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EX-31.2 - EX-31.2 - CenterPoint Energy Transition Bond CO II, LLCd361040dex312.htm
EX-31.1 - EX-31.1 - CenterPoint Energy Transition Bond CO II, LLCd361040dex311.htm
10-K - 10-K - CenterPoint Energy Transition Bond CO II, LLCd361040d10k.htm

Exhibit 99.4

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Member of

CenterPoint Energy Houston Electric, LLC

Houston, Texas

We have examined the compliance of CenterPoint Energy Houston Electric, LLC (the “Company”) with the established minimum servicing standards for the Transition Property Servicing Agreement dated as of December 16, 2005 by and between CenterPoint Energy Transition Bond Company II, LLC and the Company set forth in the accompanying Appendix II to Management’s Assertion of Compliance with Servicing Standards dated March 27, 2018 ( the “minimum servicing standards”), during the period January 1, 2017 through December 31, 2017. Management is responsible for the Company’s compliance with the minimum servicing standards. Our responsibility is to express an opinion on the Company’s compliance with the minimum servicing standards based on our examination.

Our examination was conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) and, accordingly, included examining, on a test basis, evidence about the Company’s compliance with the minimum servicing standards, including tests on a sample basis of the servicing activities related to the minimum servicing standards, determining whether the Company performed those selected activities in compliance with the minimum servicing standards during the specified period, and performing such other procedures as we considered necessary in the circumstances. Further, an examination is not designed to detect noncompliance arising from errors that may have occurred prior to the period specified above that may have affected the balances or amounts calculated or reported by the Company during the period covered by this report. We believe that our examination provides a reasonable basis for our opinion. Our examination does not provide a legal determination on the Company’s compliance with the minimum servicing standards.

Our examination disclosed the following material noncompliance with the minimum servicing standards during the period January 1, 2017 through December 31, 2017:

The Company failed to make required remittances to the trustee for the TBC II Senior Secured Transition Bonds, Series A, in accordance with criterion IV.2 of the minimum servicing standards included in Appendix II to Management’s Assertion of Compliance with Servicing Standards.

In our opinion, except for the material noncompliance described in the preceding paragraph, the Company complied, in all material respects, with the minimum servicing standards during the period January 1, 2017 through December 31, 2017.

Appendix I to Management’s Assertion of Compliance with Servicing Standards includes management’s response to the material noncompliance identified in our examination. Such response has not been subject to the procedures applied in our examination and, accordingly, we do not express an opinion or provide any form of assurance on the appropriateness of the response or the effectiveness of any corrective actions described therein.

/s/ DELOITTE & TOUCHE LLP

Houston, Texas

March 27, 2018


MANAGEMENT’S ASSERTION OF COMPLIANCE WITH SERVICING STANDARDS

Except as set forth in Appendix I, as of and for the year ended December 31, 2017, CenterPoint Energy Houston Electric, LLC (the “Company”) has complied, in all material respects, with the Company’s established minimum servicing standards for the Transition Property Servicing Agreement dated as of December 16, 2005 by and between CenterPoint Energy Transition Bond Company II, LLC, as Issuer, and the Company, as Servicer, as set forth in Appendix II attached hereto.

Dated: March 27, 2018

 

/s/ Carla Anita Kneipp

Carla Anita Kneipp

Vice President and Treasurer

CenterPoint Energy Houston Electric, LLC


APPENDIX I

LIST OF SERVICER DEFAULTS

The following Servicer Defaults, or events which with the giving of notice, the lapse of time, or both, would become Servicer Defaults known to the undersigned, relating to criterion IV.2 of the minimum servicing standards listed in Appendix II, occurred during the year ended December 31, 2017:

 

Nature of Default

  

Status

In conjunction with the Servicer’s mandated rebilling of retail electric providers due to the Public Utility Commission of Texas’s Final Order in Docket No. 46606 regarding revised annual four coincident peak demand values used as billing determinants and the configuration of the Servicer’s billing system, the Servicer failed to make required remittances to the trustee for the TBC II Senior Secured Transition Bonds, Series A (the “Bonds”) from April 24, 2017 to May 11, 2017.    The Servicer transferred the estimated and trued-up transition charge collections, together with accrued interest thereon, that it had failed to remit to the trustee for the Bonds on May 11, 2017 and June 27, 2017, respectively. The Servicer had estimated transition charge collections until such trued-up transition charge collections were remitted to the trustee.


APPENDIX II

CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC’S MINIMUM SERVICING STANDARDS

I. GENERAL SERVICING AND ADMINISTRATION

1. Policies and procedures are instituted to monitor whether or not a Servicer Default has occurred under the Transition Property Servicing Agreement dated as of December 16, 2005, by and between CenterPoint Energy Transition Bond Company II, LLC, as Issuer (the “Issuer”), and CenterPoint Energy Houston Electric, LLC, as Servicer (the “Servicing Agreement”).

