LBD05310-02-4
S. 9339 2
2. "ARREARAGE COSTS" MEANS, IF REQUESTED BY A UTILITY CORPORATION AND
AS APPROVED BY THE COMMISSION, AN AMOUNT EQUAL TO THE VERIFIED ARREARAG-
ES, INCLUDING RESIDENTIAL AND SMALL BUSINESS BAD DEBT EXPENSE, THAT
EXCEED SIXTY DAYS PAST DUE.
3. "ASSIGNEE" MEANS ANY INDIVIDUAL, CORPORATION, LIMITED LIABILITY
COMPANY, PARTNERSHIP OR LIMITED PARTNERSHIP, TRUST OR OTHER LEGALLY
RECOGNIZED ENTITY TO WHICH AN INTEREST IN RECOVERY PROPERTY IS CREATED,
RECOGNIZED, ASSIGNED, SOLD OR TRANSFERRED, OTHER THAN AS SECURITY,
INCLUDING ANY ASSIGNEE OF SUCH PROPERTY.
4. "CONSUMER" MEANS ANY INDIVIDUAL, GOVERNMENTAL BODY, TRUST, BUSINESS
ENTITY, NONPROFIT ORGANIZATION OR OTHER LEGALLY RECOGNIZED ENTITY THAT
TAKES:
(A) ELECTRIC DELIVERY SERVICE WITHIN THE SERVICE AREA BY MEANS OF
ELECTRIC TRANSMISSION OR DISTRIBUTION FACILITIES, WHETHER THOSE ELECTRIC
TRANSMISSION OR DISTRIBUTION FACILITIES ARE OWNED BY A UTILITY CORPO-
RATION OR OTHER ENTITY;
(B) GAS DELIVERY SERVICE WITHIN THE SERVICE AREA BY MEANS OF DISTRIB-
UTION FACILITIES OWNED BY A GAS CORPORATION OR OTHER ENTITY; OR
(C) BOTH ELECTRIC DELIVERY SERVICE AND GAS DELIVERY SERVICE, AS
DESCRIBED IN PARAGRAPHS (A) AND (B) OF THIS SUBDIVISION.
5. "FINANCING COSTS" MEANS:
(A) INTEREST AND ACQUISITION, DEFEASANCE, OR REDEMPTION PREMIUMS THAT
ARE PAYABLE ON RECOVERY BONDS;
(B) ANY PAYMENT REQUIRED UNDER AN ANCILLARY AGREEMENT AND ANY AMOUNT
REQUIRED TO FUND OR REPLENISH RESERVE OR OTHER ACCOUNTS ESTABLISHED
UNDER THE TERMS OF ANY INDENTURE, ANCILLARY AGREEMENT, OR OTHER FINANC-
ING DOCUMENTS PERTAINING TO RECOVERY BONDS;
(C) ANY OTHER COST RELATED TO ISSUING, SUPPORTING, REPAYING, AND
SERVICING RECOVERY BONDS, INCLUDING BUT NOT LIMITED TO SERVICING FEES,
ACCOUNTING AND AUDITING FEES, TRUSTEE FEES, LEGAL FEES, CONSULTING FEES,
ADMINISTRATIVE FEES, PLACEMENT AND UNDERWRITING FEES, CAPITALIZED INTER-
EST, RATING AGENCY FEES, STOCK EXCHANGE LISTING AND COMPLIANCE FEES, AND
FILING FEES, INCLUDING COSTS RELATED TO OBTAINING A FINANCING ORDER; OR
(D) ANY FEDERAL, STATE OR LOCAL TAXES, PAYMENTS IN LIEU OF TAXES,
FRANCHISE FEES OR LICENSE FEES IMPOSED ON RECOVERY CHARGE REVENUES.
6. "FINANCING ORDER" MEANS AN ORDER OF THE COMMISSION WHICH AUTHOR-
IZES:
(A) THE ISSUANCE OF RECOVERY BONDS;
(B) THE IMPOSITION, COLLECTION, AND PERIODIC ADJUSTMENTS OF RECOVERY
CHARGES;
(C) THE CREATION OR RECOGNITION OF RECOVERY PROPERTY; AND/OR
(D) THE SALE, ASSIGNMENT, OR TRANSFER OF RECOVERY PROPERTY TO AN
ASSIGNEE.
7. "FINANCING PARTY" MEANS ANY HOLDER OF RECOVERY BONDS AND ANY TRUS-
TEE, COLLATERAL AGENT, OR OTHER PERSON ACTING FOR THE BENEFIT OF HOLDERS
OF RECOVERY BONDS.
8. "FINANCING STATEMENT" SHALL HAVE THE SAME MEANING AS THAT PROVIDED
IN PARAGRAPH THIRTY-NINE OF SUBSECTION (A) OF SECTION 9-102 THE UNIFORM
COMMERCIAL CODE. ALL FINANCING STATEMENTS UNDER THIS ARTICLE SHALL BE
FILED IN ACCORDANCE WITH SECTION 9-501 OF THE UNIFORM COMMERCIAL CODE.
9. "LIEN CREDITOR" SHALL HAVE THE SAME MEANING AS THAT PROVIDED IN
PARAGRAPH FIFTY-TWO OF SUBSECTION (A) OF SECTION 9-102 OF THE UNIFORM
COMMERCIAL CODE.
