The United Illuminating Company LREC/ZREC Acceptable Forms and Methods of Providing Performance Assurance You are required to post 1 Performance Assurance in the amount specified on the Cover Sheet/Service Agreement in one of the following forms or methods. UI has no discretion with respect to extending the due date for Performance Assurance; failure to timely provide the Performance Assurance in the form and amount as meets the requirements of the Standard Agreement shall result in the automatic termination of the Standard Agreement. Performance Assurance shall be made payable to The United Illuminating Company. Pursuant to the PURA approved Solicitation Plan, Performance Assurance is not required for projects that UI can verify are online and producing energy. (See also Q. 80of Q&A document.) The following sections describe the approved forms and methods of providing Performance Assurance for: A. Cash B. Letters of Credit C. Surety Bonds D. Checks (in the form of a Bank Check or Cashier s Check only, see below.) Counterparties that choose to satisfy the Performance Assurance requirement with a Letter of Credit, Surety Bond or Check must send them via an overnight certified United States postal service or courier service that can document receipt of package on the delivery date to: Gary Zielanski Wholesale Power Contracts The United Illuminating Company MS 1-16F 180 Marsh Hill Road Orange, CT 06477 Phone number 203.499.3982 Letters of Credit, Surety Bonds or Checks sent by overnight United States postal service or overnight courier service shall be deemed received on the close of business on the next Business Day after such notice was sent. Directions for sending cash are included below. 1 UI defines post as received by the company.
A. Cash Cash may only be provided pursuant to an automated clearing house ( ACH ) or via a wire transfer in satisfaction of Performance Assurance requirements. Counterparties that have chosen to satisfy the Performance Assurance requirement with cash shall send such to either of the following accounts: Wire/ACH Instructions for The United Illuminating Company 157 Church Street New Haven, CT 06510 JP Morgan Chase Bank ABA # The United Illuminating Company Account Number: # # - ACH payments take longer time to process than Wire Transfers. You should check with your financial institution to confirm that the payment will be received by UI by the Performance Assurance due date. * See Standard Contract Cover Sheet for account numbers and ABA numbers. RFP Process (LREC, Large and Medium ZREC): For Standard Contracts executed under the RFP process, the LREC/ZREC bid/contract number, as included on the Cover Sheet to the Standard Contract, must both be listed on the applicable ACH or wire transfer. Tariff Process (Small ZREC): For Service Agreements executed under the Tariff process, the LREC/ZREC bid/service Agreement number, as included on the Service Agreement to the Tariff, must both be listed on the applicable ACH or wire transfer. B. Letters of Credit RFP Process (LREC, Large and Medium ZREC): For Standard Contracts executed under the RFP process, the Project bid/contract number, as included on the Cover Sheet to the Standard Contract, must be listed on the applicable Letter of Credit. Tariff Process (Small ZREC): For Service Agreements executed under the Tariff process, the bid/service Agreement number, as included on the Service Agreement, must be listed on the applicable Letter of Credit. Section 1.39 of the Standard Contract and Section 1.36 of the Small Class I Zero Emission Project Tariff, Attachment 2, Terms and Conditions, sets forth the minimum requirements for Letter(s) of Credit. According to that provision, Letter(s) of Credit means one or more irrevocable, non-transferable standby letters of credit issued by a Qualified Institution in a form reasonably acceptable to the Buyer. Costs of a Letter of Credit shall be borne solely by the applicant for such Letter of Credit." Attachment 2 to the Standard Contract and Appendix B of the Small Class I Zero Emission Project Tariff, Attachment 2, Terms and Conditions, provides a Form of Letter of Credit that is acceptable to UI, which is included here for the convenience of winning Bidders/counterparties.
