HB 0303

1
A bill to be entitled
2An act relating to storm recovery financing; creating s.
3366.8260, F.S.; providing definitions; authorizing
4electric utilities to petition the Florida Public Service
5Commission for certain financing orders for certain storm
6recovery purposes; providing requirements; providing
7powers and duties of the commission in issuing such
8orders; specifying procedures and requirements for the
9commission in issuing financing orders; authorizing
10electric utilities to create storm recovery property;
11providing for pledge of storm recovery property to secure
12storm recovery bonds; providing for retirement of storm
13recovery bonds under certain circumstances; providing for
14judicial review of such orders; providing for effect of
15such orders; providing exceptions to commission
16jurisdiction to issue financing orders; providing
17limitations; prohibiting the commission from requiring use
18of storm recovery bonds for certain purposes; specifying
19duties of electric utilities; specifying properties,
20requirements, permissible activities, and limitations
21relating to storm recovery property under certain
22circumstances; providing for security interests in storm
23recovery property; providing for perfecting security
24interests in storm recovery property; providing for
25priority of and resolution of conflicting interests;
26providing requirements, procedures, and limitations for
27sale, assignment, or transfer of storm recovery property;
28providing requirements for descriptions or indications of
29storm recovery property transferred, granted, or pledged,
30or indicated in a financing statement; subjecting
31financing statements to certain provisions of law;
32specifying that storm recovery bonds are not public debt;
33specifying storm recovery bonds as legal investments for
34certain entities; specifying certain state pledges
35relating to bondholders; providing a tax exemption for
36certain revenues collected by electric utilities under
37certain circumstances; declaring certain entities as not
38electric utilities under certain circumstances; specifying
39effect of certain provisions in situations of conflict;
40providing for protecting validity of certain bonds under
41certain circumstances; limiting commission authority to
42issue certain financing orders after a time certain;
43providing for section expiration under certain
44circumstances; providing for continued application under
45certain circumstances; amending s. 679.1091, F.S.;
46specifying nonapplication of secured transactions
47provisions of the Uniform Commercial Code to interests in
48storm recovery property; providing an effective date.
49
50     WHEREAS, four major hurricanes struck Florida within a span
51of 6 weeks during the unprecedented 2004 hurricane season, and
52     WHEREAS, the hurricanes resulted in widespread and
53protracted power outages affecting millions of Florida
54residents, and
55     WHEREAS, the hurricanes had a destructive impact on the
56electric infrastructure of Florida's investor-owned electric
57utilities, and
58     WHEREAS, it is in the public interest for Florida's
59investor-owned electric utilities to safely and expeditiously
60restore electric service following a hurricane or named tropical
61storm, and
62     WHEREAS, given the unprecedented impact of the 2004
63hurricane season, the storm reserves and insurance proceeds of
64Florida's investor-owned electric utilities were insufficient to
65cover the costs of electric restoration following the 2004
66hurricanes, and
67     WHEREAS, it is in the public interest for Florida's
68investor-owned electric utilities to replenish their reserves to
69provide for costs of electric restoration in the event of a
70hurricane or named tropical storm, and
71     WHEREAS, existing provisions of the Florida Statutes
72authorize the Florida Public Service Commission to permit
73recovery of deficiencies in and reestablishment of investor-
74owned utility storm reserves but do not provide a specific
75financing mechanism for doing so, and
76     WHEREAS, the financing arrangement to be authorized and
77enabled by this legislation, which allows for the recovery of
78deficiencies in and provides a mechanism for reestablishment of
79investor-owned electric utility storm reserves, will facilitate
80the expeditious recovery of deficiencies in and reestablishment
81of investor-owned utility reserves and is expected to save
82investor-owned electric utilities' customers millions of dollars
83compared with the traditional method of recovering such costs
84from customers and alternative financing methods available to
85investor-owned electric utilities, and
86     WHEREAS, the provision of adequate and efficient electric
87service by financially sound investor-owned electric utilities
88is in the public interest, NOW, THEREFORE,
89
90Be It Enacted by the Legislature of the State of Florida:
91
92     Section 1.  Section 366.8260, Florida Statutes, is created
93to read:
94     366.8260  Storm recovery financing.--
95     (1)  DEFINITIONS.--As used in this section:
96     (a)  "Ancillary agreement" means any bond, insurance
97policy, letter of credit, reserve account, surety bond, swap
98arrangement, hedging arrangement, liquidity or credit support
99arrangement, or other financial arrangement entered into in
100connection with the issuance of storm recovery bonds.
101     (b)  "Assignee" means any entity, including, but not
102limited to, a corporation, limited liability company,
103partnership or limited partnership, public authority, trust,
104financing entity, or other legally recognized entity to which an
105electric utility assigns, sells, or transfers, other than as
106security, all or a portion of its interest in or right to storm
107recovery property. The term also includes any entity to which a
108direct assignee of an electric utility may assign, sell, or
109transfer, other than as security, its interest in or right to
110storm recovery property.
