HB 0303

CS

CHAMBER ACTION

1	The Utilities & Telecommunications Committee recommends the
2	following:
3
4	Council/Committee Substitute
5	Remove the entire bill and insert:
6	A bill to be entitled
7	An act relating to storm recovery financing; creating s.
8	366.8260, F.S.; providing definitions; authorizing
9	electric utilities to petition the Florida Public Service
10	Commission for certain financing orders for certain storm
11	recovery purposes; providing requirements; providing
12	powers and duties of the commission in issuing such
13	orders; specifying procedures and requirements for the
14	commission in issuing financing orders; authorizing the
15	commission to engage outside consultants or counsel for
16	certain purposes; authorizing payment of certain expenses
17	from storm recovery bonds; authorizing electric utilities
18	to create storm recovery property; providing for pledge of
19	storm recovery property to secure storm recovery bonds;
20	providing for retirement of storm recovery bonds under
21	certain circumstances; providing for judicial review of
22	such orders; providing for effect of such orders;
23	providing exceptions to commission jurisdiction to issue
24	financing orders; providing limitations; prohibiting the
25	commission from requiring use of storm recovery bonds for
26	certain purposes; specifying duties of electric utilities;
27	specifying properties, requirements, permissible
28	activities, and limitations relating to storm recovery
29	property under certain circumstances; providing for
30	security interests in storm recovery property; providing
31	for perfecting security interests in storm recovery
32	property; providing for priority of and resolution of
33	conflicting interests; providing requirements, procedures,
34	and limitations for sale, assignment, or transfer of storm
35	recovery property; providing requirements for descriptions
36	or indications of storm recovery property transferred,
37	granted, or pledged, or indicated in a financing
38	statement; subjecting financing statements to certain
39	provisions of law; specifying that storm recovery bonds
40	are not public debt; specifying storm recovery bonds as
41	legal investments for certain entities; specifying certain
42	state pledges relating to bondholders; providing a tax
43	exemption for certain revenues collected by electric
44	utilities under certain circumstances; declaring certain
45	entities as not electric utilities under certain
46	circumstances; specifying effect of certain provisions in
47	situations of conflict; providing for protecting validity
48	of certain bonds under certain circumstances; limiting
49	commission authority to issue certain financing orders
50	after a time certain; providing for section expiration
51	under certain circumstances; providing for continued
52	application under certain circumstances; amending s.
53	679.1091, F.S.; specifying nonapplication of secured
54	transactions provisions of the Uniform Commercial Code to
55	interests in storm recovery property; providing an
56	effective date.
57
58	WHEREAS, four major hurricanes struck Florida within a span
59	of 6 weeks during the unprecedented 2004 hurricane season, and
60	WHEREAS, the hurricanes resulted in widespread and
61	protracted power outages affecting millions of Florida
62	residents, and
63	WHEREAS, the hurricanes had a destructive impact on the
64	electric infrastructure of Florida's investor-owned electric
65	utilities, and
66	WHEREAS, it is in the public interest for Florida's
67	investor-owned electric utilities to safely and expeditiously
68	restore electric service following a hurricane or named tropical
69	storm, and
70	WHEREAS, given the unprecedented impact of the 2004
71	hurricane season, the storm reserves and insurance proceeds of
72	Florida's investor-owned electric utilities were insufficient to
73	cover the costs of electric restoration following the 2004
74	hurricanes, and
75	WHEREAS, it is in the public interest for Florida's
76	investor-owned electric utilities to replenish their reserves to
77	provide for costs of electric restoration in the event of a
78	hurricane or named tropical storm, and
79	WHEREAS, existing provisions of the Florida Statutes
80	authorize the Florida Public Service Commission to permit
81	recovery of deficiencies in and reestablishment of investor-
82	owned utility storm reserves but do not provide a specific
83	financing mechanism for doing so, and
84	WHEREAS, the financing arrangement to be authorized and
85	enabled by this legislation, which allows for the recovery of
86	deficiencies in and provides a mechanism for reestablishment of
87	investor-owned electric utility storm reserves, will facilitate
88	the expeditious recovery of deficiencies in and reestablishment
89	of investor-owned utility reserves and is expected to minimize
90	the rate impact to investor-owned electric utilities' customers
91	compared with the traditional method of recovering such costs
92	from customers and alternative financing methods available to
93	investor-owned electric utilities, and
94	WHEREAS, the provision of adequate and efficient electric
95	service by financially sound investor-owned electric utilities
96	is in the public interest, NOW, THEREFORE,
97
98	Be It Enacted by the Legislature of the State of Florida:
99
100	Section 1.  Section 366.8260, Florida Statutes, is created
101	to read:
102	366.8260  Storm recovery financing.--
103	(1)  DEFINITIONS.--As used in this section:
104	(a)  "Ancillary agreement" means any bond, insurance
105	policy, letter of credit, reserve account, surety bond, swap
106	arrangement, hedging arrangement, liquidity or credit support
107	arrangement, or other financial arrangement entered into in
108	connection with the issuance of storm recovery bonds.
109	(b)  "Assignee" means any entity, including, but not
110	limited to, a corporation, limited liability company,
111	partnership or limited partnership, public authority, trust,
112	financing entity, or other legally recognized entity to which an
113	electric utility assigns, sells, or transfers, other than as
114	security, all or a portion of its interest in or right to storm
115	recovery property. The term also includes any entity to which a
116	direct assignee of an electric utility may assign, sell, or
117	transfer, other than as security, its interest in or right to
118	storm recovery property.
