View Daily Data Tracking History
View Bill Text
View Statement of Purpose / Fiscal Impact
S1255......................................................by STATE AFFAIRS
ENERGY COST RECOVERY BONDS - Adds to existing law to authorize the Public
Utilities Commission to allow for the issuance of bonds for public
utilities so that recovery of large energy increases through fuel or power
cost adjustments, purchased gas adjustment tracker rates, commodity tracker
rate adjustments or purchased power tracker rates will be facilitated by
the issuance of bonds.
03/15 Senate intro - 1st rdg - to printing
03/16 Rpt prt - to St Aff
03/19 Rpt out - rec d/p - to 2nd rdg
03/20 2nd rdg - to 3rd rdg
03/21 3rd rdg - PASSED - 30-5-0
AYES -- Andreason, Boatright, Branch, Brandt, Bunderson, Danielson,
Darrington, Davis, Deide, Dunklin, Frasure, Geddes, Goedde, Ingram,
Ipsen, King-Barrutia, Lee, Lodge, Noh, Richardson, Risch, Sandy,
Schroeder, Sims, Sorensen, Stegner, Stennett, Thorne, Wheeler,
Williams,
NAYS -- Burtenshaw, Cameron, Hawkins, Keough, Whitworth
Absent and excused -- None
Floor Sponsors -- Lee & Noh
Title apvd - to House
03/21 House intro - 1st rdg - to St Aff
03/26 Rpt out - rec d/p - to 2nd rdg
03/28 2nd rdg - to 3rd rdg
03/29 3rd rdg - PASSED - 45-22-3
AYES -- Barraclough, Bedke, Bell, Bieter, Black, Boe, Bolz, Bradford,
Bruneel, Chase, Cuddy, Deal, Denney, Ellsworth, Eskridge, Field(13),
Gould, Hammond, Higgins, Hornbeck, Jaquet, Jones, Kellogg, Kunz,
Langford, Mader, Marley, McKague, Meyer, Mortensen, Moss, Moyle,
Pearce, Pischner, Pomeroy, Raybould, Robison, Sellman, Shepherd,
Smylie, Stevenson, Stone, Tilman, Trail, Mr. Speaker
NAYS -- Barrett, Callister, Clark, Collins, Ellis, Field(20), Gagner,
Hadley, Hansen, Harwood, Henbest(Farley), Kendell, Lake, Loertscher,
Ridinger, Roberts, Sali, Schaefer, Smith Wheeler, Wood, Young(Young)
Absent and excused -- Campbell, Crow, Montgomery
Floor Sponsor -- Stevenson
Title apvd - to Senate
03/29 To enrol
03/30 Rpt enrol - Pres signed
Sp signed - to Governor
04/10 Governor signed
Session Law Chapter 380
Effective: 04/10/01
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-sixth Legislature First Regular Session - 2001
