Florida Senate - 2009 SB 1168
By Senator King
8-01425-09 20091168__
1 A bill to be entitled
2 An act relating to securitizing energy rates; defining
3 terms; authorizing an electric utility to petition the
4 Public Service Commission for a financing order for
5 developing an electric utility plant; requiring the
6 electric utility to provide specified information in
7 the petition for a financing order; requiring that the
8 proceedings to consider a petition for a financing
9 order be completed in accordance with the provisions
10 of ch. 120, F.S., and other specified rules; requiring
11 the Public Service Commission to include specified
12 information in the financing order issued to the
13 electric utility; requiring the electric utility to
14 file with the commission a biannual letter that
15 applies the formula-based mechanism applicable to
16 preconstruction cost charges; authorizing an adversely
17 affected party to petition for judicial review in the
18 Supreme Court under certain circumstances; providing
19 that a financing order remains in effect until the
20 preconstruction cost bonds issued pursuant to the
21 order have been paid in full and the commission
22 approved financing costs of such bonds have been
23 recovered in full; providing exceptions to Public
24 Service Commission jurisdiction; specifying duties for
25 an electric utility that has obtained a financing
26 order; requiring the electric utility to include
27 specified information in electric bills; providing
28 that preconstruction cost property of an electric
29 utility development constitutes a property right or
30 interest; providing that preconstruction cost property
31 of the electric utility plant development continues to
32 exist until the preconstruction cost bonds issued
33 under a financing order, and all financing costs and
34 other costs of the bonds, are paid in full; providing
35 that the Uniform Commercial Code does not apply to
36 preconstruction cost property of the electric utility
37 plant development; providing exceptions; providing
38 that preconstruction cost property of the electric
39 plant development may be sold, assigned, or
40 transferred; requiring that all referenced financing
41 statements are subject to the Uniform Commercial Code;
42 providing an exception; providing that state law
43 governs electric utility plant developments; providing
44 that preconstruction cost bonds are not a debt or a
45 general obligation of the state or any of its
46 political subdivisions; providing that certain
47 designated entities may legally invest in
48 preconstruction cost bonds; providing that the state
49 pledges to and agrees with specified parties that the
50 state will refrain from taking certain actions;
51 providing that an assignee or financing party is not
52 an electric utility or person providing electric
53 service when it engages in the transactions described
54 in this section; providing that certain occurrences do
55 not affect the validity of any action taken by an
56 electric utility, assignee, or financing party;
57 providing for penalties if the utility violates the
58 financing order or applicable provisions of the act;
59 amending s. 366.06(1), F.S.; authorizing the
60 commission in fixing rates to consider the extent to
61 which the public utility’s economic risk has been
62 reduced by use of cost recovery mechanisms; providing
63 an effective date.
64
65 Be It Enacted by the Legislature of the State of Florida:
66
67 Section 1. Energy securitized rates.—
68 (1) ALTERNATIVE COST RECOVERY.—As an alternative to the
69 process for advance cost recovery for the siting, design,
70 licensing, and construction of nuclear and integrated
71 gasification combined cycle power plants provided in s. 366.93,
72 Florida Statutes, a public utility may securitize these costs as
73 provided in this section.
74 (2) DEFINITIONS.—As used in this section, the term:
75 (a) “Ancillary agreement” means any bond, insurance policy,
76 letter of credit, reserve account, surety bond, swap
77 arrangement, hedging arrangement, liquidity or credit support
78 arrangement, or other financial arrangement entered into in
79 connection with the issuance of preconstruction cost bonds.
80 (b) “Assignee” means any entity, including, but not limited
81 to, a corporation, limited liability company, partnership or
82 limited partnership, public authority, trust, financing entity,
83 or other legally recognized entity to which an electric utility
84 assigns, sells, or transfers, other than as security, all or a
85 portion of its interest in or right to preconstruction cost
86 property. The term also includes any entity to which an assignee
87 assigns, sells, or transfers, other than as security, its
88 interest in or right to preconstruction cost property.
89 (c) “Commission” means the Florida Public Service
90 Commission.
91 (d) “Electric utility” or “utility” has the same meaning as
92 that provided in s. 366.8255, Florida Statutes.
93 (e) “Financing costs” means:
94 1. Interest and acquisition, defeasance, or redemption
95 premiums that are payable on preconstruction cost bonds;
96 2. Any payment required under an ancillary agreement and
97 any amount required to fund or replenish an account established
98 under the terms of any indenture, ancillary agreement, or other
99 financing documents pertaining to preconstruction cost bonds;
100 3. Any other cost related to issuing, supporting, repaying,
101 and servicing preconstruction cost bonds, including, but not
102 limited to, servicing fees, accounting and auditing fees,
103 trustee fees, legal fees, consulting fees, administrative fees,
104 placement and underwriting fees, capitalized interest, rating
105 agency fees, stock exchange listing and compliance fees, and
106 filing fees, including costs related to obtaining the financing
107 order;
108 4. Any taxes and license fees imposed on the revenues
109 generated from the collection of preconstruction cost charges;
110 5. Any income taxes resulting from the collection of
111 preconstruction cost charges in any such case whether paid,
112 payable, or accrued; or
113 6. Any state and local taxes, franchise, gross receipts,
114 and other taxes or similar charges, including, but not limited
115 to, regulatory assessment fees, whether paid, payable, or
116 accrued.
117 (f) “Financing order” means an order under subsection (3)
118 which allows for the issuance of preconstruction cost bonds; the
119 imposition, collection, and periodic adjustments of
120 preconstruction cost charges; and the creation of
121 preconstruction cost property.