111     (c)  "Commission" means the Florida Public Service
112Commission.
113     (d)  "Electric utility" or "utility" has the same meaning
114as that provided in s. 366.8255.
115     (e)  "Financing costs" means:
116     1.  Interest and acquisition, defeasance, or redemption
117premiums that are payable on storm recovery bonds;
118     2.  Any payment required under an ancillary agreement and
119any amount required to fund or replenish a reserve account or
120other accounts established under the terms of any indenture,
121ancillary agreement, or other financing documents pertaining to
122storm recovery bonds;
123     3.  Any other cost related to issuing, supporting,
124repaying, and servicing storm recovery bonds, including, but not
125limited to, servicing fees, accounting and auditing fees,
126trustee fees, legal fees, consulting fees, administrative fees,
127placement and underwriting fees, capitalized interest, rating
128agency fees, stock exchange listing and compliance fees, and
129filing fees, including costs related to obtaining the financing
130order;
131     4.  Costs to finance any deficiency or deficiencies in
132storm recovery reserves until such time as storm recovery bonds
133are issued;
134     5.  Any taxes and license fees imposed on the revenues
135generated from the collection of storm recovery charges;
136     6.  Any income taxes resulting from the collection of storm
137recovery charges; or
138     7.  Costs of retiring any existing indebtedness related to
139storm recovery costs.
140     (f)  "Financing order" means an order under subsection (2)
141that allows for the issuance of storm recovery bonds, the
142imposition and collection and periodic adjustments of storm
143recovery charges, and the creation of storm recovery property.
144     (g)  "Financing party" means holders of storm recovery
145bonds and trustees, collateral agents, or other persons acting
146for the benefit of holders of storm recovery bonds.
147     (h)  "Financing statement" has the same meaning as that
148provided in Article 9 of the Uniform Commercial Code.
149     (i)  "Pledgee" means a financing party to which an electric
150utility or its successors or assignees mortgages, negotiates,
151hypothecates, pledges, or creates a security interest or lien on
152all or any portion of its interest in or right to storm recovery
153property.
154     (j)  "Storm" means a named tropical storm or hurricane that
155occurred during calendar year 2004.
156     (k)  "Storm recovery activity" means any activity or
157activities by or on behalf of an electric utility in connection
158with the restoration of service associated with electric power
159outages affecting customers of an electric utility as the result
160of a storm or storms, including, but not limited to,
161mobilization, staging, and construction, reconstruction,
162replacement, or repair of electric generation, transmission, or
163distribution facilities.
164     (l)  "Storm recovery bonds" means bonds, debentures, notes,
165certificates of participation, certificates of beneficial
166interest, certificates of ownership, or other evidences of
167indebtedness or ownership that are issued by an electric utility
168or an assignee pursuant to a financing order, the proceeds of
169which are used directly or indirectly to recover, finance, or
170refinance storm recovery costs and financing costs and that are
171secured by or payable from storm recovery property.
172     (m)  "Storm recovery charge" means the amounts authorized
173by the commission to recover, finance, or refinance storm
174recovery costs and financing costs as provided for in a
175financing order to be imposed on all customer bills and
176collected by an electric utility or its successors or assignees,
177or a collection agent, in full through a charge that is separate
178and apart from the electric utility's base rates, which charge
179shall be paid by all customers receiving transmission or
180distribution service from the electric utility or its successors
181or assignees under commission-approved rate schedules or under
182special contracts, even if the customer elects to purchase
183electricity from an alternative electricity supplier following a
184fundamental change in regulation of public utilities in this
185state.
186     (n)  "Storm recovery costs" means, at the option and
187request of the electric utility, and as approved by the
188commission pursuant to sub-subparagraph (2)(b)1.b., costs
189incurred or to be incurred by an electric utility in undertaking
190a storm recovery activity, which may include the amount
191necessary to replenish the storm recovery reserve to the level
192that existed before the storm or storms, or such other level as
193the commission may authorize in a financing order.
194     (o)  "Storm recovery property" means:
195     1.  All rights and interests of an electric utility or
196successor or assignee of the electric utility under a financing
197order, including the right to impose, bill, collect, and receive
198storm recovery charges authorized in the financing order and to
199obtain periodic adjustments to such charges as provided in the
200financing order.
201     2.  All revenues, collections, claims, rights to payments,
202payments, money, or proceeds arising from the rights and
203interests specified in subparagraph 1., regardless of whether
204such revenues, collections, claims, rights to payment, payments,
205money, or proceeds are imposed, billed, received, collected, or
206maintained together with or commingled with other revenues,
207collections, rights to payment, payments, money, or proceeds.
208     (p)  "Storm recovery reserve" means an electric utility
209storm reserve or such other similar reserve established by law
210or rule or pursuant to order of the commission.
211     (q)  "Uniform Commercial Code" has the same meaning as that
212provided in s. 671.101.
213     (2)  FINANCING ORDERS.--
214     (a)  An electric utility may petition the commission for a
215financing order. For each petition, an electric utility shall:
216     1.  Describe the storm recovery activities that the
217electric utility has undertaken or proposes to undertake and
218describe the reasons for undertaking the activities.
