Bill Text: TX HB4492 | 2021-2022 | 87th Legislature | Enrolled
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-Enrolled.html
H.B. No. 4492 |
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relating to financing certain costs associated with electric | ||
markets; granting authority to issue bonds; authorizing fees. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Section 404.0241, Government Code, is amended by | ||
adding Subsections (b-1), (b-2), (b-3), (b-4), and (b-5) to read as | ||
follows: | ||
(b-1) Notwithstanding any other law, directly or indirectly | ||
through a separately managed account or other investment vehicle, | ||
the comptroller shall invest not more than $800 million of the | ||
economic stabilization fund balance to finance the default balance | ||
as defined by Section 39.602, Utilities Code, to be repaid by ERCOT | ||
market participants through default charges established by the | ||
Public Utility Commission of Texas. The interest rate charged in | ||
connection with the debt obligations must be calculated by adding | ||
the rate determined by the Municipal Market Data Municipal Electric | ||
Index, as published by Refinitiv TM3, based on the credit rating of | ||
the independent organization, as defined by Section 39.602, | ||
Utilities Code, plus 2.5 percent. The term of the debt obligations | ||
may not exceed 30 years. | ||
(b-2) A person may not bring a civil action against this | ||
state, the Texas Treasury Safekeeping Trust Company, or an | ||
employee, independent contractor, or official of this state, | ||
including the comptroller, for any claim, including breach of | ||
fiduciary duty or violation of any constitutional, statutory, or | ||
regulatory requirement, in connection with any action, inaction, | ||
decision, divestment, investment, report, or other determination | ||
made or taken in connection with Subsections (b-1), (b-4), and | ||
(b-5). | ||
(b-3) A person who brings an action described by Subsection | ||
(b-2) is liable to the defendant for the defendant's costs and | ||
attorney's fees resulting from the action. | ||
(b-4) The comptroller shall manage the investments required | ||
by Subsection (b-1) as a separate investment portfolio. The | ||
comptroller shall provide separate accounting and reporting for the | ||
investments in that portfolio. The comptroller shall credit to that | ||
portfolio all payments, distributions, interest, and other | ||
earnings on the investments in that portfolio. | ||
(b-5) The comptroller has any power necessary to accomplish | ||
the purposes of managing and investing the assets of the portfolio | ||
described by Subsection (b-4). In managing the assets of that | ||
portfolio, through procedures and subject to restrictions the | ||
comptroller considers appropriate, the comptroller may acquire, | ||
sell, transfer, or otherwise assign the investments as appropriate, | ||
taking into consideration the purposes, terms, distribution | ||
requirements, and other circumstances of that portfolio then | ||
prevailing. | ||
SECTION 2. Section 39.002, Utilities Code, is amended to | ||
read as follows: | ||
Sec. 39.002. APPLICABILITY. This chapter, other than | ||
Sections 39.151, 39.1516, 39.155, 39.157(e), 39.159, 39.203, | ||
39.904, 39.9051, 39.9052, and 39.914(e), and Subchapters M and N, | ||
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) of this section, | ||
Section 39.653(c), or any other law, the independent system | ||
operator in the ERCOT power region may not reduce payments to or | ||
uplift short-paid amounts to a municipally owned utility that | ||
becomes subject to the jurisdiction of that independent system | ||
operator on or after May 29, 2021, and before December 30, 2021, | ||
related to a default on a payment obligation by a market participant | ||
that occurred before May 29, 2021. | ||
SECTION 4. Subchapter D, Chapter 39, Utilities Code, is | ||
amended by adding Section 39.159 to read as follows: | ||
Sec. 39.159. AMOUNTS OWED TO INDEPENDENT ORGANIZATION BY | ||
MARKET PARTICIPANTS. (a) The commission shall require that all | ||
market participants fully and promptly pay to the independent | ||
organization certified under Section 39.151 for the ERCOT power | ||
region all amounts owed to the independent organization, or provide | ||
for the full and prompt payment of those amounts owed, which must | ||
be calculated solely according to the protocols of the independent | ||
organization in effect during the period of emergency and subject | ||
to the jurisdiction of the commission, to qualify, or to continue | ||
to qualify, as a market participant in the ERCOT power region. | ||
(b) The independent organization shall report to the | ||
commission that a market participant is in default for the failure | ||
to pay, or provide for the full and prompt payment of, all amounts | ||
owed to the independent organization as calculated in accordance | ||
with this section. The commission may not allow the defaulting | ||
market participant to continue to be a market participant in the | ||
ERCOT power region for any purpose or allow the independent | ||
