1.1 A bill for an act
1.2 relating to energy; authorizing natural gas utilities to sell extraordinary event bonds
1.3 under certain circumstances; establishing an account; appropriating money;
1.4 proposing coding for new law in Minnesota Statutes, chapter 216B.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. [216B.491] DEFINITIONS.
1.7 Subdivision 1.Scope.For the purposes of sections 216B.491 to 216B.499, the terms
1.8defined in this section have the meanings given.
1.9 Subd. 2.Ancillary agreement."Ancillary agreement" means a bond, insurance policy,
1.10letter of credit, reserve account, surety bond, interest rate lock or swap arrangement, liquidity
1.11or credit support arrangement, or other financial arrangement entered into in connection
1.12with extraordinary event bonds that is designed to promote the credit quality and
1.13marketability of extraordinary event bonds or to mitigate the risk of an increase in interest
1.14rates.
1.15 Subd. 3.Assignee."Assignee" means a person to which an interest in extraordinary
1.16event property is sold, assigned, transferred, or conveyed, other than as security, and any
1.17successor to or subsequent assignee of the person.
1.18 Subd. 4.Bondholder."Bondholder" means a holder or owner of extraordinary event
1.19bonds.
1.20 Subd. 5.Customer."Customer" means a person who purchases natural gas or natural
1.21gas transportation services from a utility in Minnesota. Customer does not include a person
1.22who:
1Section 1.
REVISOR RSI/VJ 25-0048801/10/25
State of Minnesota
This Document can be made available
in alternative formats upon request
HOUSE OF REPRESENTATIVES
H. F. No. 1226
NINETY-FOURTH SESSION
Authored by Igo and Hollins02/20/2025
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
2.2fewer than 350,000 natural gas customers in Minnesota; and
2.3 (2) does not purchase natural gas from a utility in Minnesota.
2.4 Subd. 6.Extraordinary event.(a) "Extraordinary event" means an event arising from
2.5unforeseen circumstances of sufficient magnitude, as determined by the commission:
2.6 (1) to impose significant costs on customers; and
2.7 (2) for which the issuance of extraordinary event bonds in response to the event meets
2.8the conditions of section 216B.492, subdivision 2.
2.9 (b) Extraordinary event includes but is not limited to a storm event or other natural
2.10disaster, an act of God, war, terrorism, sabotage, vandalism, a cybersecurity attack, or a
2.11temporary significant increase in the wholesale price of natural gas.
2.12 Subd. 7.Extraordinary event activity."Extraordinary event activity" means an activity
2.13undertaken by or on behalf of a utility to restore or maintain the utility's ability to provide
2.14natural gas service following one or more extraordinary events, including but not limited
2.15to activities related to mobilizing, staging, constructing, reconstructing, replacing, or repairing
2.16natural gas transmission, distribution, storage, or general facilities.
2.17 Subd. 8.Extraordinary event bonds."Extraordinary event bonds" means debt securities,
2.18including but not limited to senior secured bonds, debentures, notes, certificates of
2.19participation, certificates of beneficial interest, certificates of ownership, or other evidences
2.20of indebtedness or ownership, that: (1) have a scheduled maturity of no longer than 30 years
2.21and a final legal maturity date that is not later than 32 years from the issue date; (2) are rated
2.22AA, Aa2, or higher by a major independent credit rating agency at the time of issuance;
2.23and (3) are issued by a utility or an assignee under a financing order.
2.24 Subd. 9.Extraordinary event charge."Extraordinary event charge" means a
2.25nonbypassable charge that:
2.26 (1) a utility that is the subject of a financing order or the utility's successors or assignees
2.27imposes on all of the utility's customers;
2.28 (2) is separate from the utility's base rates; and
2.29 (3) provides a source of revenue used only to repay, finance, or refinance extraordinary
2.30event costs.
2.31 Subd. 10.Extraordinary event costs."Extraordinary event costs":
2Section 1.
