RÉSUMÉ DIGEST
ACT 255 (SB 110) 2022 Regular Session Reese
New 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.
New law provides that it is the intent of the legislature that new law benefits La. ratepayers
by allowing an electric utility, if authorized, to achieve certain tax and credit benefits of
financing energy transition costs.
New law defines terms, including "eligible electric generating facility", "energy transition
bonds", "energy transition charge", "energy transition costs", "energy transition property",
and "energy transition reserve".
New law defines "eligible mine" as a coal or lignite mine that services a mine-mouth eligible
electric generating facility furnishing electric service to customers within this state.
New 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.
New 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.
New law requires certain provisions be in a financing order issued by the commission to an
electric utility to create energy transition property.
New law provides that the commission may include the following additional provisions in
the order:
(1)Prescribe any limitation on potential assignees of energy transition property.
(2)Authorize an issuer that is organized pursuant to the laws of this state to provide and
establish in its articles of incorporation, partnership agreement, or operating
agreement, as applicable, that in order for a person to file a voluntary bankruptcy
petition on behalf of that issuer, the prior unanimous consent of the directors,
partners, or managers, as applicable, shall be required.
(3)Provide that the creation of the electric utility's energy transition property is
conditioned upon, and shall be simultaneous with, the sale, assignment, or other
transfer of the energy transition property to an issuer and the security interest created
in the energy transition property to secure energy transition bonds and financing
costs.
(4)Establish the portion of energy transition costs allocated to this state of an electric
utility that has an eligible electric generating facility and eligible mine used to
furnish electric service to customers within the state.
(5)Additionally provide with respect to any matters pertaining to and within the
commission's constitutional jurisdiction over electric utilities and plenary power to
regulate electric utilities or such other jurisdiction as may be conferred on the
commission by law.
New 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.
New 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. New 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 that the district court may affirm the
commission's order or set it aside. Provides for a direct appeal process to the La. Supreme
Court from the district court.
New 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.
New 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.
New 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.
New 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.
New law provides that energy transition property is an individualized, separate incorporeal
movable susceptible of ownership, sale, assignment, transfer, and security interest
encumbrance.
New 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.
New 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. New law provides relative to the sale, assignment, or other transfer of energy transition
property.
New 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 new 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.
New 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.
New 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.
New 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.
New 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 new law.
New 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.
New 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.
New 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.
New 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. New 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.
New 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.
New 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 new law may provide for a security interest
in after-acquired collateral. New 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.
New 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.
New law provides relative to conflict of laws and provides that new 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.
New law provides that if there a conflict between new law and any other law, new law
governs.
New 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."
New 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 new 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.
New 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.
New law authorizes any person or entity that issues energy transition bonds to include new
law pledges in the bonds and related documents.
New 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 new law transactions.
New 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. New law provides that a utility may finance energy transition costs that were incurred before
August 1, 2022.
Effective June 3, 2022.
(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)