanding Amount of the Notes may, on behalf of all Noteholders, waive in writing any default by the Servicer in the performance of its obligations hereunder and its consequences, except a default in making any required Remittances to the
Collection Account in accordance with this Agreement. Upon any such waiver of a past default, such default shall cease to exist, and any Servicer Default arising therefrom shall be deemed to have been remedied for every purpose of this Agreement. No
such waiver shall extend to any subsequent or other default or impair any right consequent thereto. 
  
 Section 7.04. Notice of Servicer Default. The Servicer shall deliver to the Note Issuer, the Note Trustee, the Certificate Trustee, the Certificate
Issuer, the Agencies and the Rating Agencies, promptly after having obtained knowledge thereof, but in no event later than five Servicer Business Days thereafter, written notice in an Officers’ Certificate of any event which with the giving of
notice or lapse of time, or both, would become a Servicer Default under Section 7.01(a) or (b). 
  
 ARTICLE VIII. 
 MISCELLANEOUS PROVISIONS 
  
 Section 8.01. Amendment. This Agreement may be amended in writing by the Servicer and the Note Issuer with ten
Servicer Business Days’ prior written notice given to the Rating Agencies and the prior written consent of the Note Trustee (which consent shall not be unreasonably withheld), but without the consent of any of the Noteholders, to cure any
ambiguity, to correct or supplement any provisions in this Agreement or for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions in this Agreement or of modifying in any manner the rights of the
Noteholders; provided, however, that such action shall not, as evidenced by an Officer’s Certificate delivered to the Note Issuer and the Note Trustee, adversely affect in any material respect the interests of any Noteholder or
Certificateholder. 
  
 This Agreement may also be amended in
writing from time to time by the Servicer and the Note Issuer with ten Servicer Business Days’ prior written notice given to the Rating Agencies and the prior written consent of the Note Trustee (which consent shall not be unreasonably
withheld) and the prior written consent of the Holders of Notes evidencing not less than a majority of the Outstanding Amount of the Notes, for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Noteholders; provided, however, that any amendment of the provisions of Sections 4.01 or 4.03 of this Agreement shall satisfy the Rating Agency Condition (except that with respect to
Moody’s it shall be sufficient to provide ten days prior notice). 
  
 It shall not be necessary for the consent of Noteholders pursuant to this Section to approve the particular form of any proposed amendment or consent, but it shall be sufficient if such consent shall approve the substance thereof.

  
 The Note Issuer shall promptly provide each of the Rating
Agencies with a copy of any amendment to this Agreement. 
  

 -23- 








 Prior to its consent to any amendment to this Agreement, the Note Trustee shall be entitled to receive
and conclusively rely upon an Opinion of Counsel stating that such amendment is authorized or permitted by this Agreement. The Note Trustee may, but shall not be obligated to, enter into any such amendment which affects the Note Trustee’s own
rights, duties or immunities under this Agreement or otherwise. 
  
 Section 8.02. Maintenance of Accounts and Records. 
  
 (a) The Servicer shall maintain accounts and records as to the Transition Property accurately and in accordance with its standard accounting procedures and in sufficient detail to permit reconciliation between RTC Charge Collections and
Deemed RTC Charge Payments. 
  
 (b) The Servicer shall permit the
Note Trustee and its agents at any time during normal business hours, upon reasonable notice to the Servicer and to the extent it does not unreasonably interfere with the Servicer’s normal operations, to inspect, audit and make copies of and
abstracts from the Servicer’s records regarding the Transition Property and the RTC Charge. Nothing in this Section 8.02(b) shall affect the obligation of the Servicer to observe any applicable law (including any DTE Regulation) prohibiting
disclosure of information regarding the Customers, and the failure of the Servicer to provide access to such information as a result of such obligation shall not constitute a breach of this Section 8.02(b). 
  
 Section 8.03. Notices. Unless otherwise specifically provided herein,
all notices, directions, consents and waivers required under the terms and provisions of this Agreement shall be in English and in writing, and any such notice, direction, consent or waiver may be given by United States mail, courier service,
facsimile transmission or electronic mail (confirmed by telephone, United States mail or courier service in the case of notice by facsimile transmission or electronic mail) or any other customary means of communication, and any such notice,
direction, consent or waiver shall be effective when delivered, or if mailed, three days after deposit in the United States mail with proper postage for ordinary mail prepaid: 
  

	 	(a)	if to the Servicer, to 

  
 Commonwealth Electric Company 
 One NSTAR Way

 Westwood, MA 02090 
 Attention:    Director of Corporate Finance 
             and Cash Management 
  
 Facsimile:    (781) 441-8013 
  
 Telephone:   (781) 441-8127 
  

	 	(b)	if to the Note Issuer, to 

  
 CEC Funding, LLC 
 One NSTAR Way 

Westwood, MA 02090 
 Attention:
   President 
  
 Facsimile:    (781) 441-8013 
  
 Telephone:   (781) 441-8900 
  

 -24- 









	 	(c)	if to the Note Trustee, to 

  
 The Bank of New York 
 101 Barclay Street,
Floor 8 West 
 New York, NY 10286 
 Attention:     Asset Backed Finance Unit 
  
 Facsimile:    (212) 815-5544 
  
 Telephone:   (212) 815-5286 
  

	 	(d)	if to Moody’s, to 

  
 Moody’s Investors Service, Inc. 
 99
Church Street 
 New York, NY 10007 
 Attention:     ABS Monitoring Department 
  