REVISOR RSI/VJ 25-0048801/10/25 3.1 (1) means all incremental costs of extraordinary event activities that are approved by
3.2the commission in a financing order issued under section 216B.492 as being:
3.3 (i) necessary to enable the utility to restore or maintain natural gas service to customers
3.4after the utility experiences an extraordinary event; and
3.5 (ii) prudent and reasonable;
3.6 (2) includes costs to repurchase equity or retire any indebtedness relating to extraordinary
3.7event activities;
3.8 (3) are net of applicable insurance proceeds, tax benefits, and any other amounts intended
3.9to reimburse the utility for extraordinary event activities, including government grants or
3.10aid of any kind;
3.11 (4) do not include any monetary penalty, fine, or forfeiture assessed against a utility by
3.12a government agency or court under a federal or state environmental statute, rule, or
3.13regulation; and
3.14 (5) must be adjusted to reflect:
3.15 (i) the difference, as determined by the commission, between extraordinary event costs
3.16that the utility expects to incur and actual, reasonable, and prudent costs incurred; or
3.17 (ii) a more fair or reasonable allocation of extraordinary event costs to customers over
3.18time, as expressed in a commission order, provided that after the issuance of extraordinary
3.19event bonds relating to the extraordinary event costs, the adjustment must not (A) impair
3.20the value of the extraordinary event property relating to the extraordinary event bonds, or
3.21(B) reduce, alter, or impair extraordinary event charges relating to the extraordinary event
3.22bonds until all principal and interest payable on the extraordinary event bonds, all financing
3.23costs for the extraordinary event bonds, and all amounts that must be paid to an assignee
3.24or financing party under an ancillary agreement relating to the extraordinary event bonds
3.25are paid in full.
3.26 Subd. 11.Extraordinary event property."Extraordinary event property" means:
3.27 (1) all rights and interests that a utility or the utility's successor or assignee possess under
3.28a financing order to impose, bill, collect, receive, and obtain periodic adjustments to
3.29extraordinary event charges authorized under a financing order issued by the commission;
3.30and
3.31 (2) all revenue, collections, claims, rights to payments, payments, money, or proceeds
3.32arising from the rights and interests specified in clause (1), regardless of whether any are
3Section 1.
REVISOR RSI/VJ 25-0048801/10/25 4.1commingled with other revenue, collections, rights to payment, payments, money, or
4.2proceeds.
4.3 Subd. 12.Extraordinary event revenue."Extraordinary event revenue" means revenue,
4.4receipts, collections, payments, money, claims, or other proceeds arising from extraordinary
4.5event property.
4.6 Subd. 13.Financing costs."Financing costs" means:
4.7 (1) principal, interest, and redemption premiums that are payable on extraordinary event
4.8bonds;
4.9 (2) payments required under an ancillary agreement and amounts required to fund or
4.10replenish a reserve account or other accounts established under the terms of any indenture,
4.11ancillary agreement, or other financing document pertaining to extraordinary event bonds;
4.12 (3) other demonstrable costs related to issuing, supporting, repaying, refunding, and
4.13servicing extraordinary event bonds, including but not limited to servicing fees, accounting
4.14and auditing fees, trustee fees, legal fees, consulting fees, financial adviser fees,
4.15administrative fees, placement and underwriting fees, capitalized interest, rating agency
4.16fees, stock exchange listing and compliance fees, security registration fees, filing fees,
4.17information technology programming costs, and any other demonstrable costs necessary to
4.18otherwise ensure and guarantee the timely payment of extraordinary event bonds, other
4.19amounts payable in connection with extraordinary event bonds, or other charges payable
4.20in connection with extraordinary event bonds;
4.21 (4) taxes and license fees imposed on the revenue generated from collecting an
4.22extraordinary event charge;
4.23 (5) state and local taxes, including franchise, sales and use, and other taxes or similar
4.24charges, including but not limited to regulatory assessment fees, whether paid, payable, or
4.25accrued; and
4.26 (6) costs incurred by the commission to (i) hire and compensate additional temporary
4.27staff needed to perform the commission's responsibilities under this section, and (ii) engage
4.28specialized counsel and expert consultants experienced in securitized utility ratepayer-backed
4.29bond financings similar to extraordinary event bond financings, as provided under section
4.30216B.494.
4.31 Subd. 14.Financing order."Financing order" means an order issued by the commission
4.32under section 216B.492 that authorizes an applicant to:
4.33 (1) issue extraordinary event bonds in one or more series;
4Section 1.
REVISOR RSI/VJ 25-0048801/10/25 5.1 (2) impose, charge, and collect extraordinary event charges; and
5.2 (3) create extraordinary event property.
5.3 Subd. 15.Financing party."Financing party" means a holder of extraordinary event
5.4bonds and a trustee, a collateral agent, a party under an ancillary agreement, or any other
5.5person acting for the benefit of extraordinary event bondholders.
5.6 Subd. 16.Natural gas facility."Natural gas facility" means natural gas pipelines,
5.7including distribution lines, underground storage areas, liquefied natural gas facilities,
5.8propane storage tanks, and other facilities the commission determines are used and useful
5.9to provide natural gas service to retail and transportation customers in Minnesota.
5.10 Subd. 17.Nonbypassable."Nonbypassable" means an extraordinary event charge that
5.11a retail customer located within a utility service area cannot avoid and must pay.
