2017 -- H 5291

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LC000424

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2017

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A N   A C T

RELATING TO PUBLIC UTILITIES AND CARRIERS - SECURITIZATION ACT

     Introduced By: Representative Brian P. Kennedy

     Date Introduced: January 27, 2017

     Referred To: House Corporations

     (by request)

It is enacted by the General Assembly as follows:

     SECTION 1. Sections 39-1-43, 39-1-44, 39-1-45, 39-1-46, 39-1-47, 39-1-48, 39-1-49,

39-1-50, 39-1-51, 39-1-52, 39-1-53, 39-1-54, 39-1-55, 39-1-56, 39-1-57, 39-1-58, 39-1-59 and

39-1-60 of the General Laws in Chapter 39-1 entitled "Public Utilities Commission" are hereby

repealed.

     39-1-43. Legislative findings and declarations.

     The general assembly finds and declares that it is in the public interest to facilitate the

transition to a competitive retail market by providing a mechanism that will permit the more

efficient financing and recovery of certain utility costs arising out of the introduction of

competition on a basis that will achieve savings to electric ratepayers. This can be accomplished

by authorizing electric distribution companies to apply to the commission for securitization orders

to finance all or portions of the contract termination fees paid by electric distribution companies

to their wholesale power suppliers. To achieve its purpose, this chapter is to be construed in such

a manner as to give effect to the form and terms of the transactions effected pursuant to such

orders.

     39-1-44. Definitions.

     For the purpose of this chapter, the following terms shall have the following meanings:

     (1) "Assignee" shall mean any party to whom an electric distribution company shall have

assigned or transferred all or a portion of its interest, other than as security, in intangible

transition property (including, without limitation, affiliates of the electric distribution company or

the electric distribution company's wholesale supplier or its affiliates), and any other party to

whom all or a portion of such interest shall subsequently be so assigned or transferred.

     (2) "Contract termination fees" shall mean the fees owed by the electric distribution

company to its wholesale supplier, authorized by § 39-1-27.4, and determined and approved by

the federal energy regulatory commission (FERC), which would include, if applicable, the

contract termination fees provided in a settlement (approved by the FERC) that may be entered

into between (i) an electric distribution company's wholesale power supplier and (ii) the division

or the commission, which settlement arises out of the contract termination proceedings at the

FERC referred to in § 39-1-27.1(b).

     (3) "Financing Party" shall mean a holder of transition bonds, including trustees,

collateral agents and other such parties acting for the benefit of such a holder.

     (4) "Intangible transition charges" shall mean the amounts authorized to be imposed and

collected from customers of the electric distribution company to recover qualified transition

expenditures pursuant to a securitization order, whether such charges are fixed, contingent or

unliquidated.

     (5) "Intangible transition property" shall mean the right, title and interest of an electric

distribution company or assignee in a securitization order, including all rights in, to, under and

pursuant to such order, which rights shall include all rights to revenues, collections, claims,

payments, money or other property and amounts arising from the imposition of intangible

transition charges pursuant to such order. The foregoing rights shall include, without limitation,

the right to require the electric distribution company to provide electric services, as contemplated

in the securitization order, but shall not include the right or duty to provide such services.

Property or amounts collected or recovered in respect of the foregoing rights or the disposition

thereof, including amounts arising from the temporary investment or reinvestment of such

amounts, are proceeds of the intangible transition property, whenever realized.

     (6) "Securitization order" shall mean an order of the commission, adopted in accordance

with the provisions of this chapter, approving an application of an electric distribution company

for the recovery of qualified transition expenditures incurred by or on behalf of an electric

distribution company or assignee, including any compliance orders associated therewith.

     (7) "Transition bonds" shall mean bonds, debentures, notes, certificates of participation or

beneficial interest, and other evidences of indebtedness or ownership, issued pursuant to an

executed trust indenture or other agreement of an electric distribution company or assignee, and

which are secured by or payable from intangible transition property.