organization to accept the defaulting market participant's loads or | ||
generation for scheduling in the ERCOT power region until all | ||
amounts owed to the independent organization by the market | ||
participant as calculated in this section are fully paid. | ||
(c) 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 costs that | ||
would otherwise be borne by other market participants or their | ||
customers. | ||
SECTION 5. Chapter 39, Utilities Code, is amended by adding | ||
Subchapters M and N to read as follows: | ||
SUBCHAPTER M. WINTER STORM URI DEFAULT BALANCE FINANCING | ||
Sec. 39.601. PURPOSE. (a) The purpose of this subchapter is | ||
to address the Winter Storm Uri default balance, as defined by | ||
Section 39.602, in a manner that benefits the public interest by: | ||
(1) enabling the independent organization to finance | ||
the payment of the default balance with debt obligations; and | ||
(2) authorizing the commission to contract with the | ||
comptroller under Section 404.0241, Government Code, to finance the | ||
payment of the default balance with debt obligations. | ||
(b) Financing the default balance in the manner provided by | ||
this subchapter will: | ||
(1) allow wholesale market participants that are owed | ||
money to be paid in a more timely manner; | ||
(2) replenish financial revenue auction receipts | ||
temporarily used by the independent organization to reduce the | ||
Winter Storm Uri-related amounts short-paid to the wholesale market | ||
participants; and | ||
(3) allow the wholesale market to repay the default | ||
balance over time. | ||
(c) The legislature finds that the financing authorized by | ||
this subchapter serves the public purpose of preserving the | ||
integrity of the electricity market in the ERCOT power region. | ||
(d) The proceeds of debt obligations issued under this | ||
subchapter must be used solely for the purpose of financing default | ||
balances that otherwise would be or have been uplifted to the | ||
wholesale market. | ||
(e) The commission shall ensure that the structuring and | ||
pricing of debt obligations issued under this subchapter result in | ||
the lowest financing costs consistent with market conditions and | ||
the terms of the commission's order. The present value calculation | ||
must use a discount rate equal to the proposed interest rate on the | ||
debt obligations. | ||
Sec. 39.602. DEFINITIONS. In this subchapter: | ||
(1) "Default balance" means an amount of money of not | ||
more than $800 million that includes only: | ||
(A) amounts owed to the independent organization | ||
by competitive wholesale market participants from the period of | ||
emergency that otherwise would be or have been uplifted to other | ||
wholesale market participants; | ||
(B) financial revenue auction receipts used by | ||
the independent organization to temporarily reduce amounts | ||
short-paid to wholesale market participants related to the period | ||
of emergency; and | ||
(C) reasonable costs incurred by a state agency | ||
or the independent organization to implement a debt obligation | ||
order under Sections 39.603 and 39.604, including the cost of | ||
retiring or refunding existing debt. | ||
(2) "Default charges" means charges assessed to | ||
wholesale market participants to repay amounts financed under this | ||
subchapter to pay the default balance. | ||
(3) "Independent organization" means the independent | ||
organization certified under Section 39.151 for the ERCOT power | ||
region. | ||
(4) "Period of emergency" means the period beginning | ||
12:01 a.m., February 12, 2021, and ending 11:59 p.m., February 20, | ||
2021. | ||
Sec. 39.603. DEBT OBLIGATION ORDER. (a) On application by | ||
the independent organization, the commission by order may authorize | ||
the independent organization to establish a debt financing | ||
mechanism to finance the default balance if the commission finds | ||
that the debt obligations are needed to preserve the integrity of | ||
the wholesale market and the public interest, after considering: | ||
(1) the need to timely replenish financial revenue | ||
auction receipts used by the independent organization to reduce | ||
amounts short-paid to wholesale market participants; | ||
(2) the interests of wholesale market participants | ||
that are owed balances; and | ||
(3) the potential effects of uplifting those balances | ||
to the wholesale market without a financing vehicle. | ||
(b) The order must state: | ||
(1) the default balance to be financed; and | ||
(2) the period over which the default charges must be | ||
assessed to repay the debt obligations, which may not exceed 30 | ||
years. | ||
(c) The order must include an adjustment mechanism | ||
requiring the independent organization to adjust default charges to | ||
refund, over the remaining period of the default charges, any | ||
payments made by a market participant toward unpaid obligations | ||
from the period of emergency that were included in the financed | ||
default balance. | ||
(d) The independent organization shall collect from and | ||
allocate among wholesale market participants the default charges | ||