5.12 Subd. 18.Pretax costs."Pretax costs" means costs incurred by a utility and approved
5.13by the commission, including but not limited to:
5.14 (1) unrecovered capitalized costs of replaced natural gas facilities damaged or destroyed
5.15by an extraordinary event;
5.16 (2) costs to decommission and restore the site of a natural gas facility damaged or
5.17destroyed by an extraordinary event;
5.18 (3) other applicable capital and operating costs, accrued carrying charges, deferred
5.19expenses, reductions for applicable insurance, and salvage proceeds; and
5.20 (4) costs to retire any existing indebtedness, fees, costs, and expenses to modify existing
5.21debt agreements, or for waivers or consents related to existing debt agreements.
5.22 Subd. 19.Storm event."Storm event" means a tornado, derecho, ice or snow storm,
5.23wildfire, flood, earthquake, or other significant weather or natural disaster that causes
5.24substantial damage to a utility's infrastructure.
5.25 Subd. 20.Successor."Successor" means a legal entity that succeeds by operation of law
5.26to the rights and obligations of another legal entity as a result of bankruptcy, reorganization,
5.27restructuring, other insolvency proceeding, merger, acquisition, consolidation, or sale or
5.28transfer of assets.
5.29 Subd. 21.Utility."Utility" means a public utility, as defined in section 216B.02,
5.30subdivision 4, that provides natural gas service to Minnesota customers. Utility includes
5.31the utility's successors or assignees.
5.32 EFFECTIVE DATE.This section is effective the day following final enactment.
5Section 1.
REVISOR RSI/VJ 25-0048801/10/25 6.1 Sec. 2. [216B.492] FINANCING ORDER.
6.2 Subdivision 1.Application.(a) A utility may file an application with the commission
6.3requesting a financing order to enable the utility to recover extraordinary event costs by
6.4issuing extraordinary event bonds under this section.
6.5 (b) The application must include the following information, as applicable:
6.6 (1) a description of each natural gas facility to be repaired or replaced;
6.7 (2) the undepreciated value remaining in each natural gas facility under clause (1) that
6.8the utility proposes to repair or replace using financing obtained by issuing extraordinary
6.9event bonds under sections 216B.491 to 216B.499, and the method used to calculate the
6.10undepreciated value remaining;
6.11 (3) the estimated costs imposed on customers resulting from an extraordinary event that
6.12involves no physical damage to natural gas facilities;
6.13 (4) the estimated savings or estimated mitigation of rate impacts to utility customers if
6.14the financing order is issued as requested in the application, calculated by comparing the
6.15costs to customers that are expected to result from implementing the financing order and
6.16the estimated costs associated with implementing traditional utility financing mechanisms
6.17with respect to the same undepreciated balance, expressed in net present value terms;
6.18 (5) a description of (i) the nonbypassable extraordinary event charge utility customers
6.19must pay in order to fully recover financing costs, and (ii) the method and assumptions used
6.20to calculate the nonbypassable extraordinary event charge;
6.21 (6) a proposed methodology to allocate the revenue requirement for the extraordinary
6.22event charge among the utility's customer classes;
6.23 (7) a description of a proposed adjustment mechanism that is implemented when necessary
6.24to correct any overcollection or undercollection of extraordinary event charges, in order to
6.25complete payment of scheduled principal and interest on extraordinary event bonds and
6.26other financing costs in a timely fashion;
6.27 (8) a memorandum with supporting exhibits, from a securities firm that is experienced
6.28in the marketing of securitized utility ratepayer-backed bonds and that is approved by the
6.29commissioner of management and budget, indicating the proposed issuance satisfies (i) the
6.30current published AA, Aa2, or higher rating; or (ii) equivalent rating criteria of at least one
6.31nationally recognized securities rating organization for issuances similar to the proposed
6.32extraordinary event bonds;
6Sec. 2.
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
7.2term of the extraordinary event bonds or series of bonds, provided that the scheduled final
7.3maturity for each bond issuance does not exceed 30 years;
7.4 (10) identification of plans to sell, assign, transfer, or convey, other than as a security,
7.5interest in extraordinary event property, including identification of an assignee and
7.6demonstration that the assignee is a financing entity that is wholly owned, directly or
7.7indirectly, by the utility;
7.8 (11) identification of ancillary agreements that may be necessary or appropriate;
7.9 (12) one or more alternative financing scenarios in addition to the preferred scenario
7.10contained in the application;
7.11 (13) the extent of damage to the utility's natural gas facility caused by an extraordinary
7.12event and the estimated costs to repair or replace the damaged natural gas facility;
7.13 (14) a schedule of the proposed repairs to and replacement of the damaged natural gas
7.14facility;
7.15 (15) a description of the steps taken to provide customers interim natural gas service
7.16while the damaged natural gas facility is being repaired or replaced; and
7.17 (16) a description of the impacts on the utility's current workforce resulting from
7.18implementing a repair or replacement plan following an extraordinary event.