     (8) "Qualified transition expenditures" shall mean (i) all of the contract termination fees

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owed by an electric distribution company to its wholesale power supplier, whether payable in

money or through the transfer of other property or rights, and (ii) any reasonable transaction costs

incurred to obtain, carry, or administer the financing and transactions of an electric distribution

company or assignee, whether or not an electric distribution company has proposed such

financing in an application for a securitization order, including without limitation, (A) interest

and premium, if any, or with respect to certificates of participation, beneficial interest, or

ownership, amounts corresponding thereto, (B) other transaction fees, and (C) any federal, state

or local tax expenses arising from the transactions.

     39-1-45. Securitization order -- General.

     Notwithstanding any other provision of law, the commission is authorized to issue

securitization orders in accordance with the provisions of this chapter to facilitate the financing,

or financings, of qualified transition expenditures through the issuance of transition bonds,

subject to the following:

     (1) Voluntary filing. Each electric distribution company recovering transition charges

pursuant to § 39-1-27.4 shall have the option, but not be obligated, to file an application with the

commission for issuance of a securitization order. A securitization order may be issued by the

commission only upon the application of an electric distribution company, filed in accordance

with the procedures set forth in § 39-1-46; provided, however that if an electric distribution

company elects to finance qualified transition expenditures through the issuance of bonds or other

evidence of indebtedness without first seeking a securitization order, then all of the net savings

achieved through such financing shall be credited to the customer of the electric distribution

company in the same manner as if the electric distribution company had filed an application for a

securitization order in accordance with § 39-1-46. Such securitization order shall become

effective in accordance with its terms only after the electric distribution company files with the

commission the electric distribution company's written consent to all terms and conditions of such

order.

     (2) Irrevocability. (i) Notwithstanding any other provision of law, the securitization order

shall be irrevocable and neither the order nor the intangible transition charges authorized to be

imposed and collected thereunder shall be subject to reduction, postponement, impairment,

alteration, limitation or termination by any subsequent action of the commission, nor shall the

commission, the state, or any agency, employee or agent thereof take any action or make or

authorize any statement that would support such a modification of any intangible transition

charges or contract termination fees to which the securitization order may relate, or any finding

relating to such fees, after those fees have been approved by the federal energy regulatory

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commission or any successor thereto.

     (ii) Notwithstanding any other provision of law, any requirement under this chapter or a

securitization order that the commission take action with respect to the subject matter of a

securitization order shall be binding upon the commission, as it may be constituted from time to

time, and any successor agency exercising functions similar to the commission and the

commission shall have no authority to rescind, alter, or amend that requirement in a securitization

order.

     (3) Assignment -- Pledge. Notwithstanding any other provision of law, all or portions of

the interest of an electric distribution company or assignee in a securitization order and in

intangible transition property arising therefrom may be sold or otherwise transferred to an

assignee, and may be pledged or assigned as security by an electric distribution company or

assignee to or for the benefit of one or more financing parties. To the extent that all or a portion

of any such interest is so sold or transferred, or is so pledged or assigned as security, the electric

distribution company shall be authorized to contract with and for the benefit of any such assignee

and/or financing party that it will continue to operate its system to provide electric services to its

customers and will impose and collect the applicable intangible transition charges for the benefit

and account of the assignee or financing party, and will account for and remit the same to or for

the account of such party.

     (4) Nonbypass. Notwithstanding any other provision of law, if the electric distribution

company contracts as provided in the preceding paragraph (3), then, such obligations of the

electric distribution company, (i) shall be binding upon the electric distribution company, its

successor and assigns, and (ii) shall be required by the commission to be undertaken and

performed by the electric distribution company and any other party who provides electric services

to a person who was a customer of the electric distribution company located within the authorized

service area of the electric distribution company on January 1, 1997, or who thereafter became a

customer of electric services within such area, and is still located within such area, as a condition

to the provision of services to such customer by such electric distribution company or party,

unless a termination charge shall have been paid by or on behalf of such customer, all in the

manner and on the basis specified in the application for a securitization order approved by the

commission.

