§ 45:1337 — Permitted use of funds

§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.

Legislative History

Acts 2021, No. 293, §3, eff. June 14, 2021.