Minnesota 2025-2026 Regular Session

Minnesota House Bill HF1226 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	1.1 A bill for an act
2	2	1.2 relating to energy; authorizing natural gas utilities to sell extraordinary event bonds
3	3	1.3 under certain circumstances; establishing an account; appropriating money;
4	4	1.4 proposing coding for new law in Minnesota Statutes, chapter 216B.
5	5	1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
6	6	1.6 Section 1. [216B.491] DEFINITIONS.
7	7	1.7 Subdivision 1.Scope.For the purposes of sections 216B.491 to 216B.499, the terms
8	8	1.8defined in this section have the meanings given.
9	9	1.9 Subd. 2.Ancillary agreement."Ancillary agreement" means a bond, insurance policy,
10	10	1.10letter of credit, reserve account, surety bond, interest rate lock or swap arrangement, liquidity
11	11	1.11or credit support arrangement, or other financial arrangement entered into in connection
12	12	1.12with extraordinary event bonds that is designed to promote the credit quality and
13	13	1.13marketability of extraordinary event bonds or to mitigate the risk of an increase in interest
14	14	1.14rates.
15	15	1.15 Subd. 3.Assignee."Assignee" means a person to which an interest in extraordinary
16	16	1.16event property is sold, assigned, transferred, or conveyed, other than as security, and any
17	17	1.17successor to or subsequent assignee of the person.
18	18	1.18 Subd. 4.Bondholder."Bondholder" means a holder or owner of extraordinary event
19	19	1.19bonds.
20	20	1.20 Subd. 5.Customer."Customer" means a person who purchases natural gas or natural
21	21	1.21gas transportation services from a utility in Minnesota. Customer does not include a person
22	22	1.22who:
23	23	1Section 1.
24	24	REVISOR RSI/VJ 25-0048801/10/25
25	25	State of Minnesota
26	26	This Document can be made available
27	27	in alternative formats upon request
28	28	HOUSE OF REPRESENTATIVES
29	29	H. F. No. 1226
30	30	NINETY-FOURTH SESSION
31	31	Authored by Igo and Hollins02/20/2025
32	32	The bill was read for the first time and referred to the Committee on Energy Finance and Policy 2.1 (1) purchases natural gas transportation services from a utility in Minnesota that serves
33	33	2.2fewer than 350,000 natural gas customers in Minnesota; and
34	34	2.3 (2) does not purchase natural gas from a utility in Minnesota.
35	35	2.4 Subd. 6.Extraordinary event.(a) "Extraordinary event" means an event arising from
36	36	2.5unforeseen circumstances of sufficient magnitude, as determined by the commission:
37	37	2.6 (1) to impose significant costs on customers; and
38	38	2.7 (2) for which the issuance of extraordinary event bonds in response to the event meets
39	39	2.8the conditions of section 216B.492, subdivision 2.
40	40	2.9 (b) Extraordinary event includes but is not limited to a storm event or other natural
41	41	2.10disaster, an act of God, war, terrorism, sabotage, vandalism, a cybersecurity attack, or a
42	42	2.11temporary significant increase in the wholesale price of natural gas.
43	43	2.12 Subd. 7.Extraordinary event activity."Extraordinary event activity" means an activity
44	44	2.13undertaken by or on behalf of a utility to restore or maintain the utility's ability to provide
45	45	2.14natural gas service following one or more extraordinary events, including but not limited
46	46	2.15to activities related to mobilizing, staging, constructing, reconstructing, replacing, or repairing
47	47	2.16natural gas transmission, distribution, storage, or general facilities.
48	48	2.17 Subd. 8.Extraordinary event bonds."Extraordinary event bonds" means debt securities,
49	49	2.18including but not limited to senior secured bonds, debentures, notes, certificates of
50	50	2.19participation, certificates of beneficial interest, certificates of ownership, or other evidences
51	51	2.20of indebtedness or ownership, that: (1) have a scheduled maturity of no longer than 30 years
52	52	2.21and a final legal maturity date that is not later than 32 years from the issue date; (2) are rated
53	53	2.22AA, Aa2, or higher by a major independent credit rating agency at the time of issuance;
54	54	2.23and (3) are issued by a utility or an assignee under a financing order.
55	55	2.24 Subd. 9.Extraordinary event charge."Extraordinary event charge" means a
56	56	2.25nonbypassable charge that:
57	57	2.26 (1) a utility that is the subject of a financing order or the utility's successors or assignees
58	58	2.27imposes on all of the utility's customers;
59	59	2.28 (2) is separate from the utility's base rates; and
60	60	2.29 (3) provides a source of revenue used only to repay, finance, or refinance extraordinary
61	61	2.30event costs.
62	62	2.31 Subd. 10.Extraordinary event costs."Extraordinary event costs":
63	63	2Section 1.
