Texas 2021 - 87th Regular

Texas Senate Bill SB1579 Compare Versions

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

Old	New	Differences
1	1	By: Hancock S.B. No. 1579
2	2
3	3
4	4	A BILL TO BE ENTITLED
5	5	AN ACT
6	6	relating to the recovery and securitization of extraordinary costs
7	7	incurred by certain gas utilities; authority to issue bonds.
8	8	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
9	9	SECTION 1. Chapter 1232.002, Government Code, is amended by
10	10	adding a new (3) to read as follows:
11	11	Sec. 1232.002. PURPOSE. The purpose of this chapter is to
12	12	provide a method of financing for:
13	13	(1) the acquisition or construction of buildings;
14	14	(2) the purchase or lease of equipment by executive or
15	15	judicial branch state agencies; and
16	16	(3) customer rate relief bonds authorized by the
17	17	Railroad Commission of Texas.
18	18	SECTION 2. Chapter 1232.06(a), Government Code is amended
19	19	by adding (4) to read as follows:
20	20	Sec. 1232.06. BOARD AUTHORITY. Sec. 1232.066. BOARD
21	21	AUTHORITY. (a) The board's authority under this chapter is limited
22	22	to the financing of:
23	23	(1) the acquisition or construction of a building;
24	24	(2) the purchase or lease of equipment;
25	25	(3) stranded costs of a municipal power agency; or
26	26	(4) customer rate relief bonds approved by the
27	27	railroad commission.
28	28	SECTION 3. Chapter 1232, Government Code is amended to add a
29	29	new section to read as follows:
30	30	Sec. 1232.1072. ISSUANCE OF OBLIGATIONS FOR CUSTOMER RATE
31	31	RELIEF BONDS APPROVED BY THE RAILROAD COMMISSION OF TEXAS. (a) The
32	32	authority may, either directly or by means of a trust or trusts
33	33	established by it, issue obligations or other evidences of
34	34	indebtedness for financing customer rate relief bonds approved by
35	35	the Railroad Commission of Texas pursuant to Chapter 104, Utilities
36	36	Code.
37	37	(b) At the request of the Railroad Commission of Texas, the
38	38	authority shall issue obligations or other evidences of
39	39	indebtedness in the amount of the requested customer rate relief
40	40	bonds, plus the issuance costs, and shall make a grant of the
41	41	proceeds of the obligations or evidences of indebtedness to the
42	42	Railroad Commission of Texas. The Railroad Commission of Texas'
43	43	request under this subsection must include a statement of the
44	44	payment terms for recovering customer rate relief costs.
45	45	(c) Obligations or evidences of indebtedness issued by the
46	46	authority under this section must be created pursuant to financing
47	47	orders issued by the Railroad Commission of Texas. Such financing
48	48	orders shall authorize the authority to create isolated bankruptcy
49	49	remote financing entities to hold customer rate relief property,
50	50	and the establishment of such financing entities is hereby
51	51	authorized.
52	52	(d) Obligations or evidences of indebtedness issued by the
53	53	authority under this section shall also include administrative
54	54	costs related to each approved customer rate relief financing, as
55	55	part of the financing costs of each financing.
56	56	(e) Obligations or evidences of indebtedness issued by the
57	57	authority under this section must be secured by CRR property, as
58	58	defined in Section 104.361 (10), Utilities Code, and non-bypassable
59	59	CRR charges, as defined in Section 104.361 (9), Utilities Code,
60	60	imposed by the authority on customers receiving natural gas
61	61	services provided by the requesting gas utility, which must be
62	62	consistent with the customer rate relief recovery terms stated in
63	63	the gas utility's request unless otherwise approved by the Railroad
64	64	Commission of Texas. Obligations or evidences of indebtedness
65	65	issued by the authority under this section are not a debt of this
66	66	state, the Railroad Commission of Texas, or any gas utility.
67	67	(f) The Railroad Commission of Texas shall provide
68	68	necessary assistance to the authority to ensure the collection and
69	69	enforcement of the non-bypassable charges, either directly or by
70	70	using the assistance and powers of the requesting gas utility as
71	71	servicer.
72	72	(1) The authority and the Railroad Commission of Texas
73	73	have all the powers necessary to perform the duties and
74	74	responsibilities described by this section. This section shall be
75	75	interpreted broadly in a manner consistent with the most
76	76	cost-effective financing of customer rate relief related costs.
77	77	Obligations or evidences of indebtedness issued by the authority
78	78	under this section may be structured so that any interest on the
79	79	obligations or evidences of indebtedness is excluded from gross
80	80	income for federal income tax purposes. Any interest on the
81	81	obligations or evidences of indebtedness is not subject to taxation
82	82	by and shall not be included as part of the measurement of a tax by
83	83	this state or a political subdivision of this state.
84	84	(2) The authority shall make periodic reports to the
85	85	Railroad Commission of Texas and the public regarding each
86	86	financing.