 Facsimile:    (212) 553-0573 
  
 Telephone:   (212) 553-3686 
  

	 	(e)	if to S&P, to 

  
 Standard & Poor’s Rating Services 
 55 Water Street, 41st Floor 
 New York, NY 10041 
 Attention:     ABS Surveillance Group – New Assets 
  
 Facsimile:    (212) 438-2655 
  
 Telephone:   (212) 438-2000 
  
 E-mail:          Servicer_reports@sandp.com 
  

	 	(f)	if to the Agencies, to 

  
 Massachusetts Development Finance Agency 
 160
Federal Street 
 Boston, MA 02110 
 Attention:     General Counsel 
  
 Facsimile:    (617) 330-2001 
  
 Telephone:   (617) 330-2006 
  

 -25- 








 and 
  
 Massachusetts Health and Educational Facilities Authority 
 99 Summer Street, 10th Floor 
 Boston, MA 02110 
 Attention:     General Counsel 
  
 Facsimile:    (617) 737-8366 
  
 Telephone:   (617) 737-8377 
  

	 	(g)	if to the Certificate Issuer, to: 

  
 The Bank of New York (Delaware), as Delaware Trustee for Massachusetts RRB Special Purpose Trust BEC-1 
  
 c/o The Bank of New York 
 101 Barclay Street, Floor 8 West 
 New York,
NY 10286 
 Attention:     Asset Backed Finance Unit 
  
 Facsimile:    (212) 815-5544 
  
 Telephone:   (212) 815-5286 
  
 (with copies to the Agencies at the addresses listed herein) 
  

	 	(h)	as to each of the foregoing, at such other address as shall be designated by written notice to the other parties. 

  
 Section 8.04. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Section 6.04 and as provided in the provisions of this Agreement concerning the resignation of the Servicer, this Agreement may not be assigned by the Servicer. 
  
 Section 8.05. Limitations on Rights of Third Parties. The provisions
of this Agreement are solely for the benefit of the Servicer, the Note Issuer, the Noteholders, the Certificateholders, the Note Trustee, the Certificate Trustee, the Delaware Trustee, the Agencies, the Certificate Issuer and the other Persons
expressly referred to herein and such Persons shall have the right to enforce the relevant provisions of this Agreement, except that the Noteholders and the Certificateholders shall be entitled to enforce their rights against the Servicer under this
Agreement solely through a cause of action brought for their benefit by the Note Trustee or the Certificate Trustee, as the case may be. Nothing in this Agreement, whether express or implied, shall be construed to give to any other Person any legal
or equitable right, remedy or claim in the Transition Property or under or in respect of this Agreement or any covenants, conditions or provisions contained herein. 
  
 Section 8.06. Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such 

  

 -26- 








 
prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction. 
  
 Section 8.07. Separate Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument. 
  
 Section 8.08. Headings. The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. 
  
 Section 8.09. Governing Law. This Agreement shall be construed in
accordance with the substantive laws of The Commonwealth of Massachusetts, without giving effect to its conflict of law or other principles that would cause the application of the laws of another jurisdiction, and the obligations, rights and
remedies of the parties hereunder shall be determined in accordance with such laws. 
  
 Section 8.10. Assignment to Note Trustee. The Servicer hereby acknowledges and consents to the collateral assignment of any or all of the Note Issuer’s rights and obligations hereunder to the Note Trustee
for the benefit of the holders of the Notes and to the further assignment of the Note Trustee’s rights and obligations under the Note Indenture to the Certificate Trustee for the benefit of the holders of the Certificates. 
  
 Section 8.11. Nonpetition Covenants. Notwithstanding any prior
termination of this Agreement or the Note Indenture, but subject to the DTE’s right to order the sequestration and payment of revenues arising with respect to the Transition Property notwithstanding any bankruptcy, reorganization or other
insolvency proceedings with respect to the debtor, pledgor or transferor of the Transition Property pursuant to Sections 1H(d)(5) and 1H(e) of the Statute, the Servicer solely in its capacity as creditor of the Note Issuer, shall not, prior to the
date which is one year and one day after the termination of the Note Indenture with respect to the Note Issuer, petition or otherwise invoke or cause the Note Issuer or the Trust to invoke the process of any court or governmental authority for the
purpose of commencing or sustaining an involuntary case against the Note Issuer or the Trust under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Note Issuer or the Trust or any substantial part of the property of the Note Issuer or the Trust, or, to the fullest extent permitted by law, ordering the winding up or liquidation of the affairs of the Note Issuer or the
Trust. 
  

 -27- 








 IN WITNESS WHEREOF, the parties hereto have caused this Transition Property Servicing Agreement to be
duly executed by their respective officers as of the day and year first above written. 
  