122 (g) “Financing party” means holders of preconstruction cost
123 bonds and trustees, collateral agents, or other persons acting
124 for the benefit of holders of preconstruction cost bonds.
125 (h) “Financing statement” has the same meaning as that
126 provided in Article 9 of the Uniform Commercial Code.
127 (i) “Integrated gasification combined cycle power plant” or
128 “plant” means an electrical power plant as defined in s.
129 403.503, Florida Statutes, which uses synthesis gas produced by
130 integrated gasification technology.
131 (j) “Nuclear power plant” or “plant” means an electrical
132 power plant as defined in s. 403.503, Florida Statutes, which
133 uses nuclear materials for fuel.
134 (k) “Pledgee” means a financing party to which an electric
135 utility or its successor or assignee mortgages, negotiates,
136 hypothecates, pledges, or creates a security interest or lien on
137 all or any portion of its interest in or right to
138 preconstruction cost property.
139 (l) “Power plant” or “plant” means a nuclear power plant or
140 an integrated gasification combined cycle power plant.
141 (m) “Preconstruction” is that period of time after a site,
142 including any related electrical transmission lines or
143 facilities, has been selected through and including the date the
144 utility completes site-clearing work. Preconstruction costs
145 shall be afforded deferred accounting treatment and shall accrue
146 a carrying charge equal to the utility's allowance for funds
147 used during construction (AFUDC) rate until recovered in rates.
148 (n) “Preconstruction cost” includes, but is not limited to,
149 all capital investments, including rate of return, any
150 applicable taxes, and all expenses, including operation and
151 maintenance expenses, related to or resulting from the siting,
152 licensing, design, construction, or operation of the nuclear
153 power plant, including new, expanded, or relocated electrical
154 transmission lines or facilities of any size which are necessary
155 thereto, or of the integrated gasification combined cycle power
156 plant. It also includes appropriate carrying costs on the
157 utility's projected construction cost balance associated with
158 the nuclear or integrated gasification combined cycle power
159 plant. To encourage investment and provide certainty, for
160 nuclear or integrated gasification combined cycle power plant
161 need petitions submitted on or before December 31, 2010,
162 associated carrying costs shall be equal to the pretax AFUDC in
163 effect on the date this act becomes law. For nuclear or
164 integrated gasification combined cycle power plants for which
165 need petitions are submitted after December 31, 2010, the
166 utility's existing pretax AFUDC rate is presumed to be
167 appropriate unless determined otherwise by the commission in the
168 determination of need for the nuclear or integrated gasification
169 combined cycle power plant.
170 (o) “Preconstruction cost bonds” means bonds, debentures,
171 notes, certificates of participation, certificates of beneficial
172 interest, certificates of ownership, or other evidences of
173 indebtedness or ownership which are issued by an electric
174 utility or an assignee pursuant to a financing order, the
175 proceeds of which are used directly or indirectly to recover,
176 finance, or refinance commission-approved preconstruction costs
177 or financing costs and which are secured by or payable from
178 preconstruction cost property.
179 (p) “Preconstruction cost charge” means the amounts
180 authorized by the commission to recover, finance, or refinance
181 preconstruction costs or financing costs, or as provided for in
182 a financing order, to be imposed on all customer bills and
183 collected in full by an electric utility or its successors or
184 assignees, or a collection agent, through a charge that is
185 separate and apart from the electric utility's base rates. This
186 charge shall be paid by all customers receiving transmission or
187 distribution service from the electric utility or its successors
188 or assignees under commission-approved rate schedules or under
189 special contracts, even if the customer elects to purchase
190 electricity from an alternative electricity supplier following a
191 fundamental change in regulation of public utilities in this
192 state.
193 (q) “Preconstruction cost property” means:
194 1. All rights and interests of an electric utility or
195 successor or assignee of the electric utility under a financing
196 order, including the right to impose, bill, collect, and receive
197 preconstruction cost charges authorized in the financing order
198 and to obtain periodic adjustments to such charges as provided
199 in the financing order.
200 2. All revenues, collections, claims, rights to payments,
201 payments, money, or proceeds arising from the rights and
202 interests specified in subparagraph 1., regardless of whether
203 such revenues, collections, claims, rights to payment, payments,
204 money, or proceeds are imposed, billed, received, collected, or
205 maintained together with or commingled with other revenues,
206 collections, rights to payment, payments, money, or proceeds.
207 (r) “Uniform Commercial Code” has the same meaning as that
208 provided in s. 671.101, Florida Statutes.
209 (3) FINANCING ORDERS.—
210 (a) An electric utility may petition the commission for a
211 financing order for the recovery in rates of all prudently
212 incurred preconstruction costs. For each petition, the electric
213 utility shall:
214 1. Describe the activities that the electric utility has
215 undertaken or proposes to undertake which have or will result in
216 preconstruction costs and describe the reasons for undertaking
217 the activities.
218 2. Set forth the known preconstruction costs and estimate
219 the costs of any preconstruction activities that are not
220 completed, or for which the costs are not yet known, as
221 identified and requested by the electric utility.
222 3. Indicate whether the electric utility proposes to
223 finance all or a portion of the preconstruction costs using
224 preconstruction cost bonds. If the electric utility proposes to
225 finance a portion of such costs, the electric utility shall
226 identify that portion in the petition.
227 5. Estimate the financing costs related to the
228 preconstruction cost bonds.
229 6. Estimate the preconstruction charges necessary to
230 recover the preconstruction costs and financing costs and the
231 period for recovery of such costs.
