Bill Text: TX HB4492 | 2021-2022 | 87th Legislature | Comm Sub

NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Relating to financing certain costs associated with electric markets; granting authority to issue bonds; authorizing fees.

Spectrum: Partisan Bill (Republican 2-0)

Status: (Passed) 2021-06-16 - Effective immediately [HB4492 Detail]

Download: Texas-2021-HB4492-Comm_Sub.html
 
 
  By: Paddie (Senate Sponsor - Hancock) H.B. No. 4492
         (In the Senate - Received from the House May 10, 2021;
  May 13, 2021, read first time and referred to Committee on Business &
  Commerce; May 24, 2021, reported favorably by the following vote:  
  Yeas 8, Nays 0; May 24, 2021, sent to printer.)
Click here to see the committee vote
 
 
A BILL TO BE ENTITLED
 
AN ACT
 
  relating to securitizing costs associated with electric markets;
  granting authority to issue bonds.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Chapter 31, Utilities Code, is amended by adding
  Subchapter C to read as follows:
  SUBCHAPTER C. SECURITIZATION CORPORATION
         Sec. 31.101.  PURPOSE. (a)  The purpose of this subchapter
  is to create a corporation dedicated to financing costs that are
  eligible for securitization as provided by Subchapter M, Chapter
  39, to securitize costs not securitized under Subchapter D, Chapter
  41. An entity authorized to securitize costs under Subchapter M,
  Chapter 39, subject to any other requirements applicable to the
  authorization, may request that the Texas Electric Securitization
  Corporation conduct the financing on behalf of the entity.
         (b)  The Texas Electric Securitization Corporation is
  created under this subchapter as a special purpose public
  corporation and instrumentality of the state for the essential
  public purpose of providing a lower-cost financing mechanism for
  securitization in the manner provided by this subchapter.
         (c)  Bonds issued under this subchapter will be the
  obligation solely of the issuer and the corporation as borrower, if
  applicable, and will not be a debt of or a pledge of the faith and
  credit of the state.
         (d)  Bonds issued under this subchapter shall be nonrecourse
  to the credit or any assets of the state and the commission.
         Sec. 31.102.  DEFINITIONS. In this subchapter:
               (1)  "Corporation" means the Texas Electric
  Securitization Corporation.
               (2)  "Issuer" means the corporation or any other
  corporation, public trust, public instrumentality, or entity that
  issues bonds approved by a financing order.
         Sec. 31.103.  CREATION OF CORPORATION. (a) The corporation
  is a nonprofit corporation and instrumentality of this state, and
  shall perform the essential governmental function of financing
  eligible costs in accordance with this subchapter. The corporation:
               (1)  shall perform only functions consistent with this
  subchapter;
               (2)  shall exercise its powers through a governing
  board;
               (3)  is subject to the regulation of the commission;
  and
               (4)  has a legal existence as a public corporate body
  and instrumentality of the state separate and distinct from the
  state.
         (b)  Assets of the corporation may not be considered part of
  any state fund. The state may not budget for or provide any state
  money to the corporation. The debts, claims, obligations, and
  liabilities of the corporation may not be considered to be a debt of
  the state or a pledge of its credit. 
         (c)  The corporation must be self-funded. Before the
  imposition of charges to recover securitized amounts, the
  corporation may accept and expend for its operating expenses money
  that may be received from any source, including financing
  agreements with the state, a commercial bank, or another entity to:
               (1)  finance the corporation's obligations until the
  corporation receives sufficient property to cover its operating
  expenses as financing costs; and
               (2)  repay any short-term borrowing under any such
  financing agreements.
         (d)  The corporation has the powers, rights, and privileges
  provided for a corporation organized under Chapter 22, Business
  Organizations Code, subject to the express exceptions and
  limitations provided by this subchapter.
         (e)  An organizer selected by the executive director of the
  commission shall prepare the certificate of formation of the
  corporation under Chapters 3 and 22, Business Organizations Code.
  The certificate of formation must be consistent with the provisions
  of this subchapter.
