65- 407 C.M.R. ch. 301, § 3
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.
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.
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.
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.
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.
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:
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.
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.
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.
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.
Standard offer providers shall provide all or the specified portion of the standard offer requirements of each standard offer class for which it is selected at its accepted bid price. Standard offer service shall include all line losses associated with delivery to the customers' meters .
Each standard offer provider shall comply with the renewable resource portfolio requirements pursuant to Chapter 311 of the Commission's Rules.
Each standard offer provider that serves within a service area of a transmission and distribution utility within the New England bulk power system control area shall comply with all applicable Independent System Operator - New England rules and requirements; and either the standard offer provider or an affiliate of the standard offer provider shall be a designated load serving entity with a settlements account pursuant to Independent System Operator - New England rules for the standard offer load obligations. Each standard offer provider that serves within an area that is within the Maritimes control area shall comply with all applicable rules and requirements of the Northern Maine Independent System Administrator.
Each standard offer provider shall comply with all statutory and regulatory requirements applicable to standard offer service, applicable provisions in the requests for standard offer bids, and the requirements of the standard offer contract between the transmission and distribution utility and standard offer providers, approved by the Commission pursuant to section 5(D) below.
Each standard offer provider shall maintain the technical and financial capability to fulfill its obligations under this section.
65- 407 C.M.R. ch. 301, § 3