					
	 CEC FUNDING, LLC,
 Note Issuer

			
	By:	 	 	 	/s/    EMILIE
O’NEIL        
	 	 	 Name:
	 	Emilie O’Neil
	 	 	 Title:
	 	Assistant Treasurer
	
	 COMMONWEALTH ELECTRIC COMPANY,
 Servicer

			
	By:	 	 	 	/s/    PHILIP J. LEMBO        
	 	 	 Name:
	 	Philip J. Lembo
	 	 	 Title:
	 	Assistant Treasurer


  

 -28- 








  
 EXHIBIT A 
 CERTIFICATE OF COMPLIANCE 
  
 The undersigned hereby certifies that he/she is the duly elected and acting
[                    ] of Commonwealth Electric Company, as servicer (the “Servicer”) under the Transition Property Servicing
Agreement, dated as of March 1, 2005 (the “Servicing Agreement”), between the Servicer and CEC Funding, LLC (the “Note Issuer”), and further certifies on behalf of the Servicer that: 
  
 1. A review of the activities of the Servicer and of its performance under
the Servicing Agreement during the [twelve] months ended December 31, [        ] has been made under the supervision of the undersigned pursuant to Section 3.03 of the Servicing Agreement; and

  
 2. To the undersigned’s knowledge, based on such review,
the Servicer has fulfilled all of its material obligations in all material respects under the Servicing Agreement throughout the [twelve] months ended December 31, [        ], except as listed on Annex
A hereto. 
  
 Executed as of this
                     day of
                     . 
  

					
			
	By:	 	 	 	 
	 	 	 Name:
	 	 
	 	 	 Title:
	 	 


  

 -29- 








  
 ANNEX A TO EXHIBIT A

  
 LIST OF SERVICER DEFAULTS 
  

			
	 Nature of Default

	 	 Status



  

 -30- 








  
 EXHIBIT B 
  
 FORM OF ROUTINE TRUE-UP LETTER 
  
 [date] 
  
 ADVICE                    

  
 DEPARTMENT OF TELECOMMUNICATIONS AND ENERGY (THE
“DEPARTMENT”) 
  
 OF THE COMMONWEALTH OF MASSACHUSETTS

  

	SUBJECT:	Periodic RTC Charge True-Up Mechanism Advice Filing Pursuant to D.T.E. 04-70 (the “Financing Order”), Commonwealth Electric Company (“Commonwealth Electric”), as
servicer of the RRBs or any successor Servicer and on behalf of the trustee as assignee of the special purpose entity (the “SPE”) may apply for adjustment to the RTC Charge annually and at such additional intervals as may be provided for
in the Financing Order. Any capitalized terms not defined herein shall have the meanings ascribed thereto in the Financing Order. 

  
 PURPOSE 
  
 This filing establishes the revised RTC Charge to be assessed and collected from all classes of retail users of Boston Edison’s distribution system within the
geographic service territory as in effect on July 1, 1997, whether or not energy is purchased from Commonwealth Electric or any third party generation supplier, and whether or not such distribution system is being operated by Commonwealth Electric
or a successor distribution company. The RTC Charge is a usage-based component of the transition charge on each retail user’s monthly bill and may include in the future a component of any exit charge collected pursuant to G.L. c. 164, §
1G(g) until the Total Payment Requirements of the Company’s SPE are discharged in full. In the Financing Order, the Department authorized Commonwealth Electric to file Routine True-Up Advice Letters annually and at such additional intervals, if
necessary, as provided for in the Financing Order. Boston Edison, or a successor Servicer, is authorized to file periodic RTC Charge adjustments to the extent necessary to ensure the timely recovery of revenues sufficient to provide for the payment
of an amount equal to the sum of the Periodic Payment Requirements (as defined in the Financing Order), which may include indemnity obligations of the SPE in the RRB transaction documents for SPE officers and directors, trustee fees, liabilities of
the special purpose trust and liabilities to the underwriters related to the underwriting of the RRBs. Routine True-Up Advice Letter filings are those where Commonwealth Electric uses the methodology approved by the Department in DTE Docket No.
04-70 to adjust upward or downward the existing RTC Charge. 

  

 -31- 








 
Using the methodology approved by the Department in the Financing Order, this filing modifies the variables used in the RTC Charge calculation and provides
the resulting modified RTC Charge. Table I shows the revised assumptions for each of the variables used in calculating the RTC Charge for retail users. The assumptions underlying the current RTC Charges were filed in an Issuance Advice Letter, dated
                    . 
  
 Table I below shows the current assumptions for each of the variables used in the RTC Charge calculation. 
  
 TABLE 1 
  
 INPUT VALUES FOR RTC CHARGE 
  
 Forecasted annual retail kWh sales: 
  
 Percent of billed amounts expected to be charged-off: 
  
 Weighted average days sales outstanding: 
  
 ( calculated as follows) 
  
 Percent of billed amounts collected in current month: 
  
 Percent of billed amounts collected in second month after billing: 
  
 Percent of billed amounts collected in third month after billing: 
  
 Percent of billed amounts collected in fourth month after billing:

  
 Percent of billed amounts collected in fifth month after
billing: 
  
 Annual ongoing transaction expenses (Company only): 
  
 Current SPE Debt Securities outstanding balance: 
  
 Expected SPE Debt Securities outstanding balance as of
        /        /        :            

  
 Deferred unpaid SPE Debt Securities principal: 
  
 Accrued but unpaid SPE Debt Securities interest: 
  
 Unpaid ongoing transaction costs (Company only): 
  
 Required annual overcollateralization amount: 
  
 Deficiency in capital subaccount: 
  
 Deficiency in overcollateralization subaccount: 
  
 Amount in reserve subaccount: 
  
 The adjusted RTC Charge calculated for retail users is as follows:
             ¢/kWh 
  

 -32- 








 EFFECTIVE DATE 
  
 In accordance with the Financing Order, Routine True-Up Advice Letters for annual RTC Charge adjustments shall be filed annually or more
frequently, if necessary, with the resulting changes to be effective no sooner than 15 days after the filing of this Routine True-Up Advice Letter. No resolution by the Department is required. Therefore, these RTC Charges shall be effective as of
                    . 
  