64	64	REVISOR RSI/VJ 25-0048801/10/25 3.1 (1) means all incremental costs of extraordinary event activities that are approved by
65	65	3.2the commission in a financing order issued under section 216B.492 as being:
66	66	3.3 (i) necessary to enable the utility to restore or maintain natural gas service to customers
67	67	3.4after the utility experiences an extraordinary event; and
68	68	3.5 (ii) prudent and reasonable;
69	69	3.6 (2) includes costs to repurchase equity or retire any indebtedness relating to extraordinary
70	70	3.7event activities;
71	71	3.8 (3) are net of applicable insurance proceeds, tax benefits, and any other amounts intended
72	72	3.9to reimburse the utility for extraordinary event activities, including government grants or
73	73	3.10aid of any kind;
74	74	3.11 (4) do not include any monetary penalty, fine, or forfeiture assessed against a utility by
75	75	3.12a government agency or court under a federal or state environmental statute, rule, or
76	76	3.13regulation; and
77	77	3.14 (5) must be adjusted to reflect:
78	78	3.15 (i) the difference, as determined by the commission, between extraordinary event costs
79	79	3.16that the utility expects to incur and actual, reasonable, and prudent costs incurred; or
80	80	3.17 (ii) a more fair or reasonable allocation of extraordinary event costs to customers over
81	81	3.18time, as expressed in a commission order, provided that after the issuance of extraordinary
82	82	3.19event bonds relating to the extraordinary event costs, the adjustment must not (A) impair
83	83	3.20the value of the extraordinary event property relating to the extraordinary event bonds, or
84	84	3.21(B) reduce, alter, or impair extraordinary event charges relating to the extraordinary event
85	85	3.22bonds until all principal and interest payable on the extraordinary event bonds, all financing
86	86	3.23costs for the extraordinary event bonds, and all amounts that must be paid to an assignee
87	87	3.24or financing party under an ancillary agreement relating to the extraordinary event bonds
88	88	3.25are paid in full.
89	89	3.26 Subd. 11.Extraordinary event property."Extraordinary event property" means:
90	90	3.27 (1) all rights and interests that a utility or the utility's successor or assignee possess under
91	91	3.28a financing order to impose, bill, collect, receive, and obtain periodic adjustments to
92	92	3.29extraordinary event charges authorized under a financing order issued by the commission;
93	93	3.30and
94	94	3.31 (2) all revenue, collections, claims, rights to payments, payments, money, or proceeds
95	95	3.32arising from the rights and interests specified in clause (1), regardless of whether any are
96	96	3Section 1.
97	97	REVISOR RSI/VJ 25-0048801/10/25 4.1commingled with other revenue, collections, rights to payment, payments, money, or
98	98	4.2proceeds.
99	99	4.3 Subd. 12.Extraordinary event revenue."Extraordinary event revenue" means revenue,
100	100	4.4receipts, collections, payments, money, claims, or other proceeds arising from extraordinary
101	101	4.5event property.
102	102	4.6 Subd. 13.Financing costs."Financing costs" means:
103	103	4.7 (1) principal, interest, and redemption premiums that are payable on extraordinary event
104	104	4.8bonds;
105	105	4.9 (2) payments required under an ancillary agreement and amounts required to fund or
106	106	4.10replenish a reserve account or other accounts established under the terms of any indenture,
107	107	4.11ancillary agreement, or other financing document pertaining to extraordinary event bonds;
108	108	4.12 (3) other demonstrable costs related to issuing, supporting, repaying, refunding, and
109	109	4.13servicing extraordinary event bonds, including but not limited to servicing fees, accounting
110	110	4.14and auditing fees, trustee fees, legal fees, consulting fees, financial adviser fees,
111	111	4.15administrative fees, placement and underwriting fees, capitalized interest, rating agency
112	112	4.16fees, stock exchange listing and compliance fees, security registration fees, filing fees,
113	113	4.17information technology programming costs, and any other demonstrable costs necessary to
114	114	4.18otherwise ensure and guarantee the timely payment of extraordinary event bonds, other
115	115	4.19amounts payable in connection with extraordinary event bonds, or other charges payable
116	116	4.20in connection with extraordinary event bonds;
117	117	4.21 (4) taxes and license fees imposed on the revenue generated from collecting an
118	118	4.22extraordinary event charge;
119	119	4.23 (5) state and local taxes, including franchise, sales and use, and other taxes or similar
120	120	4.24charges, including but not limited to regulatory assessment fees, whether paid, payable, or
121	121	4.25accrued; and
122	122	4.26 (6) costs incurred by the commission to (i) hire and compensate additional temporary
123	123	4.27staff needed to perform the commission's responsibilities under this section, and (ii) engage
124	124	4.28specialized counsel and expert consultants experienced in securitized utility ratepayer-backed
125	125	4.29bond financings similar to extraordinary event bond financings, as provided under section
126	126	4.30216B.494.
127	127	4.31 Subd. 14.Financing order."Financing order" means an order issued by the commission
128	128	4.32under section 216B.492 that authorizes an applicant to:
129	129	4.33 (1) issue extraordinary event bonds in one or more series;
130	130	4Section 1.
131	131	REVISOR RSI/VJ 25-0048801/10/25 5.1 (2) impose, charge, and collect extraordinary event charges; and
132	132	5.2 (3) create extraordinary event property.
133	133	5.3 Subd. 15.Financing party."Financing party" means a holder of extraordinary event
134	134	5.4bonds and a trustee, a collateral agent, a party under an ancillary agreement, or any other
135	135	5.5person acting for the benefit of extraordinary event bondholders.
136	136	5.6 Subd. 16.Natural gas facility."Natural gas facility" means natural gas pipelines,
137	137	5.7including distribution lines, underground storage areas, liquefied natural gas facilities,
138	138	5.8propane storage tanks, and other facilities the commission determines are used and useful
139	139	5.9to provide natural gas service to retail and transportation customers in Minnesota.
140	140	5.10 Subd. 17.Nonbypassable."Nonbypassable" means an extraordinary event charge that
141	141	5.11a retail customer located within a utility service area cannot avoid and must pay.
