California Electric Service Provider $25,000 Bond

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California Electric Service Provider $25,000 Bond

Clients of electric service providers are shielded from financial losses and damages by surety bonds known as the California Electric Service Provider Bond. This bond protects against the client’s electric service provider’s nonperformance, fraud, misrepresentation, or other legal infractions.

In order for providers to be able to sell their electric services to consumers in the retail market, they are needed to post the bond as a form of assurance that they can do so financially. California Electric Service Provider Bonds are a tool that the obligee may use to demonstrate to the principal that the organization supplying electric service is financially secure and creditworthy.

Entities that are currently conducting business in the state of California as an Electric Service Provider (ESP) or that wish to begin conducting business in the state as an ESP are required to apply for an ESP Registration number with the California Public Utilities Commission (CPUC). In addition to that, as part of the registration process, these entities are required to provide the CPUC with a California Electric Service Provider Bond in an amount that is not less than $25,000.

Bond Amount

The percentage of the total bond that a person with a perfect credit history will be required to pay might range anywhere from one percent to five percent. Applicants that met the requirements may purchase a $25,000 California Electric Service Provider Bond for as low as $250 per year in premiums.

The California Electric Service Provider Bond may be purchased at varying prices, and the amount of your premium will be determined by the following factors:

  • Indicate the context in which the bond is needed.
  • Quantity of the bond in question.
  • The duration of the bond’s term.
  • Personal credit lines for shareholders having a minimum ownership position of ten percent in the company.


The California Electric Service Provider Bond safeguards the obligee by assuring the financial soundness of any firm providing electric services. This is in contrast to insurance, which covers you, your house, or your business.

In the case that the services that were bought are not provided in full or returned in accordance with what was agreed upon, the obligee may submit a claim for relief with the surety firm. In the event that the claim can be shown to be legitimate, the surety will settle the claim by paying out a maximum amount equal to the bond’s punitive sum.

After that, you are obligated to pay back the surety for any and all money that was paid out, including any legal expenses that the surety expended in the process of defending the claim against you. Claims have the potential to be harmful to your company. In addition to the financial damage they do, they make it very difficult, if not impossible, to get a bond in the future.

How it Works

Surety Bond-California Electric Service Provider $25,000 Bond How It Works

Both the principal (the company that provides the electric service) and the surety (the company that provides the surety bond) will be legally obligated to the obligee (the California Public Utilities Commission). The principal is the primary individual accountable for ensuring compliance with the responsibilities mandated by both the code and the rules and regulations imposed by the commission.

In the event that the electric service provider is unable to fulfill the aforementioned responsibilities, the obligee will initiate a claim for the compensation of individuals who have been harmed.

Before any payment is issued, the surety will conduct an investigation to determine whether or not the claim is legitimate. According to the provisions of the indemnification agreement, the principal is responsible for making restitution to the surety in the event that a claim is found to be legitimate and the surety ultimately decides to settle the claim.


Along with the following conditions for registration, this bond has to be handed in to the California Public Utilities Commission.

  • An UDC-ESP Service Agreement for each individual utility distribution company.
  • An agreement between the schedule coordinator and the Independent System Operator, which was given the go-ahead by ISO.
  • Form of application for registration in the ESP, completed.
  • The requirements for resource adequacy as well as the requirements for renewable portfolio standards.
  • Electric service providers who are delivering their services to residential or small business clients are obliged to submit a copy of the Section 394.5 Notice to the Energy Division of the CPUC. This requirement is in place to protect consumers.
  • Personnel fingerprints are to be taken and stored.

Frequently Asked Questions

What Exactly Is a Supplier of Electric Service?

An organization that supplies electrical service to customers located inside the service region of an electrical company is referred to as an electric service provider.

Which States Mandate the Purchase of Surety Bonds by Electric Service Providers?

The states of California, Illinois, as well as Washington, D.C.
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