Texas 2021 - 87th Regular

Texas Senate Bill SB2227 Compare Versions

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

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1	1	87R21424 JXC-F
2	2	By: Hughes S.B. No. 2227
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to securitizing costs associated with electric markets;
8	8	granting authority to issue bonds.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Chapter 31, Utilities Code, is amended by adding
11	11	Subchapter C to read as follows:
12	12	SUBCHAPTER C. SECURITIZATION CORPORATION
13	13	Sec. 31.101. PURPOSE. (a) The purpose of this subchapter
14	14	is to create a corporation dedicated to financing costs that are
15	15	eligible for securitization as provided by Subchapter M, Chapter
16	16	39. An entity authorized to securitize costs under Subchapter M,
17	17	Chapter 39, subject to any other requirements applicable to the
18	18	authorization, may request that the Texas Electric Securitization
19	19	Corporation conduct the financing on behalf of the entity.
20	20	(b) The Texas Electric Securitization Corporation is
21	21	created under this subchapter as a special purpose public
22	22	corporation and instrumentality of the state for the essential
23	23	public purpose of providing a lower-cost financing mechanism for
24	24	securitization in the manner provided by this subchapter.
25	25	(c) Bonds issued under this subchapter will be the
26	26	obligation solely of the issuer and the corporation as borrower, if
27	27	applicable, and will not be a debt of or a pledge of the faith and
28	28	credit of the state.
29	29	(d) Bonds issued under this subchapter shall be nonrecourse
30	30	to the credit or any assets of the state and the commission.
31	31	Sec. 31.102. DEFINITIONS. In this subchapter:
32	32	(1) "Corporation" means the Texas Electric
33	33	Securitization Corporation.
34	34	(2) "Issuer" means the corporation or any other
35	35	corporation, public trust, public instrumentality, or entity that
36	36	issues bonds approved by a financing order.
37	37	Sec. 31.103. CREATION OF CORPORATION. (a) The corporation
38	38	is a nonprofit corporation and instrumentality of this state, and
39	39	shall perform the essential governmental function of financing
40	40	eligible costs in accordance with this subchapter. The corporation:
41	41	(1) shall perform only functions consistent with this
42	42	subchapter;
43	43	(2) shall exercise its powers through a governing
44	44	board;
45	45	(3) is subject to the regulation of the commission;
46	46	and
47	47	(4) has a legal existence as a public corporate body
48	48	and instrumentality of the state separate and distinct from the
49	49	state.
50	50	(b) Assets of the corporation may not be considered part of
51	51	any state fund. The state may not budget for or provide any state
52	52	money to the corporation. The debts, claims, obligations, and
53	53	liabilities of the corporation may not be considered to be a debt of
54	54	the state or a pledge of its credit.
55	55	(c) The corporation must be self-funded. Before the
56	56	imposition of charges to recover securitized amounts, the
57	57	corporation may accept and expend for its operating expenses money
58	58	that may be received from any source, including financing
59	59	agreements with the state, a commercial bank, or another entity to:
60	60	(1) finance the corporation's obligations until the
61	61	corporation receives sufficient property to cover its operating
62	62	expenses as financing costs; and
63	63	(2) repay any short-term borrowing under any such
64	64	financing agreements.
65	65	(d) The corporation has the powers, rights, and privileges
66	66	provided for a corporation organized under Chapter 22, Business
67	67	Organizations Code, subject to the express exceptions and
68	68	limitations provided by this subchapter.
69	69	(e) An organizer selected by the executive director of the
70	70	commission shall prepare the certificate of formation of the
71	71	corporation under Chapters 3 and 22, Business Organizations Code.
72	72	The certificate of formation must be consistent with the provisions
73	73	of this subchapter.
74	74	(f) State officers and agencies are authorized to render
75	75	services to the corporation, within their respective functions, as
76	76	may be requested by the commission or the corporation.
77	77	(g) The corporation or an issuer may:
78	78	(1) retain professionals, financial advisors, and
79	79	accountants the corporation or issuer considers necessary to
80	80	fulfill the corporation's or issuer's duties under this subchapter;
81	81	and
82	82	(2) determine the duties and compensation of a person
83	83	retained under Subdivision (1), subject to the approval of the
84	84	commission.
