RS 1318 - Financing orders
A. A utility may petition the commission for a financing order. The application of the utility shall specify the following:
(1) Set forth any known previously incurred system restoration costs and set forth any storm damage reserve that is proposed to be established or replenished.
(2) Indicate the amount of the costs set forth pursuant to Paragraph (1) of this Subsection that is proposed to be financed using system restoration bonds under this Part.
(3) Estimate to the extent practicable the financing costs related to such system restoration bonds.
(4) Describe and estimate the system restoration charges necessary to pay such system restoration bonds, including any financing costs, and the time period for recovery of such system restoration charges.
B. The commission may grant an application under Subsection A in whole or in part by a financing order, and with such modifications thereto and upon such terms and conditions as the commission prescribes. The corporation shall be a party to the commission's proceedings along with the pertinent utility. The utility shall participate, subject to the commission's procedures, in the design of the proposed system restoration charges.
C. If the commission in its discretion determines that the criteria specified in R.S. 45:1311(C) are met and elects to issue any financing order under this Part, then, in order for a financing order to create system restoration property under this Part, the commission in such financing order shall:
(1) Specify the amount of system restoration costs prudently incurred by a utility and any level of storm damage reserves appropriate for such utility, all whether approved by the commission therein or in a prior order, taking into consideration, to the extent the commission deems appropriate, any other methods used to recover these costs and any insurance proceeds or governmental grants received by the utility or other offsets or credits to those costs, and provide with respect to the estimated amount of financing costs that may be recovered through system restoration charges. The financing order shall require that the utility commit to reduce the system restoration costs eligible for securitization by the amount of any insurance proceeds, federal government grants, or similar source of permanent reimbursement received by the utility before the issuance of the financing order.
(2) Authorize the corporation to impose system restoration charges on the customers of a utility that has such system restoration costs, storm damage reserve, and financing costs approved by the commission in an order, and specify the time period over which such charges may be imposed. This time period may be until the system restoration bonds and financing costs are paid in full. System restoration charges paid under any financing order shall not be considered the revenue of the utility for any purpose, but instead shall be created, assessed, and collected as the property of the corporation pursuant to a state regulatory program, subject to subsequent transfer as authorized by this Part.
(3) Require the corporation to either (a) sell such specified system restoration property to an issuer in exchange for the net proceeds from the issuance of system restoration bonds or (b) pledge such specified system restoration property to the issuer of system restoration bonds as security for repayment of a loan to the corporation by the issuer of the net proceeds from the issuance of such bonds, and use the collections of that system restoration property to repay such loan.
(4) Authorize and require the utility identified in Paragraph (2) of this Subsection to serve as collection agent to collect the system restoration charges and transfer those collected charges to the corporation, the issuer, or a financing party, as appropriate.
(5)(a) Require the corporation to transfer the proceeds of the system restoration bonds received under Paragraph (3) of this Subsection to the utility that is collecting the applicable system restoration charges, for the public good as a non-shareholder contribution to capital, subject to the express conditions and requirements set forth in the financing order that, upon receipt of the contribution by the utility, such utility shall do all of the following:
(i) Set aside in a restricted escrow account, in an amount and manner required by the commission, any monies or investments used to fund the utility's storm damage reserve, and otherwise spend the contributed proceeds solely to purchase securities that shall become a permanent part of the utility's working capital, pending use for other authorized corporate purposes.
(ii) Not seek to recover the system restoration costs approved by that applicable financing order, to the extent of such contribution, from any of its commission-jurisdictional customers.
(iii) Flow through to the benefit of its customers in a manner determined by the commission the amount of any insurance proceeds, federal government grants, or similar source of permanent reimbursement received by the utility after the issuance of the financing order relating to that same system restoration activity and those same system restoration costs.
(b) The financing order shall require that, upon receipt of the contribution by the utility, such utility fully release any claim that the utility has to recover, in any manner, from its commission-jurisdictional customers any of the system restoration costs covered by the financing order to the extent of the amount of such contribution.
(6) Specify and create certain system restoration property of the corporation, which shall be used to pay and secure, either directly after a sale to the issuer or indirectly as security for the loan to the corporation, the system restoration bonds and any associated financing costs as they shall become due.
(7) Provide that the system restoration charges shall be sufficient at all times to pay the scheduled principal of and interest on the system restoration bonds as the same shall become due and payable and all other financing costs and, if determined appropriate by the commission, establish a formulaic true-up mechanism requiring that the system restoration charges be reviewed and adjusted at least annually, in order to correct any overcollection or undercollection during the period after the issuance or preceding adjustment and to ensure the projected recovery of amounts sufficient to provide timely payment of the scheduled principal of and interest on the pertinent system restoration bonds and all other financing costs.
(8) Provide and pledge that after the issuance of system restoration bonds authorized thereby, a financing order is irrevocable until the indefeasible payment in full of the system restoration bonds and the financing costs. The financing order shall provide that, except as provided in Subsection F of this Section or to implement any true-up mechanism adopted by the commission as described in Paragraph (7) of this Subsection, the commission may not amend, modify, or terminate the financing order by any subsequent action or reduce, impair, postpone, terminate, or otherwise adjust system restoration charges approved in the financing order.
(9) Provide that the financing order shall remain in effect and unabated, notwithstanding the reorganization, bankruptcy, or other insolvency proceedings, or merger or sale, of the applicable utility or its successors or assignees.
