HB 0303

CS

CHAMBER ACTION

1	The Finance & Tax Committee recommends the following:
2
3	Council/Committee Substitute
4	Remove the entire bill and insert:
5	A bill to be entitled
6	An act relating to storm infrastructure recovery; creating
7	s. 366.8260, F.S.; providing definitions; authorizing
8	electric utilities to petition the Florida Public Service
9	Commission for certain financing orders for certain storm-
10	recovery purposes; providing requirements; providing
11	powers and duties of the commission in issuing such
12	orders; specifying procedures and requirements for the
13	commission in issuing financing orders; authorizing
14	electric utilities to create storm-recovery property;
15	providing for pledge of storm-recovery property to secure
16	storm-recovery bonds; providing for retirement of storm-
17	recovery bonds under certain circumstances; providing for
18	judicial review of such orders; providing for effect of
19	such orders; providing exceptions to commission
20	jurisdiction to issue financing orders; providing
21	limitations; prohibiting the commission from requiring use
22	of storm-recovery bonds for certain purposes; specifying
23	duties of electric utilities; providing penalties for
24	certain compliance failure; specifying properties,
25	requirements, permissible activities, and limitations
26	relating to storm-recovery property under certain
27	circumstances; providing for security interests in storm-
28	recovery property; providing for perfecting security
29	interests in storm-recovery property; providing for
30	priority and resolution of conflicting interests;
31	providing requirements, procedures, and limitations for
32	sale, assignment, or transfer of storm-recovery property;
33	providing requirements for descriptions or indications of
34	storm-recovery property transferred, granted, or pledged
35	or indicated in a financing statement; subjecting
36	financing statements to certain provisions of law;
37	specifying that storm-recovery bonds are not public debt;
38	specifying storm-recovery bonds as legal investments for
39	certain entities; specifying certain state pledges
40	relating to bondholders; declaring certain entities as not
41	electric utilities under certain circumstances; specifying
42	effect of certain provisions in situations of conflict;
43	providing for protecting validity of certain bonds under
44	certain circumstances; providing penalties for certain
45	violations; prohibiting recovery of certain costs from
46	taxpayers; limiting commission authority to issue certain
47	financing orders after a time certain; providing for
48	section expiration under certain circumstances; providing
49	for continued application under certain circumstances;
50	amending s. 679.1091, F.S.; specifying nonapplication of
51	secured transactions provisions of the Uniform Commercial
52	Code to interests in storm-recovery property; providing an
53	effective date.
54
55	Be It Enacted by the Legislature of the State of Florida:
56
57	Section 1.  Section 366.8260, Florida Statutes, is created
58	to read:
59	366.8260  Storm-recovery financing.--
60	(1)  DEFINITIONS.--As used in this section, the term:
61	(a)  "Ancillary agreement" means any bond, insurance
62	policy, letter of credit, reserve account, surety bond, swap
63	arrangement, hedging arrangement, liquidity or credit support
64	arrangement, or other financial arrangement entered into in
65	connection with the issuance of storm-recovery bonds.
66	(b)  "Assignee" means any entity, including, but not
67	limited to, a corporation, limited liability company,
68	partnership or limited partnership, public authority, trust,
69	financing entity, or other legally recognized entity to which an
70	electric utility assigns, sells, or transfers, other than as
71	security, all or a portion of its interest in or right to storm-
72	recovery property. The term also includes any entity to which an
73	assignee assigns, sells, or transfers, other than as security,
74	its interest in or right to storm-recovery property.
75	(c)  "Commission" means the Florida Public Service
76	Commission.
77	(d)  "Electric utility" or "utility" has the same meaning
78	as that provided in s. 366.8255.
79	(e)  "Financing costs" means:
80	1.  Interest and acquisition, defeasance, or redemption
81	premiums that are payable on storm-recovery bonds;
82	2.  Any payment required under an ancillary agreement and
83	any amount required to fund or replenish a reserve account or
84	other accounts established under the terms of any indenture,
85	ancillary agreement, or other financing documents pertaining to
86	storm-recovery bonds;
87	3.  Any other cost related to issuing, supporting,
88	repaying, and servicing storm-recovery bonds, including, but not
89	limited to, servicing fees, accounting and auditing fees,
90	trustee fees, legal fees, consulting fees, administrative fees,
91	placement and underwriting fees, capitalized interest, rating
92	agency fees, stock exchange listing and compliance fees, and
93	filing fees, including costs related to obtaining the financing
94	order;
95	4.  Any taxes and license fees imposed on the revenues
96	generated from the collection of storm-recovery charges by the
97	utiltiy;
98	5.  Any income taxes resulting from the collection of
99	storm-recovery charges in any such case whether paid, payable,
100	or accrued by the utility; or
101	6.  Any state and local taxes and franchise, gross
102	receipts, and other taxes or similar charges, including, but not
103	limited to, regulatory assessment fees, in any such case whether
104	paid, payable, or accrued by the utility.
105	(f)  "Financing order" means an order under subsection (2)
106	that allows for the issuance of storm-recovery bonds, the
107	imposition, collection, and periodic adjustments of storm-
108	recovery charges, and the creation of storm-recovery property.
109	(g)  "Financing party" means holders of storm-recovery
110	bonds and trustees, collateral agents, or other persons acting
111	for the benefit of holders of storm-recovery bonds.
