TX
Texas House Bill HB3544

Texas 2021 - 87th Regular

Texas House Bill HB3544 Compare Versions

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1-87R17077 JXC-F
2- By: Holland, Darby, Smithee, Bell of Kaufman, H.B. No. 3544
3- Spiller
4- Substitute the following for H.B. No. 3544:
5- By: Paddie C.S.H.B. No. 3544
1+87R14218 TYPED
2+ By: Holland H.B. No. 3544
63
74
85 A BILL TO BE ENTITLED
96 AN ACT
10- relating to the use of securitization by electric cooperatives to
11- address certain weather-related extraordinary costs and expenses.
7+ relating to the restructuring of certain electric utility
8+ providers.
129 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
13- SECTION 1. Chapter 41, Utilities Code, is amended by adding
14- Subchapter D to read as follows:
15- SUBCHAPTER D. SECURITIZATION
10+ SECTION 1. Subchapter D, Chapter 41, Utilities Code, is
11+ amended by adding Sections 41.151-.163 to read as follows:
1612 Sec. 41.151. PURPOSE. The purpose of this subchapter is to
1713 enable electric cooperatives to use securitization financing to
18- recover extraordinary costs and expenses incurred due to the
19- abnormal weather events that occurred in this state in the period
20- beginning 12:00 a.m., February 12, 2021, and ending at 11:59 p.m.,
21- February 20, 2021. This type of debt will reduce the cost of
22- financing the extraordinary costs and expenses relative to the
23- costs that would be incurred using conventional electric
24- cooperative financing methods. The proceeds of the securitized
25- bonds shall be used solely for the purposes of financing or
26- refinancing the extraordinary costs and expenses, including costs
27- relating to consummation and administration of the securitized
28- financing. The board of each electric cooperative involved in the
14+ recover extraordinary costs and expenses incurred because of the
15+ abnormal weather events of February [(START DATE)] through [(END
16+ DATE)], 2021. This type of debt will lower the cost of financing
17+ such extraordinary costs and expenses relative to the costs that
18+ would be incurred using conventional electric cooperative
19+ financing methods. The proceeds of the securitized bonds shall be
20+ used solely for the purposes of financing or refinancing such
21+ extraordinary costs and expenses, including costs relating to
22+ consummation and administration of the securitized financing
23+ itself. The board of each electric cooperative involved in such
2924 financing shall ensure that securitization provides tangible and
30- quantifiable benefits to its members, greater than would have been
31- achieved absent the issuance of securitized bonds. Each board that
32- chooses to securitize under this subchapter shall ensure that the
33- structuring and pricing of the securitized bonds are consistent
34- with market conditions and the terms of the financing order. This
35- subchapter may be used by a group of electric cooperatives to issue
36- securitized bonds in a combined securitization transaction.
25+ quantifiable benefits to ratepayers, greater than would have been
26+ achieved absent the issuance of securitized bonds. Each board
27+ shall ensure that the structuring and pricing of the securitized
28+ bonds result in the lowest securitized bond charges consistent with
29+ market conditions and the terms of the financing order. The amount
30+ securitized may not exceed the present value of the revenue
31+ requirement over the life of the proposed securitized bonds
32+ associated with the extraordinary costs and expenses being
33+ financed. The present value calculation shall use a discount rate
34+ equal to the proposed interest rate on the securitized bonds.
3735 Sec. 41.152. DEFINITIONS. In this subchapter:
3836 (1) "Assignee" means any individual, corporation, or
39- other legally recognized entity, including a special purpose
40- entity, to which an interest in securitized property is
41- transferred, other than as security.
42- (2) "Board" means the governing body of an electric
43- cooperative.
44- (3) "Combined securitization transaction" means the
45- issuance of securitized bonds under this subchapter in a
46- transaction involving at least two electric cooperatives acting
47- together.
48- (4) "Extraordinary costs and expenses" means:
49- (A) costs and expenses incurred by an electric
50- cooperative for electric power and energy purchased during the
51- period of emergency in excess of what would have been paid for the
52- same amount of electric power and energy at the average rate
53- incurred by the electric cooperative for electric power and energy
54- purchased during the month of January 2021;
55- (B) costs and expenses incurred by an electric
56- cooperative to generate and transmit electric power and energy
57- during the period of emergency, including fuel costs, operation and
58- maintenance expenses, overtime costs, and all other costs and
59- expenses that would not have been incurred but for the abnormal
60- weather events; and
61- (C) any charges imposed on the electric
62- cooperative or on a power supplier to the electric cooperative that
63- were passed on to the electric cooperative by the applicable
64- regional transmission organization or independent system operator,
65- resulting from defaults by other market participants of the
66- regional transmission organization or independent system operator
67- for costs relating to the period of emergency.