10. "RECOVERY BONDS" MEANS BONDS, DEBENTURES, NOTES, CERTIFICATES OF
PARTICIPATION, CERTIFICATES OF OWNERSHIP, OR OTHER EVIDENCES OF INDEBT-
EDNESS OR OWNERSHIP THAT ARE ISSUED PURSUANT TO AN INDENTURE, CONTRACT,
S. 9339 3
OR OTHER AGREEMENT OF A UTILITY CORPORATION OR ITS ASSIGNEE PURSUANT TO
A FINANCING ORDER, THE PROCEEDS OF WHICH ARE USED DIRECTLY OR INDIRECTLY
TO PROVIDE, RECOVER, FINANCE, OR REFINANCE COMMISSION-APPROVED RECOVERY
COSTS, FINANCING COSTS, AND COSTS TO REPLENISH OR FUND A STORM RECOVERY
RESERVE TO SUCH LEVEL AS THE COMMISSION MAY AUTHORIZE IN A FINANCING
ORDER, AND WHICH ARE SECURED BY OR PAYABLE FROM RECOVERY PROPERTY. IF
CERTIFICATES OF PARTICIPATION OR OWNERSHIP ARE ISSUED, REFERENCES IN
THIS ARTICLE TO PRINCIPAL, INTEREST, OR PREMIUM SHALL BE CONSTRUED TO
REFER TO COMPARABLE AMOUNTS UNDER SUCH CERTIFICATES. RECOVERY BONDS
SHALL BE NONRECOURSE TO THE CREDIT OR ANY ASSETS OF THE UTILITY CORPO-
RATION OTHER THAN THE RECOVERY PROPERTY AS SPECIFIED IN THE FINANCING
ORDER AND ANY RIGHTS UNDER ANY ANCILLARY AGREEMENT. RECOVERY BONDS SHALL
BE LEGAL INVESTMENTS FOR ALL GOVERNMENTAL UNITS, FINANCIAL INSTITUTIONS,
INSURANCE COMPANIES, FIDUCIARIES, AND OTHER PERSONS THAT REQUIRE STATU-
TORY AUTHORITY REGARDING LEGAL INVESTMENT.
11. "RECOVERY CHARGE" MEANS THE AMOUNTS AUTHORIZED BY THE COMMISSION
TO RECOVER, FINANCE, OR REFINANCE RECOVERY COSTS AND FINANCING COSTS. IF
PROVIDED FOR IN A FINANCING ORDER, SUCH AMOUNTS SHALL BE IMPOSED ON
CONSUMER BILLS AND COLLECTED BY A UTILITY CORPORATION OR ITS SUCCESSORS
OR ASSIGNEES OR A COLLECTION AGENT, IN FULL, THROUGH A CHARGE PAID BY
EXISTING AND FUTURE CONSUMERS RECEIVING TRANSMISSION OR DISTRIBUTION
SERVICE, OR BOTH, FROM THE UTILITY CORPORATION OR ITS SUCCESSORS OR
ASSIGNEES UNDER RATE SCHEDULES OR SPECIAL CONTRACTS APPROVED BY THE
COMMISSION. THE RECOVERY CHARGE SHALL BE NON-BYPASSABLE AND IMPOSED ON
ALL CONSUMERS IN THE SERVICE AREA AND COLLECTED BY THE UTILITY CORPO-
RATION OR ITS SUCCESSOR, AGENT, SUBCONTRACTOR, ASSIGNEE, OR COLLECTION
AGENT OR ANY OTHER ENTITY DESIGNATED UNDER THE FINANCING ORDER.
12. "RECOVERY COSTS" MEANS ARREARAGE COSTS AND/OR STORM RECOVERY COSTS
IDENTIFIED FOR RECOVERY IN A FINANCING ORDER.
13. "RECOVERY PROPERTY" (A) MEANS THE PROPERTY RIGHTS AND INTERESTS
CREATED PURSUANT TO THIS ARTICLE, INCLUDING BUT NOT LIMITED TO ANY AND
ALL RIGHT, TITLE, AND INTEREST:
(I) IN AND TO RECOVERY CHARGES ESTABLISHED PURSUANT TO A FINANCING
ORDER, AS ADJUSTED FROM TIME TO TIME IN ACCORDANCE WITH SUCH FINANCING
ORDER;
(II) IN AND TO ALL REVENUES, COLLECTIONS, CLAIMS, PAYMENTS, MONEY, OR
PROCEEDS OF OR ARISING FROM THE RECOVERY CHARGES OR CONSTITUTING RECOV-
ERY CHARGES THAT ARE THE SUBJECT OF A FINANCING ORDER, REGARDLESS OF
WHETHER SUCH REVENUES, COLLECTIONS, CLAIMS, PAYMENTS, MONEY, OR PROCEEDS
ARE IMPOSED, BILLED, RECEIVED, COLLECTED, OR MAINTAINED TOGETHER WITH OR
COMMINGLED WITH OTHER REVENUES, COLLECTIONS, CLAIMS, PAYMENTS, MONEY, OR
PROCEEDS; AND
(III) IN AND TO ALL RIGHTS TO OBTAIN PERIODIC ADJUSTMENTS TO THE
RECOVERY CHARGES PURSUANT TO THE TERMS OF THE FINANCING ORDER; AND
(B) SHALL CONSTITUTE A VESTED, PRESENTLY EXISTING PROPERTY RIGHT.