219     2.  Estimate the storm recovery costs as identified and
220requested by the electric utility.
221     3.  Indicate whether the electric utility proposes to
222finance all or a portion of the storm recovery costs estimated
223under subparagraph 2. with storm recovery bonds. If the electric
224utility proposes to finance a portion of such costs, the
225electric utility shall identify that portion in the petition.
226     4.  Estimate the financing costs related to the storm
227recovery bonds proposed under subparagraph 3.
228     5.  Estimate the storm recovery charges necessary to
229recover the storm recovery costs and financing costs estimated
230in the petition and the period for recovery of such costs.
231     6.  Estimate any cost savings or demonstrate the avoidance
232or mitigation of significant rate impacts to customers resulting
233from financing storm recovery costs with storm recovery bonds as
234opposed to the traditional method of recovering such costs from
235customers and through alternative financing methods available to
236the electric utility.
237     7.  File with the petition direct testimony supporting the
238petition.
239     (b)1.  Proceedings on a petition submitted pursuant to
240paragraph (a) shall begin with a petition by an electric utility
241and shall be disposed of in accordance with the provisions of
242chapter 120 and applicable rules, except that the provisions of
243this section, to the extent applicable, shall control.
244     a.  Within 7 days after the filing of a petition, the
245commission shall publish a case schedule, which schedule shall
246place the matter before the commission on an agenda that will
247permit a commission decision no later than 120 days after the
248date the petition is filed.
249     b.  No later than 135 days after the date the petition is
250filed, the commission shall issue a financing order or an order
251rejecting the petition. A party to the commission proceeding may
252petition the commission for reconsideration of the financing
253order within 5 days after the date of its issuance. The
254commission shall issue a financing order authorizing financing
255of reasonable and prudent storm recovery costs and financing
256costs if the commission finds that the issuance of the storm
257recovery bonds and the imposition of storm recovery charges
258authorized by the order are reasonably expected to result in
259lower overall costs or would avoid or mitigate more significant
260rate impacts to customers than would alternative methods of
261financing or recovering storm recovery costs. Any determination
262of whether storm recovery costs are reasonable and prudent shall
263be made with reference to the general public interest in, and
264the scope of effort required to provide, the safe and
265expeditious restoration of electric service.
266     2.  In a financing order issued to an electric utility, the
267commission shall:
268     a.  Except as provided in sub-subparagraph d. and in
269subparagraph 4., specify the amount of storm recovery costs and
270describe and estimate the amount of financing costs that may be
271recovered through storm recovery charges and the period over
272which such costs may be recovered.
273     b.  Determine that the proposed structuring, expected
274pricing, and financing costs of the storm recovery bonds are
275reasonably expected to result in lower overall costs or would
276avoid or mitigate more significant rate impacts to customers
277than would alternative methods of financing or recovering storm
278recovery costs.
279     c.  Provide that, for the period specified pursuant to sub-
280subparagraph a., the imposition and collection of storm recovery
281charges authorized in the financing order shall be paid by all
282customers receiving transmission or distribution service from
283the electric utility or its successors or assignees under
284commission-approved rate schedules or under special contracts,
285even in the event the customer elects to purchase electricity
286from an alternative electric supplier following a fundamental
287change in regulation of public utilities in the state.
288     d.  Include a formula-based mechanism for making
289expeditious periodic adjustments in the storm recovery charges
290that customers are required to pay under the financing order and
291making any adjustments that are necessary to correct for any
292overcollection or undercollection of the charges or to otherwise
293ensure the timely payment of storm recovery bonds and financing
294costs and other required amounts and charges payable in
295connection with the storm recovery bonds.
296     e.  Specify the storm recovery property that is, or shall
297be, created in favor of an electric utility or its successors or
298assignees and that shall be used to pay or secure storm recovery
299bonds and financing costs.
300     f.  Afford flexibility in establishing the terms and
301conditions of the storm recovery bonds, including, but not
302limited to, repayment schedules, interest rates, and other
303financing costs.
304     g.  Provide that storm recovery charges shall be allocated
305to the customer classes using the criteria set out in s.
306366.06(1), in the manner in which these costs or their
307equivalent were allocated in the cost-of-service study approved
308in connection with the electric utility's last rate case. If the
309electric utility's last rate case was resolved by a settlement
310agreement, the cost-of-service methodology filed by the electric
311utility in that case shall be used.
312     h.  Provide that, after the final terms of an issuance of
313storm recovery bonds have been established and prior to the
314issuance of storm recovery bonds, the electric utility shall
315determine the resulting initial storm recovery charge in
316accordance with the financing order and such initial storm
317recovery charge shall be final and effective upon the issuance
318of such storm recovery bonds without further commission action.
319     i.  Include any other conditions that the commission
320considers appropriate and that are not otherwise inconsistent
321with this section.