Form of Letter of Credit IRREVOCABLE LETTER OF CREDIT NO. ISSUE DATE: EXPIRY DATE: APPLICANT [Applicant Name] [Applicant Address] BENEFICIARY [Beneficiary Name] c/o The United Illuminating Company 180 Marsh Hill Road Orange, CT 06477 ATTENTION: Mr. Alan Trotta, Director EXPIRY DATE: [insert date] CURRENCY USD AMOUNT $ [insert amount] ASSOCIATED AGREEMENT [Agreement title and date] WE HEREBY ISSUE IN YOUR FAVOR OUR IRREVOCABLE LETTER OF CREDIT NO: [ ] BY ORDER OF AND FOR THE ACCOUNT OF [Applicant Name], [Applicant Address] FOR AN AMOUNT OR AMOUNTS NOT TO EXCEED IN THE AGGREGATE [ ] AND 00/100 UNITED STATES DOLLARS (USD[ ]) FOR THE LREC/ZREC Standard Contract Number/Service Agreement Number ] AVAILABLE BY YOUR DRAFT(S) AT SIGHT ON [Name of Issuer] ( ISSUER ) LOCATED AT [Issuer Address]. THIS LETTER OF CREDIT IS EFFECTIVE FROM [, 20[ ]] AND SHALL EXPIRE ON [, ] AT OUR COUNTERS, PROVIDED THAT THIS LETTER OF CREDIT SHALL BE DEEMED TO BE AUTOMATICALLY EXTENDED WITHOUT AMENDMENT FOR ONE (1) YEAR FROM THE EXPIRY DATE HEREOF, OR ANY FUTURE EXPIRY DATE, UNLESS AT LEAST SIXTY (60) DAYS PRIOR TO THE EXPIRY DATE WE NOTIFY YOU BY REGISTERED MAIL RETURN RECEIPT REQUESTED OR COURIER (WITH DELIVERY CONFIRMED IN WRITING) THAT WE ELECT NOT TO CONSIDER THIS LETTER OF CREDIT RENEWED FOR ANY SUCH ADDITIONAL PERIOD. UPON RECEIPT BY YOU OF SUCH NOTICE AND IF A SUBSTITUTE LETTER OF CREDIT IN FORM, SUBSTANCE AND AMOUNT ACCEPTABLE TO YOU IS
NOT PROVIDED TO YOU BY OR ON BEHALF OF THE APPLICANT AT LEAST THIRTY (30) DAYS PRIOR TO THE THEN CURRENT EXPIRY DATE IN EFFECT AT THE TIME OF NOTICE, THEN YOU MAY DRAW DOWN THIS LETTER OF CREDIT UP TO THE AVAILABLE AMOUNT (i.e., ORIGINAL AMOUNT OF THIS LETTER OF CREDIT NOTED ABOVE REDUCED BY AMOUNT OF PRIOR PAID DRAWINGS). THIS LETTER OF CREDIT IS PRESENTABLE AND PAYABLE AT OUR COUNTERS AND WE HEREBY ENGAGE WITH YOU THAT DRAFTS DRAWN UNDER AND IN COMPLIANCE WITH THE TERMS AND CONDITIONS OF THIS LETTER OF CREDIT WILL BE HONORED ON PRESENTATION IF ACCOMPANIED BY THE REQUIRED DOCUMENTS PURSUANT TO THE TERMS AND CONDITIONS OF THIS LETTER OF CREDIT. THE BELOW MENTIONED DOCUMENT(S) MUST BE PRESENTED ON OR BEFORE THE EXPIRY DATE OF THIS INSTRUMENT IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THIS LETTER OF CREDIT. 1. YOUR SIGNED AND DATED STATEMENT, IN THE FORM OF ANNEX 1 ATTACHED HERETO; AND 2. THIS ORIGINAL LETTER OF CREDIT AND ANY AMENDMENT(S). PRESENTATION OF ANY DRAWING MAY BE MADE BY HAND-DELIVERY, EXPRESS COURIER, OR CERTIFIED MAIL AT THE FOLLOWING ADDRESS: [Issuer] [Issuer s Address] PH: [( ) - ] ATTENTION: [ ] DRAWINGS PRESENTED BY TELEFACSIMILE ( FAX ) TO FAX NO.[ ] ARE ALSO ACCEPTABLE PROVIDED THAT SUCH FAX PRESENTATION IS MADE ON OR BEFORE THE EXPIRY DATE AND THE ORIGINAL DRAWING CERTIFICATES ARE SIMULTANEOUSLY FORWARDED BY OVERNIGHT COURIER SERVICE TO THE ABOVE ADDRESS, BUT THE FAILURE OF THE COURIER SERVICE TO TIMELY DELIVER SHALL NOT AFFECT THE EFFECTIVENESS OF THE FAX PRESENTATION. IF A DRAWING IS MADE BY YOU HEREUNDER AT OR BEFORE 11:00 A.M., NEW YORK TIME, ON A BUSINESS DAY (AS HEREINAFTER DEFINED) IN CONFORMANCE WITH THE TERMS AND CONDITIONS OF THIS LETTER OF CREDIT, PAYMENT SHALL BE MADE TO YOU IN IMMEDIATELY AVAILABLE FUNDS AT OR BEFORE 4:00 P.M., NEW YORK TIME, ON THE NEXT FOLLOWING BUSINESS DAY. IF A DRAWING IS MADE BY YOU HEREUNDER AFTER 11:00 A.M., NEW YORK TIME,
