Senate Bill sb1366c1
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Florida Senate - 2005 CS for SB 1366
By the Committee on Communications and Public Utilities; and
Senators Constantine and Dockery
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1 A bill to be entitled
2 An act relating to storm infrastructure
3 recovery; creating s. 366.8260, F.S.; providing
4 definitions; authorizing electric utilities to
5 petition the Florida Public Service Commission
6 for certain financing orders for certain
7 storm-recovery purposes; providing
8 requirements; providing powers and duties of
9 the commission in issuing such orders;
10 specifying procedures and requirements for the
11 commission in issuing financing orders;
12 authorizing electric utilities to create
13 storm-recovery property; providing for pledge
14 of storm-recovery property to secure
15 storm-recovery bonds; providing for retirement
16 of storm-recovery bonds under certain
17 circumstances; providing for judicial review of
18 such orders; providing for effect of such
19 orders; providing exceptions to commission
20 jurisdiction to issue financing orders;
21 providing limitations; prohibiting the
22 commission from requiring use of storm-recovery
23 bonds for certain purposes; specifying duties
24 of electric utilities; specifying properties,
25 requirements, permissible activities, and
26 limitations relating to storm-recovery property
27 under certain circumstances; providing for
28 security interests in storm-recovery property;
29 providing for perfecting security interests in
30 storm-recovery property; providing for priority
31 of and resolution of conflicting interests;
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1 providing requirements, procedures, and
2 limitations for sale, assignment, or transfer
3 of storm-recovery property; providing
4 requirements for descriptions or indications of
5 storm-recovery property transferred, granted,
6 or pledged, or indicated in a financing
7 statement; subjecting financing statements to
8 certain provisions of law; specifying that
9 storm-recovery bonds are not public debt;
10 specifying storm-recovery bonds as legal
11 investments for certain entities; specifying
12 certain state pledges relating to bondholders;
13 declaring certain entities as not electric
14 utilities under certain circumstances;
15 specifying effect of certain provisions in
16 situations of conflict; providing for
17 protecting validity of certain bonds under
18 certain circumstances; limiting commission
19 authority to issue certain financing orders
20 after a time certain; amending s. 679.1091,
21 F.S.; specifying nonapplication of secured
22 transactions provisions of the Uniform
23 Commercial Code to interests in storm-recovery
24 property; providing an effective date.
25
26 Be It Enacted by the Legislature of the State of Florida:
27
28 Section 1. Section 366.8260, Florida Statutes, is
29 created to read:
30 366.8260 Storm-recovery financing.--
31 (1) DEFINITIONS.--As used in this section, the term:
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1 (a) "Ancillary agreement" means any bond, insurance
2 policy, letter of credit, reserve account, surety bond, swap
3 arrangement, hedging arrangement, liquidity or credit support
4 arrangement, or other financial arrangement entered into in
5 connection with the issuance of storm-recovery bonds.
6 (b) "Assignee" means any entity, including, but not
7 limited to, a corporation, limited liability company,
8 partnership or limited partnership, public authority, trust,
9 financing entity, or other legally recognized entity to which
10 an electric utility assigns, sells, or transfers, other than
11 as security, all or a portion of its interest in or right to
12 storm-recovery property. The term also includes any entity to
13 which an assignee assigns, sells, or transfers, other than as
14 security, its interest in or right to storm-recovery property.
15 (c) "Commission" means the Florida Public Service
16 Commission.
17 (d) "Electric utility" or "utility" has the same
18 meaning as that provided in s. 366.8255.
19 (e) "Financing costs" means:
20 1. Interest and acquisition, defeasance, or redemption
21 premiums that are payable on storm-recovery bonds;
22 2. Any payment required under an ancillary agreement
23 and any amount required to fund or replenish a reserve account
24 or other accounts established under the terms of any
25 indenture, ancillary agreement, or other financing documents
26 pertaining to storm-recovery bonds;
27 3. Any other cost related to issuing, supporting,
28 repaying, and servicing storm-recovery bonds, including, but
29 not limited to, servicing fees, accounting and auditing fees,
30 trustee fees, legal fees, consulting fees, administrative
31 fees, placement and underwriting fees, capitalized interest,
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1 rating agency fees, stock exchange listing and compliance
2 fees, and filing fees, including costs related to obtaining
3 the financing order;
4 4. Any taxes and license fees imposed on the revenues
5 generated from the collection of storm-recovery charges;
6 5. Any income taxes resulting from the collection of
7 storm-recovery charges in any such case whether paid, payable,
8 or accrued; or
9 6. Any state and local taxes, franchise, gross
10 receipts, and other taxes or similar charges, including but
11 not limited to, regulatory assessment fees, in any such case
12 whether paid, payable, or accrued.
13 (f) "Financing order" means an order under subsection
14 (2) which allows for the issuance of storm-recovery bonds, the
15 imposition, collection, and periodic adjustments of
16 storm-recovery charges, and the creation of storm-recovery
17 property.
18 (g) "Financing party" means holders of storm-recovery
19 bonds and trustees, collateral agents, or other persons acting
20 for the benefit of holders of storm-recovery bonds.
21 (h) "Financing statement" has the same meaning as that
22 provided in Article 9 of the Uniform Commercial Code.
