This section says system restoration property created in a financing order belongs to the corporation and can be sold or pledged, while the utility has no ownership interest and must collect and transfer charges as directed.
§1319. System restoration property A. All system restoration property that is specified in a financing order shall constitute an existing, present property right of the corporation, constituting an individualized, separate, incorporeal movable susceptible of ownership, sale, assignment, transfer, pledge, and security interest, including without limitation for purposes of contracts concerning sale of property and pledges of and security interests in property, notwithstanding that the value of such property and the imposition and collection of system restoration charges depend on future acts such as the utility performing its collection agent functions relating to the collection of system restoration charges and on future electricity or gas consumption. Such property shall exist whether or not the revenues or proceeds arising from the property have been billed, have accrued, or have been collected and notwithstanding the fact that the value or amount of such property is or may be dependent on the future provision of service to customers by the utility or its successors or assignees and the future consumption by customers of electricity or gas. System restoration property created by a financing order shall be a vested contract right, and such financing order shall create a contractual obligation of irrevocability by the commission in favor of the corporation and its transferees, including an issuer and financing parties. B. System restoration property specified in a financing order shall continue to exist until the system restoration bonds issued pursuant to the financing order are paid in full and all financing costs of the bonds have been recovered in full. C. The system restoration property specified in a financing order may be sold to an issuer by the corporation, or may be pledged to an issuer by the corporation to secure the corporation's payment to the issuer of monies sufficient to pay the system restoration bonds issued as contemplated by the financing order and financing costs. Each such sale or pledge by the corporation is considered to be a transaction in the ordinary course of business. D. The utility shall have no ownership or beneficial interest in nor any claim of right in the system restoration property, other than the obligation to collect the system restoration charges as agent of the corporation, issuer, or financing party, as applicable, and transfer those charges to the corporation, issuer, or financing party entitled to receive those charges, all as directed in any financing order. E. To the extent provided in a financing order, the interest of the corporation or a transferee in system restoration property specified in the financing order is not subject to setoff, counterclaim, surcharge, or defense by the utility or by any customer of the utility, or in connection with a bankruptcy of the utility or any other person. F. The description of system restoration property being sold or assigned in any sale agreement, purchase agreement, or other transfer agreement, or being pledged or encumbered in any security agreement, pledge agreement, or other security document, is sufficient only if such description refers to the specific financing order that created the system restoration property and states that such agreement covers all or part of such system restoration property described in such financing order. This Subsection applies to all purported sales, assignments, or transfers of, and all purported liens or security interests in, system restoration property, regardless of whether the related sale agreement, purchase agreement, other transfer agreement, security agreement, pledge agreement, or other security document was entered into, or any financing statement was filed, before or after the effective date of this Part. G. System restoration property shall be an individualized, separate, incorporeal movable susceptible of ownership, sale, assignment, transfer, pledge, and security interest encumbrance, notwithstanding any of the following: (1) That notice is not given to utility customers that the system restoration property is owned by the corporation or a transferee and that the utility or another entity if applicable is acting as a collection agent for the corporation, issuer, or financing party. (2) That the system restoration charges are not shown as a separate line item on individual utility bills. (3) That funds arising from the collection of system restoration charges by the utility as collection agent are commingled with other monies of the utility prior to the utility's transfer as collection agent of such funds to the corporation, issuer, or financing party. H. If there is a default on system restoration bonds, upon application by an interested party, and without limiting any other remedies available to the applying party, a court shall order the sequestration and payment of the monies arising from the system restoration property to the person entitled to receive such monies. Any such order shall remain in full force and effect notwithstanding any reorganization, bankruptcy, or other insolvency proceedings with respect to the utility or its successors or assignees. Acts 2007, No. 55, §3, eff. June 18, 2007; Acts 2021, No. 293, §4, eff. June 14, 2021.