14. "SECURED PARTY" MEANS A FINANCING PARTY IN FAVOR OF WHICH A UTILI-
TY CORPORATION OR ITS SUCCESSORS OR ASSIGNEES CREATES A SECURITY INTER-
EST IN ALL OR ANY PORTION OF ITS INTEREST IN OR RIGHT TO RECOVERY PROP-
ERTY. A SECURED PARTY MAY BE GRANTED A SECURITY INTEREST IN RECOVERY
PROPERTY UNDER THIS ARTICLE AND A SECURITY INTEREST IN OTHER COLLATERAL
SUBJECT TO THE UNIFORM COMMERCIAL CODE IN A SINGLE SECURITY AGREEMENT.
15. "SECURITY INTEREST" MEANS A PLEDGE, HYPOTHECATION, OR OTHER ENCUM-
BRANCE OF OR OTHER RIGHT OVER ANY PORTION OF RECOVERY PROPERTY CREATED
BY CONTRACT TO SECURE THE PAYMENT OR PERFORMANCE OF AN OBLIGATION.
S. 9339 4
16. "SERVICE AREA" MEANS THE GEOGRAPHICAL AREA WITHIN WHICH A UTILITY
CORPORATION PROVIDES ELECTRIC OR GAS DISTRIBUTION SERVICES AS OF THE
DATE OF A FINANCING ORDER.
17. "SERVICE INTERRUPTION" MEANS THE LOSS OF SERVICE FOR FIVE MINUTES
OR MORE, FOR ONE OR MORE CONSUMERS, WHICH IS THE RESULT OF ONE OR MORE
COMPONENT FAILURES.
18. "STORM" MEANS A PERIOD OF ADVERSE WEATHER DURING WHICH SERVICE
INTERRUPTIONS AFFECT AT LEAST TEN PERCENT OF THE CONSUMERS IN AN OPERAT-
ING AREA AND/OR RESULT IN CONSUMERS BEING WITHOUT ELECTRIC SERVICE FOR
DURATIONS OF AT LEAST TWENTY-FOUR HOURS.
19. "STORM RECOVERY ACTIVITY" MEANS ANY ACTIVITY OR ACTIVITIES BY OR
ON BEHALF OF A UTILITY CORPORATION IN CONNECTION WITH THE RESTORATION OF
SERVICE AND INFRASTRUCTURE ASSOCIATED WITH ELECTRIC POWER OUTAGES
AFFECTING CONSUMERS OF A UTILITY CORPORATION AS THE RESULT OF A STORM OR
STORMS, INCLUDING BUT NOT LIMITED TO MOBILIZATION, STAGING, AND
CONSTRUCTION, RECONSTRUCTION, REPLACEMENT, OR REPAIR OF ELECTRIC GENER-
ATION, TRANSMISSION, OR DISTRIBUTION FACILITIES.
20. "STORM RECOVERY COSTS" MEANS, IF REQUESTED BY A UTILITY CORPO-
RATION AND APPROVED BY THE COMMISSION, COSTS INCURRED OR TO BE INCURRED
BY A UTILITY CORPORATION IN UNDERTAKING A STORM RECOVERY ACTIVITY. SUCH
COSTS SHALL INCLUDE THE UTILITY CORPORATION'S COST OF CAPITAL FROM THE
DATE OF THE APPLICABLE STORM TO THE DATE THE STORM RECOVERY BONDS ARE
ISSUED CALCULATED USING THE UTILITY CORPORATION'S WEIGHTED AVERAGE COST
OF CAPITAL AS DEFINED IN ITS MOST RECENT BASE RATE CASE PROCEEDING
BEFORE THE COMMISSION NET OF ALL APPLICABLE INCOME TAX SAVINGS RELATED
TO THE INTEREST COMPONENT. SUCH COSTS MAY BE NET OF APPLICABLE INSUR-
ANCE PROCEEDS, TAX BENEFITS, AND ANY OTHER AMOUNTS INTENDED TO REIMBURSE
THE UTILITY CORPORATION FOR STORM RECOVERY ACTIVITIES SUCH AS GOVERN-
MENTAL GRANTS OR AID OF ANY KIND AND MAY INCLUDE ADJUSTMENTS FOR NORMAL
CAPITAL REPLACEMENT AND OPERATING COSTS, OR OTHER POTENTIAL OFFSETTING
ADJUSTMENTS. STORM RECOVERY COSTS MAY INCLUDE THE COSTS TO FUND AND
FINANCE ANY STORM RECOVERY RESERVES AND COSTS OF REPURCHASING EQUITY OR
RETIRING ANY EXISTING INDEBTEDNESS RELATING TO STORM RECOVERY ACTIV-
ITIES.
21. "STORM RECOVERY RESERVE" MEANS A UTILITY CORPORATION'S STORM
RESERVE OR SUCH OTHER SIMILAR RESERVE ESTABLISHED PURSUANT TO ORDER OR
RULE OF THE COMMISSION.