142	142	5.12 Subd. 18.Pretax costs."Pretax costs" means costs incurred by a utility and approved
143	143	5.13by the commission, including but not limited to:
144	144	5.14 (1) unrecovered capitalized costs of replaced natural gas facilities damaged or destroyed
145	145	5.15by an extraordinary event;
146	146	5.16 (2) costs to decommission and restore the site of a natural gas facility damaged or
147	147	5.17destroyed by an extraordinary event;
148	148	5.18 (3) other applicable capital and operating costs, accrued carrying charges, deferred
149	149	5.19expenses, reductions for applicable insurance, and salvage proceeds; and
150	150	5.20 (4) costs to retire any existing indebtedness, fees, costs, and expenses to modify existing
151	151	5.21debt agreements, or for waivers or consents related to existing debt agreements.
152	152	5.22 Subd. 19.Storm event."Storm event" means a tornado, derecho, ice or snow storm,
153	153	5.23wildfire, flood, earthquake, or other significant weather or natural disaster that causes
154	154	5.24substantial damage to a utility's infrastructure.
155	155	5.25 Subd. 20.Successor."Successor" means a legal entity that succeeds by operation of law
156	156	5.26to the rights and obligations of another legal entity as a result of bankruptcy, reorganization,
157	157	5.27restructuring, other insolvency proceeding, merger, acquisition, consolidation, or sale or
158	158	5.28transfer of assets.
159	159	5.29 Subd. 21.Utility."Utility" means a public utility, as defined in section 216B.02,
160	160	5.30subdivision 4, that provides natural gas service to Minnesota customers. Utility includes
161	161	5.31the utility's successors or assignees.
162	162	5.32 EFFECTIVE DATE.This section is effective the day following final enactment.
163	163	5Section 1.
164	164	REVISOR RSI/VJ 25-0048801/10/25 6.1 Sec. 2. [216B.492] FINANCING ORDER.
165	165	6.2 Subdivision 1.Application.(a) A utility may file an application with the commission
166	166	6.3requesting a financing order to enable the utility to recover extraordinary event costs by
167	167	6.4issuing extraordinary event bonds under this section.
168	168	6.5 (b) The application must include the following information, as applicable:
169	169	6.6 (1) a description of each natural gas facility to be repaired or replaced;
170	170	6.7 (2) the undepreciated value remaining in each natural gas facility under clause (1) that
171	171	6.8the utility proposes to repair or replace using financing obtained by issuing extraordinary
172	172	6.9event bonds under sections 216B.491 to 216B.499, and the method used to calculate the
173	173	6.10undepreciated value remaining;
174	174	6.11 (3) the estimated costs imposed on customers resulting from an extraordinary event that
175	175	6.12involves no physical damage to natural gas facilities;
176	176	6.13 (4) the estimated savings or estimated mitigation of rate impacts to utility customers if
177	177	6.14the financing order is issued as requested in the application, calculated by comparing the
178	178	6.15costs to customers that are expected to result from implementing the financing order and
179	179	6.16the estimated costs associated with implementing traditional utility financing mechanisms
180	180	6.17with respect to the same undepreciated balance, expressed in net present value terms;
181	181	6.18 (5) a description of (i) the nonbypassable extraordinary event charge utility customers
182	182	6.19must pay in order to fully recover financing costs, and (ii) the method and assumptions used
183	183	6.20to calculate the nonbypassable extraordinary event charge;
184	184	6.21 (6) a proposed methodology to allocate the revenue requirement for the extraordinary
185	185	6.22event charge among the utility's customer classes;
186	186	6.23 (7) a description of a proposed adjustment mechanism that is implemented when necessary
187	187	6.24to correct any overcollection or undercollection of extraordinary event charges, in order to
188	188	6.25complete payment of scheduled principal and interest on extraordinary event bonds and
189	189	6.26other financing costs in a timely fashion;
190	190	6.27 (8) a memorandum with supporting exhibits, from a securities firm that is experienced
191	191	6.28in the marketing of securitized utility ratepayer-backed bonds and that is approved by the
192	192	6.29commissioner of management and budget, indicating the proposed issuance satisfies (i) the
193	193	6.30current published AA, Aa2, or higher rating; or (ii) equivalent rating criteria of at least one
194	194	6.31nationally recognized securities rating organization for issuances similar to the proposed
195	195	6.32extraordinary event bonds;
196	196	6Sec. 2.
197	197	REVISOR RSI/VJ 25-0048801/10/25 7.1 (9) an estimate of: (i) the timing of the extraordinary event bonds issuance; and (ii) the
198	198	7.2term of the extraordinary event bonds or series of bonds, provided that the scheduled final
199	199	7.3maturity for each bond issuance does not exceed 30 years;
200	200	7.4 (10) identification of plans to sell, assign, transfer, or convey, other than as a security,
201	201	7.5interest in extraordinary event property, including identification of an assignee and
202	202	7.6demonstration that the assignee is a financing entity that is wholly owned, directly or
203	203	7.7indirectly, by the utility;
204	204	7.8 (11) identification of ancillary agreements that may be necessary or appropriate;
205	205	7.9 (12) one or more alternative financing scenarios in addition to the preferred scenario
206	206	7.10contained in the application;
207	207	7.11 (13) the extent of damage to the utility's natural gas facility caused by an extraordinary
208	208	7.12event and the estimated costs to repair or replace the damaged natural gas facility;
209	209	7.13 (14) a schedule of the proposed repairs to and replacement of the damaged natural gas
210	210	7.14facility;
211	211	7.15 (15) a description of the steps taken to provide customers interim natural gas service
212	212	7.16while the damaged natural gas facility is being repaired or replaced; and
213	213	7.17 (16) a description of the impacts on the utility's current workforce resulting from
214	214	7.18implementing a repair or replacement plan following an extraordinary event.