87	87	SECTION 4. Chapter 1232.018, Government Code is amended to
88	88	read as follows:
89	89	Sec. 1232.108. LEGISLATIVE AUTHORIZATION REQUIRED. Except
90	90	as permitted by Section 1232.109, 1232.1072, 2166.452, 1232.1072
91	91	or 2166.453, before the board may issue and sell bonds, the
92	92	legislature by the General Appropriations Act or other law must
93	93	have authorized:
94	94	(1) the specific project for which the bonds are to be
95	95	issued and sold; and
96	96	(2) the estimated cost of the project or the maximum
97	97	amount of bonded indebtedness that may be incurred by the issuance
98	98	and sale of bonds for the project.
99	99	SECTION 5. Chapter 104, Utilities Code, is amended by
100	100	adding subchapter I to read as follows:
101	101	SUBCHAPTER I. CUSTOMER RATE RELIEF BONDS
102	102	Sec. 104.360. PURPOSE. The purpose of this subchapter is to
103	103	reduce the cost that customers would otherwise experience due to
104	104	the extraordinary costs that gas utilities incurred and may incur
105	105	to secure gas supply and provide service during natural and
106	106	man-made disasters, system failures, and other catastrophic events
107	107	and to restore gas utility systems after such events by providing
108	108	securitization financing enabling gas utilities to recover these
109	109	costs. This financing mechanism will provide rate relief to
110	110	customers by extending the timeframe over which the extraordinary
111	111	costs are recovered from customers and support the financial
112	112	strength and stability of gas utility companies. The commission
113	113	shall determine that securitization provides tangible and
114	114	quantifiable benefits to customers, greater than would have been
115	115	achieved absent the issuance of the CRR bonds, as defined herein.
116	116	The commission shall determine that the structuring and pricing of
117	117	the CRR bonds result in CRR bond charges consistent with the terms
118	118	of the applicable financing order and market conditions at the time
119	119	of the pricing of the CRR bonds. The proceeds of the CRR bonds shall
120	120	be used solely for the purpose of reducing the amount of the
121	121	regulatory asset determined by the commission to be reasonable and
122	122	other purposes provided herein.
123	123	SECTION 6. Chapter 104, Utilities Code, is amended by
124	124	adding Section 104.361 to read as follows:
125	125	Sec. 104.361. DEFINITIONS. In this subchapter:
126	126	(1) "Ancillary agreement" means any bond, insurance
127	127	policy, letter of credit, reserve account, surety bond, interest
128	128	rate or currency swap arrangement, interest rate lock agreement,
129	129	forward payment conversion agreement, or other hedging
130	130	arrangement, liquidity or credit support arrangement, or other
131	131	financial arrangement entered into in connection with the issuance
132	132	or payment of CRR bonds that enhances the marketability, security,
133	133	or creditworthiness of CRR bonds.
134	134	(2) "Assignee" means any legally recognized entity to
135	135	which an interest in CRR property is transferred, other than as
136	136	security. The term includes a corporation, limited liability
137	137	company, public authority, trust, general partnership or limited
138	138	partnership, or other financing entity, including any assignee of
139	139	that party.
140	140	(3) "Authority" means the Texas Public Finance
141	141	Authority, as the sponsoring issuer of CRR bonds.
142	142	(4) "Bond administrative expenses" means expenses
143	143	incurred to administer CRR bonds issued under this subchapter,
144	144	including fees for paying agents, trustees, and attorneys, and for
145	145	other professional services necessary to ensure compliance with
146	146	applicable state or federal law.
147	147	(5) "Bond obligations" means the principal of a CRR
148	148	bond and any premium and interest on a CRR bond issued under this
149	149	subchapter, together with any amount owed under a related ancillary
150	150	agreement or credit agreement
151	151	(6) "Commission" means the Railroad Commission of
152	152	Texas.
153	153	(7) "Credit agreement" means a loan agreement, a
154	154	revolving credit agreement, an agreement establishing a line of
155	155	credit, or any similar financing arrangement.
156	156	(8) "CRR bonds" means bonds, notes, certificates, or
157	157	other evidences of indebtedness or ownership that are issued by an
158	158	assignee pursuant to an financing order, the proceeds of which are
159	159	used directly or indirectly to recover, finance or refinance
160	160	railroad commission-approved regulatory assets, including
161	161	extraordinary costs, and related financing costs, and that are
162	162	payable from and secured by CRR property and amounts on deposit in
163	163	the obligation trust fund to the extent provided by the applicable
164	164	financing order.
165	165	(9) "CRR charges" means the amounts authorized by the
166	166	commission to repay, finance, or refinance regulatory assets,
167	167	including extraordinary costs, financing costs, and other costs
168	168	authorized by the financing order and that are non-bypassable
169	169	charges:
170	170	(a) imposed on and part of customer bills of a gas utility
171	171	who has received a regulatory asset determination under Section
172	172	104.363;
173	173	(b) collected by a gas utility who has received a regulatory
174	174	asset determination under Section 104.363, or its successors or
175	175	assignees, or a collection agent, as servicer, in full, separate
176	176	and apart from the gas utility's base rates; and (c) paid by all
177	177	existing or future customers receiving service from a gas utility
178	178	that has received a regulatory asset determination under Section
179	179	104.363 or its successors or assignees, even if a customer elects to
180	180	purchase gas from an alternative gas supplier.
