The original instrument and the following digest, which constitutes no part of the
legislative instrument, were prepared by Michelle Ridge.
DIGEST
SB 110 Original 2022 Regular Session Reese
Proposed law creates the La. Electric Utility Energy Transition Securitization Act for the purposes
of enabling La. electric utilities, if authorized by the La. Public Service Commission (commission),
to use securitization financing for certain energy transition costs.
Proposed law provides that it is the intent of the legislature that proposed law benefits La. ratepayers
by allowing an electric utility, if authorized, to achieve certain tax and credit benefits of financing
energy transition costs.
Proposed law defines terms, including ""eligible electric generating facility", "energy transition
bonds", "energy transition charge", "energy transition costs", "energy transition property", and
"energy transition reserve".
Proposed law provides that an electric utility may petition the commission for a financing order.
Provides for an application process for an electric utility or its issuer to issue energy transition bonds
as the commission prescribes. Prohibits an electric utility from applying any proceeds of energy
transition bonds to any purpose not specified in the commission's order, or to any purpose in excess
of the amount allowed for such purpose in the order, or to any purpose in contravention of the order
or supplemental order.
Proposed law provides that subject to certain circumstances, the commission may grant an
application by a financing order and may, after hearing and for good cause shown, make
supplemental orders in the premises as it finds necessary or appropriate.
Proposed law requires certain provisions be in a financing order issued by the commission to an
electric utility to create energy transition property. Proposed law provides that the commission may
include additional provisions in the order.
Proposed law provides that after the order is issued, the electric utility retains discretion regarding
whether to sell, assign, or transfer energy transition property or to cause the energy transition bonds
to be issued.
Proposed law provides that all financing orders by the commission shall be operative and in full
force and effect from the time fixed for them to become effective by the commission.
Proposed law provides that an aggrieved party or intervenor may file in district court, within 15 days
of a financing order becoming effective, a petition setting forth the particular cause of objection to
the order. Provides that if there is a timely application for rehearing made at the commission, the 15-
day period for appeal shall not begin until the effective date of the commission order disposing of the rehearing. Provides for a direct appeal process to the La. Supreme Court from the district court.
Proposed law provides that all energy transition property that is listed in a financing order shall
constitute an existing, present contract right constituting an individualized, separate incorporeal
movable susceptible of ownership, sale, assignment, transfer, and security interest. Provides the
property will exist whether or not the revenues or proceeds arising from the property have been
billed, have accrued, or have been collected notwithstanding the fact that the value or amount of the
property is or may be dependent on the future provision of service to customers by the electric utility
and the future consumption by customers of electricity. The energy transition property created by a
financing order shall be a vested contract right, and the financing order shall create a contractual
obligation of irrevocability by the commission in favor of the electric utility and its assignees and
financing parties.
Proposed law provides that energy transition property listed in a financing order shall continue to
exist until the energy transition bonds are paid in full and all financing costs of the bonds have been
recovered in full.
Proposed law provides that all or any portion of energy transition property listed in the financing
order issued to an electric utility may be sold, assigned, or transferred to an assignee or be
encumbered by a security interest to secure energy transition bonds issued pursuant to the order and
other financing costs. Provides that each sale, assignment, transfer, or security interest granted by
an electric utility or assignee shall be considered to be a transaction in the ordinary course of
business.
Proposed law provides that the description of energy transition property sold, assigned, or transferred
to an assignee in any sale agreement, purchase agreement, or other transfer agreement, encumbered
to a secured party in any security agreement, or indicated in any financing statement shall be
sufficient only if the description or indiction refers to the specific financing order that created the
energy transition property and states that such agreement or financing statement covers all or part
of the property described in the financing order.
Proposed law provides that energy transition property is an individualized, separate incorporeal
movable susceptible of ownership, sale, assignment, transfer, and security interest encumbrance.
Proposed law provides that if the electric utility defaults on any required payment of charges arising
from the energy transition property listed in the financing order, the district court of the domicile of
the commission, upon application of an interested party, and without limiting any other remedies
available to the applying party, shall order the sequestration and payment of the revenues arising
from the energy transition property to the financing parties or their representatives. Provides the
order shall remain in full force and effective, notwithstanding any reorganization, bankruptcy, or
other insolvency proceedings with respect to the electric utility or its successors or the assignees.
Proposed law provides to the extent provided in a financing order, the following:
(1)The interest of an assignee or secured party in energy transition property listed in a financing order shall not be subject to setoff, counterclaim, surcharge, or defense by the electric utility
or by any customer of the electric utility or other person, or in connection with the
reorganization, bankruptcy, or other insolvency of the electric utility or any other person.
(2)Any successors to an electric utility shall perform and satisfy all obligations of, and have the
same rights under a financing order as, the electric utility under the order in the same manner
and to the same extent as the electric utility, including collecting and paying to the persons
entitled to receive them, the revenues, collections, payments, or proceeds of the energy
transition property.
Proposed law provides relative to the sale, assignment, or other transfer of energy transition property.
Proposed law provides that the Uniform Commercial Code-Secured Transactions shall not apply to
energy transition property or any right, title, or interest of a utility or assignee, whether before or after
the issuance of the financing order, except as otherwise provided in proposed law. Provides such
right, title, or interest pertaining to a financing order shall not be treated as proceeds of any right or
interest other than of the financing order and the energy transition property arising from the financing
order. Provides that all revenues and collections resulting from energy transition property shall
constitute proceeds only of the energy transition property arising from the financing order.
Proposed law, with respect to filings of financing statements or control of deposit accounts or
investment property as original collateral, governs the creation, attachment, granting, perfection, and
priority of security interests in energy transition property to secure energy transition bonds and
financing costs. Provides that energy transition property shall not be susceptible of pledge under the
provisions of the Civil Code.