23 (i) "Pledgee" means a financing party to which an
24 electric utility or its successors or assignees mortgages,
25 negotiates, hypothecates, pledges, or creates a security
26 interest or lien on all or any portion of its interest in or
27 right to storm-recovery property.
28 (j) "Storm" means a named tropical storm or hurricane
29 that occurred during calendar year 2004 or thereafter.
30 (k) "Storm-recovery activity" means any activity or
31 activities by or on behalf of an electric utility in
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1 connection with the restoration of service associated with
2 electric power outages affecting customers of an electric
3 utility as the result of a storm or storms, including, but not
4 limited to, mobilization, staging, and construction,
5 reconstruction, replacement, or repair of electric generation,
6 transmission, or distribution facilities.
7 (l) "Storm-recovery bonds" means bonds, debentures,
8 notes, certificates of participation, certificates of
9 beneficial interest, certificates of ownership, or other
10 evidences of indebtedness or ownership that are issued by an
11 electric utility or an assignee pursuant to a financing order,
12 the proceeds of which are used directly or indirectly to
13 recover, finance, or refinance commission-approved
14 storm-recovery costs and financing costs, and that are secured
15 by or payable from storm-recovery property.
16 (m) "Storm-recovery charge" means the amounts
17 authorized by the commission to recover, finance, or refinance
18 storm-recovery costs and financing costs as provided for in a
19 financing order to be imposed on all customer bills and
20 collected by an electric utility or its successors or
21 assignees, or a collection agent, in full through a charge
22 that is separate and apart from the electric utility's base
23 rates, which charge shall be paid by all customers receiving
24 transmission or distribution service from the electric utility
25 or its successors or assignees under commission-approved rate
26 schedules or under special contracts, even if the customer
27 elects to purchase electricity from an alternative electricity
28 supplier following a fundamental change in regulation of
29 public utilities in this state.
30 (n) "Storm-recovery costs" means, at the option and
31 request of the electric utility, and as approved by the
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1 commission pursuant to sub-subparagraph (2)(b)1.b., costs
2 incurred or to be incurred by an electric utility in
3 undertaking a storm-recovery activity. Such costs shall be net
4 of applicable insurance proceeds and, where determined
5 appropriate by the commission, shall include adjustments for
6 normal capital replacement and operating costs, lost revenues,
7 or other potential offsetting adjustments. Storm-recovery
8 costs shall include the costs to finance any deficiency or
9 deficiencies in storm-recovery reserves until such time as
10 storm-recovery bonds are issued, and costs of retiring any
11 existing indebtedness relating to storm-recovery activities.
12 (o) "Storm-recovery property" means:
13 1. All rights and interests of an electric utility or
14 successor or assignee of the electric utility under a
15 financing order, including the right to impose, bill, collect,
16 and receive storm-recovery charges authorized in the financing
17 order and to obtain periodic adjustments to such charges as
18 provided in the financing order.
19 2. All revenues, collections, claims, rights to
20 payments, payments, money, or proceeds arising from the rights
21 and interests specified in subparagraph 1., regardless of
22 whether such revenues, collections, claims, rights to payment,
23 payments, money, or proceeds are imposed, billed, received,
24 collected, or maintained together with or commingled with
25 other revenues, collections, rights to payment, payments,
26 money, or proceeds.
27 (p) "Storm-recovery reserve" means an electric utility
28 storm reserve or such other similar reserve established by law
29 or rule or pursuant to order of the commission.
30 (q) "Uniform Commercial Code" has the same meaning as
31 that provided in s. 671.101.
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1 (2) FINANCING ORDERS.--
2 (a) An electric utility may petition the commission
3 for a financing order. For each petition, the electric utility
4 shall:
5 1. Describe the storm-recovery activities that the
6 electric utility has undertaken or proposes to undertake and
7 describe the reasons for undertaking the activities.
8 2. Set forth the known storm-recovery costs and
9 estimate the costs of any storm-recovery activities that are
10 not completed, or for which the costs are not yet known, as
11 identified and requested by the electric utility.
12 3. Set forth the level of the storm-recovery reserve
13 that the utility proposes to establish or replenish and has
14 determined would be appropriate to recover through
15 storm-recovery bonds and is seeking to so recover and such
16 level that the utility is funding or will seek to fund through
17 other means, together with a description of the factors and
18 calculations used in determining the amounts and methods of
19 recovery.
20 4. Indicate whether the electric utility proposes to
21 finance all or a portion of the storm-recovery costs using
22 storm-recovery bonds. If the electric utility proposes to
23 finance a portion of such costs, the electric utility shall
24 identify that portion in the petition.
25 5. Estimate the financing costs related to the
26 storm-recovery bonds proposed under subparagraph 4.
27 6. Estimate the storm-recovery charges necessary to
28 recover the storm-recovery costs and financing costs and the
29 period for recovery of such costs.
30 7. Estimate any cost savings or demonstrate how it
31 would avoid or significantly mitigate rate impacts to
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1 customers resulting from financing storm-recovery costs with
2 storm-recovery bonds as opposed to the traditional method of
3 recovering such costs from customers and through alternative
4 financing methods available to the electric utility.
5 8. File with the petition direct testimony supporting
6 the petition.
7 (b)1. Proceedings on a petition submitted pursuant to
8 paragraph (a) shall begin with a petition by an electric
9 utility and shall be disposed of in accordance with the
10 provisions of chapter 120 and applicable rules, except that
11 the provisions of this section, to the extent applicable,
12 shall control.