215	215	7.19 Subd. 2.Findings.After providing notice and holding a public hearing on an application
216	216	7.20filed under subdivision 1, the commission may issue a financing order if the commission
217	217	7.21finds that:
218	218	7.22 (1) the extraordinary event costs described in the application are reasonable;
219	219	7.23 (2) the proposed issuance of extraordinary event bonds and the imposition and collection
220	220	7.24of extraordinary event charges:
221	221	7.25 (i) are just and reasonable;
222	222	7.26 (ii) are consistent with the public interest;
223	223	7.27 (iii) constitute a prudent and reasonable mechanism to finance the extraordinary event
224	224	7.28costs; and
225	225	7.29 (iv) provide tangible and quantifiable benefits to customers, either by providing lower
226	226	7.30overall costs or mitigating rate impacts relative to traditional methods of financing, that
227	227	7.31exceed the benefits achieved absent the issuance of extraordinary event bonds; and
228	228	7Sec. 2.
229	229	REVISOR RSI/VJ 25-0048801/10/25 8.1 (3) the proposed structuring, marketing, and pricing of the extraordinary event bonds:
230	230	8.2 (i) lower overall costs to customers or mitigate rate impacts to customers relative to
231	231	8.3traditional methods of financing; and
232	232	8.4 (ii) achieve customer savings or mitigate rate impacts to customers, as determined by
233	233	8.5the commission in a financing order, consistent with market conditions at the time of sale
234	234	8.6and the terms of the financing order.
235	235	8.7 Subd. 3.Contents.(a) A financing order issued under this section must:
236	236	8.8 (1) determine the maximum amount of extraordinary event costs that may be financed
237	237	8.9from proceeds of extraordinary event bonds issued pursuant to the financing order;
238	238	8.10 (2) describe the proposed customer billing mechanism for extraordinary event charges
239	239	8.11and include a finding that the mechanism is just and reasonable;
240	240	8.12 (3) describe the financing costs that may be recovered through extraordinary event
241	241	8.13charges and the period over which the costs may be recovered, which must end no earlier
242	242	8.14than the date of final legal maturity of the extraordinary event bonds;
243	243	8.15 (4) describe the extraordinary event property that is created and that may be used to pay,
244	244	8.16and secure the payment of, principal and interest on the extraordinary event bonds and other
245	245	8.17financing costs authorized in the financing order;
246	246	8.18 (5) authorize the utility to finance extraordinary event costs by issuing one or more series
247	247	8.19of extraordinary event bonds. A utility is not required to secure a separate financing order
248	248	8.20for each extraordinary event bonds issuance or for each scheduled phase to replace natural
249	249	8.21gas facilities approved in the financing order;
250	250	8.22 (6) include a formula-based mechanism that must be used to make expeditious periodic
251	251	8.23adjustments to the extraordinary event charges authorized by the financing order that are
252	252	8.24necessary to (i) correct for any overcollection or undercollection, or (ii) otherwise provide
253	253	8.25for the timely payment of extraordinary event bonds, other financing costs, and other required
254	254	8.26amounts and charges payable in connection with extraordinary event bonds;
255	255	8.27 (7) specify the degree of flexibility afforded to the utility to establish the terms and
256	256	8.28conditions of the extraordinary event bonds, including but not limited to repayment schedules,
257	257	8.29expected interest rates, and other financing costs;
258	258	8.30 (8) specify that the extraordinary event bonds must be issued, subject to market conditions
259	259	8.31and the financing order's terms, as soon as feasible following the financing order's issuance;
260	260	8Sec. 2.
261	261	REVISOR RSI/VJ 25-0048801/10/25 9.1 (9) require the utility, at the same time extraordinary event charges are initially collected
262	262	9.2and independent of the schedule to close and decommission any natural gas facility replaced
263	263	9.3as the result of an extraordinary event, if any, to remove the natural gas facility from the
264	264	9.4utility's rate base and commensurately reduce the utility's base rates;
265	265	9.5 (10) specify a future ratemaking process to reconcile any difference between the projected
266	266	9.6pretax costs included in the amount financed by extraordinary event bonds and the final
267	267	9.7actual pretax costs incurred by the utility to retire or replace the natural gas facility, if any;
268	268	9.8 (11) specify information regarding extraordinary event bond issuance and repayments,
269	269	9.9financing costs, energy transaction charges, extraordinary event property, and related matters
270	270	9.10that the natural gas utility is required to provide to the commission on a schedule determined
271	271	9.11by the commission;
272	272	9.12 (12) allow or require the creation of a utility's extraordinary event property to be
273	273	9.13conditioned on, and occur simultaneously with, the sale or other transfer of the extraordinary
274	274	9.14event property to an assignee and the pledge of the extraordinary event property to secure
275	275	9.15the extraordinary event bonds;
276	276	9.16 (13) ensure that the structuring, marketing, and pricing of extraordinary event bonds
277	277	9.17result in reasonable securitization bond charges and customer savings or rate impact
278	278	9.18mitigation, consistent with market conditions and the financing order's terms; and
279	279	9.19 (14) specify that a utility that finances the replacement of one or more natural gas facilities
280	280	9.20after the natural gas facilities that are subject to the finance order are removed from the
281	281	9.21utility's rate base is prohibited from:
282	282	9.22 (i) operating the natural gas facilities; or
283	283	9.23 (ii) selling the natural gas facilities to another entity to operate as natural gas facilities.