 -33- 








 NOTICE 
  
 Copies of this filing are being furnished to the parties on the attached service list. Notice to the public is hereby given by filing and
keeping this filing open for public inspection at Commonwealth Electric’s corporate headquarters. 
  
 Enclosures 
  

 -34- 








  
 EXHIBIT C 
  
 FORM OF MONTHLY SERVICER CERTIFICATE 
  
 Pursuant to Section 4.01(d)(ii) of the Transition Property Servicing
Agreement, dated as of March 1, 2005 (the “Agreement”), between Commonwealth Electric Company, as servicer (the “Servicer”) and CEC Funding, LLC, the Servicer does hereby certify as follows: 
  
 Capitalized terms used herein have their respective meanings as set forth in
the Agreement. 
  
 For the Monthly
Period:                     
  

	1.	Billings: 

  

	a)	Monthly kWh Consumption: 

  

	b)	Applicable RTC Charge: 

  

	c)	Total RTC Charge Amount Billed (less expected charge-offs) this Month: 

  

	d)	Cumulative RTC Charge Amount Billed (less expected charge-offs) this Remittance Period: 

  

	2.	Remittances: 

  

	a)	Total Amount Remitted this Month: 

  

	b)	Cumulative Amount Remitted this Remittance Period: 

  

	3.	Draws on Subaccounts: 

  

	a)	Reserve Subaccount Draw Amount this Month: 

  

	b)	Cumulative Reserve Subaccount Draw Amount this Remittance Period (net of funding): 

  

	c)	Overcollateralization Subaccount Draw Amount this Month: 

  

	d)	Cumulative Overcollateralization Subaccount Draw Amount this Remittance Period (net of funding): 

  

	e)	Capital Subaccount Draw Amount this Month: 

  

	f)	Cumulative Capital Subaccount Draw Amount this Remittance Period (net of funding): 

  
 Executed as of this
                     day of
                    . 
  

					
	 COMMONWEALTH ELECTRIC COMPANY
 as
Servicer

		
	By:	 	 
	 	 	 Name:
	 	 
	 	 	 Title:
	 	 

  

 -35- 








  
 EXHIBIT D 
  
 FORM OF SEMIANNUAL SERVICER CERTIFICATE 
  
 Pursuant to Section 4.01(d)(iii) of the Transition Property Servicing
Agreement, dated as of March 1, 2005 (the “Agreement”), between Commonwealth Electric Company, as servicer and CEC Funding, LLC, the Servicer does hereby certify, for the Current Payment Date, as follows: 
  
 Capitalized terms used herein have their respective meanings as set forth in
the Agreement. References herein to certain sections and subsections are references to the respective sections of the Agreement. 
  
 1. RTC Charge Collections and Aggregate Amounts Available for the Current Payment Date: 
  

	 	i.	Amount Remitted [Month] [Year] 

  

	 	ii.	Amount Remitted [Month] [Year] 

  

	 	iii.	Amount Remitted [Month] [Year] 

  

	 	iv.	Amount Remitted [Month] [Year] 

  

	 	v.	Amount Remitted [Month] [Year] 

  

	 	vi.	Amount Remitted [Month] [Year] 

  

	 	vii.	Total Amount Remitted for this Period (sum of i. through vi. above): 

  

	 	viii.	Net Earnings on Collection Account (1): 

  

	 	ix.	Expenses Paid to Date: 

  

	 	x.	General Subaccount Balance (sum of vii. and viii. above minus ix.): 

  

	 	xi.	Reserve Subaccount Balance 

  

	 	xii.	Overcollateralization Subaccount Balance 

  

	 	xiii.	Capital Subaccount Balance 

  

	 	xiv.	Collection Account Balance (sum of x. through xiii. above)1: 

  
 2. Outstanding Principal Balance as of Prior Payment Date by Tranche: 
  

	 	i.	Class A-1 Principal Balance Outstanding Note: 

  

	 	ii.	Class A-2 Principal Balance Outstanding Note: 

  

	 	iii.	Class A-3 Principal Balance Outstanding Note: 

  

	 	iv.	Class A-4 Principal Balance Outstanding Note: 

  

	 	vi.	Total Note Principal Balance: 



	1	Includes interest earned on the reserve and overcollaterization account transferred to the collection account. 

  

