Common use of Charge-Offs Clause in Contracts

Charge-Offs. In accordance with the Financing Order and Schedule TC5, each REP will be permitted to hold back an allowance for charge-offs in its Transition Charge payments to the Servicer. Such charge-off rate will be recalculated each year in connection with the annual Transition Charge Adjustment. Until the first Calculation Date, each REP that has chosen to hold back an allowance for charge-offs in its payments of Billed TCs to the Servicer will remit to the Servicer Transition Charges based on the charge-off percentage in effect for the then most recently established transition charges related to the transition bonds issued by CenterPoint Energy Transition Bond Company, LLC on October 24, 2001, by CenterPoint Energy Transition Bond Company II, LLC on December 16, 2005 and CenterPoint Energy Transition Bond Company III, LLC on February 12, 2008. Thereafter, on or about each Calculation Date, the REP and the Servicer will be responsible for reconciling the amounts held back with amounts actually written off as uncollectible in accordance with the terms agreed to by the REP and the Servicer, provided that: (i) The REP’s right to reconciliation for write-offs will be limited to customers whose service has been permanently terminated and whose entire accounts (i.e., all amounts due the REP for its own account as well as the portion representing all Transition Charges) have been written off. (ii) The REP’s recourse will be limited to a credit against future Transition Charge payments unless the REP and the Servicer agree to alternative arrangements, but, in accordance with the Financing Order and Schedule TC5, in no event will the REP have recourse to the Trustee, the Issuer or the Issuer’s funds for such payments. (iii) In accordance with the Financing Order and Schedule TC5, the REP shall provide information on a timely basis to the Servicer so that the Servicer can include the REP’s default experience and any subsequent credits into its calculation of the adjusted Transition Charge rates for the next Transition Charge billing period. The REP’s rights to credits will not take effect until after such adjusted Transition Charges have been implemented. (iv) If the REP has held back less than the amount actually written off as uncollectible during the time period, the REP shall be entitled to a credit against future Transition Charge payments over the twelve-month period immediately following the next Adjustment Date in the amount of the hold-back shortfall and no other remedy. If the REP has held back more than the amount actually written off as uncollectible during the time period, the permitted charge-off percentage shall be adjusted so that it is projected that the REP will remit to the Servicer the amount of such underpayment of TC Collections over the twelve-month period immediately following the next Adjustment Date. (v) The Servicer will incorporate the REPs’ Customer default information and any subsequent credits to the REPs for Transition Charges already paid by the REPs to the Servicer in its calculation of the Transition Charge Adjustments on the Calculation Date. The REPs’ right described in this Section 4 to receive a credit against future payments of Billed TCs to the Servicer shall not take effect until after the next Adjustment Date.

Charge-Offs. In accordance with the Financing Order and Schedule TC5TC3, each REP will be permitted to hold back an allowance for charge-offs in its Transition Charge payments to the Servicer. Such charge-off rate will be recalculated each year in connection with the annual Transition Charge Adjustment. Until the first Calculation Date, each REP that has chosen to hold back an allowance for charge-offs in its payments of Billed TCs to the Servicer will remit to the Servicer Transition Charges based on the charge-off percentage in effect for the then most recently established transition charges related to the transition bonds issued by CenterPoint Energy Transition Bond Company, LLC on October 24, 2001, 2001 and by CenterPoint Energy Transition Bond Company II, LLC on December 16, 2005 and CenterPoint Energy Transition Bond Company III, LLC on February 12, 20082005. Thereafter, on or about each Calculation Date, the REP and the Servicer will be responsible for reconciling the amounts held back with amounts actually written off as uncollectible in accordance with the terms agreed to by the REP and the Servicer, provided that: (i) The REP’s right to reconciliation for write-offs will be limited to customers whose service has been permanently terminated and whose entire accounts (i.e., all amounts due the REP for its own account as well as the portion representing all Transition Charges) have been written off. (ii) The REP’s recourse will be limited to a credit against future Transition Charge payments unless the REP and the Servicer agree to alternative arrangements, but, in accordance with the Financing Order and Schedule TC5TC3, in no event will the REP have recourse to the Trustee, the Issuer or the Issuer’s funds for such payments. (iii) In accordance with the Financing Order and Schedule TC5TC3, the REP shall provide information on a timely basis to the Servicer so that the Servicer can include the REP’s default experience and any subsequent credits into its calculation of the adjusted Transition Charge rates for the next Transition Charge billing period. The REP’s rights to credits will not take effect until after such adjusted Transition Charges have been implemented. (iv) If the REP has held back less than the amount actually written off as uncollectible during the time period, the REP shall be entitled to a credit against future Transition Charge payments over the twelve-month period immediately following the next Adjustment Date in the amount of the hold-back shortfall and no other remedy. If the REP has held back more than the amount actually written off as uncollectible during the time period, the permitted charge-off percentage shall be adjusted so that it is projected that the REP will remit to the Servicer the amount of such underpayment of TC Collections over the twelve-month period immediately following the next Adjustment Date. (v) The Servicer will incorporate the REPs’ Customer default information and any subsequent credits to the REPs for Transition Charges already paid by the REPs to the Servicer in its calculation of the Transition Charge Adjustments on the Calculation Date. The REPs’ right described in this Section 4 to receive a credit against future payments of Billed TCs to the Servicer shall not take effect until after the next Adjustment Date.