         (f)  State officers and agencies are authorized to render
  services to the corporation, within their respective functions, as
  may be requested by the commission or the corporation.
         (g)  The corporation or an issuer may:
               (1)  retain professionals, financial advisors, and
  accountants the corporation or issuer considers necessary to
  fulfill the corporation's or issuer's duties under this subchapter;
  and 
               (2)  determine the duties and compensation of a person
  retained under Subdivision (1), subject to the approval of the
  commission.
         (h)  The corporation is governed by a board of five directors
  appointed by the commission for two-year terms. 
         (i)  An official action of the board requires the favorable
  vote of a majority of the directors present and voting at a meeting
  of the board.
         Sec. 31.104.  POWERS AND DUTIES OF CORPORATION. (a) The
  corporation, in each instance subject to the prior authorization of
  the commission, shall participate in the financial transactions
  authorized by this subchapter. The corporation may not engage in
  business activities except those activities provided for by this
  subchapter and those ancillary and incidental to those activities.  
  The corporation or an issuer may not apply proceeds of bonds or
  charges to a purpose not specified in a financing order, to a
  purpose in an amount that exceeds the amount allowed for the purpose
  in the order, or to a purpose in contravention of the order.
         (b)  The board of the corporation, under the provisions of
  this subchapter, may employ or retain persons as are necessary to
  perform the duties of the corporation.
         (c)  The corporation may:
               (1)  acquire, sell, pledge, or transfer property as
  necessary to effect the purposes of this subchapter and, in
  connection with the action, agree to such terms and conditions as
  the corporation deems necessary and proper, consistent with the
  terms of a financing order:
                     (A)  to acquire property and to pledge such
  property, and any other collateral:
                           (i)  to secure payment of bonds issued by the
  corporation, together with payment of any other qualified costs; or 
                           (ii)  to secure repayment of any borrowing
  from any other issuer of bonds; or
                     (B)  to sell the property to another issuer, which
  may in turn pledge that property, together with any other
  collateral, to the repayment of bonds issued by the issuer together
  with any other qualified costs;
               (2)  issue bonds on terms and conditions consistent
  with a financing order;
               (3)  borrow funds:
                     (A)  from an issuer of bonds to acquire property,
  and pledge that property to the repayment of any borrowing from an
  issuer, together with any related qualified costs, all on terms and
  conditions consistent with a financing order; or
                     (B)  for initial operating expenses;
               (4)  sue or be sued in its corporate name;
               (5)  intervene as a party before the commission or any
  court in this state in any matter involving the corporation's
  powers and duties;
               (6)  negotiate and become a party to contracts as
  necessary, convenient, or desirable to carry out the purposes of
  this subchapter; and
               (7)  engage in corporate actions or undertakings that
  are permitted for nonprofit corporations in this state and that are
  not prohibited by, or contrary to, this subchapter.
         (d)  The corporation shall maintain separate accounts and
  records relating to each entity that collects charges for all
  charges, revenues, assets, liabilities, and expenses relating to
  the entity's related bond issuances.
         (e)  The board of the corporation may not authorize any
  rehabilitation, liquidation, or dissolution of the corporation and
  a rehabilitation, liquidation, or dissolution of the corporation
  may not take effect as long as any bonds are outstanding unless
  adequate protection and provision have been made for the payment of
  the bonds pursuant to the documents authorizing the issuance of the
  bonds. In the event of any rehabilitation, liquidation, or
  dissolution, the assets of the corporation must be applied first to
  pay all debts, liabilities, and obligations of the corporation,
  including the establishment of reasonable reserves for any
  contingent liabilities or obligations, and all remaining funds of
  the corporation must be applied and distributed as provided by an
  order of the commission.
         (f)  Before the date that is two years and one day after the
  date that the corporation no longer has any payment obligation with
  respect to any bonds, including any obligation to an issuer of any
  bonds outstanding, the corporation may not file a voluntary
  petition under federal bankruptcy law and neither any public
  official nor any organization, entity, or other person may
  authorize the corporation to be or to become a debtor under federal
  bankruptcy law during that period. The state covenants that it will
  not limit or alter the denial of authority under this subsection or
  Subsection (e), and the provisions of this subsection and
  Subsection (e) are hereby made a part of the contractual obligation
  that is subject to the state pledge set forth in Section 39.609.