68- (5) "Financing order" means an order of a board
69- approving the issuance of securitized bonds, which may be through
70- participation in a combined securitization transaction, and the
71- creation of securitized charges for the recovery of qualified
72- costs.
73- (6) "Financing party" means a holder of securitized
37+ other legally recognized entity, including a special-purpose
38+ entity, to which an interest in transition property is transferred,
39+ other than as security, including any assignee of that party.
40+ (2) "Board" means the board of directors or other
41+ governing body of an electric cooperative.
42+ (3) "Extraordinary costs and expenses" means (A)costs
43+ and expenses incurred by the electric cooperative for power and
44+ energy purchased during the period of emergency in excess of what
45+ would have been paid for the same amount of power and energy at the
46+ average rate paid by the electric cooperative for power and energy
47+ purchased during [(the month of January, 2021)], (B)costs and
48+ expenses incurred by the electric cooperative to generate and
49+ transmit power and energy during the period of emergency (including
50+ fuel costs, operation and maintenance expenses, overtime costs and
51+ all other costs and expenses that would not have been incurred but
52+ for the extreme weather conditions), and (C) any charges imposed on
53+ the electric cooperative or on a power supplier to the electric
54+ cooperative and passed on to the electric cooperative by the
55+ applicable regional transmission organization or independent
56+ system operator, resulting from defaults by other market
57+ participants in the power pool for costs relating to the period of
58+ emergency.
59+ (4) "Financing order" means an order of the board
60+ approving the issuance of securitized bonds and the creation of
61+ transition charges for the recovery of qualified costs.
62+ (5) "Financing party" means a holder of securitized
7463 bonds, including trustees, collateral agents, and other persons
7564 acting for the benefit of the holder.
76- (7) "Qualified costs" means up to 100 percent of an
77- electric cooperative's:
78- (A) extraordinary costs and expenses;
79- (B) costs of issuing, supporting, repaying,
80- servicing, and refinancing the securitized bonds, whether incurred
81- or paid upon issuance of the securitized bonds or over the life of
82- the securitized bonds or the refunded securitized bonds, whether
83- incurred directly or allocated in a combined securitization
84- transaction; and
85- (C) any costs of retiring and refunding the
86- electric cooperative's existing debt securities initially issued
87- to finance the extraordinary costs and expenses including interest
88- accrued on debt securities over their term, whether incurred
89- directly or allocated in a combined securitization transaction.
90- (8) "Period of emergency" means the period beginning
91- 12:00 a.m., February 12, 2021, and ending 11:59 p.m., February 20,
92- 2021.
93- (9) "Securitized bonds" means bonds, debentures,
65+ (6) "Qualified costs" means 100 percent of an electric
66+ cooperative's extraordinary costs and expenses together with the
67+ costs of issuing, supporting, repaying, servicing, and refinancing
68+ the securitized bonds, whether incurred or paid upon issuance of
69+ the securitized bonds or over the life of the securitized bonds or
70+ the refunded securitized bonds, and any costs of retiring and
71+ refunding the electric cooperative's existing debt securities
72+ initially issued to finance the extraordinary costs and expenses.
73+ (7) "Period of emergency" means the period from and
74+ including 00:00 February [(START DATE)], 2021 to and including
75+ 00:00 February [(END DATE)], 2021.
76+ (8) "Securitized bonds" means bonds, debentures,
9477 notes, certificates of participation or of beneficial interest, or
9578 other evidences of indebtedness or ownership that are issued by an
96- electric cooperative, its successors, or an assignee of the
97- electric cooperative or group of electric cooperatives under a
98- financing order or financing orders, that have a term not longer
99- than 30 years, and that are secured by or payable, primarily, from
100- securitized property and the proceeds thereof and, in a combined
101- securitization transaction, securitized property contributed by
102- other electric cooperatives. If certificates of participation,
103- beneficial interest, or ownership are issued, references in this
104- subchapter to principal, interest, or premium shall refer to
105- comparable amounts under those certificates.
106- (10) "Securitized charges" means nonbypassable
107- amounts to be charged for the use or availability of electric
108- services, approved by the board under a financing order to recover
109- qualified costs, that shall be collected by an electric
110- cooperative, its successors, an assignee, or other collection
111- agents as provided for in the financing order.
112- (11) "Securitized property" means the property right
113- created under this subchapter, including the right, title, and
114- interest of the electric cooperative or its assignee:
115- (A) in and to the securitized charges established
116- under a financing order, including all rights to obtain adjustments
117- in accordance with Section 41.157 and the financing order;
79+ electric cooperative, its successors or an assignee under a
80+ financing order, that have a term not longer than [(YEARS)] years,
81+ and that are secured by or payable, primarily, from transition
82+ property and the proceeds thereof. If certificates of
83+ participation, beneficial interest, or ownership are issued,
84+ references in this subchapter to principal, interest, or premium
85+ shall refer to comparable amounts under those certificates.
