Code of Maine Rules › 65 - DEPARTMENT OF PUBLIC UTILITIES COMMISSION › 407 - PUBLIC UTILITIES COMMISSION › Chapter 301 - STANDARD OFFER SERVICE › Section 407-301-3 - Eligibility and Obligations of Standard Offer Service Providers

Current through 2024-29, July 17, 2024
A.
Licensing
Each standard offer provider must have a license authorizing
				  to it provide standard offer service issued pursuant to Chapter 305 of the
				  Commission's Rules prior to Commission acceptance of its bid its to provide
				  standard offer service. Each standard offer provider must maintain the license
				  throughout the designated standard offer term.
B.
Financial Security
1.
Requirements
Each standard offer provider shall comply with the financial
				  security requirements in this subsection and as specified by the Commission in
				  the request for standard offer bids. The financial security requirements shall
				  provide reasonable assurance that sufficient funds will be available for the
				  additional costs of replacement standard offer service in the event that the
				  standard offer provider fails to satisfy its obligations to provide standard
				  offer service.
2.
Amount of Security
The Commission shall specify the required financial security
				  amount or the methods to determine the amount in its request for standard offer
				  bids. The amount of financial security may be fixed for the term of standard
				  offer service, decline in pre-determined amounts over the term of standard
				  offer service, or vary periodically based on actual or projected changes in
				  market prices of electricity or standard offer load.
3.
Type of Security
A standard offer provider may satisfy its financial security
				  requirement through an irrevocable letter of credit, a corporate guarantee, or
				  cash. The financial security must comply with the requirements of this
				  subsection and the request for standard offer bids. The Commission may limit
				  the amount of financial security that may be satisfied through a corporate
				  guarantee or may determine that financial security may not be satisfied through
				  a corporate guarantee. Each standard offer provider shall provide the letter of
				  credit, corporate guarantee or cash to the applicable transmission and
				  distribution utility.
a.
Letter
				of Credit
An irrevocable letter of credit must unconditionally obligate
				  the issuing financial institution to honor drafts drawn on such letters for the
				  purpose of paying the additional costs of replacement standard offer service
				  and be issued by a commercial bank with a minimum corporate debt rating of
				  "BBB+" by Standard & Poor's or Fitch or "Baa1" by Moody's Investors
				  Service, or an equivalent short-term debt rating by one of these agencies. If,
				  at any time, the corporate debt ratings of an issuing financial institution
				  drop below the above specified levels, the standard offer provider shall notify
				  the Commission's Director of Technical Analysis and the applicable transmission
				  and distribution utility in writing and provide replacement security that
				  satisfies the requirements of this subsection and the request for standard
				  offer bids.
b.
Corporate Guarantees
A corporate guarantee must be issued by the standard offer
				  provider, a corporation affiliated with the standard offer provider, the
				  standard offer provider's wholesale supplier or a corporation affiliated with
				  the standard offer provider's wholesale supplier. The corporate guarantee must
				  be unconditional and irrevocable for the period of the standard offer term. The
				  Commission may not accept a corporate guarantee to satisfy the requirement of
				  this subsection unless the corporate guarantor meets the following financial
				  qualifications and capabilities:
i.
				The senior secured debt obligations of the guarantor shall be publicly rated,
				at a minimum, at "BBB-" from Standard & Poor's, or Fitch or "Baa3" from
				Moody's Investors Service;
ii. The
				total assets of the guarantor must be at least 5.0 times the amount of the
				corporate guarantee amount ; and
iii. The total common equity of the guarantor
				must be at least 2.5 times the amount of the corporate guarantee.
If a corporate guarantor's senior secured debt obligations
				  are rated by two of the agencies listed above, the guarantor's rating will be
				  determined by the lower assigned rating. If a corporate guarantor's senior
				  secured debt obligations are rated by all three of the agencies listed above,
				  two of those agencies must have assigned ratings equal to or higher than the
				  required ratings described above. If, at any time, the corporate guarantor
				  fails to meet the requirements of this subsection and the request for standard
				  offer bids, the standard offer provider shall immediately notify the
				  Commission's Director of Technical Analysis and applicable transmission and
				  distribution utility in writing and provide replacement security that satisfies
				  the requirements of this subsection and the request for standard offer bids.
				  The Commission may adopt greater financial qualification and capability
				  standards in the request for standard offer bids.
c.
Cash
To satisfy the security requirement of this section, cash
				  must be accompanied by proper documentation so as to perfect a security
				  interest. Cash and the applicable interest shall be returned to the standard
				  offer provider after all standard offer obligations are satisfied.
4.
Termination
Each standard offer provider shall maintain financial
				  security that complies with the requirements of this subsection and the request
				  for standard offer bids for a period not less than 30 days after the end of the
				  applicable term of service. The termination of the financial security shall not
				  affect obligations incurred while the financial security was in effect.
5.
Use of Security
				Amounts
Amounts received as a result of the financial security
				  requirements shall be used to defray the additional costs of replacement
				  standard offer service. For purposes of this provision, additional costs of
				  replacement standard offer service are all costs that are incurred or will be
				  incurred to acquire replacement standard offer service, including supply and
				  administrative costs, through the remaining standard offer term that exceed the
				  amounts paid or to be paid by standard offer customers at the standard offer
				  rates in effect at the time of the Commission's declaration of a standard offer
				  provider's default. Amounts received as a result of the financial security
				  requirements may also be used to reimburse expenses and costs (including
				  attorneys' fees) associated with enforcing the obligations of the standard
				  offer provider, including payment obligations deriving from the financial
				  security requirements.