IN THE SENATE
SENATE BILL NO. 1255
BY STATE AFFAIRS COMMITTEE
1 AN ACT
2 RELATING TO ENERGY COST RECOVERY BONDS; AMENDING TITLE 61, IDAHO CODE, BY THE
3 ADDITION OF A NEW CHAPTER 15, TITLE 61, IDAHO CODE, TO PROVIDE LEGISLATIVE
4 INTENT, TO DEFINE TERMS, TO PROVIDE FOR ENERGY COST RECOVERY BONDS, TO
5 PROVIDE PROCEDURES FOR ISSUANCE OF ENERGY COST RECOVERY BONDS, TO PROVIDE
6 FOR SECURITY INTEREST, TO PROVIDE FOR TRANSFERS IN INTEREST, TO PROVIDE
7 FOR SUCCESSORS AND TO PROVIDE SEVERABILITY; AND DECLARING AN EMERGENCY.
8 Be It Enacted by the Legislature of the State of Idaho:
9 SECTION 1. That Title 61, Idaho Code, be, and the same is hereby amended
10 by the addition thereto of a NEW CHAPTER, to be known and designated as Chap-
11 ter 15, Title 61, Idaho Code, and to read as follows:
12 CHAPTER 15
13 ENERGY COST RECOVERY BONDS
14 61-1501. LEGISLATIVE INTENT. It is the intent of the legislature in
15 enacting this chapter to provide a process by which the recovery of large
16 energy rate increases caused by fuel or power cost adjustments, purchased gas
17 adjustment tracker rates, commodity tracker rate adjustments or purchased
18 power tracker rates will be facilitated by the issuance of bonds. This legis-
19 lation will provide electric and gas utilities with a mechanism for recovery
20 of their increased costs while leveling the rate impact of such increase on
21 the utilities' customers. The legislature believes that this type of securi-
22 ties legislation is in the public interest but should not be considered as an
23 endorsement of, or intended to provide, a mechanism for restructuring of the
24 utility industry in the state of Idaho.
25 61-1502. DEFINITIONS. For purposes of this chapter, the following terms
26 shall have the following meanings:
27 (1) "Assignee" means any corporation, limited liability company, trust,
28 partnership or other entity to which a public utility assigns, sells or trans-
29 fers, other than as security, all or a portion of the public utility's inter-
30 est in or right to energy cost property. The term also includes any such
31 entity to which an assignee assigns, sells or transfers, other than as secu-
32 rity, the assignee's interest in or right to energy cost property.
33 (2) "Chapter 9" means chapter 9, title 28, Idaho Code, as from time to
34 time amended, including any successor provisions.
35 (3) "Commission" means the Idaho public utilities commission, as it may
36 be constituted from time to time, and any successor agency exercising func-
37 tions similar in purpose thereto.
38 (4) "ECA" means any of the following, as authorized by the commission and
39 reflected in a usage-based charge of a public utility: a fuel or power cost
40 adjustment; a purchased gas adjustment tracker rate; a commodity electric or
2
1 gas tracker rate adjustment; or a purchased power tracker rate.
2 (5) "Energy cost amounts" means the amounts that a public utility,
3 assignee or other issuer has been authorized to recover by the commission pur-
4 suant to an energy cost financing order, including without limitation:
5 (a) Amounts recoverable by a public utility pursuant to an ECA;
6 (b) Expenditures incurred to refinance or retire existing debt or exist-
7 ing equity capital of the public utility through the issuance of energy
8 cost recovery bonds and any costs related thereto;
9 (c) Amounts necessary to recover federal or state taxes actually paid by
10 a public utility, which tax liability is modified by the transactions
11 approved in an energy cost financing order issued by the commission pursu-
12 ant to this chapter; and
13 (d) Reasonable costs, as approved by the commission, relating to the
14 issuance, servicing or refinancing of energy cost recovery bonds under the
15 provisions of this chapter including, without limitation, principal and
16 interest payments and accruals, sinking fund payments, debt service and
17 other reserves, costs of credit enhancement, indemnities, if any, owed to
18 an assignee or other issuer or the trustee for the energy cost recovery
19 bonds, issuance costs and redemption premiums, if any, and all other rea-
20 sonable fees, costs and charges with respect to the energy cost recovery
21 bonds.
22 (6) "Energy cost bond charge" means a nonbypassable usage-based charge
23 that the commission authorizes in an energy cost financing order as a separate
24 line item for recovery on a public utility's bill to all of its customers,
25 whether such amounts are billed and/or collected by the public utility, any
26 subsidiary or affiliate thereof, or any third party that may assume the
27 responsibility for billing or collecting such charges.
28 (7) "Energy cost financing order" means an order of the commission issued
29 in accordance with this chapter that authorizes the imposition and collection
30 of energy cost amounts and the issuance of energy cost recovery bonds. If
31 requested by an electric or gas public utility in its application for an
32 energy cost financing order, energy cost bond charges shall be in an amount
33 sufficient to recover federal and state taxes associated with the recovery of
34 energy cost amounts described therein.