Proposed law provides that a security interest in energy transition property shall be valid and
enforceable against the electric utility and its successors, any assignee, and any third party and
attaches to energy transition property only after certain conditions are met.
Proposed law provides that a security interest in energy transition property shall be perfected only
if it has attached and a financing statement indicating the energy transition property collateral
covered has been filed. Provides that a financing statement shall be filed to perfect all security
interests and liens in energy transition property. Provides that a security interest in energy transition
property shall be perfected when it has attached and when the applicable financing statement has
been filed.
Proposed law provides that the interest of a secured party shall not be perfected unless a financing
statement is filed, and after perfection, the secured party's interest continues in the energy transition
property and all proceeds of such energy transition property, whether or not billed, accrued, or
collected, and whether or not deposited into a deposit account and however evidenced. Provides that
a security interest in proceeds of energy transition property shall be a perfected security interest if
the security interest in the energy transition property was perfected in accordance with proposed law.
Proposed law provides that financing statements shall be filed, indexed, maintained, amended, assigned, continued, and terminated in the same manner and in the same system of records
maintained for the filing of financing statements pursuant to the Uniform Commercial Code-Secured
Transactions. Provides that the filing of the financing statement shall be the only method of
perfecting a lien or security interest on energy transition property and the statement shall be filed as
if the debtor named were located in the state.
Proposed law provides for the priority of conflicting security interests of secured parties in the same
interest or rights in any energy transition property as follows:
(1)Conflicting perfected security interests of secured parties rank according to priority in time
of perfection.
(2)A perfected security interest of a secured party shall have priority over a conflicting
unperfected security interest of a secured party.
(3)A perfected security interest of a secured party shall have priority over a person who becomes
a lien creditor after the perfection of such secured party's security interest.
Proposed law provides that a perfected security interest in energy transition property and all proceeds
of such property shall have priority over a conflicting lien or privilege of any nature in the same
collateral property, except a security interest shall be subordinate to the rights of a person that
becomes a lien creditor before the perfection of such interest.
Proposed law provides that the relative priority of a perfected security interest of a secured party
shall not be adversely affected by any security interest, lien, or privilege in a deposit account of the
electric utility that is a collector and into which the revenues are deposited.
Proposed law provides that the priority of a security interest shall not be defeated or impaired by any
later modification of the financing order or energy transition property or by the commingling of
funds arising from energy transition property with other funds. Any other security interest that may
apply to those funds shall be terminated as to all funds transferred to a segregated account for the
benefit of an assignee or financing party or to an assignee or financing party directly.
Proposed law provides that the Uniform Commercial Code-Secured Transactions, including choice
of law rules, shall govern the perfection by control, the effect of perfection by control, and the
priority of a security interest granted by the issuer of and securing energy transition bonds held by
a secured party having control of a segregated deposit account or securities account as original
collateral into which revenues, collections, or proceeds are deposited or credited.
Proposed law provides for the foreclosure on or enforcement of security interest in any energy
transition property if a default occurs.
A security interest created in accordance with proposed law may provide for a security interest in
after-acquired collateral. Proposed law provides that a security interest granted shall not be invalid
or fraudulent against creditors solely because the grantor or the electric utility as collector or servicer has the right or ability to commingle the collateral or proceeds, or collect, compromise, enforce, and
otherwise deal with collateral.
Proposed law provides that any action arising to enforce a security interest in energy transition
property shall be brought in the district court of the domicile of the commission. The suits shall be
governed by the Code of Civil Procedure and other laws applicable to executory proceedings.
Proposed law provides relative to conflict of laws and provides that proposed law governs the
validity, enforceability, attachment, creation, perfection, the effect of perfection or nonperfection,
priority, exercise of remedies, and venue with respect to the sale, assignment, or transfer of an
interest or right or the creation of a security interest in any energy transition property.
Proposed law provides that if there a conflict between proposed law and any other law, proposed law
governs.
Proposed law provides that energy transition bonds are not a debt or general obligation of the state
or any of its political subdivisions, agencies, or instrumentalities and shall not be a charge on their
full faith and credit and the bonds issued shall contain on the face of a statement the following:
"Neither the full faith and credit nor the taxing power of the state of Louisiana is pledged to the
payment of the principal of, or interest on, this bond."
Proposed law provides that the state and the Legislature of Louisiana each pledge to and agree with
bondholders, the owners of the energy transition property, and other financing parties that, until the
financing costs and the energy transition bonds and any ancillary agreements have been paid and
performed in full, the state shall not perform certain acts, including amending the provisions of
proposed law that authorize the commission to create an irrevocable contract right by the issuance
of a financing order, to create energy transition property, and to make the energy transition charges
imposed by a financing order irrevocable, binding, and nonbypassable charges.
Proposed law shall not preclude limitation or alteration if and when full compensation is made by
law for the full protection of the energy transition charges imposed, charged, and collected pursuant
to a financing order and full protection of the holders of energy transition bonds and any assignee
or financing party.
Proposed law authorizes any person or entity that issues energy transition bonds to include proposed
law pledges in the bonds and related documents.
Proposed law provides that an assignee or financing party shall not be considered an electric utility
or person providing electric service by virtue of engaging in proposed law transactions.
Proposed law is not intended to be nor shall be construed to constitute any limitation, derogation,
or diminution of the jurisdiction or authority of the commission.
Proposed law provides that a utility may finance energy transition costs that were incurred before
August 1, 2022. Effective upon signature of the governor or lapse of time for gubernatorial action.
(Amends R.S. 10:9-109(c)(6)(intro para), (c)(6)(C), (c)(7)(intro para) and (c)(7)(C); adds R.S. 10:9-
109(c)(8) and R.S. 45:1271-1281)