         (g)  The corporation shall prepare and submit to the
  commission for approval an annual operating budget. If requested by
  the commission, the corporation shall prepare and submit an annual
  report containing the annual operating and financial statements of
  the corporation and any other appropriate information. 
         Sec. 31.105.  COMMISSION REGULATION OF CORPORATION. The
  commission shall regulate the corporation as provided by this
  subchapter.  Notwithstanding the regulation authorized by this
  section, the corporation is not a public utility.
         Sec. 31.106.  FINANCING ORDER. (a) This section applies to
  the commission's issuance of a financing order under this
  subchapter.
         (b)  Except as otherwise specifically provided by this
  subchapter, the provisions of this subtitle that address the
  commission's issuance of a financing order under other provisions
  of this subtitle also apply to the commission's issuance of a
  financing order under this subchapter.
         (c)  The corporation and any issuer must be a party to the
  commission's proceedings that address the issuance of a financing
  order along with the entity requesting securitization.
         (d)  In addition to the other applicable requirements of this
  subtitle, a financing order issued under this subchapter must:
               (1)  require the sale, assignment, or other transfer to
  the corporation of certain specified property created by the
  financing order and, following that sale, assignment, or transfer,
  require that charges paid under any financing order be created,
  assessed, and collected as the property of the corporation, subject
  to subsequent sale, assignment, or transfer by the corporation as
  authorized under this subchapter;
               (2)  authorize:
                     (A)  the issuance of bonds by the corporation
  secured by a pledge of specified property, and the application of
  the proceeds of those bonds, net of issuance costs, to the
  acquisition of the property from the entity requesting
  securitization; or
                     (B)  the acquisition of specified property from
  the entity requesting securitization by the corporation, financed:
                           (i)  by a loan by an issuer to the
  corporation of the proceeds of bonds, net of issuance costs; or 
                           (ii)  by the acquisition by an issuer from
  the corporation of the property and in each case the pledge of the
  property to the repayment of the loan or bonds, as applicable; and
               (3)  authorize the entity requesting securitization to
  serve as collection agent to collect the charges and transfer the
  collected charges to the corporation, the issuer, or a financing
  party, as appropriate.
         (e)  After issuance of the financing order, the corporation
  shall arrange for the issuance of bonds as specified in the
  financing order by the corporation or another issuer selected by
  the corporation and approved by the commission.
         (f)  Bonds issued pursuant to a financing order under this
  section are secured only by the related property and any other funds
  pledged under the bond documents. No assets of the state or the
  entity requesting securitization are subject to claims by the
  holders of the bonds. Following assignment of the property, the
  entity requesting securitization does not have any beneficial
  interest or claim of right in such charges or in any property.
         Sec. 31.107.  SEVERABILITY. Effective on the date the first
  bonds are issued under this subchapter, if any provision in this
  title or portion of this title is held to be invalid or is
  invalidated, superseded, replaced, repealed, or expires for any
  reason, that occurrence does not affect the validity or
  continuation of this subchapter or any other provision of this
  title that is relevant to the issuance, administration, payment,
  retirement, or refunding of authorized securitization bonds or to
  any actions of an entity requesting securitization under this
  subchapter, its successors, an assignee, a collection agent, the
  corporation, an issuer, or a financing party, and those provisions
  shall remain in full force and effect.
         SECTION 2.  Section 39.002, Utilities Code, is amended to
  read as follows:
         Sec. 39.002.  APPLICABILITY. This chapter, other than
  Subchapter M and Sections 39.151, 39.1516, 39.155, 39.157(e),
  39.203, 39.904, 39.9051, 39.9052, and 39.914(e), does not apply to
  a municipally owned utility or an electric cooperative. Sections
  39.157(e), 39.203, and 39.904, however, apply only to a municipally
  owned utility or an electric cooperative that is offering customer
  choice. If there is a conflict between the specific provisions of
  this chapter and any other provisions of this title, except for
  Chapters 40 and 41, the provisions of this chapter control.