ON A BUSINESS DAY IN CONFORMANCE WITH THE TERMS AND CONDITIONS OF THIS LETTER OF CREDIT, PAYMENT SHALL BE MADE TO YOU IN IMMEDIATELY AVAILABLE FUNDS AT OR BEFORE 3:00 P.M., NEW YORK TIME, ON THE SECOND BUSINESS DAY THEREAFTER. THIS LETTER OF CREDIT MAY BE TERMINATED UPON BENEFICIARY S RECEIPT OF FULL PAYMENT FROM THE APPLICANT AND ISSUER S RECEIPT OF A WRITTEN RELEASE FROM THE BENEFICIARY RELEASING THE ISSUER FROM ITS OBLIGATIONS UNDER THIS LETTER OF CREDIT. THE TERM BUSINESS DAY AS USED HEREIN MEANS ANY DAY OTHER THAN (I) A SATURDAY, (II) A SUNDAY, OR (III) A DAY ON WHICH BANKING INSTITUTIONS LOCATED IN THE CITY OF NEW YORK, NEW YORK ARE REQUIRED OR AUTHORIZED BY LAW TO BE CLOSED. APPLICANT'S FILING OF A BANKRUPTCY, RECEIVERSHIP OR OTHER DEBTOR-RELIEF PETITION, AND/OR APPLICANT'S DISCHARGE THEREUNDER, SHALL IN NO WAY AFFECT THE LIABILITY OF THE ISSUER UNDER THIS LETTER OF CREDIT AND, AS A RESULT, THE ISSUER SHALL ALWAYS REMAIN LIABLE TO THE BENEFICIARY FOR THE FULL AMOUNT OF THIS LETTER OF CREDIT, NOTWITHSTANDING SAID BANKRUPTCY, RECEIVERSHIP, PETITION OR DISCHARGE - NOT TO EXCEED THE AVAILABLE AMOUNT OF THIS LETTER OF CREDIT. ADDITIONAL TERMS AND CONDITIONS: 1. ALL COMMISSIONS AND OTHER BANKING CHARGES WITH RESPECT TO THIS LETTER OF CREDIT WILL BE BORNE BY THE APPLICANT. 2. THIS LETTER OF CREDIT MAY NOT BE TRANSFERRED OR ASSIGNED. 3. THIS LETTER OF CREDIT IS IRREVOCABLE. 4. THE AMOUNT WHICH MAY BE DRAWN BY YOU UNDER THIS LETTER OF CREDIT SHALL BE AUTOMATICALLY REDUCED BY THE AMOUNT OF ANY UNREIMBURSED DRAWINGS HEREUNDER AT OUR COUNTERS. 5. ANY NUMBER OF PARTIAL DRAWINGS ARE PERMITTED FROM TIME TO TIME UNDER THIS LETTER OF CREDIT. 6. THIS LETTER OF CREDIT IS SUBJECT TO THE INTERNATIONAL STANDBY PRACTICES (1998) OF THE INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION NO. 590 ( ISP98 ) OR SUCH LATER REVISION (S) OF THE INTERNATIONAL STANDBY PRACTICES AS MAY BE HEREAFTER ADOPTED. AS TO MATTERS NOT GOVERNED BY ISP98, THIS LETTER OF CREDIT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING, TO THE EXTENT NOT INCONSISTENT WITH ISP98, THE UNIFORM
COMMERCIAL CODE AS IN EFFECT IN THE STATE OF NEW YORK. THIS LETTER OF CREDIT MAY NOT BE AMENDED, CHANGED OR MODIFIED WITHOUT THE EXPRESS WRITTEN CONSENT OF THE BENEFICIARY AND THE ISSUER. 7. THE BENEFICIARY SHALL NOT BE DEEMED TO HAVE WAIVED ANY RIGHTS UNDER THIS LETTER OF CREDIT, UNLESS THE BENEFICIARY OR AN AUTHORIZED AGENT OF THE BENEFICIARY SHALL HAVE SIGNED A DATED WRITTEN WAIVER. NO SUCH WAIVER, UNLESS EXPRESSLY SO STATED THEREIN, SHALL BE EFFECTIVE AS TO ANY TRANSACTION THAT OCCURS SUBSEQUENT TO THE DATE OF THE WAIVER, NOR AS TO ANY CONTINUANCE OF A BREACH AFTER THE WAIVER. 