using the same allocated pro rata share methodology under which the | ||
charges would otherwise be uplifted under the protocols in effect | ||
on March 1, 2021. The 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 | ||
who enter the market after a debt obligation order is issued under | ||
this subchapter, and may be based on periodically updated | ||
transaction data to prevent market participants from engaging in | ||
behavior designed to avoid the default charges. | ||
(e) Not later than the 30th day after the date the | ||
independent organization receives a default charge payment from a | ||
wholesale market participant, the independent organization shall | ||
remit the payment to the comptroller toward repayment of debt | ||
obligations in which the comptroller made an investment under | ||
Section 404.0241(b-1), Government Code, if applicable. | ||
(f) Notwithstanding another provision of this subchapter, | ||
default charges may not be collected from or allocated to a market | ||
participant that: | ||
(1) otherwise would be subject to a default 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 Section 1a, Commodity Exchange Act (7 | ||
U.S.C. Section 1a). | ||
(g) Not later than the 90th day after the date the | ||
independent organization files an application for an order under | ||
Subsection (a), the commission shall issue an order described by | ||
Subsection (a) or an order denying the application. The order | ||
becomes effective in accordance with its terms and the order, | ||
together with the default charges authorized in the order, shall be | ||
irrevocable and not subject to reduction, impairment, or adjustment | ||
by further action of the commission after the order takes effect. | ||
Notwithstanding this requirement, the commission may refinance any | ||
debt obligations created by an order issued under this subchapter | ||
if the commission determines that the refinancing is in the public | ||
interest, considering the interest of both the ERCOT market and the | ||
state's interest in the economic stabilization fund, and otherwise | ||
meets the requirements of this subchapter. | ||
(h) An order described by Subsection (a) or (g) is not | ||
subject to rehearing by the commission. The order may be reviewed by | ||
appeal by a party to the proceeding to a Travis County district | ||
court that is filed not later than the 15th day after the date the | ||
order is signed by the commission. The judgment of the district | ||
court may be reviewed only by a direct appeal to the Supreme Court | ||
of Texas that is 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 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. | ||
(i) A debt obligation issued under this section is a | ||
nonrecourse debt secured solely by the default charges explicitly | ||
assessed to repay the obligation. The independent organization's | ||
obligations authorized under this section do not create personal | ||
liability for the independent organization. | ||
Sec. 39.604. COMMISSION-AUTHORIZED FINANCING. (a) The | ||
commission may contract with another state agency with expertise in | ||
public financing to establish a debt financing mechanism for the | ||
payment of the default balance as defined in this subchapter, under | ||
an order that meets the requirements of Section 39.603. This | ||
section does not apply to a default balance securitized under | ||
Subchapter D, Chapter 41. | ||
(b) The contracted state agency and any issuer, along with | ||
the independent organization, must be a party to the commission's | ||
proceedings that address the issuance of an order. | ||
(c) In addition to the other applicable requirements of this | ||
subtitle, an order issued under this section must: | ||
(1) require the sale, assignment, or other transfer to | ||
the contracted state agency of default charges created by the order | ||
and, following that sale, assignment, or transfer, require that | ||
default charges paid under any order be created, assessed, and | ||
collected as the property of the contracted state agency, subject | ||
to subsequent sale, assignment, or transfer by the contracted state | ||
agency as authorized under this subchapter; | ||
(2) authorize: | ||
(A) the issuance of debt obligations by the | ||
contracted state agency secured by a pledge of default charge | ||
revenue, and the application of the proceeds of those debt | ||
obligations, net of issuance costs, to the independent | ||
organization; or | ||
(B) the acquisition of default charge revenue | ||
from the independent organization by the contracted state agency, | ||
financed: | ||
(i) by a loan by an issuer to the contracted | ||
state agency of the proceeds of debt obligations, net of issuance | ||
costs; or | ||
(ii) by the acquisition by an issuer from | ||
the contracted state agency of the default charge revenue and in | ||
each case the pledge of the revenue to the repayment of the loan or | ||
other debt obligation, as applicable; and | ||
(3) authorize the independent organization to serve as | ||
collection agent to collect the default charges and transfer the | ||
