CEC FUNDING, LLC, as Note Issuer and

EX-10.2.2 10 dex1022.htm TRANSITION PROPERTY SERVICING AGREEMENT (CEC FUNDING, LLC) 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.

(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

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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

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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.

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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.

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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: ###-###-####

Telephone: ###-###-####

(b)

if to the Note Issuer, to

CEC Funding, LLC

One NSTAR Way

Westwood, MA 02090

Attention: President

Facsimile: ###-###-####

Telephone: ###-###-####

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(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: ###-###-####

Telephone: ###-###-####

(d)

if to Moody’s, to

Moody’s Investors Service, Inc.

99 Church Street

New York, NY 10007

Attention: ABS Monitoring Department

Facsimile: ###-###-####

Telephone: ###-###-####

(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: ###-###-####

Telephone: ###-###-####

E-mail: ***@***

(f)

if to the Agencies, to

Massachusetts Development Finance Agency

160 Federal Street

Boston, MA 02110

Attention: General Counsel

Facsimile: ###-###-####

Telephone: ###-###-####

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and

Massachusetts Health and Educational Facilities Authority

99 Summer Street, 10th Floor

Boston, MA 02110

Attention: General Counsel

Facsimile: ###-###-####

Telephone: ###-###-####

(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: ###-###-####

Telephone: ###-###-####

(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

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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.

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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

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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:

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ANNEX A TO EXHIBIT A

LIST OF SERVICER DEFAULTS


Nature of Default		Status

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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.

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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

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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 .

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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

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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:

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:

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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: