Louisiana Revised Statutes 45:1271 – A. This Part shall be known and may be cited as the “Louisiana Electric Utility Energy Transition Securitization Act”.
Terms Used In Louisiana Revised Statutes 45:1271
- Bankruptcy: Refers to statutes and judicial proceedings involving persons or businesses that cannot pay their debts and seek the assistance of the court in getting a fresh start. Under the protection of the bankruptcy court, debtors may discharge their debts, perhaps by paying a portion of each debt. Bankruptcy judges preside over these proceedings.
- Commission: means the Louisiana Public Service Commission. See Louisiana Revised Statutes 45:1272
- Energy transition bonds: means bonds, notes, certificates of participation, or other evidences of indebtedness that are issued pursuant to an indenture or other contract of an electric utility or an issuer pursuant to a financing order, the proceeds of which are used directly or indirectly to provide, recover, finance, or refinance commission-approved energy transition costs and financing costs, and costs to fund energy transition reserves to such levels as the commission may authorize in a financing order, and that are secured by or payable from energy transition property. See Louisiana Revised Statutes 45:1272
- Energy transition costs: means , if requested by the electric utility, and as may be approved by the commission, costs incurred or to be incurred by an electric utility consisting of any of the following:
(a) Costs caused by or associated with the following:
(i) The retirement of an eligible electric generating facility. See Louisiana Revised Statutes 45:1272
- Energy transition property: means the contract right constituting incorporeal movable property newly created pursuant to this Part which consists of all of the following:
(a) The rights and interests of an electric utility or successors or assignees of the electric utility specified as being energy transition property in a financing order, including the right to impose, bill, charge, collect, and receive energy transition charges authorized in the financing order, the right to enforce the obligations of the utility to collect and service the energy transition charges, and the right to obtain periodic adjustments to such charges as may be provided in the financing order and this Part. See Louisiana Revised Statutes 45:1272
- Financing order: means an order of the commission, if granted by the commission in its sole discretion, which allows for all of the following:
(a) The issuance of energy transition bonds. See Louisiana Revised Statutes 45:1272
- Issuer: means any assignee that is a wholly owned subsidiary of an electric utility and that issues energy transition bonds approved by a financing order. See Louisiana Revised Statutes 45:1272
- Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Public debt: Cumulative amounts borrowed by the Treasury Department or the Federal Financing Bank from the public or from another fund or account. The public debt does not include agency debt (amounts borrowed by other agencies of the Federal Government). The total public debt is subject to a statutory limit.
- Security interest: means an encumbrance of and a right of preference over any portion of energy transition property created by contract to secure the payment or performance of an obligation. See Louisiana Revised Statutes 45:1272
- utility: means an "electric public utility" as defined in La. See Louisiana Revised Statutes 45:1272
A. This Part shall be known and may be cited as the “Louisiana Electric Utility Energy Transition Securitization Act”.
B. The purpose of this Part is to enable Louisiana electric utilities, if authorized by a financing order issued by the commission, to use securitization financing for certain energy transition costs, because this type of debt may lower the total amount of costs being included in customers’ rates in comparison with conventional utility financing methods or alternative methods of recovery, thereby benefiting ratepayers. The energy transition bonds will not be public debt or a pledge of the full faith and credit of the state or any political or governmental unit thereof. Energy transition bonds will be solely the obligation of the issuer, an affiliate of an electric utility. The proceeds of the energy transition bonds shall be used for the purpose of recovering certain energy transition costs, solely as allowed by the commission. Securitization financing for energy transition costs is hereby recognized to be a valid public purpose. Federal tax laws and revenue procedures expressly require that special state legislation be enacted in order for such transactions to receive certain tax benefits. The legislature finds a need to promote securitization financing, if authorized by the commission, by providing clear and exclusive methods to create, transfer, and encumber interests in energy transition property as defined in this Part. This need is met by providing in this Part for such methods and by establishing that any conflict between the rules governing sales, assignments, or transfers of, or security interests, privileges, or other encumbrances of any nature upon, incorporeal movable property pursuant to other laws of this state and the methods provided in this Part, including without limitation with regard to creation, perfection, priority, or enforcement, shall be resolved in favor of the rules and methods established in this Part with regard to energy transition property.
C. The intent of this Part is to provide benefits to Louisiana ratepayers by allowing a Louisiana electric utility, if authorized by a financing order, to achieve certain tax and credit benefits of financing energy transition costs. This Part does not in any way limit, impair, or impact the commission’s plenary jurisdiction over the rates charged and services rendered by public utilities in this state. Instead, this Part addresses certain property, security interest, and other matters to ensure that the financial and federal income tax benefits of financing energy transition costs through securitization are available in this state. The beneficial income tax and credit characteristics that may be achieved include the following:
(1) Treating the energy transition bonds as debt of the electric utility for income tax purposes.
(2) Treating the energy transition charges as gross income to the electric utility recognized under the utility’s usual method of accounting for federal and state income tax purposes, rather than recognizing gross income upon the receipt of the financing order or of cash in exchange for the sale of the energy transition property or the issuance of the energy transition bonds.
(3) Avoiding the recognition of debt on the electric utility’s balance sheet for certain credit and regulatory purposes by reason of the energy transition bonds.
(4) Treating the sale, assignment, or transfer of the energy transition property by the electric utility as a true sale for state law and bankruptcy purposes.
(5) Mitigating any adverse impact of the financing on the electric utility’s credit rating.
D. This Part does not impose fees or energy transition charges, but instead only authorizes the commission to approve energy transition charges in its discretion.
Acts 2022, No. 255, §2, eff. June 3, 2022.