collected default charges to the contracted state agency or the | ||
issuer, as appropriate. | ||
(d) After issuance of the order, the contracted state agency | ||
shall arrange for the issuance of debt obligations, as specified by | ||
the order, by the contracted state agency or another issuer | ||
selected by the contracted state agency and approved by the | ||
commission. | ||
(e) Debt obligations issued pursuant to an order issued | ||
under this section are secured only by the default charge revenue | ||
and any other funds pledged under the bond documents. No assets of | ||
the state or the independent organization are subject to claims by | ||
the holders of the debt obligations. Following assignment of the | ||
default charge revenue, the independent organization does not have | ||
any beneficial interest or claim of right in the revenue. | ||
(f) Effective on the date the first debt obligations are | ||
issued under this subchapter, if any provision of this title or | ||
portion of this title is held to be invalid or is invalidated, | ||
superseded, replaced, or 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 | ||
debt obligations authorized under this subchapter or to any actions | ||
of the independent organization, its successors, an assignee, a | ||
collection agent, the contracted state agency, or an issuer and | ||
those provisions shall remain in full force and effect. | ||
Sec. 39.605. DEFAULT CHARGES NONBYPASSABLE. An order | ||
issued under Section 39.603 or 39.604 must: | ||
(1) include terms ensuring that the imposition and | ||
collection of default charges authorized in the order shall be | ||
nonbypassable by wholesale market participants; and | ||
(2) authorize the independent organization to | ||
establish appropriate fees and other methods for pursuing amounts | ||
owed from entities exiting the wholesale market. | ||
Sec. 39.606. TRUE-UP MECHANISM. An order issued under | ||
Section 39.603 or 39.604 must include a mechanism requiring that | ||
default charges be reviewed and adjusted at least annually, not | ||
later than the 45th day after the anniversary date of the issuance | ||
of the order, to: | ||
(1) correct over-collections or under-collections | ||
over the preceding 12 months; and | ||
(2) ensure the expected recovery of amounts sufficient | ||
to timely provide all payments of debt service. | ||
Sec. 39.607. TAX EXEMPTION. The transfer and receipt of | ||
default charges are exempt from state and local sales and use, | ||
franchise, and gross receipts taxes. | ||
Sec. 39.608. PROPERTY RIGHTS. (a) The rights and interests | ||
of the independent organization or its successor under a debt | ||
obligation order issued under this subchapter, including the right | ||
to impose, collect, and receive default charges, shall be only | ||
contract rights until they are first transferred to an assignee or | ||
pledged in connection with an investment agreement entered into | ||
under Section 404.0241, Government Code, or the issuance of debt | ||
obligations, at which time they will become default property, as | ||
described by Subsection (b). | ||
(b) Default 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 | ||
charges depends on further acts of the independent organization or | ||
others that have not yet occurred. A debt obligation order issued | ||
under this subchapter 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 | ||
charges shall constitute proceeds only of the default property | ||
arising from the debt obligation order. | ||
Sec. 39.609. PLEDGE OF STATE. Debt obligations issued | ||
pursuant to this subchapter, including any 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 property, or reduce, alter, or impair | ||
the default 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 debt obligations have been paid and | ||
performed in full. Any party issuing a debt obligation under this | ||
subchapter is authorized to include this pledge in any | ||
documentation relating to the obligation. | ||
SUBCHAPTER N. WINTER STORM URI UPLIFT FINANCING | ||
Sec. 39.651. PURPOSE; USE OF PROCEEDS. (a) The purpose of | ||
this subchapter is to address the Winter Storm Uri uplift balance | ||
by: | ||
(1) enabling the independent organization certified | ||
under Section 39.151 for the ERCOT power region to finance the | ||
uplift balance on behalf of wholesale market participants through | ||
debt obligations; and | ||
(2) authorizing the commission to contract with | ||
another state agency to finance the payment of the uplift balance | ||
with debt obligations or use any another financial mechanism | ||
consistent with this subchapter for that purpose. | ||
(b) Financing the uplift balance in the manner provided by | ||
this subchapter will allow wholesale market participants who were | ||
assessed extraordinary uplift charges due to consumption during the | ||
period of emergency to pay those charges over a longer period of | ||
time, alleviating liquidity issues and reducing the risk of | ||
additional defaults in the wholesale market. | ||
(c) The legislature finds that authorizing financing under | ||