13 a. Within 7 days after the filing of a petition, the
14 commission shall publish a case schedule, which schedule shall
15 place the matter before the commission on an agenda that will
16 permit a commission decision no later than 120 days after the
17 date the petition is filed.
18 b. No later than 135 days after the date the petition
19 is filed, the commission shall issue a financing order or an
20 order rejecting the petition. A party to the commission
21 proceeding may petition the commission for reconsideration of
22 the financing order within 5 days after the date of its
23 issuance. The commission shall issue a financing order
24 authorizing financing of reasonable and prudent storm-recovery
25 costs and financing costs if the commission finds that the
26 issuance of the storm-recovery bonds and the imposition of
27 storm-recovery charges authorized by the order are reasonably
28 expected to result in lower overall costs or would avoid or
29 significantly mitigate rate impacts to customers as compared
30 with alternative methods of financing or recovering
31 storm-recovery costs. Any determination of whether
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1 storm-recovery costs are reasonable and prudent shall be made
2 with reference to the general public interest in, and the
3 scope of effort required to provide, the safe and expeditious
4 restoration of electric service.
5 2. In a financing order issued to an electric utility,
6 the commission shall:
7 a. Except as provided in sub-subparagraph f. and in
8 subparagraph 4., specify the amount of storm-recovery costs
9 and the level of storm-recovery reserves, taking into
10 consideration, to the extent the commission deems appropriate,
11 any other methods used to recover these costs, and describe
12 and estimate the amount of financing costs which may be
13 recovered through storm-recovery charges; and specify the
14 period over which such costs may be recovered.
15 b. Determine that the proposed structuring, expected
16 pricing, and financing costs of the storm-recovery bonds are
17 reasonably expected to result in lower overall costs or would
18 avoid or significantly mitigate rate impacts to customers as
19 compared with alternative methods of financing or recovering
20 storm-recovery costs.
21 c. Provide that, for the period specified pursuant to
22 sub-subparagraph a., the imposition and collection of
23 storm-recovery charges authorized in the financing order shall
24 be paid by all customers receiving transmission or
25 distribution service from the electric utility or its
26 successors or assignees under commission-approved rate
27 schedules or under special contracts, even if the customer
28 elects to purchase electricity from an alternative electric
29 supplier following a fundamental change in regulation of
30 public utilities in the state.
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1 d. Determine what portion, if any, of the
2 storm-recovery reserves must be held in a funded reserve and
3 any limitations on how the reserve may be held, accessed, or
4 used.
5 e. Include a formula-based mechanism for making
6 expeditious periodic adjustments in the storm-recovery charges
7 that customers are required to pay under the financing order
8 and for making any adjustments that are necessary to correct
9 for any overcollection or undercollection of the charges or to
10 otherwise ensure the timely payment of storm-recovery bonds
11 and financing costs and other required amounts and charges
12 payable in connection with the storm-recovery bonds.
13 f. Specify the storm-recovery property that is, or
14 shall be, created in favor of an electric utility or its
15 successors or assignees and that shall be used to pay or
16 secure storm-recovery bonds and financing costs.
17 g. Specify the degree of flexibility to be afforded to
18 the electric utility in establishing the terms and conditions
19 of the storm-recovery bonds, including, but not limited to,
20 repayment schedules, interest rates, and other financing
21 costs.
22 h. Provide that storm-recovery charges be allocated to
23 the customer classes using the criteria set out in s.
24 366.06(1), in the manner in which these costs or their
25 equivalent were allocated in the cost-of-service study
26 approved in connection with the electric utility's last rate
27 case. If the electric utility's last rate case was resolved by
28 a settlement agreement, the the cost-of-service methodology
29 filed by the electric utility in that case shall be used.
30 i. Provide that, after the final terms of an issuance
31 of storm-recovery bonds have been established and prior to the
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1 issuance of storm-recovery bonds, the electric utility shall
2 determine the resulting initial storm-recovery charge in
3 accordance with the financing order and such initial
4 storm-recovery charge shall be final and effective upon the
5 issuance of such storm-recovery bonds without further
6 commission action.
7 j. Include any other conditions that the commission
8 considers appropriate and that are not otherwise inconsistent
9 with this section.
10
11 In performing the responsibilities of this subparagraph and
12 subparagraph 5., the commission may engage outside consultants
13 or counsel. Any expenses associated with such services shall
14 be included as part of financing costs and included in
15 storm-recovery charges.
16 3. A financing order issued to an electric utility may
17 provide that creation of the electric utility's storm-recovery
18 property pursuant to sub-subparagraph 2.f. is conditioned
19 upon, and shall be simultaneous with, the sale or other
20 transfer of the storm-recovery property to an assignee and the
21 pledge of the storm-recovery property to secure storm-recovery
22 bonds.