232 7. Estimate any cost savings or demonstrate how it would
233 avoid or significantly mitigate rate impacts to customers
234 resulting from financing preconstruction costs with
235 preconstruction cost bonds. This estimate of cost savings,
236 avoidance, or mitigation shall consider the traditional method
237 of recovering such costs from customers and through alternative
238 financing methods available to the electric utility and the
239 advance cost recovery procedure set forth in s. 366.93, Florida
240 Statutes.
241 8. File with the petition direct testimony supporting the
242 petition.
243 (b)1. Proceedings on a petition submitted pursuant to
244 paragraph (a) shall begin with a petition by an electric utility
245 and shall be disposed of in accordance with the provisions of
246 chapter 120, Florida Statutes, and applicable rules, except that
247 the provisions of this section, to the extent applicable, shall
248 control.
249 a. Within 7 days after the filing of a petition, the
250 commission shall publish a case schedule which shall place the
251 matter before the commission on an agenda that will permit a
252 commission decision no later than 120 days after the date the
253 petition is filed.
254 b. No later than 135 days after the date the petition is
255 filed, the commission shall issue a financing order or an order
256 rejecting the petition. A party to the commission proceeding may
257 petition the commission for reconsideration of the financing
258 order within 5 days after the date of its issuance. The
259 commission shall issue a financing order authorizing financing
260 of reasonable and prudent preconstruction costs and financing
261 costs if the commission finds that the issuance of the
262 preconstruction cost bonds and the imposition of preconstruction
263 cost charges authorized by the order are reasonably expected to
264 result in lower overall costs or would avoid or significantly
265 mitigate rate impacts to customers as compared with alternative
266 methods of financing or recovering preconstruction costs.
267 2. In a financing order issued to an electric utility, the
268 commission shall:
269 a. Except as provided in sub-subparagraph f. and in
270 subparagraph 4., specify the amount of preconstruction costs,
271 taking into consideration, to the extent the commission deems
272 appropriate, any other methods used to recover these costs,
273 describe and estimate the amount of financing costs which may be
274 recovered through preconstruction cost charges, and specify the
275 period over which such costs may be recovered.
276 b. Determine that the proposed structuring, expected
277 pricing, and financing costs of the preconstruction cost bonds
278 are reasonably expected to result in lower overall costs or
279 would avoid or significantly mitigate rate impacts to customers
280 as compared with alternative methods of financing or recovering
281 preconstruction costs.
282 c. Provide that, for the period specified pursuant to sub
283 subparagraph a., the imposition and collection of
284 preconstruction cost charges authorized in the financing order
285 shall be paid by all customers receiving transmission or
286 distribution service from the electric utility or its successors
287 or assignees under commission-approved rate schedules or under
288 special contracts, even if the customer elects to purchase
289 electricity from an alternative electric supplier following a
290 fundamental change in regulation of public utilities in the
291 state.
292 d. Include a formula-based mechanism for making expeditious
293 periodic adjustments in the preconstruction cost charges that
294 customers are required to pay under the financing order and for
295 making any adjustments that are necessary to correct for any
296 overcollection or undercollection of the charges or to otherwise
297 ensure the timely payment of preconstruction cost bonds and
298 financing costs and other required amounts and charges payable
299 in connection with the preconstruction cost bonds.
300 e. Specify the preconstruction cost property that is, or
301 shall be, created in favor of an electric utility or its
302 successors or assignees and that shall be used to pay or secure
303 preconstruction cost bonds and financing costs.
304 f. Specify the degree of flexibility to be afforded to the
305 electric utility in establishing the terms and conditions of the
306 preconstruction cost bonds, including, but not limited to,
307 repayment schedules, interest rates, and other financing costs.
308 g. Provide that preconstruction cost charges be allocated
309 to the customer classes using the criteria set out in s.
310 366.06(1), Florida Statutes, in the manner in which these costs
311 or their equivalent were allocated in the cost-of-service study
312 approved in connection with the electric utility's last rate
313 case. If the electric utility's last rate case was resolved by a
314 settlement agreement, the cost-of-service methodology filed by
315 the electric utility in the settlement agreement shall be used.
316 h. Provide that, after the final terms of an issuance of
317 preconstruction cost bonds have been established and prior to
318 the issuance of preconstruction cost bonds, the electric utility
319 shall determine the resulting initial preconstruction cost
320 charge in accordance with the financing order. Such initial
321 preconstruction cost charge is final and effective upon the
322 issuance of such preconstruction cost bonds without further
323 commission action.
324 i. Include any other conditions that the commission
325 considers appropriate and that are not otherwise inconsistent
326 with this section.
327 In performing the responsibilities of this subparagraph and
328 subparagraph 5., the commission may engage outside consultants
329 or counsel. Any expenses associated with such services shall be
330 included as part of financing costs and included in
331 preconstruction cost charges.
332 3. A financing order issued to an electric utility may
333 provide that creation of the electric utility's preconstruction
334 cost property pursuant to sub-subparagraph 2.g. is conditioned
335 upon, and shall be simultaneous with, the sale or other transfer
336 of the preconstruction cost property to an assignee and the
337 pledge of the preconstruction cost property to secure
338 preconstruction cost bonds.