35 (8) "Energy cost property" means the irrevocable, vested property right
36 created pursuant to this chapter and one (1) or more energy cost financing
37 orders including, without limitation, the right, title and interest of a pub-
38 lic utility, assignee or other issuer of energy cost recovery bonds to all
39 revenues, collections, claims, payments, money or proceeds of or arising from
40 an energy cost recovery charge or constituting the costs of recovering, reim-
41 bursing, financing or refinancing energy cost amounts and acquiring energy
42 cost property (including the costs of issuing, servicing and retiring energy
43 cost recovery bonds) and all rights to obtain adjustments to such energy cost
44 recovery charge pursuant to the terms of this chapter and any energy cost
45 financing order; provided that any right that a public utility has in the
46 energy cost property before the sale or other transfer of such property or any
47 other rights created under this chapter or created in any energy cost financ-
48 ing order and assignable under section 61-1504, Idaho Code, or assignable pur-
49 suant to an energy cost financing order shall be only a contract right. Energy
50 cost property shall, upon its sale or other transfer, constitute a current and
51 irrevocably vested property right notwithstanding the fact that the value of
52 such property right will depend upon consumers using electricity and/or the
53 public utility performing certain services.
54 (9) "Energy cost recovery bond" means any instrument, pass-through cer-
55 tificate, note, bond, debenture, certificate of participation, collateral
3
1 trust certificate, beneficial interest or other evidence of indebtedness or
2 ownership issued by a public utility, assignee or other issuer pursuant to an
3 energy cost financing order and an executed indenture, security agreement or
4 other similar agreement of a public utility, assignee or other issuer that is
5 secured by or payable from energy cost bond charges or energy cost property.
6 (10) "Energy cost recovery bondholder" means any holder of an energy cost
7 recovery bond or any trustee, collateral agent or other entity acting for the
8 benefit of or on behalf of any such holder.
9 61-1503. ENERGY COST RECOVERY BONDS. An electric or gas public utility
10 may apply to the commission for an energy cost financing order requesting that
11 certain energy cost amounts be recovered through the sale of energy cost
12 recovery bonds.
13 (1) A public utility may apply to the commission at any time and from
14 time to time for an authorization that it may recover ECA amounts and other
15 energy cost amounts through the issuance of energy cost recovery bonds. The
16 public utility may apply to the commission for such an authorization either in
17 a separate proceeding or in a proceeding considering the authorization of an
18 ECA. Upon such an application, if the commission finds that the public inter-
19 est would be better served if the energy cost amounts were recovered through
20 the issuance of energy cost recovery bonds over the term of such bonds than if
21 the ECA amounts were recovered over a period of one (1) year, assuming a con-
22 ventional financing of such amounts, the commission shall issue an energy cost
23 financing order to allow the public utility to recover energy cost amounts.
24 (2) The energy cost financing order shall detail the energy cost amount
25 to be recovered and the period of time in which the energy cost recovery is to
26 occur. The commission shall not issue an energy cost financing order unless
27 the total of the then (a) existing ECAs, (b) existing energy cost bond
28 charges, and (c) the amount identified by the electric or gas public utility
29 in its application for such financing order as the additional ECA that would
30 be required absent an issuance of energy cost recovery bonds pursuant to such
31 financing order, exceeds a minimum amount (expressed in cents per kilowatt-
32 hour or cents per therm) approved by the commission and in effect at the time
33 of the issuance of such energy cost financing order. Each public utility
34 shall, at least thirty (30) days prior to its first application for an energy
35 cost financing order and at five (5) year intervals thereafter, file with the
36 commission a proposal as to what such minimum amount should be and the commis-
37 sion shall, within twenty-eight (28) days of such filing, issue an order
38 regarding its determination of such proposed minimum amount. Energy cost
39 recovery bonds shall have an expected maturity date no later than five (5)
40 years after the date of issuance, and scheduled principal payments on such
41 bonds shall, to the extent practicable, be scheduled to be made in approxi-
42 mately equal amounts during each year of the term of such bonds. Energy cost
43 recovery bonds shall have a legal maturity date no later than seven (7) years
44 after the date of issuance. Energy cost bond charges shall remain in effect
45 until all energy cost recovery bonds and all energy cost amounts have been
46 paid in full. The commission may issue successive energy cost financing orders
47 permitting subsequent issuances of energy cost recovery bonds.