23 4. If the commission issues a financing order, the
24 electric utility shall file with the commission at least
25 biannually a petition or a letter applying the formula-based
26 mechanism pursuant to sub-subparagraph 2.e. and, based on
27 estimates of consumption for each rate class and other
28 mathematical factors, requesting administrative approval to
29 make the adjustments described in sub-subparagraph 2.e. The
30 review of such a request shall be limited to determining
31 whether there is any mathematical error in the application of
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1 the formula-based mechanism relating to the appropriate amount
2 of any overcollection or undercollection of storm-recovery
3 charges and the amount of an adjustment. Such adjustments
4 shall ensure the recovery of revenues sufficient to provide
5 for the payment of principal, interest, acquisition,
6 defeasance, financing costs, or redemption premium and other
7 fees, costs, and charges in respect of storm-recovery bonds
8 approved under the financing order. Within 60 days after
9 receiving an electric utility's request pursuant to this
10 paragraph, the commission shall either approve the request or
11 inform the electric utility of any mathematical errors in its
12 calculation. If the commission informs the utility of
13 mathematical errors in its calculation, the utility may
14 correct its error and refile its request. The timeframes
15 previously described in this paragraph shall apply to a
16 refiled request.
17 5. Within 120 days after the issuance of
18 storm-recovery bonds, the electric utility shall file with the
19 commission information on the actual costs of the
20 storm-recovery-bond issuance. The commission shall review such
21 information to determine if such costs incurred in the
22 issuance of the bonds resulted in the lowest overall costs
23 that were reasonably consistent with market conditions at the
24 time of the issuance and the terms of the financing order. The
25 commission may disallow any incremental issuance costs in
26 excess of the lowest overall costs by requiring the utility to
27 make a contribution to the storm reserve in an amount equal to
28 the excess of actual issuance costs incurred, and paid for out
29 of storm recovery bond proceeds, and the lowest overall
30 issuance costs as determined by the commission. The commission
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1 may not make adjustments to the storm-recovery charges for any
2 such excess issuance costs.
3 6. Subsequent to the earlier of the transfer of
4 storm-recovery property to an assignee or the issuance of
5 storm-recovery bonds authorized thereby, a financing order is
6 irrevocable and, except as provided in subparagraph 4. and
7 paragraph (c), the commission may not amend, modify, or
8 terminate the financing order by any subsequent action or
9 reduce, impair, postpone, terminate, or otherwise adjust
10 storm-recovery charges approved in the financing order. After
11 the issuance of a financing order, the electric utility
12 retains sole discretion regarding whether to assign, sell, or
13 otherwise transfer storm-recovery property or to cause the
14 storm-recovery bonds to be issued, including the right to
15 defer or postpone such assignment, sale, transfer, or
16 issuance.
17 (c) At the request of an electric utility, the
18 commission may commence a proceeding and issue a subsequent
19 financing order that provides for retiring and refunding
20 storm-recovery bonds issued pursuant to the original financing
21 order if the commission finds that the subsequent financing
22 order satisfies all of the criteria specified in paragraph
23 (b). Effective on retirement of the refunded storm-recovery
24 bonds and the issuance of new storm-recovery bonds, the
25 commission shall adjust the related storm-recovery charges
26 accordingly.
27 (d) Within 30 days after the commission issues an
28 order pursuant to paragraph (b) or a decision denying a
29 request for reconsideration or, if the request for
30 reconsideration is granted, within 30 days after the
31 commission issues its decision on reconsideration, an
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1 adversely affected party may petition for judicial review in
2 the Florida Supreme Court. The petition for review shall be
3 served upon the executive director of the commission
4 personally or by service at the office of the commission.
5 Review on appeal shall be based solely on the record before
6 the commission and briefs to the court and shall be limited to
7 determining whether the order issued pursuant to paragraph
8 (b), or the order on reconsideration, conforms to the
9 constitution and laws of this state and the United States and
10 is within the authority of the commission under this section.
11 Inasmuch as delay in the determination of the appeal of a
12 financing order will delay the issuance of storm-recovery
13 bonds, thereby diminishing savings to customers which might be
14 achieved if such bonds were issued as contemplated by a
15 financing order, the Supreme Court shall proceed to hear and
16 determine the action as expeditiously as practicable and give
17 the action precedence over other matters not accorded similar
18 precedence by law.
19 (e)1. A financing order remains in effect until the
20 storm-recovery bonds issued pursuant to the order have been
21 paid in full and the commission-approved financing costs of
22 such bonds have been recovered in full.
23 2. A financing order issued to an electric utility
24 shall remain in effect and unabated notwithstanding the
25 reorganization, bankruptcy, or other insolvency proceedings of
26 the electric utility or its successors or assignees.
27 (3) EXCEPTIONS TO COMMISSION JURISDICTION.--
28 (a) If the commission issues a financing order to an
29 electric utility pursuant to this section, the commission may
30 not, in exercising its powers and carrying out its duties
31 regarding any matter within its authority pursuant to this
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1 chapter, consider the storm-recovery bonds issued pursuant to
2 the order to be the debt of the electric utility other than
3 for federal income tax purposes, consider the storm-recovery
4 charges paid under the order to be the revenue of the electric
5 utility for any purpose, or consider the storm-recovery costs
6 or financing costs specified in the order to be the costs of
7 the electric utility, nor may the commission determine any
8 action taken by an electric utility which is consistent with
9 the order to be unjust or unreasonable.