284	284	9.24 (b) A financing order issued under this section may:
285	285	9.25 (1) include conditions different from those requested in the application that the
286	286	9.26commission determines are necessary to:
287	287	9.27 (i) promote the public interest; and
288	288	9.28 (ii) maximize the financial benefits or minimize the financial risks of the transaction to
289	289	9.29customers and to directly impacted Minnesota workers and communities; and
290	290	9.30 (2) select one or more underwriters for the extraordinary event bonds.
291	291	9Sec. 2.
292	292	REVISOR RSI/VJ 25-0048801/10/25 10.1 Subd. 4.Duration; irrevocability; subsequent order.(a) A financing order remains
293	293	10.2effective until the extraordinary event bonds issued under the financing order and all
294	294	10.3financing costs related to the extraordinary event bonds have been paid in full.
295	295	10.4 (b) A financing order remains effective and unabated notwithstanding the bankruptcy,
296	296	10.5reorganization, or insolvency of the utility to which the financing order applies or any
297	297	10.6affiliate, successor, or assignee of the utility to which the financing order applies.
298	298	10.7 (c) Subject to judicial review under section 216B.52, a financing order is irrevocable
299	299	10.8and is not reviewable by a future commission. The commission must not: (1) reduce, impair,
300	300	10.9postpone, or terminate extraordinary event charges approved in a financing order; or (2)
301	301	10.10impair extraordinary event property or the collection or recovery of extraordinary event
302	302	10.11charges and extraordinary event revenue.
303	303	10.12 (d) Notwithstanding paragraph (c), the commission may, on the commission's own
304	304	10.13motion or at the request of a utility or any other person, commence a proceeding and issue
305	305	10.14a subsequent financing order that provides for refinancing, retiring, or refunding extraordinary
306	306	10.15event bonds issued under the original financing order if:
307	307	10.16 (1) the commission makes all of the findings specified in subdivision 2 with respect to
308	308	10.17the subsequent financing order; and
309	309	10.18 (2) the modification contained in the subsequent financing order does not in any way
310	310	10.19impair the covenants and terms of the extraordinary event bonds being refinanced, retired,
311	311	10.20or refunded.
312	312	10.21 Subd. 5.Effect on commission jurisdiction.(a) Except as provided in paragraph (b),
313	313	10.22the commission, in exercising the powers and carrying out the duties under this section, is
314	314	10.23prohibited from:
315	315	10.24 (1) considering extraordinary event bonds issued under this section to be debt of the
316	316	10.25utility other than for income tax purposes, unless considering the extraordinary event bonds
317	317	10.26to be debt is necessary to achieve consistency with prevailing utility debt rating
318	318	10.27methodologies;
319	319	10.28 (2) considering the extraordinary event charges paid under the financing order to be
320	320	10.29revenue of the utility;
321	321	10.30 (3) considering the extraordinary event costs or financing costs specified in the financing
322	322	10.31order to be the regulated costs or assets of the utility; or
323	323	10.32 (4) determining that any prudent action taken by a utility that is consistent with the
324	324	10.33financing order is unjust or unreasonable.
325	325	10Sec. 2.
326	326	REVISOR RSI/VJ 25-0048801/10/25 11.1 (b) Nothing in this subdivision:
327	327	11.2 (1) affects the authority of the commission to apply or modify a billing mechanism
328	328	11.3designed to recover extraordinary event charges;
329	329	11.4 (2) prevents or precludes the commission from (i) investigating a utility's compliance
330	330	11.5with the financing order's terms and conditions, and (ii) requiring compliance with the
331	331	11.6financing order; or
332	332	11.7 (3) prevents or precludes the commission from imposing regulatory sanctions against a
333	333	11.8utility for failure to comply with the financing order's terms and conditions or the
334	334	11.9requirements of this section.
335	335	11.10 (c) The commission is prohibited from refusing to allow a utility to recover any costs
336	336	11.11associated with the replacement of natural gas facilities solely because the utility has elected
337	337	11.12to finance the natural gas facility replacement through a financing mechanism other than
338	338	11.13extraordinary event bonds.
339	339	11.14 EFFECTIVE DATE.This section is effective the day following final enactment.
340	340	11.15Sec. 3. [216B.493] POSTORDER COMMISSION DUTIES.
341	341	11.16 Subdivision 1.Financing cost review.Within 120 days after the date extraordinary
342	342	11.17event bonds are issued, a utility subject to a financing order must file with the commission
343	343	11.18the actual initial and ongoing financing costs, the final structure and pricing of the
344	344	11.19extraordinary event bonds, and the actual extraordinary event charge. The commission must
345	345	11.20review the prudence of the natural gas utility's actions to determine whether the actual
346	346	11.21financing costs were the lowest that could reasonably be achieved given the financing order's
347	347	11.22terms and market conditions prevailing at the time of the extraordinary event bond's issuance.
348	348	11.23 Subd. 2.Enforcement.If the commission determines that a utility's actions under this
349	349	11.24section are not prudent or are inconsistent with the financing order, the commission may
350	350	11.25apply remedies deemed appropriate for utility actions, provided that any remedy applied
351	351	11.26must not directly or indirectly (1) impair the value of the extraordinary event property, or
352	352	11.27(2) reduce, alter, or impair extraordinary event charges, until all principal and interest payable
353	353	11.28on the extraordinary event bonds, all financing costs, and all amounts to be paid to an
354	354	11.29assignee or financing party under an ancillary agreement are paid in full.