112	(h)  "Financing statement" has the same meaning as that
113	provided in Article 9 of the Uniform Commercial Code.
114	(i)  "Pledgee" means a financing party to which an electric
115	utility or its successors or assignees mortgages, negotiates,
116	hypothecates, pledges, or creates a security interest or lien on
117	all or any portion of the utility's interest in or right to
118	storm-recovery property.
119	(j)  "Storm" means a named tropical storm or hurricane that
120	occurred during calendar year 2004.
121	(k)  "Storm-recovery activity" means any activity or
122	activities by or on behalf of an electric utility in connection
123	with the restoration of service associated with electric power
124	outages affecting customers of an electric utility as the result
125	of a storm or storms, including, but not limited to,
126	mobilization, staging, and construction, reconstruction,
127	replacement, or repair of electric generation, transmission, or
128	distribution facilities.
129	(l)  "Storm-recovery bonds" means bonds, debentures, notes,
130	certificates of participation, certificates of beneficial
131	interest, certificates of ownership, or other evidences of
132	indebtedness or ownership that are issued by an electric utility
133	or an assignee pursuant to a financing order, the proceeds of
134	which are used directly or indirectly to recover, finance, or
135	refinance commission-approved storm-recovery costs and financing
136	costs and that are secured by or payable from storm-recovery
137	property.
138	(m)  "Storm-recovery charge" means the amounts authorized
139	by the commission to recover, finance, or refinance storm-
140	recovery costs and financing costs as provided for in a
141	financing order to be imposed on all customer bills and
142	collected by an electric utility or its successors or assignees,
143	or a collection agent, in full through a charge that is separate
144	and apart from the electric utility's base rates, which charge
145	shall be paid by all customers receiving transmission or
146	distribution service from the electric utility or its successors
147	or assignees under commission-approved rate schedules or under
148	special contracts, even if the customer elects to purchase
149	electricity from an alternative electricity supplier following a
150	fundamental change in regulation of public utilities in this
151	state.
152	(n)  "Storm-recovery costs" means, at the option and
153	request of the electric utility, and as approved by the
154	commission pursuant to sub-subparagraph (2)(b)1.b., costs
155	incurred or to be incurred by an electric utility in undertaking
156	a storm-recovery activity. Such costs shall be net of applicable
157	insurance proceeds and, when determined appropriate by the
158	commission, shall include adjustments for normal capital
159	replacement and operating costs, lost revenues, or other
160	potential offsetting adjustments. Storm-recovery costs shall
161	include the costs to finance any deficiency or deficiencies in
162	storm-recovery reserves until such time as storm-recovery bonds
163	are issued and costs of retiring any existing indebtedness
164	relating to storm-recovery activities.
165	(o)  "Storm-recovery property" means:
166	1.  All rights and interests of an electric utility or
167	successor or assignee of the electric utility under a financing
168	order, including the right to impose, bill, collect, and receive
169	storm-recovery charges authorized in the financing order and to
170	obtain periodic adjustments to such charges as provided in the
171	financing order.
172	2.  All revenues, collections, claims, rights to payments,
173	payments, money, or proceeds arising from the rights and
174	interests specified in subparagraph 1., regardless of whether
175	such revenues, collections, claims, rights to payment, payments,
176	money, or proceeds are imposed, billed, received, collected, or
177	maintained together with or commingled with other revenues,
178	collections, rights to payment, payments, money, or proceeds.
179	(p)  "Storm-recovery reserve" means a fully funded electric
180	utility storm reserve or such other similar reserve established
181	by law or rule or pursuant to order of the commission.
182	(q)  "Uniform Commercial Code" has the same meaning as that
183	provided in s. 671.101.
184	(2)  FINANCING ORDERS.--
185	(a)  An electric utility may petition the commission for a
186	financing order. For each petition, the electric utility shall:
187	1.  Describe the storm-recovery activities that the
188	electric utility has undertaken or proposes to undertake and
189	describe the reasons for undertaking the activities.
190	2.  Set forth the known storm-recovery costs and estimate
191	the costs of any storm-recovery activities that are not
192	completed or for which the costs are not yet known, as
193	identified and requested by the electric utility.
194	3.  Set forth the level of the storm-recovery reserve that
195	the utility proposes to establish or replenish and has
196	determined would be appropriate to recover through storm-
197	recovery bonds and is seeking to make such recovery and such
198	level that the utility is funding or will seek to fund through
199	other means, together with a description of the factors and
200	calculations used in determining the amounts and methods of
201	recovery.
202	4.  Indicate whether the electric utility proposes to
203	finance all or a portion of the storm-recovery costs using
204	storm-recovery bonds. If the electric utility proposes to
205	finance a portion of such costs, the electric utility shall
206	identify that portion in the petition.
207	5.  Estimate the financing costs related to the storm-
208	recovery bonds proposed under subparagraph 4.
209	6.  Estimate the storm-recovery charges necessary to
210	recover the storm-recovery costs and financing costs estimated
211	in the petition and the period for recovery of such costs.
212	7.  Estimate any cost savings or demonstrate how the
213	financing order would avoid or significantly mitigate rate
214	impacts to customers resulting from financing storm-recovery
215	costs with storm-recovery bonds as opposed to the traditional
216	method of recovering such costs from customers and through
217	alternative financing methods available to the electric utility.
218	8.  File with the petition direct testimony supporting the
219	petition.
220	(b)1.  Proceedings on a petition submitted pursuant to
221	paragraph (a) shall begin with a petition by an electric utility
222	and shall be disposed of in accordance with the provisions of
223	chapter 120 and applicable rules, except that the provisions of
224	this section, to the extent applicable, shall control.
225	a.  Within 7 days after the filing of a petition, the
226	commission shall publish a case schedule, which schedule shall
227	place the matter before the commission on an agenda that will
228	permit a commission decision no later than 120 days after the
229	date the petition is filed.
230	b.  No later than 135 days after the date the petition is
231	filed, the commission shall issue a financing order or an order
232	rejecting the petition. A party to the commission proceeding may
233	petition the commission for reconsideration of the financing
234	order within 5 days after the date of its issuance. The
235	commission shall issue a financing order authorizing financing
236	of reasonable and prudent storm-recovery costs and financing
237	costs if the commission finds that the issuance of the storm-
238	recovery bonds and the imposition of storm-recovery charges
239	authorized by the order are reasonably expected to result in
240	lower overall costs or would avoid or significantly mitigate
241	rate impacts to customers as compared with alternative methods
242	of financing or recovering storm-recovery costs. Any
243	determination of whether storm-recovery costs are reasonable and
244	prudent shall be made with reference to the general public
245	interest in, and the scope of effort required to provide, the
246	safe and expeditious restoration of electric service.
247	2.  In a financing order issued to an electric utility, the
248	commission shall:
249	a.  Except as provided in sub-subparagraph d. and in
250	subparagraph 4., specify the amount of storm-recovery costs and
251	the level of storm-recovery reserves, taking into consideration,
252	to the extent the commission deems appropriate, any other
253	methods used to recover these costs, and describe and estimate
254	the amount of financing costs that may be recovered through
255	storm-recovery charges and specify the period over which such
256	costs may be recovered.
257	b.  Determine that the proposed structuring, expected
258	pricing, and financing costs of the storm-recovery bonds are
259	reasonably expected to result in lower overall costs or would
260	avoid or significantly mitigate rate impacts to customers as
261	compared with alternative methods of financing or recovering
262	storm-recovery costs.
263	c.  Provide that, for the period specified pursuant to sub-
264	subparagraph a., the imposition and collection of storm-recovery
265	charges authorized in the financing order shall be paid by all
266	customers receiving transmission or distribution service from
267	the electric utility or its successors or assignees under
268	commission-approved rate schedules or under special contracts,
269	even if the customer elects to purchase electricity from an
270	alternative electric supplier following a fundamental change in
271	regulation of public utilities in the state.
272	d.  Determine what portion, if any, of the storm-recovery
273	reserves must be held in a funded reserve and any limitations on
274	how the reserve may be held, accessed, or used.
275	e.  Include a formula-based mechanism for making
276	expeditious periodic adjustments in the storm-recovery charges
277	that customers are required to pay under the financing order and
278	for making any adjustments that are necessary to correct for any
279	overcollection or undercollection of the charges or to otherwise
280	ensure the timely payment of storm-recovery bonds and financing
281	costs and other required amounts and charges payable in
282	connection with the storm-recovery bonds.
283	f.  Specify the storm-recovery property that is, or shall
284	be, created in favor of an electric utility or its successors or
285	assignees and that shall be used to pay or secure storm-recovery
286	bonds and financing costs.
287	g.  Specify the degree of flexibility to be afforded to the
288	electric utility in establishing the terms and conditions of the
289	storm-recovery bonds, including, but not limited to, repayment
290	schedules, interest rates, and other financing costs.
291	h.  Provide that storm-recovery charges be allocated to the
292	customer classes using the criteria set out in s. 366.06(1), in
293	the manner in which these costs or their equivalent were
294	allocated in the cost-of-service study approved in connection
295	with the electric utility's last rate case. If the electric
296	utility's last rate case was resolved by a settlement agreement,
297	the cost-of-service methodology filed by the electric utility in
298	that case shall be used.
299	i  Provide that, after the final terms of an issuance of
300	storm-recovery bonds have been established and prior to the
301	issuance of storm-recovery bonds, the electric utility shall
302	determine the resulting initial storm-recovery charge in
303	accordance with the financing order and such initial storm-
304	recovery charge shall be final and effective upon the issuance
305	of such storm-recovery bonds without further commission action.
306	j.  Include any other conditions that the commission
307	considers appropriate and that are not otherwise inconsistent
308	with this section.
309
310	In performing the responsibilities of this subparagraph and
311	subparagraph 5., the commission may engage outside consultants
312	or counsel. Any expenses associated with such services shall be
313	included as part of the financing costs and included in storm-
314	recovery charges.
315	3.  A financing order issued to an electric utility may
316	provide that creation of the electric utility's storm-recovery
317	property created pursuant to sub-subparagraph 2.f. is
318	conditioned upon, and shall be simultaneous with, the sale or
319	other transfer of the storm-recovery property to an assignee and
320	the pledge of the storm-recovery property to secure storm-
321	recovery bonds.
322	4.  If the commission issues a financing order, the
323	electric utility shall file with the commission at least
324	biannually a petition or a letter applying the formula-based
325	mechanism pursuant to sub-subparagraph 2.e. and, based on
326	estimates of consumption for each rate class and other
327	mathematical factors, requesting administrative approval to make
328	the adjustments described in sub-subparagraph 2.e. The review of
329	such a request shall be limited to determining whether there is
330	any mathematical error in the application of the formula-based
331	mechanism relating to the appropriate amount of any
332	overcollection or undercollection of storm-recovery charges and
333	the amount of an adjustment. Such adjustments shall ensure the
334	recovery of revenues sufficient to provide for the payment of
335	principal, interest, acquisition, defeasance, financing costs,
336	or redemption premium and other fees, costs, and charges with
337	respect to storm-recovery bonds approved under the financing
338	order. Within 60 days after receiving an electric utility's
339	request pursuant to this paragraph, the commission shall either
340	approve the request or inform the electric utility of any
341	mathematical errors in its calculation. If the commission
342	informs the utility of mathematical errors in its calculation,
343	the utility may correct its error and refile its request. The
344	timeframes previously described in this paragraph shall apply to
345	a refiled request.
346	5.  Within 120 days after the issuance of storm-recovery
347	bonds, the electric utility shall file with the commission
348	information on the actual costs of the storm-recovery-bond
349	issuance. The commission shall review such information to
350	determine if such costs incurred in the issuance of the bonds
351	resulted in the lowest overall costs that were reasonably
352	consistent with market conditions at the time of the issuance
353	and the terms of the financing order. The commission may
354	disallow any incremental issuance costs in excess of the lowest
355	overall costs by requiring the utility to make a contribution to
356	the storm reserve in an amount equal to the excess of actual
357	issuance costs incurred and paid for out of storm-recovery bond
358	proceeds and the lowest overall issuance costs as determined by
359	the commission. The commission may not make adjustments to the
360	storm-recovery charges for any such excess issuance costs.
361	6.  Subsequent to the earlier of the transfer of storm-
362	recovery property to an assignee and the issuance of storm-
363	recovery bonds authorized thereby, a financing order is
364	irrevocable and, except as provided in subparagraph 4. and
365	paragraph (c), the commission may not amend, modify, or
366	terminate the financing order by any subsequent action or
367	reduce, impair, postpone, terminate, or otherwise adjust storm-
368	recovery charges approved in the financing order. After the
369	issuance of a financing order, the electric utility retains sole
370	discretion regarding whether to assign, sell, or otherwise
371	transfer storm-recovery property or to cause the storm-recovery
372	bonds to be issued, including the right to defer or postpone
373	such assignment, sale, transfer, or issuance.
374	(c)  At the request of an electric utility, the commission
375	may commence a proceeding and issue a subsequent financing order
376	that provides for retiring and refunding storm-recovery bonds
377	issued pursuant to the original financing order if the
378	commission finds that the subsequent financing order satisfies
379	all of the criteria specified in paragraph (b). Effective on
380	retirement of the refunded storm-recovery bonds and the issuance
381	of new storm-recovery bonds, the commission shall adjust the
382	related storm-recovery charges accordingly.
383	(d)  Within 30 days after the commission issues either an
384	order pursuant to paragraph (b) or a decision denying a request
385	for reconsideration or, if the request for reconsideration is
386	granted, within 30 days after the commission issues its decision
387	on reconsideration, an adversely affected party may petition for
388	judicial review in the Florida Supreme Court. The petition for
389	review shall be served upon the executive director of the
390	commission either personally or by service at the office of the
391	commission. Review on appeal shall be based solely on the record
392	before the commission and briefs to the court. Inasmuch as delay
393	in the determination of the appeal of a financing order will
394	delay the issuance of storm-recovery bonds, thereby diminishing
395	savings to customers that might be achieved if such bonds were
396	issued as contemplated by a financing order, the Supreme Court
397	shall proceed to hear and determine the action as expeditiously
398	as practicable and give the action precedence over other matters
399	not accorded similar precedence by law.
400	(e)1.  A financing order remains in effect until the storm-
401	recovery bonds issued pursuant to the order have been paid in
402	full and the commission-approved financing costs of such bonds
403	have been recovered in full.
404	2.  A financing order issued to an electric utility shall
405	remain in effect and unabated notwithstanding the
406	reorganization, bankruptcy, or other insolvency proceedings of
407	the electric utility or its successors or assignees.
408	(3)  EXCEPTIONS TO COMMISSION JURISDICTION.--
409	(a)  If the commission issues a financing order to an
410	electric utility pursuant to this section, the commission may
411	not, in exercising its powers and carrying out its duties
412	regarding any matter within its authority pursuant to this
413	chapter, consider the storm-recovery bonds issued pursuant to
414	the order to be the debt of the electric utility other than for
415	federal income tax purposes, consider the storm-recovery charges
416	paid under the order to be the revenue of the electric utility
417	for any purpose, or consider the storm-recovery costs or
418	financing costs specified in the order to be the costs of the
419	electric utility, nor may the commission determine any action
420	taken by an electric utility that is consistent with the order
421	to be unjust or unreasonable.
422	(b)  The commission may not order or otherwise directly or
423	indirectly require an electric utility to use storm-recovery
424	bonds to finance any project, addition, plant, facility,
425	extension, capital improvement, equipment, or any other
426	expenditure, unless the electric utility has filed a petition
427	under paragraph (2)(a) to finance such expenditure using storm-
428	recovery bonds. The commission may not refuse to allow an
429	electric utility to recover costs for storm-recovery activities
430	in an otherwise permissible fashion, or refuse or condition
431	authorization or approval pursuant to s. 366.04 of the issuance
432	and sale by an electric utility of securities, or the assumption
433	by it of liabilities or obligations, solely because of the
434	potential availability of storm-recovery financing.
435	(4)  ELECTRIC UTILITY DUTIES.--
436	(a)  The electric bills of an electric utility that has
437	obtained a financing order and issued storm-recovery bonds must
438	explicitly reflect that a portion of the charges on such bill
439	represents storm-recovery charges approved in a financing order
440	issued to the electric utility and, if the storm-recovery
441	property has been transferred to an assignee, must include a
442	statement to the effect that the assignee is the owner of the
443	rights to storm-recovery charges and that the electric utility
444	or any other entity, if applicable, is acting as a collection
445	agent or servicer for the assignee. The tariff applicable to
446	customers must indicate the storm-recovery charge and the
447	ownership of that charge. The commission shall determine whether
448	to require electric utilities to include such information or
449	amounts owed with respect to the storm-recovery property as a
450	separate line item on individual electric bills.
451	(b)  The failure of an electric utility to comply with this
452	subsection shall not invalidate, impair, or affect any financing
453	order, storm-recovery property, storm-recovery charge, or storm-
454	recovery bonds but shall subject the electric utility to
455	penalties under s. 366.095.
456	(5)  STORM-RECOVERY PROPERTY.--
457	(a)1.  All storm-recovery property that is specified in a
458	financing order shall constitute an existing, present property
459	right or interest therein, notwithstanding that the imposition
460	and collection of storm-recovery charges depends on the electric
461	utility to which the order is issued performing its servicing
462	functions relating to the collection of storm-recovery charges
463	and on future electricity consumption. Such property shall exist
464	whether or not the revenues or proceeds arising from the
465	property have been billed, have accrued, or have been collected
466	and notwithstanding the fact that the value or amount of the
467	property is dependent on the future provision of service to
468	customers by the electric utility or its successors or
469	assignees.
470	2.  Storm-recovery property specified in a financing order
471	shall continue to exist until the storm-recovery bonds issued
472	pursuant to the order are paid in full and all financing costs
473	and other costs of the bonds have been recovered in full.
474	3.  All or any portion of storm-recovery property specified
475	in a financing order issued to an electric utility may be
476	transferred, sold, conveyed, or assigned to a successor or
477	assignee, including an affiliate or affiliates of the electric
478	utility created for the limited purpose of acquiring, owning, or
479	administering storm-recovery property or issuing storm-recovery
480	bonds under the financing order. All or any portion of storm-
481	recovery property may be pledged to secure storm-recovery bonds
482	issued pursuant to the order, amounts payable to financing
483	parties and to counterparties under any ancillary agreements,
484	and other financing costs. Each such transfer, sale, conveyance,
485	assignment, or pledge by an electric utility or affiliate of an
486	electric utility is considered to be a transaction in the
487	ordinary course of business.
488	4.  If an electric utility defaults on any required payment
489	of charges arising from storm-recovery property specified in a
490	financing order, a court, upon application by an interested
491	party, and without limiting any other remedies available to the
492	applying party, shall order the sequestration and payment of the
493	revenues arising from the storm-recovery property to the
494	financing parties. Any such order shall remain in full force and
495	effect notwithstanding any reorganization, bankruptcy, or other
496	insolvency proceedings with respect to the electric utility or
497	its successors or assignees.
498	5.  The interest of a transferee, purchaser, acquirer,
499	assignee, or pledgee in storm-recovery property specified in a
500	financing order issued to an electric utility, and in the
501	revenue and collections arising from that property, is not
502	subject to setoff, counterclaim, surcharge, or defense by the
503	electric utility or any other person or in connection with the
504	reorganization, bankruptcy, or other insolvency of the electric
505	utility or any other entity.
506	6.  Any successor to an electric utility, whether pursuant
507	to any reorganization, bankruptcy, or other insolvency
508	proceeding or whether pursuant to any merger or acquisition,
509	sale, or other business combination, or transfer by operation of
510	law, as a result of electric utility restructuring or otherwise,
511	shall perform and satisfy all obligations of, and have the same
512	rights under a financing order as, the electric utility under
513	the financing order in the same manner and to the same extent as
514	the electric utility, including collecting and paying to the
515	person entitled to receive the revenues, collections, payments,
516	or proceeds of the storm-recovery property.
517	(b)1.  Except as specified in this section, the Uniform
518	Commercial Code does not apply to storm-recovery property or any
519	right, title, or interest of a utility or assignee described in
520	subparagraph (1)(o)1., whether before or after the issuance of
521	the financing order. In addition, such right, title, or interest
522	pertaining to a financing order, including, but not limited to,
523	the associated storm-recovery property and any revenues,
524	collections, claims, rights to payment, payments, money, or
525	proceeds of or arising from storm-recovery charges pursuant to
526	such order, shall not be deemed proceeds of any right or
527	interest other than in the financing order and the storm-
528	recovery property arising from the order.
529	2.  The creation, attachment, granting, perfection,
530	priority, and enforcement of liens and security interests in
531	storm-recovery property to secure storm-recovery bonds is
532	governed solely by this section and not by the Uniform
533	Commercial Code.
534	3.  A valid, enforceable, and attached lien and security
535	interest in storm-recovery property may be created only upon the
536	later of:
537	a.  The issuance of a financing order;
538	b.  The execution and delivery of a security agreement with
539	a financing party in connection with the issuance of storm-
540	recovery bonds; or
541	c.  The receipt of value for the storm-recovery bonds.
542
543	A valid, enforceable, and attached security interest shall be
544	perfected against third parties as of the date of filing of a
545	financing statement in the Florida Secured Transaction Registry,
546	as such registry is defined in Article 9 of the Uniform
547	Commercial Code, in accordance with subparagraph 4., and shall
548	thereafter be a continuously perfected lien; and such security
549	interest in the storm-recovery property and all proceeds of such
550	storm-recovery property, whether or not billed, accrued, or
551	collected, and whether or not deposited into a deposit account
552	and however evidenced, shall have priority in accordance with
553	subparagraph 8. and take precedence over any subsequent judicial
554	or other lien creditor. No continuation statement need be filed
555	to maintain such perfection.
556	4.  Financing statements required to be filed pursuant to
557	this section shall be filed, maintained, and indexed in the same
558	manner and in the same system of records maintained for the
559	filing of financing statements in the Florida Secured
560	Transaction Registry under Article 9 of the Uniform Commercial
561	Code. The filing of such a financing statement shall be the only
562	method of perfecting a lien or security interest on storm-
563	recovery property.
564	5.  The priority of a lien and security interest perfected
565	under this paragraph is not impaired by any later modification
566	of the financing order or storm-recovery property or by the
567	commingling of funds arising from storm-recovery property with
568	other funds, and any other security interest that may apply to
569	those funds shall be terminated as to all funds transferred to a
570	segregated account for the benefit of an assignee or a financing
571	party or to an assignee or financing party directly.
572	6.  If a default or termination occurs under the terms of
573	the storm-recovery bonds, the financing parties or their
574	representatives may foreclose on or otherwise enforce their lien
575	and security interest in any storm-recovery property as if they
576	were a secured party under Article 9 of the Uniform Commercial
577	Code; and a court may order that amounts arising from storm-
578	recovery property be transferred to a separate account for the
579	financing parties' benefit, to which their lien and security
580	interest shall apply. On application by or on behalf of the
581	financing parties to a circuit court of this state, such court
582	shall order the sequestration and payment to the financing
583	parties of revenues arising from the storm-recovery property.
584	7.  The interest of a pledgee of an interest or any rights
585	in any storm-recovery property is not perfected until filing as
586	provided in subparagraph 4.
587	8.  The priority of the conflicting interests of pledgees
588	in the same interest or rights in any storm-recovery property is
589	determined as follows:
590	a.  Conflicting perfected interests or rights of pledgees
591	rank according to priority in time of perfection. Priority dates
592	from the time a filing covering the interest or right is made in
593	accordance with this paragraph.
594	b.  A perfected interest or right of a pledgee has priority
595	over a conflicting unperfected interest or right of a pledgee.
596	c.  A perfected interest or right of a pledgee has priority
597	over a person who becomes a lien creditor after the perfection
598	of such pledgee's interest or right.
599	(c)  The sale, assignment, or transfer of storm-recovery
600	property is governed by this paragraph. All of the following
601	apply to a sale, assignment, or transfer under this paragraph:
602	1.  The sale, conveyance, assignment, or other transfer of
603	storm-recovery property by an electric utility to an assignee
604	that the parties have in the governing documentation expressly
605	stated to be a sale or other absolute transfer is an absolute
606	transfer and true sale of, and not a pledge of or secured
607	transaction relating to, the transferor's right, title, and
608	interest in, to, and under the storm-recovery property, other
609	than for federal and state income and franchise tax purposes.
610	After such a transaction, the storm-recovery property is not
611	subject to any claims of the transferor or the transferor's
612	creditors, other than creditors holding a prior security
613	interest in the storm-recovery property perfected under
614	paragraph (b).
615	2.  The characterization of the sale, conveyance,
616	assignment, or other transfer as a true sale or other absolute
617	transfer under subparagraph 1. and the corresponding
618	characterization of the transferee's property interest is not
619	affected by:
620	a.  Commingling of amounts arising with respect to the
621	storm-recovery property with other amounts.
622	b.  The retention by the transferor of a partial or
623	residual interest, including an equity interest, in the storm-
624	recovery property, whether direct or indirect, or whether
625	subordinate or otherwise.
626	c.  Any recourse that the transferee may have against the
627	transferor other than any such recourse created, contingent
628	upon, or otherwise occurring or resulting from one or more of
629	the transferor's customers' inability to timely pay all or a
630	portion of the storm-recovery charge.
631	d.  Any indemnifications, obligations, or repurchase rights
632	made or provided by the transferor, other than indemnity or
633	repurchase rights based solely upon a transferor's customers'
634	inability to timely pay all or a portion of the storm-recovery
635	charge.
636	e.  The responsibility of the transferor to collect storm-
637	recovery charges.
638	f.  The treatment of the sale, conveyance, assignment, or
639	other transfer for tax, financial reporting, or other purposes.