         SECTION 3.  Section 39.151, Utilities Code, is amended by
  adding Subsection (j-1) to read as follows:
         (j-1)  Notwithstanding Subsection (j), the independent
  system operator in ERCOT may not reduce payments to or charge uplift
  short-paid amounts from a municipally owned utility that becomes
  subject to the jurisdiction of the independent system operator in
  ERCOT on or after June 1, 2021, and before December 30, 2021,
  related to a default on a payment obligation by a market participant
  that occurred before June 1, 2021.
         SECTION 4.  Chapter 39, Utilities Code, is amended by adding
  Subchapter M to read as follows:
  SUBCHAPTER M.  SECURITIZATION FOR INDEPENDENT ORGANIZATION
         Sec. 39.601.  PURPOSE; USE OF PROCEEDS; BOND CHARGES. (a)
  The purpose of this subchapter is to enable the independent
  organization certified under Section 39.151 for the ERCOT power
  region to use securitization financing to fund substantial default
  balances that would otherwise be uplifted to the wholesale market
  as a result of market participants defaulting on amounts owed after
  an extreme pricing event and extraordinary ancillary service and
  reliability deployment price adder charges that were uplifted on a
  load ratio share basis.  Securitization will allow wholesale market
  participants who are owed money to be paid in a more timely manner,
  while allowing the balance to be repaid over time at a low carrying
  cost. This subchapter and Subchapter D, Chapter 41, do not change,
  alter, or reduce the obligation of a market participant to timely
  and fully pay the debts or obligations of the market participant to
  the independent organization.
         (b)  The proceeds of bonds issued for the purpose described
  by Subsection (a) must be used solely for the purpose of financing
  default balances that otherwise would be or have been uplifted to
  the wholesale market and uplift balances that were allocated to all
  load-serving entities on a load ratio share basis as a result of
  usage during the period of emergency. The commission shall ensure
  that securitization provides tangible and quantifiable benefits to
  wholesale market participants, greater than would have been
  achieved absent the issuance of bonds.
         (c)  The commission shall ensure that the structuring and
  pricing of the bonds result in the lowest bond charges consistent
  with market conditions and the terms of the financing order. The
  present value calculation shall use a discount rate equal to the
  proposed interest rate on the bonds.
         (d)  The commission shall require that all market
  participants, including market participants not otherwise subject
  to this subchapter, pay or make provision for the full and prompt
  payment to the independent organization certified under Section
  39.151 for the ERCOT power region of all amounts owed to the
  independent organization to qualify, or to continue to qualify, as
  a market participant in the ERCOT power region. The commission and
  the independent organization shall pursue collection in full of
  amounts owed to the independent organization by any market
  participant to reduce the qualifying costs that would otherwise be
  borne by other market participants or their customers.
         Sec. 39.602.  DEFINITIONS. In this subchapter:
               (1)  "Assignee" means any individual, corporation, or
  other legally recognized entity to which an interest in default or
  uplift property is transferred, other than as security.
               (2)  "Default charges" means nonbypassable amounts to
  be charged on all wholesale market transactions administered by the
  independent organization certified under Section 39.151 for the
  ERCOT power region, approved by the commission under a financing
  order to recover qualified costs, that shall be collected by the
  independent organization, its successors, an assignee, or other
  collection agents as provided by the financing order.
               (3)  "Financing order" means an order of the commission
  approving the issuance of bonds and the creation of charges for the
  recovery of qualified costs.
               (4)  "Financing party" means a holder of bonds,
  including trustees, collateral agents, and other persons acting for
  the benefit of the holder.
               (5)  "Independent organization" means the independent
  organization certified under Section 39.151 for the ERCOT power
  region.
               (6)  "Load-serving entity" means a municipally owned
  utility, an electric cooperative, or a retail electric provider.
               (7)  "Period of emergency" means the period beginning
  12:00 a.m., February 12, 2021, and ending 11:59 p.m., February 20,
  2021.