     (5) Lapse. The irrevocable status of the securitization order, as provided in this chapter

shall lapse and terminate to the extent that a sale or other transfer and/or debt financing of the

intangible transition property resulting therefor has not commenced within any period or periods

specified in the securitization order.

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     (6) No Cross-Subsidies. Notwithstanding any other provision of law, in no event shall

any securitization order (i) authorize or require the customers of an electric distribution company

other than the electric distribution company applying for such securitization order to pay any

intangible transition charges or other amounts with respect to the transactions authorized by such

securitization order, or (ii) authorize, permit, or require that any amounts arising from the

transactions authorized by such securitization order be used to subsidize or benefit an electric

distribution company (or the customers thereof) other than the electric distribution company (and

the affiliates thereof) applying for such securitization order and its (or its affiliates') customers.

     39-1-46. Application and proceedings relating to securitization order.

     (a) An electric distribution company seeking a securitization order shall file an

application with the commission. The contents of the application shall include:

     (1) A financing plan, including a description and the principal terms and conditions of the

transactions contemplated;

     (2) A statement and appropriate schedules defining the portion of the qualified transition

expenditures that will be financed;

     (3) An analysis showing the savings to the electric distribution company's customers that

are expected, on average, to be realized through the financing plan;

     (4) A statement and appropriate schedules setting forth the specific qualified transition

charges that will be charged in rates, on average, to the electric distribution company's customers

in lieu of the applicable portion of the original transition charges authorized by § 39-1-27.4;

     (5) A proposed adjustment procedure, as described in subsection (h) below; and

     (6) A statement regarding the use or uses of the proceeds of the transition bonds, and a

description of how the intangible transition charges are to be billed, collected, held, accounted

for, and paid over to a financing party in respect of the financing.

     (b) The commission shall review the application to determine whether the application

meets the following criteria: (1) the transaction(s) contemplated in the application, including

without limitation issuance of transition bonds, are reasonably certain to result, on average, in

quantifiable savings in the transition charges authorized by § 39-1-27.4 and paid to the electric

distribution company by its retail distribution customers; (2) the terms of the financing plan are

commercially reasonable; (3) all of the savings to be achieved by the financing plan, net of costs,

will be credited to the customer of the electric distribution company through the intangible

transition charges; and (4) the procedures and terms proposed in the application are consistent

with the terms and intent of this chapter.

     (c) The commission will take action to approve or disapprove the application within not

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more than one hundred and twenty (120) days after such application is filed by the electric

distribution company.

     (d) If the commission finds that the application meets the criteria specified in subsection

(b) above, the commission shall issue a securitization order approving the terms of the

application, consistent with the provisions of this chapter. If, however, the commission finds that

the application does not meet such criteria, the commission shall issue a written order denying the

application and specifying with reasonable particularity the reasons why the application does not

meet the criteria.

     (e) After the agreements that will be used to implement the financing plan have been

completed and executed, but before they become effective, the electric distribution company

applicant shall make a compliance filing with the commission containing the final executed

agreements. If requested by the applicant electric distribution company, the commission shall

issue a written compliance order within thirty (30) days after receiving the compliance filing

confirming whether the final agreements are materially consistent with the original application

that was approved by the commission in the securitization order.

     (f) In the event that the applicant electric distribution company submits a financing plan

that contemplates transition bond financings occurring in stages, the commission shall determine

whether the application meets the criteria specified in subsection (b) above and, if it so finds,

shall make such determination in the securitization order in connection with such financing plan

as provided above. The commission shall not, thereafter, in connection with any supplementary

compliance filings that may be contemplated in the application to carry out the stages of

financing, condition the approval of such compliance filings on the commission renewing any of

its findings that were made in the securitization order approving the financing plan.

     (g) An electric distribution company shall be permitted to designate in its application for

a securitization order the portions, sub-parts, or components of qualified transition expenditures

that shall be the subject of the securitization order and subsequent related financing through the

issuance of transition bonds.