640	g.  The granting or providing to holders of the storm-
641	recovery bonds of a preferred right to the storm-recovery
642	property or credit enhancement by the electric utility or its
643	affiliates with respect to the storm-recovery bonds.
644	3.  Any right that an electric utility has in the storm-
645	recovery property prior to its pledge, sale, or transfer or any
646	other right created under this section or created in the
647	financing order and assignable under this section or assignable
648	pursuant to a financing order shall be property in the form of a
649	contract right. Transfer of an interest in storm-recovery
650	property to an assignee is enforceable only upon the later of
651	the issuance of a financing order, the execution and delivery of
652	transfer documents to the assignee in connection with the
653	issuance of storm-recovery bonds, and the receipt of value. An
654	enforceable transfer of an interest in storm-recovery property
655	to an assignee shall be perfected against all third parties,
656	including subsequent judicial or other lien creditors, when a
657	notice of that transfer has been given by the filing of a
658	financing statement in accordance with subparagraph 4. The
659	transfer shall be perfected against third parties as of the date
660	of filing.
661	4.  Financing statements required to be filed under this
662	section shall be maintained and indexed in the same manner and
663	in the same system of records maintained for the filing of
664	financing statements in the Florida Secured Transaction Registry
665	under Article 9 of the Uniform Commercial Code. The filing of
666	such a financing statement shall be the only method of
667	perfecting a transfer of storm-recovery property.
668	5.  The priority of a transfer perfected under this section
669	is not impaired by any later modification of the financing order
670	or storm-recovery property or by the commingling of funds
671	arising from storm-recovery property with other funds, and any
672	other security interest that may apply to those funds shall be
673	terminated when they are transferred to a segregated account for
674	the assignee or a financing party. If storm-recovery property
675	has been transferred to an assignee or financing party, any
676	proceeds of that property shall be held in trust for the
677	assignee or financing party.
678	6.  The priority of the conflicting interests of assignees
679	in the same interest or rights in any storm-recovery property is
680	determined as follows:
681	a.  Conflicting perfected interests or rights of assignees
682	rank according to priority in time of perfection. Priority dates
683	from the time a filing covering the transfer is made in
684	accordance with subparagraph 4.
685	b.  A perfected interest or right of an assignee has
686	priority over a conflicting unperfected interest or right of an
687	assignee.
688	c.  A perfected interest or right of an assignee has
689	priority over a person who becomes a lien creditor after the
690	perfection of such assignee's interest or right.
691	(6)  DESCRIPTION OR INDICATION OF PROPERTY.--The
692	description of storm-recovery property being transferred to an
693	assignee in any sale agreement, purchase agreement, or other
694	transfer agreement, granted or pledged to a pledgee in any
695	security agreement, pledge agreement, or other security
696	document, or indicated in any financing statement is only
697	sufficient if such description or indication describes the
698	financing order that created the storm-recovery property and
699	states that such agreement or financing statement covers all or
700	part of such property described in such financing order. This
701	subsection applies to all purported transfers of, and all
702	purported grants or liens or security interests in, storm-
703	recovery property, regardless of whether the related sale
704	agreement, purchase agreement, other transfer agreement,
705	security agreement, pledge agreement, or other security document
706	was entered into, or any financing statement was filed, before
707	or after the effective date of this section.
708	(7)  FINANCING STATEMENTS.--All financing statements
709	referenced in this section shall be subject to Part 5 of Article
710	9 of the Uniform Commercial Code except the requirement as to
711	continuation statements shall not apply.
712	(8)  CHOICE OF LAW.--The law governing the validity,
713	enforceability, attachment, perfection, priority, and exercise
714	of remedies with respect to the transfer of an interest or right
715	or the pledge or creation of a security interest in any storm-
716	recovery property shall be the laws of this state, and
717	exclusively, the laws of this section.
718	(9)  STORM-RECOVERY BONDS NOT PUBLIC DEBT.--The state or
719	its political subdivisions are not liable on any storm-recovery
720	bonds, and the bonds are not a debt or a general obligation of
721	the state or any of its political subdivisions, agencies, or
722	instrumentalities. An issue of storm-recovery bonds does not,
723	directly or indirectly or contingently, obligate the state or
724	any agency, political subdivision, or instrumentality of the
725	state to levy any tax or make any appropriation for payment of
726	the bonds, other than in the entity's capacity as a consumer of
727	electricity. This subsection shall in no way preclude bond
728	guarantees or enhancements pursuant to this section. All bonds
729	must contain on the face thereof a statement to the following
730	effect: "Neither the full faith and credit nor the taxing power
731	of the State of Florida is pledged to the payment of the
732	principal of, or interest on, this bond."
733	(10)  STORM-RECOVERY BONDS AS LEGAL INVESTMENTS WITH
734	RESPECT TO INVESTORS THAT REQUIRE STATUTORY AUTHORITY REGARDING
735	LEGAL INVESTMENT.--The following entities may legally invest any
736	sinking funds, moneys, or other funds belonging to them or under
737	their control in storm-recovery bonds:
738	(a)  The state, the investment board, municipal
739	corporations, political subdivisions, public bodies, and public
740	officers except for members of the commission.
741	(b)  Banks and bankers, savings and loan associations,
742	credit unions, trust companies, savings banks and institutions,
743	investment companies, insurance companies, insurance
744	associations, and other persons carrying on a banking or
745	insurance business.