322     3.  A financing order issued to an electric utility may
323provide that the electric utility's storm recovery property
324created pursuant to sub-subparagraph 2.e. is conditioned upon,
325and shall be simultaneous with, the sale or other transfer of
326the storm recovery property to an assignee and the pledge of the
327storm recovery property to secure storm recovery bonds.
328     4.  If the commission issues a financing order, the
329electric utility shall file with the commission at least
330biannually a petition or a letter applying the formula-based
331mechanism pursuant to sub-subparagraph 2.d. and, based on
332estimates of consumption for each rate class and other
333mathematical factors, requesting administrative approval to make
334the adjustments described in sub-subparagraph 2.d. The review of
335such a request shall be limited to determining whether there is
336any mathematical error in the application of the formula-based
337mechanism relating to the appropriate amount of any
338overcollection or undercollection of storm recovery charges and
339the amount of an adjustment. Such adjustments shall ensure the
340recovery of revenues sufficient to provide for the payment of
341principal, interest, acquisition, defeasance, financing costs,
342or redemption premium and other fees, costs, and charges in
343respect of storm recovery bonds approved under the financing
344order. Within 60 days after receiving an electric utility's
345request pursuant to this paragraph, the commission shall either
346approve the request or inform the electric utility of any
347mathematical errors in its calculation. If the commission
348informs the utility of mathematical errors in its calculation,
349the utility may correct its error and refile its request. The
350timeframes previously described in this paragraph shall apply to
351a refiled request.
352     5.  Subsequent to the earlier of the transfer of storm
353recovery property to an assignee and the issuance of storm
354recovery bonds authorized thereby, a financing order shall be
355irrevocable and, except as provided in subparagraph 4. and
356paragraph (c), the commission shall not amend, modify, or
357terminate the financing order by any subsequent action or
358reduce, impair, postpone, terminate, or otherwise adjust storm
359recovery charges approved in the financing order. After the
360issuance of a financing order, the electric utility shall retain
361sole discretion regarding whether to assign, sell, or otherwise
362transfer storm recovery property or to cause the storm recovery
363bonds to be issued, including the right to defer or postpone
364such assignment, sale, transfer, or issuance.
365     (c)  At the request of an electric utility, the commission
366may commence a proceeding and issue a subsequent financing order
367that provides for retiring and refunding storm recovery bonds
368issued pursuant to the original financing order if the
369commission finds that the subsequent financing order satisfies
370all of the criteria specified in paragraph (b). Effective on
371retirement of the refunded storm recovery bonds and the issuance
372of new storm recovery bonds, the commission shall adjust the
373related storm recovery charges accordingly.
374     (d)  Within 10 days after the commission issues either an
375order pursuant to paragraph (b) or a decision denying a request
376for reconsideration or, if the request for reconsideration is
377granted, within 10 days after the commission issues its decision
378on reconsideration, an adversely affected party may petition for
379judicial review in the Florida Supreme Court. The petition for
380review shall be served upon the executive director of the
381commission either personally or by service at the office of the
382commission. Review on appeal shall be based solely on the record
383before the commission and briefs to the court and shall be
384limited to determining whether the order issued pursuant to
385paragraph (b), or the order on reconsideration, conforms to the
386constitution and laws of this state and the United States and is
387within the authority of the commission under this section.
388Inasmuch as delay in the determination of the appeal of a
389financing order will delay the issuance of storm recovery bonds,
390thereby diminishing savings to customers that might be achieved
391if such bonds were issued as contemplated by a financing order,
392the Supreme Court shall proceed to hear and determine the action
393as expeditiously as practicable and give the action precedence
394over other matters not accorded similar precedence by law.
395     (e)1.  A financing order shall remain in effect until the
396storm recovery bonds issued pursuant to the order have been paid
397in full and the financing and other costs of such bonds have
398been recovered in full.
399     2.  A financing order issued to an electric utility shall
400remain in effect and unabated notwithstanding the
401reorganization, bankruptcy, or other insolvency proceedings of
402the electric utility or its successors or assignees.
403     (3)  EXCEPTIONS TO COMMISSION JURISDICTION.--
404     (a)  If the commission issues a financing order to an
405electric utility pursuant to this section, the commission may
406not, in exercising its powers and carrying out its duties
407regarding any matter within its authority pursuant to this
408chapter, consider the storm recovery bonds issued pursuant to
409the order to be the debt of the electric utility other than for
410federal income tax purposes, the storm recovery charges paid
411under the order to be the revenue of the electric utility for
412any purpose, or the storm recovery costs or financing costs
413specified in the order to be the costs of the electric utility,
414nor may the commission determine any action taken by an electric
415utility that is consistent with the order to be unjust or
416unreasonable.
