Senate Bill sb1366c3

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    By the Committees on Transportation and Economic Development
    Appropriations; Government Efficiency Appropriations;
    Communications and Public Utilities; and Senators Constantine
    and Dockery


    606-2209-05

  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; providing penalties;

19         amending s. 679.1091, F.S.; specifying

20         nonapplication of secured transactions

21         provisions of the Uniform Commercial Code to

22         interests in storm-recovery property; providing

23         an effective date.

24  

25  Be It Enacted by the Legislature of the State of Florida:

26  

27         Section 1.  Section 366.8260, Florida Statutes, is

28  created to read:

29         366.8260  Storm-recovery financing.--

30         (1)  DEFINITIONS.--As used in this section, the term:

31  

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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, financing cost, costs to replenish the

15  storm-recovery reserve to the level that existed before the

16  storm or storms, or such other level as the commission may

17  authorize in a financing order, and which are secured by or

18  payable from storm-recovery property.

19         (m)  "Storm-recovery charge" means the amounts

20  authorized by the commission to recover, finance, or refinance

21  storm-recovery costs, financing cost, costs to replenish the

22  storm-recovery reserve to the level that existed before the

23  storm or storms, or such other level as the commission may

24  authorize in a financing order, or as provided for in a

25  financing order to be imposed on all customer bills and

26  collected by an electric utility or its successors or

27  assignees, or a collection agent, in full through a charge

28  that is separate and apart from the electric utility's base

29  rates, which charge shall be paid by all customers receiving

30  transmission or distribution service from the electric utility

31  or its successors or assignees under commission-approved rate

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 1  schedules or under special contracts, even if the customer

 2  elects to purchase electricity from an alternative electricity

 3  supplier following a fundamental change in regulation of

 4  public utilities in this state.

 5         (n)  "Storm-recovery costs" means, at the option and

 6  request of the electric utility, and as approved by the

 7  commission pursuant to sub-subparagraph (2)(b)1.b., costs

 8  incurred or to be incurred by an electric utility in

 9  undertaking a storm-recovery activity. Such costs shall be net

10  of applicable insurance proceeds and, where determined

11  appropriate by the commission, shall include adjustments for

12  normal capital replacement and operating costs, lost revenues,

13  or other potential offsetting adjustments. Storm-recovery

14  costs shall include the costs to finance any deficiency or

15  deficiencies in storm-recovery reserves until such time as

16  storm-recovery bonds are issued, and costs of retiring any

17  existing indebtedness relating to storm-recovery activities.

18         (o)  "Storm-recovery property" means:

19         1.  All rights and interests of an electric utility or

20  successor or assignee of the electric utility under a

21  financing order, including the right to impose, bill, collect,

22  and receive storm-recovery charges authorized in the financing

23  order and to obtain periodic adjustments to such charges as

24  provided in the financing order.

25         2.  All revenues, collections, claims, rights to

26  payments, payments, money, or proceeds arising from the rights

27  and interests specified in subparagraph 1., regardless of

28  whether such revenues, collections, claims, rights to payment,

29  payments, money, or proceeds are imposed, billed, received,

30  collected, or maintained together with or commingled with

31  

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 1  other revenues, collections, rights to payment, payments,

 2  money, or proceeds.

 3         (p)  "Storm-recovery reserve" means an electric utility

 4  storm reserve or such other similar reserve established by law

 5  or rule or pursuant to order of the commission.

 6         (q)  "Uniform Commercial Code" has the same meaning as

 7  that provided in s. 671.101.

 8         (2)  FINANCING ORDERS.--

 9         (a)  An electric utility may petition the commission

10  for a financing order. For each petition, the electric utility

11  shall:

12         1.  Describe the storm-recovery activities that the

13  electric utility has undertaken or proposes to undertake and

14  describe the reasons for undertaking the activities.

15         2.  Set forth the known storm-recovery costs and

16  estimate the costs of any storm-recovery activities that are

17  not completed, or for which the costs are not yet known, as

18  identified and requested by the electric utility.

19         3.  Set forth the level of the storm-recovery reserve

20  that the utility proposes to establish or replenish and has

21  determined would be appropriate to recover through

22  storm-recovery bonds and is seeking to so recover and such

23  level that the utility is funding or will seek to fund through

24  other means, together with a description of the factors and

25  calculations used in determining the amounts and methods of

26  recovery.

27         4.  Indicate whether the electric utility proposes to

28  finance all or a portion of the storm-recovery costs and

29  storm-recovery reserve using storm-recovery bonds. If the

30  electric utility proposes to finance a portion of such costs,

31  

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 1  the electric utility shall identify that portion in the

 2  petition.

 3         5.  Estimate the financing costs related to the

 4  storm-recovery bonds.