119	(c)  "Commission" means the Florida Public Service
120	Commission.
121	(d)  "Electric utility" or "utility" has the same meaning
122	as that provided in s. 366.8255.
123	(e)  "Financing costs" means:
124	1.  Interest and acquisition, defeasance, or redemption
125	premiums that are payable on storm recovery bonds;
126	2.  Any payment required under an ancillary agreement and
127	any amount required to fund or replenish a reserve account or
128	other accounts established under the terms of any indenture,
129	ancillary agreement, or other financing documents pertaining to
130	storm recovery bonds;
131	3.  Any other cost related to issuing, supporting,
132	repaying, and servicing storm recovery bonds, including, but not
133	limited to, servicing fees, accounting and auditing fees,
134	trustee fees, legal fees, consulting fees, administrative fees,
135	placement and underwriting fees, capitalized interest, rating
136	agency fees, stock exchange listing and compliance fees, and
137	filing fees, including costs related to obtaining the financing
138	order;
139	4.  Costs to finance any deficiency or deficiencies in
140	storm recovery reserves until such time as storm recovery bonds
141	are issued;
142	5.  Any taxes and license fees imposed on the revenues
143	generated from the collection of storm recovery charges;
144	6.  Any income taxes resulting from the collection of storm
145	recovery charges net of tax deductions; or
146	7.  Costs of retiring any existing indebtedness related to
147	storm recovery costs.
148	(f)  "Financing order" means an order under subsection (2)
149	that allows for the issuance of storm recovery bonds, the
150	imposition and collection and periodic adjustments of storm
151	recovery charges, and the creation of storm recovery property.
152	(g)  "Financing party" means holders of storm recovery
153	bonds and trustees, collateral agents, or other persons acting
154	for the benefit of holders of storm recovery bonds.
155	(h)  "Financing statement" has the same meaning as that
156	provided in Article 9 of the Uniform Commercial Code.
157	(i)  "Pledgee" means a financing party to which an electric
158	utility or its successors or assignees mortgages, negotiates,
159	hypothecates, pledges, or creates a security interest or lien on
160	all or any portion of its interest in or right to storm recovery
161	property.
162	(j)  "Storm" means a named tropical storm or hurricane that
163	occurred during calendar year 2004.
164	(k)  "Storm recovery activity" means any activity or
165	activities by or on behalf of an electric utility in connection
166	with the restoration of service associated with electric power
167	outages affecting customers of an electric utility as the result
168	of a storm or storms, including, but not limited to,
169	mobilization, staging, and construction, reconstruction,
170	replacement, or repair of electric generation, transmission, or
171	distribution facilities.
172	(l)  "Storm recovery bonds" means bonds, debentures, notes,
173	certificates of participation, certificates of beneficial
174	interest, certificates of ownership, or other evidences of
175	indebtedness or ownership that are issued by an electric utility
176	or an assignee pursuant to a financing order, the proceeds of
177	which are used directly or indirectly to recover, finance, or
178	refinance storm recovery costs and financing costs and that are
179	secured by or payable from storm recovery property.
180	(m)  "Storm recovery charge" means the amounts authorized
181	by the commission to recover, finance, or refinance storm
182	recovery costs and financing costs as provided for in a
183	financing order to be imposed on all customer bills and
184	collected by an electric utility or its successors or assignees,
185	or a collection agent, in full through a charge that is separate
186	and apart from the electric utility's base rates, which charge
187	shall be paid by all customers receiving transmission or
188	distribution service from the electric utility or its successors
189	or assignees under commission-approved rate schedules or under
190	special contracts, even if the customer elects to purchase
191	electricity from an alternative electricity supplier following a
192	fundamental change in regulation of public utilities in this
193	state.
194	(n)  "Storm recovery costs" means, at the option and
195	request of the electric utility, and as approved by the
196	commission pursuant to sub-subparagraph (2)(b)1.b., costs
197	incurred or to be incurred by an electric utility in undertaking
198	a storm recovery activity net of applicable insurance proceeds
199	and normal capital replacement and operating costs, which may
200	include the amount necessary to replenish the storm recovery
201	reserve to the level that existed before the storm or storms, or
202	such other level as the commission may authorize in a financing
203	order.
204	(o)  "Storm recovery property" means:
205	1.  All rights and interests of an electric utility or
206	successor or assignee of the electric utility under a financing
207	order, including the right to impose, bill, collect, and receive
208	storm recovery charges authorized in the financing order and to
209	obtain periodic adjustments to such charges as provided in the
210	financing order.
211	2.  All revenues, collections, claims, rights to payments,
212	payments, money, or proceeds arising from the rights and
213	interests specified in subparagraph 1., regardless of whether
214	such revenues, collections, claims, rights to payment, payments,
215	money, or proceeds are imposed, billed, received, collected, or
216	maintained together with or commingled with other revenues,
217	collections, rights to payment, payments, money, or proceeds.
218	(p)  "Storm recovery reserve" means an electric utility's
219	funded or unfunded storm reserve or such other similar reserve
220	established by law or rule or pursuant to order of the
221	commission.
222	(q)  "Uniform Commercial Code" has the same meaning as that
223	provided in s. 671.101.