               (8)  "Qualified costs" means a default balance
  resulting from the period of emergency that otherwise would be or
  has been uplifted to other wholesale market participants, together
  with the costs of issuing, supporting, and servicing bonds and any
  costs of retiring and refunding existing debt in connection with
  the issuance of the bonds.
               (9)  "Uplift charges" means charges for reliability
  deployment price adders and ancillary services costs in excess of
  the commission's system-wide offer cap that were uplifted to
  load-serving entities on a load ratio share basis due to energy
  consumption during the period of emergency. The term includes only
  uplifted amounts and does not include amounts that were part of the
  prevailing settlement point price.
         Sec. 39.603.  FINANCING ORDERS; TERMS. (a) On application
  of the independent organization, the commission may adopt a
  financing order to recover the costs of a substantial default or
  uplift balance of qualified costs resulting from a significant
  pricing event on making a finding that such financing is needed to
  preserve the integrity of the wholesale market and the public
  interest after considering:
               (1)  the interests of wholesale market participants who
  are owed balances; and 
               (2)  the potential effects of uplifting those balances
  without a financing vehicle.
         (b)  The financing order must detail the amounts to be
  recovered and the period over which the nonbypassable default or
  uplift charges shall be recovered. The period may not exceed 30
  years. If an amount determined under this section is subject to
  judicial review of a commission order, a bankruptcy proceeding, or
  another type of litigation at the time of the securitization
  proceeding, the financing order shall include an adjustment
  mechanism requiring the independent organization to adjust its
  default or uplift charges in a manner that would refund, over the
  remaining life of the bonds, any overpayments resulting from
  securitization of amounts in excess of the amount resulting from a
  final determination after completion of all appellate reviews. The
  adjustment mechanism may not affect the stream of revenue available
  to service the bonds. An adjustment may not be made under this
  subsection until all appellate reviews have been completed,
  including appellate reviews following a commission decision on
  remand of its original orders, if applicable.
         (c)  Nonbypassable default charges must be collected and
  allocated among wholesale market participants using the same
  allocation methodology described in the protocols of the
  independent organization, as they existed on March 1, 2021. The
  rate associated with the nonbypassable default charges must be
  assessed on all wholesale market participants, including market
  participants who are in default but still participating in the
  wholesale market, and must be based on updated transaction data to
  prevent market participants from engaging in behavior designed to
  avoid the nonbypassable default charges.
         (d)  Notwithstanding another provision of this subchapter,
  nonbypassable default charges may not be collected from or
  allocated to a market participant that:
               (1)  would otherwise be subject to an uplift charge
  solely as a result of acting as a central counterparty
  clearinghouse in wholesale market transactions in the ERCOT power
  region; and
               (2)  is regulated as a derivatives clearing
  organization, as defined by the Commodity Exchange Act (7 U.S.C.
  Section 1a).
         (e)  Nonbypassable uplift charges must be allocated to all
  load-serving entities on a load ratio share basis, excluding the
  load of entities that have opted out under Subsection (f).
         (f)  The commission shall develop a process that allows a
  load-serving entity and any customer whose demand is greater than
  one megawatt and is served by a retail electric provider to opt out
  of the uplift charges by paying in full all invoices owed for usage
  during the period of emergency. Load-serving entities and
  individual customers that opt out may not receive any proceeds from
  the uplift bonds.
         (g)  A financing order becomes effective in accordance with
  its terms and the financing order, together with the default or
  uplift charges authorized in the order, shall be irrevocable and
  not subject to reduction, impairment, or adjustment by further
  action of the commission after it takes effect.
         (h)  The commission shall issue a financing order not later
  than the 90th day after the date the independent organization files
  a request for the financing order under Subsection (a) or (j).
         (i)  A financing order is not subject to rehearing by the
  commission. A financing order may be reviewed by appeal by a party
  to the proceeding to a Travis County district court filed not later
  than the 15th day after the date the financing order is signed by
  the commission. The judgment of the district court may be reviewed
  only by direct appeal to the Supreme Court of Texas filed not later
  than the 15th day after the date of the entry of judgment. All
  appeals shall be heard and determined by the district court and the
  Supreme Court of Texas as expeditiously as possible with lawful
  precedence over other matters. Review on appeal shall be based
  solely on the record before the commission and briefs to the court
  and shall be limited to whether the financing order conforms to the
  constitution and laws of this state and the United States and is
  within the authority of the commission under this chapter.
