Surety Bond Encyclopedia

Electric Generation Supplier Bond - Statewide in Pennsylvania

Brief Summary

The $250,000 figure most suppliers plan around is only the starting point. Once you are selling, the PUC resets your required security every year to 10% of your latest four quarters of gross receipts, never below the initial level. A continuous surety bond on the PUC's own template lets you meet that requirement without tying up a letter of credit at your bank, and it can be increased by rider as your sales grow.

Pennsylvania electric generation suppliers must post and keep a financial security instrument with the Pennsylvania Public Utility Commission to obtain and hold an EGS license. Unless the Commission approves otherwise, the initial security is $250,000. After that, 52 Pa. Code § 54.40(d) sets the level at 10% of the supplier's most recent reported four quarters of gross receipts, updated annually, and never lower than the initial security. The bond must match the Commission's template exactly and be filed as an original.

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How to Apply for a Electric Generation Supplier Bond:

Confirm your license type. Suppliers and aggregators start at $250,000 in security, broker/marketers at $10,000.
Download the PUC continuous bond template and have the bond issued on it word for word.
Provide the legal entity name exactly as it appears on the EGS license application, plus company financial statements for underwriting.
Pay the premium and receive the original bond with wet or digital signatures and a raised seal or original notary stamp.
File the original bond with the application and the $350 filing fee.
Each year, compare 10% of your most recent four quarters of gross receipts to your current bond and increase it by rider if needed.

Detailed Information About the Pennsylvania Electric Generation Supplier Bond:

$250,000 is the floor, not the fixed amount

Many applicants assume the supplier bond is a flat $250,000. That is the initial security level the PUC requires unless the Commission approves something different. Once a supplier is operating, the Commission's regulations at 52 Pa. Code § 54.40(d) require the security to equal 10% of the supplier's most recent reported four quarters of gross receipts, and suppliers must update the level annually. The PUC's supplier resources state the rule as the greater of that percentage or $250,000, and the FAQ adds that the security may not drop below the initial level set when the license was granted. A supplier that obtains approval of a security reduction petition can use 5% of gross receipts instead of 10%.

Suppliers and broker/marketers are different amounts

The $250,000 and gross receipts rules apply to suppliers and aggregators. An EGS licensed as a broker/marketer maintains a $10,000 security unless the Commission orders otherwise, and must ask for that reduction from $250,000 in its application. This page covers the supplier bond.

The bond has to match the PUC template exactly

The Commission accepts a bond, a letter of credit or a parental guarantee, and it urges applicants to use continuous bonds or continuous letters of credit because those instruments have no annual expiration date. The PUC publishes both a fixed term and a continuous bond template, and the filed bond must match the Commission provided template exactly. Originals must carry wet or digital signatures and a raised seal or original notary stamp. A copy is rejected and returned.

Fees and filing

Every application is filed with a $350 filing fee, and the Public Utility Code authorizes the PUC to collect an annual fee of $350 from each licensed supplier, broker, marketer and aggregator of electricity and natural gas. Confidential financial documents are sent by hard copy with tracking to the Secretary of the Pennsylvania Public Utility Commission at 400 North Street, Harrisburg, PA 17120.

Eligibility and Requirements for a Pennsylvania Electric Generation Supplier Bond:

Initial security of $250,000 for suppliers unless the Commission approves a different level.
Annual update to 10% of the most recent four quarters of gross receipts under 52 Pa. Code § 54.40(d), never below the initial level.
Bond language matching the PUC fixed term or continuous bond template exactly.
Original instrument with wet or digital signatures and a raised seal or original notary stamp.
Pennsylvania Public Utility Commission as the agency holding the security.

Pennsylvania Electric Generation Supplier Bond FAQs:

Is the supplier bond always $250,000?

No. $250,000 is the initial security unless the Commission approves otherwise. After that, the level is updated annually to 10% of your most recent reported four quarters of gross receipts, and it cannot go below the initial level. A supplier with an approved security reduction petition uses 5%.

Should I use a continuous or fixed term bond?

The PUC urges continuous bonds or continuous letters of credit because they do not carry an annual expiration date. It publishes templates for both bond types, and the bond you file must match the template exactly.

Can I file a PDF or a copy of the bond?

No. The PUC requires original financial instruments with wet or digital signatures and a raised seal or original notary stamp. A bond that is not an original is rejected and returned.

What if we only broker or market electricity?

Broker/marketer licensees maintain a $10,000 security unless the Commission orders otherwise, and must request the reduction from $250,000 in the application. Suppliers and aggregators follow the $250,000 and gross receipts rules.

How is the premium set?

At these amounts the surety underwrites the company, not just the owners. It reviews financial statements, working capital, energy supply and hedging arrangements, and the supplier's operating history. The bond amount also scales with gross receipts, so premium moves with sales. Applying gives you an actual quote.