PUC Seeks To Increase Financial Security Required From Suppliers, Also Raise Maximum Limit

As part of a wide-ranging proposal to revise the retail electric supplier rules (see additional stories here, including proposed prohibition on door-to-door marketing) the New Hampshire PUC is proposing to increase the financial security required from retail electric suppliers

Under the proposed rules, the financial security instrument required from electric suppliers under Puc 2003.01 (b)(2) shall be in an amount equal to the greater of:

a. $100,000; or

b. 25% of the supplier's actual gross revenue in New Hampshire for the preceding full year of operation, not including revenue from the provision of default service, for any year after the supplier's first full year of operation;

Notwithstanding the above, the proposed security requirement for a supplier shall not exceed $500,000

These provisions represent an increase from the current security requirements

Currently, the rules provide that security for retail suppliers shall be set at the greater of:

a. $100,000;

b. 20% of the supplier's estimated gross receipts for its first full year of operation, not including revenue from the provision of default service, for a supplier's first year of operation; or

c. 20% of the supplier's actual gross receipts for the preceding year of operation, not including revenue from the provision of default service, for any year after the first year of operation;

The current rules provide that security requirement for a supplier shall not exceed $350,000

However, the PUC does propose to reduce the term of any security instrument from the current five years. Instead, the security shall have an effective term of no less than:

a. 18 months for a letter of credit or unconditional guaranty executed by the supplier's parent company; or

b. 12 months with a 6 month extended claims or demand period for a surety bond

The newly proposed rules would also more specifically delineate acceptable forms of retail supplier security as including:

a. An irrevocable standby letter of credit issued by:

i. A bank on the ISO-NE list of approved letter of credit banks and presentable at a U.S. office of such bank; or

ii. A bank with a retail office in New Hampshire and presentable at a New Hampshire office of such bank;

b. A surety bond issued by an insurance company or bonding company included on the U.S. Treasury Department's list of certified companies and licensed in New Hampshire, with demand to be made on a U.S. office of the named surety; or

c. An unconditional guaranty of payment executed by the parent company or other affiliate of the supplier, if the parent company has and maintains an investment grade credit rating

Docket DRM 16-853