     (h) The application of the electric distribution company shall include a procedure through

which the commission will annually review the intangible transition charges authorized therein,

and within not more than thirty (30) days after each such review, adjust such charges if and to the

extent necessary to ensure the timely recovery of revenues sufficient to provide for the payment

for all principal, interest, premium, if any, and other charges, or, with respect to certificates of

beneficial interest, participation or ownership, amounts corresponding thereto, in respect of the

transition bonds proposed in the application; provided, however, that any such adjustments shall

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in no event require the acceleration of payments of any such charges or amounts related to the

securitization order.

     (i) The application may propose the principal terms and conditions upon which the

transition bonds may be refinanced, including the disposition of any savings achieved by it

thereby and the effect of such refinancing upon the intangible transition charges from such

refinancing.

     39-1-47. Creation and existence of intangible transition property.

     Intangible transition property shall arise and exist when the applicable securitization

order becomes effective in accordance with § 39-1-45(1) and shall thereafter continuously exist

as provided in the order, which shall be for a period at least equal to the period to which the

agreement of the state under § 39-1-53 applies with respect to the securitization order.

     39-1-48. Security interests.

     A security interest in intangible transition property of an electric distribution company or

assignee may be created and shall attach and be perfected only in accordance with the provisions

of this chapter.

     39-1-49. Obligations.

     Nothing in §§ 39-1-43 -- 39-1-60, inclusive, shall be construed as relieving an electric

distribution company of any contractual obligations to which it would otherwise be subject.

     39-1-50. Interpretation of securitization orders -- Judicial review of securitization

orders.

     (a) The commission shall have jurisdiction over the interpretation of the terms and

conditions of a securitization order, including any petition of an electric distribution company,

assignee or financing party for clarification of the terms of the order. Such jurisdiction shall

include matters pertaining to enforcement of the obligations of an electric distribution company,

its successor, or any other party providing electric services as described in § 39-1-45(4), to

impose and collect intangible transition charges pursuant to such order. An assignee or financing

party shall be entitled, as of right, to be a party to any such proceeding. A securitization order

shall remain in full force and effect and, as an exercise of the commission's rate-making authority,

the jurisdiction of the commission with respect thereto shall continue unabated, notwithstanding

any bankruptcy, reorganization, dissolution or insolvency proceedings affecting the electric

distribution company or an assignee.

     (b) In order to preserve the customer rate savings expected to result from a securitization

order, which may be time-sensitive to financial market conditions affecting the feasibility and

terms of transition bonds approved therein, any judicial review of a securitization order or

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commission decision regarding the terms or enforcement of a securitization order shall be in

accordance with the provisions of chapter 5 of title 39.

     39-1-51. Change of securitization order upon judicial review.

     In the event that the terms and conditions of a securitization order initially approved by

the commission are required to be modified or set aside in any part as a result of judicial review

of that order under § 39-1-50, other than in any manner provided in the original terms of the

order, the order shall take effect only after the commission shall have adopted the terms and

conditions thereof as so modified and the electric distribution company shall have filed with the

commission its written consent to all terms and conditions of the order as modified.

     39-1-52. No effect on other industry restructuring provisions.

     The provisions of §§ 39-1-43 -- 39-1-60, inclusive, are not intended to alter the

provisions of law set forth in §§ 39-1-27 -- 39-1-27.6, inclusive, and other provisions enacted

through the Utility Restructuring Act of 1996; provided, however, that intangible transition

charges authorized through the issuance of a securitization order shall be paid by all customers of

the applicant electric distribution company in lieu of the applicable portion of the original

transition charges that were authorized by § 39-1-27.4. In the event that only a portion of the

original transition charges are being securitized through the securitization order, the components

of the intangible transition charges and the remaining original transition charges will be

accounted for separately for purposes of implementing the financing plan approved by the

commission and performing any reconciliations thereof; provided, however, for purposes of § 39-

3-37.3, the aggregate amount of the components may be billed as one "transition charge" on bills

sent to customers.

     39-1-53. Agreement of the state.