 -36- 








 3. Required Funding/Payments as of Current Payment Date: 
  
 a) Projected Principal Balances and Payments 
  

							
	 	 	 	  	Projected
Principal Balance

	  	Semi-Annual
Principal Due


				
	i.       	 	 ClassA-1 Note
	  	 	  	 
				
	ii.      	 	 ClassA-2 Note
	  	 	  	 
				
	iii      	 	 ClassA-3 Note
	  	 	  	 
				
	iv.     	 	 ClassA-4 Note
	  	 	  	 
				
	vi.     	 	 TotalProjected Principal Amount:
	  	 	  	 

  
 b) Required
Interest Payments 
  

									
	 	 	 	  	Note
Interest Rate

	  	Days in
Applicable Period

	  	Interest
Due


					
	 i.       
	 	 ClassA-1 Note
	  	 	  	 	  	 
					
	 ii.      
	 	 ClassA-2 Note
	  	 	  	 	  	 
					
	 iii.    
	 	 ClassA-3 Note
	  	 	  	 	  	 
					
	 iv.     
	 	 ClassA-4 Note
	  	 	  	 	  	 
					
	 vi.     
	 	 TotalRequired Interest Amount:
	  	 	  	 	  	 

  
 c) Projected
Subaccount Payments and Levels 
  

							
	Subaccount

	 	 	  	Projected Level

	  	Funding
Required


	i.       	 	 CapitalSubaccount:
	  	 	  	 
				
	ii.      	 	 OvercollateralizationSubaccount:
	  	 	  	 
				
	iii.    	 	Total Subaccount Payments and Levels:	  	 	  	 

  
 4. Allocation of
Remittances as of Current Payment Date Pursuant to Section 8.02(d) of Note Indenture: 
  
 a) Semiannual Expenses 
  

 -37- 








 Net Expense Amount (Payable on Current Payment Date): 
  

	 	i.	Note, Delaware and Certificate Trustee Fees and Expenses allocable to Note Issuer: 

  

	 	ii.	Semiannual Servicing Fee: 

  

	 	iii.	Semiannual Administration Fee: 

  

	 	iv.	Operating Expenses (subject to $100,000 cap): 

  

	 	v.	Total Expenses: 

  
 b) Semiannual Interest 
  

							
	 	 	 	  	Aggregate

	  	Per $1000 of Original
Principal Amount


				
	i.       	 	 ClassA-1 Note
	  	 	  	 
				
	ii.      	 	 ClassA-2 Note
	  	 	  	 
				
	iii.    	 	 ClassA-3 Note
	  	 	  	 
				
	iv.     	 	 ClassA-4 Note
	  	 	  	 
				
	vi.     	 	 TotalSemiannual Interest:
	  	 	  	 

  
 c) Semiannual
Principal 
  

							
	 	 	 	  	Aggregate

	  	Per $1000 of Original
Principal Amount


				
	i.       	 	 ClassA-1 Note
	  	 	  	 
				
	ii.      	 	 ClassA-2 Note
	  	 	  	 
				
	iii.    	 	 ClassA-3 Note
	  	 	  	 
				
	iv.     	 	 ClassA-4 Note
	  	 	  	 
				
	vi.     	 	 TotalSemiannual Principal:
	  	 	  	 

  

 -38- 








 d) Other Payments 
  

	 	i.	Operating Expenses (in excess of $100,000): 

  

	 	ii.	Funding of Capital Subaccount (to required amount): 

  

	 	iii.	Funding of Overcollateralization Subaccount (to required level): 

  

	 	iv.	Deposits to Reserve Subaccount: 

  
 5. Outstanding Principal Balance and Collection Account Balance as of Current Payment Date (after giving effect to payments to be made on such
distribution date): 
  

	 	a)	Principal Balance Outstanding: 

  

	 	i.	Class A-1 Principal Balance Outstanding Note: 

  

	 	ii.	Class A-2 Principal Balance Outstanding Note: 

  

	 	iii.	Class A-3 Principal Balance Outstanding Note: 

  

	 	iv.	Class A-4 Principal Balance Outstanding Note: 

  

	 	vi.	Total Note Principal Balance: 

  
 b) Collection Account Balances Outstanding: 
  

	 	i.	Capital Subaccount: 

  

	 	ii.	Overcollateralization Subaccount: 

  

	 	iii.	Reserve Subaccount: 

  

	 	iv.	Total Subaccount Amount: 

  
 6. Sub-Account Draws as of Current Payment Date (if applicable, pursuant to Section 8.02(e) of Note Indenture): 
  

	 	i.	Capital Subaccount: 

  

	 	ii.	Overcollateralization Subaccount: 

  

	 	iii.	Reserve Subaccount: 

  

	 	iv.	Total Subaccount Draws: 

  
 7. Shortfalls in Interest and Principal Payments as of Current Payment Date (if applicable): 
  
 a) Semiannual Interest Shortfall 
  

	 	i.	Class A-1 Note 

  

	 	ii.	Class A-2 Note 

  

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	 	iii.	Class A-3 Note 

  

	 	iv.	Class A-4 Note 

  

	 	vi.	Total Semiannual Interest Shortfall: 

  
 b) Semiannual Principal Shortfall 
  

	 	i.	Class A-1 Note 

  

	 	ii.	Class A-2 Note 

  

	 	iii.	Class A-3 Note 

  

	 	iv.	Class A-4 Note 

  

	 	vi.	Total Semiannual Principal Shortfall: 

  
 8. Shortfalls in Required Subaccount Levels as of Current Distribution Date: 
  

	 	i.	Capital Subaccount: 

  

	 	ii.	Overcollateralization Subaccount: 

  

	 	iii.	Total Subaccount Shortfalls: 

  
 IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Semiannual Servicer Certificate this
         day of             ,             . 
  