224	(2)  FINANCING ORDERS.--
225	(a)  An electric utility may petition the commission for a
226	financing order. For each petition, an electric utility shall:
227	1.  Describe the storm recovery activities that the
228	electric utility has undertaken or proposes to undertake and
229	describe the reasons for undertaking the activities.
230	2.  Estimate the storm recovery costs as identified and
231	requested by the electric utility.
232	3.  Indicate whether the electric utility proposes to
233	finance all or a portion of the storm recovery costs estimated
234	under subparagraph 2. with storm recovery bonds. If the electric
235	utility proposes to finance a portion of such costs, the
236	electric utility shall identify that portion in the petition.
237	4.  Estimate the financing costs related to the storm
238	recovery bonds proposed under subparagraph 3.
239	5.  Estimate the storm recovery charges necessary to
240	recover the storm recovery costs and financing costs estimated
241	in the petition and the period for recovery of such costs.
242	6.  Estimate any cost savings or demonstrate how the
243	financing order would avoid or significantly mitigate rate
244	impacts to customers resulting from financing storm recovery
245	costs with storm recovery bonds as opposed to the traditional
246	method of recovering such costs from customers and through
247	alternative financing methods available to the electric utility.
248	7.  File with the petition direct testimony supporting the
249	petition.
250	(b)1.  Proceedings on a petition submitted pursuant to
251	paragraph (a) shall begin with a petition by an electric utility
252	and shall be disposed of in accordance with the provisions of
253	chapter 120 and applicable rules, except that the provisions of
254	this section, to the extent applicable, shall control.
255	a.  Within 7 days after the filing of a petition, the
256	commission shall publish a case schedule, which schedule shall
257	place the matter before the commission on an agenda that will
258	permit a commission decision no later than 120 days after the
259	date the petition is filed.
260	b.  No later than 135 days after the date the petition is
261	filed, the commission shall issue a financing order or an order
262	rejecting the petition. A party to the commission proceeding may
263	petition the commission for reconsideration of the financing
264	order within 5 days after the date of its issuance. The
265	commission shall issue a financing order authorizing financing
266	of reasonable and prudent storm recovery costs and financing
267	costs if the commission finds that the issuance of the storm
268	recovery bonds and the imposition of storm recovery charges
269	authorized by the order are reasonably expected to result in
270	lower overall costs or would avoid or significantly mitigate
271	rate impacts to customers than would alternative methods of
272	financing or recovering storm recovery costs. Any determination
273	of whether storm recovery costs are reasonable and prudent shall
274	be made with reference to the general public interest in, and
275	the scope of effort required to provide, the safe and
276	expeditious restoration of electric service.
277	2.  In a financing order issued to an electric utility, the
278	commission shall:
279	a.  Except as provided in sub-subparagraph d. and in
280	subparagraph 4., specify the amount of storm recovery costs and
281	describe and estimate the amount of financing costs that may be
282	recovered through storm recovery charges and the period over
283	which such costs may be recovered.
284	b.  Determine that the proposed structuring, expected
285	pricing, and financing costs of the storm recovery bonds are
286	reasonably expected to result in lower overall costs or would
287	avoid or significantly mitigate rate impacts to customers than
288	would alternative methods of financing or recovering storm
289	recovery costs.
290	c.  Ensure that the marketing, structuring, pricing, and
291	financing costs of the storm recovery bonds will result in the
292	lowest cost of the funds and the lowest storm recovery charges
293	that are consistent with market conditions and the terms of the
294	financing order.
295	d.  Provide that, for the period specified pursuant to sub-
296	subparagraph a., the imposition and collection of storm recovery
297	charges authorized in the financing order shall be paid by all
298	customers receiving transmission or distribution service from
299	the electric utility or its successors or assignees under
300	commission-approved rate schedules or under special contracts,
301	even in the event the customer elects to purchase electricity
302	from an alternative electric supplier following a fundamental
303	change in regulation of public utilities in the state.
304	e.  Determine what portion, if any, of the storm recovery
305	reserve must be held in a funded storm recovery reserve.
306	f.  Include a formula-based mechanism for making
307	expeditious periodic adjustments in the storm recovery charges
308	that customers are required to pay under the financing order and
309	making any adjustments that are necessary to correct for any
310	overcollection or undercollection of the charges or to otherwise
311	ensure the timely payment of storm recovery bonds and financing
312	costs and other required amounts and charges payable in
313	connection with the storm recovery bonds.
314	g.  Specify the storm recovery property that is, or shall
315	be, created in favor of an electric utility or its successors or
316	assignees and that shall be used to pay or secure storm recovery
317	bonds and financing costs.
318	h.  Specify the degree of flexibility to be afforded to the
319	electric utility in establishing the terms and conditions of the
320	storm recovery bonds, including, but not limited to, repayment
321	schedules, interest rates, maturity date, and other financing
322	costs.
323	i.  Provide that storm recovery charges shall be allocated
324	to the customer classes using the criteria set out in s.
325	366.06(1), in the manner in which these costs or their
326	equivalent were allocated in the cost-of-service study approved
327	in connection with the electric utility's last rate case. If the
328	electric utility's last rate case was resolved by a settlement
329	agreement, the cost-of-service methodology filed by the electric
330	utility in that case may be used.
