§ 45:1318 — Financing orders

§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.

Legislative History

Acts 2007, No. 55, §3, eff. June 18, 2007; Acts 2021, No. 293, §4, eff. June 14, 2021.