§ 302. FINANCING ORDERS. 1. NO UTILITY CORPORATION OR ITS AFFILIATE OR
OTHER ASSIGNEE SHALL ISSUE ANY RECOVERY BONDS UNLESS IT HAS BEEN SPECIF-
ICALLY AUTHORIZED TO DO SO BY A FINANCING ORDER ISSUED PURSUANT TO THIS
SECTION. A UTILITY CORPORATION MAY PETITION THE COMMISSION FOR A FINANC-
ING ORDER GRANTING SUCH AUTHORITY. SUCH PETITION SHALL BE MADE UNDER
OATH AND SHALL BE SIGNED AND FILED ON BEHALF OF THE UTILITY CORPORATION
OR ITS AFFILIATE OR OTHER ASSIGNEE BY THE PRESIDENT OR BY A VICE PRESI-
DENT, TREASURER, OR OTHER EXECUTIVE OFFICER HAVING KNOWLEDGE OF THE
MATTERS SET FORTH THEREIN AND SHALL BE SUBMITTED IN SUCH FORM AS THE
COMMISSION SHALL PRESCRIBE.
2. EACH PETITION FILED UNDER THIS SECTION SHALL INCLUDE ALL OF THE
FOLLOWING:
(A) A DESCRIPTION OF:
(I) THE STORM RECOVERY ACTIVITIES THAT THE UTILITY CORPORATION HAS
UNDERTAKEN OR PROPOSES TO UNDERTAKE AND THE REASONS FOR UNDERTAKING THE
ACTIVITIES; AND/OR
(II) THE TOTAL AMOUNT OF SIXTY DAY ARREARAGES RECORDED BY THE UTILITY
CORPORATION.
S. 9339 5
(B) IF A PETITION IS FILED BY A UTILITY CORPORATION SEEKING TO RECOVER
STORM RECOVERY COSTS, THE STORM RECOVERY COSTS AND AN ESTIMATE OF THE
COSTS OF ANY STORM RECOVERY ACTIVITIES THAT ARE BEING UNDERTAKEN BUT NOT
COMPLETED.
(C) IF A PETITION IS FILED BY A UTILITY CORPORATION SEEKING TO RECOVER
STORM RECOVERY COSTS, THE LEVEL OF THE STORM RECOVERY RESERVE THAT THE
UTILITY CORPORATION PROPOSES TO ESTABLISH OR REPLENISH AND HAS DETER-
MINED WOULD BE APPROPRIATE TO RECOVERY THROUGH RECOVERY BONDS AND IS
SEEKING TO SO RECOVER AND THE LEVEL THAT THE UTILITY CORPORATION IS
FUNDING OR WILL SEEK TO FUND THROUGH OTHER MEANS, TOGETHER WITH A
DESCRIPTION OF THE FACTORS AND CALCULATIONS USED IN DETERMINING SUCH
AMOUNTS AND METHODS OF RECOVERY.
(D) IF A PETITION IS FILED BY A UTILITY CORPORATION SEEKING TO RECOVER
ARREARAGE COSTS, THE TOTAL AMOUNT OF ARREARAGE COSTS THROUGH THE DATE OF
THE PETITION, INCLUDING ALL RELATED CARRYING COSTS INCURRED BY THE UTIL-
ITY CORPORATION.
(E) AN INDICATION OF WHETHER THE UTILITY CORPORATION PROPOSES TO
FINANCE ALL OR A PORTION OF THE RECOVERY COSTS USING RECOVERY BONDS. IF
THE UTILITY CORPORATION PROPOSES TO FINANCE A PORTION OF SUCH COSTS, THE
UTILITY CORPORATION MUST IDENTIFY THE SPECIFIC PORTION IN THE PETITION.
AN ELECTION NOT TO FINANCE A PORTION OF THE RECOVERY COSTS USING RECOV-
ERY BONDS BY A UTILITY CORPORATION SHALL NOT BE DEEMED TO WAIVE ITS
RIGHT TO RECOVER SUCH COSTS PURSUANT TO A SEPARATE PROCEEDING WITH THE
COMMISSION.
(F) AN ESTIMATE OF THE FINANCING COSTS RELATED TO THE RECOVERY BONDS.
(G) AN ESTIMATE OF THE RECOVERY CHARGES NECESSARY TO RECOVER THE
RECOVERY COSTS AND FINANCING COSTS AND THE PERIOD FOR RECOVERY OF SUCH
COSTS.
(H) A COMPARISON BETWEEN THE NET PRESENT VALUE OF THE COSTS TO CONSUM-
ERS THAT ARE ESTIMATED TO RESULT FROM THE ISSUANCE OF RECOVERY BONDS AND
THE RESULT FROM THE APPLICATION OF THE TRADITIONAL METHOD OF FINANCING
AND RECOVERING RECOVERY COSTS FROM CONSUMERS. THE COMPARISON SHOULD
DEMONSTRATE THAT THE ISSUANCE OF RECOVERY BONDS AND THE IMPOSITION OF
RECOVERY CHARGES ARE EXPECTED TO PROVIDE QUANTIFIABLE BENEFITS TO
CONSUMERS.