417     (b)  The commission may not order or otherwise directly or
418indirectly require an electric utility to use storm recovery
419bonds to finance any project, addition, plant, facility,
420extension, capital improvement, equipment, or any other
421expenditure, unless the electric utility has filed a petition
422under paragraph (2)(a) to finance such expenditure using storm
423recovery bonds. The commission may not refuse to allow an
424electric utility to recover costs for storm recovery activities
425in an otherwise permissible fashion, or refuse or condition
426authorization or approval pursuant to s. 366.04 of the issuance
427and sale by an electric utility of securities or the assumption
428by it of liabilities or obligations, solely because of the
429potential availability of storm recovery financing.
430     (4)  ELECTRIC UTILITY DUTIES.--
431     (a)  The electric bills of an electric utility that has
432obtained a financing order and issued storm recovery bonds shall
433explicitly reflect that a portion of the charges on such bill
434represents storm recovery charges approved in a financing order
435issued to the electric utility and, if the storm recovery
436property has been transferred to an assignee, a statement to the
437effect that the assignee is the owner of the rights to storm
438recovery charges and that the electric utility or any other
439entity, if applicable, is acting as a collection agent or
440servicer for the assignee. The tariff applicable to customers
441shall indicate the storm recovery charge and the ownership of
442that charge. The commission shall determine whether to require
443electric utilities to include such information or amounts owed
444with respect to the storm recovery property as a separate line
445item on individual electric bills.
446     (b)  The failure of an electric utility to comply with this
447subsection shall not invalidate, impair, or affect any financing
448order, storm recovery property, storm recovery charge, or storm
449recovery bonds.
450     (5)  STORM RECOVERY PROPERTY.--
451     (a)1.  All storm recovery property that is specified in a
452financing order shall constitute an existing, present property
453right or interest therein, notwithstanding that the imposition
454and collection of storm recovery charges depends on the electric
455utility to which the order is issued performing its servicing
456functions relating to the collection of storm recovery charges
457and on future electricity consumption. Such property shall exist
458whether or not the revenues or proceeds arising from the
459property have been billed, have accrued, or have been collected
460and notwithstanding the fact that the value or amount of the
461property is dependent on the future provision of service to
462customers by the electric utility or its successors or
463assignees.
464     2.  Storm recovery property specified in a financing order
465shall continue to exist until the storm recovery bonds issued
466pursuant to the order are paid in full and all financing costs
467and other costs of the bonds have been recovered in full.
468     3.  All or any portion of storm recovery property specified
469in a financing order issued to an electric utility may be
470transferred, sold, conveyed, or assigned to a successor or
471assignee, including an affiliate or affiliates of the electric
472utility created for the limited purpose of acquiring, owning, or
473administering storm recovery property or issuing storm recovery
474bonds under the financing order. All or any portion of storm
475recovery property may be pledged to secure storm recovery bonds
476issued pursuant to the order, amounts payable to financing
477parties and to counterparties under any ancillary agreements,
478and other financing costs. Each such transfer, sale, conveyance,
479assignment, or pledge by an electric utility or affiliate of an
480electric utility is considered to be a transaction in the
481ordinary course of business.
482     4.  If an electric utility defaults on any required payment
483of charges arising from storm recovery property specified in a
484financing order, a court, upon application by an interested
485party, and without limiting any other remedies available to the
486applying party, shall order the sequestration and payment of the
487revenues arising from the storm recovery property to the
488financing parties. Any such order shall remain in full force and
489effect notwithstanding any reorganization, bankruptcy, or other
490insolvency proceedings with respect to the electric utility or
491its successors or assignees.
492     5.  The interest of a transferee, purchaser, acquirer,
493assignee, or pledgee in storm recovery property specified in a
494financing order issued to an electric utility, and in the
495revenue and collections arising from that property, is not
496subject to setoff, counterclaim, surcharge, or defense by the
497electric utility or any other person or in connection with the
498reorganization, bankruptcy, or other insolvency of the electric
499utility or any other entity.
500     6.  Any successor to an electric utility, whether pursuant
501to any reorganization, bankruptcy, or other insolvency
502proceeding or whether pursuant to any merger or acquisition,
503sale, or other business combination, or transfer by operation of
504law, as a result of electric utility restructuring or otherwise,
505shall perform and satisfy all obligations of, and have the same
506rights under a financing order as, the electric utility under
507the financing order in the same manner and to the same extent as
508the electric utility, including collecting and paying to the
509person entitled to receive the revenues, collections, payments,
510or proceeds of the storm recovery property.
511     (b)1.  Except as specified in this section, the Uniform
512Commercial Code shall not apply to storm recovery property or
513any right, title, or interest of a utility or assignee described
514in subparagraph (1)(o)1., whether before or after the issuance
515of the financing order. In addition, such right, title, or
516interest pertaining to a financing order, including, but not
517limited to, the associated storm recovery property and any
518revenues, collections, claims, rights to payment, payments,
519money, or proceeds of or arising from storm recovery charges
520pursuant to such order, shall not be deemed proceeds of any
521right or interest other than in the financing order and the
522storm recovery property arising from the order.
523     2.  The creation, attachment, granting, perfection, and
524enforcement of liens and security interests in storm recovery
525property to secure storm recovery bonds is governed solely by
526this section and not by the Uniform Commercial Code.