48 (3) An energy cost financing order may be issued only upon the applica-
49 tion of a public utility and shall become effective only in accordance with
50 its terms and conditions. The public utility may withdraw its application if
51 it disagrees with any of the terms and conditions of the energy cost financing
52 order or any modification thereof within fourteen (14) days of issuance of the
53 energy cost financing order or of such modification. The energy cost financing
54 order shall specify the estimated amount of the energy cost bond charge and
4
1 the formula for determining the amount of the charge that from time to time
2 will be sufficient to recover all energy cost amounts.
3 (4) After issuance of an energy cost financing order, the public utility
4 may sell, assign or otherwise transfer or pledge energy cost property or cause
5 the energy cost recovery bonds to be issued, provided it may defer, postpone
6 or refrain from effecting the sale, assignment, transfer, pledge or issuance,
7 in which case no energy cost bond charge shall be imposed unless and until
8 such energy cost recovery bonds are issued. If energy cost recovery bonds are
9 not issued within one (1) year after the energy cost financing order becomes
10 final and nonappealable, the authorization contained in the energy cost
11 financing order shall expire, provided that a public utility may apply for an
12 extension or renewal of an energy cost financing order.
13 (5) The energy cost financing orders, the energy cost amounts and the
14 energy cost bond charges that have been determined by the commission shall be
15 irrevocable and binding upon the commission. The commission shall not have
16 authority either by rescinding, altering or amending the energy cost financing
17 order or otherwise to, either directly or indirectly, revalue or revise for
18 ratemaking purposes the energy cost amounts. Once the commission determines
19 the energy cost bond charge, it cannot determine in a later proceeding that
20 the energy cost bond charge is unjust or unreasonable or in any way reduce or
21 impair the value of energy cost property either directly or indirectly by tak-
22 ing the energy cost bond charge into account when setting other rates for the
23 public utility; nor shall the amount of revenues arising with respect thereto
24 be subject to reduction, impairment, postponement or termination. The state of
25 Idaho does hereby pledge to and agree with the owners of energy cost property
26 and with any energy cost recovery bondholders that neither the state nor any
27 of its agencies, including the commission, shall (by legislative action, bal-
28 lot initiative or other similar process) limit, alter, restrict or impair the
29 energy cost amounts, the energy cost bond charge, the energy cost property,
30 the energy cost financing orders or any rights thereunder or ownership thereof
31 or security interest therein or in any way impair the rights or remedies of
32 any energy cost recovery bondholders until the energy cost recovery bonds,
33 including all principal, interest, premium, costs, expenses and arrearages
34 thereon, are fully met and discharged, provided nothing contained in this
35 chapter shall preclude such a limitation, alteration, restriction or impair-
36 ment if and when adequate provision (including without limitation provision
37 for the payment of principal and interest when due) shall be made by law for
38 the protection of the energy cost recovery bondholders. The state of Idaho
39 does hereby acknowledge that any energy cost recovery bondholders may and will
40 rely on this pledge and agreement and that they would be irreparably harmed by
41 any such limitation, alteration, restriction or impairment without such ade-
42 quate provision. The public utility and any assignee or other issuer are
43 authorized to include this pledge and agreement in the energy cost recovery
44 bonds and the documents relating thereto. Notwithstanding any other provision
45 of this subsection, the commission shall approve such adjustments to the
46 energy cost bond charges as may be necessary to ensure timely recovery of all
47 energy cost amounts that are the subject of the pertinent energy cost financ-
48 ing order.
49 (6) Energy cost recovery bonds issued under this chapter and any energy
50 cost financing orders do not constitute a debt or liability of the state or of
51 any political subdivision thereof and do not constitute a pledge of the full
52 faith and credit of the state or any of its political subdivisions, but are
53 payable solely from the funds provided therefor. All the bonds shall contain
54 on the face thereof a statement to the following effect: "Neither the full
55 faith and credit nor the taxing power of the state of Idaho is pledged to the
5
1 payment of the principal of, or interest on, this bond." This paragraph shall
2 in no way preclude bond guarantees or enhancements pursuant to this chapter,
3 nor shall it preclude the payment of compensation for any breach of the
4 state's pledge contained in subsection (5) of this section or for any action
5 or failure to act by the commission in contravention of this chapter.