331	j.  Provide that, after the final terms of an issuance of
332	storm recovery bonds have been established and prior to the
333	issuance of storm recovery bonds, the electric utility shall
334	determine the resulting initial storm recovery charge in
335	accordance with the financing order and such initial storm
336	recovery charge shall be final and effective upon the issuance
337	of such storm recovery bonds without further commission action.
338	k.  Include any other conditions that the commission
339	considers appropriate and that are not otherwise inconsistent
340	with this section.
341	3.  In performing the responsibilities of this section, the
342	commission may engage outside consultants or counsel. Any
343	expenses associated with such services shall be included as part
344	of the financing costs as described in subparagraph (1)(e)3.,
345	and appropriate remuneration for such expenses shall be made
346	from storm recovery bonds.
347	4.  A financing order issued to an electric utility may
348	provide that the electric utility's storm recovery property
349	created pursuant to sub-subparagraph 2.e. is conditioned upon,
350	and shall be simultaneous with, the sale or other transfer of
351	the storm recovery property to an assignee and the pledge of the
352	storm recovery property to secure storm recovery bonds.
353	5.  If the commission issues a financing order, the
354	electric utility shall file with the commission at least
355	biannually a petition or a letter applying the formula-based
356	mechanism pursuant to sub-subparagraph 2.d. and, based on
357	estimates of consumption for each rate class and other
358	mathematical factors, requesting administrative approval to make
359	the adjustments described in sub-subparagraph 2.d. The review of
360	such a request shall be limited to determining whether there is
361	any mathematical error in the application of the formula-based
362	mechanism relating to the appropriate amount of any
363	overcollection or undercollection of storm recovery charges and
364	the amount of an adjustment. Such adjustments shall ensure the
365	recovery of revenues sufficient to provide for the payment of
366	principal, interest, acquisition, defeasance, financing costs,
367	or redemption premium and other fees, costs, and charges in
368	respect of storm recovery bonds approved under the financing
369	order. Within 60 days after receiving an electric utility's
370	request pursuant to this paragraph, the commission shall either
371	approve the request or inform the electric utility of any
372	mathematical errors in its calculation. If the commission
373	informs the utility of mathematical errors in its calculation,
374	the utility may correct its error and refile its request. The
375	timeframes previously described in this paragraph shall apply to
376	a refiled request.
377	6.  Subsequent to the earlier of the transfer of storm
378	recovery property to an assignee and the issuance of storm
379	recovery bonds authorized thereby, a financing order shall be
380	irrevocable and, except as provided in subparagraph 4. and
381	paragraph (c), the commission shall not amend, modify, or
382	terminate the financing order by any subsequent action or
383	reduce, impair, postpone, terminate, or otherwise adjust storm
384	recovery charges approved in the financing order. After the
385	issuance of a financing order, the electric utility shall retain
386	sole discretion regarding whether to assign, sell, or otherwise
387	transfer storm recovery property or to cause the storm recovery
388	bonds to be issued, including the right to defer or postpone
389	such assignment, sale, transfer, or issuance.
390	(c)  At the request of an electric utility, the commission
391	may commence a proceeding and issue a subsequent financing order
392	that provides for retiring and refunding storm recovery bonds
393	issued pursuant to the original financing order if the
394	commission finds that the subsequent financing order satisfies
395	all of the criteria specified in paragraph (b). Effective on
396	retirement of the refunded storm recovery bonds and the issuance
397	of new storm recovery bonds, the commission shall adjust the
398	related storm recovery charges accordingly.
399	(d)  Within 10 days after the commission issues either an
400	order pursuant to paragraph (b) or a decision denying a request
401	for reconsideration or, if the request for reconsideration is
402	granted, within 10 days after the commission issues its decision
403	on reconsideration, an adversely affected party may petition for
404	judicial review in the Florida Supreme Court. The petition for
405	review shall be served upon the executive director of the
406	commission either personally or by service at the office of the
407	commission. Review on appeal shall be based solely on the record
408	before the commission and briefs to the court and shall be
409	limited to determining whether the order issued pursuant to
410	paragraph (b), or the order on reconsideration, conforms to the
411	constitution and laws of this state and the United States and is
412	within the authority of the commission under this section.
413	Inasmuch as delay in the determination of the appeal of a
414	financing order will delay the issuance of storm recovery bonds,
415	thereby diminishing savings to customers that might be achieved
416	if such bonds were issued as contemplated by a financing order,
417	the Supreme Court shall proceed to hear and determine the action
418	as expeditiously as practicable and give the action precedence
419	over other matters not accorded similar precedence by law.
420	(e)1.  A financing order shall remain in effect until the
421	storm recovery bonds issued pursuant to the order have been paid
422	in full and the financing and other costs of such bonds have
423	been recovered in full.
424	2.  A financing order issued to an electric utility shall
425	remain in effect and unabated notwithstanding the
426	reorganization, bankruptcy, or other insolvency proceedings of
427	the electric utility or its successors or assignees.
428	(3)  EXCEPTIONS TO COMMISSION JURISDICTION.--
429	(a)  If the commission issues a financing order to an
430	electric utility pursuant to this section, the commission may
431	not, in exercising its powers and carrying out its duties
432	regarding any matter within its authority pursuant to this
433	chapter, consider the storm recovery bonds issued pursuant to
434	the order to be the debt of the electric utility other than for
435	federal income tax purposes, the storm recovery charges paid
436	under the order to be the revenue of the electric utility for
437	any purpose, or the storm recovery costs or financing costs
438	specified in the order to be the costs of the electric utility,
439	nor may the commission determine any action taken by an electric
440	utility that is consistent with the order to be unjust or
441	unreasonable.