     The state of Rhode Island does hereby pledge to and agree with the holders of any

transition bonds issued under the authority of this chapter and with any electric distribution

company with respect to which a securitization order is adopted pursuant to this chapter and any

assignee or financing party who may enter into contracts with an electric distribution company or

assignee pursuant to such provisions of the general laws, that the state will not limit or alter the

rights vested in an electric distribution company or assignee or financing party pursuant to a

securitization order (including without limitation, the intangible transition charges, intangible

transition property, securitization orders, and all rights thereunder) until the principal of, interest

on and premium, if any, with respect to such transition bonds, or, with respect to certificates of

participation, beneficial interest or ownership, amounts corresponding thereto, and costs related

thereto, are fully paid and discharged and such contracts are fully performed on the part of all

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parties to the transactions contemplated in the financing plan approved by the commission,

including without limitation the electric distribution company, its successors and assigns and any

other party providing electric service as described in § 39-1-45(4); provided that, subject to other

requirements of law, nothing herein contained shall preclude such limitation or alteration if and

when full compensation, giving due effect to the payment of principle and interest (or amounts

corresponding thereto) and other costs and charges, shall be provided by law for the protection of

the electric distribution company, its successor, if any, the holders of such transition bonds, and

any assignee or financing party entering into such contracts with the electric distribution company

or an assignee. The electric distribution company or an assignee is authorized to include this

pledge and undertaking for the state in these obligations.

     39-1-54. Intangible transition property -- The Uniform Commercial Code.

     For purposes of § 6A-9-106 of the Uniform Commercial Code, title 6A, neither

intangible transition property nor any right, title or interest of an electric distribution company or

assignee of such property, whether before or after the issuance of the securitization order, shall be

considered "accounts" or "general intangibles"; nor, for purposes of Article 9 of the Uniform

Commercial Code (chapter 9 of title 6A) shall a securitization order or any such right, title or

interest pertaining thereto, including the associated intangible transition property and any

revenues, collections, claims, payments, money or other property and amounts arising from

intangible transition charges pursuant to such order, be deemed proceeds of any right or interest

other than such order and the intangible property arising therefrom.

     39-1-55. Attachment and perfection of security interest.

     A valid and enforceable security interest in intangible transition property shall be created

by the terms of the applicable securitization order, or by the execution and delivery of a security

agreement between the electric distribution company, or assignee, and a financing party, and shall

attach, and shall be perfected only by means of a separate filing with the commission, under the

rules as the commission establishes pursuant to § 39-1-56. For this purpose, the commission shall

provide that:

     (i) If transition bonds are issued to finance any qualified transition expenditures, as

specified in the applicable securitization order, the security interest securing such bonds shall

attach automatically to the intangible transition property relating to such expenditures from the

time that value is given for the issuance of the bonds;

     (ii) Such security interest shall thereupon and thereafter be deemed a valid and

enforceable security interest in the intangible transition property securing such transition bonds,

and, subject to compliance with such further conditions, if any, as may be stated in the

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securitization order, shall thereupon be deemed a continuously perfected security interest in such

property and in all revenues and other proceeds arising in respect of such property, whenever the

same may accrue or be identified, if, before the date of issuance specified in subparagraph (i) of

this section or within not more than ten (10) days thereafter, a filing shall have been made by or

on behalf of the financing party to protect that security interest in accordance with the procedures

prescribed by the commission pursuant to this section and other provisions of this chapter;

     (iii) Any filing, in accordance with the rules of the commission established pursuant to §

39-1-56, in respect of a security interest securing transition bonds issued pursuant to a

securitization order, shall have priority over any filing in respect of a security interest not

securing such bonds, whenever effected;

     (iv) Conflicting security interests securing transition bonds issued pursuant to a

securitization order shall rank according to priority in time of perfection;

     (v) The relative priority of a security interest in intangible transition property, when

perfected in accordance with the rules of the commission established pursuant to § 39-1-56, shall

not be adversely affected by subsequent changes to the securitization order or to the intangible

transition charges to be paid by any customer pursuant thereto, as contemplated in §§ 39-1-45 and

39-1-46; and

     (vi) A security interest in intangible transition property when perfected in accordance

with the rules of the commission established pursuant to § 39-1-56, shall have priority over the

claim of any judgment lien creditor or other lien creditor of the debtor, whose lien becomes

perfected or attached after perfection, of the security interest.

