§ 45:1319 — System restoration property

§1319. System restoration property
A. All system restoration property that is specified in a financing order shall
constitute an existing, present property right of the corporation, constituting an
individualized, separate, incorporeal movable susceptible of ownership, sale, assignment,
transfer, pledge, and security interest, including without limitation for purposes of contracts
concerning sale of property and pledges of and security interests in property, notwithstanding
that the value of such property and the imposition and collection of system restoration
charges depend on future acts such as the utility performing its collection agent functions
relating to the collection of system restoration charges and on future electricity or gas
consumption. Such property shall exist whether or not the revenues or proceeds arising from
the property have been billed, have accrued, or have been collected and notwithstanding the
fact that the value or amount of such property is or may be dependent on the future provision
of service to customers by the utility or its successors or assignees and the future
consumption by customers of electricity or gas. System restoration property created by a
financing order shall be a vested contract right, and such financing order shall create a
contractual obligation of irrevocability by the commission in favor of the corporation and its
transferees, including an issuer and financing parties.
B. System restoration property specified in a financing order shall continue to exist
until the system restoration bonds issued pursuant to the financing order are paid in full and
all financing costs of the bonds have been recovered in full.
C. The system restoration property specified in a financing order may be sold to an
issuer by the corporation, or may be pledged to an issuer by the corporation to secure the
corporation's payment to the issuer of monies sufficient to pay the system restoration bonds
issued as contemplated by the financing order and financing costs. Each such sale or pledge
by the corporation is considered to be a transaction in the ordinary course of business.
D. The utility shall have no ownership or beneficial interest in nor any claim of right
in the system restoration property, other than the obligation to collect the system restoration
charges as agent of the corporation, issuer, or financing party, as applicable, and transfer
those charges to the corporation, issuer, or financing party entitled to receive those charges,
all as directed in any financing order.
E. To the extent provided in a financing order, the interest of the corporation or a
transferee in system restoration property specified in the financing order is not subject to
setoff, counterclaim, surcharge, or defense by the utility or by any customer of the utility, or
in connection with a bankruptcy of the utility or any other person.
F. The description of system restoration property being sold or assigned in any sale
agreement, purchase agreement, or other transfer agreement, or being pledged or encumbered
in any security agreement, pledge agreement, or other security document, is sufficient only
if such description refers to the specific financing order that created the system restoration
property and states that such agreement covers all or part of such system restoration property
described in such financing order. This Subsection applies to all purported sales,
assignments, or transfers of, and all purported liens or security interests in, system restoration
property, regardless of whether the related sale agreement, purchase agreement, other transfer
agreement, security agreement, pledge agreement, or other security document was entered
into, or any financing statement was filed, before or after the effective date of this Part.
G. System restoration property shall be an individualized, separate, incorporeal
movable susceptible of ownership, sale, assignment, transfer, pledge, and security interest
encumbrance, notwithstanding any of the following:
(1) That notice is not given to utility customers that the system restoration property
is owned by the corporation or a transferee and that the utility or another entity if applicable
is acting as a collection agent for the corporation, issuer, or financing party.
(2) That the system restoration charges are not shown as a separate line item on
individual utility bills.
(3) That funds arising from the collection of system restoration charges by the utility
as collection agent are commingled with other monies of the utility prior to the utility's
transfer as collection agent of such funds to the corporation, issuer, or financing party.
H. If there is a default on system restoration bonds, upon application by an interested
party, and without limiting any other remedies available to the applying party, a court shall
order the sequestration and payment of the monies arising from the system restoration
property to the person entitled to receive such monies. Any such order shall remain in full
force and effect notwithstanding any reorganization, bankruptcy, or other insolvency
proceedings with respect to the utility or its successors or assignees.

Legislative History

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