Louisiana Revised Statutes 45:1251 – Short title; purpose
Terms Used In Louisiana Revised Statutes 45:1251
- 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 or, solely with respect to an electric utility furnishing electric service within the city of New Orleans, the council of the city of New Orleans. See Louisiana Revised Statutes 45:1252
- Financing costs: means any of the following:
(a) Interest and acquisition, defeasance, or redemption premiums that are payable on investment recovery bonds. See Louisiana Revised Statutes 45:1252
- 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 investment recovery bonds. See Louisiana Revised Statutes 45:1252
- Investment recovery bonds: means bonds, debentures, notes, certificates of participation, certificates of ownership, or other evidences of indebtedness or ownership that are issued pursuant to an indenture, contract, or other agreement of an electric utility or an assignee pursuant to a financing order, the proceeds of which are used directly or indirectly to provide, recover, finance, or refinance commission-approved investment recovery costs and financing costs, and which are secured by or payable from investment recovery property. See Louisiana Revised Statutes 45:1252
- Investment recovery 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 associated with the following:
(i) The cancelled construction of electric generating or transmission facilities. See Louisiana Revised Statutes 45:1252
- Investment recovery property: means the contract right constituting incorporeal movable property newly created pursuant to this Part which consists of any of the following:
(a) The rights and interests of an electric utility or successor or assignee of the electric utility specified under a financing order, including the right to impose, bill, charge, collect, and receive investment recovery charges authorized in the financing order and to obtain periodic adjustments to such charges as may be provided in the financing order. See Louisiana Revised Statutes 45:1252
- 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.
- 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 a pledge, hypothecation, or other encumbrance of or other right over any portion of investment recovery property created by contract to secure the payment or performance of an obligation. See Louisiana Revised Statutes 45:1252
- utility: means an "electric public utility" as defined in La. See Louisiana Revised Statutes 45:1252
A. This Part shall be known and may be cited as the “Louisiana Electric Utility Investment Recovery 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 investment recovery costs, because this type of debt may lower the financing costs or mitigate the impact on rates in comparison with conventional utility financing methods or alternative methods of recovery, thereby benefiting ratepayers. The investment recovery bonds will not be public debt. The proceeds of the investment recovery bonds shall be used for the purpose of recovering certain investment recovery costs, solely as allowed by the commission. Securitization financing for investment recovery 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 such securitization financing, if authorized by the commission, by providing clear and exclusive methods to create, transfer, and encumber interests in investment recovery property as defined in this Part. This need can be 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 under other Louisiana laws 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 investment recovery 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 investment recovery 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 investment recovery costs through securitization are available in Louisiana. The beneficial income tax and credit characteristics that may be achieved include the following:
(1) Treating the investment recovery bonds as debt of the electric utility for income tax purposes.
(2) Treating the investment recovery 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 investment recovery property or the issuance of the investment recovery bonds.
(3) Avoiding the recognition of debt on the electric utility’s balance sheet for certain credit and regulatory purposes by reason of the investment recovery bonds.
(4) Treating the sale, assignment, or transfer of the investment recovery property by the electric utility as a true sale for state law and bankruptcy purposes.
(5) Avoiding any adverse impact of the financing on the electric utility’s credit rating.
Acts 2010, No. 988, §2, eff. July 6, 2010.