 5         6.  Estimate the storm-recovery charges necessary to

 6  recover the storm-recovery costs, storm-recovery reserve, and

 7  financing costs and the period for recovery of such costs.

 8         7.  Estimate any cost savings or demonstrate how it

 9  would avoid or significantly mitigate rate impacts to

10  customers resulting from financing storm-recovery costs with

11  storm-recovery bonds as opposed to the traditional method of

12  recovering such costs from customers and through alternative

13  financing methods available to the electric utility.

14         8.  File with the petition direct testimony supporting

15  the petition.

16         (b)1.  Proceedings on a petition submitted pursuant to

17  paragraph (a) shall begin with a petition by an electric

18  utility and shall be disposed of in accordance with the

19  provisions of chapter 120 and applicable rules, except that

20  the provisions of this section, to the extent applicable,

21  shall control.

22         a.  Within 7 days after the filing of a petition, the

23  commission shall publish a case schedule, which schedule shall

24  place the matter before the commission on an agenda that will

25  permit a commission decision no later than 120 days after the

26  date the petition is filed.

27         b.  No later than 135 days after the date the petition

28  is filed, the commission shall issue a financing order or an

29  order rejecting the petition. A party to the commission

30  proceeding may petition the commission for reconsideration of

31  the financing order within 5 days after the date of its

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 1  issuance. The commission shall issue a financing order

 2  authorizing financing of reasonable and prudent storm-recovery

 3  costs, the storm-recovery reserve amount determined

 4  appropriate by the commission, and financing costs if the

 5  commission finds that the issuance of the storm-recovery bonds

 6  and the imposition of storm-recovery charges authorized by the

 7  order are reasonably expected to result in lower overall costs

 8  or would avoid or significantly mitigate rate impacts to

 9  customers as compared with alternative methods of financing or

10  recovering storm-recovery costs and storm-recovery reserve.

11  Any determination of whether storm-recovery costs are

12  reasonable and prudent shall be made with reference to the

13  general public interest in, and the scope of effort required

14  to provide, the safe and expeditious restoration of electric

15  service.

16         2.  In a financing order issued to an electric utility,

17  the commission shall:

18         a.  Except as provided in sub-subparagraph f. and in

19  subparagraph 4., specify the amount of storm-recovery costs

20  and the level of storm-recovery reserves, taking into

21  consideration, to the extent the commission deems appropriate,

22  any other methods used to recover these costs, and describe

23  and estimate the amount of financing costs which may be

24  recovered through storm-recovery charges; and specify the

25  period over which such costs may be recovered.

26         b.  Determine that the proposed structuring, expected

27  pricing, and financing costs of the storm-recovery bonds are

28  reasonably expected to result in lower overall costs or would

29  avoid or significantly mitigate rate impacts to customers as

30  compared with alternative methods of financing or recovering

31  storm-recovery costs.

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 1         c.  Provide that, for the period specified pursuant to

 2  sub-subparagraph a., the imposition and collection of

 3  storm-recovery charges authorized in the financing order shall

 4  be paid by all customers receiving transmission or

 5  distribution service from the electric utility or its

 6  successors or assignees under commission-approved rate

 7  schedules or under special contracts, even if the customer

 8  elects to purchase electricity from an alternative electric

 9  supplier following a fundamental change in regulation of

10  public utilities in the state.

11         d.  Determine what portion, if any, of the

12  storm-recovery reserves must be held in a funded reserve and

13  any limitations on how the reserve may be held, accessed, or

14  used.

15         e.  Include a formula-based mechanism for making

16  expeditious periodic adjustments in the storm-recovery charges

17  that customers are required to pay under the financing order

18  and for making any adjustments that are necessary to correct

19  for any overcollection or undercollection of the charges or to

20  otherwise ensure the timely payment of storm-recovery bonds

21  and financing costs and other required amounts and charges

22  payable in connection with the storm-recovery bonds.

23         f.  Specify the storm-recovery property that is, or

24  shall be, created in favor of an electric utility or its

25  successors or assignees and that shall be used to pay or

26  secure storm-recovery bonds and financing costs.

27         g.  Specify the degree of flexibility to be afforded to

28  the electric utility in establishing the terms and conditions

29  of the storm-recovery bonds, including, but not limited to,

30  repayment schedules, interest rates, and other financing

31  costs.

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 1         h.  Provide that storm-recovery charges be allocated to

 2  the customer classes using the criteria set out in s.

 3  366.06(1), in the manner in which these costs or their

 4  equivalent were allocated in the cost-of-service study

 5  approved in connection with the electric utility's last rate

 6  case. If the electric utility's last rate case was resolved by

 7  a settlement agreement, the the cost-of-service methodology

 8  filed by the electric utility in that case shall be used.