85	85	(h) The corporation is governed by a board of five directors
86	86	appointed by the commission for two-year terms.
87	87	(i) An official action of the board of the corporation
88	88	requires the favorable vote of a majority of the directors present
89	89	and voting at a meeting of the board.
90	90	Sec. 31.104. POWERS AND DUTIES OF CORPORATION. (a) The
91	91	corporation, in each instance subject to the prior authorization of
92	92	the commission, shall participate in the financial transactions
93	93	authorized by this subchapter. The corporation may not engage in
94	94	business activities except those activities provided for by this
95	95	subchapter and those ancillary and incidental to those activities.
96	96	The corporation or an issuer may not apply proceeds of bonds or
97	97	charges to a purpose not specified in a financing order, to a
98	98	purpose in an amount that exceeds the amount allowed for the purpose
99	99	in the order, or to a purpose in contravention of the order.
100	100	(b) The board of the corporation, under the provisions of
101	101	this subchapter, may employ or retain persons as are necessary to
102	102	perform the duties of the corporation.
103	103	(c) The corporation may:
104	104	(1) acquire, sell, pledge, or transfer property as
105	105	necessary to effect the purposes of this subchapter and, in
106	106	connection with the action, agree to such terms and conditions as
107	107	the corporation considers necessary and proper, consistent with the
108	108	terms of a financing order:
109	109	(A) to acquire property and to pledge such
110	110	property, and any other collateral:
111	111	(i) to secure payment of bonds issued by the
112	112	corporation, together with payment of any other qualified costs; or
113	113	(ii) to secure repayment of any borrowing
114	114	from any other issuer of bonds; or
115	115	(B) to sell the property to another issuer, which
116	116	may in turn pledge that property, together with any other
117	117	collateral, to the repayment of bonds issued by the issuer together
118	118	with any other qualified costs;
119	119	(2) issue bonds on terms and conditions consistent
120	120	with a financing order;
121	121	(3) borrow funds:
122	122	(A) from an issuer of bonds to acquire property,
123	123	and pledge that property to the repayment of any borrowing from an
124	124	issuer, together with any related qualified costs, all on terms and
125	125	conditions consistent with a financing order; or
126	126	(B) for initial operating expenses;
127	127	(4) sue or be sued in its corporate name;
128	128	(5) intervene as a party before the commission or any
129	129	court in this state in any matter involving the corporation's
130	130	powers and duties;
131	131	(6) negotiate and become a party to contracts as
132	132	necessary, convenient, or desirable to carry out the purposes of
133	133	this subchapter; and
134	134	(7) engage in corporate actions or undertakings that
135	135	are permitted for nonprofit corporations in this state and that are
136	136	not prohibited by, or contrary to, this subchapter.
137	137	(d) The corporation shall maintain separate accounts and
138	138	records relating to each entity that collects charges for all
139	139	charges, revenues, assets, liabilities, and expenses relating to
140	140	the entity's related bond issuances.
141	141	(e) The board of the corporation may not authorize any
142	142	rehabilitation, liquidation, or dissolution of the corporation and
143	143	a rehabilitation, liquidation, or dissolution of the corporation
144	144	may not take effect as long as any bonds are outstanding unless
145	145	adequate protection and provision have been made for the payment of
146	146	the bonds pursuant to the documents authorizing the issuance of the
147	147	bonds. In the event of any rehabilitation, liquidation, or
148	148	dissolution, the assets of the corporation must be applied first to
149	149	pay all debts, liabilities, and obligations of the corporation,
150	150	including the establishment of reasonable reserves for any
151	151	contingent liabilities or obligations, and all remaining funds of
152	152	the corporation must be applied and distributed as provided by an
153	153	order of the commission.