442	(b)  The commission may not order or otherwise directly or
443	indirectly require an electric utility to use storm recovery
444	bonds to finance any project, addition, plant, facility,
445	extension, capital improvement, equipment, or any other
446	expenditure, unless the electric utility has filed a petition
447	under paragraph (2)(a) to finance such expenditure using storm
448	recovery bonds. The commission may not refuse to allow an
449	electric utility to recover costs for storm recovery activities
450	in an otherwise permissible fashion, or refuse or condition
451	authorization or approval pursuant to s. 366.04 of the issuance
452	and sale by an electric utility of securities or the assumption
453	by it of liabilities or obligations, solely because of the
454	potential availability of storm recovery financing.
455	(4)  ELECTRIC UTILITY DUTIES.--
456	(a)  The electric bills of an electric utility that has
457	obtained a financing order and issued storm recovery bonds shall
458	explicitly reflect that a portion of the charges on such bill
459	represents storm recovery charges approved in a financing order
460	issued to the electric utility and, if the storm recovery
461	property has been transferred to an assignee, a statement to the
462	effect that the assignee is the owner of the rights to storm
463	recovery charges and that the electric utility or any other
464	entity, if applicable, is acting as a collection agent or
465	servicer for the assignee. The tariff applicable to customers
466	shall indicate the storm recovery charge and the ownership of
467	that charge. The commission shall determine whether to require
468	electric utilities to include such information or amounts owed
469	with respect to the storm recovery property as a separate line
470	item on individual electric bills.
471	(b)  The failure of an electric utility to comply with this
472	subsection shall not invalidate, impair, or affect any financing
473	order, storm recovery property, storm recovery charge, or storm
474	recovery bonds.
475	(5)  STORM RECOVERY PROPERTY.--
476	(a)1.  All storm recovery property that is specified in a
477	financing order shall constitute an existing, present property
478	right or interest therein, notwithstanding that the imposition
479	and collection of storm recovery charges depends on the electric
480	utility to which the order is issued performing its servicing
481	functions relating to the collection of storm recovery charges
482	and on future electricity consumption. Such property shall exist
483	whether or not the revenues or proceeds arising from the
484	property have been billed, have accrued, or have been collected
485	and notwithstanding the fact that the value or amount of the
486	property is dependent on the future provision of service to
487	customers by the electric utility or its successors or
488	assignees.
489	2.  Storm recovery property specified in a financing order
490	shall continue to exist until the storm recovery bonds issued
491	pursuant to the order are paid in full and all financing costs
492	and other costs of the bonds have been recovered in full.
493	3.  All or any portion of storm recovery property specified
494	in a financing order issued to an electric utility may be
495	transferred, sold, conveyed, or assigned to a successor or
496	assignee, including an affiliate or affiliates of the electric
497	utility created for the limited purpose of acquiring, owning, or
498	administering storm recovery property or issuing storm recovery
499	bonds under the financing order. All or any portion of storm
500	recovery property may be pledged to secure storm recovery bonds
501	issued pursuant to the order, amounts payable to financing
502	parties and to counterparties under any ancillary agreements,
503	and other financing costs. Each such transfer, sale, conveyance,
504	assignment, or pledge by an electric utility or affiliate of an
505	electric utility is considered to be a transaction in the
506	ordinary course of business.
507	4.  If an electric utility defaults on any required payment
508	of charges arising from storm recovery property specified in a
509	financing order, a court, upon application by an interested
510	party, and without limiting any other remedies available to the
511	applying party, shall order the sequestration and payment of the
512	revenues arising from the storm recovery property to the
513	financing parties. Any such order shall remain in full force and
514	effect notwithstanding any reorganization, bankruptcy, or other
515	insolvency proceedings with respect to the electric utility or
516	its successors or assignees.
517	5.  The interest of a transferee, purchaser, acquirer,
518	assignee, or pledgee in storm recovery property specified in a
519	financing order issued to an electric utility, and in the
520	revenue and collections arising from that property, is not
521	subject to setoff, counterclaim, surcharge, or defense by the
522	electric utility or any other person or in connection with the
523	reorganization, bankruptcy, or other insolvency of the electric
524	utility or any other entity.
525	6.  Any successor to an electric utility, whether pursuant
526	to any reorganization, bankruptcy, or other insolvency
527	proceeding or whether pursuant to any merger or acquisition,
528	sale, or other business combination, or transfer by operation of
529	law, as a result of electric utility restructuring or otherwise,
530	shall perform and satisfy all obligations of, and have the same
531	rights under a financing order as, the electric utility under
532	the financing order in the same manner and to the same extent as
533	the electric utility, including collecting and paying to the
534	person entitled to receive the revenues, collections, payments,
535	or proceeds of the storm recovery property.
536	(b)1.  Except as specified in this section, the Uniform
537	Commercial Code shall not apply to storm recovery property or
538	any right, title, or interest of a utility or assignee described
539	in subparagraph (1)(o)1., whether before or after the issuance
540	of the financing order. In addition, such right, title, or
541	interest pertaining to a financing order, including, but not
542	limited to, the associated storm recovery property and any
543	revenues, collections, claims, rights to payment, payments,
544	money, or proceeds of or arising from storm recovery charges
545	pursuant to such order, shall not be deemed proceeds of any
546	right or interest other than in the financing order and the
547	storm recovery property arising from the order.