this subchapter serves the public purpose of allowing the | ||
commission to stabilize the wholesale electricity market in the | ||
ERCOT power region. | ||
(d) The proceeds of debt obligations issued under this | ||
subchapter must be used solely for the purpose of financing | ||
reliability deployment price adder charges and ancillary service | ||
costs that exceeded the commission's system-wide offer cap and were | ||
uplifted to load-serving entities based on consumption during the | ||
period of emergency. A load-serving entity that receives proceeds | ||
from the debt obligations may use the proceeds solely for the | ||
purposes of fulfilling payment obligations directly related to such | ||
costs and refunding such costs to retail customers who have paid or | ||
otherwise would be obligated to pay such costs. | ||
(e) The commission shall ensure that the structuring and | ||
pricing of the debt obligations results in the lowest uplift | ||
charges consistent with market conditions and the terms of the | ||
order issued under this subchapter. The present value calculation | ||
must use a discount rate equal to the proposed interest rate on the | ||
debt obligations. | ||
Sec. 39.652. DEFINITIONS. In this subchapter: | ||
(1) "Independent organization" means the independent | ||
organization certified under Section 39.151 for the ERCOT power | ||
region. | ||
(2) "Load-serving entity" means a municipally owned | ||
utility, an electric cooperative, or a retail electric provider. | ||
(3) "Period of emergency" means the period beginning | ||
12:01 a.m., February 12, 2021, and ending 11:59 p.m., February 20, | ||
2021. | ||
(4) "Uplift balance" means an amount of money of not | ||
more than $2.1 billion that was uplifted to load-serving entities | ||
on a load ratio share basis due to energy consumption during the | ||
period of emergency for reliability deployment price adder charges | ||
and ancillary services costs in excess of the commission's | ||
system-wide offer cap, excluding amounts securitized under | ||
Subchapter D, Chapter 41. The term does not include amounts that | ||
were part of the prevailing settlement point price during the | ||
period of emergency. | ||
(5) "Uplift charges" means charges assessed to | ||
load-serving entities to repay amounts financed under this | ||
subchapter to pay the uplift balance and reasonable costs incurred | ||
by a state agency or the independent organization to implement a | ||
debt obligation order under Section 39.653, 39.654, or 39.655, | ||
including the cost of retiring or refunding existing debt. | ||
Sec. 39.653. DEBT OBLIGATION ORDER. (a) The independent | ||
organization shall file an application with the commission to | ||
establish a debt financing mechanism for the payment of the uplift | ||
balance if the commission finds that such financing will support | ||
the financial integrity of the wholesale market and is necessary to | ||
protect the public interest, considering the impacts on both | ||
wholesale market participants and retail customers. | ||
(b) An order issued under this section must: | ||
(1) state the uplift balance to be financed; | ||
(2) state the period over which the uplift charges | ||
must be assessed to repay the debt obligations, which may not exceed | ||
30 years; and | ||
(3) provide the process for remitting the proceeds of | ||
the financing to load-serving entities who were exposed to the | ||
costs included in the uplift balance, including a requirement for | ||
the load-serving entities to submit documentation of their | ||
exposure. | ||
(c) The independent organization shall assess uplift | ||
charges to all load-serving entities on a load ratio share basis, | ||
which may be translated to a kWh charge, including load serving | ||
entities who enter the market after an order has been issued under | ||
this subchapter, but excluding the load of entities that opt out | ||
under Subsection (d). | ||
(d) The commission shall develop a one-time process that | ||
allows municipally owned utilities, electric cooperatives, river | ||
authorities, a retail electric provider that has the same corporate | ||
parent as each of the provider's customers, a retail electric | ||
provider that is an affiliate of each of the provider's customers, | ||
and transmission-voltage customers 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 transmission-voltage customers that opt | ||
out under this subsection shall not receive any proceeds from the | ||
uplift financing. | ||
(e) An order issued under this section must include a | ||
requirement that any load-serving entity that receives proceeds | ||
from the financing that exceed the entity's actual exposure to | ||
uplift charges from consumption during the period of emergency | ||
notify the independent organization and remit any excess receipts. | ||
Any payments received under this subsection must be credited | ||
against the uplift balance to reduce the remaining uplift charges. | ||
(f) Not later than the 90th day after the date the | ||
independent organization files an application for an order under | ||
