ARIZONA HOUSE OF REPRESENTATIVES Fifty-seventh Legislature First Regular Session
	House: NREW DP 7-2-1-0 | 3^rd read 35-21-4-0 Senate: NR DP 4-3-1-0 | 3^rd Read 17-11-2-0

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HB 2679: power; public utilities; UCC; securities

Sponsor: Representative Griffin, LD 19

Senate Engrossed

Overview

Permits public power entities, public service corporations and member owned cooperative corporations to engage in securitization.

History

A public power entity means any municipal corporation, city, town or other political subdivision that is organized under state law, that generates, transmits, distributes or otherwise provides electricity and that is not a public service corporation (A.R.S. § 30-801). The Corporation Commission (Commission) is permitted to supervise and regulate every public service corporation in the state and do all things necessary and convenient in the exercise of that power and jurisdiction (A.R.S. § 40-202).

Provisions

Public Power Entities

1. Permits a public power entity to initiate a securitization transaction and outlines required actions when initiating the adoption of a financing resolution. (Sec. 1)

2. Outlines the requirements of the securitization proposal. (Sec. 1)

3. Lists required actions to be taken by a public power entity during a public comment period and meeting. (Sec. 1)

4. Permits the adoption of a financing resolution that approves initiation of the transaction under the requirement that the governing board finds that certain conditions are met. (Sec. 1)

5. Outlines requirements for a rehearing and lists actions to obtain a rehearing with the public power utility's governing board. (Sec. 1)

Public Service Corporations

6. Permits a public service corporation, member-owned cooperative corporation and two or more member owned cooperatives or corporations to request permission, to initiate securitization, from the Commission. (Sec. 2)

7. Outlines the requirements for the application. (Sec. 2)

8. Requires the Commission to approve the financing order if certain conditions are met. (Sec. 2)

9. Prescribes the authority and jurisdiction with the Commission for the actions related to securitization transactions. (Sec. 2)

10. Outlines requirements for and actions relating to obtaining a rehearing with the Commission. (Sec. 2)

Language that Applies to Both

 Public Service Corporations and Public Power Entities

11. Defines pertinent terms. (Sec. 1 and 2)

12. Contains a statement of public policy. (Sec. 1 and 2)

13. Designates the governing mechanisms for security interests in transition property. (Sec. 1 and 2)

14. Provides authority of a qualified special purpose entity to issue transition bonds and differentiates what are obligated and nonobligated actions. (Sec. 1 and 2)

15. Outlines transition property characteristics and operations. (Sec. 1 and 2)

16. Designates true-up mechanism actions and civil actions regarding financing payments. (Sec. 1 and 2)

17. Permits public power entities and public service corporations to utilize their resources and duties to perform the duties of a servicer under a transition billing services tariff and outlines payment collecting actions. (Sec. 1 and 2)

18. Prohibits the transition property, the true-up mechanism and the financing charges from being subject to reduction, impairment, rescission, irrevocability and other actions or designations. (Sec. 1 and 2)

19. Prohibits financial charges from being subject to:

a) a franchise fee that is imposed by a municipality, county or other local government unit as a result of a franchise agreement of lawful ordinance; or

b) taxes that are applicable to services provided by or rates of a public power entity. (Sec. 1 and 2)

20. Prohibits transition bonds from being deemed public debt and details related prohibitions and actions. (Sec. 1 and 2)

21. Directs that transition bonds are legal investments for:

a) all governmental units;

b) permanent funds of this state;

c) finance authorities;

d) financial institutions;

e) insurance companies;

f) fiduciaries; and

g) other persons requiring statutory authority regarding legal investments. (Sec. 1 and 2)

22. Prescribes obligations of financing resolutions for successors to a public power entity. (Sec. 1 and 2)

23. Outlines procedures in the case of conflict between other law regarding security interest in transition property, invalidation, replacement or repeal of the chapter. (Sec. 1 and 2)

24. Makes technical changes. (Sec 1, 2 and 3)

Uniform Commercial Code (UCC)

25. Exempts a security interest from a public power entity, public service corporation, member-owned cooperative corporation or two or more member owned cooperatives corporations from the scope of the UCC. (Sec. 3)

Senate Amendments

1. Alters the definitions of:

a) financing costs;

b) significant event recovery costs;

c) transition costs; and

d) true up mechanism. (Sec. 1 and 2)

2. Removes the definition of unrecovered fuel costs. (Sec. 1 and 2)

3. Modifies the statement of public policy. (Sec. 1 and 2)

4. Alters the requirements of a securitization proposal to require:

a) that transition assets must currently be or previously have been in operation providing service for the public power entity's customers as of the effective date of this act, with exceptions for transition assets that are placed into service after this act and that meet certain standards; and

b) the inclusion of an analysis that shows the securitization transaction will result in lower costs to the public power entity's customers through certain criteria. (Sec. 1)

5. Defines financing charges. (Sec. 1 and 2)

6. Adds that the governing body of a public power entity must find that the securitization transaction will result in lower costs to the public power entity's customers on a certain basis to approve or approve with conditions the initiation of the proposed transaction. (Sec. 1)

7. Allows the governing body of a public power entity to retain the use of outside expert consultants and charge the qualified special purpose entity for the reimbursement of any costs and fees that are associated with the expert consultants, for the purposes of review and approving a securitization proposal. (Sec. 1)

8. Alters the requirements of the application for a financing order to require:

a) that transition assets must currently be or previously have been in operation providing service for the applicant's customers as of the effective date of this act, with exceptions for transition assets that are placed into service after this act and that meet certain standards;

b) that the estimate of transition costs and financing costs include an estimate of recovering such costs on a net present value basis;

c) the inclusion of an analysis that shows the securitization transaction will result in lower costs to the applicant's customers through certain criteria. (Sec. 2)

9. Allows the Commission to use expert consultants and charge the qualified special purpose entity a fee for hiring the expert consultants. (Sec. 2)

10. Adds that the Commission must find the securitization transaction will result in lower costs to the applicant's customers on certain basis to approve or approve with conditions the proposed transaction. (Sec. 2)

11. Makes technical and conforming changes. (Sec. 1 and 2)

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15.                   HB 2679

16. Initials CW          Page 0 Senate Engrossed

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