355	355	11.30 EFFECTIVE DATE.This section is effective the day following final enactment.
356	356	11Sec. 3.
357	357	REVISOR RSI/VJ 25-0048801/10/25 12.1 Sec. 4. [216B.494] USE OF OUTSIDE EXPERTS.
358	358	12.2 (a) To carry out the duties under this section, the commission may:
359	359	12.3 (1) contract with outside consultants and counsel experienced in securitized utility
360	360	12.4customer-backed bond financing similar to extraordinary event bonds; and
361	361	12.5 (2) hire and compensate additional temporary staff as needed.
362	362	12.6Expenses incurred by the commission under this paragraph must be treated as financing
363	363	12.7costs paid by the extraordinary event revenue. The costs incurred under clause (1) are not
364	364	12.8an obligation of the state and are assigned solely to the transaction.
365	365	12.9 (b) A utility presented with a written request from the commission to reimburse the
366	366	12.10commission's expenses incurred under paragraph (a), accompanied by a detailed account
367	367	12.11of the subject expenses, must remit full payment of the expenses to the commission within
368	368	12.1230 days of receiving the request.
369	369	12.13 (c) If a utility's application for a financing order is denied or withdrawn for any reason
370	370	12.14and extraordinary event bonds are not issued, the commission's costs to retain expert
371	371	12.15consultants under this section must be paid by the applicant utility and are deemed a prudent
372	372	12.16deferred expense eligible for recovery in the utility's future rates.
373	373	12.17 EFFECTIVE DATE.This section is effective the day following final enactment.
374	374	12.18Sec. 5. [216B.495] EXTRAORDINAR Y EVENT CHARGE; BILLING TREATMENT.
375	375	12.19 (a) A utility that obtains a financing order and issues extraordinary event bonds must:
376	376	12.20 (1) include on each customer's monthly natural gas bill:
377	377	12.21 (i) a statement that a portion of the charges represents extraordinary event charges
378	378	12.22approved in a financing order;
379	379	12.23 (ii) the amount and rate of the extraordinary event charge as a separate line item titled
380	380	12.24"extraordinary event charge"; and
381	381	12.25 (iii) if extraordinary event property has been transferred to an assignee, a statement that
382	382	12.26the assignee is the owner of the rights to extraordinary event charges and that the utility or
383	383	12.27other entity, if applicable, is acting as a collection agent or servicer for the assignee; and
384	384	12.28 (2) file annually with the commission:
385	385	12.29 (i) a calculation that identifies the impact financing the retirement or replacement of
386	386	12.30natural gas facilities has on customer rates, itemized by customer class; and
387	387	12Sec. 5.
388	388	REVISOR RSI/VJ 25-0048801/10/25 13.1 (ii) evidence demonstrating that extraordinary event revenues are applied solely to pay
389	389	13.2(A) principal and interest on extraordinary event bonds, and (B) other financing costs.
390	390	13.3 (b) Extraordinary event charges are nonbypassable and must be paid by all existing and
391	391	13.4future customers receiving service from the utility or the utility's successors or assignees
392	392	13.5under commission-approved rate schedules or special contracts.
393	393	13.6 (c) A utility's failure to comply with this section does not invalidate, impair, or affect
394	394	13.7any financing order, extraordinary event property, extraordinary event charge, or
395	395	13.8extraordinary event bonds, but does subject the utility to penalties under applicable
396	396	13.9commission rules provided that any penalty applied must not directly or indirectly (1) impair
397	397	13.10the value of the extraordinary event property, or (2) reduce, alter, or impair extraordinary
398	398	13.11event charges, until all principal and interest payable on the extraordinary event bonds, all
399	399	13.12financing costs, and all amounts to be paid to an assignee or financing party under an
400	400	13.13ancillary agreement are paid in full.
401	401	13.14 EFFECTIVE DATE.This section is effective the day following final enactment.
402	402	13.15Sec. 6. [216B.496] EXTRAORDINAR Y EVENT PROPERTY.
403	403	13.16 Subdivision 1.General.(a) Extraordinary event property is an existing present property
404	404	13.17right or interest in a property right, even though the imposition and collection of extraordinary
405	405	13.18event charges depend on the utility collecting extraordinary event charges and on future
406	406	13.19natural gas consumption. The property right or interest exists regardless of whether the
407	407	13.20revenues or proceeds arising from the extraordinary event property have been billed, have
408	408	13.21accrued, or have been collected.
409	409	13.22 (b) Extraordinary event property exists until all extraordinary event bonds issued under
410	410	13.23a financing order are paid in full and all financing costs and other extraordinary event bonds
411	411	13.24costs have been recovered in full.
412	412	13.25 (c) All or any portion of extraordinary event property described in a financing order
413	413	13.26issued to a utility may be transferred, sold, conveyed, or assigned to a successor or assignee
414	414	13.27that is wholly owned, directly or indirectly, by the utility and created for the limited purpose
415	415	13.28of acquiring, owning, or administering extraordinary event property or issuing extraordinary
416	416	13.29event bonds authorized by the financing order. All or any portion of extraordinary event
417	417	13.30property may be pledged to secure extraordinary event bonds issued under a financing order,
418	418	13.31amounts payable to financing parties and to counterparties under any ancillary agreements,
419	419	13.32and other financing costs. Each transfer, sale, conveyance, assignment, or pledge by a utility
420	420	13Sec. 6.