548	2.  The creation, attachment, granting, perfection, and
549	enforcement of liens and security interests in storm recovery
550	property to secure storm recovery bonds is governed solely by
551	this section and not by the Uniform Commercial Code.
552	3.  A valid, enforceable, and attached lien and security
553	interest in storm recovery property may be created only upon the
554	later of:
555	a.  The issuance of a financing order;
556	b.  The execution and delivery of a security agreement with
557	a financing party in connection with the issuance of storm
558	recovery bonds; or
559	c.  The receipt of value for the storm recovery bonds.
560
561	A valid, enforceable, and attached security interest shall be
562	perfected against third parties as of the date of filing of a
563	financing statement in the Florida Secured Transaction Registry,
564	as such registry is defined in Article 9 of the Uniform
565	Commercial Code, in accordance with subparagraph 4., and shall
566	thereafter be a continuously perfected lien; and such security
567	interest in the storm recovery property and all proceeds of such
568	storm recovery property, whether or not billed, accrued, or
569	collected, and whether or not deposited into a deposit account
570	and however evidenced, shall have priority in accordance with
571	subparagraph 8. and take precedence over any subsequent judicial
572	or other lien creditor. No continuation statement need be filed
573	to maintain such perfection.
574	4.  Financing statements required to be filed pursuant to
575	this section shall be filed, maintained, and indexed in the same
576	manner and in the same system of records maintained for the
577	filing of financing statements in the Florida Secured
578	Transaction Registry under Article 9 of the Uniform Commercial
579	Code. The filing of such a financing statement shall be the only
580	method of perfecting a lien or security interest on storm
581	recovery property.
582	5.  The priority of a lien and security interest perfected
583	under this paragraph is not impaired by any later modification
584	of the financing order or storm recovery property or by the
585	commingling of funds arising from storm recovery property with
586	other funds, and any other security interest that may apply to
587	those funds shall be terminated as to all funds transferred to a
588	segregated account for the benefit of an assignee or a financing
589	party or to an assignee or financing party directly.
590	6.  If a default or termination occurs under the terms of
591	the storm recovery bonds, the financing parties or their
592	representatives may foreclose on or otherwise enforce their lien
593	and security interest in any storm recovery property as if they
594	were a secured party under Article 9 of the Uniform Commercial
595	Code; and a court may order that amounts arising from storm
596	recovery property be transferred to a separate account for the
597	financing parties' benefit, to which their lien and security
598	interest shall apply. On application by or on behalf of the
599	financing parties to a circuit court of this state, such court
600	shall order the sequestration and payment to the financing
601	parties of revenues arising from the storm recovery property.
602	7.  The interest of a pledgee of an interest or any rights
603	in any storm recovery property is not perfected until filing as
604	provided in subparagraph 4.
605	8.  The priority of the conflicting interests of pledgees
606	in the same interest or rights in any storm recovery property is
607	determined as follows:
608	a.  Conflicting perfected interests or rights of pledgees
609	rank according to priority in time of perfection. Priority dates
610	from the time a filing covering the interest or right is made in
611	accordance with this paragraph.
612	b.  A perfected interest or right of a pledgee has priority
613	over a conflicting unperfected interest or right of a pledgee.
614	c.  A perfected interest or right of a pledgee has priority
615	over a person who becomes a lien creditor after the perfection
616	of such pledgee's interest or right.
617	(c)  The sale, assignment, or transfer of storm recovery
618	property is governed by this paragraph. All of the following
619	apply to a sale, assignment, or transfer under this paragraph:
620	1.  The sale, conveyance, assignment, or other transfer of
621	storm recovery property by an electric utility to an assignee
622	that the parties have in the governing documentation expressly
623	stated to be a sale or other absolute transfer is an absolute
624	transfer and true sale of, and not a pledge of or secured
625	transaction relating to, the transferor's right, title, and
626	interest in, to, and under the storm recovery property, other
627	than for federal and state income and franchise tax purposes.
628	After such a transaction, the storm recovery property is not
629	subject to any claims of the transferor or the transferor's
630	creditors, other than creditors holding a prior security
631	interest in the storm recovery property perfected under
632	paragraph (b).
633	2.  The characterization of the sale, conveyance,
634	assignment, or other transfer as a true sale or other absolute
635	transfer under subparagraph 1. and the corresponding
636	characterization of the transferee's property interest is not
637	affected by:
638	a.  Commingling of amounts arising with respect to the
639	storm recovery property with other amounts.
640	b.  The retention by the transferor of a partial or
641	residual interest, including an equity interest, in the storm
642	recovery property, whether direct or indirect, or whether
643	subordinate or otherwise.
644	c.  Any recourse that the transferee may have against the
645	transferor other than any such recourse created, contingent
646	upon, or otherwise occurring or resulting from one or more of
647	the transferor's customers' inability to timely pay all or a
648	portion of the storm recovery charge.
649	d.  Any indemnifications, obligations, or repurchase rights
650	made or provided by the transferor, other than indemnity or
651	repurchase rights based solely upon a transferor's customers'
652	inability to timely pay all or a portion of the storm recovery
653	charge.