86+ (9) "Transition charges" means nonbypassable amounts
87+ to be charged for the use or availability of electric services,
88+ approved by the board of the electric cooperative under a financing
89+ order to recover qualified costs, that shall be collected by an
90+ electric cooperative, its successors, an assignee, or other
91+ collection agents as provided for in the financing order.
92+ (10) "Transition property" means the property right
93+ created pursuant to this subchapter D, including without
94+ limitation, the right, title, and interest of the electric
95+ cooperative or its assignee:
96+ (A) In and to the transition charges established
97+ pursuant to a financing order, including all rights to obtain
98+ adjustments in accordance with Section 41.157 and the financing
99+ order.
118100 (B) To be paid the amount that is determined in a
119101 financing order to be the amount that the electric cooperative or
120- its transferee is lawfully entitled to receive under this
121- subchapter and the proceeds thereof; and
122- (C) in and to all revenue, collections, claims,
123- payments, money, or process of or arising from the securitized
124- charges that are the subject of a financing order.
102+ its transferee is lawfully entitled to receive pursuant to the
103+ provisions of this subchapter and the proceeds thereof, and in and
104+ to all revenues, collections, claims, payments, moneys, or process
105+ of or arising from the transition charges that are the subject of a
106+ financing order.
125107 Sec. 41.153. FINANCING ORDERS; TERMS. (a) The board shall
126108 adopt a financing order to recover the electric cooperative's
127- qualified costs consistent with the standards in Section 41.151.
109+ qualified costs on making a finding that the total amount of
110+ revenues to be collected under the financing order is less than the
111+ revenue requirement that would be recovered over the remaining life
112+ of the transition property using conventional financing methods and
113+ that the financing order is consistent with the standards in
114+ Section 41.151.
128115 (b) The financing order shall detail the amount of qualified
129116 costs to be recovered and the period over which the nonbypassable
130- securitized charges shall be recovered, which period may not exceed
131- 30 years.
132- (c) Securitized charges shall be collected and allocated
133- among customers in the manner provided by the financing order.
134- (d) A financing order becomes effective in accordance with
135- its terms, and the financing order, together with the securitized
136- charges authorized in the order, after it takes effect, is
137- irrevocable and not subject to denial, recission, reduction,
138- impairment, adjustment, or other alteration by further action of
139- the board or by action of any regulatory or other governmental body
140- of this state, except as permitted by Section 41.157. A financing
141- order issued under this subchapter has the same force and effect of
142- a financing order issued under Chapter 39.
143- (e) A financing order may be reviewed by appeal by a member
144- of the electric cooperative to a district court in the county where
145- the electric cooperative is domiciled, filed not later than the
146- 15th day after the date the financing order is adopted by the board.
147- The judgment of the district court may be reviewed only by direct
148- appeal to the Supreme Court of Texas filed not later than the 15th
149- day after the date of the entry of judgment. All appeals shall be
150- heard and determined by the district court and the Supreme Court of
151- Texas as expeditiously as possible with lawful precedence over
152- other matters. Review on appeal shall be based solely on the
153- financing order adopted by the board, other information considered
154- by the board in adopting the resolutions, and briefs to the court
155- and shall be limited to whether the financing order conforms to the
117+ transition charges shall be recovered, which period may not exceed
118+ [(YEARS)] years.
119+ (c) Transition charges shall be collected and allocated
120+ among customers in such manner as set forth in the financing order.
121+ (d) A financing order shall become effective in accordance
122+ with its terms, and the financing order, together with the
123+ transition charges authorized in the order, shall thereafter be
124+ irrevocable and not subject to rescission, reduction, impairment,
125+ or adjustment or other alteration by further action of the board or
126+ by action of any regulatory or other governmental body of the State
127+ of Texas, except as permitted by Section 41.157. A financing order
128+ issued pursuant to this subchapter shall have the same force and
129+ effect of a financing order under Title 2, Chapter 39.
130+ (e) A financing order may be reviewed by appeal only to a
131+ Travis County district court by a member of the electric
132+ cooperative filed within 15 days after the financing order is
133+ adopted by the board. The judgment of the district court may be
134+ reviewed only by direct appeal to the Supreme Court of Texas filed
135+ within 15 days after entry of judgment. All appeals shall be heard
136+ and determined by the district court and the Supreme Court of Texas
137+ as expeditiously as possible with lawful precedence over other
138+ matters. Review on appeal shall be based solely on the financing
139+ order adopted by the board, other information considered by the
140+ board in adopting the resolutions and briefs to the court and shall
141+ be limited to whether the financing order conforms to the
156142 constitution and laws of this state and the United States and is
157143 within the authority of the board under this subchapter.