					
	 COMMONWEALTH ELECTRIC COMPANY, as Servicer

			
	 By:
	 	 	 	 
	 	 	 Name:
	 	 
	 	 	 Title:
	 	 


  

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 EXHIBIT E 
  
 FORM OF ANNUAL RECONCILIATION 
  
 Pursuant to Section 4.03(b) of the Transition Property Servicing Agreement,
dated as of March 1, 2005, between Commonwealth Electric Company, as servicer (the “Servicer”) and CEC Funding, LLC, the Servicer does hereby certify as follows: 
  
 For the Reconciliation
Period:                     to
                     
  

	1.	Calculation of Remittance Shortfall or Remittance Excess: 

  

	 	a)	System-wide Billed Revenues: 

  

	 	b)	System-wide Charge-Offs: 

  

	 	c)	System-wide Charge-Off % (b / a): 

  

	 	d)	RTC Charge-Off adjustment factor: 

  

	 	e)	“Deemed Charge-Off Percent” (c x d): 

  

	 	f)	“Estimated Charge-Off Percent”: 

  

	 	g)	kWh Consumption ([Jan. 1] to [Mar. 31]): 

  

	 	h)	RTC Charge ([Jan. 1] to [Mar. 31]): 

  

	 	i)	RTC Charges (gross of charge-offs)([Jan. 1] to [Mar. 31]) (g x h): 

  

	 	j)	kWh Consumption ([Apr. 1] to [Dec. 31]): 

  

	 	k)	RTC Charge ([Apr. 1] to [Dec. 31]): 

  

	 	l)	RTC Charges (gross of charge-offs)([Apr. 1] to [Dec. 31]) (j x k) 

  

	 	m)	Deemed RTC Charge Payments ([100% – e] x [i + l]): 

  

	 	n)	Estimated RTC Charge Payments ([100% – f] x [i + l]): 

  

	 	o)	Remittance Shortfall (m – n, if positive): 

  

	 	p)	Remittance Excess (n – m, if positive): 

  
 Executed as of this                      day of
                    . 
  

					
	COMMONWEALTH ELECTRIC COMPANY, as Servicer
		
	By:	 	 
	 	 	 Name:
	 	 
	 	 	 Title:
	 	 

  

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 ANNEX I 
  
 SERVICING PROCEDURES 
  
 The Servicer agrees to comply with the following servicing procedures:

  
 SECTION 1. DEFINITIONS 
  
 (a) Capitalized terms used herein and not otherwise defined herein shall have
the meanings set forth in the Agreement. 
  
 (b) Whenever used in
this Annex I, the following words and phrases shall have the following meanings: 
  
 “Billed RTC Charges” means the dollar amounts billed to Customers or the Applicable TPS in respect of the RTC Charge, whether billed to Customers or the Applicable TPS by the Servicer or to Customers by a
TPS pursuant to a TPS Service Agreement. 
  
 “Deemed
Charge-Off Percent” means the Servicer’s actual system wide charge-off percentage, as adjusted for estimates of partially paid bills (which are deemed to have paid the RTC Charge in full). 
  
 “Estimated Charge-Off Percent” means the Servicer’s good faith
estimate of the Deemed Charge-Off Percent. 
  
 “Servicer
Policies and Practices” means, with respect to the Servicer’s duties under this Annex I, the policies and practices of the Servicer applicable to such duties that the Servicer follows with respect to comparable assets that it services for
itself or others, as in effect from time to time and in accordance with DTE Regulations. The Servicer shall provide ten days’ prior written notice to the Rating Agencies of any amendment to the Servicer Policies and Practices that would
adversely affect in any material respect the Noteholders or Certificateholders. 
  
 SECTION 2. DATA ACQUISITION 
  
 (a) Installation and Maintenance of Meters. Except to the extent that a TPS is responsible for such services pursuant to a TPS Service Agreement, the Servicer shall cause to be installed, replaced and maintained meters in accordance with
the Servicer Policies and Practices. 
  
 (b) Meter Reading. In
accordance with the Servicer Policies and Practices, the Servicer shall obtain usage measurements for each Customer; provided, however, that the Servicer may determine any Customer’s usage on the basis of estimates in accordance with applicable
DTE Regulations; and, provided, further, that the Servicer may obtain usage measurements from the Applicable TPS for Customers receiving meter reading services from such TPS if the applicable TPS Service Agreement so provides. 
  
 (c) Cost of Metering. The Note Issuer shall not be obligated to pay any costs
associated with the metering duties set forth in this Section 2, including the costs of installing, 

  

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replacing and maintaining meters, nor shall the Note Issuer be entitled to any credit against the Servicing Fee for any cost savings realized by the Servicer
or any TPS as a result of new metering and/or billing technologies. 
  
 SECTION 3. USAGE AND BILL CALCULATION 
  
 The Servicer
shall obtain a calculation of each Customer’s usage (which may be based on data obtained from such Customer’s meter read or on usage estimates determined in accordance with applicable DTE Regulations) in accordance with the Servicer
Policies and Practices and shall determine therefrom Billed RTC Charges; provided, however, that in the case of Customers served by a TPS pursuant to a TPS Service Agreement, the Servicer may obtain usage measurements from the Applicable TPS for
Customers receiving meter reading services from such TPS if the applicable TPS Service Agreement so provides and shall determine therefrom Billed RTC Charges. 
  

SECTION 4. BILLING 
  
 (a) The Servicer shall implement the RTC Charge as of the Closing Date and shall thereafter bill each Customer or the Applicable TPS for each
Customer’s Billed RTC Charges in accordance with the provisions of this Section 4. 
  