10 (b) The commission may not order or otherwise directly
11 or indirectly require an electric utility to use
12 storm-recovery bonds to finance any project, addition, plant,
13 facility, extension, capital improvement, equipment, or any
14 other expenditure, unless the electric utility has filed a
15 petition under paragraph (2)(a) to finance such expenditure
16 using storm-recovery bonds. The commission may not refuse to
17 allow an electric utility to recover costs for storm-recovery
18 activities in an otherwise permissible fashion, or refuse or
19 condition authorization or approval pursuant to s. 366.04 of
20 the issuance and sale by an electric utility of securities or
21 the assumption by it of liabilities or obligations, solely
22 because of the potential availability of storm-recovery
23 financing.
24 (4) ELECTRIC UTILITY DUTIES.--
25 (a) The electric bills of an electric utility that has
26 obtained a financing order and issued storm-recovery bonds
27 must explicitly reflect that a portion of the charges on such
28 bill represents storm-recovery charges approved in a financing
29 order issued to the electric utility and, if the
30 storm-recovery property has been transferred to an assignee,
31 must include a statement to the effect that the assignee is
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1 the owner of the rights to storm-recovery charges and that the
2 electric utility or any other entity, if applicable, is acting
3 as a collection agent or servicer for the assignee. The tariff
4 applicable to customers must indicate the storm-recovery
5 charge and the ownership of that charge. The commission shall
6 determine whether to require electric utilities to include
7 such information or amounts owed with respect to the
8 storm-recovery property as a separate line item on individual
9 electric bills.
10 (b) The failure of an electric utility to comply with
11 this subsection shall not invalidate, impair, or affect any
12 financing order, storm-recovery property, storm-recovery
13 charge, or storm-recovery bonds but shall subject the electric
14 utility to penalties under s. 366.095.
15 (5) STORM-RECOVERY PROPERTY.--
16 (a)1. All storm-recovery property that is specified in
17 a financing order shall constitute an existing, present
18 property right or interest therein, notwithstanding that the
19 imposition and collection of storm-recovery charges depends on
20 the electric utility to which the order is issued performing
21 its servicing functions relating to the collection of
22 storm-recovery charges and on future electricity consumption.
23 Such property shall exist whether or not the revenues or
24 proceeds arising from the property have been billed, have
25 accrued, or have been collected and notwithstanding the fact
26 that the value or amount of the property is dependent on the
27 future provision of service to customers by the electric
28 utility or its successors or assignees.
29 2. Storm-recovery property specified in a financing
30 order shall continue to exist until the storm-recovery bonds
31 issued pursuant to the order are paid in full and all
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1 financing costs and other costs of the bonds have been
2 recovered in full.
3 3. All or any portion of storm-recovery property
4 specified in a financing order issued to an electric utility
5 may be transferred, sold, conveyed, or assigned to a successor
6 or assignee, including an affiliate or affiliates of the
7 electric utility created for the limited purpose of acquiring,
8 owning, or administering storm-recovery property or issuing
9 storm-recovery bonds under the financing order. All or any
10 portion of storm-recovery property may be pledged to secure
11 storm-recovery bonds issued pursuant to the order, amounts
12 payable to financing parties and to counterparties under any
13 ancillary agreements, and other financing costs. Each such
14 transfer, sale, conveyance, assignment, or pledge by an
15 electric utility or affiliate of an electric utility is
16 considered to be a transaction in the ordinary course of
17 business.
18 4. If an electric utility defaults on any required
19 payment of charges arising from storm-recovery property
20 specified in a financing order, a court, upon application by
21 an interested party, and without limiting any other remedies
22 available to the applying party, shall order the sequestration
23 and payment of the revenues arising from the storm-recovery
24 property to the financing parties. Any such order shall remain
25 in full force and effect notwithstanding any reorganization,
26 bankruptcy, or other insolvency proceedings with respect to
27 the electric utility or its successors or assignees.
28 5. The interest of a transferee, purchaser, acquirer,
29 assignee, or pledgee in storm-recovery property specified in a
30 financing order issued to an electric utility, and in the
31 revenue and collections arising from that property, is not
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1 subject to setoff, counterclaim, surcharge, or defense by the
2 electric utility or any other person or in connection with the
3 reorganization, bankruptcy, or other insolvency of the
4 electric utility or any other entity.
5 6. Any successor to an electric utility, whether
6 pursuant to any reorganization, bankruptcy, or other
7 insolvency proceeding or whether pursuant to any merger or
8 acquisition, sale, or other business combination, or transfer
9 by operation of law, as a result of electric utility
10 restructuring or otherwise, shall perform and satisfy all
11 obligations of, and have the same rights under a financing
12 order as, the electric utility under the financing order in
13 the same manner and to the same extent as the electric
14 utility, including collecting and paying to the person
15 entitled to receive the revenues, collections, payments, or
16 proceeds of the storm-recovery property.
17 (b)1. Except as specified in this section, the Uniform
18 Commercial Code does not apply to storm-recovery property or
19 any right, title, or interest of a utility or assignee
20 described in subparagraph (1)(o)1., whether before or after
21 the issuance of the financing order. In addition, such right,
22 title, or interest pertaining to a financing order, including,
23 but not limited to, the associated storm-recovery property and
24 any revenues, collections, claims, rights to payment,
25 payments, money, or proceeds of or arising from storm-recovery
26 charges pursuant to such order, shall not be deemed proceeds
27 of any right or interest other than in the financing order and
28 the storm-recovery property arising from the order.