         (j)  At the request of the independent organization, the
  commission may adopt a financing order providing for retiring and
  refunding the bonds on making a finding that the future default or
  uplift charges required to service the new bonds, including
  transaction costs, will be less than the future default or uplift
  charges required to service the bonds being refunded. On the
  retirement of the refunded bonds, the commission shall adjust the
  related default or uplift charges accordingly.
         Sec. 39.604.  PROPERTY RIGHTS. (a) The rights and interests
  of the independent organization or its successor under a financing
  order, including the right to impose, collect, and receive default
  or uplift charges authorized in the order, shall be only contract
  rights until they are first transferred to an assignee or pledged in
  connection with the issuance of bonds, at which time they will
  become default or uplift property, as described by Subsection (b).
         (b)  Default or uplift property shall constitute a present
  property right for purposes of contracts concerning the sale or
  pledge of property, even though the imposition and collection of
  default or uplift charges depends on further acts of the
  independent organization or others that have not yet occurred. The
  financing order shall remain in effect and the property shall
  continue to exist for the same period as the pledge of the state
  described by Section 39.609.
         (c)  All revenues and collections resulting from default or
  uplift charges shall constitute proceeds only of the default or
  uplift property arising from the financing order.
         Sec. 39.605.  INTEREST NOT SUBJECT TO SETOFF. The interest
  of an assignee or pledgee in default or uplift property and in the
  revenues and collections arising from that property are not subject
  to setoff, counterclaim, surcharge, or defense by the independent
  organization or any other person or in connection with the
  bankruptcy of a wholesale market participant or the independent
  organization. A financing order shall remain in effect and
  unabated notwithstanding the bankruptcy of the independent
  organization, its successors, or assignees.
         Sec. 39.606.  DEFAULT AND UPLIFT CHARGES NONBYPASSABLE. A
  financing order shall include terms ensuring that the imposition
  and collection of default or uplift charges authorized in the order
  shall be nonbypassable, other than uplift charges paid under
  Section 39.603(f).
         Sec. 39.607.  TRUE-UP. A financing order shall include a
  mechanism requiring that default or uplift charges be reviewed and
  adjusted at least annually, not later than the 45th day after the
  anniversary date of the issuance of the bonds, to:
               (1)  correct over-collections or under-collections of
  the preceding 12 months; and
               (2)  ensure the expected recovery of amounts sufficient
  to timely provide all payments of debt service and other required
  amounts and charges in connection with the bonds.
         Sec. 39.608.  SECURITY INTERESTS; ASSIGNMENT; COMMINGLING;
  DEFAULT. (a) Default or uplift property does not constitute an
  account or general intangible under Section 9.106, Business &
  Commerce Code. The creation, granting, perfection, and enforcement
  of liens and security interests in default or uplift property are
  governed by this section and not by the Business & Commerce Code.
         (b)  A valid and enforceable lien and security interest in
  default or uplift property may be created only by a financing order
  and the execution and delivery of a security agreement with a
  financing party in connection with the issuance of bonds. The lien
  and security interest shall attach automatically from the time that
  value is received for the bonds and, on perfection through the
  filing of notice with the secretary of state in accordance with the
  rules prescribed under Subsection (d), shall be a continuously
  perfected lien and security interest in the default or uplift
  property and all proceeds of the property, whether accrued or not,
  shall have priority in the order of filing and take precedence over
  any subsequent judicial or other lien creditor. If notice is filed
  before the 10th day after the date value is received for the default
  bonds, the security interest shall be perfected retroactive to the
  date value was received. Otherwise, the security interest shall be
  perfected as of the date of filing.