 9         i.  Provide that, after the final terms of an issuance

10  of storm-recovery bonds have been established and prior to the

11  issuance of storm-recovery bonds, the electric utility shall

12  determine the resulting initial storm-recovery charge in

13  accordance with the financing order and such initial

14  storm-recovery charge shall be final and effective upon the

15  issuance of such storm-recovery bonds without further

16  commission action.

17         j.  Include any other conditions that the commission

18  considers appropriate and that are not otherwise inconsistent

19  with this section.

20  

21  In performing the responsibilities of this subparagraph and

22  subparagraph 5., the commission may engage outside consultants

23  or counsel. Any expenses associated with such services shall

24  be included as part of financing costs and included in

25  storm-recovery charges.

26         3.  A financing order issued to an electric utility may

27  provide that creation of the electric utility's storm-recovery

28  property pursuant to sub-subparagraph 2.f. is conditioned

29  upon, and shall be simultaneous with, the sale or other

30  transfer of the storm-recovery property to an assignee and the

31  

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 1  pledge of the storm-recovery property to secure storm-recovery

 2  bonds.

 3         4.  If the commission issues a financing order, the

 4  electric utility shall file with the commission at least

 5  biannually a petition or a letter applying the formula-based

 6  mechanism pursuant to sub-subparagraph 2.e. and, based on

 7  estimates of consumption for each rate class and other

 8  mathematical factors, requesting administrative approval to

 9  make the adjustments described in sub-subparagraph 2.e. The

10  review of such a request shall be limited to determining

11  whether there is any mathematical error in the application of

12  the formula-based mechanism relating to the appropriate amount

13  of any overcollection or undercollection of storm-recovery

14  charges and the amount of an adjustment. Such adjustments

15  shall ensure the recovery of revenues sufficient to provide

16  for the payment of principal, interest, acquisition,

17  defeasance, financing costs, or redemption premium and other

18  fees, costs, and charges in respect of storm-recovery bonds

19  approved under the financing order. Within 60 days after

20  receiving an electric utility's request pursuant to this

21  paragraph, the commission shall either approve the request or

22  inform the electric utility of any mathematical errors in its

23  calculation. If the commission informs the utility of

24  mathematical errors in its calculation, the utility may

25  correct its error and refile its request. The timeframes

26  previously described in this paragraph shall apply to a

27  refiled request.

28         5.  Within 120 days after the issuance of

29  storm-recovery bonds, the electric utility shall file with the

30  commission information on the actual costs of the

31  storm-recovery-bond issuance. The commission shall review such

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 1  information to determine if such costs incurred in the

 2  issuance of the bonds resulted in the lowest overall costs

 3  that were reasonably consistent with market conditions at the

 4  time of the issuance and the terms of the financing order. The

 5  commission may disallow any incremental issuance costs in

 6  excess of the lowest overall costs by requiring the utility to

 7  make a contribution to the storm reserve in an amount equal to

 8  the excess of actual issuance costs incurred, and paid for out

 9  of storm recovery bond proceeds, and the lowest overall

10  issuance costs as determined by the commission. The commission

11  may not make adjustments to the storm-recovery charges for any

12  such excess issuance costs.

13         6.  Subsequent to the earlier of the transfer of

14  storm-recovery property to an assignee or the issuance of

15  storm-recovery bonds authorized thereby, a financing order is

16  irrevocable and, except as provided in subparagraph 4. and

17  paragraph (c), the commission may not amend, modify, or

18  terminate the financing order by any subsequent action or

19  reduce, impair, postpone, terminate, or otherwise adjust

20  storm-recovery charges approved in the financing order. After

21  the issuance of a financing order, the electric utility

22  retains sole discretion regarding whether to assign, sell, or

23  otherwise transfer storm-recovery property or to cause the

24  storm-recovery bonds to be issued, including the right to

25  defer or postpone such assignment, sale, transfer, or

26  issuance.

27         (c)  At the request of an electric utility, the

28  commission may commence a proceeding and issue a subsequent

29  financing order that provides for retiring and refunding

30  storm-recovery bonds issued pursuant to the original financing

31  order if the commission finds that the subsequent financing

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 1  order satisfies all of the criteria specified in paragraph

 2  (b). Effective on retirement of the refunded storm-recovery

 3  bonds and the issuance of new storm-recovery bonds, the

 4  commission shall adjust the related storm-recovery charges

 5  accordingly.

 6         (d)  Within 30 days after the commission issues an

 7  order pursuant to paragraph (b) or a decision denying a

 8  request for reconsideration or, if the request for

 9  reconsideration is granted, within 30 days after the

10  commission issues its decision on reconsideration, an

11  adversely affected party may petition for judicial review in

12  the Florida Supreme Court. The petition for review shall be

13  served upon the executive director of the commission

14  personally or by service at the office of the commission.