7.19 Subd. 2.Findings.After providing notice and holding a public hearing on an application
7.20filed under subdivision 1, the commission may issue a financing order if the commission
7.21finds that:
7.22 (1) the extraordinary event costs described in the application are reasonable;
7.23 (2) the proposed issuance of extraordinary event bonds and the imposition and collection
7.24of extraordinary event charges:
7.25 (i) are just and reasonable;
7.26 (ii) are consistent with the public interest;
7.27 (iii) constitute a prudent and reasonable mechanism to finance the extraordinary event
7.28costs; and
7.29 (iv) provide tangible and quantifiable benefits to customers, either by providing lower
7.30overall costs or mitigating rate impacts relative to traditional methods of financing, that
7.31exceed the benefits achieved absent the issuance of extraordinary event bonds; and
7Sec. 2.
REVISOR RSI/VJ 25-0048801/10/25 8.1 (3) the proposed structuring, marketing, and pricing of the extraordinary event bonds:
8.2 (i) lower overall costs to customers or mitigate rate impacts to customers relative to
8.3traditional methods of financing; and
8.4 (ii) achieve customer savings or mitigate rate impacts to customers, as determined by
8.5the commission in a financing order, consistent with market conditions at the time of sale
8.6and the terms of the financing order.
8.7 Subd. 3.Contents.(a) A financing order issued under this section must:
8.8 (1) determine the maximum amount of extraordinary event costs that may be financed
8.9from proceeds of extraordinary event bonds issued pursuant to the financing order;
8.10 (2) describe the proposed customer billing mechanism for extraordinary event charges
8.11and include a finding that the mechanism is just and reasonable;
8.12 (3) describe the financing costs that may be recovered through extraordinary event
8.13charges and the period over which the costs may be recovered, which must end no earlier
8.14than the date of final legal maturity of the extraordinary event bonds;
8.15 (4) describe the extraordinary event property that is created and that may be used to pay,
8.16and secure the payment of, principal and interest on the extraordinary event bonds and other
8.17financing costs authorized in the financing order;
8.18 (5) authorize the utility to finance extraordinary event costs by issuing one or more series
8.19of extraordinary event bonds. A utility is not required to secure a separate financing order
8.20for each extraordinary event bonds issuance or for each scheduled phase to replace natural
8.21gas facilities approved in the financing order;
8.22 (6) include a formula-based mechanism that must be used to make expeditious periodic
8.23adjustments to the extraordinary event charges authorized by the financing order that are
8.24necessary to (i) correct for any overcollection or undercollection, or (ii) otherwise provide
8.25for the timely payment of extraordinary event bonds, other financing costs, and other required
8.26amounts and charges payable in connection with extraordinary event bonds;
8.27 (7) specify the degree of flexibility afforded to the utility to establish the terms and
8.28conditions of the extraordinary event bonds, including but not limited to repayment schedules,
8.29expected interest rates, and other financing costs;
8.30 (8) specify that the extraordinary event bonds must be issued, subject to market conditions
8.31and the financing order's terms, as soon as feasible following the financing order's issuance;
8Sec. 2.
REVISOR RSI/VJ 25-0048801/10/25 9.1 (9) require the utility, at the same time extraordinary event charges are initially collected
9.2and independent of the schedule to close and decommission any natural gas facility replaced
9.3as the result of an extraordinary event, if any, to remove the natural gas facility from the
9.4utility's rate base and commensurately reduce the utility's base rates;
9.5 (10) specify a future ratemaking process to reconcile any difference between the projected
9.6pretax costs included in the amount financed by extraordinary event bonds and the final
9.7actual pretax costs incurred by the utility to retire or replace the natural gas facility, if any;
9.8 (11) specify information regarding extraordinary event bond issuance and repayments,
9.9financing costs, energy transaction charges, extraordinary event property, and related matters
9.10that the natural gas utility is required to provide to the commission on a schedule determined
9.11by the commission;
9.12 (12) allow or require the creation of a utility's extraordinary event property to be
9.13conditioned on, and occur simultaneously with, the sale or other transfer of the extraordinary
9.14event property to an assignee and the pledge of the extraordinary event property to secure
9.15the extraordinary event bonds;
9.16 (13) ensure that the structuring, marketing, and pricing of extraordinary event bonds
9.17result in reasonable securitization bond charges and customer savings or rate impact
9.18mitigation, consistent with market conditions and the financing order's terms; and
9.19 (14) specify that a utility that finances the replacement of one or more natural gas facilities
9.20after the natural gas facilities that are subject to the finance order are removed from the
9.21utility's rate base is prohibited from:
9.22 (i) operating the natural gas facilities; or
9.23 (ii) selling the natural gas facilities to another entity to operate as natural gas facilities.