3. (A) THE COMMISSION MAY GRANT A PETITION UNDER SUBDIVISION ONE OF
THIS SECTION IN WHOLE OR IN PART BY ISSUING A FINANCING ORDER, WITH SUCH
MODIFICATIONS THERETO AND UPON SUCH TERMS AND CONDITIONS AS THE COMMIS-
SION PRESCRIBES AND THAT ARE CONSISTENT WITH THIS ARTICLE. IF THE
COMMISSION ISSUES A FINANCING ORDER APPROVING THE ISSUANCE OF RECOVERY
BONDS UNDER THIS ARTICLE, THE COMMISSION SHALL CONSIDER WHETHER:
(I) THE PROPOSED ISSUANCE OF RECOVERY BONDS AND THE IMPOSITION AND
COLLECTION OF A RECOVERY CHARGE ARE EXPECTED TO PROVIDE QUANTIFIABLE
BENEFITS TO CONSUMERS AS COMPARED TO THE COSTS THAT WOULD HAVE BEEN
INCURRED ABSENT THE ISSUANCE OF RECOVERY BONDS; AND
(II) THE PROPOSED STRUCTURING, EXPECTED PRICING, AND FINANCING COSTS
OF THE RECOVERY BONDS ARE REASONABLY EXPECTED TO RESULT IN THE LOWEST
RECOVERY CHARGES CONSISTENT WITH MARKET CONDITIONS AT THE TIME THE
RECOVERY BONDS ARE PRICED AND THE TERMS OF THE FINANCING ORDER OR WOULD
AVOID OR MITIGATE RATE IMPACTS TO CONSUMERS AS COMPARED WITH TRADITIONAL
METHODS OF FINANCING OR RECOVERING RECOVERY COSTS.
(B) THE COMMISSION MAY DETERMINE WHAT DEGREE OF FLEXIBILITY TO AFFORD
TO THE UTILITY CORPORATION OR ASSIGNEES IN ESTABLISHING THE TERMS AND
CONDITIONS OF THE RECOVERY BONDS, INCLUDING BUT NOT LIMITED TO REPAYMENT
SCHEDULES, INTEREST RATES, AND OTHER FINANCING COSTS. A COPY OF ANY
FINANCING ORDER ISSUED UNDER THIS ARTICLE DULY CERTIFIED BY A COMMIS-
S. 9339 6
SIONER OR OTHER PERSON AUTHORIZED TO ACT ON BEHALF OF THE COMMISSION
SHALL BE SUFFICIENT EVIDENCE FOR ALL PURPOSES OF WHOLE AND COMPLETE
COMPLIANCE BY THE UTILITY CORPORATION WITH ALL PROCEDURAL AND OTHER
MATTERS REQUIRED PRECEDENT TO THE ISSUANCE OF THE ORDER.
4. PROCEEDINGS ON A PETITION SUBMITTED PURSUANT TO THIS SECTION BEGIN
WITH THE PETITION FOR A FINANCING ORDER FILED BY A UTILITY CORPORATION
WITH THE COMMISSION FOR REVIEW AND APPROVAL WITHIN ONE HUNDRED THIRTY-
FIVE DAYS OF THE FILING OF THE PETITION AND SHALL BE DISPOSED OF IN
ACCORDANCE WITH THE REQUIREMENTS OF THIS ARTICLE AND THE RULES OF THE
COMMISSION. A PARTY TO SUCH PROCEEDING MAY PETITION THE COMMISSION FOR
REHEARING OF THIS FINANCING ORDER WITHIN FIVE DAYS AFTER THE DATE OF ITS
ISSUANCE.
5. A FINANCING ORDER ISSUED BY THE COMMISSION TO A UTILITY CORPORATION
SHALL:
(A) IF A UTILITY CORPORATION IS SEEKING TO ISSUE RECOVERY BONDS TO
FUND STORM RECOVERY COSTS, SPECIFY THE AMOUNT OF STORM RECOVERY COSTS,
INCLUDING ANY LEVEL OF STORM RECOVERY RESERVES, TAKING INTO CONSIDER-
ATION, TO THE EXTENT THE COMMISSION DEEMS APPROPRIATE, ANY OTHER METHODS
USED TO RECOVER THESE COSTS AND ANY OFFSETS OR CREDITS TO THOSE COSTS,
AND PROVIDE WITH RESPECT TO THE AMOUNT OF FINANCING COSTS WHICH MAY BE
RECOVERED THROUGH RECOVERY CHARGES;
(B) PROVIDE THAT THE PROPOSED ISSUANCE OF RECOVERY BONDS AND THE IMPO-
SITION AND COLLECTION OF RECOVERY CHARGES ARE EXPECTED TO PROVIDE QUAN-
TIFIABLE BENEFITS TO CONSUMERS AS COMPARED TO THE COSTS THAT WOULD HAVE
BEEN INCURRED ABSENT THE ISSUANCE OF THE RECOVERY BONDS;
(C) PROVIDE THAT THE STRUCTURING AND PRICING OF THE RECOVERY BONDS ARE
EXPECTED TO RESULT IN THE LOWEST RECOVERY CHARGES CONSISTENT WITH MARKET
CONDITIONS AT THE TIME THE RECOVERY BONDS ARE PRICED AND THE TERMS SET
FORTH IN SUCH FINANCING ORDER;
(D) SPECIFY AND CREATE THE RECOVERY PROPERTY OF A UTILITY CORPORATION
OR ITS SUCCESSORS OR ASSIGNEES THAT MAY BE USED TO PAY OR SECURE RECOV-
ERY BONDS AND FINANCING COSTS;
(E) PROVIDE THAT SUCH RECOVERY PROPERTY MAY BE: (I) SOLD, ASSIGNED, OR