     39-1-56. Filing system -- Commission rules.

     By December 31, 1997, the commission shall establish a filing system and technical rules

for the administration of such system. The commission shall establish and maintain a separate

system of records to reflect the date and time of receipt of all filings made pursuant to this

chapter, and shall provide that transfers of intangible transition property to an assignee shall be

filed in accordance with such system.

     39-1-57. Assignment.

     (a) A transfer to an assignee of any interest in a securitization order, including any

intangible transition property arising therefrom, and any revenues or other proceeds arising in

respect of such property, whenever realized, shall be perfected as against third parties, including

any other purchaser from the transferor, when:

     (1) the related securitization order becomes effective;

     (2) a written instrument of assignment has been executed by the assignor and delivered to

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the assignee; and

     (3) a statement describing the assignment has been filed with the commission in

accordance with its rules established pursuant to § 39-1-56. A filing shall be effective as of the

date of assignment, if made on or before the date of the assignment or within ten (10) days

thereafter.

     (b) The relative priority of interest of two (2) or more assignees for value, and without

notice, who have filed in accordance with the rules of the commission, shall be determined by

reference to the order in which their statements have been filed; and, if an assignment with

respect to which a complying filing has been made shall for any purpose of law be treated as a

security interest, the filing shall be deemed effective as a filing with respect to such security

interest.

     39-1-58. Events of default; foreclosure.

     Upon the occurrence of an event of default with respect to transition bonds issued

pursuant thereto and which are secured by a security interest perfected in accordance with this

chapter, the holders of such bonds or their authorized representatives shall have the same rights as

those of a secured party under Article 9 of the Uniform Commercial Code (as set forth in chapter

9 of title 6A); and, subject to the rights of other parties, if any, holding prior security interests

perfected in the manner provided in this chapter, shall be entitled to foreclose upon and otherwise

enforce their security interest in court and to request the sequestration and payment to the holders

or their authorized representatives of all revenues and other amounts arising from the imposition

of intangible transition charges included in the intangible transition property in which such

holders have a security interest.

     39-1-59. True sale.

     (a) To better implement the purposes of §§ 39-1-43 -- 39-1-60, inclusive, with a view to

maximizing customer savings intended to be accomplished thereby, in the event that all or a

portion of the interest of an electric distribution company or assignee in a securitization order,

including any intangible transition property arising therefrom, is transferred in a transaction that

is approved in the securitization order and which the governing documentation expressly states to

be a sale or other absolute transfer of the transferor's right, title and interest in the portion of such

order and intangible transition property so transferred, then such transfer shall be treated as a sale

or other absolute transfer of the interest so transferred, as in a true sale and not as a pledge or

other financing thereof and shall be deemed to constitute a sufficient transfer of dominion over

such transferred portion of the securitization order and the intangible transition property to

constitute a true sale. For this purpose, the absolute nature of such a sale or other transfer shall not

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be affected or impaired in any manner by, among other things: (i) the assignor's retention of bare

legal title to intangible transition property for the purpose of servicing or supervising the

servicing of such property and collections with respect thereto; (ii) the assignor's retention, or

acquisition, as a part of the assignment transaction or otherwise, of a de minimis equity interest

not exceeding five percent (5%) in the intangible transition property for investment purposes, or

the provision of credit enhancement at market rates for the same de minimis portion of such

property; (iii) any provision in the securitization order determining the order in which amounts

are deemed collected, on either a priority or ratable basis, in respect of intangible transition

charges and other rates or charges, excluding taxes, collected from customers of the electric

distribution company, in the event of partial payment; (iv) the fact that only a portion of the

intangible transition property is transferred; or (v) the fact that the electric distribution company

or an affiliate thereof acts as the collector of intangible transition charges in connection with

intangible transition property.