15  Review on appeal shall be based solely on the record before

16  the commission and briefs to the court and shall be limited to

17  determining whether the order issued pursuant to paragraph

18  (b), or the order on reconsideration, conforms to the

19  constitution and laws of this state and the United States and

20  is within the authority of the commission under this section.

21  Inasmuch as delay in the determination of the appeal of a

22  financing order will delay the issuance of storm-recovery

23  bonds, thereby diminishing savings to customers which might be

24  achieved if such bonds were issued as contemplated by a

25  financing order, the Supreme Court shall proceed to hear and

26  determine the action as expeditiously as practicable and give

27  the action precedence over other matters not accorded similar

28  precedence by law.

29         (e)1.  A financing order remains in effect until the

30  storm-recovery bonds issued pursuant to the order have been

31  

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 1  paid in full and the commission-approved financing costs of

 2  such bonds have been recovered in full.

 3         2.  A financing order issued to an electric utility

 4  shall remain in effect and unabated notwithstanding the

 5  reorganization, bankruptcy, or other insolvency proceedings of

 6  the electric utility or its successors or assignees.

 7         (3)  EXCEPTIONS TO COMMISSION JURISDICTION.--

 8         (a)  If the commission issues a financing order to an

 9  electric utility pursuant to this section, the commission may

10  not, in exercising its powers and carrying out its duties

11  regarding any matter within its authority pursuant to this

12  chapter, consider the storm-recovery bonds issued pursuant to

13  the order to be the debt of the electric utility other than

14  for federal income tax purposes, consider the storm-recovery

15  charges paid under the order to be the revenue of the electric

16  utility for any purpose, or consider the storm-recovery costs

17  or financing costs specified in the order to be the costs of

18  the electric utility, nor may the commission determine any

19  action taken by an electric utility which is consistent with

20  the order to be unjust or unreasonable.

21         (b)  The commission may not order or otherwise directly

22  or indirectly require an electric utility to use

23  storm-recovery bonds to finance any project, addition, plant,

24  facility, extension, capital improvement, equipment, or any

25  other expenditure, unless the electric utility has filed a

26  petition under paragraph (2)(a) to finance such expenditure

27  using storm-recovery bonds. The commission may not refuse to

28  allow an electric utility to recover costs for storm-recovery

29  activities in an otherwise permissible fashion, or refuse or

30  condition authorization or approval pursuant to s. 366.04 of

31  the issuance and sale by an electric utility of securities or

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 1  the assumption by it of liabilities or obligations, solely

 2  because of the potential availability of storm-recovery

 3  financing.

 4         (4)  ELECTRIC UTILITY DUTIES.--

 5         (a)  The electric bills of an electric utility that has

 6  obtained a financing order and issued storm-recovery bonds

 7  must explicitly reflect that a portion of the charges on such

 8  bill represents storm-recovery charges approved in a financing

 9  order issued to the electric utility and, if the

10  storm-recovery property has been transferred to an assignee,

11  must include a statement to the effect that the assignee is

12  the owner of the rights to storm-recovery charges and that the

13  electric utility or any other entity, if applicable, is acting

14  as a collection agent or servicer for the assignee. The tariff

15  applicable to customers must indicate the storm-recovery

16  charge and the ownership of that charge. The commission shall

17  determine whether to require electric utilities to include

18  such information or amounts owed with respect to the

19  storm-recovery property as a separate line item on individual

20  electric bills.

21         (b)  The failure of an electric utility to comply with

22  this subsection shall not invalidate, impair, or affect any

23  financing order, storm-recovery property, storm-recovery

24  charge, or storm-recovery bonds but shall subject the electric

25  utility to penalties under s. 366.095.

26         (5)  STORM-RECOVERY PROPERTY.--

27         (a)1.  All storm-recovery property that is specified in

28  a financing order shall constitute an existing, present

29  property right or interest therein, notwithstanding that the

30  imposition and collection of storm-recovery charges depends on

31  the electric utility to which the order is issued performing

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 1  its servicing functions relating to the collection of

 2  storm-recovery charges and on future electricity consumption.

 3  Such property shall exist whether or not the revenues or

 4  proceeds arising from the property have been billed, have

 5  accrued, or have been collected and notwithstanding the fact

 6  that the value or amount of the property is dependent on the

 7  future provision of service to customers by the electric

 8  utility or its successors or assignees.

 9         2.  Storm-recovery property specified in a financing

10  order shall continue to exist until the storm-recovery bonds

11  issued pursuant to the order are paid in full and all

12  financing costs and other costs of the bonds have been

13  recovered in full.