339 4. If the commission issues a financing order, the electric
340 utility shall file with the commission at least biannually a
341 petition or a letter applying the formula-based mechanism
342 pursuant to sub-subparagraph 2.e. and, based on estimates of
343 consumption for each rate class and other mathematical factors,
344 requesting administrative approval to make the adjustments
345 described in sub-subparagraph 2.e. The review of such a request
346 shall be limited to determining whether there is any
347 mathematical error in the application of the formula-based
348 mechanism relating to the appropriate amount of any
349 overcollection or undercollection of preconstruction cost
350 charges and the amount of an adjustment. Such adjustments shall
351 ensure the recovery of revenues sufficient to provide for the
352 payment of principal, interest, acquisition, defeasance,
353 financing costs, or redemption premium and other fees, costs,
354 and charges with respect to preconstruction cost bonds approved
355 under the financing order. Within 60 days after receiving an
356 electric utility's request pursuant to this paragraph, the
357 commission shall approve the request or inform the electric
358 utility of any mathematical errors in its calculation. If the
359 commission informs the utility of mathematical errors in its
360 calculation, the utility may correct its error and refile its
361 request. The timeframes previously described in this paragraph
362 apply to a refiled request.
363 5. Within 120 days after the issuance of preconstruction
364 cost bonds, the electric utility shall file with the commission
365 information on the actual costs of the preconstruction cost bond
366 issuance. The commission shall review such information to
367 determine if the costs incurred in the issuance of the bonds
368 resulted in the lowest overall costs that were reasonably
369 consistent with market conditions at the time of the issuance
370 and the terms of the financing order. The commission may
371 disallow any incremental issuance costs in excess of the lowest
372 overall costs by requiring the utility to make a refund to its
373 customers in an amount equal to the excess of actual issuance
374 costs incurred, and paid for out of preconstruction cost bond
375 proceeds, and the lowest overall issuance costs as determined by
376 the commission. The commission may not make adjustments to the
377 preconstruction cost charges for any such excess issuance costs.
378 6. Subsequent to the earlier of the transfer of
379 preconstruction cost property to an assignee or the issuance of
380 preconstruction cost bonds authorized thereby, a financing order
381 is irrevocable and, except as provided in subparagraph 4. and
382 paragraph (c), the commission may not amend, modify, or
383 terminate the financing order by any subsequent action or
384 reduce, impair, postpone, terminate, or otherwise adjust
385 preconstruction cost charges approved in the financing order.
386 After the issuance of a financing order, the electric utility
387 retains sole discretion regarding whether to assign, sell, or
388 otherwise transfer preconstruction cost property or to cause the
389 preconstruction cost bonds to be issued, including the right to
390 defer or postpone such assignment, sale, transfer, or issuance.
391 (c) At the request of an electric utility, the commission
392 may commence a proceeding and issue a subsequent financing order
393 that provides for retiring and refunding preconstruction cost
394 bonds issued pursuant to the original financing order if the
395 commission finds that the subsequent financing order satisfies
396 all of the criteria specified in paragraph (b). Effective on
397 retirement of the refunded preconstruction cost bonds and the
398 issuance of new preconstruction cost bonds, the commission shall
399 adjust the related preconstruction cost charges accordingly.
400 (d) Within 30 days after the commission issues an order
401 pursuant to paragraph (b) or a decision denying a request for
402 reconsideration or, if the request for reconsideration is
403 granted, within 30 days after the commission issues its decision
404 on reconsideration, an adversely affected party may petition for
405 judicial review in the Supreme Court. The petition for review
406 shall be served upon the executive director of the commission
407 personally or by service at the office of the commission. Review
408 on appeal shall be based solely on the record before the
409 commission and briefs to the court and shall be limited to
410 determining whether the order issued pursuant to paragraph (b),
411 or the order on reconsideration, conforms to the constitution
412 and laws of this state and the United States and is within the
413 authority of the commission under this section. Inasmuch as
414 delay in the determination of the appeal of a financing order
415 will delay the issuance of preconstruction cost bonds, thereby
416 diminishing savings to customers which might be achieved if such
417 bonds were issued as contemplated by a financing order, the
418 Supreme Court shall proceed to hear and determine the action as
419 expeditiously as practicable and give the action precedence over
420 other matters not accorded similar precedence by law.
421 (e)1. A financing order remains in effect until the
422 preconstruction cost bonds issued pursuant to the order have
423 been paid in full and the commission-approved financing costs of
424 such bonds have been recovered in full.
425 2. A financing order issued to an electric utility shall
426 remain in effect and unabated notwithstanding the
427 reorganization, bankruptcy, or other insolvency proceedings of
428 the electric utility or its successors or assignees.
429 (4) EXCEPTIONS TO COMMISSION JURISDICTION.—
430 (a) If the commission issues a financing order to an
431 electric utility pursuant to this section, the commission may
432 not, in exercising its powers and carrying out its duties
433 pursuant to this chapter, consider the preconstruction cost
434 bonds issued pursuant to the order to be the debt of the
435 electric utility other than for federal income tax purposes,
436 consider the preconstruction cost charges paid under the order
437 to be the revenue of the electric utility for any purpose, or
438 consider the preconstruction costs or financing costs specified
439 in the order to be the costs of the electric utility, nor may
440 the commission determine any action taken by an electric utility
441 which is consistent with the order to be unjust or unreasonable.
442 (b) The commission may not order or otherwise directly or
443 indirectly require an electric utility to use preconstruction
444 cost bonds to finance any project, addition, plant, facility,
445 extension, capital improvement, equipment, or any other
446 expenditure, unless the electric utility has filed a petition
447 under paragraph (3)(a) to finance the expenditure using
448 preconstruction cost bonds. The commission may not refuse to
449 allow an electric utility to recover costs for preconstruction
450 cost activities in an otherwise permissible fashion, or refuse
451 or condition authorization or approval under s. 366.04, Florida
452 Statutes, of the issuance and sale by an electric utility of
453 securities or the assumption by it of liabilities or
454 obligations, solely because of the potential availability of
455 preconstruction cost financing.