181	181	Such charges shall continue to be paid until all CRR bonds and
182	182	financing costs are paid in full. CRR charges shall be designed as
183	183	uniform volumetric charges applicable to all existing or future
184	184	customers receiving service from a gas utility that has received a
185	185	regulatory asset determination under Section 104.363.
186	186	(10) "CRR property" means the property described in
187	187	Section 104.365.
188	188	(11) "Extraordinary costs" means:
189	189	(A) Reasonable and necessary costs placed in a
190	190	regulatory asset as defined in subpart (16) and approved by the
191	191	commission in a regulatory asset determination pursuant to section
192	192	104.363. Extraordinary costs eligible for inclusion in a
193	193	regulatory asset may include costs incurred to serve customers,
194	194	including capital costs and other costs expensed, charged to
195	195	self-insurance reserves, deferred, capitalized, or otherwise
196	196	financed, that are incurred by a gas utility or on behalf of the gas
197	197	utility for gas procurement, supply and system restoration and
198	198	infrastructure, operations and administration in response to any
199	199	tropical storm or hurricane, ice or snow storm, flood, or other
200	200	weather-related event, other natural or man-made disaster, system
201	201	failure, or other catastrophic event. (B) Extraordinary costs may
202	202	include natural gas procurement costs above normalized market
203	203	pricing, mobilization, staging, construction, reconstruction,
204	204	replacement, or repair of system facilities. Extraordinary costs
205	205	may include reasonable estimates of the costs of natural gas
206	206	procurement above normalized market pricing and any activity or
207	207	activities conducted or expected to be conducted by or on behalf of
208	208	the gas utility in connection with the restoration of service or
209	209	infrastructure associated with natural gas outages, and such
210	210	estimates may be subject to reconciliation after the actual costs
211	211	are known but before the commission makes a determination as to the
212	212	utility's regulatory asset in accordance with Section 104.363.
213	213	(C) Extraordinary costs may include:
214	214	(i) a carrying charge interest rate at the
215	215	gas utility's cost of long-term debt as last approved by the
216	216	commission in a general rate proceeding if the final order (which
217	217	may be an order on rehearing) approving the cost of long-term debt
218	218	was filed less than three years before the application for
219	219	regulatory asset recovery was filed;
220	220	(ii) if the final order approving the gas
221	221	utility's cost of long-term debt is not stated in a final order
222	222	meeting the requirements of subsection (c)(i) or the final order
223	223	was filed three or more years before the application for regulatory
224	224	asset recovery was filed an alternative cost of long-term debt
225	225	shall be used that reflects the average cost of long-term debt
226	226	established by the commission for all gas utilities based on final
227	227	orders issued in the most recent three-year period preceding the
228	228	filing of the application for regulatory asset recovery; or
229	229	(iii) the carrying charge interest rate set
230	230	at the applicable cost of long-term debt set forth in subsection
231	231	(c)(i-ii) shall be applied from the date on which the extraordinary
232	232	costs were incurred until the date that CRR bonds are issued or
233	233	until extraordinary costs are otherwise recovered by the gas
234	234	utility pursuant to the provisions of this section.
235	235	Extraordinary costs include any costs of acquiring, retiring, and
236	236	refunding the gas utility's existing debt and equity securities or
237	237	credit facilities in connection with the issuance of CRR bonds.
238	238	(12) "Financing costs" means any of the following:
239	239	(A) interest and acquisition, defeasance, or
240	240	redemption premiums that are payable on CRR bonds.
241	241	(B) any payment required under an ancillary
242	242	agreement and any amount required to fund or replenish reserve or
243	243	other accounts established under the terms of any indenture,
244	244	ancillary agreement, or other financing documents pertaining to CRR
245	245	bonds.
246	246	(C) issuance costs, and any ongoing costs related
247	247	to supporting, repaying, servicing, and refunding CRR bonds,
248	248	including but not limited to servicing fees, accounting and
249	249	auditing fees, trustee fees, legal fees and expenses, consulting
250	250	fees, administrative fees, printing fees, financial advisor fees
251	251	and expenses, SEC registration fees, issuer fees, placement and
252	252	underwriting fees, capitalized interest, overcollateralization
253	253	funding requirements, rating agency fees, stock exchange listing
254	254	and compliance fees, filing fees, and any other bond administration
255	255	expenses. The term includes the costs to the commission of
256	256	acquiring professional services for the purpose of evaluating
257	257	extraordinary costs under this subchapter.
258	258	(13) "Financing order" means an order of the
259	259	commission adopted under Section 104.364 approving the issuance of
260	260	CRR bonds and the creation of CRR property and associated CRR
261	261	charges for the recovery of regulatory assets, including
262	262	extraordinary costs, and related financing costs, and other costs
263	263	authorized by such financing order.
264	264	(14) "Financing party" means a holder of CRR bonds,
265	265	including trustees, collateral agents, any party under an ancillary
266	266	agreement and other persons acting for the benefit of the holder.