158- (f) The board or, in a combined securitization transaction,
159- the boards of all participating electric cooperatives, may adopt a
160- financing order or financing orders providing for retiring and
161- refunding securitized bonds on making a finding that the future
162- securitized charges required to service the new securitized bonds,
163- including transaction costs, will be less than the future
164- securitized charges required to service the securitized bonds being
165- refunded. After the indefeasible repayment in full of all
166- outstanding securitized bonds and associated financing costs, the
167- board shall adjust the related securitized charges accordingly.
144+ (f) The board may adopt a financing order providing for
145+ retiring and refunding securitized bonds on making a finding that
146+ the future transition charges required to service the new
147+ securitized bonds, including transaction costs, will be less than
148+ the future transition charges required to service the securitized
149+ bonds being refunded. After the indefeasible repayment in full of
150+ all outstanding securitized bonds and associated financing costs,
151+ the board shall adjust the related transition charges accordingly.
168152 Sec. 41.154. PROPERTY RIGHTS. (a) The rights and interests
169153 of an electric cooperative or its subsidiary, affiliate, successor,
170- financing party, or assignee under a financing order, including the
171- right to impose, collect, receive, and enforce the payment of
172- securitized charges authorized in the financing order, shall be
173- only contract rights until the property is first transferred or
174- pledged to an assignee or financing party, as applicable, in
175- connection with the issuance of securitized bonds, at which time
176- the property becomes securitized property.
177- (b) Securitized property that is specified in the financing
178- order constitutes a present vested property right for all purposes,
179- including for purposes of Sections 16 and 17, Article I, Texas
180- Constitution, Section 10, Article I, United States Constitution,
181- and the Fifth Amendment to the United States Constitution, and the
182- laws of this state and the United States, even if the imposition and
183- collection of securitized charges depend on further acts of the
154+ financing party or assignee under a financing order, including the
155+ right to impose, collect, receive and enforce the payment of
156+ transition charges authorized in the financing order, shall be only
157+ contract rights until such property is first transferred or pledged
158+ to an assignee or financing party, as applicable, in connection
159+ with the issuance of securitized bonds, at which time such property
160+ will become "transition property."
161+ (b) Transition property that is specified in the financing
162+ order shall constitute a present vested property right for all
163+ purposes, including, for the avoidance of doubt, for purposes of
164+ the contracts and takings clauses of the constitutions and laws of
165+ this state and the United States, even if the imposition and
166+ collection of transition charges depends on further acts of the
184167 electric cooperative or others that may not have yet occurred.
185- (c) Securitized property shall exist regardless of whether
186- securitized charges have been billed, have accrued, or have been
187- collected and notwithstanding the fact that the value or amount of
188- the property is dependent on the future provision of service to
189- customers by the electric cooperative or its successors or assigns.
190- (d) On the issuance of the securitized bonds and the
191- financing order, and when the requirements of Section 41.159 are
192- met, the securitized charges, including their nonbypassability,
193- are irrevocable, final, nondiscretionary, and effective without
168+ Transition property shall exist whether or not transition charges
169+ have been billed, have accrued, or have been collected and
170+ notwithstanding the fact that the value or amount of the property is
171+ dependent on the future provision of service to customers by the
172+ electric cooperative or its successors or assigns. Upon the
173+ issuance of the securitized bonds, the financing order, and
174+ satisfaction of the requirements of provisions of Section 41.159,
175+ the transition charges, including their nonbypassability, shall be
176+ irrevocable, final, non-discretionary and effective without
194177 further action by the electric cooperative or any other person or
195178 governmental authority. The financing order shall remain in effect
196179 and the property shall continue to exist for the same period as the
197180 pledge of the state described in Section 41.160.
198- (e) All revenue, collections, claims, payments, money, or
199- proceeds of or arising from or relating to securitized charges
200- shall constitute proceeds of the securitized property arising from
201- the financing order.
181+ (c) All revenues, collections, claims, payments, moneys, or
182+ proceeds of or arising from or relating to transition charges shall
183+ constitute proceeds of the transition property arising from the
184+ financing order.
202185 Sec. 41.155. NO SETOFF. The interest of an assignee or
203- pledgee in securitized property and in the revenues and collections
186+ pledgee in transition property and in the revenues and collections
204187 arising from that property are not subject to setoff, counterclaim,
205- surcharge, recoupment, or defense by the electric cooperative or
206- any other person or in connection with the bankruptcy of the
207- electric cooperative or any other entity. A financing order shall
208- remain in effect and unabated notwithstanding the bankruptcy of the
209- electric cooperative, its successors, or assignees.