527     3.  A valid, enforceable, and attached lien and security
528interest in storm recovery property may be created only upon the
529later of:
530     a.  The issuance of a financing order;
531     b.  The execution and delivery of a security agreement with
532a financing party in connection with the issuance of storm
533recovery bonds; or
534     c.  The receipt of value for the storm recovery bonds.
535
536A valid, enforceable, and attached security interest shall be
537perfected against third parties as of the date of filing of a
538financing statement in the Florida Secured Transaction Registry,
539as such registry is defined in Article 9 of the Uniform
540Commercial Code, in accordance with subparagraph 4., and shall
541thereafter be a continuously perfected lien; and such security
542interest in the storm recovery property and all proceeds of such
543storm recovery property, whether or not billed, accrued, or
544collected, and whether or not deposited into a deposit account
545and however evidenced, shall have priority in accordance with
546subparagraph 8. and take precedence over any subsequent judicial
547or other lien creditor. No continuation statement need be filed
548to maintain such perfection.
549     4.  Financing statements required to be filed pursuant to
550this section shall be filed, maintained, and indexed in the same
551manner and in the same system of records maintained for the
552filing of financing statements in the Florida Secured
553Transaction Registry under Article 9 of the Uniform Commercial
554Code. The filing of such a financing statement shall be the only
555method of perfecting a lien or security interest on storm
556recovery property.
557     5.  The priority of a lien and security interest perfected
558under this paragraph is not impaired by any later modification
559of the financing order or storm recovery property or by the
560commingling of funds arising from storm recovery property with
561other funds, and any other security interest that may apply to
562those funds shall be terminated as to all funds transferred to a
563segregated account for the benefit of an assignee or a financing
564party or to an assignee or financing party directly.
565     6.  If a default or termination occurs under the terms of
566the storm recovery bonds, the financing parties or their
567representatives may foreclose on or otherwise enforce their lien
568and security interest in any storm recovery property as if they
569were a secured party under Article 9 of the Uniform Commercial
570Code; and a court may order that amounts arising from storm
571recovery property be transferred to a separate account for the
572financing parties' benefit, to which their lien and security
573interest shall apply. On application by or on behalf of the
574financing parties to a circuit court of this state, such court
575shall order the sequestration and payment to the financing
576parties of revenues arising from the storm recovery property.
577     7.  The interest of a pledgee of an interest or any rights
578in any storm recovery property is not perfected until filing as
579provided in subparagraph 4.
580     8.  The priority of the conflicting interests of pledgees
581in the same interest or rights in any storm recovery property is
582determined as follows:
583     a.  Conflicting perfected interests or rights of pledgees
584rank according to priority in time of perfection. Priority dates
585from the time a filing covering the interest or right is made in
586accordance with this paragraph.
587     b.  A perfected interest or right of a pledgee has priority
588over a conflicting unperfected interest or right of a pledgee.
589     c.  A perfected interest or right of a pledgee has priority
590over a person who becomes a lien creditor after the perfection
591of such pledgee's interest or right.
592     (c)  The sale, assignment, or transfer of storm recovery
593property is governed by this paragraph. All of the following
594apply to a sale, assignment, or transfer under this paragraph:
595     1.  The sale, conveyance, assignment, or other transfer of
596storm recovery property by an electric utility to an assignee
597that the parties have in the governing documentation expressly
598stated to be a sale or other absolute transfer is an absolute
599transfer and true sale of, and not a pledge of or secured
600transaction relating to, the transferor's right, title, and
601interest in, to, and under the storm recovery property, other
602than for federal and state income and franchise tax purposes.
603After such a transaction, the storm recovery property is not
604subject to any claims of the transferor or the transferor's
605creditors, other than creditors holding a prior security
606interest in the storm recovery property perfected under
607paragraph (b).
608     2.  The characterization of the sale, conveyance,
609assignment, or other transfer as a true sale or other absolute
610transfer under subparagraph 1. and the corresponding
611characterization of the transferee's property interest is not
612affected by:
613     a.  Commingling of amounts arising with respect to the
614storm recovery property with other amounts.
615     b.  The retention by the transferor of a partial or
616residual interest, including an equity interest, in the storm
617recovery property, whether direct or indirect, or whether
618subordinate or otherwise.
619     c.  Any recourse that the transferee may have against the
620transferor other than any such recourse created, contingent
621upon, or otherwise occurring or resulting from one or more of
622the transferor's customers' inability to timely pay all or a
623portion of the storm recovery charge.
624     d.  Any indemnifications, obligations, or repurchase rights
625made or provided by the transferor, other than indemnity or
626repurchase rights based solely upon a transferor's customers'
627inability to timely pay all or a portion of the storm recovery
628charge.
629     e.  The responsibility of the transferor to collect storm
630recovery charges.
631     f.  The treatment of the sale, conveyance, assignment, or
632other transfer for tax, financial reporting, or other purposes.