8. A FAILURE TO MAKE ANY PARTIAL DRAWINGS AT ANY TIME SHALL NOT IMPAIR OR REDUCE THE AVAILABILITY OF THIS LETTER OF CREDIT IN ANY SUBSEQUENT PERIOD OR OUR OBLIGATION TO HONOR YOUR SUBSEQUENT DEMANDS FOR PAYMENT MADE IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THIS LETTER OF CREDIT. 9. NOTWITHSTANDING ANY PROVISION OF THIS LETTER OF CREDIT TO THE CONTRARY, SHOULD THIS LETTER OF CREDIT EXPIRE OR TERMINATE ON A DATE THAT THE ISSUER'S LOCATION IS CLOSED DUE TO AN INTERRUPTION OF THE ISSUER'S BUSINESS CAUSED BY AN ACT OF GOD, WEATHER-RELATED EVENT, RIOT, CIVIL COMMOTION, INSURRECTION, ACT OF TERRORISM, WAR, DECLARED OR UNDECLARED, OR ANY CAUSE BEYOND THE ISSUER'S CONTROL, THEN THE TERMS OF THIS LETTER OF CREDIT WILL AUTOMATICALLY BE EXTENDED FOR AN ADDITIONAL PERIOD EQUAL TO THE LENGTH OF THE INTERRUPTION OF THE ISSUER'S BUSINESS, WHICH ADDITIONAL PERIOD SHALL NOT BE LESS THAN TEN (10) BUSINESS DAYS OR IN ANY EVENT LONGER THAN THIRTY (30) CALENDAR DAYS, FOLLOWING THE DAY ON WHICH THE ISSUER RESUMES ITS BUSINESS AFTER THE CAUSE OF SUCH INTERRUPTION HAS BEEN REMOVED OR ELIMINATED, AND, AS A RESULT, ANY DRAWING ON THIS LETTER OF CREDIT WHICH COULD PROPERLY HAVE BEEN MADE, BUT FOR SUCH INTERRUPTION, SHALL BE PERMITTED DURING SUCH EXTENDED PERIOD. AUTHORIZED SIGNATURE: TITLE: PLEASE DIRECT ANY WRITTEN CORRESPONDENCE, INCLUDING DRAWING OR INQUIRIES TO: [Issuer] [Issuer Address] PH: [( ) - ] ATTENTION:
C. Surety Bonds RFP Process (LREC, Large and Medium ZREC): For Standard Contracts executed under the RFP process, the Bid/Contract number, as included on the Cover Sheet to the Standard Contract, must be listed on the applicable Surety Bond. Tariff Process (Small ZREC): For Service Agreements executed under the Tariff process, the Service Agreement number, as included on the Service Agreement, must be listed on the applicable Surety Bond. Surety Bond Issuer must satisfy the following criteria: Licensed to do business in Connecticut. Financial Strength Rating by A.M. Best Company of "A minus" or better. Financial Size Category A.M. Best of VIII or larger. Surety Bond form must satisfy the following criteria: The Surety Bond submitted to UI must provide for payment of the Performance Assurance amount to Buyer in the Event of Default by Seller prior to the In-Service Date. Surety Bond forms similar to the Form of Surety Bond, as determined by UI in its sole discretion, will be acceptable to UI. The following is a Form of Surety Bond that is acceptable to UI: Form of Surety Bond Bond No. KNOW ALL MEN BY THESE PRESENTS, that we, [ ], as Principal, and, [ ], a corporation organized under the laws of the State of [ ], and duly authorized to transact business in the State of Connecticut, as Surety, are held and firmly bound unto The United Illuminating Company ( Obligee ) in the penal sum of [ ] Dollars ($ ) lawful money of the United States, For the LREC/ZREC Project Name, [Standard Contract Number/Service Agreement Number ] to the payment of which well and truly to be made we hereby bind ourselves and our heirs, administrators, successors, and assigns, jointly and severally, firmly by these presents. WHEREAS the above