210- Sec. 41.156. NO BYPASS. (a) A financing order shall include
211- terms ensuring that the imposition and collection of securitized
212- charges authorized in the order shall be nonbypassable and apply to
213- all customers connected to the electric cooperative's system assets
214- and taking service, regardless of whether the system assets
188+ surcharge, recoupment or defense by the electric cooperative or any
189+ other person or in connection with the bankruptcy of the electric
190+ cooperative or any other entity. A financing order shall remain in
191+ effect and unabated notwithstanding the bankruptcy of the electric
192+ cooperative, its successors, or assignees.
193+ Sec. 41.156. NO BYPASS. A financing order shall include
194+ terms ensuring that the imposition and collection of transition
195+ charges authorized in the order shall be nonbypassable and shall
196+ apply to all customers connected to the electric cooperative's
197+ system assets and taking service, whether or not the system assets
215198 continue to be owned by the electric cooperative.
216- (b) The electric cooperative, its servicer, any entity
217- providing electric transmission or distribution services, and any
218- retail electric provider providing services to a retail customer in
219- the electric cooperative's certificated service area as it existed
220- on the date of enactment of this subchapter are entitled to collect
221- and must remit, consistent with this subchapter and any financing
222- order adopted under this subchapter, the securitized charges from
223- the retail customers and from retail customers that switch to new
224- on-site generation. Such retail customers are required to pay the
225- securitized charges.
226- Sec. 41.157. TRUE-UP. (a) A financing order shall be
227- reviewed and adjusted promptly if after its adoption there are
228- additional charges, reductions, or refunds of extraordinary costs
229- and expenses, to:
230- (1) ensure that there is not an over-collection or an
231- under-collection of extraordinary costs and expenses; and
232- (2) ensure that collections on the securitized
233- property will be sufficient to timely make all periodic and final
234- payments of principal, interest, fees, and other amounts and to
235- timely fund all reserve accounts, if any, related to the
236- securitized bonds.
237- (b) A financing order shall also include a mechanism
238- requiring that securitized charges be reviewed by the board and
239- adjusted at least annually, not later than the 45th day after the
240- anniversary date of the issuance of the securitized bonds, to:
241- (1) correct over-collections or under-collections of
242- the preceding 12 months; and
243- (2) ensure the expected recovery of amounts sufficient
199+ Sec. 41.157. TRUE-UP. A financing order shall be promptly
200+ reviewed and adjusted, if after its adoption there are additional
201+ charges or refunds of extraordinary costs and expenses so as to
202+ ensure that there is neither an over collection or under collection
203+ of extraordinary costs and expenses and that collections on the
204+ transition property will be sufficient to timely make all periodic
205+ and final payments of principal, interest, fees and other amounts,
206+ [(and to timely fund all reserve accounts, if any,)] related to the
207+ securitized bonds. A financing order shall also include a
208+ mechanism requiring that transition charges be reviewed by the
209+ board and adjusted at least annually, within 45 days of the
210+ anniversary date of the issuance of the securitized bonds, to
211+ correct any over collections or under collections of the preceding
212+ 12 months and to ensure the expected recovery of amounts sufficient
244213 to timely provide all payments of debt service and other required
245- amounts and charges in connection with the securitized bonds.
246- (c) The electric cooperatives that are members of a
247- generation and transmission cooperative may include in their
248- financing orders the ability to allocate any true-up amounts over
249- the retail customers of all electric cooperatives that are members
250- of the same generation and transmission cooperative.
251- (d) In a combined securitization transaction, each
252- generation and transmission cooperative may calculate all
253- adjustments and determinations relevant to each true-up by each
254- electric cooperative member of the generation and transmission
255- cooperative participating in the securitization transaction, with
256- the adjustments being allocated across the electric cooperatives in
257- the manner agreed to by all of the participating electric
258- cooperatives under their financing orders.
259- (e) A governmental authority may not disapprove of or alter
260- any adjustments made or proposed to be made under this subchapter
261- other than to correct computation or other manifest errors.
214+ amounts and charges in connection with the securitized bonds. No
215+ governmental authority shall have the discretion or authority to
216+ disapprove of, or alter, any adjustments made or proposed to be made
217+ hereunder other than to correct computation or other manifest
218+ errors.