421	421	REVISOR RSI/VJ 25-0048801/10/25 14.1or an affiliate of extraordinary event property is a transaction in the ordinary course of
422	422	14.2business.
423	423	14.3 (d) If a utility defaults on any required payment of charges arising from extraordinary
424	424	14.4event property described in a financing order, a court, upon petition by an interested party
425	425	14.5and without limiting any other remedies available to the petitioner, must order the
426	426	14.6sequestration and payment of the revenues arising from the extraordinary event property to
427	427	14.7the financing parties.
428	428	14.8 (e) The interest of a transferee, purchaser, acquirer, assignee, or pledgee in extraordinary
429	429	14.9event property specified in a financing order issued to a utility, and in the revenue and
430	430	14.10collections arising from the property, is not subject to setoff, counterclaim, surcharge, or
431	431	14.11defense by the utility or any other person, or in connection with the reorganization,
432	432	14.12bankruptcy, or other insolvency of the utility or any other entity.
433	433	14.13 (f) A successor to a utility, whether resulting from a reorganization, bankruptcy, or other
434	434	14.14insolvency proceeding, merger or acquisition, sale, other business combination, transfer by
435	435	14.15operation of law, utility restructuring, or otherwise: (1) must perform and satisfy all
436	436	14.16obligations of, and has the same duties and rights under, a financing order as the utility to
437	437	14.17which the financing order applies; and (2) must perform the duties and exercise the rights
438	438	14.18in the same manner and to the same extent as the utility, including (i) collecting extraordinary
439	439	14.19event bonds revenues, collections, payments, or proceeds, and (ii) paying a person entitled
440	440	14.20to receive extraordinary event bonds revenues, collections, payments, or proceeds.
441	441	14.21 Subd. 2.Security interests in extraordinary event property.(a) The creation,
442	442	14.22perfection, and enforcement of any security interest in extraordinary event property to secure
443	443	14.23the repayment of the principal and interest on extraordinary event bonds, amounts payable
444	444	14.24under any ancillary agreement, and other financing costs are governed by this section only.
445	445	14.25 (b) A security interest in extraordinary event property is created, valid, and binding
446	446	14.26when:
447	447	14.27 (1) the financing order that describes the extraordinary event property is issued;
448	448	14.28 (2) a security agreement is executed and delivered; and
449	449	14.29 (3) value is received for the extraordinary event bonds.
450	450	14.30 (c) Once a security interest in extraordinary event property is created, the security interest
451	451	14.31attaches without any physical delivery of collateral or any other act. The lien of the security
452	452	14.32interest is valid, binding, and perfected against all parties having claims of any kind in tort,
453	453	14.33in contract, or otherwise against the person granting the security interest, regardless of
454	454	14Sec. 6.
455	455	REVISOR RSI/VJ 25-0048801/10/25 15.1whether the parties have notice of the lien, upon the filing of a financing statement with the
456	456	15.2secretary of state.
457	457	15.3 (d) The description or indication of extraordinary event property in a transfer or security
458	458	15.4agreement and a financing statement is sufficient only if the description or indication refers
459	459	15.5to this section and the financing order creating the extraordinary event property.
460	460	15.6 (e) A security interest in extraordinary event property is a continuously perfected security
461	461	15.7interest and has priority over any other lien, created by operation of law or otherwise, that
462	462	15.8may subsequently attach to the extraordinary event property unless the person that holds
463	463	15.9the security interest has agreed otherwise in writing.
464	464	15.10 (f) The priority of a security interest in extraordinary event property is not affected by
465	465	15.11the commingling of extraordinary event property or extraordinary event revenue with other
466	466	15.12money. An assignee, bondholder, or financing party has a perfected security interest in the
467	467	15.13amount of all extraordinary event property or extraordinary event revenue that is pledged
468	468	15.14to pay extraordinary event bonds even if the extraordinary event property or extraordinary
469	469	15.15event revenue is deposited in a cash or deposit account owned by the utility in which the
470	470	15.16extraordinary event revenue is commingled with other money. Any other security interest
471	471	15.17that applies to the other money does not apply to the extraordinary event revenue.
472	472	15.18 (g) A subsequent commission order amending a financing order under section 216B.492,
473	473	15.19subdivision 4, or the application of an adjustment mechanism authorized by a financing
474	474	15.20order under section 216B.492, subdivision 3, does not affect the validity, perfection, or
475	475	15.21priority of a security interest in or transfer of extraordinary event property.
476	476	15.22 Subd. 3.Sales of extraordinary event property.(a) A sale, assignment, or transfer of
477	477	15.23extraordinary event property is an absolute transfer and true sale of, and not a pledge of or
478	478	15.24secured transaction relating to, the seller's right, title, and interest in, to, and under the
479	479	15.25extraordinary event property if the documents governing the transaction expressly state that
480	480	15.26the transaction is a sale or other absolute transfer. A transfer of an interest in extraordinary
481	481	15.27event property may be created when:
482	482	15.28 (1) the financing order creating and describing the extraordinary event property is
483	483	15.29effective;
484	484	15.30 (2) the documents evidencing the transfer of the extraordinary event property are executed
485	485	15.31and delivered to the assignee; and
486	486	15.32 (3) value is received.
487	487	15Sec. 6.