bounden Principal has entered into the Standard Contract for the Purchase and Sale of Connecticut Class I Renewable Energy Credits from Low and Zero Emission Projects (the Contract ) with the above named Obligee, effective the day of,, which Contract is hereby referred to and made a part hereof as fully and to the same extent as if copies at length were attached herein. NOW THEREFORE, if the Principal shall comply with and faithfully perform the terms of the Contract up to the In-Service Date, then this bond shall be null and void, otherwise to be in full force and effect. PROVIDED HOWEVER, that this bond is executed by the Surety and accepted by the Obligee subject to the following expressed conditions.
1. Capitalized terms used but not defined in this bond shall have the meanings set forth in the Contract. 2. This bond is for the term beginning as of the Effective Date and ending as of the In-Service Date, as each term is defined in the Contract. 3. If the Contract is terminated due to an Event of Default by Principal prior to the In-Service Date, Obligee will then notify Surety in writing of Obligee s claim and Surety shall immediately pay the amount of such claim to Obligee, subject to the terms of this bond. 4. Neither non-renewal by the Surety, nor failure, nor inability of the Principal to file a replacement bond shall constitute a loss to the Obligee which is recoverable under this bond. 5. Surety s liability under this bond and all continuation certificates issued in connection therewith shall not be cumulative and shall in no event exceed the amount as set forth in this bond or in any additions, riders, or endorsements properly issued by the Surety as supplements thereto. 6. No claim, action, suit or proceeding, except as herein set forth, shall be had or maintained against the Surety on this bond unless same be brought or instituted and process served upon the Surety within six months following the expiration of the original term of this bond, or extended term as provided herein. Signed, sealed and dated this day of,. ATTEST BY Principal ATTEST BY Attorney-in-Fact Seal
D. Checks Performance Assurances in the form of a check are an other form of security and thus must be acceptable to UI in its sole discretion. (Standard Contract 1.50 and Service Agreement Attachment 2, Terms and Conditions 1.47.) A check transfer must satisfy the minimum requirements as to form method of submission, and may be provided only in the form of a cashier s check, also known as a bank check (a Check ). 2 RFP Process (LREC, Large and Medium ZREC): For Standard Contracts executed pursuant to the RFP process, the Bid/Contract Number, as included on the Cover Sheet to the Standard Contract, must be listed on the Check stub. Tariff Process (Small ZREC): For Service Agreements executed pursuant to the Tariff process, the Service Agreement number, as included in the Service Agreement to the Tariff, must be listed on the Check stub. 2 Note: UI will not accept a personal check or a business check, it must be a cashier s check or bank check.