262219 Sec. 41.158. TRUE SALE. An agreement by an electric
263- cooperative or assignee to transfer securitized property that
220+ cooperative or assignee to transfer transition property that
264221 expressly states that the transfer is a sale or other absolute
265222 transfer signifies that the transaction is a true sale and is not a
266223 secured transaction and that title, legal and equitable, has passed
267- to the entity to which the securitized property is transferred. The
224+ to the entity to which the transition property is transferred. The
268225 transaction shall be treated as an absolute sale regardless of
269226 whether the purchaser has any recourse against the seller, or any
270227 other term of the parties' agreement, including the seller's
271- retention of an equity interest in the securitized property, the
228+ retention of an equity interest in the transition property, the
272229 fact that the electric cooperative acts as the collector of
273- securitized charges relating to the securitized property, or the
274- treatment of the transfer as a financing for tax, financial
275- reporting, or other purposes.
230+ transition charges relating to the transition property, or the
231+ treatment of the transfer as a financing for tax, accounting,
232+ financial reporting, or other purposes.
276233 Sec. 41.159. SECURITY INTERESTS; ASSIGNMENT; COMMINGLING;
277- DEFAULT. (a) Securitized property does not constitute an account
278- or general intangible under Section 9.106, Business & Commerce
279- Code. The transfer, sale, or assignment, or the creation,
280- granting, perfection, and enforcement of liens and security
281- interests in securitized property are governed by this section and
282- not by the Business & Commerce Code. Securitized property shall
283- constitute property for all purposes, including for contracts
284- securing securitized bonds, regardless of whether the securitized
285- property revenues and proceeds have accrued.
286- (b) A valid and enforceable transfer, sale, or assignment,
287- or lien and security interest, as applicable, in securitized
288- property may be created only by a financing order and the execution
289- and delivery of a transfer, sale, or assignment, or security
290- agreement, as applicable, with a financing party in connection with
291- the issuance of securitized bonds. The transfer, sale, assignment,
292- or lien and security interest, as applicable, shall attach
234+ DEFAULT. (a) Transition property does not constitute an account or
235+ general intangible under Section 9.106, Business & Commerce Code.
236+ The transfer, sale or assignment, or the creation, granting,
237+ perfection, and enforcement of liens and security interests in
238+ transition property are governed by this section and not by the
239+ Business & Commerce Code. Transition property shall constitute
240+ property for all purposes, including for contracts securing
241+ securitized bonds, whether or not the transition property revenues
242+ and proceeds have accrued.
243+ (b) A valid and enforceable transfer, sale or assignment, or
244+ lien and security interest, as applicable, in transition property
245+ may be created only by a financing order and the execution and
246+ delivery of a transfer, sale or assignment, or security agreement,
247+ as applicable, with a financing party in connection with the
248+ issuance of securitized bonds. The transfer, sale, assignment, or
249+ lien and security interest, as applicable, shall attach
293250 automatically from the time that value is received for the
294251 securitized bonds and, on perfection through the filing of notice
295252 with the secretary of state in accordance with the rules prescribed
296253 under Subsection (d), shall be a continuously perfected transfer,
297- sale, and assignment, or lien and security interest, as applicable,
298- in the securitized property and all proceeds of the property,
254+ sale and assignment or lien and security interest, as applicable,
255+ in the transition property and all proceeds of the property,
299256 whether accrued or not, shall have priority in the order of filing
300257 and take precedence over any subsequent judicial or other lien
301- creditor. If notice is filed before the 10th day after the date
302- value is received for the securitized bonds, the transfer, sale, or
258+ creditor. If notice is filed within 10 days after value is received
259+ for the securitized bonds, the transfer, sale, or assignment, or
260+ security interest, as applicable, shall be perfected retroactive to
261+ the date value was received, otherwise, the transfer, sale or
303262 assignment, or security interest, as applicable, shall be perfected
304- retroactive to the date value was received. Otherwise, the
305- transfer, sale, or assignment, or security interest, as applicable,
306- shall be perfected as of the date of filing.
307- (c) Transfer, sale, or assignment of an interest in
308- securitized property to an assignee shall be perfected against all
263+ as of the date of filing.
264+ (c) Transfer, sale or assignment of an interest in
265+ transition property to an assignee shall be perfected against all
309266 third parties, including subsequent judicial or other lien
310267 creditors, when the financing order becomes effective, transfer
311268 documents have been delivered to the assignee, and a notice of that
312269 transfer has been filed in accordance with the rules prescribed
313- under Subsection (d). However, if notice of the transfer has not
314- been filed in accordance with this subsection before the 10th day
315- after the delivery of transfer documentation, the transfer of the
316- interest is not perfected against third parties until the notice is
317- filed.
270+ under Subsection (d); provided, however, that if notice of the
271+ transfer has not been filed in accordance with this subsection
272+ within 10 days after the delivery of transfer documentation, the
273+ transfer of the interest is not perfected against third parties
274+ until the notice is filed.