14         3.  All or any portion of storm-recovery property

15  specified in a financing order issued to an electric utility

16  may be transferred, sold, conveyed, or assigned to a successor

17  or assignee, including an affiliate or affiliates of the

18  electric utility created for the limited purpose of acquiring,

19  owning, or administering storm-recovery property or issuing

20  storm-recovery bonds under the financing order. All or any

21  portion of storm-recovery property may be pledged to secure

22  storm-recovery bonds issued pursuant to the order, amounts

23  payable to financing parties and to counterparties under any

24  ancillary agreements, and other financing costs. Each such

25  transfer, sale, conveyance, assignment, or pledge by an

26  electric utility or affiliate of an electric utility is

27  considered to be a transaction in the ordinary course of

28  business.

29         4.  If an electric utility defaults on any required

30  payment of charges arising from storm-recovery property

31  specified in a financing order, a court, upon application by

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 1  an interested party, and without limiting any other remedies

 2  available to the applying party, shall order the sequestration

 3  and payment of the revenues arising from the storm-recovery

 4  property to the financing parties. Any such order shall remain

 5  in full force and effect notwithstanding any reorganization,

 6  bankruptcy, or other insolvency proceedings with respect to

 7  the electric utility or its successors or assignees.

 8         5.  The interest of a transferee, purchaser, acquirer,

 9  assignee, or pledgee in storm-recovery property specified in a

10  financing order issued to an electric utility, and in the

11  revenue and collections arising from that property, is not

12  subject to setoff, counterclaim, surcharge, or defense by the

13  electric utility or any other person or in connection with the

14  reorganization, bankruptcy, or other insolvency of the

15  electric utility or any other entity.

16         6.  Any successor to an electric utility, whether

17  pursuant to any reorganization, bankruptcy, or other

18  insolvency proceeding or whether pursuant to any merger or

19  acquisition, sale, or other business combination, or transfer

20  by operation of law, as a result of electric utility

21  restructuring or otherwise, shall perform and satisfy all

22  obligations of, and have the same rights under a financing

23  order as, the electric utility under the financing order in

24  the same manner and to the same extent as the electric

25  utility, including collecting and paying to the person

26  entitled to receive the revenues, collections, payments, or

27  proceeds of the storm-recovery property.

28         (b)1.  Except as specified in this section, the Uniform

29  Commercial Code does not apply to storm-recovery property or

30  any right, title, or interest of a utility or assignee

31  described in subparagraph (1)(o)1., whether before or after

                                  18

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 1  the issuance of the financing order. In addition, such right,

 2  title, or interest pertaining to a financing order, including,

 3  but not limited to, the associated storm-recovery property and

 4  any revenues, collections, claims, rights to payment,

 5  payments, money, or proceeds of or arising from storm-recovery

 6  charges pursuant to such order, shall not be deemed proceeds

 7  of any right or interest other than in the financing order and

 8  the storm-recovery property arising from the order.

 9         2.  The creation, attachment, granting, perfection,

10  priority, and enforcement of liens and security interests in

11  storm-recovery property to secure storm-recovery bonds is

12  governed solely by this section and not by the Uniform

13  Commercial Code.

14         3.  A valid, enforceable, and attached lien and

15  security interest in storm-recovery property may be created

16  only upon the later of:

17         a.  The issuance of a financing order;

18         b.  The execution and delivery of a security agreement

19  with a financing party in connection with the issuance of

20  storm-recovery bonds; or

21         c.  The receipt of value for the storm-recovery bonds.

22  

23  A valid, enforceable, and attached security interest shall be

24  perfected against third parties as of the date of filing of a

25  financing statement in the Florida Secured Transaction

26  Registry, as such registry is defined in Article 9 of the

27  Uniform Commercial Code, in accordance with subparagraph 4.,

28  and shall thereafter be a continuously perfected lien; and

29  such security interest in the storm-recovery property and all

30  proceeds of such storm-recovery property, whether or not

31  billed, accrued, or collected, and whether or not deposited

                                  19

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 1  into a deposit account and however evidenced, shall have

 2  priority in accordance with subparagraph 8. and take

 3  precedence over any subsequent judicial or other lien

 4  creditor. No continuation statement need be filed to maintain

 5  such perfection.

 6         4.  Financing statements required to be filed pursuant

 7  to this section shall be filed, maintained, and indexed in the

 8  same manner and in the same system of records maintained for

 9  the filing of financing statements in the Florida Secured

10  Transaction Registry under Article 9 of the Uniform Commercial

11  Code. The filing of such a financing statement shall be the

12  only method of perfecting a lien or security interest on

13  storm-recovery property.