9.24 (b) A financing order issued under this section may:
9.25 (1) include conditions different from those requested in the application that the
9.26commission determines are necessary to:
9.27 (i) promote the public interest; and
9.28 (ii) maximize the financial benefits or minimize the financial risks of the transaction to
9.29customers and to directly impacted Minnesota workers and communities; and
9.30 (2) select one or more underwriters for the extraordinary event bonds.
9Sec. 2.
REVISOR RSI/VJ 25-0048801/10/25 10.1 Subd. 4.Duration; irrevocability; subsequent order.(a) A financing order remains
10.2effective until the extraordinary event bonds issued under the financing order and all
10.3financing costs related to the extraordinary event bonds have been paid in full.
10.4 (b) A financing order remains effective and unabated notwithstanding the bankruptcy,
10.5reorganization, or insolvency of the utility to which the financing order applies or any
10.6affiliate, successor, or assignee of the utility to which the financing order applies.
10.7 (c) Subject to judicial review under section 216B.52, a financing order is irrevocable
10.8and is not reviewable by a future commission. The commission must not: (1) reduce, impair,
10.9postpone, or terminate extraordinary event charges approved in a financing order; or (2)
10.10impair extraordinary event property or the collection or recovery of extraordinary event
10.11charges and extraordinary event revenue.
10.12 (d) Notwithstanding paragraph (c), the commission may, on the commission's own
10.13motion or at the request of a utility or any other person, commence a proceeding and issue
10.14a subsequent financing order that provides for refinancing, retiring, or refunding extraordinary
10.15event bonds issued under the original financing order if:
10.16 (1) the commission makes all of the findings specified in subdivision 2 with respect to
10.17the subsequent financing order; and
10.18 (2) the modification contained in the subsequent financing order does not in any way
10.19impair the covenants and terms of the extraordinary event bonds being refinanced, retired,
10.20or refunded.
10.21 Subd. 5.Effect on commission jurisdiction.(a) Except as provided in paragraph (b),
10.22the commission, in exercising the powers and carrying out the duties under this section, is
10.23prohibited from:
10.24 (1) considering extraordinary event bonds issued under this section to be debt of the
10.25utility other than for income tax purposes, unless considering the extraordinary event bonds
10.26to be debt is necessary to achieve consistency with prevailing utility debt rating
10.27methodologies;
10.28 (2) considering the extraordinary event charges paid under the financing order to be
10.29revenue of the utility;
10.30 (3) considering the extraordinary event costs or financing costs specified in the financing
10.31order to be the regulated costs or assets of the utility; or
10.32 (4) determining that any prudent action taken by a utility that is consistent with the
10.33financing order is unjust or unreasonable.
10Sec. 2.
REVISOR RSI/VJ 25-0048801/10/25 11.1 (b) Nothing in this subdivision:
11.2 (1) affects the authority of the commission to apply or modify a billing mechanism
11.3designed to recover extraordinary event charges;
11.4 (2) prevents or precludes the commission from (i) investigating a utility's compliance
11.5with the financing order's terms and conditions, and (ii) requiring compliance with the
11.6financing order; or
11.7 (3) prevents or precludes the commission from imposing regulatory sanctions against a
11.8utility for failure to comply with the financing order's terms and conditions or the
11.9requirements of this section.
11.10 (c) The commission is prohibited from refusing to allow a utility to recover any costs
11.11associated with the replacement of natural gas facilities solely because the utility has elected
11.12to finance the natural gas facility replacement through a financing mechanism other than
11.13extraordinary event bonds.
11.14 EFFECTIVE DATE.This section is effective the day following final enactment.
11.15Sec. 3. [216B.493] POSTORDER COMMISSION DUTIES.
11.16 Subdivision 1.Financing cost review.Within 120 days after the date extraordinary
11.17event bonds are issued, a utility subject to a financing order must file with the commission
11.18the actual initial and ongoing financing costs, the final structure and pricing of the
11.19extraordinary event bonds, and the actual extraordinary event charge. The commission must
11.20review the prudence of the natural gas utility's actions to determine whether the actual
11.21financing costs were the lowest that could reasonably be achieved given the financing order's
11.22terms and market conditions prevailing at the time of the extraordinary event bond's issuance.
11.23 Subd. 2.Enforcement.If the commission determines that a utility's actions under this
11.24section are not prudent or are inconsistent with the financing order, the commission may
11.25apply remedies deemed appropriate for utility actions, provided that any remedy applied
11.26must not directly or indirectly (1) impair the value of the extraordinary event property, or
11.27(2) reduce, alter, or impair extraordinary event charges, until all principal and interest payable
11.28on the extraordinary event bonds, all financing costs, and all amounts to be paid to an
11.29assignee or financing party under an ancillary agreement are paid in full.