(10) Provide that any successor to a utility, whether pursuant to any reorganization, bankruptcy, or other insolvency proceeding, or whether pursuant to any merger or acquisition, sale or other business combination, or transfer by operation of law, as a result of utility restructuring or otherwise, shall perform and satisfy all obligations of the utility under any related commission order in the same manner and to the same extent as the utility, including collecting and paying to the person entitled to receive the revenues, collections, payments, or proceeds of the system restoration property. Nothing in this Section is intended to limit or impair any authority of the commission concerning the transfer or succession of interests of utilities.
(11) Include terms satisfactory to the commission in its discretion ensuring that the imposition and collection of system restoration charges authorized in the financing order shall be nonbypassable to the fullest extent consistent with the Constitution of Louisiana and the commission's jurisdiction. If determined appropriate by the commission and provided for in a financing order, such nonbypassable charges shall be imposed by the corporation on, and be a part of, all customer bills and be collected by a utility or its successors or assignees, or other collection agent, on behalf of the corporation through a charge which may be collected in the same manner as the utility's base rates or in any other manner deemed appropriate by the commission, for the time period specified in the financing order, paid by existing and future customers, including as to an electric utility all customers for and with regard to all electric load directly or indirectly connected to electric facilities of the electric utility or its successors or assignees under rate schedules or special contracts authorized or approved by the commission. The commission may provide for payment of such nonbypassable charges even if the customer elects to purchase electricity or gas from an alternative supplier, including as a result of a fundamental change in the manner of regulation of public utilities in this state.
D. The commission may include any other conditions and provisions in a financing order that the commission considers appropriate and that are not inconsistent with this Part, with respect to any matters pertaining to and within the Public Service Commission's constitutional jurisdiction over utilities and plenary power to regulate utilities or such other jurisdiction as may be conferred on the commission by law or, in the case of the council of the city of New Orleans, otherwise provide with respect to any matters pertaining to and within its home rule charter or other lawful regulatory jurisdiction and authority over utilities providing service within the city of New Orleans. Such conditions and provisions may include how amounts collected from a customer shall be allocated between the corporation's system restoration charges and other charges by the utility on the customer's bill, and whether the system restoration charges are to be shown as a separate line item on individual customer bills.
E. After the issuance of a financing order, the corporation shall arrange for the issuance of system restoration bonds as specified in the financing order by an issuer selected by the corporation and approved by the commission. The corporation shall enter into a sale or loan transaction with the issuer and then transfer the net proceeds of such system restoration bonds received by the corporation to the pertinent utility as a non-shareholder contribution to capital as provided in R.S. 45:1322.
F. The commission may commence a proceeding and issue a subsequent financing order that provides for the refinancing, retiring, or refunding of system restoration bonds issued pursuant to the original financing order, to the extent consistent with the original financing order and the terms of the authorized system restoration bonds issued thereunder, or that provides with respect to any excess collections, to the extent consistent with Paragraph (C)(7) of this Section. Effective on retirement of the refunded system restoration bonds and the issuance of new system restoration bonds, the commission may adjust the related system restoration charges of the corporation accordingly or establish substitute system restoration charges.
G. System restoration bonds issued pursuant to a financing order shall not be the debt of the utility. System restoration charges paid and collected under any financing order shall not be considered the revenue or property of the utility for any purpose. The utility shall not have any beneficial interest or claim of right in such system restoration charges or in any system restoration property.
H. A financing order may grant the corporation limited discretion, subject to a deadline and other limitations and conditions as determined by the commission, such as that no system restoration charges be collected from customers until system restoration bonds are issued, regarding when to request the issuer to cause the system restoration bonds to be issued. If changed circumstances warrant, the corporation also may request authority from the commission to be granted the right upon request of the utility to have the issuer postpone or cancel the proposed issuance of the system restoration bonds.
I. All financing orders by the commission shall be operative and in full force and effect from the time fixed for them to become effective by the commission.
J. An aggrieved party or intervenor may as its sole remedy, within fifteen days after the financing order or a supplemental order made by the commission becomes effective, file in the district court of the domicile of the commission, a petition setting forth the particular cause of objection to the order complained of. When a timely application for a rehearing has been made at the commission, the fifteen-day time period for such appeal does not commence until the effective date of the commission order disposing of the rehearing application. Inasmuch as delay in the determination of the appeal of a financing order may delay the issuance of system restoration bonds, thereby diminishing savings to customers which might be achieved if such bonds were issued as contemplated by a financing order, all such cases shall be given precedence over all other civil cases in the court and shall be heard and determined as speedily as possible. No appeal to the supreme court shall be allowed unless the petition therefor is filed within fifteen days from the date on which the judgment of the district court is entered and only if the party taking the appeal has the record certified to the supreme court and his brief filed therein within twenty days from the date on which the judgment of the district court is entered. Review on appeal from the Public Service Commission otherwise shall be in accordance with R.S. 45:1193 through 1195. However, the immediately preceding two sentences of this Subsection shall have no application to appeals of any order of the council of the city of New Orleans, which shall proceed in the manner provided therefor by applicable law.
Acts 2007, No. 55, §3, eff. June 18, 2007; Acts 2021, No. 293, §4, eff. June 14, 2021.