14         5.  The priority of a lien and security interest

15  perfected under this paragraph is not impaired by any later

16  modification of the financing order or storm-recovery property

17  or by the commingling of funds arising from storm-recovery

18  property with other funds, and any other security interest

19  that may apply to those funds shall be terminated as to all

20  funds transferred to a segregated account for the benefit of

21  an assignee or a financing party or to an assignee or

22  financing party directly.

23         6.  If a default or termination occurs under the terms

24  of the storm-recovery bonds, the financing parties or their

25  representatives may foreclose on or otherwise enforce their

26  lien and security interest in any storm-recovery property as

27  if they were a secured party under Article 9 of the Uniform

28  Commercial Code; and a court may order that amounts arising

29  from storm-recovery property be transferred to a separate

30  account for the financing parties' benefit, to which their

31  lien and security interest shall apply. On application by or

                                  20

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 1  on behalf of the financing parties to a circuit court of this

 2  state, such court shall order the sequestration and payment to

 3  the financing parties of revenues arising from the

 4  storm-recovery property.

 5         7.  The interest of a pledgee of an interest or any

 6  rights in any storm-recovery property is not perfected until

 7  filing as provided in subparagraph 4.

 8         8.  The priority of the conflicting interests of

 9  pledgees in the same interest or rights in any storm-recovery

10  property is determined as follows:

11         a.  Conflicting perfected interests or rights of

12  pledgees rank according to priority in time of perfection.

13  Priority dates from the time a filing covering the interest or

14  right is made in accordance with this paragraph.

15         b.  A perfected interest or right of a pledgee has

16  priority over a conflicting unperfected interest or right of a

17  pledgee.

18         c.  A perfected interest or right of a pledgee has

19  priority over a person who becomes a lien creditor after the

20  perfection of such pledgee's interest or right.

21         (c)  The sale, assignment, or transfer of

22  storm-recovery property is governed by this paragraph. All of

23  the following apply to a sale, assignment, or transfer under

24  this paragraph:

25         1.  The sale, conveyance, assignment, or other transfer

26  of storm-recovery property by an electric utility to an

27  assignee that the parties have in the governing documentation

28  expressly stated to be a sale or other absolute transfer is an

29  absolute transfer and true sale of, and not a pledge of or

30  secured transaction relating to, the transferor's right,

31  title, and interest in, to, and under the storm-recovery

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 1  property, other than for federal and state income and

 2  franchise tax purposes. After such a transaction, the

 3  storm-recovery property is not subject to any claims of the

 4  transferor or the transferor's creditors, other than creditors

 5  holding a prior security interest in the storm-recovery

 6  property perfected under paragraph (b).

 7         2.  The characterization of the sale, conveyance,

 8  assignment, or other transfer as a true sale or other absolute

 9  transfer under subparagraph 1. and the corresponding

10  characterization of the transferee's property interest is not

11  affected by:

12         a.  Commingling of amounts arising with respect to the

13  storm-recovery property with other amounts.

14         b.  The retention by the transferor of a partial or

15  residual interest, including an equity interest, in the

16  storm-recovery property, whether direct or indirect, or

17  whether subordinate or otherwise.

18         c.  Any recourse that the transferee may have against

19  the transferor other than any such recourse created,

20  contingent upon, or otherwise occurring or resulting from one

21  or more of the transferor's customers' inability to timely pay

22  all or a portion of the storm-recovery charge.

23         d.  Any indemnifications, obligations, or repurchase

24  rights made or provided by the transferor, other than

25  indemnity or repurchase rights based solely upon a

26  transferor's customers' inability to timely pay all or a

27  portion of the storm-recovery charge.

28         e.  The responsibility of the transferor to collect

29  storm-recovery charges.

30  

31  

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 1         f.  The treatment of the sale, conveyance, assignment,

 2  or other transfer for tax, financial reporting, or other

 3  purposes.

 4         g.  Granting or providing to holders of the

 5  storm-recovery bonds a preferred right to the storm-recovery

 6  property or credit enhancement by the electric utility or its

 7  affiliates with respect to the storm-recovery bonds.

 8         3.  Any right that an electric utility has in the

 9  storm-recovery property prior to its pledge, sale, or transfer

10  or any other right created under this section or created in

11  the financing order and assignable under this section or

12  assignable pursuant to a financing order shall be property in

13  the form of a contract right. Transfer of an interest in

14  storm-recovery property to an assignee is enforceable only

15  upon the later of the issuance of a financing order, the

16  execution and delivery of transfer documents to the assignee

17  in connection with the issuance of storm-recovery bonds, and

18  the receipt of value. An enforceable transfer of an interest

19  in storm-recovery property to an assignee shall be perfected

20  against all third parties, including subsequent judicial or

21  other lien creditors, when a notice of that transfer has been

22  given by the filing of a financing statement in accordance

23  with subparagraph 4. The transfer shall be perfected against

24  third parties as of the date of filing.