11.30 EFFECTIVE DATE.This section is effective the day following final enactment.
11Sec. 3.
REVISOR RSI/VJ 25-0048801/10/25 12.1 Sec. 4. [216B.494] USE OF OUTSIDE EXPERTS.
12.2 (a) To carry out the duties under this section, the commission may:
12.3 (1) contract with outside consultants and counsel experienced in securitized utility
12.4customer-backed bond financing similar to extraordinary event bonds; and
12.5 (2) hire and compensate additional temporary staff as needed.
12.6Expenses incurred by the commission under this paragraph must be treated as financing
12.7costs paid by the extraordinary event revenue. The costs incurred under clause (1) are not
12.8an obligation of the state and are assigned solely to the transaction.
12.9 (b) A utility presented with a written request from the commission to reimburse the
12.10commission's expenses incurred under paragraph (a), accompanied by a detailed account
12.11of the subject expenses, must remit full payment of the expenses to the commission within
12.1230 days of receiving the request.
12.13 (c) If a utility's application for a financing order is denied or withdrawn for any reason
12.14and extraordinary event bonds are not issued, the commission's costs to retain expert
12.15consultants under this section must be paid by the applicant utility and are deemed a prudent
12.16deferred expense eligible for recovery in the utility's future rates.
12.17 EFFECTIVE DATE.This section is effective the day following final enactment.
12.18Sec. 5. [216B.495] EXTRAORDINAR Y EVENT CHARGE; BILLING TREATMENT.
12.19 (a) A utility that obtains a financing order and issues extraordinary event bonds must:
12.20 (1) include on each customer's monthly natural gas bill:
12.21 (i) a statement that a portion of the charges represents extraordinary event charges
12.22approved in a financing order;
12.23 (ii) the amount and rate of the extraordinary event charge as a separate line item titled
12.24"extraordinary event charge"; and
12.25 (iii) if extraordinary event property has been transferred to an assignee, a statement that
12.26the assignee is the owner of the rights to extraordinary event charges and that the utility or
12.27other entity, if applicable, is acting as a collection agent or servicer for the assignee; and
12.28 (2) file annually with the commission:
12.29 (i) a calculation that identifies the impact financing the retirement or replacement of
12.30natural gas facilities has on customer rates, itemized by customer class; and
12Sec. 5.
REVISOR RSI/VJ 25-0048801/10/25 13.1 (ii) evidence demonstrating that extraordinary event revenues are applied solely to pay
13.2(A) principal and interest on extraordinary event bonds, and (B) other financing costs.
13.3 (b) Extraordinary event charges are nonbypassable and must be paid by all existing and
13.4future customers receiving service from the utility or the utility's successors or assignees
13.5under commission-approved rate schedules or special contracts.
13.6 (c) A utility's failure to comply with this section does not invalidate, impair, or affect
13.7any financing order, extraordinary event property, extraordinary event charge, or
13.8extraordinary event bonds, but does subject the utility to penalties under applicable
13.9commission rules provided that any penalty applied must not directly or indirectly (1) impair
13.10the value of the extraordinary event property, or (2) reduce, alter, or impair extraordinary
13.11event charges, until all principal and interest payable on the extraordinary event bonds, all
13.12financing costs, and all amounts to be paid to an assignee or financing party under an
13.13ancillary agreement are paid in full.
13.14 EFFECTIVE DATE.This section is effective the day following final enactment.
13.15Sec. 6. [216B.496] EXTRAORDINAR Y EVENT PROPERTY.
13.16 Subdivision 1.General.(a) Extraordinary event property is an existing present property
13.17right or interest in a property right, even though the imposition and collection of extraordinary
13.18event charges depend on the utility collecting extraordinary event charges and on future
13.19natural gas consumption. The property right or interest exists regardless of whether the
13.20revenues or proceeds arising from the extraordinary event property have been billed, have
13.21accrued, or have been collected.
13.22 (b) Extraordinary event property exists until all extraordinary event bonds issued under
13.23a financing order are paid in full and all financing costs and other extraordinary event bonds
13.24costs have been recovered in full.
13.25 (c) All or any portion of extraordinary event property described in a financing order
13.26issued to a utility may be transferred, sold, conveyed, or assigned to a successor or assignee
13.27that is wholly owned, directly or indirectly, by the utility and created for the limited purpose
13.28of acquiring, owning, or administering extraordinary event property or issuing extraordinary
13.29event bonds authorized by the financing order. All or any portion of extraordinary event
13.30property may be pledged to secure extraordinary event bonds issued under a financing order,
13.31amounts payable to financing parties and to counterparties under any ancillary agreements,
13.32and other financing costs. Each transfer, sale, conveyance, assignment, or pledge by a utility
13Sec. 6.