154	154	(f) Before the date that is two years and one day after the
155	155	date that the corporation no longer has any payment obligation with
156	156	respect to any bonds, including any obligation to an issuer of any
157	157	bonds outstanding, the corporation may not file a voluntary
158	158	petition under federal bankruptcy law and neither any public
159	159	official nor any organization, entity, or other person may
160	160	authorize the corporation to be or to become a debtor under federal
161	161	bankruptcy law during that period. The state covenants that it will
162	162	not limit or alter the denial of authority under this subsection or
163	163	Subsection (e), and the provisions of this subsection and
164	164	Subsection (e) are hereby made a part of the contractual obligation
165	165	that is subject to the state pledge set forth in Section 39.609.
166	166	(g) The corporation shall prepare and submit to the
167	167	commission for approval an annual operating budget. If requested by
168	168	the commission, the corporation shall prepare and submit an annual
169	169	report containing the annual operating and financial statements of
170	170	the corporation and any other appropriate information.
171	171	Sec. 31.105. COMMISSION REGULATION OF CORPORATION. The
172	172	commission shall regulate the corporation as provided by this
173	173	subchapter. Notwithstanding the regulation authorized by this
174	174	section, the corporation is not a public utility.
175	175	Sec. 31.106. FINANCING ORDER. (a) This section applies to
176	176	the commission's issuance of a financing order under this
177	177	subchapter.
178	178	(b) Except as otherwise specifically provided by this
179	179	subchapter, the provisions of this subtitle that address the
180	180	commission's issuance of a financing order under other provisions
181	181	of this subtitle also apply to the commission's issuance of a
182	182	financing order under this subchapter.
183	183	(c) The corporation and any issuer must be a party to the
184	184	commission's proceedings that address the issuance of a financing
185	185	order along with the entity requesting securitization.
186	186	(d) In addition to the other applicable requirements of this
187	187	subtitle, a financing order issued under this subchapter must:
188	188	(1) require the sale, assignment, or other transfer to
189	189	the corporation of certain specified property created by the
190	190	financing order and, following that sale, assignment, or transfer,
191	191	require that charges paid under any financing order be created,
192	192	assessed, and collected as the property of the corporation, subject
193	193	to subsequent sale, assignment, or transfer by the corporation as
194	194	authorized under this subchapter;
195	195	(2) authorize:
196	196	(A) the issuance of bonds by the corporation
197	197	secured by a pledge of specified property, and the application of
198	198	the proceeds of those bonds, net of issuance costs, to the
199	199	acquisition of the property from the entity requesting
200	200	securitization; or
201	201	(B) the acquisition of specified property from
202	202	the entity requesting securitization by the corporation, financed:
203	203	(i) by a loan by an issuer to the
204	204	corporation of the proceeds of bonds, net of issuance costs; or
205	205	(ii) by the acquisition by an issuer from
206	206	the corporation of the property and in each case the pledge of the
207	207	property to the repayment of the loan or bonds, as applicable; and
208	208	(3) authorize the entity requesting securitization to
209	209	serve as collection agent to collect the charges and transfer the
210	210	collected charges to the corporation, the issuer, or a financing
211	211	party, as appropriate.
212	212	(e) After issuance of the financing order, the corporation
213	213	shall arrange for the issuance of bonds as specified in the
214	214	financing order by the corporation or another issuer selected by
215	215	the corporation and approved by the commission.
216	216	(f) Bonds issued pursuant to a financing order under this
217	217	section are secured only by the related property and any other funds
218	218	pledged under the bond documents. No assets of the state or the
219	219	entity requesting securitization are subject to claims by the
220	220	holders of the bonds. Following assignment of the property, the
221	221	entity requesting securitization does not have any beneficial
222	222	interest or claim of right in such charges or in any property.
223	223	Sec. 31.107. SEVERABILITY. Effective on the date the first
224	224	bonds are issued under this subchapter, if any provision in this
225	225	title or portion of this title is held to be invalid or is
226	226	invalidated, superseded, replaced, repealed, or expires for any
227	227	reason, that occurrence does not affect the validity or
228	228	continuation of this subchapter or any other provision of this
229	229	title that is relevant to the issuance, administration, payment,
230	230	retirement, or refunding of authorized securitization bonds or to
231	231	any actions of an entity requesting securitization under this
232	232	subchapter, its successors, an assignee, a collection agent, the
233	233	corporation, an issuer, or a financing party, and those provisions
234	234	shall remain in full force and effect.