Subsection (a), the commission shall issue an order described by | ||
Subsection (a) or an order denying the application. The order | ||
becomes effective in accordance with its terms and the order, | ||
together with the 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. | ||
Notwithstanding this requirement, the commission may refinance any | ||
debt obligations created by an order under this subchapter if the | ||
commission determines that the refinancing is in the public | ||
interest and otherwise meets the requirements of this subchapter. | ||
(g) An order issued under this section is not subject to | ||
rehearing by the commission. An 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 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 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. | ||
(h) A debt obligation issued under this section is a | ||
nonrecourse debt secured solely by the uplift charges explicitly | ||
assessed to repay the obligation. The independent organization's | ||
obligations authorized under this section do not create personal | ||
liability for the independent organization. | ||
(i) This section does not apply to any balance securitized | ||
under Subchapter D, Chapter 41. | ||
Sec. 39.654. COMMISSION-AUTHORIZED FINANCING. (a) The | ||
commission may contract with another state agency with expertise in | ||
public financing to establish a debt financing mechanism to finance | ||
the payment of the uplift balance under an order that meets the | ||
requirements of Section 39.653. | ||
(b) The contracted state agency and any issuer must be a | ||
party to the commission's proceedings that address the issuance of | ||
an order along with the independent organization. | ||
(c) In addition to the other applicable requirements of this | ||
subtitle, an order issued under this section must: | ||
(1) require the sale, assignment, or other transfer to | ||
the contracted state agency of uplift charges created by the order | ||
and, following that sale, assignment, or transfer, require that | ||
uplift charges paid under any order be created, assessed, and | ||
collected as the property of the contracted state agency, subject | ||
to subsequent sale, assignment, or transfer by the contracted state | ||
agency as authorized under this subchapter; | ||
(2) authorize: | ||
(A) the issuance of debt obligations by the | ||
contracted state agency secured by a pledge of uplift charge | ||
revenue, and the application of the proceeds of those debt | ||
obligations, net of issuance costs, to the independent | ||
organization; or | ||
(B) the acquisition of uplift charge revenue from | ||
the independent organization by the contracted state agency, | ||
financed: | ||
(i) by a loan by an issuer to the contracted | ||
state agency of the proceeds of debt obligations, net of issuance | ||
costs; or | ||
(ii) by the acquisition by an issuer from | ||
the contracted state agency of the uplift charge revenue and in each | ||
case the pledge of the revenue to the repayment of the loan or debt | ||
obligations, as applicable; and | ||
(3) authorize the independent organization to serve as | ||
collection agent to collect the uplift charges and transfer the | ||
collected uplift charges to the contracted state agency or the | ||
issuer, as appropriate. | ||
(d) After issuance of the order, the contracted state agency | ||
shall arrange for the issuance of debt obligations, as specified by | ||
the order, by the contracted state agency or another issuer | ||
selected by the contracted state agency and approved by the | ||
commission. | ||
(e) Debt obligations issued pursuant to an order issued | ||
under this section are secured only by the uplift charge revenue and | ||
any other funds pledged under the bond documents. No assets of the | ||
state or the independent organization are subject to claims by the | ||
holders of the debt obligations. Following assignment of the | ||
uplift charge revenue, the independent organization does not have | ||
any beneficial interest or claim of right in the revenue. | ||
Sec. 39.655. OTHER FINANCIAL MECHANISM. The commission may | ||
use a financial mechanism other than the mechanisms described by | ||
Sections 39.653 and 39.654 that meets the requirements of this | ||
subchapter to accomplish the purposes of this subchapter. | ||
Sec. 39.656. UPLIFT CHARGES NONBYPASSABLE. An order issued | ||
under Section 39.653, 39.654, or 39.655 must: | ||
(1) include terms ensuring that the imposition and | ||
collection of uplift charges authorized in the order shall be | ||
nonbypassable, except for entities excluded under Section | ||
39.653(d); and | ||
(2) authorize the independent organization to | ||
establish appropriate fees and other methods for pursuing amounts | ||
owed from entities exiting the wholesale market. | ||
Sec. 39.657. TRUE-UP. An order shall include a mechanism | ||
requiring that uplift charges be reviewed and adjusted at least | ||
annually, not later than the 45th day after the anniversary date of | ||
the issuance of the debt obligations, to: | ||
(1) correct over-collections or under-collections | ||