         (c)  Transfer of an interest in default or uplift property to
  an assignee shall be perfected against all third parties, including
  subsequent judicial or other lien creditors, when the financing
  order becomes effective, transfer documents have been delivered to
  the assignee, and a notice of that transfer has been filed in
  accordance with the rules adopted under Subsection (d). However, if
  notice of the transfer has not been filed in accordance with this
  subsection before the 10th day after the delivery of transfer
  documentation, the transfer of the interest is not perfected
  against third parties until the notice is filed.
         (d)  The secretary of state shall implement this section by
  establishing and maintaining a separate system of records for the
  filing of notices under this section and adopting the rules for
  those filings based on Chapter 9, Business & Commerce Code, adapted
  to this subchapter and using the terms defined by this subchapter.
         (e)  The priority of a lien and security interest perfected
  under this section is not impaired by any later modification of the
  financing order under Section 39.607 or by the commingling of funds
  arising from default or uplift charges with other funds, and any
  other security interest that may apply to those funds shall be
  terminated when they are transferred to a segregated account for
  the assignee or a financing party. If default or uplift property
  has been transferred to an assignee, any proceeds of that property
  shall be held in trust for the assignee.
         (f)  If a default or termination occurs under the bonds, the
  financing parties or their representatives may foreclose on or
  otherwise enforce their lien and security interest in any property
  as if they were secured parties under Chapter 9, Business & Commerce
  Code, and the commission may order that amounts arising from
  default or uplift charges be transferred to a separate account for
  the financing parties' benefit, to which their lien and security
  interest shall apply. On application by or on behalf of the
  financing parties, a district court of Travis County shall order
  the sequestration and payment to them of revenues arising from the
  default or uplift charges.
         Sec. 39.609.  PLEDGE OF STATE. Default bonds are not a debt
  or obligation of the state and are not a charge on its full faith and
  credit or taxing power. The state pledges, however, for the benefit
  and protection of financing parties and the independent
  organization that it will not take or permit any action that would
  impair the value of default or uplift property, or reduce, alter, or
  impair the default or uplift charges to be imposed, collected, and
  remitted to financing parties, until the principal, interest and
  premium, and any other charges incurred and contracts to be
  performed in connection with the related bonds have been paid and
  performed in full. Any party issuing bonds under this subchapter is
  authorized to include this pledge in any documentation relating to
  those bonds.
         Sec. 39.610.  TAX EXEMPTION. Transactions involving the
  transfer and ownership of default or uplift property and the
  receipt of default or uplift charges are exempt from state and local
  income, sales, franchise, gross receipts, and other taxes or
  similar charges.
         Sec. 39.611.  NOT PUBLIC UTILITY. An assignee or financing
  party may not be considered to be a public utility or person
  providing electric service solely by virtue of the transactions
  described in this subchapter.
         Sec. 39.612.  SEVERABILITY. Effective on the date the first
  bonds are issued under this subchapter, if any provision in this
  title or portion of this title is held to be invalid or is
  invalidated, superseded, replaced, repealed, or expires for any
  reason, that occurrence does not affect the validity or
  continuation of this subchapter or any other provision of this
  title that is relevant to the issuance, administration, payment,
  retirement, or refunding of bonds or to any actions of the
  independent organization, its successors, an assignee, a
  collection agent, or a financing party, which shall remain in full
  force and effect.
         Sec. 39.613.  CUSTOMER CHARGES. All load-serving entities
  that receive offsets to specific uplift charges from the
  independent organization under this subchapter must adjust
  customer invoices to reflect the offsets for any charges that were
  or would otherwise be passed through to customers under the terms of
  service with the load-serving entity, including by providing a
  refund for any offset charges that were previously paid. An
  electric cooperative, including an electric cooperative that
  elects to receive offsets, shall not otherwise become subject to
  rate regulation by the commission and receipt of offsets does not
  affect the applicability of Chapter 41 to an electric cooperative.
         SECTION 5.  This Act takes effect on the date on which Senate
  Bill No. 1580, House Bill No. 3544, or other similar legislation of
  the 87th Legislature, Regular Session, 2021, relating to the use of
  securitization by electric cooperatives to address weather-related
  extraordinary costs and expenses becomes law.
 
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