Louisiana Revised Statutes 45:1226 – Short title; purpose
Terms Used In Louisiana Revised Statutes 45:1226
- Bankruptcy: Refers to statutes and judicial proceedings involving persons or businesses that cannot pay their debts and seek the assistance of the court in getting a fresh start. Under the protection of the bankruptcy court, debtors may discharge their debts, perhaps by paying a portion of each debt. Bankruptcy judges preside over these proceedings.
- Commission: means the Public Service Commission or, solely with respect to an electric utility furnishing electric service within the city of New Orleans, the council of the city of New Orleans. See Louisiana Revised Statutes 45:1227
- Financing costs: means :
(a) Interest and acquisition, defeasance, or redemption premiums that are payable on storm recovery bonds;
(b) Any payment required under an ancillary agreement and any amount required to fund or replenish reserve or other accounts established under the terms of any indenture, ancillary agreement, or other financing documents pertaining to storm recovery bonds;
(c) Any other cost related to issuing, supporting, repaying, and servicing storm recovery bonds, including but not limited to servicing fees, accounting and auditing fees, trustee fees, legal fees, consulting fees, administrative fees, placement and underwriting fees, capitalized interest, rating agency fees, stock exchange listing and compliance fees, and filing fees, including costs related to obtaining the financing order;
(d) Any income taxes and license fees imposed on the revenues generated from the collection of storm recovery charges or otherwise resulting from the collection of storm recovery charges, in any such case whether paid, payable, or accrued; or
(e) Any state and local taxes, franchise, gross receipts, and other taxes or similar charges including but not limited to regulatory assessment fees, in any such case whether paid, payable, or accrued. See Louisiana Revised Statutes 45:1227
- Financing order: means an order of the commission, if granted by the commission in its sole discretion, which allows for:
(a) The issuance of storm recovery bonds. See Louisiana Revised Statutes 45:1227
- Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
- Public debt: Cumulative amounts borrowed by the Treasury Department or the Federal Financing Bank from the public or from another fund or account. The public debt does not include agency debt (amounts borrowed by other agencies of the Federal Government). The total public debt is subject to a statutory limit.
- Storm: means a named tropical storm or hurricane, ice or snow storm, flood, or other significant weather or natural disaster that occurred during calendar year 2005 or that occurs thereafter. See Louisiana Revised Statutes 45:1227
- Storm recovery bonds: means bonds, debentures, notes, certificates of participation, certificates of ownership, or other evidences of indebtedness or ownership that are issued pursuant to an indenture, contract, or other agreement of an electric utility or an assignee pursuant to a financing order, the proceeds of which are used directly or indirectly to provide, recover, finance, or refinance commission-approved storm recovery costs, financing costs, and costs to replenish or fund a storm recovery reserve to such level as the commission may authorize in a financing order, and which are secured by or payable from storm recovery property. See Louisiana Revised Statutes 45:1227
- Storm recovery costs: means , if requested by the electric utility, and as may be approved by the commission, costs incurred or to be incurred by an electric utility in undertaking a storm recovery activity. See Louisiana Revised Statutes 45:1227
- Storm recovery property: means the contract right constituting incorporeal movable property newly created pursuant to this Part which may consist of any of the following:
(a) All rights and interests of an electric utility or successor or assignee of the electric utility under a financing order, including the right to impose, bill, charge, collect, and receive storm recovery charges authorized in the financing order and to obtain periodic adjustments to such charges as may be provided in the financing order. See Louisiana Revised Statutes 45:1227
A. This Part shall be known and may be cited as the “Louisiana Electric Utility Storm Recovery Securitization Act”.
B. The purpose of this Part is to enable Louisiana electric utilities, if authorized by a financing order issued by the commission, to use securitization financing for storm recovery costs, because this type of debt may lower the financing costs or mitigate the impact on rates in comparison with conventional utility financing methods or alternative methods of recovery, thereby benefitting rate payers. The storm recovery bonds will not be public debt. The proceeds of the storm recovery bonds shall be used for the purposes of recovering storm recovery costs, solely as determined by the commission, to encourage and facilitate the rebuilding of utility infrastructure damaged by storms. Securitization financings for storm recovery costs are hereby recognized to be a valid public purpose. Federal tax laws and revenue procedures expressly require that special state legislation be enacted in order for such transactions to receive certain tax benefits. The legislature finds a need to promote such securitization financings, if authorized by the commission, by providing clear and exclusive methods to create, transfer, and encumber interests in storm recovery property as defined in this Part. This need can be met by providing in this Part for such methods and by establishing that any conflict between the rules governing sales, assignments, or transfers of, or security interests, privileges, or other encumbrances of any nature upon, incorporeal movable property under other Louisiana laws and the methods provided in this Part, including without limitation with regard to creation, perfection, priority, or enforcement, shall be resolved in favor of the rules and methods established in this Part with regard to storm recovery property.
C. The intent of this Part is to provide benefits to Louisiana rate payers by allowing a Louisiana electric utility, if authorized by a financing order, to achieve certain tax and credit benefits of financing storm recovery costs, on a similar basis with utilities in other states. This Part does not in any way limit, impair, or impact the commission’s plenary jurisdiction over the rates charged and services rendered by the public utilities in this state. Instead, this Part addresses certain property, security interests, and other matters to ensure that the financial and federal income tax benefits of financing storm recovery costs through securitization are available in Louisiana. The beneficial income tax and credit characteristics that may be achieved include the following:
(1) Treating the storm recovery bonds as debt of the electric utility for income tax purposes.
(2) Treating the storm recovery charges as gross income to the electric utility recognized under the utility’s usual method of accounting for federal and state income taxes, rather than recognizing gross income upon the receipt of the financing order or of cash in exchange for the sale of the storm recovery property or the issuance of the storm recovery bonds.
(3) Avoiding the recognition of debt on the electric utility’s balance sheet for certain credit and regulatory purposes by reason of the storm recovery bonds.
(4) Treating the sale, assignment, or transfer of the storm recovery property by the electric utility as a true sale for state law and bankruptcy purposes.
(5) Avoiding any adverse impact of the financing on the electric utility’s credit rating.
Acts 2006, No. 64, §2, eff. May 22, 2006.