318275 (d) The secretary of state shall implement this section by
319276 establishing and maintaining a separate system of records for the
320277 filing of notices under this section and prescribing the rules for
321278 those filings based on Chapter 9, Business & Commerce Code, adapted
322279 to this subchapter and using the terms defined in this subchapter.
323280 (e) The priority of a lien and security interest perfected
324281 under this section is not impaired by any later modification of the
325282 financing order under Section 41.157 or by the commingling of funds
326- arising from securitized charges with other funds, and any other
283+ arising from transition charges with other funds, and any other
327284 security interest that may apply to those funds shall be terminated
328285 when they are transferred to a segregated account for the assignee
329- or a financing party. If securitized property has been transferred
286+ or a financing party. If transition property has been transferred
330287 to an assignee, any proceeds of that property shall be held in trust
331288 for the assignee.
332- (f) Securitized bonds shall be secured by a statutory lien
333- on the securitized property in favor of the owners or beneficial
334- owners of securitized bonds. The lien shall automatically arise on
335- issuance of the securitized bonds without the need for any action or
336- authorization by the electric cooperative or the board. The lien
337- shall be valid and binding from the time the securitized bonds are
338- executed and delivered. The securitized property shall be
289+ (f) (1) Securitized bonds shall be secured by a statutory
290+ lien on the transition property in favor of the owners or beneficial
291+ owners of securitized bonds. The lien shall automatically arise
292+ upon issuance of the securitized bonds without the need for any
293+ action or authorization by the electric cooperative or the board.
294+ The lien shall be valid and binding from the time the securitized
295+ bonds are executed and delivered. The transition property shall be
339296 immediately subject to the lien, and the lien shall immediately
340- attach to the securitized property and be effective, binding, and
297+ attach to the transition property and be effective, binding, and
341298 enforceable against the electric cooperative, its creditors, their
342299 successors, assignees, and all others asserting rights therein,
343- regardless of whether those persons have notice of the lien and
300+ irrespective of whether those persons have notice of the lien and
344301 without the need for any physical delivery, recordation, filing, or
345302 further act. The lien is created by this subchapter and not by any
346303 security agreement, but may be enforced by any financing party or
347304 their representatives as if they were secured parties under Chapter
348- 9, Business & Commerce Code. On application by or on behalf of the
349- financing parties, a district court in the county where the
350- electric cooperative is domiciled may order that amounts arising
351- from securitized charges be transferred to a separate account for
352- the financing parties' benefit.
353- (g) The statutory lien is a continuously perfected security
354- interest and has priority over any other lien, created by operation
355- of law or otherwise, that may subsequently attach to that
356- securitized property or proceeds thereof unless the owners or
305+ 9, Business & Commerce Code, and upon application by or on behalf of
306+ the financing parties, a district court of Travis County may order
307+ that amounts arising from transition charges be transferred to a
308+ separate account for the financing parties' benefit.
309+ (2) This statutory lien is a continuously perfected
310+ security interest and has priority over any other lien, created by
311+ operation of law or otherwise, that may subsequently attach to that
312+ transition property or proceeds thereof unless the owners or
357313 beneficial owners of securitized bonds as specified in the trust
358- agreement or indenture have agreed in writing otherwise. The
359- statutory lien is a lien on the securitized charges and all
360- securitized charge revenues or other proceeds that are deposited in
314+ agreement or indenture has agreed in writing otherwise. This
315+ statutory lien is a lien on the transition charges and all
316+ transition charge revenues or other proceeds that are deposited in
361317 any deposit account or other account of the servicer or other person
362- in which securitized charge revenues or other proceeds have been
318+ in which transition charge revenues or other proceeds have been
363319 commingled with other funds.
364- (h) The statutory lien is not adversely affected or impaired
365- by, among other things, the commingling of securitized charge
366- revenues or other proceeds from securitized charges with other
367- amounts regardless of the person holding those amounts.
368- (i) The electric cooperative, any successor or assignee of
369- the electric cooperative, or any other person with any operational
370- control of any portion of the electric cooperative's system assets,
371- whether as owner, lessee, franchisee, or otherwise, and any
372- successor servicer of collections of the securitized charges shall
373- be bound by the requirements of this subchapter and shall perform
374- and satisfy all obligations imposed under this subchapter in the
320+ (4) The statutory lien shall not adversely be affected
321+ or impaired by, among other things, the commingling of transition
322+ charge revenues or other proceeds from transition charges with
323+ other amounts regardless of the person holding such amounts.
324+ (5) The electric cooperative, any successor or assign
325+ of the electric cooperative or any other person with any
326+ operational control of any portion of the electric cooperative's
327+ system assets, whether as owner, lessee, franchisee or otherwise
328+ and any successor servicer of collections of the transition charges
329+ shall be bound by the requirements of this subchapter and shall
330+ perform and satisfy all obligations imposed pursuant hereto in the
375331 same manner and to the same extent as did its predecessor, including
376- the obligation to bill, adjust, and enforce the payment of
377- securitized charges.