456 (5) ELECTRIC UTILITY DUTIES.—
457 (a) The electric bills issued by an electric utility that
458 has obtained a financing order and issued preconstruction cost
459 bonds must explicitly reflect that a portion of the charges
460 represents preconstruction cost charges approved in a financing
461 order issued to the electric utility. If the preconstruction
462 cost property has been transferred to an assignee, the bills
463 also must include a statement to the effect that the assignee is
464 the owner of the rights to preconstruction cost charges and that
465 the electric utility or any other entity, if applicable, is
466 acting as a collection agent or servicer for the assignee. The
467 tariff applicable to customers must indicate the preconstruction
468 cost charge and the ownership of that charge. The commission
469 shall determine whether to require electric utilities to include
470 such information or amounts owed with respect to the
471 preconstruction cost property as a separate line item on
472 individual electric bills.
473 (b) The failure of an electric utility to comply with this
474 subsection does not invalidate, impair, or affect any financing
475 order, preconstruction cost property, preconstruction cost
476 charge, or preconstruction cost bonds, but subjects the electric
477 utility to penalties under s. 366.095, Florida Statutes.
478 (6) PRECONSTRUCTION COST PROPERTY.—
479 (a)1. All preconstruction cost property that is specified
480 in a financing order constitutes an existing, present property
481 right or interest, notwithstanding that the imposition and
482 collection of preconstruction cost charges depends on the
483 electric utility to which the order is issued performing its
484 servicing functions relating to the collection of
485 preconstruction cost charges and on future electricity
486 consumption. Such property exists whether or not the revenues or
487 proceeds arising from the property have been billed, have
488 accrued, or have been collected, and notwithstanding the fact
489 that the value or amount of the property is dependent on the
490 future provision of service to customers by the electric utility
491 or its successors or assignees.
492 2. Preconstruction cost property specified in a financing
493 order shall continue to exist until the preconstruction cost
494 bonds issued under the order are paid in full and all financing
495 costs and other costs of the bonds have been recovered in full.
496 3. All or any portion of preconstruction cost property
497 specified in a financing order issued to an electric utility may
498 be transferred, sold, conveyed, or assigned to a successor or
499 assignee, including an affiliate or affiliates of the electric
500 utility created for the limited purpose of acquiring, owning, or
501 administering preconstruction cost property or issuing
502 preconstruction cost bonds under the financing order. All or any
503 portion of preconstruction cost property may be pledged to
504 secure preconstruction cost bonds issued pursuant to the order,
505 amounts payable to financing parties and counterparties under
506 any ancillary agreements, and other financing costs. Each such
507 transfer, sale, conveyance, assignment, or pledge by an electric
508 utility or affiliate of an electric utility is considered to be
509 a transaction in the ordinary course of business.
510 4. If an electric utility defaults on any required payment
511 of charges arising from preconstruction cost property specified
512 in a financing order, a court shall, upon application by an
513 interested party, and without limiting any other remedies
514 available to the applying party, order the sequestration and
515 payment of the revenues arising from the preconstruction cost
516 property to the financing parties. Any such order remains in
517 full force and effect notwithstanding any reorganization,
518 bankruptcy, or other insolvency proceedings with respect to the
519 electric utility or its successors or assignees.
520 5. The interest of a transferee, purchaser, acquirer,
521 assignee, or pledgee in preconstruction cost property specified
522 in a financing order issued to an electric utility, and in the
523 revenue and collections arising from that property, is not
524 subject to setoff, counterclaim, surcharge, or defense by the
525 electric utility or any other person or in connection with the
526 reorganization, bankruptcy, or other insolvency of the electric
527 utility or any other entity.
528 6. Any successor to an electric utility shall perform and
529 satisfy all obligations of, and have the same rights under a
530 financing order as, the electric utility under the financing
531 order in the same manner and to the same extent as the electric
532 utility, including collecting and paying to the person entitled
533 to receive the revenues, collections, payments, or proceeds of
534 the preconstruction cost property. This provision applies
535 whether the succession occurs pursuant to any reorganization,
536 bankruptcy, or other insolvency proceeding or whether pursuant
537 to any merger or acquisition, sale, or other business
538 combination, or transfer by operation of law, as a result of
539 electric utility restructuring or otherwise.
540 (b)1. Except as specified in this section, the Uniform
541 Commercial Code does not apply to preconstruction cost property
542 or any right, title, or interest of a utility or assignee
543 described in subparagraph (2)(q)1., whether before or after the
544 issuance of the financing order. In addition, such right, title,
545 or interest pertaining to a financing order, including, but not
546 limited to, the associated preconstruction cost property and any
547 revenues, collections, claims, rights to payment, payments,
548 money, or proceeds of or arising from preconstruction cost
549 charges pursuant to such order, shall not be deemed proceeds of
550 any right or interest other than in the financing order and the
551 preconstruction cost property arising from the order.
552 2. The creation, attachment, granting, perfection,
553 priority, and enforcement of liens and security interests in
554 preconstruction cost property to secure preconstruction cost
555 bonds is governed solely by this section and not by the Uniform
556 Commercial Code.
557 3. A valid, enforceable, and attached lien and security
558 interest in preconstruction cost property may be created only
559 upon the later of:
560 a. The issuance of a financing order;
561 b. The execution and delivery of a security agreement with
562 a financing party in connection with the issuance of
563 preconstruction cost bonds; or
564 c. The receipt of value for the preconstruction cost bonds.