267	267	(15) "Gas utility" shall mean:
268	268	(A) An operator of natural gas distribution
269	269	pipelines that delivers and sells natural gas to the public and that
270	270	is subject to the commission's jurisdiction under Section 102.001
271	271	of this title; and
272	272	(B) a gas utility that transmits, transports,
273	273	delivers, or sells natural gas or synthetic natural gas to
274	274	operators of natural gas distribution pipelines and whose rates for
275	275	such services are established by the commission in a cost of service
276	276	rate proceeding filed pursuant to Chapter 104 of this title.
277	277	(16) "Non-bypassable" shall mean a charge that may not
278	278	be offset by any credit.
279	279	(17) "Normalized market pricing" shall be determined
280	280	using the average monthly pricing at the Henry Hub for the three (3)
281	281	preceding months prior to the month during which extraordinary
282	282	costs were incurred, plus contractual adders to the index price,
283	283	and other non-indexed gas procurement costs.
284	284	(18) "Regulatory asset" includes the extraordinary
285	285	costs recorded by the gas utility in its books and records in
286	286	accordance with the Uniform System of Accounts Prescribed for
287	287	Natural Gas Companies Subject to the Provisions of the Natural Gas
288	288	Act (FERC USOA) and Generally Accepted Accounting Principles (GAAP)
289	289	or classified as a receivable or financial asset under
290	290	International Financial Reporting Standards (IFRS) pursuant to the
291	291	commission's authorization in the Notice of Authorization for
292	292	Regulatory Asset Accounting for Local Distribution Companies
293	293	Affected by the February 2021 Winter Weather Event issued on issued on
294	294	February 13, 2021, or any notice or order issued by the commission
295	295	thereafter for other similarly authorized natural or man-made
296	296	disasters or system failure events.
297	297	SECTION 7. Chapter 104, Utilities Code, is amended by
298	298	adding Section 104.361 to read as follows:
299	299	Sec. 104.361. JURISDICTION AND POWERS OF THE COMMISSION AND
300	300	OTHER REGULATORY AUTHORITIES. (a) The commission may authorize the
301	301	issuance of CRR bonds if the commission finds pursuant to Section
302	302	104.363 that the proposed structuring, expected pricing, and
303	303	proposed financing costs of the CRR bonds are reasonably expected
304	304	to provide benefits to customers comparing the net present value of
305	305	the costs to customers resulting from the issuance of CRR bonds and
306	306	the costs that would result from the application of conventional
307	307	methods of financing or recovering gas utility extraordinary costs
308	308	and other costs authorized by a financing order.
309	309	(b) The commission may assess to a gas utility costs
310	310	associated with administering this subchapter and such assessments
311	311	shall be recovered from rate-regulated customers as part of gas
312	312	cost.
313	313	(c) The commission has exclusive, original jurisdiction to
314	314	issue financing orders that authorize the creation of CRR property,
315	315	CRR charges to service CRR bonds and financing costs. CRR charges,
316	316	if authorized by the commission through a financing order in its
317	317	sole discretion, will be imposed pursuant to CRR property, and not
318	318	by a gas utility.
319	319	(d) Except as provided by (c), this subchapter does not in
320	320	any way limit or impair a regulatory authority's plenary
321	321	jurisdiction over the rates, charges and services rendered by gas
322	322	utilities in this state under Chapter 102 of this subtitle.
323	323	SECTION 8. Chapter 104, Utilities Code, is amended by
324	324	adding Section 104.362 to read as follows:
325	325	Sec. 104.362. REGULATORY ASSET DETERMINATION. (a) The
326	326	commission shall, upon application of a gas utility to recover a
327	327	regulatory asset, determine the regulatory asset amount to be
328	328	recovered by the gas utility.
329	329	(b) A gas utility desiring to participate in the CRR bond
330	330	process pursuant to a financing order shall file an application
331	331	with the commission no later than 90 days following the conclusion
332	332	of the event for which regulatory asset recovery is requested or no
333	333	later than 60 days following the effective date of this
334	334	subchapter's passage. The application date deadline shall be
335	335	determined by the commission consistent with this subpart.
336	336	(c) If the commission does not make a final determination
337	337	concerning the regulatory asset amount to be recovered by the gas
338	338	utility not later than 90 days of an application filed under (a),
339	339	the commission is considered to have approved the regulatory asset
340	340	amount requested by the gas utility.
341	341	(d) The regulatory asset determination shall not otherwise
342	342	be subject to reduction, impairment, or adjustment by further
343	343	action of the commission, except as permitted by Section 104.368.
344	344	(e) The regulatory asset determination is not subject to
345	345	rehearing by the commission. A regulatory asset determination may
346	346	only be appealed to a Travis County district court by a party to the
347	347	proceeding filed not later than 15 days after the order is signed by
348	348	the commission. The judgment of the district court may be reviewed
349	349	only by direct appeal to the Supreme Court of Texas filed not later
350	350	than 15 days after entry of judgment. All appeals shall be heard and
351	351	determined by the district court and the Supreme Court of Texas as
352	352	expeditiously as possible with lawful precedence over other
353	353	matters. Review on appeal shall be based solely on the record before
354	354	the commission and briefs to the court and shall be limited to
355	355	whether the financing order conforms to the constitution and laws
356	356	of this state and the United States and is within the authority of
357	357	the commission under this subchapter.