25         4.  Financing statements required to be filed under

26  this section shall be maintained and indexed in the same

27  manner and in the same system of records maintained for the

28  filing of financing statements in the Florida Secured

29  Transaction Registry under Article 9 of the Uniform Commercial

30  Code. The filing of such a financing statement shall be the

31  

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 1  only method of perfecting a transfer of storm-recovery

 2  property.

 3         5.  The priority of a transfer perfected under this

 4  section is not impaired by any later modification of the

 5  financing order or storm-recovery property or by the

 6  commingling of funds arising from storm-recovery property with

 7  other funds, and any other security interest that may apply to

 8  those funds shall be terminated when they are transferred to a

 9  segregated account for the assignee or a financing party. If

10  storm-recovery property has been transferred to an assignee or

11  financing party, any proceeds of that property shall be held

12  in trust for the assignee or financing party.

13         6.  The priority of the conflicting interests of

14  assignees in the same interest or rights in any storm-recovery

15  property is determined as follows:

16         a.  Conflicting perfected interests or rights of

17  assignees rank according to priority in time of perfection.

18  Priority dates from the time a filing covering the transfer is

19  made in accordance with subparagraph 4.

20         b.  A perfected interest or right of an assignee has

21  priority over a conflicting unperfected interest or right of

22  an assignee.

23         c.  A perfected interest or right of an assignee has

24  priority over a person who becomes a lien creditor after the

25  perfection of such assignee's interest or right.

26         (6)  DESCRIPTION OR INDICATION OF PROPERTY.--The

27  description of storm-recovery property being transferred to an

28  assignee in any sale agreement, purchase agreement, or other

29  transfer agreement, granted or pledged to a pledgee in any

30  security agreement, pledge agreement, or other security

31  document, or indicated in any financing statement is only

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 1  sufficient if such description or indication describes the

 2  financing order that created the storm-recovery property and

 3  states that such agreement or financing statement covers all

 4  or part of such property described in such financing order.

 5  This subsection applies to all purported transfers of, and all

 6  purported grants or liens or security interests in,

 7  storm-recovery property, regardless of whether the related

 8  sale agreement, purchase agreement, other transfer agreement,

 9  security agreement, pledge agreement, or other security

10  document was entered into, or any financing statement was

11  filed, before or after the effective date of this section.

12         (7)  FINANCING STATEMENTS.--All financing statements

13  referenced in this section shall be subject to Part 5 of

14  Article 9 of the Uniform Commercial Code except that the

15  requirement as to continuation statements shall not apply.

16         (8)  CHOICE OF LAW.--The law governing the validity,

17  enforceability, attachment, perfection, priority, and exercise

18  of remedies with respect to the transfer of an interest or

19  right or the pledge or creation of a security interest in any

20  storm-recovery property shall be the laws of this state, and

21  exclusively, the laws of this section.

22         (9)  STORM-RECOVERY BONDS NOT PUBLIC DEBT.--The state

23  or its political subdivisions are not liable on any

24  storm-recovery bonds, and the bonds are not a debt or a

25  general obligation of the state or any of its political

26  subdivisions, agencies, or instrumentalities. An issue of

27  storm-recovery bonds does not, directly or indirectly or

28  contingently, obligate the state or any agency, political

29  subdivision, or instrumentality of the state to levy any tax

30  or make any appropriation for payment of the bonds, other than

31  in their capacity as consumers of electricity. This subsection

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 1  shall in no way preclude bond guarantees or enhancements

 2  pursuant to this section. All bonds must contain on the face

 3  thereof a statement to the following effect: "Neither the full

 4  faith and credit nor the taxing power of the State of Florida

 5  is pledged to the payment of the principal of, or interest on,

 6  this bond."

 7         (10)  STORM-RECOVERY BONDS AS LEGAL INVESTMENTS WITH

 8  RESPECT TO INVESTORS THAT REQUIRE STATUTORY AUTHORITY

 9  REGARDING LEGAL INVESTMENT.--The following entities may

10  legally invest any sinking funds, moneys, or other funds

11  belonging to them or under their control in storm-recovery

12  bonds:

13         (a)  The state, the investment board, municipal

14  corporations, political subdivisions, public bodies, and

15  public officers except for members of the commission.

16         (b)  Banks and bankers, savings and loan associations,

17  credit unions, trust companies, savings banks and

18  institutions, investment companies, insurance companies,

19  insurance associations, and other persons carrying on a

20  banking or insurance business.

