RS 1337 - Permitted use of funds
A. A trust shall perform only those functions consistent with and effectuate only the purposes set forth in this Subpart. A trust shall acquire and subscribe for preferred interests of a utility affiliate using all of the contributed proceeds of system restoration bonds received from the corporation as settlor. Notwithstanding the provisions of R.S. 45:1318(C)(5)(a), a financing order issued under this Subpart shall require the corporation to transfer the net proceeds of the system restoration bonds it receives, pursuant to R.S. 45:1318(C)(3), to a trust whose beneficiary is the related utility that is collecting the applicable system restoration charges. A financing order shall require that trust to use those contributed proceeds as provided in this Subsection, shall require that trust to use the distributions in respect of the purchased preferred interests as provided in Subsection C of this Section, and shall require that the trust be subject to the express conditions and requirements set forth in the financing order described in Subsection B of this Section.
B. A financing order issued under this Subpart shall include the related utility's commitment that, upon receipt of the purchase proceeds by the utility affiliate, the related utility shall fully release any claims or rights to recover the system restoration costs approved by that financing order, to the extent of such related bonds' proceeds, from any of its commission-jurisdictional customers, and shall set aside in a restricted reserve account, in an amount and manner required by the commission, any monies or investments used to fund the utility's storm damage reserve. The primary purpose of this Subpart is to serve the public good and to benefit the public as a whole as part of a regulatory program that is intended to minimize the rates charged by utilities and to strengthen the financial position of utilities that have restored and rebuilt their systems after storms. The purchase proceeds are not payments for any electric or gas service provided by the related utility to any person and are not payments in the nature of insurance, or otherwise as direct compensation for losses by the related utility from storms. Instead, the purchase proceeds are made in exchange for the preferred interests, the dividend income, and redemption payments attributable thereto and for the related utility's obligations set forth in the financing order.
C. A trust shall pay distributions, whether dividend income, redemption payments, or otherwise, in respect of the preferred interests only to the beneficiaries of the trust, shared between the beneficiaries, as specified in the approved trust agreement, or when applicable, to a permitted pledgee, and for expenses permitted by R.S. 45:1338(D). A trust may cause the periodic redemption of the preferred interests only as provided in the approved trust agreement. The terms and attributes of the preferred interests purchased by a trust shall be approved by the commission in a financing order or by the use of an approval method provided in a financing order.
D. System restoration bonds issued pursuant to a financing order under this Subpart shall not be debt of a trust. System restoration bonds shall be nonrecourse to the credit or any assets of a trust, other than the trust's obligation to distribute proceeds to the corporation or a pledgee as specified in the trust agreement and pursuant to the pledge by the corporation to the issuer of the related bonds as security for repayment of a loan to the corporation by the issuer. The terms of the indenture, and other financing documents pertaining to system restoration bonds issued pursuant to this Subpart shall be consistent with this Section.
Acts 2021, No. 293, §3, eff. June 14, 2021.