746	(c)  Personal representatives, guardians, trustees, and
747	other fiduciaries.
748	(d)  All other persons whomsoever who are now or may
749	hereafter be authorized to invest in bonds or other obligations
750	of a similar nature.
751	(11)  STATE PLEDGE.--
752	(a)  For purposes of this subsection, the term "bondholder"
753	means a person who holds a storm-recovery bond.
754	(b)  The state pledges to and agrees with bondholders, the
755	owners of the storm-recovery property, and other financing
756	parties that the state will not:
757	1.  Alter the provisions of this section which make the
758	storm-recovery charges imposed by a financing order irrevocable,
759	binding, and nonbypassable charges;
760	2.  Take or permit any action that impairs or would impair
761	the value of storm-recovery property; or
762	3.  Except as allowed under this section, reduce, alter, or
763	impair storm-recovery charges that are to be imposed, collected,
764	and remitted for the benefit of the bondholders and other
765	financing parties until any and all principal, interest,
766	premium, financing costs and other fees, expenses, or charges
767	incurred, and any contracts to be performed, in connection with
768	the related storm-recovery bonds have been paid and performed in
769	full.
770
771	Nothing in this paragraph shall preclude limitation or
772	alteration if full compensation is made by law for the full
773	protection of the storm-recovery charges collected pursuant to a
774	financing order and of the holders of storm-recovery bonds and
775	any assignee or financing party entering into a contract with
776	the electric utility.
777	(c)  Any person or entity that issues storm-recovery bonds
778	may include the pledge specified in paragraph (b) in the bonds
779	and related documentation.
780	(12)  NOT AN ELECTRIC UTILITY.--An assignee or financing
781	party shall not be considered an electric utility or person
782	providing electric service by virtue of engaging in the
783	transactions described in this section.
784	(13)  CONFLICTS.--In the event of conflict between this
785	section and any other law regarding the attachment, assignment,
786	or perfection, or the effect of perfection, or priority of,
787	assignment or transfer of, or security interest in, storm-
788	recovery property, this section shall govern to the extent of
789	the conflict.
790	(14)  EFFECT OF INVALIDITY ON ACTIONS.--Effective on the
791	date that storm-recovery bonds are first issued under this
792	section, if any provision of this section is held to be invalid,
793	is invalidated, superseded, replaced, or repealed, or expires
794	for any reason, that occurrence shall not affect the validity of
795	any action allowed under this section that is taken by an
796	electric utility, an assignee, a financing party, a collection
797	agent, or a party to an ancillary agreement; and any such action
798	shall remain in full force and effect with respect to all storm-
799	recovery bonds issued or authorized in a financing order to be
800	issued under this section prior to the date that such provision
801	is held to be invalid, is invalidated, superseded, replaced, or
802	repealed, or expires for any reason.
803	(15)  PENALTIES.--A violation of this section or of a
804	financing order issued under this section subjects the utility
805	that obtained the order to penalties under s. 366.095 and to any
806	other penalties or remedies that the commission determines are
807	necessary to achieve the intent of this section and the intent
808	and terms of the financing order and to prevent any increase in
809	financial impact to the utility's ratepayers above that set
810	forth in the financing order. If the commission orders a penalty
811	or a remedy for a violation, the monetary penalty or remedy and
812	the costs of defending against the proposed penalty or remedy
813	may not be recovered from the ratepayers.
814	(16)  AUTHORITY.--Commission authority to issue financing
815	orders pursuant to this section shall apply only to petitions
816	filed pursuant to paragraph (2)(a) within 12 months after the
817	effective date of this section. The expiration of the authority
818	shall have no effect upon financing orders adopted by the
819	commission pursuant to this section; any storm-recovery property
820	arising therefrom; any charges authorized to be levied
821	thereunder; any rights, interests, and obligations of the
822	electric utility, an assignee, or a financing party, holders of
823	storm-recovery bonds, or parties to ancillary agreements
824	pursuant to the financing order; or the authority of the
825	commission to monitor, supervise, or take further action with
826	respect to the order in accordance with the terms of this
827	section and of the order.
828	(17)  EXPIRATION.--This section shall expire on January 1
829	of the second year following payment in full of all
830	storm-recovery bonds issued pursuant to this section and all
831	related financing costs as noticed by the commission to the
832	Joint Administrative Procedures Committee of the Legislature
833	with a copy of such notice published in the Florida
834	Administrative Weekly, but shall continue to apply to any causes
835	of action timely made arising from or relating to matters
836	addressed in this section.
837	Section 2.  Paragraphs (m) and (n) of subsection (4) of
838	section 679.1091, Florida Statutes, are amended, and paragraph
839	(o) is added to said subsection, to read:
840	679.1091  Scope.--
841	(4)  This chapter does not apply to:
842	(m)  An assignment of a deposit account, other than a
843	nonnegotiable certificate of deposit, in a consumer transaction,
844	but ss. 679.3151 and 679.322 apply with respect to proceeds and
845	priorities in proceeds; or
846	(n)  Any transfer by a government or governmental unit; or
847	(o)  A transfer or pledge of, or creation of a security
848	interest in, any interest or right or portion of any interest or
849	right in any storm-recovery property as defined in s. 366.8260.
850	Section 3.  This act shall take effect upon becoming a law.

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