235	235	SECTION 2. Section 39.002, Utilities Code, is amended to
236	236	read as follows:
237	237	Sec. 39.002. APPLICABILITY. This chapter, other than
238	238	Sections 39.151, 39.1516, 39.155, 39.157(e), 39.203, 39.904,
239	239	39.9051, 39.9052, and 39.914(e), does not apply to a municipally
240	240	owned utility or an electric cooperative. Sections 39.157(e),
241	241	39.203, and 39.904, however, apply only to a municipally owned
242	242	utility or an electric cooperative that is offering customer
243	243	choice. If there is a conflict between the specific provisions of
244	244	this chapter and any other provisions of this title, except for
245	245	Chapters 40 and 41, the provisions of this chapter control.
246	246	SECTION 3. Section 39.151, Utilities Code, is amended by
247	247	adding Subsection (j-1) to read as follows:
248	248	(j-1) Notwithstanding Subsection (j), the independent
249	249	system operator in ERCOT may not apply proceeds or assess uplift
250	250	charges to a municipally owned utility that becomes subject to the
251	251	jurisdiction of the independent system operator in ERCOT on or
252	252	after June 1, 2021, and before December 30, 2021, related to uplift
253	253	charges that occurred before June 1, 2021.
254	254	SECTION 4. Chapter 39, Utilities Code, is amended by adding
255	255	Subchapter M to read as follows:
256	256	SUBCHAPTER M. SECURITIZATION FOR INDEPENDENT ORGANIZATION
257	257	Sec. 39.601. PURPOSE; USE OF PROCEEDS; BOND CHARGES. (a)
258	258	The purpose of this subchapter is to enable the independent
259	259	organization certified under Section 39.151 for the ERCOT power
260	260	region to use securitization financing to fund extraordinary
261	261	ancillary service and reliability deployment price adder charges
262	262	that were uplifted on a load ratio share basis and added to the cost
263	263	of energy used to supply end-use customers. Securitization will
264	264	allow wholesale market participants who are owed money to be paid in
265	265	a more timely manner, while allowing the balance to be repaid over
266	266	time at a low carrying cost.
267	267	(b) The proceeds of bonds issued for the purpose described
268	268	by Subsection (a) must be used solely for the purpose of financing
269	269	uplift balances that were allocated to all load-serving entities on
270	270	a load ratio share basis as a result of usage during the period of
271	271	emergency or uplift adders that were included in the cost of energy
272	272	used to supply end-use customers. The commission shall ensure that
273	273	securitization provides tangible and quantifiable benefits to
274	274	wholesale market participants, greater than would have been
275	275	achieved absent the issuance of bonds.
276	276	(c) The commission shall ensure that the structuring and
277	277	pricing of the bonds result in the lowest bond charges consistent
278	278	with market conditions and the terms of the financing order. The
279	279	present value calculation shall use a discount rate equal to the
280	280	proposed interest rate on the bonds.
281	281	Sec. 39.602. DEFINITIONS. In this subchapter:
282	282	(1) "Assignee" means any individual, corporation, or
283	283	other legally recognized entity to which an interest in uplift
284	284	property is transferred, other than as security.
285	285	(2) "Financing order" means an order of the commission
286	286	approving the issuance of bonds and the creation of charges for the
287	287	recovery of qualified costs.
288	288	(3) "Financing party" means a holder of bonds,
289	289	including trustees, collateral agents, and other persons acting for
290	290	the benefit of the holder.
291	291	(4) "Independent organization" means the independent
292	292	organization certified under Section 39.151 for the ERCOT power
293	293	region.
294	294	(5) "Load-serving entity" means a municipally owned
295	295	utility, an electric cooperative, or a retail electric provider
296	296	that provides electric service to end-use customers.
297	297	(6) "Period of emergency" means the period beginning
298	298	12:01 a.m., February 12, 2021, and ending 11:59 p.m., February 20,
299	299	2021.