633     g.  Granting or providing to holders of the storm recovery
634bonds a preferred right to the storm recovery property or credit
635enhancement by the electric utility or its affiliates with
636respect to the storm recovery bonds.
637     3.  Any right that an electric utility has in the storm
638recovery property prior to its pledge, sale, or transfer or any
639other right created under this section or created in the
640financing order and assignable under this section or assignable
641pursuant to a financing order shall be property in the form of a
642contract right. Transfer of an interest in storm recovery
643property to an assignee is enforceable only upon the later of
644the issuance of a financing order, the execution and delivery of
645transfer documents to the assignee in connection with the
646issuance of storm recovery bonds, and the receipt of value. An
647enforceable transfer of an interest in storm recovery property
648to an assignee shall be perfected against all third parties,
649including subsequent judicial or other lien creditors, when a
650notice of that transfer has been given by the filing of a
651financing statement in accordance with subparagraph 4. The
652transfer shall be perfected against third parties as of the date
653of filing.
654     4.  Financing statements required to be filed under this
655section shall be maintained and indexed in the same manner and
656in the same system of records maintained for the filing of
657financing statements in the Florida Secured Transaction Registry
658under Article 9 of the Uniform Commercial Code. The filing of
659such a financing statement shall be the only method of
660perfecting a transfer of storm recovery property.
661     5.  The priority of a transfer perfected under this section
662is not impaired by any later modification of the financing order
663or storm recovery property or by the commingling of funds
664arising from storm recovery property with other funds, and any
665other security interest that may apply to those funds shall be
666terminated when they are transferred to a segregated account for
667the assignee or a financing party. If storm recovery property
668has been transferred to an assignee or financing party, any
669proceeds of that property shall be held in trust for the
670assignee or financing party.
671     6.  The priority of the conflicting interests of assignees
672in the same interest or rights in any storm recovery property is
673determined as follows:
674     a.  Conflicting perfected interests or rights of assignees
675rank according to priority in time of perfection. Priority dates
676from the time a filing covering the transfer is made in
677accordance with subparagraph 4.
678     b.  A perfected interest or right of an assignee has
679priority over a conflicting unperfected interest or right of an
680assignee.
681     c.  A perfected interest or right of an assignee has
682priority over a person who becomes a lien creditor after the
683perfection of such assignee's interest or right.
684     (6)  DESCRIPTION OR INDICATION OF PROPERTY.--The
685description of storm recovery property being transferred to an
686assignee in any sale agreement, purchase agreement, or other
687transfer agreement, granted or pledged to a pledgee in any
688security agreement, pledge agreement, or other security
689document, or indicated in any financing statement is only
690sufficient if such description or indication describes the
691financing order that created the storm recovery property and
692states that such agreement or financing statement covers all or
693part of such property described in such financing order. This
694subsection applies to all purported transfers of, and all
695purported grants or liens or security interests in, storm
696recovery property, regardless of whether the related sale
697agreement, purchase agreement, other transfer agreement,
698security agreement, pledge agreement, or other security document
699was entered into, or any financing statement was filed, before
700or after the effective date of this section.
701     (7)  FINANCING STATEMENTS.--All financing statements
702referenced in this section shall be subject to Part 5 of Article
7039 of the Uniform Commercial Code except the requirement as to
704continuation statements shall not apply.
705     (8)  CHOICE OF LAW.--The law governing the validity,
706enforceability, attachment, perfection, priority, and exercise
707of remedies with respect to the transfer of an interest or right
708or the pledge or creation of a security interest in any storm
709recovery property shall be the laws of this state, and
710exclusively, the laws of this section.
711     (9)  STORM RECOVERY BONDS NOT PUBLIC DEBT.--The state or
712its political subdivisions are not liable on any storm recovery
713bonds, and the bonds are not a debt or a general obligation of
714the state or any of its political subdivisions, agencies, or
715instrumentalities. An issue of storm recovery bonds does not,
716directly or indirectly or contingently, obligate the state or
717any agency, political subdivision, or instrumentality of the
718state to levy any tax or make any appropriation for payment of
719the bonds, other than in their capacity as consumers of
720electricity. This subsection shall in no way preclude bond
721guarantees or enhancements pursuant to this section. All bonds
722shall contain on the face thereof a statement to the following
723effect: "Neither the full faith and credit nor the taxing power
724of the State of Florida is pledged to the payment of the
725principal of, or interest on, this bond."
726     (10)  STORM RECOVERY BONDS AS LEGAL INVESTMENTS WITH
727RESPECT TO INVESTORS THAT REQUIRE STATUTORY AUTHORITY REGARDING
728LEGAL INVESTMENT.--The following entities may legally invest any
729sinking funds, moneys, or other funds belonging to them or under
730their control in storm recovery bonds:
731     (a)  The state, the investment board, municipal
732corporations, political subdivisions, public bodies, and public
733officers except for members of the commission.
734     (b)  Banks and bankers, savings and loan associations,
735credit unions, trust companies, savings banks and institutions,
736investment companies, insurance companies, insurance
737associations, and other persons carrying on a banking or
738insurance business.