     (b) Notwithstanding such a sale or other absolute transfer of intangible transition

property, the consideration received by an electric distribution company or assignee in respect of

any such sale or transfer shall not be subject to any state or local taxes, or any surcharges based

on such taxes, now or hereafter imposed, nor shall the assignee of intangible transition property

be considered to be a public utility or a party providing electric services for purposes of this

chapter. The electric distribution company or other party providing electric services with respect

to which intangible transition charges are authorized and/or required to be imposed shall be the

party obligated to collect and/or be liable to pay each of the foregoing taxes with respect to such

charges. In addition, notwithstanding such sale or other absolute transfer, the commission shall

continue to have jurisdiction to take such further actions as are required or permitted to be taken

with respect to the securitization order in accordance with the terms of such order, and pursuant

to the provisions of this chapter, notwithstanding that the assignee or financing party is not an

electric distribution company or other party that would otherwise be subject to the jurisdiction of

the commission.

     39-1-60. Commingling.

     The validity of the interest of an assignee or secured party in intangible transition

property, and in all revenues or other proceeds arising in respect of such property whenever

realized, as herein provided, and the relative priority of the security interest of a secured party

therein, when perfected in accordance with the rules of the commission established pursuant to §

39-1-56, shall not be defeated or adversely affected by the commingling of any such revenues or

other proceeds with other funds, including those of the electric distribution company or assignee,

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a successor to either such party, another party providing electric service as described in § 39-1-

45(4) or a party performing collection functions on behalf of any of the foregoing. All of the

foregoing parties shall for purposes of this section be referred to as a "collection party". Nor shall

such interest be defeated by the existence of any security interest in a deposit account of any such

collection party perfected under Article 9, commencing with § 9-101, of the Uniform Commercial

Code (chapter 9 of title 6A), in which such revenues or other proceeds may have been deposited;

and, to the extent that moneys of an assignee of intangible transition property are at any time held

in a deposit or other account of a collection party, such moneys shall be considered to be held in

trust for the benefit of such assignee. For this purpose:

     (1) An assignee of intangible transition property arising under a securitization order shall

have a perfected interest, and the holders of a perfected security interest in intangible transition

property of the electric distribution company or assignee arising under such order shall have a

perfected security interest, in all cash and deposit accounts of any collection party in which

amounts collected, recovered or received in respect of intangible transition charges pursuant to

such order have been deposited and commingled with other funds, provided, that any such

perfected security interest in deposit accounts of the electric distribution company or assignee or a

successor thereof, if such party is the debtor of the party holding the perfected security interest,

shall be subject to any applicable right of set-off and, in the event of insolvency of the electric

distribution company or assignee or a successor thereof, the perfected security interest in

intangible transition property of such insolvent party and any revenues or other proceeds arising

in respect of such property shall be limited to an amount not greater than the amounts collected or

recovered by such party in respect of intangible transition charges, whether or not actually

deposited in the deposit accounts of such party, within the twelve (12) months preceding the

commencement of insolvency proceedings, less the sum of such amounts paid to or for the

account of the holders of such security interest in intangible transition property, or transferred to a

segregated account held solely for their benefit, during such twelve (12) month period; and

     (2) In the event that proceeds of intangible transition property which have been

recovered, collected, or otherwise received by a collection party shall have been transferred by

such party from a commingled account that includes other funds to a segregated account

identified as held solely for the benefit of the holders of transition bonds, which bonds are

secured by a security interest, perfected in accordance with the rules of the commission

established pursuant to § 39-1-56, in the intangible transition property and all revenues and other

proceeds arising in respect of such property, the security interest of the holders of the transition

bonds shall apply to any such segregated account, and shall have priority over any other interest

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or security interest therein, and over the lien of any judgment lien creditor or other lien creditor to

which the security interest of the transition bonds is senior, in accordance with § 39-1-55(vi) of

this chapter.

     SECTION 2. Sections 39-3-15, 39-3-24 and 39-3-28 of the General Laws in Chapter 39-3

entitled "Regulatory Powers of Administration" are hereby amended to read as follows:

     39-3-15. Security issues for which permission required.