Charge-Offs. In accordance with the Financing Order and Schedule TC5SRC, each REP will be permitted to hold back an allowance for charge-offs in its Transition System Restoration Charge payments to the Servicer. Such charge-off rate will be recalculated each year in connection with the annual Transition System Restoration Charge Adjustment. Until the first Calculation Date, each REP that has chosen to hold back an allowance for charge-offs in its payments of Billed TCs SRCs to the Servicer will remit to the Servicer Transition System Restoration Charges based on the charge-off percentage in effect for the then most recently established transition charges related to the transition bonds issued by CenterPoint Energy Transition Bond Company, LLC on October 24, 2001, by CenterPoint Energy Transition Bond Company II, LLC on December 16, 2005 and CenterPoint Energy Transition Bond Company III, LLC on February 12, 2008. Thereafter, on or about each Calculation Date, the REP and the Servicer will be responsible for reconciling the amounts held back with amounts actually written off as uncollectible in accordance with the terms agreed to by the REP and the Servicer, provided that: (i) The REP’s right to reconciliation for write-offs will be limited to customers whose service has been permanently terminated and whose entire accounts (i.e., all amounts due the REP for its own account as well as the portion representing all Transition System Restoration Charges) have been written off. (ii) The REP’s recourse will be limited to a credit against future Transition System Restoration Charge payments unless the REP and the Servicer agree to alternative arrangements, but, in accordance with the Financing Order and Schedule TC5SRC, in no event will the REP have recourse to the Trustee, the Issuer or the Issuer’s funds for such payments. (iii) In accordance with the Financing Order and Schedule TC5SRC, the REP shall provide information on a timely basis to the Servicer so that the Servicer can include the REP’s default experience and any subsequent credits into its calculation of the adjusted Transition System Restoration Charge rates for the next Transition System Restoration Charge billing period. The REP’s rights to credits will not take effect until after such adjusted Transition System Restoration Charges have been implemented. (iv) If the REP has held back less than the amount actually written off as uncollectible during the time period, the REP shall be entitled to a credit against future Transition System Restoration Charge payments over the twelve-month period immediately following the next Adjustment Date in the amount of the hold-back shortfall and no other remedy. If the REP has held back more than the amount actually written off as uncollectible during the time period, the permitted charge-off percentage shall be adjusted so that it is projected that the REP will remit to the Servicer the amount of such underpayment of TC SRC Collections over the twelve-month period immediately following the next Adjustment Date. (v) The Servicer will incorporate the REPs’ Customer default information and any subsequent credits to the REPs for Transition System Restoration Charges already paid by the REPs to the Servicer in its calculation of the Transition System Restoration Charge Adjustments on the Calculation Date. The REPs’ right described in this Section 4 to receive a credit against future payments of Billed TCs SRCs to the Servicer shall not take effect until after the next Adjustment Date.