TRANSFERRED BY THE UTILITY CORPORATION TO (A) A SUBSIDIARY WHICH IS
WHOLLY OWNED, DIRECTLY OR INDIRECTLY, BY THE UTILITY CORPORATION AND
WHICH WILL BE THE ISSUER OF THE RECOVERY BONDS OR (B) ANOTHER ASSIGNEE
WHICH WILL BE THE ISSUER OF THE RECOVERY BONDS; OR
(II) CREATED OR RECOGNIZED AS PROPERTY OF AN ASSIGNEE WHICH WILL BE
THE ISSUER OF THE RECOVERY BONDS;
(F) PROVIDE THAT THE RECOVERY CHARGES SHALL BE SUFFICIENT AT ALL TIMES
TO PAY THE PRINCIPAL OF AND INTEREST ON THE RECOVERY BONDS AS THE SAME
SHALL BECOME DUE AND PAYABLE AND ALL OTHER FINANCING COSTS AND ESTABLISH
A TRUE-UP MECHANISM REQUIRING THAT THE RECOVERY CHARGES BE REVIEWED AND
ADJUSTED AT LEAST ANNUALLY TO CORRECT ANY OVERCOLLECTION OR UNDERCOL-
LECTION DURING THE PERIOD SINCE THE ISSUANCE OR PRECEDING ADJUSTMENT AND
TO ENSURE THE PROJECTED RECOVERY OF AMOUNTS SUFFICIENT TO PROVIDE TIMELY
PAYMENT OF ALL PRINCIPAL, INTEREST AND OTHER FINANCING COSTS. EACH
ADJUSTMENT TO THE RECOVERY CHARGE, IN AMOUNTS AS CALCULATED BY OR ON
BEHALF OF THE OWNER OF RECOVERY PROPERTY, SHALL AUTOMATICALLY BECOME
EFFECTIVE SIXTY DAYS FOLLOWING THE DATE ON WHICH THE PERIODIC ADJUSTMENT
IS FILED WITH THE COMMISSION UNLESS THE COMMISSION APPROVES AN EARLIER
EFFECTIVE DATE REQUESTED BY THE ISSUER OF RECOVERY BONDS;
(G) PROVIDE AND PLEDGE THAT AFTER THE EARLIER OF THE TRANSFER OF
RECOVERY PROPERTY TO AN ASSIGNEE OR THE ISSUANCE OF RECOVERY BONDS
AUTHORIZED THEREBY, A FINANCING ORDER IS IRREVOCABLE UNTIL THE INDEFEAS-
IBLE PAYMENT IN FULL OF THE RECOVERY BONDS AND THE FINANCING COSTS AND,
S. 9339 7
PROVIDED THAT, EXCEPT AS PROVIDED IN SUBDIVISION EIGHT OF THIS SECTION
OR TO IMPLEMENT ANY TRUE-UP MECHANISM ADOPTED BY THE COMMISSION AS
DESCRIBED IN PARAGRAPH (F) OF THIS SUBDIVISION, THE COMMISSION MAY NOT
AMEND, MODIFY, OR TERMINATE THE FINANCING ORDER BY ANY SUBSEQUENT ACTION
OR REDUCE, IMPAIR, POSTPONE, TERMINATE, OR OTHERWISE ADJUST RECOVERY
CHARGES APPROVED IN THE FINANCING ORDER, PROVIDED NOTHING SHALL PRECLUDE
LIMITATION OR ALTERATION IF AND WHEN FULL COMPENSATION, INCLUDING FULL
COST RECOVERY, IS MADE FOR THE FULL PROTECTION OF THE RECOVERY CHARGES
COLLECTED PURSUANT TO A FINANCING ORDER AND THE FULL PROTECTION OF THE
HOLDERS OF RECOVERY BONDS AND ANY ASSIGNEE OR FINANCING PARTY;
(H) SPECIFY HOW AMOUNTS COLLECTED FROM CONSUMERS SHALL BE ALLOCATED
BETWEEN RECOVERY CHARGES AND OTHER CHARGES;
(I) PROVIDE THAT A FINANCING ORDER REMAINS IN EFFECT UNTIL THE RECOV-
ERY BONDS ISSUED PURSUANT TO THE ORDER HAVE BEEN INDEFEASIBLY PAID IN
FULL AND THE FINANCING COSTS OF SUCH BONDS HAVE BEEN RECOVERED IN FULL;
(J) PROVIDE THAT A FINANCING ORDER SHALL REMAIN IN EFFECT AND UNABATED
NOTWITHSTANDING THE REORGANIZATION, BANKRUPTCY, OR OTHER INSOLVENCY
PROCEEDINGS, OR MERGER OR SALE, OF THE APPLICABLE UTILITY CORPORATION OR
ITS SUCCESSORS OR ASSIGNEES; AND
(K) AUTHORIZE AND REQUIRE THE UTILITY CORPORATION, TO THE EXTENT THAT
ANY INTEREST IN RECOVERY PROPERTY IS SOLD OR ASSIGNED, SHALL CONTRACT
WITH THE ASSIGNEE OR ANY FINANCING PARTY TO CONTINUE TO OPERATE ITS
SYSTEM TO PROVIDE SERVICE TO ITS CONSUMERS, COLLECT AMOUNTS IN RESPECT
OF THE RECOVERY CHARGES FOR THE BENEFIT AND ACCOUNT OF SUCH ASSIGNEE OR
FINANCING PARTY, AND ACCOUNT FOR AND REMIT SUCH AMOUNTS TO OR FOR THE
ACCOUNT OF SUCH ASSIGNEE OR FINANCING PARTY, INCLUDING PURSUANT TO A
SEQUESTRATION ORDER AUTHORIZED BY SUBDIVISION SIX OF SECTION THREE
HUNDRED THREE OR SUBDIVISION SEVEN OF SECTION THREE HUNDRED FIVE OF THIS
ARTICLE.
