§ 369-B:6 — Creation, Assignment, and Pledge of RRB Property

I. The RRB charge shall constitute RRB property when, and to the extent that, a finance order authorizing such RRB charge has become effective in accordance with this chapter, and the RRB property shall thereafter continuously exist as a current and irrevocable vested property right for all purposes with all of the rights and privileges of this chapter for the period and to the extent provided in the finance order, but in any event until the rate reduction bonds, including all principal, interest, premium, costs, and arrearages on such bonds, are paid in full. Prior to its sale or other transfer by the electric utility pursuant to this chapter, RRB property shall be a vested contract right of the electric utility, notwithstanding any contrary treatment thereof for accounting, tax, or other purpose. Upon application by an electric utility or a financing entity, or upon its own motion, the commission shall have authority to initiate such other proceedings, hold such other hearings, and take such other actions as may be necessary to implement, protect, and preserve the value of the finance order, the RRB charge specified therein, and the RRB property.
II. The state does hereby pledge, contract, and agree with the owners of RRB property and holders of and trustees for rate reduction bonds that neither the state, nor any of its agencies, including the commission, shall limit, alter, amend, reduce, or impair the RRB charge, RRB property, finance orders, and all rights thereunder or ownership thereof or security interest therein until the rate reduction bonds, including all principal, interest, premium, costs and arrearages thereon, are fully met and discharged, provided nothing contained in this paragraph shall preclude the limitation, alteration, amendment, reduction, or impairment if and when adequate provision shall be made by law for the protection of such owners, holders and trustees. The state does hereby acknowledge that such owners, holders and trustees may and will rely on this pledge, contract, and agreement and that any such limitation, alteration, amendment, reduction, or impairment without such adequate provision will irreparably harm such owners, holders and trustees. The state treasurer and the financing entity are each authorized to include this pledge, contract, agreement, and acknowledgment of the state in the documentation relating to the rate reduction bonds.
III. An electric utility may sell and assign all or portions of its interest in RRB property to an affiliate to the extent approved in the pertinent finance orders. An electric utility or its affiliate may sell or assign its interests to one or more financing entities that make that property the basis for issuance of rate reduction bonds to the extent approved in the pertinent finance orders. An electric utility, its affiliate, or a financing entity may pledge RRB property as collateral, directly or indirectly, for rate reduction bonds to the extent approved in the pertinent finance orders providing for a security interest in the RRB property, in the manner set forth in RSA 369-B:7. In addition, RRB property may be sold or assigned by:
(a) The financing entity or a trustee for the holders of rate reduction bonds in connection with the exercise of remedies upon a default; or
(b) Any person acquiring the RRB property after a sale or assignment pursuant to this paragraph.
IV. To the extent that any interest in RRB property is so sold or assigned, or is so pledged as collateral, the commission shall require the electric utility to contract with the financing entity that it will continue to operate its system to provide service to its retail customers, will collect amounts in respect of the RRB charge for the benefit and account of the financing entity, and will account for and remit these amounts to or for the account of the financing entity. Contracting with the financing entity in accordance with that authorization shall not impair or negate the characterization of the sale, assignment, or pledge as an absolute transfer, a true sale, or security interest, as applicable, and shall not cause the electric utility to be subject to the provisions of RSA 358-C. Contracts or other arrangements entered into between an electric utility and a financing entity shall not be subject to the provisions of RSA 366. Neither a finance entity nor any other person that is an assignee or pledgee of RRB property shall for any purpose be considered to be an electric utility or a person providing electric service solely by virtue of the transactions described in this chapter.
V. A transfer of RRB property by an electric utility to an affiliate or to a financing entity, or by an affiliate of an electric utility or a financing entity to another financing entity, that the parties have expressly stated in the governing documentation to be a sale or other absolute transfer, in a transaction approved in a finance order and made in connection with the issuance of rate reduction bonds shall be treated as an absolute transfer of all of the transferor's right, title, and interest, as in a true sale, and not as a pledge or other financing, of the RRB property, in each case notwithstanding any contrary treatment of such transfer for accounting, tax, or other purposes. According the holders of rate reduction bonds a preferred right to revenues of the electric utility or the provision by the electric utility of other credit enhancement with respect to rate reduction bonds shall not impair or negate the characterization of any transfer as a true sale, in each case notwithstanding any contrary treatment of such transfer for accounting, tax, or other purposes. Any finance order shall remain in full force and effect notwithstanding any bankruptcy, reorganization, or other insolvency proceeding with respect to the debtor, pledgor, or transferor of RRB property.
VI. A transfer of RRB property shall be deemed perfected as against third persons and shall vest title to the RRB property in the transferee when both of the following have taken place:
(a) A finance order authorizing the RRB charge included in the RRB property has become effective in accordance with this chapter.
(b) An assignment of the RRB property in writing has been executed and delivered to the transferee.
VII. As between bona fide assignees of the same right for value without notice, the assignee first filing financing statements in accordance with Article 9 of RSA 382-A naming the assignor of the RRB property as debtor and identifying the RRB property has priority. Any description of the RRB property shall be sufficient if it refers to the finance order creating the RRB property. A copy of the financing statements shall be filed by the assignee with the commission, and the commission may require the assignor or the assignee to make other filings with respect to the transfer in accordance with procedures it may establish, but the filing with the commission and such other filings shall not affect the perfection of the transfer.
VIII. The interest of an assignee or pledgee in RRB property and in the revenues and collections arising from such RRB property are not subject to setoff, counterclaim, surcharge, or defense by the electric utility or any other person or in connection with the bankruptcy of the electric utility or any other person.

Legislative History

2000, 249:2, eff. June 12, 2000.