     A public utility, as defined in § 39-1-2, may not, without application to and authority

from the division, issue stocks, bonds, notes, or other evidences of indebtedness, payable more

than twelve (12) months from the date of issue, when necessary for the acquisition of property,

the construction, completion, extension, or improvement of its facilities or for the improvement or

maintenance of its service, or for the reorganization or readjustment of its indebtedness and/or

capitalization, or for the discharge or lawful refunding of its obligations, or for the reimbursement

of money actually expended from income or from any other money in the treasury of the public

utility not secured or obtained from the issue of stocks, bonds, notes, or other evidences of

indebtedness of the public utility.

     This section shall not apply to, and a public utility shall not be required to obtain the

approval of the division for, the issuance of transition bonds or engaging in any other transactions

that are set forth in an application for a securitization order that is approved by the commission

pursuant to § 39-1-46.

     39-3-24. Transactions between utilities for which approval required.

     With the consent and approval of the division, but not otherwise:

     (1) Any two (2) or more public utilities doing business in the same municipality or

locality within this state, or any two (2) or more public utilities whose lines intersect or parallel

each other within this state, or furnish a like service or product within this state, may enter into

contracts with each other that will enable the public utilities to operate their lines or plants in

connection with each other.

     (2) Any public utility may purchase or lease all or any part of the property, assets, plant,

and business of any other public utility or merge with any other public utility, and in connection

therewith may exercise and enjoy all of the rights, powers, easements, privileges, and franchises

theretofore exercised and enjoyed by any other public utility with respect to the property, assets,

plant, and business so purchased, leased, or merged.

     (3) Any public utility may merge with any other public utility or sell or lease all or any

part of its property, assets, plant, and business to any other public utility, provided that the merger

or a sale or lease of all or substantially all of its property, assets, plant, and business shall be

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authorized by a vote of at least two-thirds (2/3) in interest of its stockholders at a meeting duly

called for the purpose. Any stockholder who shall not have voted in favor of the merger sale or

lease, either in person or by proxy, shall be entitled to the rights, and the corporation shall be

subject to the duties, obligations, and liabilities set forth in §§ 7-1.2-1201 and 7-1.2-1202 with

respect to dissenting stockholders and to corporations which sell, lease, or exchange their entire

assets respectively.

     (4) Any public utility may directly or indirectly purchase the stock of any other public

utility.

     (5) This section shall not apply to, and a public utility shall not be required to obtain the

consent and approval of the division for, the issuance of transition bonds or engaging in any other

transactions that are set forth in an application for a securitization order that is approved by the

commission pursuant to § 39-1-46.

     39-3-28. Filing of agreements with affiliates.

     The original or a verified copy of any contract or arrangement and of any modification

thereof or a verified summary of any unwritten contract or arrangement, the consideration of

which exceeds five hundred dollars ($500), hereafter entered into between a public utility and an

affiliate providing for the furnishing of managerial, supervisory, construction, engineering,

accounting, purchasing, financial, or any other services, either to or by a public utility or an

affiliate, shall be filed by the public utility with the division within ten (10) days after the date on

which the contract is executed or the arrangement entered into. The division may also require a

public utility to file in such form as the division may require full information with respect to any

purchase from or sale to an affiliate, whether or not made in pursuance of a continuing contract or

arrangement.

     This section and §§ 39-3-29 -- 39-3-32, inclusive, shall not apply to, and a public utility

shall not be required to file with the division, any agreements or arrangements that are set forth in

an application for a securitization order that is approved by the commission pursuant to § 39-1-

46.

     SECTION 3. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO PUBLIC UTILITIES AND CARRIERS - SECURITIZATION ACT

***

     This act would repeal The Public Utility Securitization Act (39-1-43 to 60), passed in

1997. There is currently no entity to whom application of this chapter would apply. The act

would allow the PUC to repeal a set of obsolete rules.

     This act would take effect upon passage.

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