358	358	(f) The commission shall issue an order to establish a
359	359	schedule, filing requirements, and procedure for determining the
360	360	prudence of the costs included in a gas utility's regulatory asset.
361	361	(g) To the extent a gas utility subject to this subchapter
362	362	receives insurance proceeds, governmental grants, or any other
363	363	sources of funding that compensates or otherwise reimburses or
364	364	indemnifies it for extraordinary costs following the issuance of
365	365	CRR bonds a gas utility may record the amount in a regulatory
366	366	liability account and such amounts will be reviewed in a future
367	367	proceeding. If any audit conducted under a valid gas purchase
368	368	agreement identifies a change to the total amount of greater than 5%
369	369	of the gas supply costs incurred during the extraordinary event set
370	370	forth in Section 104.361(10)(A) is identified, the gas utility may
371	371	record the amount in a regulatory asset or regulatory liability
372	372	account and such amounts will be reviewed for recovery in a future
373	373	proceeding.
374	374	SECTION 7. Chapter 104, Utilities Code, is amended by
375	375	adding Section 104.363 to read as follows:
376	376	Sec. 104.363. FINANCING ORDERS AND ISSUANCE OF CRR BONDS BY
377	377	OR ON BEHALF OF THE AUTHORITY. (a) If the commission determines
378	378	that CRR bond financing for extraordinary costs is the most
379	379	cost-effective method of funding several regulatory asset
380	380	reimbursements to be made to gas utilities, the commission may,
381	381	following the final resolution of all applications filed under
382	382	Section 104.363, request the authority to issue CRR bonds on its
383	383	behalf. Before making a request of the authority under this
384	384	section, the commission must issue a financing order that complies
385	385	with the provisions of this Section 104.363.
386	386	(b) The financing order shall include a finding that the use
387	387	of the securitization financing mechanism is in the public interest
388	388	and that the financing order is consistent with the standards set
389	389	forth in Section 104.360.
390	390	(c) The financing order shall detail the total amount of the
391	391	regulatory asset determinations to be included in the CRR bond
392	392	issuance.
393	393	(d) The financing order shall authorize the recovery of any
394	394	tax obligation of the gas utilities arising or resulting from its
395	395	receipt of CRR bond proceeds, or from the collection or remittance
396	396	of CRR charges through the gas utilities' gas cost recovery
397	397	mechanism or other means determined by the commission to be
398	398	reasonable.
399	399	(e) The financing order shall authorize the authority's
400	400	issuance of CRR bonds through one or more legally isolated
401	401	bankruptcy remote financing entities established by the authority.
402	402	(f) The financing order shall include a statement of the
403	403	aggregated regulatory asset determination to be included in the
404	404	principal amount of the CRR bonds, not to exceed $10 billion for any
405	405	separate bond issue, and the maximum scheduled final maturity of
406	406	the CRR bonds may not exceed 30 years, however the legal final
407	407	maturity may be longer, based upon rating agency and market
408	408	considerations.
409	409	(g) The financing order shall provide for the imposition and
410	410	mandatory periodic formulaic adjustment of CRR charges in
411	411	accordance with Section 104.368 and the collection thereof by all
412	412	gas utilities for whom a regulatory asset determination has been
413	413	made pursuant to Section 104.363 to guarantee that the bonds will be
414	414	paid in full.
415	415	(h) The financing order shall authorize the creation of CRR
416	416	property in favor of the authority and the authority's transfer
417	417	thereof.
418	418	(i) The financing order shall direct the authority to
419	419	disperse the proceeds of CRR bonds to gas utilities for which a
420	420	regulatory asset determination has been made under Section 104.363
421	421	and the amounts to be distributed.
422	422	(j) The principal amount determined by the commission under
423	423	subsection (c) may be increased to include an amount sufficient to:
424	424	(1) pay the financing costs for such issuance;
425	425	(2) reimburse the authority for any costs incurred for
426	426	the issuance;
427	427	(3) provide a bond reserve fund; and
428	428	(4) capitalize interest for the period determined
429	429	necessary by the commission.
430	430	(k) The authority, consistent with this subchapter and the
431	431	terms of the financing order, shall issue CRR bonds on request by
432	432	the commission, in accordance with the requirements of Chapter
433	433	1232, Government Code, as amended by this subchapter and other
434	434	provisions of Title 9, Government Code, that apply to bond issuance
435	435	by a state agency.
436	436	(l) The authority, consistent with this subchapter and the
437	437	terms of the financing order, shall determine the method of sale,
438	438	type of bond, bond form, maximum interest rates, and other terms of
439	439	the CRR bonds that, in the authority's judgment, best achieve the
440	440	economic goals of the financing order and effect the financings at
441	441	the lowest practicable cost.
442	442	(m) The authority shall establish legally isolated
443	443	bankruptcy remote financing entities and may enter into credit
444	444	agreements or ancillary agreements in connection with the issuance
445	445	of CRR bonds.
446	446	(n) The financing order shall provide that CRR charges shall
447	447	be collected and allocated among customers of each utility for whom
448	448	a regulatory determination has been made under Section 104.363
449	449	through uniform, monthly volumetric charges to be paid by customers
450	450	as a component of the gas utility's gas cost or in such other manner
451	451	as determined by the commission to be reasonable.