6 (7) The commission shall establish procedures for the expeditious proc-
7 essing of any application for energy cost financing orders, including the
8 approval or disapproval of any such orders within forty-five (45) days of the
9 application. In addition, each energy cost financing order shall specify a
10 procedure for making adjustments to the energy cost bond charge that is the
11 subject of the order, such adjustments to be expeditiously approved by the
12 commission, so as to ensure the timely payment of principal and interest on
13 the related energy cost recovery bonds and the recovery of all other energy
14 cost amounts. Such procedure shall provide for adjustments to be made, upon
15 application by the affected public utility, assignee or other issuer, at least
16 annually and at such additional intervals, if any, as are specified in the
17 order. The public utility, assignee or other issuer shall file its application
18 for any such adjustment with the commission at least thirty (30) days before
19 the date on which the adjustment is requested to become effective, and the
20 commission shall approve or disapprove such application no later than thirty
21 (30) days after the date of such filing. In addition, upon application by a
22 public utility, assignee or other issuer after an energy cost financing order
23 has been issued and has become effective, the commission may:
24 (a) Authorize the making of adjustments to the energy cost bond charge at
25 more frequent intervals than those specified in such order; and/or
26 (b) Authorize a change in the method for calculating the energy cost bond
27 charge from that specified in such order so as to better ensure the timely
28 recovery of all energy cost amounts.
29 (8) The energy cost bond charge shall be treated as a charge for utility
30 services for purposes of determining both the credit and collection standards
31 to which customers (including, for purposes of this subsection, any parties
32 that provide billing or collection services for energy supplied to another
33 customer) may be held subject under applicable state law and the remedies for
34 nonpayment that are available to a public utility under applicable state law,
35 and such treatment shall not alter the tax, accounting or other intended char-
36 acteristics of any energy cost bond financing.
37 (9) An energy cost bond charge shall constitute energy cost property
38 when, and to the extent that, an energy cost financing order authorizing such
39 energy cost bond charge has become effective in accordance with this chapter,
40 and the energy cost property shall thereafter continuously exist as property
41 for all purposes with all of the rights and privileges of this chapter for the
42 period and to the extent provided in the energy cost financing order, but in
43 any event until the energy cost recovery bonds are paid in full, including all
44 principal, interest, premium, costs and arrearages thereon.
45 (10) Any surplus energy cost bond charge collections in excess of the
46 amounts necessary to pay principal, premium, if any, interest, credit enhance-
47 ment and all other fees, costs and charges with respect to energy cost recov-
48 ery bonds shall be used to benefit customers in such manner as the commission
49 may reasonably determine except to the extent that such use would result in a
50 recharacterization of the tax, accounting or other intended characteristics of
51 the financing.
52 61-1504. PROCEDURE FOR ISSUANCE OF BONDS. (1) Public utilities, assignees
53 or other issuers may issue energy cost recovery bonds upon approval by the
54 commission in an energy cost financing order.
6
1 (2) Public utilities and assignees may sell and assign all or portions of
2 their interest in energy cost property. Public utilities and assignees may
3 sell or assign their interests to one (1) or more assignees or other issuers
4 that make that property the basis for issuance of energy cost recovery bonds
5 to the extent approved in the pertinent energy cost financing order. To the
6 extent approved in the pertinent energy cost financing orders, public utili-
7 ties and assignees may also pledge energy cost property as collateral,
8 directly or indirectly, for energy cost recovery bonds providing for a secu-
9 rity interest in the energy cost property, in the manner as set forth in sec-
10 tion 61-1505, Idaho Code. Energy cost property may be sold or assigned by:
11 (a) The public utility, assignee or other issuer or a trustee for the
12 holders of energy cost recovery bonds in connection with the exercise of
13 remedies upon a default; or
14 (b) Any person acquiring the energy cost property after a sale or assign-
15 ment pursuant to this subsection.
16 (3) To the extent that any interest in energy cost property is so sold or
17 assigned, or is so pledged as collateral, the commission shall authorize the
18 public utility to contract with an assignee or other issuer that it will con-
19 tinue to operate its system to provide service to its customers, will collect
20 amounts with respect to the energy cost bond charges for the benefit and
21 account of the assignee or other issuer, and will account for and remit these
22 amounts to or for the account of the assignee or other issuer. Contracting
23 with the assignee or other issuer in accordance with that authorization shall
24 not impair or negate the characterization of the sale, assignment or pledge as
25 an absolute transfer, a true sale or security interest, as applicable.