739     (c)  Personal representatives, guardians, trustees, and
740other fiduciaries.
741     (d)  All other persons whatsoever who are now or may
742hereafter be authorized to invest in bonds or other obligations
743of a similar nature.
744     (11)  STATE PLEDGE.--
745     (a)  For purposes of this subsection, the term "bondholder"
746means a person who holds a storm recovery bond.
747     (b)  The state pledges to and agrees with bondholders, the
748owners of the storm recovery property, and other financing
749parties that the state will not:
750     1.  Alter the provisions of this section which make the
751storm recovery charges imposed by a financing order irrevocable,
752binding, and nonbypassable charges;
753     2.  Take or permit any action that impairs or would impair
754the value of storm recovery property; or
755     3.  Except as allowed under this section, reduce, alter, or
756impair storm recovery charges that are to be imposed, collected,
757and remitted for the benefit of the bondholders and other
758financing parties until any and all principal, interest,
759premium, financing costs and other fees, expenses, or charges
760incurred, and any contracts to be performed, in connection with
761the related storm recovery bonds have been paid and performed in
762full.
763
764Nothing in this paragraph shall preclude limitation or
765alteration if full compensation is made by law for the full
766protection of the storm recovery charges collected pursuant to a
767financing order and of the holders of storm recovery bonds and
768any assignee or financing party entering into a contract with
769the electric utility.
770     (c)  Any person or entity that issues storm recovery bonds
771may include the pledge specified in paragraph (b) in the bonds
772and related documentation.
773     (12)  TAX EXEMPTION.--Revenues collected pursuant to a
774financing order and transactions involving the transfer and
775ownership of storm recovery property and the receipt of storm
776recovery charges by an electric utility, or its successors,
777assignees, or financing parties, shall not be deemed to be
778income for purposes of chapter 220 or any local income taxes,
779and shall be exempt from state and local sales, franchise, gross
780receipts, and other taxes or similar charges.
781     (13)  NOT AN ELECTRIC UTILITY.--An assignee or financing
782party shall not be considered an electric utility or person
783providing electric service by virtue of engaging in the
784transactions described in this section.
785     (14)  CONFLICTS.--In the event of conflict between this
786section and any other law regarding the attachment, assignment,
787or perfection, or the effect of perfection, or priority of,
788assignment or transfer of, or security interest in storm
789recovery property, this section shall govern to the extent of
790the conflict.
791     (15)  EFFECT OF INVALIDITY ON ACTIONS.--Effective on the
792date that storm recovery bonds are first issued under this
793section, if any provision of this section is held to be invalid
794or is invalidated, superseded, replaced, repealed, or expires
795for any reason, that occurrence shall not affect the validity of
796any action allowed under this section that is taken by an
797electric utility, an assignee, a financing party, a collection
798agent, or a party to an ancillary agreement; and any such action
799shall remain in full force and effect with respect to all storm
800recovery bonds issued or authorized in a financing order to be
801issued under this section prior to the date that such provision
802is held to be invalid or is invalidated, superseded, replaced,
803or repealed, or that expires for any reason.
804     (16)  AUTHORITY.--Commission authority to issue financing
805orders pursuant to this section shall apply only to petitions
806filed pursuant to paragraph (2)(a) within 12 months after the
807effective date of this section. The expiration of the authority
808shall have no effect upon financing orders adopted by the
809commission pursuant to this section; any storm recovery property
810arising therefrom; any charges authorized to be levied
811thereunder; any rights, interests, and obligations of the
812electric utility, an assignee, or a financing party, holders of
813storm recovery bonds, or parties to ancillary agreements
814pursuant to the financing order; or the authority of the
815commission to monitor, supervise, or take further action with
816respect to the order in accordance with the terms of this
817section and of the order.
818     (17)  EXPIRATION.--This section shall expire on January 1
819of the second year following payment in full of all storm
820recovery bonds issued pursuant to this section and all related
821financing costs as noticed by the commission to the Joint
822Administrative Procedures Committee of the Legislature with a
823copy of such notice published in the Florida Administrative
824Weekly, but shall continue to apply to any causes of action
825timely made arising from or relating to matters addressed in
826this section.
827     Section 2.  Paragraphs (m) and (n) of subsection (4) of
828section 679.1091, Florida Statutes, are amended, and new
829paragraph (o) is added to said subsection, to read:
830     679.1091  Scope.--
831     (4)  This chapter does not apply to:
832     (m)  An assignment of a deposit account, other than a
833nonnegotiable certificate of deposit, in a consumer transaction,
834but ss. 679.3151 and 679.322 apply with respect to proceeds and
835priorities in proceeds; or
836     (n)  Any transfer by a government or governmental unit; or
837     (o)  A transfer or pledge of, or creation of a security
838interest in, any interest or right or portion of any interest or
839right in any storm recovery property as defined in s. 366.8260.
840     Section 3.  This act shall take effect upon becoming a law.


CODING: Words stricken are deletions; words underlined are additions.