300	300	(7) "Qualified costs" means the total balance of costs
301	301	described as uplift charges, together with the costs of issuing,
302	302	supporting, and servicing bonds and any costs of retiring and
303	303	refunding existing debt in connection with the issuance of the
304	304	bonds.
305	305	(8) "Uplift charges" means charges for reliability
306	306	deployment price adders and ancillary services costs in excess of
307	307	the commission's system-wide offer cap that were uplifted to
308	308	load-serving entities on a load ratio share basis due to energy
309	309	consumption during the period of emergency. The term also includes
310	310	reliability deployment price adders included in the cost of energy
311	311	used to supply end-use customers during the period beginning 12:01
312	312	a.m., February 18, 2021, and ending 9 a.m., February 19, 2021.
313	313	Sec. 39.603. FINANCING ORDERS; TERMS. (a) On application
314	314	of the independent organization, the commission may adopt a
315	315	financing order to recover the costs of an uplift balance of
316	316	qualified costs resulting from a significant pricing event on
317	317	making a finding that such financing is needed to preserve the
318	318	integrity of the wholesale market and the public interest after
319	319	considering:
320	320	(1) the interests of wholesale market participants who
321	321	are owed balances; and
322	322	(2) the potential effects of charging those balances
323	323	to the wholesale market and end-use customers without a financing
324	324	vehicle.
325	325	(b) The financing order must detail the amounts to be
326	326	recovered and the period over which the nonbypassable uplift
327	327	charges shall be recovered. The period may not exceed 30 years. If
328	328	an amount determined under this section is subject to judicial
329	329	review of a commission order, a bankruptcy proceeding, or another
330	330	type of litigation at the time of the securitization proceeding,
331	331	the financing order shall include an adjustment mechanism requiring
332	332	the independent organization to adjust its uplift charges in a
333	333	manner that would refund, over the remaining life of the bonds, any
334	334	overpayments resulting from securitization of amounts in excess of
335	335	the amount resulting from a final determination after completion of
336	336	all appellate reviews. The adjustment mechanism may not affect the
337	337	stream of revenue available to service the bonds. An adjustment may
338	338	not be made under this subsection until all appellate reviews have
339	339	been completed, including appellate reviews following a commission
340	340	decision on remand of its original orders, if applicable.
341	341	(c) Nonbypassable uplift charges must be allocated to all
342	342	load-serving entities on a load ratio share basis for pass-through
343	343	to end-use customers.
344	344	(d) A financing order becomes effective in accordance with
345	345	its terms and the financing order, together with the uplift charges
346	346	authorized in the order, shall be irrevocable and not subject to
347	347	reduction, impairment, or adjustment by further action of the
348	348	commission after it takes effect.
349	349	(e) The commission shall issue a financing order not later
350	350	than the 30th day after the date the independent organization files
351	351	a request for the financing order under Subsection (a) or (g).
352	352	(f) A financing order is not subject to rehearing by the
353	353	commission. A financing order may be reviewed by appeal by a party
354	354	to the proceeding to a Travis County district court filed not later
355	355	than the 15th day after the date the financing order is signed by
356	356	the commission. The judgment of the district court may be reviewed
357	357	only by direct appeal to the Supreme Court of Texas filed not later
358	358	than the 15th day after the date of the entry of judgment. All
359	359	appeals shall be heard and determined by the district court and the
360	360	Supreme Court of Texas as expeditiously as possible with lawful
361	361	precedence over other matters. Review on appeal shall be based
362	362	solely on the record before the commission and briefs to the court
363	363	and shall be limited to whether the financing order conforms to the
364	364	constitution and laws of this state and the United States and is
365	365	within the authority of the commission under this chapter.
366	366	(g) At the request of the independent organization, the
367	367	commission may adopt a financing order providing for retiring and
368	368	refunding the bonds on making a finding that the future uplift
369	369	charges required to service the new bonds, including transaction
370	370	costs, will be less than the future uplift charges required to
371	371	service the bonds being refunded. On the retirement of the refunded
372	372	bonds, the commission shall adjust the related uplift charges
373	373	accordingly.
