HB 0303

CS

CHAMBER ACTION

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

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