452	452	(o) The financing order shall reflect the commitment made by
453	453	each gas utility receiving proceeds therefrom that such proceeds
454	454	shall be in lieu of recovery of these costs through the regular
455	455	rate-making process or other mechanism to the extent such costs are
456	456	reimbursed to the gas utility by CRR bond financing proceeds.
457	457	(p) The financing order shall become effective in
458	458	accordance with its terms, and the financing order, together with
459	459	the CRR property and the CRR charges authorized by the financing
460	460	order, shall thereafter be irrevocable and not subject to
461	461	reduction, impairment, or adjustment by further action of the
462	462	commission, except as provided under subpart (r) and permitted by
463	463	Section 104.368.
464	464	(q) The commission shall issue a financing order under this
465	465	Section not later than 90 days following the conclusion of all
466	466	proceedings filed under Section 104.363.
467	467	(r) A financing order is not subject to rehearing by the
468	468	commission. A financing order may only be appealed to a Travis
469	469	County district court by a party to the proceeding filed within 15
470	470	days after the financing order is signed by the commission. The
471	471	judgment of the district court may be reviewed only by direct appeal
472	472	to the Supreme Court of Texas filed within 15 days after entry of
473	473	judgment. All appeals shall be heard and determined by the district
474	474	court and the Supreme Court of Texas as expeditiously as possible
475	475	with lawful precedence over other matters. Review on appeal shall
476	476	be based solely on the record before the commission and briefs to
477	477	the court and shall be limited to whether the financing order
478	478	conforms to the constitution and laws of this state and the United
479	479	States and is within the authority of the commission under this
480	480	subchapter.
481	481	(s) The authority shall issue CRR bonds within 45 days of
482	482	the receipt of a financing order issued pursuant to this section.
483	483	The authority shall deliver CRR bond proceeds net of upfront
484	484	financing costs to each gas utility sufficient to reimburse the gas
485	485	utility the regulatory asset amount determined to be reasonable
486	486	under Section 104.363 within 15 days of issuance of the CRR bonds.
487	487	For the weather event that took place in February 2021, the
488	488	authority shall deliver CRR bond proceeds net of upfront financing
489	489	costs to each gas utility no later than December 31, 2021.
490	490	SECTION 8. Chapter 104, Utilities Code, is amended by
491	491	adding Section 104.364 to read as follows:
492	492	Sec. 104.364. PROPERTY RIGHTS. (a) The CRR bonds will be
493	493	solely the obligation of the assignee or issuing financing entity
494	494	and will not be a debt of a gas utility or a debt or a pledge of the
495	495	faith and credit of the state or any political or governmental unit
496	496	thereof.
497	497	(b) The CRR bonds shall be nonrecourse to the credit or any
498	498	assets of the state and the authority.
499	499	(c) The rights and interests of the authority or successor
500	500	under a financing order, including the right to impose and receive
501	501	CRR charges authorized in the financing order, shall be only
502	502	contract rights until they are first transferred to an assignee or
503	503	pledged in connection with the issuance of the CRR bonds, at which
504	504	time they will become "CRR property."
505	505	(d) CRR property shall constitute a present property right
506	506	for purposes of contracts concerning the sale or pledge of
507	507	property, even though the imposition and collection of CRR charges
508	508	depends on further acts of the gas utility or others that have not
509	509	yet occurred. The financing order shall remain in effect, and the
510	510	CRR property shall continue to exist for the same period as the
511	511	pledge of the state described in Section 104.372.
512	512	(e) All revenues and collections resulting from CRR charges
513	513	shall constitute proceeds only of a property right arising from the
514	514	financing order.
515	515	(f) An amount owed by the authority or an issuer under a
516	516	credit agreement shall be payable from and secured by the CRR
517	517	property, including CRR charges and amounts to the extent provided
518	518	in the proceedings authorizing the credit agreement.
519	519	SECTION 9. Chapter 104, Utilities Code, is amended by
520	520	adding Section 104.365 to read as follows:
521	521	Sec. 104.365. NO SET-OFF. The interest of an assignee or
522	522	pledgee in CRR property, including the revenues and collections
523	523	arising from CRR charges are not subject to setoff, counterclaim,
524	524	surcharge, or defense by the gas utility or any other person or in
525	525	connection with the bankruptcy of the gas utility, the authority,
526	526	or any other entity. A financing order shall remain in effect and
527	527	unabated notwithstanding the bankruptcy of the gas utility, the
528	528	authority or their successors, or assignees.
529	529	SECTION 10. Chapter 104, Utilities Code, is amended by
530	530	adding Section 104.366 to read as follows:
531	531	Sec. 104.366. NO BYPASS. A financing order shall include
532	532	terms ensuring that the imposition and collection of the CRR charge
533	533	authorized in the order shall be non-bypassable.