654	e.  The responsibility of the transferor to collect storm
655	recovery charges.
656	f.  The treatment of the sale, conveyance, assignment, or
657	other transfer for tax, financial reporting, or other purposes.
658	g.  Granting or providing to holders of the storm recovery
659	bonds a preferred right to the storm recovery property or credit
660	enhancement by the electric utility or its affiliates with
661	respect to the storm recovery bonds.
662	3.  Any right that an electric utility has in the storm
663	recovery property prior to its pledge, sale, or transfer or any
664	other right created under this section or created in the
665	financing order and assignable under this section or assignable
666	pursuant to a financing order shall be property in the form of a
667	contract right. Transfer of an interest in storm recovery
668	property to an assignee is enforceable only upon the later of
669	the issuance of a financing order, the execution and delivery of
670	transfer documents to the assignee in connection with the
671	issuance of storm recovery bonds, and the receipt of value. An
672	enforceable transfer of an interest in storm recovery property
673	to an assignee shall be perfected against all third parties,
674	including subsequent judicial or other lien creditors, when a
675	notice of that transfer has been given by the filing of a
676	financing statement in accordance with subparagraph 4. The
677	transfer shall be perfected against third parties as of the date
678	of filing.
679	4.  Financing statements required to be filed under this
680	section shall be maintained and indexed in the same manner and
681	in the same system of records maintained for the filing of
682	financing statements in the Florida Secured Transaction Registry
683	under Article 9 of the Uniform Commercial Code. The filing of
684	such a financing statement shall be the only method of
685	perfecting a transfer of storm recovery property.
686	5.  The priority of a transfer perfected under this section
687	is not impaired by any later modification of the financing order
688	or storm recovery property or by the commingling of funds
689	arising from storm recovery property with other funds, and any
690	other security interest that may apply to those funds shall be
691	terminated when they are transferred to a segregated account for
692	the assignee or a financing party. If storm recovery property
693	has been transferred to an assignee or financing party, any
694	proceeds of that property shall be held in trust for the
695	assignee or financing party.
696	6.  The priority of the conflicting interests of assignees
697	in the same interest or rights in any storm recovery property is
698	determined as follows:
699	a.  Conflicting perfected interests or rights of assignees
700	rank according to priority in time of perfection. Priority dates
701	from the time a filing covering the transfer is made in
702	accordance with subparagraph 4.
703	b.  A perfected interest or right of an assignee has
704	priority over a conflicting unperfected interest or right of an
705	assignee.
706	c.  A perfected interest or right of an assignee has
707	priority over a person who becomes a lien creditor after the
708	perfection of such assignee's interest or right.
709	(6)  DESCRIPTION OR INDICATION OF PROPERTY.--The
710	description of storm recovery property being transferred to an
711	assignee in any sale agreement, purchase agreement, or other
712	transfer agreement, granted or pledged to a pledgee in any
713	security agreement, pledge agreement, or other security
714	document, or indicated in any financing statement is only
715	sufficient if such description or indication describes the
716	financing order that created the storm recovery property and
717	states that such agreement or financing statement covers all or
718	part of such property described in such financing order. This
719	subsection applies to all purported transfers of, and all
720	purported grants or liens or security interests in, storm
721	recovery property, regardless of whether the related sale
722	agreement, purchase agreement, other transfer agreement,
723	security agreement, pledge agreement, or other security document
724	was entered into, or any financing statement was filed, before
725	or after the effective date of this section.
726	(7)  FINANCING STATEMENTS.--All financing statements
727	referenced in this section shall be subject to Part 5 of Article
728	9 of the Uniform Commercial Code except the requirement as to
729	continuation statements shall not apply.
730	(8)  CHOICE OF LAW.--The law governing the validity,
731	enforceability, attachment, perfection, priority, and exercise
732	of remedies with respect to the transfer of an interest or right
733	or the pledge or creation of a security interest in any storm
734	recovery property shall be the laws of this state, and
735	exclusively, the laws of this section.
736	(9)  STORM RECOVERY BONDS NOT PUBLIC DEBT.--The state or
737	its political subdivisions are not liable on any storm recovery
738	bonds, and the bonds are not a debt or a general obligation of
739	the state or any of its political subdivisions, agencies, or
740	instrumentalities. An issue of storm recovery bonds does not,
741	directly or indirectly or contingently, obligate the state or
742	any agency, political subdivision, or instrumentality of the
743	state to levy any tax or make any appropriation for payment of
744	the bonds, other than in their capacity as consumers of
745	electricity. This subsection shall in no way preclude bond
746	guarantees or enhancements pursuant to this section. All bonds
747	shall contain on the face thereof a statement to the following
748	effect: "Neither the full faith and credit nor the taxing power
749	of the State of Florida is pledged to the payment of the
750	principal of, or interest on, this bond."
751	(10)  STORM RECOVERY BONDS AS LEGAL INVESTMENTS WITH
752	RESPECT TO INVESTORS THAT REQUIRE STATUTORY AUTHORITY REGARDING
753	LEGAL INVESTMENT.--The following entities may legally invest any
754	sinking funds, moneys, or other funds belonging to them or under
755	their control in storm recovery bonds:
756	(a)  The state, the investment board, municipal
757	corporations, political subdivisions, public bodies, and public
758	officers except for members of the commission.