29 2. The creation, attachment, granting, perfection,
30 priority, and enforcement of liens and security interests in
31 storm-recovery property to secure storm-recovery bonds is
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1 governed solely by this section and not by the Uniform
2 Commercial Code.
3 3. A valid, enforceable, and attached lien and
4 security interest in storm-recovery property may be created
5 only upon the later of:
6 a. The issuance of a financing order;
7 b. The execution and delivery of a security agreement
8 with a financing party in connection with the issuance of
9 storm-recovery bonds; or
10 c. The receipt of value for the storm-recovery bonds.
11
12 A valid, enforceable, and attached security interest shall be
13 perfected against third parties as of the date of filing of a
14 financing statement in the Florida Secured Transaction
15 Registry, as such registry is defined in Article 9 of the
16 Uniform Commercial Code, in accordance with subparagraph 4.,
17 and shall thereafter be a continuously perfected lien; and
18 such security interest in the storm-recovery property and all
19 proceeds of such storm-recovery property, whether or not
20 billed, accrued, or collected, and whether or not deposited
21 into a deposit account and however evidenced, shall have
22 priority in accordance with subparagraph 8. and take
23 precedence over any subsequent judicial or other lien
24 creditor. No continuation statement need be filed to maintain
25 such perfection.
26 4. Financing statements required to be filed pursuant
27 to this section shall be filed, maintained, and indexed in the
28 same manner and in the same system of records maintained for
29 the filing of financing statements in the Florida Secured
30 Transaction Registry under Article 9 of the Uniform Commercial
31 Code. The filing of such a financing statement shall be the
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1 only method of perfecting a lien or security interest on
2 storm-recovery property.
3 5. The priority of a lien and security interest
4 perfected under this paragraph is not impaired by any later
5 modification of the financing order or storm-recovery property
6 or by the commingling of funds arising from storm-recovery
7 property with other funds, and any other security interest
8 that may apply to those funds shall be terminated as to all
9 funds transferred to a segregated account for the benefit of
10 an assignee or a financing party or to an assignee or
11 financing party directly.
12 6. If a default or termination occurs under the terms
13 of the storm-recovery bonds, the financing parties or their
14 representatives may foreclose on or otherwise enforce their
15 lien and security interest in any storm-recovery property as
16 if they were a secured party under Article 9 of the Uniform
17 Commercial Code; and a court may order that amounts arising
18 from storm-recovery property be transferred to a separate
19 account for the financing parties' benefit, to which their
20 lien and security interest shall apply. On application by or
21 on behalf of the financing parties to a circuit court of this
22 state, such court shall order the sequestration and payment to
23 the financing parties of revenues arising from the
24 storm-recovery property.
25 7. The interest of a pledgee of an interest or any
26 rights in any storm-recovery property is not perfected until
27 filing as provided in subparagraph 4.
28 8. The priority of the conflicting interests of
29 pledgees in the same interest or rights in any storm-recovery
30 property is determined as follows:
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1 a. Conflicting perfected interests or rights of
2 pledgees rank according to priority in time of perfection.
3 Priority dates from the time a filing covering the interest or
4 right is made in accordance with this paragraph.
5 b. A perfected interest or right of a pledgee has
6 priority over a conflicting unperfected interest or right of a
7 pledgee.
8 c. A perfected interest or right of a pledgee has
9 priority over a person who becomes a lien creditor after the
10 perfection of such pledgee's interest or right.
11 (c) The sale, assignment, or transfer of
12 storm-recovery property is governed by this paragraph. All of
13 the following apply to a sale, assignment, or transfer under
14 this paragraph:
15 1. The sale, conveyance, assignment, or other transfer
16 of storm-recovery property by an electric utility to an
17 assignee that the parties have in the governing documentation
18 expressly stated to be a sale or other absolute transfer is an
19 absolute transfer and true sale of, and not a pledge of or
20 secured transaction relating to, the transferor's right,
21 title, and interest in, to, and under the storm-recovery
22 property, other than for federal and state income and
23 franchise tax purposes. After such a transaction, the
24 storm-recovery property is not subject to any claims of the
25 transferor or the transferor's creditors, other than creditors
26 holding a prior security interest in the storm-recovery
27 property perfected under paragraph (b).
28 2. The characterization of the sale, conveyance,
29 assignment, or other transfer as a true sale or other absolute
30 transfer under subparagraph 1. and the corresponding
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1 characterization of the transferee's property interest is not
2 affected by:
3 a. Commingling of amounts arising with respect to the
4 storm-recovery property with other amounts.
5 b. The retention by the transferor of a partial or
6 residual interest, including an equity interest, in the
7 storm-recovery property, whether direct or indirect, or
8 whether subordinate or otherwise.
9 c. Any recourse that the transferee may have against
10 the transferor other than any such recourse created,
11 contingent upon, or otherwise occurring or resulting from one
12 or more of the transferor's customers' inability to timely pay
13 all or a portion of the storm-recovery charge.
14 d. Any indemnifications, obligations, or repurchase
15 rights made or provided by the transferor, other than
16 indemnity or repurchase rights based solely upon a
17 transferor's customers' inability to timely pay all or a
18 portion of the storm-recovery charge.
19 e. The responsibility of the transferor to collect
20 storm-recovery charges.
21 f. The treatment of the sale, conveyance, assignment,
22 or other transfer for tax, financial reporting, or other
23 purposes.