565 A valid, enforceable, and attached security interest shall be
566 perfected against third parties as of the date of filing of a
567 financing statement in the Florida Secured Transaction Registry,
568 as such registry is defined in Article 9 of the Uniform
569 Commercial Code, in accordance with subparagraph 4., and shall
570 thereafter be a continuously perfected lien. Such security
571 interest in the preconstruction cost property and all proceeds
572 of such preconstruction cost property, whether or not billed,
573 accrued, or collected, and whether or not deposited into a
574 deposit account and however evidenced, has priority in
575 accordance with subparagraph 8. and takes precedence over any
576 subsequent judicial or other lien creditor. No continuation
577 statement need be filed to maintain such perfection.
578 4. Financing statements required to be filed pursuant to
579 this section shall be filed, maintained, and indexed in the same
580 manner and in the same system of records maintained for the
581 filing of financing statements in the Florida Secured
582 Transaction Registry under Article 9 of the Uniform Commercial
583 Code. The filing of such a financing statement is the only
584 method of perfecting a lien or security interest on
585 preconstruction cost property.
586 5. The priority of a lien and security interest perfected
587 under this paragraph is not impaired by any later modification
588 of the financing order or preconstruction cost property or by
589 the commingling of funds arising from preconstruction cost
590 property with other funds. Any other security interest that may
591 apply to those funds shall be terminated as to all funds
592 transferred to a segregated account for the benefit of an
593 assignee or a financing party or to an assignee or financing
594 party directly.
595 6. If a default or termination occurs under the terms of
596 the preconstruction cost bonds, the financing parties or their
597 representatives may foreclose on or otherwise enforce their lien
598 and security interest in any preconstruction cost property as if
599 they were a secured party under Article 9 of the Uniform
600 Commercial Code. In that instance, a court may order that
601 amounts arising from preconstruction cost property be
602 transferred to a separate account for the financing parties'
603 benefit, to which their lien and security interest shall apply.
604 On application by or on behalf of the financing parties to a
605 circuit court of this state, such court shall order the
606 sequestration and payment to the financing parties of revenues
607 arising from the preconstruction cost property.
608 7. The interest of a pledgee of an interest or any rights
609 in any preconstruction cost property is not perfected until
610 filing as provided in subparagraph 4.
611 8. The priority of the conflicting interests of pledgees in
612 the same interest or rights in any preconstruction cost property
613 is determined as follows:
614 a. Conflicting perfected interests or rights of pledgees
615 rank according to priority in time of perfection. Priority dates
616 from the time a filing covering the interest or right is made in
617 accordance with this paragraph.
618 b. A perfected interest or right of a pledgee has priority
619 over a conflicting unperfected interest or right of a pledgee.
620 c. A perfected interest or right of a pledgee has priority
621 over a person who becomes a lien creditor after the perfection
622 of such pledgee's interest or right.
623 (c) The sale, assignment, or transfer of preconstruction
624 cost property is governed by this paragraph. All of the
625 following apply to a sale, assignment, or transfer under this
626 paragraph:
627 1. The sale, conveyance, assignment, or other transfer of
628 preconstruction cost property by an electric utility to an
629 assignee that the parties have in the governing documentation
630 expressly stated to be a sale or other absolute transfer is an
631 absolute transfer and true sale of, and not a pledge of or
632 secured transaction relating to, the transferor's right, title,
633 and interest in, to, and under the preconstruction cost
634 property, other than for federal and state income and franchise
635 tax purposes. After such a transaction, the preconstruction cost
636 property is not subject to any claims of the transferor or the
637 transferor's creditors, other than creditors that hold a prior
638 security interest in the preconstruction cost property perfected
639 under paragraph (b).
640 2. The characterization of the sale, conveyance,
641 assignment, or other transfer as a true sale or other absolute
642 transfer under subparagraph 1., and the corresponding
643 characterization of the transferee's property interest, is not
644 affected by:
645 a. Commingling of amounts arising with respect to the
646 preconstruction cost property with other amounts.
647 b. The retention by the transferor of a partial or residual
648 interest, including an equity interest, in the preconstruction
649 cost property, whether direct or indirect, or whether
650 subordinate or otherwise.
651 c. Any recourse that the transferee may have against the
652 transferor other than any such recourse created, contingent
653 upon, or otherwise occurring or resulting from one or more of
654 the transferor's customers' inability to timely pay all or a
655 portion of the preconstruction cost charge.
656 d. Any indemnifications, obligations, or repurchase rights
657 made or provided by the transferor, other than indemnity or
658 repurchase rights based solely upon a transferor's customers'
659 inability to timely pay all or a portion of the preconstruction
660 cost charge.
661 e. The responsibility of the transferor to collect
662 preconstruction cost charges.
663 f. The treatment of the sale, conveyance, assignment, or
664 other transfer for tax, financial reporting, or other purposes.
665 g. Granting or providing to holders of the preconstruction
666 cost bonds a preferred right to the preconstruction cost
667 property or credit enhancement by the electric utility or its
668 affiliates with respect to the preconstruction cost bonds.
669 3. Any right that an electric utility has in the
670 preconstruction cost property prior to its pledge, sale, or
671 transfer, or any other right created under this section or
672 created in the financing order and assignable under this section
673 or assignable pursuant to a financing order, shall be property
674 in the form of a contract right. Transfer of an interest in
675 preconstruction cost property to an assignee is enforceable only
676 upon the later of the issuance of a financing order, the
677 execution and delivery of transfer documents to the assignee in
678 connection with the issuance of preconstruction cost bonds, and
679 the receipt of value. An enforceable transfer of an interest in
680 preconstruction cost property to an assignee shall be perfected
681 against all third parties, including subsequent judicial or
682 other lien creditors, when a notice of that transfer has been
683 given by the filing of a financing statement in accordance with
684 subparagraph 4. The transfer shall be perfected against third
685 parties as of the date of filing.