REVISOR RSI/VJ 25-0048801/10/25 14.1or an affiliate of extraordinary event property is a transaction in the ordinary course of
14.2business.
14.3 (d) If a utility defaults on any required payment of charges arising from extraordinary
14.4event property described in a financing order, a court, upon petition by an interested party
14.5and without limiting any other remedies available to the petitioner, must order the
14.6sequestration and payment of the revenues arising from the extraordinary event property to
14.7the financing parties.
14.8 (e) The interest of a transferee, purchaser, acquirer, assignee, or pledgee in extraordinary
14.9event property specified in a financing order issued to a utility, and in the revenue and
14.10collections arising from the property, is not subject to setoff, counterclaim, surcharge, or
14.11defense by the utility or any other person, or in connection with the reorganization,
14.12bankruptcy, or other insolvency of the utility or any other entity.
14.13 (f) A successor to a utility, whether resulting from a reorganization, bankruptcy, or other
14.14insolvency proceeding, merger or acquisition, sale, other business combination, transfer by
14.15operation of law, utility restructuring, or otherwise: (1) must perform and satisfy all
14.16obligations of, and has the same duties and rights under, a financing order as the utility to
14.17which the financing order applies; and (2) must perform the duties and exercise the rights
14.18in the same manner and to the same extent as the utility, including (i) collecting extraordinary
14.19event bonds revenues, collections, payments, or proceeds, and (ii) paying a person entitled
14.20to receive extraordinary event bonds revenues, collections, payments, or proceeds.
14.21 Subd. 2.Security interests in extraordinary event property.(a) The creation,
14.22perfection, and enforcement of any security interest in extraordinary event property to secure
14.23the repayment of the principal and interest on extraordinary event bonds, amounts payable
14.24under any ancillary agreement, and other financing costs are governed by this section only.
14.25 (b) A security interest in extraordinary event property is created, valid, and binding
14.26when:
14.27 (1) the financing order that describes the extraordinary event property is issued;
14.28 (2) a security agreement is executed and delivered; and
14.29 (3) value is received for the extraordinary event bonds.
14.30 (c) Once a security interest in extraordinary event property is created, the security interest
14.31attaches without any physical delivery of collateral or any other act. The lien of the security
14.32interest is valid, binding, and perfected against all parties having claims of any kind in tort,
14.33in contract, or otherwise against the person granting the security interest, regardless of
14Sec. 6.
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
15.2secretary of state.
15.3 (d) The description or indication of extraordinary event property in a transfer or security
15.4agreement and a financing statement is sufficient only if the description or indication refers
15.5to this section and the financing order creating the extraordinary event property.
15.6 (e) A security interest in extraordinary event property is a continuously perfected security
15.7interest and has priority over any other lien, created by operation of law or otherwise, that
15.8may subsequently attach to the extraordinary event property unless the person that holds
15.9the security interest has agreed otherwise in writing.
15.10 (f) The priority of a security interest in extraordinary event property is not affected by
15.11the commingling of extraordinary event property or extraordinary event revenue with other
15.12money. An assignee, bondholder, or financing party has a perfected security interest in the
15.13amount of all extraordinary event property or extraordinary event revenue that is pledged
15.14to pay extraordinary event bonds even if the extraordinary event property or extraordinary
15.15event revenue is deposited in a cash or deposit account owned by the utility in which the
15.16extraordinary event revenue is commingled with other money. Any other security interest
15.17that applies to the other money does not apply to the extraordinary event revenue.
15.18 (g) A subsequent commission order amending a financing order under section 216B.492,
15.19subdivision 4, or the application of an adjustment mechanism authorized by a financing
15.20order under section 216B.492, subdivision 3, does not affect the validity, perfection, or
15.21priority of a security interest in or transfer of extraordinary event property.
15.22 Subd. 3.Sales of extraordinary event property.(a) A sale, assignment, or transfer of
15.23extraordinary event property is an absolute transfer and true sale of, and not a pledge of or
15.24secured transaction relating to, the seller's right, title, and interest in, to, and under the
15.25extraordinary event property if the documents governing the transaction expressly state that
15.26the transaction is a sale or other absolute transfer. A transfer of an interest in extraordinary
15.27event property may be created when:
15.28 (1) the financing order creating and describing the extraordinary event property is
15.29effective;
15.30 (2) the documents evidencing the transfer of the extraordinary event property are executed
15.31and delivered to the assignee; and
15.32 (3) value is received.
15Sec. 6.