6. IN EACH FINANCING ORDER ISSUED TO OR ON BEHALF OF A UTILITY CORPO-
RATION, THE COMMISSION SHALL:
(A) PRESCRIBE ANY LIMITATIONS ON POTENTIAL ASSIGNEES OF RECOVERY PROP-
ERTY;
(B) AUTHORIZE AN ASSIGNEE WHICH IS A SUBSIDIARY OF A UTILITY CORPO-
RATION AND WHICH ISSUES RECOVERY BONDS OR ANOTHER ASSIGNEE WHICH ISSUES
RECOVERY BONDS TO PROVIDE AND ESTABLISH IN ITS ORGANIZATIONAL DOCUMENTS,
PARTNERSHIP AGREEMENT, OR OPERATING AGREEMENT, AS APPLICABLE, THAT IN
ORDER FOR A PERSON TO FILE A VOLUNTARY BANKRUPTCY PETITION ON BEHALF OF
SUCH ASSIGNEE, THE PRIOR UNANIMOUS CONSENT OF THE DIRECTORS, PARTNERS,
OR MANAGERS, AS APPLICABLE, SHALL BE REQUIRED. IF SO AUTHORIZED IN A
FINANCING ORDER, ANY SUCH PROVISION SET FORTH IN THE ORGANIZATIONAL
DOCUMENTS, PARTNERSHIP AGREEMENT, OR OPERATING AGREEMENT OF SUCH AN
ASSIGNEE SHALL CONSTITUTE A LEGAL, VALID, AND BINDING AGREEMENT OF THE
SHAREHOLDERS, PARTNERS, OR MEMBERS, AS APPLICABLE, OF SUCH ASSIGNEE AND
SHALL BE ENFORCEABLE AGAINST SUCH SHAREHOLDERS, PARTNERS, OR MEMBERS;
AND
(C) PROVIDE THAT THE CREATION OF THE RECOVERY PROPERTY PURSUANT TO
PARAGRAPH (D) OF SUBDIVISION FIVE OF THIS SECTION SHALL BE CONDITIONED
UPON, AND SHALL BE SIMULTANEOUS WITH EITHER: (I) THE SALE, ASSIGNMENT,
OR OTHER TRANSFER OF THE RECOVERY PROPERTY TO AN ASSIGNEE; OR (II) THE
ISSUANCE OF THE RECOVERY BONDS AND THE SECURITY INTEREST CREATED IN THE
RECOVERY PROPERTY TO SECURE RECOVERY BONDS.
7. AFTER THE ISSUANCE OF A FINANCING ORDER, AND WITHIN SUCH TIME AND
SUBJECT TO ANY OTHER LIMITATIONS SET FORTH IN THE FINANCING ORDER, THE
UTILITY CORPORATION RETAINS DISCRETION REGARDING WHETHER TO SELL,
ASSIGN, OR OTHERWISE TRANSFER RECOVERY PROPERTY OR TO CAUSE THE RECOVERY
S. 9339 8
BONDS TO BE ISSUED, INCLUDING THE RIGHT TO DEFER OR POSTPONE SUCH SALE,
ASSIGNMENT, TRANSFER, OR ISSUANCE.
8. AT THE REQUEST OF A UTILITY CORPORATION, THE COMMISSION MAY
COMMENCE A PROCEEDING AND ISSUE A SUBSEQUENT FINANCING ORDER THAT
PROVIDES FOR THE REFINANCING, RETIRING, OR REFUNDING OF RECOVERY BONDS
ISSUED BY AN AFFILIATE OF THE UTILITY CORPORATION PURSUANT TO THE
ORIGINAL FINANCING ORDER IF THE COMMISSION FINDS THAT THE SUBSEQUENT
FINANCING ORDER SATISFIES ALL OF THE CRITERIA SPECIFIED IN SUBDIVISION
THREE OF THIS SECTION OR THAT PROVIDES FOR AN ACCOUNTING, REFUNDING, OR
CREDITING TO CONSUMERS OF THE PROCEEDS OF ANY TRUE-UP MECHANISM ADOPTED
BY THE COMMISSION IN ACCORDANCE WITH PARAGRAPH (F) OF SUBDIVISION FIVE
OF THIS SECTION. EFFECTIVE ON RETIREMENT OF THE REFUNDED RECOVERY BONDS
AND THE ISSUANCE OF NEW RECOVERY BONDS, THE COMMISSION MAY ADJUST THE
RELATED RECOVERY CHARGES ACCORDINGLY OR ESTABLISH SUBSTITUTE RECOVERY
CHARGES.