 (b) Frequency of Bills; Billing Practices. In accordance with the Servicer Policies and Practices, the Servicer shall generate and issue a Bill to each Customer, or, in the case of a Customer who is being billed by a
TPS, to the Applicable TPS, with respect to such Customer’s Billed RTC Charges. In the event that the Servicer makes any material modification to the Servicer Policies and Practices, it shall notify the Note Issuer, the Note Trustee, the
Certificate Trustee and the Rating Agencies as soon as practicable, and in no event later than 60 Servicer Business Days after such modification goes into effect; provided, however, that the Servicer may not make any modification that will
materially adversely affect the Certificateholders. 
  
 (c)
Format. 
  
 (i) Each Bill to a Customer shall
contain or be deemed to contain a Transition Charge that shall include the RTC Charge owed by such Customer for the applicable billing period. 
  
 (ii) Each Bill in which the Transition Charge is listed as a line item shall contain a statement (as a footnote) to the effect that all or
a portion of the Transition Charge is owned by the Note Issuer. 
  
 (iii) The Servicer shall conform to such requirements in respect of the format, structure and text of Bills delivered to Customers and TPSs as applicable DTE Regulations shall from time to time prescribe. To the
extent that Bill format, structure and text are not prescribed by applicable law or by applicable DTE Regulations, the Servicer shall, subject to clauses (i) and (ii) of this subsection (c), determine the format, structure and text of all Bills in
accordance with its reasonable business judgment, the Servicer Policies and Practices and historical practice. 
  

 -43- 








 (d) Delivery. Except as provided in the next sentence, the Servicer shall deliver all Bills to Customers
(i) by United States mail in such class or classes as are consistent with the Servicer Policies and Practices or (ii) by any other means, whether electronic or otherwise, that the Servicer may from time to time use in accordance with the Servicer
Policies and Practices. In the case of Customers that have elected to be billed by a TPS, the Servicer shall deliver all Bills to the Applicable TPSs by such means as are mutually agreed upon by the Servicer and the Applicable TPS in the TPS Service
Agreement and which are consistent with DTE Regulations. The Servicer or a TPS, as applicable, shall pay from its own funds all costs of issuance and delivery of all Bills that it renders, including printing and postage costs as the same may
increase or decrease from time to time. 
  
 SECTION 5. CUSTOMER
SERVICE FUNCTIONS 
  
 The Servicer or a TPS to extent provided in
the applicable TPS Service Agreement shall handle all Customer inquiries and other Customer service matters according to the Servicer Policies and Practices. 
  
 SECTION 6. COLLECTIONS; PAYMENT PROCESSING; REMITTANCE 
  
 (a) Collection Efforts, Policies, Procedures. 
  
 (i) The Servicer shall collect Billed RTC Charges from Customers and TPSs as and when the same become due in accordance with such
collection procedures as it follows with respect to comparable assets that it services for itself or others, including the following: 
  
 (A) The Servicer shall prepare and deliver overdue notices to Customers and TPSs in accordance with applicable DTE Regulations and the
Servicer Policies and Practices. 
  
 (B) The
Servicer shall deliver past-due and shut-off notices in accordance with applicable DTE Regulations and the Servicer Policies and Practices. 
  
 (C) The Servicer shall adhere to and carry out disconnection policies and termination of billing by a TPS pursuant to a TPS Service
Agreement in accordance with Sections 116, 124-124I of the Statute or successor provisions, applicable DTE Regulations and the Servicer Policies and Practices. 
  

(D) The Servicer may employ the assistance of collection agents in accordance with applicable DTE Regulations and the Servicer Policies
and Practices. 
  
 (E) The Servicer shall apply
Customer and TPS deposits to the payment of delinquent accounts in accordance with applicable DTE Regulations and the Servicer Polices and Practices. 
  
 (ii) The Servicer shall not waive any late payment charge or any other fee or charge relating to delinquent payments, if any, or waive,
vary or modify any terms of payment of any amounts payable by a Customer, in each case unless such waiver or action: (A) would be in accordance with the Servicer Policies and Practices and (B) would comply in all material respects with applicable
law. 
  

 -44- 








 (iii) The Servicer shall accept payment from Customers in respect of Billed RTC Charges
in such forms and methods and at such times and places in accordance with the Servicer Policies and Practices. The Servicer shall accept payment from TPSs in respect of Billed RTC Charges in such forms and methods and at such times and places as the
Servicer and each TPS shall mutually agree in accordance with the applicable TPS Service Agreement and applicable DTE Regulations. 
  
 (b) Payment Processing, Allocation, Priority of Payments. The Servicer shall post all payments received to Customer or TPS accounts as promptly as
practicable, and, in any event, substantially all payments shall be posted no later than two Servicer Business Days after receipt. 
  
 (c) Investment of Estimated RTC Charge Payments Received. Prior to remittance on the applicable Remittance Date, the Servicer may invest Estimated RTC
Charge Payments at its own risk and for its own benefit, and such investments and funds shall not be required to be segregated from the other investments and funds of the Servicer. The Servicer shall be entitled to retain as additional compensation
any interest earnings on Estimated RTC Charge Payments invested by it. 
  