24 g. Granting or providing to holders of the
25 storm-recovery bonds a preferred right to the storm-recovery
26 property or credit enhancement by the electric utility or its
27 affiliates with respect to the storm-recovery bonds.
28 3. Any right that an electric utility has in the
29 storm-recovery property prior to its pledge, sale, or transfer
30 or any other right created under this section or created in
31 the financing order and assignable under this section or
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1 assignable pursuant to a financing order shall be property in
2 the form of a contract right. Transfer of an interest in
3 storm-recovery property to an assignee is enforceable only
4 upon the later of the issuance of a financing order, the
5 execution and delivery of transfer documents to the assignee
6 in connection with the issuance of storm-recovery bonds, and
7 the receipt of value. An enforceable transfer of an interest
8 in storm-recovery property to an assignee shall be perfected
9 against all third parties, including subsequent judicial or
10 other lien creditors, when a notice of that transfer has been
11 given by the filing of a financing statement in accordance
12 with subparagraph 4. The transfer shall be perfected against
13 third parties as of the date of filing.
14 4. Financing statements required to be filed under
15 this section shall be maintained and indexed in the same
16 manner and in the same system of records maintained for the
17 filing of financing statements in the Florida Secured
18 Transaction Registry under Article 9 of the Uniform Commercial
19 Code. The filing of such a financing statement shall be the
20 only method of perfecting a transfer of storm-recovery
21 property.
22 5. The priority of a transfer perfected under this
23 section is not impaired by any later modification of the
24 financing order or storm-recovery property or by the
25 commingling of funds arising from storm-recovery property with
26 other funds, and any other security interest that may apply to
27 those funds shall be terminated when they are transferred to a
28 segregated account for the assignee or a financing party. If
29 storm-recovery property has been transferred to an assignee or
30 financing party, any proceeds of that property shall be held
31 in trust for the assignee or financing party.
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1 6. The priority of the conflicting interests of
2 assignees in the same interest or rights in any storm-recovery
3 property is determined as follows:
4 a. Conflicting perfected interests or rights of
5 assignees rank according to priority in time of perfection.
6 Priority dates from the time a filing covering the transfer is
7 made in accordance with subparagraph 4.
8 b. A perfected interest or right of an assignee has
9 priority over a conflicting unperfected interest or right of
10 an assignee.
11 c. A perfected interest or right of an assignee has
12 priority over a person who becomes a lien creditor after the
13 perfection of such assignee's interest or right.
14 (6) DESCRIPTION OR INDICATION OF PROPERTY.--The
15 description of storm-recovery property being transferred to an
16 assignee in any sale agreement, purchase agreement, or other
17 transfer agreement, granted or pledged to a pledgee in any
18 security agreement, pledge agreement, or other security
19 document, or indicated in any financing statement is only
20 sufficient if such description or indication describes the
21 financing order that created the storm-recovery property and
22 states that such agreement or financing statement covers all
23 or part of such property described in such financing order.
24 This subsection applies to all purported transfers of, and all
25 purported grants or liens or security interests in,
26 storm-recovery property, regardless of whether the related
27 sale agreement, purchase agreement, other transfer agreement,
28 security agreement, pledge agreement, or other security
29 document was entered into, or any financing statement was
30 filed, before or after the effective date of this section.
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1 (7) FINANCING STATEMENTS.--All financing statements
2 referenced in this section shall be subject to Part 5 of
3 Article 9 of the Uniform Commercial Code except that the
4 requirement as to continuation statements shall not apply.
5 (8) CHOICE OF LAW.--The law governing the validity,
6 enforceability, attachment, perfection, priority, and exercise
7 of remedies with respect to the transfer of an interest or
8 right or the pledge or creation of a security interest in any
9 storm-recovery property shall be the laws of this state, and
10 exclusively, the laws of this section.
11 (9) STORM-RECOVERY BONDS NOT PUBLIC DEBT.--The state
12 or its political subdivisions are not liable on any
13 storm-recovery bonds, and the bonds are not a debt or a
14 general obligation of the state or any of its political
15 subdivisions, agencies, or instrumentalities. An issue of
16 storm-recovery bonds does not, directly or indirectly or
17 contingently, obligate the state or any agency, political
18 subdivision, or instrumentality of the state to levy any tax
19 or make any appropriation for payment of the bonds, other than
20 in their capacity as consumers of electricity. This subsection
21 shall in no way preclude bond guarantees or enhancements
22 pursuant to this section. All bonds must contain on the face
23 thereof a statement to the following effect: "Neither the full
24 faith and credit nor the taxing power of the State of Florida
25 is pledged to the payment of the principal of, or interest on,
26 this bond."
27 (10) STORM-RECOVERY BONDS AS LEGAL INVESTMENTS WITH
28 RESPECT TO INVESTORS THAT REQUIRE STATUTORY AUTHORITY
29 REGARDING LEGAL INVESTMENT.--The following entities may
30 legally invest any sinking funds, moneys, or other funds
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1 belonging to them or under their control in storm-recovery
2 bonds:
3 (a) The state, the investment board, municipal
4 corporations, political subdivisions, public bodies, and
5 public officers except for members of the commission.
6 (b) Banks and bankers, savings and loan associations,
7 credit unions, trust companies, savings banks and
8 institutions, investment companies, insurance companies,
9 insurance associations, and other persons carrying on a
10 banking or insurance business.