686 4. Financing statements required to be filed under this
687 section shall be maintained and indexed in the same manner and
688 in the same system of records maintained for the filing of
689 financing statements in the Florida Secured Transaction Registry
690 under Article 9 of the Uniform Commercial Code. The filing of
691 such a financing statement shall be the only method of
692 perfecting a transfer of preconstruction cost property.
693 5. The priority of a transfer perfected under this section
694 is not impaired by any later modification of the financing order
695 or preconstruction cost property or by the commingling of funds
696 arising from preconstruction cost property with other funds, and
697 any other security interest that may apply to those funds shall
698 be terminated when they are transferred to a segregated account
699 for the assignee or a financing party. If preconstruction cost
700 property has been transferred to an assignee or financing party,
701 any proceeds of that property shall be held in trust for the
702 assignee or financing party.
703 6. The priority of the conflicting interests of assignees
704 in the same interest or rights in any preconstruction cost
705 property is determined as follows:
706 a. Conflicting perfected interests or rights of assignees
707 rank according to priority in time of perfection. Priority dates
708 from the time a filing covering the transfer is made in
709 accordance with subparagraph 4.
710 b. A perfected interest or right of an assignee has
711 priority over a conflicting unperfected interest or right of an
712 assignee.
713 c. A perfected interest or right of an assignee has
714 priority over a person who becomes a lien creditor after the
715 perfection of such assignee's interest or right.
716 (7) DESCRIPTION OR INDICATION OF PROPERTY.—The description
717 of preconstruction cost property being transferred to an
718 assignee in any sale agreement, purchase agreement, or other
719 transfer agreement, granted or pledged to a pledgee in any
720 security agreement, pledge agreement, or other security
721 document, or indicated in any financing statement is only
722 sufficient if such description or indication describes the
723 financing order that created the preconstruction cost property
724 and states that such agreement or financing statement covers all
725 or part of such property described in such financing order. This
726 subsection applies to all purported transfers of, and all
727 purported grants or liens or security interests in,
728 preconstruction cost property, regardless of whether the related
729 sale agreement, purchase agreement, other transfer agreement,
730 security agreement, pledge agreement, or other security document
731 was entered into, or any financing statement was filed, before
732 or after the effective date of this section.
733 (8) FINANCING STATEMENTS.—All financing statements
734 referenced in this section shall be subject to Part 5 of Article
735 9 of the Uniform Commercial Code, except that the requirement as
736 to continuation statements does not apply.
737 (9) CHOICE OF LAW.—The law governing the validity,
738 enforceability, attachment, perfection, priority, and exercise
739 of remedies with respect to the transfer of an interest or right
740 or the pledge or creation of a security interest in any
741 preconstruction cost property shall be the laws of this state,
742 and, exclusively, the provisions of this section.
743 (10) PRECONSTRUCTION COST BONDS NOT PUBLIC DEBT.—The state
744 or its political subdivisions are not liable on any
745 preconstruction cost bonds, and the bonds are not a debt or a
746 general obligation of the state or any of its political
747 subdivisions, agencies, or instrumentalities. An issue of
748 preconstruction cost bonds does not, directly or indirectly or
749 contingently, obligate the state or any agency, political
750 subdivision, or instrumentality of the state to levy any tax or
751 make any appropriation for payment of the bonds, other than in
752 their capacity as consumers of electricity. This subsection
753 shall in no way preclude bond guarantees or enhancements
754 pursuant to this section. All bonds must contain on their face a
755 statement to the following effect: “Neither the full faith and
756 credit nor the taxing power of the State of Florida is pledged
757 to the payment of the principal of, or interest on, this bond.”
758 (11) PRECONSTRUCTION COST BONDS AS LEGAL INVESTMENTS WITH
759 RESPECT TO INVESTORS THAT REQUIRE STATUTORY AUTHORITY REGARDING
760 LEGAL INVESTMENT.—The following entities may legally invest any
761 sinking funds, moneys, or other funds belonging to them or under
762 their control in preconstruction cost bonds:
763 (a) The state, the investment board, municipal
764 corporations, political subdivisions, public bodies, and public
765 officers, except for members of the commission.
766 (b) Banks and bankers, savings and loan associations,
767 credit unions, trust companies, savings banks and institutions,
768 investment companies, insurance companies, insurance
769 associations, and other persons carrying on a banking or
770 insurance business.
771 (c) Personal representatives, guardians, trustees, and
772 other fiduciaries.
773 (d) All other persons whatsoever who are now or may
774 hereafter be authorized to invest in bonds or other obligations
775 of a similar nature.
776 (12) STATE PLEDGE.—
777 (a) For purposes of this subsection, the term “bondholder”
778 means a person who holds a preconstruction cost bond.
779 (b) The state pledges to and agrees with bondholders, the
780 owners of the preconstruction cost property, and other financing
781 parties that the state will not:
782 1. Alter the provisions of this section which make the
783 preconstruction cost charges imposed by a financing order
784 irrevocable, binding, and nonbypassable;
785 2. Take or permit any action that impairs or would impair
786 the value of preconstruction cost property; or
787 3. Except as allowed under this section, reduce, alter, or
788 impair preconstruction cost charges that are to be imposed,
789 collected, and remitted for the benefit of the bondholders and
790 other financing parties until any and all principal, interest,
791 premium, financing costs and other fees, expenses, or charges
792 incurred, and any contracts to be performed, in connection with
793 the related preconstruction cost bonds have been paid and
794 performed in full.