26 (4) Notwithstanding any other provision of law to the contrary, any
27 requirement under this chapter or an energy cost financing order that the com-
28 mission take action with respect to the subject matter of an energy cost
29 financing order shall be binding upon the commission, as it may be constituted
30 from time to time, and any successor agency exercising functions similar to
31 the commission. The commission shall have no authority to rescind, alter or
32 amend any such requirement under this chapter or an energy cost financing
33 order; provided however, that nothing in this subsection shall preclude
34 adjustments of the energy cost bond charges in accordance with the provisions
35 of section 61-1503, Idaho Code. The issuance of energy cost recovery bonds,
36 any related transfer or pledge of energy cost recovery property and any other
37 transactions incidental to such issuance shall be exempt from the provisions
38 of sections 61-901 through 61-908, Idaho Code, upon approval by the commission
39 in an energy cost financing order. The commission shall include in any energy
40 cost financing order any additional approvals that may be required in connec-
41 tion with such issuance under applicable law.
42 (5) An assignee or other issuer shall not be considered to be a public
43 utility solely by virtue of the transactions described in this chapter.
44 61-1505. SECURITY INTEREST. (1) To the extent the provisions of this
45 section conflict with chapter 9 as from time to time in effect, including any
46 successor provisions, this section shall apply.
47 (2) A security interest in energy cost property is valid, is enforceable
48 against the pledgor and third parties, subject to the rights of any third par-
49 ties holding security interests in the energy cost property perfected in the
50 manner described in this section, and attaches when all of the following have
51 occurred:
52 (a) The commission has issued an energy cost financing order authorizing
53 the energy cost bond charges, the right to the imposition and collection
54 of which is included in the energy cost property;
7
1 (b) Value has been given by the pledgees of the energy cost property; and
2 (c) The pledgor has signed a security agreement covering the energy cost
3 property.
4 (3) A valid and enforceable security interest in energy cost property is
5 perfected when it has attached and when a financing statement has been filed
6 in accordance with chapter 9, naming the pledgor of the energy cost property
7 as "debtor" and identifying the energy cost property. Any description of the
8 energy cost property shall be sufficient if it refers to the energy cost
9 financing order creating the energy cost property. A copy of the financing
10 statement shall be filed with the commission by the pledgor or transferor of
11 the energy cost property, and the commission may require the pledgor or trans-
12 feror to make other filings with respect to the security interest in accor-
13 dance with procedures it may establish, provided that the filings shall not
14 affect the perfection of the security interest. A financing statement filed
15 pursuant to this section shall remain effective until a termination statement
16 is filed.
17 (4) A perfected security interest in energy cost property is a continu-
18 ously perfected security interest in all revenues and proceeds arising with
19 respect thereto, whether or not the revenues or proceeds have accrued. Con-
20 flicting security interests shall rank according to priority in time of per-
21 fection. Energy cost property shall constitute property for all purposes,
22 including for contracts securing energy cost recovery bonds, whether or not
23 the revenues and proceeds arising with respect thereto have accrued.
24 (5) Subject to the terms of the security agreement covering the energy
25 cost property and the rights of any third parties holding security interests
26 in the energy cost property perfected in the manner described in this section,
27 the validity and relative priority of a security interest created under this
28 section is not defeated or adversely affected by the commingling of revenues
29 arising with respect to the energy cost property with other funds of the pub-
30 lic utility that is the pledgor or transferor of the energy cost property, or
31 by any security interest in a deposit account of that public utility perfected
32 under chapter 9, into which the revenues are deposited. Subject to the terms
33 of the security agreement, the pledgees of the energy cost property shall have
34 a perfected security interest in all cash and deposit accounts of the public
35 utility in which revenues arising with respect to the energy cost property
36 have been commingled with other funds, but the perfected security interest
37 shall be limited to an amount not greater than the amount of the revenues with
38 respect to the energy cost property received by the public utility within
39 twelve (12) months before: (a) any default under the security agreement, or
40 (b) the institution of insolvency proceedings by or against the public util-
41 ity, less payments from the revenues to the pledgees during that twelve (12)
42 month period.
