TITLE 61

PUBLIC UTILITY REGULATION

CHAPTER 16

UTILITY COST REDUCTION BONDS

61-1607.  Security interest. (1) To the extent the provisions of this section conflict with chapter 9 as from time to time in effect, including any successor provisions, this section shall apply.

(2)  A security interest in cost reduction property is valid, is enforceable against the pledgor and third parties, subject to the rights of any third parties holding security interests in the cost reduction property perfected in the manner described in this section, and attaches when all of the following have occurred:

(a)  The commission has issued a cost reduction order authorizing a cost reduction rate, the right to the imposition and collection of which is included in the cost reduction;

(b)  Value has been given by the pledgees of the cost reduction property; and

(c)  The pledgor has signed a security agreement covering the cost reduction property.

(3)  A valid and enforceable security interest in cost reduction property is perfected when it has attached and when a financing statement has been filed in accordance with chapter 9, naming the pledgor of the cost reduction property as "debtor" and identifying the cost reduction property. Any description of the cost reduction property shall be sufficient if it refers to the cost reduction order creating the cost reduction property. A copy of the financing statement shall be filed with the commission by the pledgor or transferor of the cost reduction property, and the commission may require the pledgor or transferor to make other filings with respect to the security interest in accordance with procedures it may establish, provided that the filings shall not affect the perfection of the security interest. A financing statement filed pursuant to this section shall remain effective until a termination statement is filed.

(4)  A perfected security interest in cost reduction property is a continuously perfected security interest in all revenues and proceeds arising with respect thereto, whether or not the revenues or proceeds have accrued. Conflicting security interests shall rank according to priority in time of perfection. Cost reduction property shall constitute property for all purposes, including for contracts securing cost reduction instruments, whether or not the revenues and proceeds arising with respect thereto have accrued.

(5)  Subject to the terms of the security agreement covering the cost reduction property and the rights of any third parties holding security interests in the cost reduction property perfected in the manner described in this section, the validity and relative priority of a security interest created under this section is not defeated or adversely affected by the commingling of revenues arising with respect to the cost reduction property with other funds of the public utility that is the pledgor or transferor of the cost reduction property, or by any security interest in a deposit account of that public utility perfected under chapter 9, into which the revenues are deposited. Subject to the terms of the security agreement, the pledgees of the cost reduction property shall have a perfected security interest in all cash and deposit accounts of the public utility in which revenues arising with respect to the cost reduction property have been commingled with other funds, but the perfected security interest shall be limited to an amount not greater than the amount of the revenues with respect to the cost reduction property received by the public utility within twelve (12) months before: (a) any default under the security agreement, or (b) the institution of insolvency proceedings by or against the public utility, less payments from the revenues to the pledgees during that twelve (12) month period.

(6)  If an event of default occurs under the security agreement covering the cost reduction property, the pledgees of the cost reduction property, subject to the terms of the security agreement, shall have all rights and remedies of a secured party upon default under chapter 9, and shall be entitled to foreclose or otherwise enforce their security interest in the cost reduction property, subject to the rights of any third parties holding prior security interests in the cost reduction property perfected in the manner provided in this section. In addition, the commission may require, in the cost reduction order creating the cost reduction property, that, in the event of default by the public utility in payment of revenues arising with respect to the cost reduction property, the commission and any successor thereto, upon the application by the pledgees or transferees, including transferees under section 61-1608, Idaho Code, of the cost reduction property, and without limiting any other remedies available to the pledgees or transferees by reason of the default, shall order the sequestration and payment to the pledgees or transferees of revenues arising with respect to the cost reduction property. Any order shall remain in full force and effect notwithstanding any bankruptcy, reorganization, or other insolvency proceedings with respect to the debtor, pledgor or transferor of the cost reduction property.

(7)  Cost reduction property shall constitute a payment intangible as that term is defined under chapter 9.

(8)  Sections 28-9-204 and 28-9-205, Idaho Code, as from time to time amended, including any successor provisions, shall apply to a pledge of cost reduction property by a public utility, assignee or other issuer.

(9)  This section sets forth the terms by which a consensual security interest can be created and perfected in cost reduction property. Unless otherwise ordered by the commission with respect to any series of cost reduction instruments on or prior to the issuance of the series, there shall exist a statutory lien as provided in this section. Upon the effective date of the cost reduction order, there shall exist a first priority lien on all cost reduction property then existing or thereafter arising pursuant to the terms of the cost reduction order. This lien shall arise by operation of this section automatically without any action on the part of the public utility, any assignee or other issuer, or any other person. This lien shall secure all obligations, then existing or subsequently arising, to the holders of the cost reduction instruments issued pursuant to the cost reduction order, the trustee or representative for the holders, and any other entity specified in the cost reduction order. The persons for whose benefit this lien is established shall, upon the occurrence of any defaults specified in the pertinent cost reduction order, have all rights and remedies of a secured party upon default under chapter 9, and shall be entitled to foreclose or otherwise enforce this statutory lien in the cost reduction property. This lien shall attach to the cost reduction property regardless of who shall own, or shall subsequently be determined to own, the cost reduction property including any public utility, any assignee or other issuer, or any other person. This lien shall be valid, perfected, and enforceable against the owner of the cost reduction property and all third parties upon the effectiveness of the cost reduction order without any further public notice; provided however, that any person may, but shall not be required to, file a financing statement in accordance with subsection (3) of this section. Financing statements so filed may be "protective filings" and shall not be evidence of the ownership of the cost reduction property. A perfected statutory lien in cost reduction property is a continuously perfected lien in all revenues and proceeds arising with respect thereto, whether or not the revenues or proceeds have accrued. Conflicting liens shall rank according to priority in time of perfection. In addition, the commission may require, in the cost reduction order creating the cost reduction property, that, in the event of default by the public utility in payment of revenues arising with respect to cost reduction property, the commission and any successor thereto, upon the application by the beneficiaries of the statutory lien, and without limiting any other remedies available to the beneficiaries by reason of the default, shall order the sequestration and payment to the beneficiaries of revenues arising with respect to the cost reduction property.

History:

[61-1607, added 2005, ch. 372, sec. 1, p. 1191.]