759	(b)  Banks and bankers, savings and loan associations,
760	credit unions, trust companies, savings banks and institutions,
761	investment companies, insurance companies, insurance
762	associations, and other persons carrying on a banking or
763	insurance business.
764	(c)  Personal representatives, guardians, trustees, and
765	other fiduciaries.
766	(d)  All other persons whatsoever who are now or may
767	hereafter be authorized to invest in bonds or other obligations
768	of a similar nature.
769	(11)  STATE PLEDGE.--
770	(a)  For purposes of this subsection, the term "bondholder"
771	means a person who holds a storm recovery bond.
772	(b)  The state pledges to and agrees with bondholders, the
773	owners of the storm recovery property, and other financing
774	parties that the state will not:
775	1.  Alter the provisions of this section which make the
776	storm recovery charges imposed by a financing order irrevocable,
777	binding, and nonbypassable charges;
778	2.  Take or permit any action that impairs or would impair
779	the value of storm recovery property; or
780	3.  Except as allowed under this section, reduce, alter, or
781	impair storm recovery charges that are to be imposed, collected,
782	and remitted for the benefit of the bondholders and other
783	financing parties until any and all principal, interest,
784	premium, financing costs and other fees, expenses, or charges
785	incurred, and any contracts to be performed, in connection with
786	the related storm recovery bonds have been paid and performed in
787	full.
788
789	Nothing in this paragraph shall preclude limitation or
790	alteration if full compensation is made by law for the full
791	protection of the storm recovery charges collected pursuant to a
792	financing order and of the holders of storm recovery bonds and
793	any assignee or financing party entering into a contract with
794	the electric utility.
795	(c)  Any person or entity that issues storm recovery bonds
796	may include the pledge specified in paragraph (b) in the bonds
797	and related documentation.
798	(12)  TAX EXEMPTION.--Revenues collected pursuant to a
799	financing order and transactions involving the transfer and
800	ownership of storm recovery property and the receipt of storm
801	recovery charges by an electric utility, or its successors,
802	assignees, or financing parties, shall not be deemed to be
803	income for purposes of chapter 220 or any local income taxes,
804	and shall be exempt from state and local sales, franchise, gross
805	receipts, and other taxes or similar charges.
806	(13)  NOT AN ELECTRIC UTILITY.--An assignee or financing
807	party shall not be considered an electric utility or person
808	providing electric service by virtue of engaging in the
809	transactions described in this section.
810	(14)  CONFLICTS.--In the event of conflict between this
811	section and any other law regarding the attachment, assignment,
812	or perfection, or the effect of perfection, or priority of,
813	assignment or transfer of, or security interest in storm
814	recovery property, this section shall govern to the extent of
815	the conflict.
816	(15)  EFFECT OF INVALIDITY ON ACTIONS.--Effective on the
817	date that storm recovery bonds are first issued under this
818	section, if any provision of this section is held to be invalid
819	or is invalidated, superseded, replaced, repealed, or expires
820	for any reason, that occurrence shall not affect the validity of
821	any action allowed under this section that is taken by an
822	electric utility, an assignee, a financing party, a collection
823	agent, or a party to an ancillary agreement; and any such action
824	shall remain in full force and effect with respect to all storm
825	recovery bonds issued or authorized in a financing order to be
826	issued under this section prior to the date that such provision
827	is held to be invalid or is invalidated, superseded, replaced,
828	or repealed, or that expires for any reason.
829	(16)  AUTHORITY.--Commission authority to issue financing
830	orders pursuant to this section shall apply only to petitions
831	filed pursuant to paragraph (2)(a) within 12 months after the
832	effective date of this section. The expiration of the authority
833	shall have no effect upon financing orders adopted by the
834	commission pursuant to this section; any storm recovery property
835	arising therefrom; any charges authorized to be levied
836	thereunder; any rights, interests, and obligations of the
837	electric utility, an assignee, or a financing party, holders of
838	storm recovery bonds, or parties to ancillary agreements
839	pursuant to the financing order; or the authority of the
840	commission to monitor, supervise, or take further action with
841	respect to the order in accordance with the terms of this
842	section and of the order.
843	(17)  EXPIRATION.--This section shall expire on January 1
844	of the second year following payment in full of all storm
845	recovery bonds issued pursuant to this section and all related
846	financing costs as noticed by the commission to the Joint
847	Administrative Procedures Committee of the Legislature with a
848	copy of such notice published in the Florida Administrative
849	Weekly, but shall continue to apply to any causes of action
850	timely made arising from or relating to matters addressed in
851	this section.
852	Section 2.  Paragraphs (m) and (n) of subsection (4) of
853	section 679.1091, Florida Statutes, are amended, and new
854	paragraph (o) is added to said subsection, to read:
855	679.1091  Scope.--
856	(4)  This chapter does not apply to:
857	(m)  An assignment of a deposit account, other than a
858	nonnegotiable certificate of deposit, in a consumer transaction,
859	but ss. 679.3151 and 679.322 apply with respect to proceeds and
860	priorities in proceeds; or
861	(n)  Any transfer by a government or governmental unit; or
862	(o)  A transfer or pledge of, or creation of a security
863	interest in, any interest or right or portion of any interest or
864	right in any storm recovery property as defined in s. 366.8260.
865	Section 3.  This act shall take effect upon becoming a law.

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