534	534	SECTION 11. Chapter 104, Utilities Code, is amended by
535	535	adding Section 104.367 to read as follows:
536	536	Sec. 104.367. TRUE-UP. The financing order shall include a
537	537	formulaic true-up charge adjustment mechanism that requires that
538	538	the CRR charges be reviewed and adjusted at least annually, at time
539	539	periods and frequencies provided in the financing order, to correct
540	540	any overcollections or under collections of the preceding 12 months
541	541	and to ensure the expected recovery of amounts sufficient to
542	542	provide for the timely payment of upcoming scheduled CRR bond
543	543	payments and financing costs. Such true-up charge adjustments
544	544	shall become effective within 30 days of the receipt of the true-up
545	545	charge adjustment letter from the gas utility or replacement
546	546	servicer to the commission that notifies the commission of the
547	547	pending adjustment. Any administrative review of such charge
548	548	adjustments shall be limited to notifying the servicer of
549	549	mathematical or clerical errors in the calculation, and the
550	550	servicer may correct its error and refile its letter, with the
551	551	adjustment becoming effective as soon as possible within 30 days
552	552	after the refiled letter.
553	553	SECTION 12. Chapter 104, Utilities Code, is amended by
554	554	adding Section 104.368 to read as follows:
555	555	Sec. 104.368. SECURITY INTERESTS; ASSIGNMENT; COMMINGLING;
556	556	DEFAULT. (a) CRR property does not constitute an account or general
557	557	intangible under Section 9.106, Business & Commerce Code. The
558	558	creation, granting, perfection, and enforcement of liens and
559	559	security interests in CRR property are governed by this section and
560	560	not by the Business & Commerce Code.
561	561	(b) A valid and enforceable lien and security interest in
562	562	CRR property may be created only by a financing order and the
563	563	execution and delivery of a security agreement with a financing
564	564	party in connection with the issuance of CRR bonds. The lien and
565	565	security interest shall attach automatically from the time that
566	566	value is received for the CRR bonds and, on perfection through the
567	567	filing of notice with the secretary of state in accordance with the
568	568	rules prescribed under subsection (d), shall be a continuously
569	569	perfected lien and security interest in the CRR property and all
570	570	proceeds of the property, whether accrued or not, shall have
571	571	priority in the order of filing and take precedence over any
572	572	subsequent judicial or other lien creditor. If notice is filed
573	573	within 10 days after value is received for the CRR bonds, the
574	574	security interest shall be perfected retroactive to the date value
575	575	was received, otherwise, the security interest shall be perfected
576	576	as of the date of filing.
577	577	(c) Transfer of an interest in CRR property to an assignee
578	578	shall be perfected against all third parties, including subsequent
579	579	judicial or other lien creditors, when the financing order becomes
580	580	effective, transfer documents have been delivered to the assignee,
581	581	and a notice of that transfer has been filed in accordance with the
582	582	rules prescribed under subsection (d); provided, however, that if
583	583	notice of the transfer has not been filed in accordance with this
584	584	subsection within 10 days after the delivery of transfer
585	585	documentation, the transfer of the interest is not perfected
586	586	against third parties until the notice is filed.
587	587	(d) The secretary of state shall implement this section by
588	588	establishing and maintaining a separate system of records for the
589	589	filing of notices under this section and prescribing the rules for
590	590	those filings based on Chapter 9, Business & Commerce Code, adapted
591	591	to this subchapter and using the terms defined in this subchapter.
592	592	(e) The priority of a lien and security interest perfected
593	593	under this section is not impaired by any later modification of the
594	594	financing order under Section 104.368 or by the commingling of
595	595	funds arising from CRR charges with other funds, and any other
596	596	security interest that may apply to those funds shall be terminated
597	597	when they are transferred to a segregated account for the assignee
598	598	or a financing party. If CRR property has been transferred to an
599	599	assignee, any proceeds of that property shall be held in trust for
600	600	the assignee.
601	601	(f) If a default or termination occurs under the CRR bonds,
602	602	the financing parties or their representatives, a district court of
603	603	Travis County, on application by or on behalf of the financing
604	604	parties, shall order the sequestration and payment to them of
605	605	revenues arising from the CRR charges.
606	606	SECTION 13. Chapter 104, Utilities Code, is amended by
607	607	adding Section 104.369 to read as follows:
608	608	Sec. 104.369. BOND PROCEEDS. (a) The proceeds of CRR bonds
609	609	issued by or on behalf of the authority under this subchapter may be
610	610	deposited with a trustee selected by the authority or held by the
611	611	comptroller in a dedicated trust fund outside the state treasury in
612	612	the custody of the comptroller.
613	613	(b) Bond proceeds, including investment income, shall be
614	614	held in trust for the exclusive benefit of the commission's policy
615	615	of reimbursing such gas utility costs. The authority shall use the
616	616	proceeds to:
617	617	(1) reimburse each gas utility the regulatory asset
618	618	amount determined to be reasonable for that gas utility in the
619	619	financing order;
620	620	(2) pay the financing costs of issuing the bonds; and
621	621	(3) provide bond reserves, as applicable.
622	622	(c) Any excess money remaining after the purposes for which
623	623	the bonds were issued is satisfied may be used to provide credits to
624	624	gas utility customers.
625	625	(d) If there are no outstanding bonds or bond interest to be
626	626	paid, the remaining proceeds shall be used to provide credits to gas
627	627	utility customers.