REVISOR RSI/VJ 25-0048801/10/25 16.1 (b) The characterization of a sale, assignment, or transfer as an absolute transfer and
16.2true sale, and the corresponding characterization of the property interest of the assignee, is
16.3not affected or impaired by:
16.4 (1) commingling of extraordinary event revenue with other money;
16.5 (2) the seller retaining:
16.6 (i) a partial or residual interest, including an equity interest, in the extraordinary event
16.7property, whether (A) direct or indirect, or (B) subordinate or otherwise; or
16.8 (ii) the right to recover costs associated with taxes, franchise fees, or license fees imposed
16.9on the collection of extraordinary event revenue;
16.10 (3) any recourse that the extraordinary event property purchaser may have against the
16.11seller;
16.12 (4) any indemnification rights, obligations, or repurchase rights made or provided by
16.13the extraordinary event property seller;
16.14 (5) the extraordinary event property seller's obligation to collect extraordinary event
16.15revenues on behalf of an assignee;
16.16 (6) the treatment of the sale, assignment, or transfer for tax, financial reporting, or other
16.17purposes;
16.18 (7) any subsequent financing order amending a financing order under section 216B.492,
16.19subdivision 4, paragraph (d); or
16.20 (8) any application of an adjustment mechanism under section 216B.492, subdivision
16.213, paragraph (a), clause (6).
16.22 EFFECTIVE DATE.This section is effective the day following final enactment.
16.23Sec. 7. [216B.497] EXTRAORDINAR Y EVENT BONDS.
16.24 (a) A bank, trust company, savings and loan association, insurance company, executor,
16.25administrator, guardian, trustee, or other fiduciary may legally invest any money within the
16.26individual's or entity's control in extraordinary event bonds.
16.27 (b) Extraordinary event bonds issued under a financing order are not debt of or a pledge
16.28of the faith and credit or taxing power of the state, any agency of the state, or any political
16.29subdivision. An extraordinary event bonds holder does not possess the ability to compel
16.30taxes to be levied by the state or a political subdivision in order to pay the principal or
16.31interest on extraordinary event bonds. The issuance of extraordinary event bonds does not
16Sec. 7.
REVISOR RSI/VJ 25-0048801/10/25 17.1directly, indirectly, or contingently obligate the state or a political subdivision to levy any
17.2tax or make any appropriation to pay principal or interest on the extraordinary event bonds.
17.3 (c) The state pledges to and agrees with an extraordinary event bonds holder, assignee,
17.4and financing party that the state and state agencies, including the commission, are prohibited
17.5from:
17.6 (1) taking or permitting an action that impairs the value of extraordinary event property;
17.7or
17.8 (2) reducing, altering, or impairing extraordinary event charges that are imposed,
17.9collected, and remitted for the benefit of an extraordinary event bonds holder, assignee, and
17.10financing party until any principal, interest, and redemption premium payable on
17.11extraordinary event bonds, all financing costs, and all amounts to be paid to an assignee or
17.12financing party under an ancillary agreement are paid in full.
17.13 (d) The commission may include a pledge in the financing order similar to the pledge
17.14included in paragraph (c).
17.15 (e) A person who issues extraordinary event bonds may include the pledge specified in
17.16paragraphs (c) and (d) in the extraordinary event bonds, ancillary agreements, and
17.17documentation related to the issuance and marketing of the extraordinary event bonds.
17.18 EFFECTIVE DATE.This section is effective the day following final enactment.
17.19Sec. 8. [216B.498] ASSIGNEE OF FINANCING PARTY NOT SUBJECT TO
17.20COMMISSION REGULATION.
17.21 An assignee or financing party that is not already regulated by the commission does not
17.22become subject to commission regulation solely as a result of engaging in any transaction
17.23authorized by or described in sections 216B.491 to 216B.499.
17.24 EFFECTIVE DATE.This section is effective the day following final enactment.
17.25Sec. 9. [216B.499] EFFECT ON OTHER LAWS.
17.26 (a) If a provision of sections 216B.491 to 216B.499 conflicts with other law regarding
17.27the attachment, assignment, perfection, effect of perfection, or priority of a security interest
17.28in or transfer of extraordinary event property, sections 216B.491 to 216B.499 govern.
17.29 (b) Nothing in this section precludes a utility for which the commission has initially
17.30issued a financing order from applying to the commission for:
17Sec. 9.
REVISOR RSI/VJ 25-0048801/10/25 18.1 (1) a subsequent financing order amending the financing order under section 216B.492,
18.2subdivision 4, paragraph (d); or
18.3 (2) approval to issue extraordinary event bonds to refund all or a portion of an outstanding
18.4series of extraordinary event bonds.
18.5 EFFECTIVE DATE.This section is effective the day following final enactment.
18Sec. 9.
REVISOR RSI/VJ 25-0048801/10/25