488	488	REVISOR RSI/VJ 25-0048801/10/25 16.1 (b) The characterization of a sale, assignment, or transfer as an absolute transfer and
489	489	16.2true sale, and the corresponding characterization of the property interest of the assignee, is
490	490	16.3not affected or impaired by:
491	491	16.4 (1) commingling of extraordinary event revenue with other money;
492	492	16.5 (2) the seller retaining:
493	493	16.6 (i) a partial or residual interest, including an equity interest, in the extraordinary event
494	494	16.7property, whether (A) direct or indirect, or (B) subordinate or otherwise; or
495	495	16.8 (ii) the right to recover costs associated with taxes, franchise fees, or license fees imposed
496	496	16.9on the collection of extraordinary event revenue;
497	497	16.10 (3) any recourse that the extraordinary event property purchaser may have against the
498	498	16.11seller;
499	499	16.12 (4) any indemnification rights, obligations, or repurchase rights made or provided by
500	500	16.13the extraordinary event property seller;
501	501	16.14 (5) the extraordinary event property seller's obligation to collect extraordinary event
502	502	16.15revenues on behalf of an assignee;
503	503	16.16 (6) the treatment of the sale, assignment, or transfer for tax, financial reporting, or other
504	504	16.17purposes;
505	505	16.18 (7) any subsequent financing order amending a financing order under section 216B.492,
506	506	16.19subdivision 4, paragraph (d); or
507	507	16.20 (8) any application of an adjustment mechanism under section 216B.492, subdivision
508	508	16.213, paragraph (a), clause (6).
509	509	16.22 EFFECTIVE DATE.This section is effective the day following final enactment.
510	510	16.23Sec. 7. [216B.497] EXTRAORDINAR Y EVENT BONDS.
511	511	16.24 (a) A bank, trust company, savings and loan association, insurance company, executor,
512	512	16.25administrator, guardian, trustee, or other fiduciary may legally invest any money within the
513	513	16.26individual's or entity's control in extraordinary event bonds.
514	514	16.27 (b) Extraordinary event bonds issued under a financing order are not debt of or a pledge
515	515	16.28of the faith and credit or taxing power of the state, any agency of the state, or any political
516	516	16.29subdivision. An extraordinary event bonds holder does not possess the ability to compel
517	517	16.30taxes to be levied by the state or a political subdivision in order to pay the principal or
518	518	16.31interest on extraordinary event bonds. The issuance of extraordinary event bonds does not
519	519	16Sec. 7.
520	520	REVISOR RSI/VJ 25-0048801/10/25 17.1directly, indirectly, or contingently obligate the state or a political subdivision to levy any
521	521	17.2tax or make any appropriation to pay principal or interest on the extraordinary event bonds.
522	522	17.3 (c) The state pledges to and agrees with an extraordinary event bonds holder, assignee,
523	523	17.4and financing party that the state and state agencies, including the commission, are prohibited
524	524	17.5from:
525	525	17.6 (1) taking or permitting an action that impairs the value of extraordinary event property;
526	526	17.7or
527	527	17.8 (2) reducing, altering, or impairing extraordinary event charges that are imposed,
528	528	17.9collected, and remitted for the benefit of an extraordinary event bonds holder, assignee, and
529	529	17.10financing party until any principal, interest, and redemption premium payable on
530	530	17.11extraordinary event bonds, all financing costs, and all amounts to be paid to an assignee or
531	531	17.12financing party under an ancillary agreement are paid in full.
532	532	17.13 (d) The commission may include a pledge in the financing order similar to the pledge
533	533	17.14included in paragraph (c).
534	534	17.15 (e) A person who issues extraordinary event bonds may include the pledge specified in
535	535	17.16paragraphs (c) and (d) in the extraordinary event bonds, ancillary agreements, and
536	536	17.17documentation related to the issuance and marketing of the extraordinary event bonds.
537	537	17.18 EFFECTIVE DATE.This section is effective the day following final enactment.
538	538	17.19Sec. 8. [216B.498] ASSIGNEE OF FINANCING PARTY NOT SUBJECT TO
539	539	17.20COMMISSION REGULATION.
540	540	17.21 An assignee or financing party that is not already regulated by the commission does not
541	541	17.22become subject to commission regulation solely as a result of engaging in any transaction
542	542	17.23authorized by or described in sections 216B.491 to 216B.499.
543	543	17.24 EFFECTIVE DATE.This section is effective the day following final enactment.
544	544	17.25Sec. 9. [216B.499] EFFECT ON OTHER LAWS.
545	545	17.26 (a) If a provision of sections 216B.491 to 216B.499 conflicts with other law regarding
546	546	17.27the attachment, assignment, perfection, effect of perfection, or priority of a security interest
547	547	17.28in or transfer of extraordinary event property, sections 216B.491 to 216B.499 govern.
548	548	17.29 (b) Nothing in this section precludes a utility for which the commission has initially
549	549	17.30issued a financing order from applying to the commission for:
550	550	17Sec. 9.
551	551	REVISOR RSI/VJ 25-0048801/10/25 18.1 (1) a subsequent financing order amending the financing order under section 216B.492,
552	552	18.2subdivision 4, paragraph (d); or
553	553	18.3 (2) approval to issue extraordinary event bonds to refund all or a portion of an outstanding
554	554	18.4series of extraordinary event bonds.
555	555	18.5 EFFECTIVE DATE.This section is effective the day following final enactment.
556	556	18Sec. 9.
557	557	REVISOR RSI/VJ 25-0048801/10/25