628	628	SECTION 14. Chapter 104, Utilities Code, is amended by
629	629	adding Section 104.370 to read as follows:
630	630	Sec. 104.370. REPAYMENT OF CRR BONDS. (a) If any CRR bonds
631	631	and related financing costs remain outstanding, a uniform, monthly,
632	632	volumetric CRR charges shall be paid by all existing and future
633	633	customers that receive service from a gas utility for whom a
634	634	regulatory asset determination under Section 104.363. A gas
635	635	utility and its successors, assigns and or replacements, shall
636	636	continue to bill and collect, as servicer, CRR charges from the gas
637	637	utility's existing and future customers until all CRR bonds and
638	638	financing costs are paid in full.
639	639	(b) With regard to outstanding CRR bonds issued by the
640	640	authority under this subchapter, the authority shall report to the
641	641	commission the amount of the bond obligations outstanding and the
642	642	estimated amount of bond administrative expenses each year.
643	643	(c) All revenue collected from the CRR charges shall be
644	644	promptly remitted by the applicable servicers to the authority to
645	645	pay bond obligations, ongoing financing costs, and bond
646	646	administrative expenses to ensure timely payment of bond
647	647	obligations and financing costs.
648	648	(d) Revenues received from the CRR charges may be applied
649	649	only as provided by this subchapter.
650	650	(e) Bond obligations are payable only from sources provided
651	651	for payment in this subchapter.
652	652	SECTION 15. Chapter 104, Utilities Code, is amended by
653	653	adding Section 104.371 to read as follows:
654	654	Sec. 104.371. PLEDGE OF STATE. (a) CRR bonds issued under
655	655	this subchapter, and any related ancillary agreement, or credit
656	656	agreement, are not a debt of the state or any state agency or
657	657	political subdivision of the state and are not a pledge of the faith
658	658	and credit of any of them. A CRR bond, ancillary agreement, or
659	659	credit agreement is payable solely from CRR charges as provided by
660	660	this subchapter.
661	661	(b) The state, including the commission and the authority
662	662	pledge, however, for the benefit and protection of the financing
663	663	parties and the gas utility, that it will not take or permit any
664	664	action that would impair the value of CRR property, or, except as
665	665	permitted by Section 104.368, reduce, alter, or impair the CRR
666	666	charges to be imposed, collected, and remitted to financing
667	667	parties, until the principal, interest and premium, and contracts
668	668	to be performed in connection with the related CRR bonds and
669	669	financing costs have been paid and performed in full. The authority
670	670	or any other entity issuing CRR bonds is authorized to include this
671	671	pledge in any documentation relating to those bonds.
672	672	SECTION 16. Chapter 104, Utilities Code, is amended by
673	673	adding Section 104.372 to read as follows:
674	674	Sec. 104.372. TAX EXEMPTION. (a) A CRR bond issued under
675	675	this subchapter, any transaction relating to CRR bonds, and profits
676	676	made from the sale of CRR bonds are exempt from taxation by this
677	677	state or by a municipality or other political subdivision of this
678	678	state.
679	679	(b) A gas utility's receipt or collection of CRR charge
680	680	amounts is exempt from state and local income, sales, franchise,
681	681	gross receipts, and other taxes or similar assessment.
682	682	(c) Any tax obligation of the gas utility arising from its
683	683	receipt of CRR bond proceeds, or from the collection or remittance
684	684	of CRR charges is an expense that shall be recovered by the gas
685	685	utility.
686	686	SECTION 17. Chapter 104, Utilities Code, is amended by
687	687	adding Section 104.373 to read as follows:
688	688	Sec. 104.373. NOT PUBLIC UTILITY. An assignee or financing
689	689	party shall not be considered to be a public utility or person
690	690	providing natural gas service solely by virtue of the transactions
691	691	described in this subchapter.
692	692	SECTION 18. Chapter 104, Utilities Code, is amended by
693	693	adding Section 104.374 to read as follows:
694	694	Sec. 104.374. NO PERSONAL LIABILITY. The Commissioners of
695	695	the commission, commission employees, the board of directors of the
696	696	authority, and the employees of the authority shall not be
697	697	personally liable as a result of exercising the duties and
698	698	responsibilities established under this subchapter.
699	699	SECTION 19. Chapter 104, Utilities Code, is amended by
700	700	adding Section 104.375 to read as follows:
701	701	Sec. 104.375. SEVERABILITY. Effective on the date the CRR
702	702	bonds are issued under this subchapter, if any provision in this
703	703	title or portion of this title is held to be invalid or is
704	704	invalidated, superseded, replaced, repealed, or expires for any
705	705	reason, that occurrence does not affect the validity or
706	706	continuation of this subchapter or any other provision of this
707	707	title that is relevant to the issuance, administration, payment,
708	708	retirement, or refunding of CRR bonds or to any actions of the gas
709	709	utility, its successors, an assignee, a collection agent, or a
710	710	financing party, which shall remain in full force and effect.
711	711	SECTION 20. This Act takes effect immediately if it
712	712	receives a vote of two-thirds of all the members elected to each
713	713	house, as provided by Section 39, Article III, Texas Constitution.
714	714	If this Act does not receive the vote necessary for immediate
715	715	effect, this Act takes effect September 1, 2021.