 (d) Calculation of Estimated RTC Charge Payments and Deemed RTC Charge Payments; Remittances. In accordance with Section 4.03(a) of the Agreement, the Servicer shall remit to the Note Trustee for deposit in the Collection Account an amount
equal to the product of the Billed RTC Charges for a particular billing date multiplied by one hundred percent less the Estimated Charge-Off Percent. Such product shall constitute the amount of Estimated RTC Charge Payments. Pursuant to Section
4.03(b) of the Agreement, on or before March 1 of each year, the Servicer shall calculate the amount of Deemed RTC Charge Payments by multiplying the Billed RTC Charges by one hundred percent less the Deemed Charge-Off Percent. 
  
 (e) Remittances. 
  
 (i) The Note Issuer shall cause to be established the
Collection Account in the name of the Note Trustee in accordance with Section 8.02 of the Note Indenture. 
  
 (ii) The Servicer shall make or cause to be made Remittances to the Collection Account in accordance with Section 4.03 of the Agreement.

  
 (iii) Any change of account or change of
institution affecting the Collection Account shall not take effect until the Note Issuer has provided at least fifteen (15) Servicer Business Days written notice thereof to the Servicer. 
  
 SECTION 7. TPSs 
  
 In the event a TPS performs services pursuant to a TPS Service Agreement, the Servicer shall comply with the procedures set forth in Schedule A to this
Annex I. 
  

 -45- 








  
 SCHEDULE A 
  
 TO ANNEX I 
  
 Additional Servicing Procedures Applicable to TPSs 
  
 1. Establishing TPS Relationship 
  
 In addition to any actions required by the DTE or by applicable law, for each TPS that is responsible for collecting Billed RTC Charges, the Servicer
shall take the following steps: 
  
 (a) Maintain adequate records
of the payment arrangement applicable to such TPS; 
  
 (b)
Maintain copies of all Customer requests to convert to billing by a TPS; 
  
 (c) Verify with the DTE that each TPS is licensed to supply electricity in Massachusetts; 
  
 (d) Obtain information from the TPS including, but not limited to: name, contact, address, telephone facsimile transmission number and internet address;

  
 (e) Maintain and update records of Customers to permit prompt
reversion to dual-billing; 
  
 (f) Maintain estimates of one
month’s maximum Estimated RTC Charge Payments for each TPS required to post a bond, letter of credit or cash deposit pursuant to the applicable TPS Service Agreement; and 
  
 (g) Comply with credit conditions set out in the Financing Order and applicable TPS Service Agreement. 
  
 2. Monitoring TPS Obligations 
  
 (a) The Servicer shall require each TPS to pay all undisputed and all disputed Billed RTC Charges or make a financial
arrangement for such payment according to the applicable TPS Service Agreement; and 
  
 (b) For all TPSs subject to any remittance option where such TPS is liable for all amounts billed in respect of Customers served thereby regardless of the amounts received therefrom, the Servicer shall monitor payment
compliance and take all actions permitted by the DTE and the Financing Order in the event of a default in payment. 
  
 3. Enforcing TPS Obligations 
  
 The Servicer shall promptly take all actions specified by the Financing Order with respect to amounts not remitted to the Servicer in accordance with the
payment terms specified by the Financing Order, in addition to any other remedies available at law. 
  

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 SCHEDULE 4.01(A) 
  

EXPECTED AMORTIZATION SCHEDULE 
  
 OUTSTANDING PRINCIPAL BALANCE 
  

													
	 Date

	  	Class A-1
Balance

	  	Class A-2
Balance

	  	Class A-3
Balance

	  	Class A-4
Balance


	 3/1/2005
	  	$	66,237,000	  	$	93,040,000	  	$	161,858,000	  	$	87,865,000
	 9/15/2005
	  	$	46,237,288	  	$	93,040,000	  	$	161,858,000	  	$	87,865,000
	 3/15/2006
	  	$	15,112,000	  	$	93,040,000	  	$	161,858,000	  	$	87,865,000
	 9/15/2006
	  	$	0	  	$	82,819,405	  	$	161,858,000	  	$	87,865,000
	 3/15/2007
	  	$	0	  	$	57,027,000	  	$	161,858,000	  	$	87,865,000
	 9/15/2007
	  	$	0	  	$	32,819,588	  	$	161,858,000	  	$	87,865,000
	 3/15/2008
	  	$	0	  	$	5,902,000	  	$	161,858,000	  	$	87,865,000
	 9/15/2008
	  	$	0	  	$	0	  	$	143,340,375	  	$	87,865,000
	 3/15/2009
	  	$	0	  	$	0	  	$	116,635,000	  	$	87,865,000
	 9/15/2009
	  	$	0	  	$	0	  	$	92,226,889	  	$	87,865,000
	 3/15/2010
	  	$	0	  	$	0	  	$	65,510,000	  	$	87,865,000
	 9/15/2010
	  	$	0	  	$	0	  	$	41,054,710	  	$	87,865,000
	 3/15/2011
	  	$	0	  	$	0	  	$	14,385,000	  	$	87,865,000
	 9/15/2011
	  	$	0	  	$	0	  	$	0	  	$	77,765,087
	 3/15/2012
	  	$	0	  	$	0	  	$	0	  	$	51,125,000
	 9/15/2012
	  	$	0	  	$	0	  	$	0	  	$	26,598,785
	 3/15/2013
	  	$	0	  	$	0	  	$	0	  	$	0