11 (c) Personal representatives, guardians, trustees, and
12 other fiduciaries.
13 (d) All other persons whatsoever who are now or may
14 hereafter be authorized to invest in bonds or other
15 obligations of a similar nature.
16 (11) STATE PLEDGE.--
17 (a) For purposes of this subsection, the term
18 "bondholder" means a person who holds a storm-recovery bond.
19 (b) The state pledges to and agrees with bondholders,
20 the owners of the storm-recovery property, and other financing
21 parties that the state will not:
22 1. Alter the provisions of this section which make the
23 storm-recovery charges imposed by a financing order
24 irrevocable, binding, and nonbypassable charges;
25 2. Take or permit any action that impairs or would
26 impair the value of storm-recovery property; or
27 3. Except as allowed under this section, reduce,
28 alter, or impair storm-recovery charges that are to be
29 imposed, collected, and remitted for the benefit of the
30 bondholders and other financing parties until any and all
31 principal, interest, premium, financing costs and other fees,
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1 expenses, or charges incurred, and any contracts to be
2 performed, in connection with the related storm-recovery bonds
3 have been paid and performed in full.
4
5 Nothing in this paragraph shall preclude limitation or
6 alteration if full compensation is made by law for the full
7 protection of the storm-recovery charges collected pursuant to
8 a financing order and of the holders of storm-recovery bonds
9 and any assignee or financing party entering into a contract
10 with the electric utility.
11 (c) Any person or entity that issues storm-recovery
12 bonds may include the pledge specified in paragraph (b) in the
13 bonds and related documentation.
14 (12) NOT AN ELECTRIC UTILITY.--An assignee or
15 financing party shall not be considered an electric utility or
16 person providing electric service by virtue of engaging in the
17 transactions described in this section.
18 (13) CONFLICTS.--In the event of conflict between this
19 section and any other law regarding the attachment,
20 assignment, or perfection, or the effect of perfection, or
21 priority of, assignment or transfer of, or security interest
22 in storm-recovery property, this section shall govern to the
23 extent of the conflict.
24 (14) EFFECT OF INVALIDITY ON ACTIONS.--Effective on
25 the date that storm-recovery bonds are first issued under this
26 section, if any provision of this section is held to be
27 invalid or is invalidated, superseded, replaced, repealed, or
28 expires for any reason, that occurrence shall not affect the
29 validity of any action allowed under this section which is
30 taken by an electric utility, an assignee, a financing party,
31 a collection agent, or a party to an ancillary agreement; and
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1 any such action shall remain in full force and effect with
2 respect to all storm-recovery bonds issued or authorized in a
3 financing order to be issued under this section prior to the
4 date that such provision is held to be invalid or is
5 invalidated, superseded, replaced, or repealed, or that
6 expires for any reason.
7 (15) PENALTIES.--A violation of this section or of a
8 financing order issued under this section subjects the utility
9 that obtained the order to penalties under s. 366.095 and to
10 any other penalties or remedies that the commission determines
11 are necessary to achieve the intent of this section and the
12 intent and terms of the financing order and to prevent any
13 increase in financial impact to the utility's ratepayers above
14 that set forth in the financing order. If the commission
15 orders a penalty or a remedy for a violation, the monetary
16 penalty or remedy and the costs of defending against the
17 proposed penalty or remedy may not be recovered from the
18 ratepayers.
19 Section 2. Paragraphs (m) and (n) of subsection (4) of
20 section 679.1091, Florida Statutes, are amended, and paragraph
21 (o) is added to that subsection, to read:
22 679.1091 Scope.--
23 (4) This chapter does not apply to:
24 (m) An assignment of a deposit account, other than a
25 nonnegotiable certificate of deposit, in a consumer
26 transaction, but ss. 679.3151 and 679.322 apply with respect
27 to proceeds and priorities in proceeds; or
28 (n) Any transfer by a government or governmental unit;
29 or
30 (o) A transfer or pledge of, or creation of a security
31 interest in, any interest or right or portion of any interest
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1 or right in any storm-recovery property as defined in s.
2 366.8260.
3 Section 3. This act shall take effect upon becoming a
4 law.
5
6 STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
COMMITTEE SUBSTITUTE FOR
7 SB 1366
8
9 The Committee Substitute for Senate Bill 1366 makes the
following changes:
10
-The definition of the term storm-recovery costs is amended to
11 allow adjustment of these costs by normal capital replacement
and operating costs, lost revenues, or other potential
12 offsetting adjustments where determined appropriate by the
commission.
13
-A penalty is created for any violation of the section or of a
14 financing order issued under the section.
15 -The language requiring that the commission's order set forth
any allocation of costs among the utility and its ratepayers
16 is deleted.
17 -The language on true up of estimated versus actual financing
costs is deleted and replaced with language requiring the same
18 review, but prohibiting an adjustment to the storm-recovery
charge as a result of the review and providing instead for a
19 deposit by the utility into storm reserves of any excess
amount.
20
-The 10-day period for an appeal is changed to 30 days to
21 conform to Florida Supreme Court rules and avoid a potential
problem of interference with the court's constitutional
22 authority to set these time periods.
23 -The exemption from state and local taxes is deleted and these
taxes, and other taxes or similar charges, including
24 regulatory assessment fees, are included in the definition of
financing costs, and thus would be recoverable in the
25 storm-recovery charge.
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