378- (j) If a default or termination occurs under the securitized
332+ the obligation to bill, adjust and enforce the payment of
333+ transition charges.
334+ (g) If a default or termination occurs under the securitized
379335 bonds, the financing parties or their representatives may foreclose
380336 on or otherwise enforce their lien and security interest in any
381- securitized property as if they were secured parties under Chapter
382- 9, Business & Commerce Code, and on application by the electric
337+ transition property as if they were secured parties under Chapter
338+ 9, Business & Commerce Code, and upon application by the electric
383339 cooperative or by or on behalf of the financing parties, a district
384- court in the county where the electric cooperative is domiciled may
385- order that amounts arising from securitized charges be transferred
386- to a separate account for the financing parties' benefit, to which
387- their lien and security interest shall apply. On application by or
388- on behalf of the financing parties, a district court in the county
389- where the electric cooperative is domiciled shall order the
390- sequestration and payment to them of revenues arising from the
391- securitized charges.
340+ court of Travis County may order that amounts arising from
341+ transition charges be transferred to a separate account for the
342+ financing parties' benefit, to which their lien and security
343+ interest shall apply. On application by or on behalf of the
344+ financing parties, a district court of Travis County shall order
345+ the sequestration and payment to them of revenues arising from the
346+ transition charges.
392347 Sec. 41.160. PLEDGE OF STATE. Securitized bonds are not a
393348 debt or obligation of the state and are not a charge on its full
394- faith and credit or taxing power. The state pledges, however, for
395- the benefit and protection of assignees, financing parties, and the
396- electric cooperative, that it will not take or permit, or permit any
397- agency or other governmental authority or political subdivision of
398- the state to take or permit, any action that would impair the value
399- of securitized property, or, except as permitted by Section 41.157,
400- reduce, alter, or impair the securitized charges to be imposed,
401- collected, and remitted to financing parties, until the principal,
402- interest and premium, and any other charges incurred and contracts
403- to be performed in connection with the related securitized bonds
404- have been paid and performed in full. Any party issuing securitized
405- bonds is authorized to include this pledge in any documentation
406- relating to those bonds.
349+ faith and credit or taxing power. The state irrevocably pledges,
350+ however, for the benefit and protection of assignees, financing
351+ parties and the electric cooperative, that it will not take or
352+ permit, or permit any agency or other governmental authority or
353+ political subdivision of the state to take or permit, any action
354+ that would impair the value of transition property, or, except as
355+ permitted by Section 41.157, reduce, alter, or impair the
356+ transition charges to be imposed, collected, and remitted to
357+ financing parties, until the principal, interest and premium, and
358+ any other charges incurred and contracts to be performed in
359+ connection with the related securitized bonds have been paid and
360+ performed in full. Any party issuing securitized bonds is
361+ authorized to include this pledge in any documentation relating to
362+ those bonds.
407363 Sec. 41.161. TAX EXEMPTION. Transactions involving the
408- transfer and ownership of securitized property and the receipt of
409- securitized charges are exempt from state and local income, sales,
364+ transfer and ownership of transition property and the receipt of
365+ transition charges are exempt from state and local income, sales,
410366 franchise, gross receipts, and other taxes or similar charges.
411367 Sec. 41.162. NOT PUBLIC UTILITY. An assignee or financing
412368 party may not be considered to be a public utility, electric
413- cooperative, or person providing electric service solely by virtue
369+ cooperative or person providing electric service solely by virtue
414370 of the transactions described in this subchapter.
415371 Sec. 41.163. SEVERABILITY. Effective on the date the first
416372 securitized bonds are issued under this subchapter, if any
417373 provision in this title or portion of this title is held to be
418374 invalid or is invalidated, superseded, replaced, repealed, or
419375 expires for any reason, that occurrence does not affect the
420- validity or continuation of this subchapter or any other provision
376+ validity or continuation of this subchapter, or any other provision
421377 of this title that is relevant to the issuance, administration,
422378 payment, retirement, or refunding of securitized bonds or to any
423379 actions of the electric cooperative, its successors, an assignee, a
424380 collection agent, or a financing party, which shall remain in full
425381 force and effect.
426- SECTION 2. This Act takes effect immediately if it receives
427- a vote of two-thirds of all the members elected to each house, as
428- provided by Section 39, Article III, Texas Constitution. If this
429- Act does not receive the vote necessary for immediate effect, this
430- Act takes effect September 1, 2021.
382+ SECTION 2. This Act takes effect September 1, 2021.