over 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 debt obligations. | ||
Sec. 39.658. TAX EXEMPTION. Transactions involving the | ||
transfer and ownership of uplift property and the receipt of uplift | ||
charges are exempt from state and local income, sales, franchise, | ||
gross receipts, and other taxes or similar charges. | ||
Sec. 39.659. SEVERABILITY. Effective on the date the first | ||
debt obligations 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 debt obligations 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. 39.660. 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. | ||
Sec. 39.661. ENFORCEMENT. The commission may use any | ||
enforcement mechanism established by Chapter 15 or this chapter, | ||
including revocation of certification by the commission, against | ||
any entity that fails to remit excess receipts from the uplift | ||
balance financing under Section 39.653(e) or otherwise | ||
misappropriates or misuses amounts received from the uplift balance | ||
financing this subchapter. | ||
Sec. 39.662. PROPERTY RIGHTS. (a) The rights and interests | ||
of the independent organization or its successor under a debt | ||
obligation order issued under this subchapter, including the right | ||
to impose, collect, and receive uplift charges authorized in a debt | ||
obligation order under this subchapter, shall be only contract | ||
rights until they are first transferred to an assignee or pledged in | ||
connection with the issuance of a financing agreement entered into | ||
under Section 39.654(a) or the issuance of debt obligations, at | ||
which time they will become uplift property, as described by | ||
Subsection (b). | ||
(b) 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 uplift | ||
charges depends on further acts of the independent organization or | ||
others that have not yet occurred. A debt obligation order issued | ||
under this subchapter shall remain in effect and the property shall | ||
continue to exist for the same period as the pledge of the state | ||
described by Section 39.663. | ||
(c) All revenues and collections resulting from uplift | ||
charges shall constitute proceeds only of the uplift property | ||
arising from the debt obligation order. | ||
Sec. 39.663. PLEDGE OF STATE. Debt obligations issued | ||
pursuant to this subchapter, including any 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 uplift property, or reduce, alter, or impair the | ||
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 debt obligations have been paid and performed in full. | ||
Any party issuing a debt obligation under this subchapter is | ||
authorized to include this pledge in any documentation relating to | ||
the obligation. | ||
Sec. 39.664. LEGAL ACTIONS INVOLVING PRICING OR UPLIFT | ||
ACTIONS. A load-serving entity that receives proceeds from the | ||
financing under this subchapter shall return an amount of the | ||
proceeds equal to any amount of money received by the entity due to | ||
litigation seeking judicial review of pricing or uplift actions | ||
taken by the commission or the independent organization in | ||
connection with the period of emergency. | ||
SECTION 6. The independent organization to which Section | ||
39.653(a), Utilities Code, applies shall file the application | ||
required by that section not later than the 30th day after the | ||
effective date of this Act. | ||
SECTION 7. Sections 404.0241(b-2) and (b-3), Government | ||
Code, as added by this Act, apply only to a cause of action that | ||
accrues on or after the effective date of this Act. | ||
SECTION 8. This Act takes effect immediately if it receives | ||
a vote of two-thirds of all the members elected to each house, as | ||
provided by Section 39, Article III, Texas Constitution. If this | ||
Act does not receive the vote necessary for immediate effect, this | ||
Act takes effect September 1, 2021. | ||
______________________________ | ______________________________ | |
President of the Senate | Speaker of the House | |
I certify that H.B. No. 4492 was passed by the House on May 6, | ||
2021, by the following vote: Yeas 129, Nays 15, 1 present, not | ||
voting; that the House refused to concur in Senate amendments to | ||
H.B. No. 4492 on May 28, 2021, and requested the appointment of a | ||
conference committee to consider the differences between the two | ||
houses; and that the House adopted the conference committee report | ||
on H.B. No. 4492 on May 30, 2021, by the following vote: Yeas 116, | ||
Nays 18, 2 present, not voting. | ||
______________________________ | ||
Chief Clerk of the House | ||
I certify that H.B. No. 4492 was passed by the Senate, with | ||
amendments, on May 26, 2021, by the following vote: Yeas 31, Nays | ||
0; at the request of the House, the Senate appointed a conference | ||
committee to consider the differences between the two houses; and | ||
that the Senate adopted the conference committee report on H.B. No. | ||
4492 on May 30, 2021, by the following vote: Yeas 25, Nays 6. | ||
______________________________ | ||
Secretary of the Senate | ||
APPROVED: __________________ | ||
Date | ||
__________________ | ||
Governor |