21         (c)  Personal representatives, guardians, trustees, and

22  other fiduciaries.

23         (d)  All other persons whatsoever who are now or may

24  hereafter be authorized to invest in bonds or other

25  obligations of a similar nature.

26         (11)  STATE PLEDGE.--

27         (a)  For purposes of this subsection, the term

28  "bondholder" means a person who holds a storm-recovery bond.

29         (b)  The state pledges to and agrees with bondholders,

30  the owners of the storm-recovery property, and other financing

31  parties that the state will not:

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 1         1.  Alter the provisions of this section which make the

 2  storm-recovery charges imposed by a financing order

 3  irrevocable, binding, and nonbypassable charges;

 4         2.  Take or permit any action that impairs or would

 5  impair the value of storm-recovery property; or

 6         3.  Except as allowed under this section, reduce,

 7  alter, or impair storm-recovery charges that are to be

 8  imposed, collected, and remitted for the benefit of the

 9  bondholders and other financing parties until any and all

10  principal, interest, premium, financing costs and other fees,

11  expenses, or charges incurred, and any contracts to be

12  performed, in connection with the related storm-recovery bonds

13  have been paid and performed in full.

14  

15  Nothing in this paragraph shall preclude limitation or

16  alteration if full compensation is made by law for the full

17  protection of the storm-recovery charges collected pursuant to

18  a financing order and of the holders of storm-recovery bonds

19  and any assignee or financing party entering into a contract

20  with the electric utility.

21         (c)  Any person or entity that issues storm-recovery

22  bonds may include the pledge specified in paragraph (b) in the

23  bonds and related documentation.

24         (12)  NOT AN ELECTRIC UTILITY.--An assignee or

25  financing party shall not be considered an electric utility or

26  person providing electric service by virtue of engaging in the

27  transactions described in this section.

28         (13)  CONFLICTS.--In the event of conflict between this

29  section and any other law regarding the attachment,

30  assignment, or perfection, or the effect of perfection, or

31  priority of, assignment or transfer of, or security interest

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 1  in storm-recovery property, this section shall govern to the

 2  extent of the conflict.

 3         (14)  EFFECT OF INVALIDITY ON ACTIONS.--Effective on

 4  the date that storm-recovery bonds are first issued under this

 5  section, if any provision of this section is held to be

 6  invalid or is invalidated, superseded, replaced, repealed, or

 7  expires for any reason, that occurrence shall not affect the

 8  validity of any action allowed under this section which is

 9  taken by an electric utility, an assignee, a financing party,

10  a collection agent, or a party to an ancillary agreement; and

11  any such action shall remain in full force and effect with

12  respect to all storm-recovery bonds issued or authorized in a

13  financing order to be issued under this section prior to the

14  date that such provision is held to be invalid or is

15  invalidated, superseded, replaced, or repealed, or that

16  expires for any reason.

17         (15)  PENALTIES.--A violation of this section or of a

18  financing order issued under this section subjects the utility

19  that obtained the order to penalties under s. 366.095 and to

20  any other penalties or remedies that the commission determines

21  are necessary to achieve the intent of this section and the

22  intent and terms of the financing order and to prevent any

23  increase in financial impact to the utility's ratepayers above

24  that set forth in the financing order. If the commission

25  orders a penalty or a remedy for a violation, the monetary

26  penalty or remedy and the costs of defending against the

27  proposed penalty or remedy may not be recovered from the

28  ratepayers. The commission may not make adjustments to

29  storm-recovery charges for any such penalties or remedies.

30  

31  

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 1         Section 2.  Paragraphs (m) and (n) of subsection (4) of

 2  section 679.1091, Florida Statutes, are amended, and paragraph

 3  (o) is added to that subsection, to read:

 4         679.1091  Scope.--

 5         (4)  This chapter does not apply to:

 6         (m)  An assignment of a deposit account, other than a

 7  nonnegotiable certificate of deposit, in a consumer

 8  transaction, but ss. 679.3151 and 679.322 apply with respect

 9  to proceeds and priorities in proceeds; or

10         (n)  Any transfer by a government or governmental unit;

11  or

12         (o)  A transfer or pledge of, or creation of a security

13  interest in, any interest or right or portion of any interest

14  or right in any storm-recovery property as defined in s.

15  366.8260.

16         Section 3.  This act shall take effect upon becoming a

17  law.

18  

19          STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
                       COMMITTEE SUBSTITUTE FOR
20                      CS/CS Senate Bill 1366

21                                 

22  The committee substitute makes a title change only, deleting
    "limiting commission authority to issue certain financing
23  orders after a time certain" and adding "providing penalties".

24  

25  

26  

27  

28  

29  

30  

31  

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