374	374	Sec. 39.604. PROPERTY RIGHTS. (a) The rights and interests
375	375	of the independent organization or its successor under a financing
376	376	order, including the right to impose, collect, and receive uplift
377	377	charges authorized in the order, shall be only contract rights
378	378	until they are first transferred to an assignee or pledged in
379	379	connection with the issuance of bonds, at which time they will
380	380	become uplift property, as described by Subsection (b).
381	381	(b) Uplift property shall constitute a present property
382	382	right for purposes of contracts concerning the sale or pledge of
383	383	property, even though the imposition and collection of uplift
384	384	charges depends on further acts of the independent organization or
385	385	others that have not yet occurred. The financing order shall remain
386	386	in effect and the property shall continue to exist for the same
387	387	period as the pledge of the state described by Section 39.609.
388	388	(c) All revenues and collections resulting from uplift
389	389	charges shall constitute proceeds only of the uplift property
390	390	arising from the financing order.
391	391	Sec. 39.605. INTEREST NOT SUBJECT TO SETOFF. The interest
392	392	of an assignee or pledgee in uplift property and in the revenues and
393	393	collections arising from that property are not subject to setoff,
394	394	counterclaim, surcharge, or defense by the independent
395	395	organization or any other person or in connection with the
396	396	bankruptcy of a wholesale market participant or the independent
397	397	organization. A financing order shall remain in effect and
398	398	unabated notwithstanding the bankruptcy of the independent
399	399	organization, its successors, or assignees.
400	400	Sec. 39.606. UPLIFT CHARGES NONBYPASSABLE. A financing
401	401	order shall include terms ensuring that the imposition and
402	402	collection of uplift charges authorized in the order shall be
403	403	nonbypassable.
404	404	Sec. 39.607. TRUE-UP. A financing order shall include a
405	405	mechanism requiring that uplift charges be reviewed and adjusted at
406	406	least annually, not later than the 45th day after the anniversary
407	407	date of the issuance of the bonds, to:
408	408	(1) correct over-collections or under-collections of
409	409	the preceding 12 months; and
410	410	(2) ensure the expected recovery of amounts sufficient
411	411	to timely provide all payments of debt service and other required
412	412	amounts and charges in connection with the bonds.
413	413	Sec. 39.608. SECURITY INTERESTS; ASSIGNMENT; COMMINGLING;
414	414	DEFAULT. (a) Uplift property does not constitute an account or
415	415	general intangible under Section 9.106, Business & Commerce Code.
416	416	The creation, granting, perfection, and enforcement of liens and
417	417	security interests in uplift property are governed by this section
418	418	and not by the Business & Commerce Code.
419	419	(b) A valid and enforceable lien and security interest in
420	420	uplift property may be created only by a financing order and the
421	421	execution and delivery of a security agreement with a financing
422	422	party in connection with the issuance of bonds. The lien and
423	423	security interest shall attach automatically from the time that
424	424	value is received for the bonds and, on perfection through the
425	425	filing of notice with the secretary of state in accordance with the
426	426	rules prescribed under Subsection (d), shall be a continuously
427	427	perfected lien and security interest in the uplift property and all
428	428	proceeds of the property, whether accrued or not, shall have
429	429	priority in the order of filing and take precedence over any
430	430	subsequent judicial or other lien creditor. If notice is filed
431	431	before the 10th day after the date value is received for the bonds,
432	432	the security interest shall be perfected retroactive to the date
433	433	value was received. Otherwise, the security interest shall be
434	434	perfected as of the date of filing.
435	435	(c) Transfer of an interest in uplift property to an
436	436	assignee shall be perfected against all third parties, including
437	437	subsequent judicial or other lien creditors, when the financing
438	438	order becomes effective, transfer documents have been delivered to
439	439	the assignee, and a notice of that transfer has been filed in
440	440	accordance with the rules adopted under Subsection (d). However, if
441	441	notice of the transfer has not been filed in accordance with this
442	442	subsection before the 10th day after the delivery of transfer
443	443	documentation, the transfer of the interest is not perfected
444	444	against third parties until the notice is filed.