II. MAINTENANCE OF COLLATERAL OR SECURITY

1. Collateral or security on the Senior Secured Transition Bonds, Series A of the Issuer (the “Transition Bonds”) is maintained as required by the Servicing Agreement. (Servicing Agreement § 3.04(f))

2. Deposit amounts are analyzed, in accordance with the Public Utility Commission of Texas (“PUCT”) rules no more frequently than quarterly, upon the request of either the retail electric provider (“REP”) or the Servicer, to ensure that any deposits for REPs required under the Financing Order of the PUCT under Docket No. 30485 (the “Financing Order”) accurately reflect two months’ maximum collections. (Annex 1 to the Servicing Agreement § 8(a)(ii))

3. Deposits held in trust for an REP are returned to the REP within ten (10) calendar days of a reduction in activity qualifying for a deposit reduction as set forth in the Servicing Agreement. (Annex 1 to the Servicing Agreement § 8(a)(ii)) The Servicer’s procedure is to notify the REP when it holds funds in excess of current required deposit amounts and act in accordance with the REP’s instructions as to return of the funds.

III. TRUE-UP OF TRANSITION CHARGES

1. A true-up of transition charges is prepared and filed annually (as provided in the definition of Calculation Date) with the PUCT. (Annex 1 to the Servicing Agreement § 7)

IV. BILLING, COLLECTION AND REMITTANCE OF TRANSITION CHARGES

1. The Servicer calculates and bills the transition charges to the REPs. (Servicing Agreement § 3.01(a)(i))

2. Payments of transition charges made by the REPs are remitted to the Trustee (as defined in the Servicing Agreement) on or before the second business day after receipt. (Servicing Agreement § 5.11)

3. Accrued Interest (as defined in the Servicing Agreement) is paid by the Servicer from the date or dates transition charges were received to the date such transition charges were remitted to the Trustee. (Servicing Agreement § 3.03(a))

4. Pursuant to the Servicing Agreement, the Servicer charges a five percent (5%) penalty on all transition charges billed to an REP but not paid by the close of business on the 35th day following each billing by the Servicer to the REP. (Servicing Agreement § 3.02(c))

5. An REP is considered to be in default after 45 calendar days, after which time the Servicer will direct the application of the security deposit to the transition charges the REP has failed to remit and avail itself of such legal remedies as may be appropriate to collect any remaining unpaid transition charges and associated penalties. (Annex 1 to the Servicing Agreement § 9(b))

6. For each REP, a reconciliation of the amount held back for uncollectible transition charges and the amount actually written off as uncollectible during the time period is performed annually and the resulting balance is either remitted to or collected from the REP. (Annex 1 to the Servicing Agreement § 4(b))

V. INVESTOR AND TRUSTEE REPORTING

1. Semiannual Servicer’s Certificates are prepared in the timeframe set forth in and delivered to the parties required under the Servicing Agreement. (Servicing Agreement § 3.05 and Annex 1 to the Servicing Agreement § 6)

2. Semiannual Servicer’s Certificates provide the information specified by and calculated in accordance with the terms of the Servicing Agreement. (Annex 1 to the Servicing Agreement § 6)

3. Servicer’s Annual Statement as to Compliance is prepared in the timeframe set forth in and delivered to the parties required under the Servicing Agreement. (Servicing Agreement § 3.06)


4. The Servicer causes a registered public accounting firm to prepare, and the Servicer delivers the Annual Accountant’s Report in the timeframe set forth in and delivered to the parties required under the Servicing Agreement. (Servicing Agreement § 3.07)

5. Servicer’s Calculation Date Statement is prepared in the timeframe set forth in and delivered to the parties required under the Servicing Agreement. (Annex 1 to the Servicing Agreement § 3)

6. Servicer’s Calculation Date Statement provides the information specified in Annex 1 to the Servicing Agreement. (Annex 1 to the Servicing Agreement § 3)

VI. OPINIONS OF COUNSEL

1. The Servicer causes counsel to prepare, and the Servicer delivers an opinion of counsel to the parties required under the Servicing Agreement promptly after the execution and delivery of each amendment to the Servicing Agreement. (Servicing Agreement § 3.11(a))

2. The Servicer causes counsel to prepare, and the Servicer delivers an opinion of counsel to the parties required under the Servicing Agreement within ninety (90) days after the beginning of each calendar year per the Servicing Agreement. (Servicing Agreement § 3.11(b))

VII. MAINTENANCE OF RECORDS

1. The Servicer conducts, or causes to be conducted, periodic audits of the Transition Property Documentation (as defined in the Servicing Agreement) held by it under the Servicing Agreement and of the related accounts, records and computer systems and provides the audit report to the Issuer and the Trustee. (Servicing Agreement § 3.09(a))