43 (6) If an event of default occurs under the security agreement covering
44 the energy cost property, the pledgees of the energy cost property, subject to
45 the terms of the security agreement, shall have all rights and remedies of a
46 secured party upon default under chapter 9, and shall be entitled to foreclose
47 or otherwise enforce their security interest in the energy cost property, sub-
48 ject to the rights of any third parties holding prior security interests in
49 the energy cost property perfected in the manner provided in this section. In
50 addition, the commission may require, in the energy cost financing order cre-
51 ating the energy cost property, that, in the event of default by the public
52 utility in payment of revenues arising with respect to the energy cost prop-
53 erty, the commission and any successor thereto, upon the application by the
54 pledgees or transferees, including transferees under section 61-1506, Idaho
55 Code, of the energy cost property, and without limiting any other remedies
8
1 available to the pledgees or transferees by reason of the default, shall order
2 the sequestration and payment to the pledgees or transferees of revenues aris-
3 ing with respect to the energy cost property. Any order shall remain in full
4 force and effect notwithstanding any bankruptcy, reorganization, or other
5 insolvency proceedings with respect to the debtor, pledgor or transferor of
6 the energy cost property.
7 (7) Energy cost recovery property shall constitute an account as that
8 term is defined under chapter 9.
9 (8) Sections 28-9-204 and 28-9-205, Idaho Code, as from time to time
10 amended, including any successor provisions, shall apply to a pledge of energy
11 cost property by a public utility, assignee or other issuer.
12 (9) This subsection sets forth the terms by which a consensual security
13 interest can be created and perfected in the energy cost property. Unless
14 otherwise ordered by the commission with respect to any series of energy cost
15 recovery bonds on or prior to the issuance of the series, there shall exist a
16 statutory lien as provided in this subsection. Upon the effective date of the
17 energy cost financing order, there shall exist a first priority lien on all
18 energy cost property then existing or thereafter arising pursuant to the terms
19 of the energy cost financing order. This lien shall arise by operation of this
20 subsection automatically without any action on the part of the public utility,
21 any assignee or other issuer, or any other person. This lien shall secure all
22 obligations, then existing or subsequently arising, to the holders of the
23 energy cost recovery bonds issued pursuant to the energy cost financing order,
24 the trustee or representative for the holders, and any other entity specified
25 in the energy cost financing order. The persons for whose benefit this lien is
26 established shall, upon the occurrence of any defaults specified in the perti-
27 nent energy cost financing order, have all rights and remedies of a secured
28 party upon default under chapter 9, and shall be entitled to foreclose or
29 otherwise enforce this statutory lien in the energy cost property. This lien
30 shall attach to the energy cost property regardless of who shall own, or shall
31 subsequently be determined to own, the energy cost property including any pub-
32 lic utility, any assignee or other issuer, or any other person. This lien
33 shall be valid, perfected, and enforceable against the owner of the energy
34 cost property and all third parties upon the effectiveness of the energy cost
35 financing order without any further public notice; provided however, that any
36 person may, but shall not be required to, file a financing statement in accor-
37 dance with subsection (3) of this section. Financing statements so filed may
38 be "protective filings" and shall not be evidence of the ownership of the
39 energy cost property. A perfected statutory lien in energy cost property is a
40 continuously perfected lien in all revenues and proceeds arising with respect
41 thereto, whether or not the revenues or proceeds have accrued. Conflicting
42 liens shall rank according to priority in time of perfection. In addition, the
43 commission may require, in the energy cost financing order creating the energy
44 cost property, that, in the event of default by the public utility in payment
45 of revenues arising with respect to energy cost property, the commission and
46 any successor thereto, upon the application by the beneficiaries of the statu-
47 tory lien, and without limiting any other remedies available to the beneficia-
48 ries by reason of the default, shall order the sequestration and payment to
49 the beneficiaries of revenues arising with respect to the energy cost prop-
50 erty.