445	445	(d) The secretary of state shall implement this section by
446	446	establishing and maintaining a separate system of records for the
447	447	filing of notices under this section and adopting the rules for
448	448	those filings based on Chapter 9, Business & Commerce Code, adapted
449	449	to this subchapter and using the terms defined by this subchapter.
450	450	(e) The priority of a lien and security interest perfected
451	451	under this section is not impaired by any later modification of the
452	452	financing order under Section 39.607 or by the commingling of funds
453	453	arising from uplift charges with other funds, and any other
454	454	security interest that may apply to those funds shall be terminated
455	455	when they are transferred to a segregated account for the assignee
456	456	or a financing party. If uplift property has been transferred to an
457	457	assignee, any proceeds of that property shall be held in trust for
458	458	the assignee.
459	459	(f) If a default or termination occurs under the bonds, the
460	460	financing parties or their representatives may foreclose on or
461	461	otherwise enforce their lien and security interest in any property
462	462	as if they were secured parties under Chapter 9, Business & Commerce
463	463	Code, and the commission may order that amounts arising from uplift
464	464	charges be transferred to a separate account for the financing
465	465	parties' benefit, to which their lien and security interest shall
466	466	apply. On application by or on behalf of the financing parties, a
467	467	district court of Travis County shall order the sequestration and
468	468	payment to them of revenues arising from the uplift charges.
469	469	Sec. 39.609. PLEDGE OF STATE. Bonds authorized by this
470	470	subchapter are not a debt or obligation of the state and are not a
471	471	charge on its full faith and credit or taxing power. The state
472	472	pledges, however, for the benefit and protection of financing
473	473	parties and the independent organization that it will not take or
474	474	permit any action that would impair the value of uplift property, or
475	475	reduce, alter, or impair the uplift charges to be imposed,
476	476	collected, and remitted to financing parties, until the principal,
477	477	interest and premium, and any other charges incurred and contracts
478	478	to be performed in connection with the related bonds have been paid
479	479	and performed in full. Any party issuing bonds under this
480	480	subchapter is authorized to include this pledge in any
481	481	documentation relating to those bonds.
482	482	Sec. 39.610. TAX EXEMPTION. Transactions involving the
483	483	transfer and ownership of uplift property and the receipt of uplift
484	484	charges are exempt from state and local income, sales, franchise,
485	485	gross receipts, and other taxes or similar charges.
486	486	Sec. 39.611. NOT PUBLIC UTILITY. An assignee or financing
487	487	party may not be considered to be a public utility or person
488	488	providing electric service solely by virtue of the transactions
489	489	described in this subchapter.
490	490	Sec. 39.612. SEVERABILITY. Effective on the date the first
491	491	bonds are issued under this subchapter, if any provision in this
492	492	title or portion of this title is held to be invalid or is
493	493	invalidated, superseded, replaced, repealed, or expires for any
494	494	reason, that occurrence does not affect the validity or
495	495	continuation of this subchapter or any other provision of this
496	496	title that is relevant to the issuance, administration, payment,
497	497	retirement, or refunding of bonds or to any actions of the
498	498	independent organization, its successors, an assignee, a
499	499	collection agent, or a financing party, which shall remain in full
500	500	force and effect.
501	501	Sec. 39.613. CUSTOMER CHARGES. All load-serving entities
502	502	that directly or indirectly receive offsets to specific charges
503	503	from the independent organization under this subchapter must adjust
504	504	customer invoices to reflect these offsets for any charges that
505	505	were or would otherwise be passed through to customers under the
506	506	terms of service with the load-serving entity, including providing
507	507	a refund for any offset charges that were previously paid.
508	508	SECTION 5. The independent organization certified under
509	509	Section 39.151, Utilities Code, for the ERCOT power region shall
510	510	file an application for a financing order under Section 39.603,
511	511	Utilities Code, as added by this Act, not later than the 10th day
512	512	after the effective date of this Act.
513	513	SECTION 6. This Act takes effect immediately if it receives
514	514	a vote of two-thirds of all the members elected to each house, as
515	515	provided by Section 39, Article III, Texas Constitution. If this
516	516	Act does not receive the vote necessary for immediate effect, this
517	517	Act takes effect September 1, 2021.