795 This paragraph does not preclude limitation or alteration if
796 full compensation is made by law for the full protection of the
797 preconstruction cost charges collected pursuant to a financing
798 order and of the holders of preconstruction cost bonds and any
799 assignee or financing party entering into a contract with the
800 electric utility.
801 (c) Any person or entity that issues preconstruction cost
802 bonds may include the pledge specified in paragraph (b) in the
803 bonds and related documentation.
804 (13) NOT AN ELECTRIC UTILITY.—An assignee or financing
805 party shall not be considered an electric utility or person
806 providing electric service by virtue of engaging in the
807 transactions described in this section.
808 (14) CONFLICTS.—In the event of conflict between this
809 section and any other law regarding the attachment, assignment,
810 or perfection, or the effect of perfection, or priority of,
811 assignment or transfer of, or security interest in
812 preconstruction cost property, this section shall govern to the
813 extent of the conflict.
814 (15) EFFECT OF INVALIDITY ON ACTIONS.—Effective on the date
815 that preconstruction cost bonds are first issued under this
816 section, if any provision of this section is held to be invalid
817 or is invalidated, superseded, replaced, repealed, or expires
818 for any reason, that occurrence shall not affect the validity of
819 any action allowed under this section which is taken by an
820 electric utility, an assignee, a financing party, a collection
821 agent, or a party to an ancillary agreement. Any such action
822 shall remain in full force and effect with respect to all
823 preconstruction cost bonds issued or authorized in a financing
824 order issued under this section prior to the date that such
825 provision is held to be invalid or is invalidated, superseded,
826 replaced, or repealed, or that expires for any reason.
827 (16) PENALTIES.—A violation of this section or of a
828 financing order issued under this section subjects the utility
829 that obtained the order to penalties under s. 366.095, Florida
830 Statutes, and to any other penalties or remedies that the
831 commission determines are necessary to achieve the intent of
832 this section and the intent and terms of the financing order and
833 to prevent any increase in financial impact to the utility's
834 ratepayers above that set forth in the financing order. If the
835 commission orders a penalty or a remedy for a violation, the
836 monetary penalty or remedy, and the costs of defending against
837 the proposed penalty or remedy, may not be recovered from
838 ratepayers. The commission may not make adjustments to
839 preconstruction cost charges for any such penalties or remedies.
840 (17) CONSTRUCTION COSTS.—When the nuclear or integrated
841 gasification combined cycle power plant is placed in commercial
842 service, the utility shall be allowed to increase its base rate
843 charges by the projected annual revenue requirements of the
844 nuclear or integrated gasification combined cycle power plant
845 based on the jurisdictional annual revenue requirements of the
846 plant for the first 12 months of operation. The rate of return
847 on capital investments shall be calculated using the utility's
848 rate of return last approved by the commission prior to the
849 commercial inservice date of the nuclear or integrated
850 gasification combined cycle power plant. If any existing
851 generating plant is retired as a result of operation of the
852 nuclear or integrated gasification combined cycle power plant,
853 the commission shall, through an increase in base rate charges,
854 allow for the recovery of the net book value of the retired
855 plant over a period not to exceed 5 years.
856 (18) COST RECOVERY IF PLANT IS NOT COMPLETED.—If the
857 utility elects not to complete or is precluded from completing
858 construction of the nuclear power plant, including new,
859 expanded, or relocated electrical transmission lines or
860 facilities necessary thereto, or of the integrated gasification
861 combined cycle power plant, the utility shall be allowed to
862 recover all prudent preconstruction and construction costs
863 incurred following the commission's issuance of a final order
864 granting a determination of need for the nuclear power plant and
865 electrical transmission lines and facilities necessary thereto
866 or for the integrated gasification combined cycle power plant.
867 The utility shall recover such costs through the capacity cost
868 recovery clause over a period equal to the period during which
869 the costs were incurred or 5 years, whichever is greater. The
870 unrecovered balance during the recovery period shall accrue
871 interest at the utility's weighted average cost of capital as
872 reported in the commission's earnings surveillance reporting
873 requirement for the prior year.
874 Section 2. Subsection (1) of section 366.06, Florida
875 Statutes, is amended to read:
876 366.06 Rates; procedure for fixing and changing.—
877 (1) A public utility shall not, directly or indirectly,
878 charge or receive any rate not on file with the commission for
879 the particular class of service involved, and no change shall be
880 made in any schedule. All applications for changes in rates
881 shall be made to the commission in writing under rules and
882 regulations prescribed, and the commission shall have the
883 authority to determine and fix fair, just, and reasonable rates
884 that may be requested, demanded, charged, or collected by any
885 public utility for its service. The commission shall investigate
886 and determine the actual legitimate costs of the property of
887 each utility company, actually used and useful in the public
888 service, and shall keep a current record of the net investment
889 of each public utility company in such property which value, as
890 determined by the commission, shall be used for ratemaking
891 purposes and shall be the money honestly and prudently invested
892 by the public utility company in such property used and useful
893 in serving the public, less accrued depreciation, and shall not
894 include any goodwill or going-concern value or franchise value
895 in excess of payment made therefor. In fixing fair, just, and
896 reasonable rates for each customer class, the commission shall,
897 to the extent practicable, consider the cost of providing
898 service to the class, as well as the rate history, value of
899 service, and experience of the public utility; the consumption
900 and load characteristics of the various classes of customers;
901 the extent to which the public utility’s economic risk has been
902 reduced by use of cost recovery mechanisms such as recovery
903 clauses and pass-throughs, advance cost recovery, and bonding
904 using the rate-payment stream to securitize the bonds; and
905 public acceptance of rate structures.
906 Section 3. This act shall take effect upon becoming a law.