51 61-1506. TRANSFERS IN INTEREST. (1) A transfer of energy cost property by
52 a public utility to an assignee, or by an assignee to another assignee, that
53 the parties have in the governing documentation expressly stated to be a sale
54 or other absolute transfer, in a transaction approved in an energy cost
9
1 financing order, shall be treated as an absolute transfer of all of the
2 transferor's right, title and interest, as in a true sale, and not as a pledge
3 or other financing, of the energy cost property in each case notwithstanding
4 any contrary treatment for federal and state income and franchise taxes,
5 accounting or other purposes.
6 (2) A transfer of energy cost property shall be deemed perfected as
7 against third persons and shall vest title in the transferee when both of the
8 following have taken place:
9 (a) The commission has issued the energy cost financing order authorizing
10 the energy cost bond charges included in the energy cost property.
11 (b) An assignment of the energy cost property in writing has been exe-
12 cuted and delivered to the transferee.
13 (3) As between bona fide assignees of the same right for value without
14 notice, the assignee first filing a financing statement in accordance with
15 chapter 9, naming the assignor of the energy cost property as debtor and iden-
16 tifying the energy cost property has priority. Any description of the energy
17 cost property shall be sufficient if it refers to the energy cost financing
18 order creating the energy cost property. A copy of the financing statement
19 shall be filed by the assignee with the commission, and the commission may
20 require the assignor or the assignee to make other filings with respect to the
21 transfer in accordance with procedures it may establish, but these filings
22 shall not affect the perfection of the transfer.
23 (4) The interest of an assignee or pledgee in energy cost property and in
24 the revenues and collections arising from such property are not subject to
25 set-off, counterclaim, surcharge or defense by the public utility or any other
26 person or in connection with the bankruptcy of the public utility or any other
27 person.
28 61-1507. SUCCESSORS. Any successor to the public utility, whether pursu-
29 ant to any bankruptcy, reorganization or other insolvency proceeding, or pur-
30 suant to any merger, sale or transfer, by operation of law or otherwise, shall
31 perform and satisfy all obligations of the public utility pursuant to this
32 chapter in the same manner and to the same extent as was required of the pub-
33 lic utility before such proceeding or merger, sale or transfer including, but
34 not limited to, billing, collecting and paying to the energy cost recovery
35 bondholders or their representatives or the applicable financing entity energy
36 cost recovery charges and any other revenues arising with respect to the
37 energy cost property sold to the applicable financing entity or pledged to
38 secure energy cost recovery bonds and seeking energy cost bond charge adjust-
39 ments, as necessary and permitted by the pertinent energy cost financing
40 order, to recover all energy cost amounts designated in such energy cost
41 financing order.
42 61-1508. SEVERABILITY. If any provision of this chapter is held to be
43 invalid or is invalidated, superseded, replaced or repealed, or expires for
44 any reason, that occurrence does not affect the validity or continuation of
45 this chapter or any other provision of this title that is relevant to the
46 issuance, administration, payment, retirement or refunding of energy cost
47 recovery bonds or to any actions of the public utility, its successors, an
48 assignee or other issuer or a collection agent, which shall remain in full
49 force and effect.
50 SECTION 2. An emergency existing therefor, which emergency is hereby
51 declared to exist, this act shall be in full force and effect on and after its
52 passage and approval.
STATEMENT OF PURPOSE
RS11252C2
The purpose of this legislation is to provide a process by which the
recovery of large energy cost increases through fuel or power cost
adjustments, purchased gas adjustment tracker rates, commodity tracker
rate adjustments or purchased power tracker rates will be facilitated
by the issuance of bonds. This legislation will provide public
utilities with a mechanism for recovery of their increased costs
while leveling the rate impact of the increase on the public utility's
customers. This legislation should not be construed as an endorsement
of, or intended to provide a mechanism for restructuring of the
utility industry in Idaho.
FISCAL IMPACT
There should be no fiscal impact to a fund of state or a local unit
of government.
Contact:
Name: Senator Robert Lee
Representative Bert Stevenson
Phone: 332-1111
STATEMENT OF PURPOSE/FISCAL NOTE S 1255