9. (A) THE COMMISSION SHALL NOT, IN EXERCISING ITS POWERS AND CARRYING
OUT ITS DUTIES REGARDING ANY MATTER WITHIN ITS AUTHORITY PURSUANT TO
THIS ARTICLE, CONSIDER THE RECOVERY BONDS ISSUED PURSUANT TO A FINANCING
ORDER TO BE THE DEBT OF THE UTILITY CORPORATION OTHER THAN FOR FEDERAL
INCOME TAX PURPOSES, CONSIDER THE RECOVERY CHARGES PAID UNDER THE
FINANCING ORDER TO BE THE REVENUE OF THE UTILITY CORPORATION FOR ANY
PURPOSE, OR CONSIDER THE RECOVERY COSTS OR FINANCING COSTS SPECIFIED IN
THE FINANCING ORDER TO BE THE COSTS OF THE UTILITY CORPORATION, NOR MAY
THE COMMISSION DETERMINE ANY ACTION TAKEN BY A UTILITY CORPORATION WHICH
IS NOT CONSISTENT WITH THE FINANCING ORDER TO BE UNJUST OR UNREASONABLE.
(B) THE COMMISSION MAY NOT ORDER OR OTHERWISE DIRECTLY OR INDIRECTLY
REQUIRE A UTILITY CORPORATION TO USE RECOVERY BONDS TO FINANCE ANY
PROJECT, ADDITION, PLANT, FACILITY, EXTENSION, CAPITAL IMPROVEMENT,
EQUIPMENT, OR ANY OTHER EXPENDITURE. AFTER THE ISSUANCE OF A FINANCING
ORDER, THE UTILITY CORPORATION RETAINS SOLE DISCRETION WHETHER TO CAUSE
THE RECOVERY BONDS TO BE ISSUED, INCLUDING THE RIGHT TO DEFER OR POST-
PONE SUCH SALE, ASSIGNMENT, TRANSFER OR ISSUANCE. NOTHING SHALL PREVENT
THE UTILITY CORPORATION FROM ABANDONING THE ISSUANCE OF RECOVERY BONDS
UNDER THE FINANCING ORDER BY FILING WITH THE COMMISSION A STATEMENT OF
ABANDONMENT AND THE REASONS THEREFOR.
THE COMMISSION SHALL NOT REFUSE TO ALLOW A UTILITY CORPORATION TO
RECOVER RECOVERY COSTS IN AN OTHERWISE PERMISSIBLE FASHION OR REFUSE OR
CONDITION AUTHORIZATION OR APPROVAL OF THE ISSUANCE AND SALE BY A UTILI-
TY CORPORATION OF SECURITIES OR THE ASSUMPTION BY THE UTILITY CORPO-
RATION OF LIABILITIES OR OBLIGATIONS, SOLELY BECAUSE OF THE POTENTIAL
AVAILABILITY OF RECOVERY BOND FINANCING.
10. ALL FINANCING ORDERS ISSUED BY THE COMMISSION SHALL BE OPERATIVE
AND IN FULL FORCE AND EFFECT ON THE DATE OF THE ISSUANCE OF SUCH ORDER.
11. NOTWITHSTANDING ANY OTHER LAW TO THE CONTRARY, ANY ACTION, SUIT OR
PROCEEDING TO WHICH THE COMMISSION OR THE RECOVERY BOND ISSUER MAY BE A
PARTY, IN WHICH ANY QUESTION ARISES AS TO THE VALIDITY OF THIS ARTICLE
OR ANY FINANCING ORDER, SHALL BE PREFERRED OVER ALL OTHER CIVIL CAUSES
IN ALL COURTS OF THE STATE, EXCEPT ELECTION MATTERS, AND SHALL BE HEARD
AND DETERMINED IN PREFERENCE TO ALL OTHER CIVIL BUSINESS PENDING THERE-
IN, EXCEPT ELECTION MATTERS, IRRESPECTIVE OF POSITION ON THE CALENDAR.
SUCH PREFERENCE SHALL ALSO BE GRANTED UPON PETITION OF COUNSEL TO THE
COMMISSION IN ANY ACTION OR PROCEEDING QUESTIONING THE VALIDITY OF ANY
FINANCING ORDER OR OTHER DECISION MADE BY THE COMMISSION UNDER THIS
ARTICLE IN WHICH SUCH COUNSEL MAY BE ALLOWED TO INTERVENE. NOTWITH-
STANDING ANY OTHER PROVISION OF LAW TO THE CONTRARY, THE VALIDITY OF ANY
FINANCING ORDER OR OTHER DECISION MAY ONLY BE CHALLENGED BY AN AGGRIEVED
S. 9339 9
PARTY PURSUANT TO AN ACTION, SUIT OR PROCEEDING FILED WITHIN THIRTY DAYS
AFTER SUCH FINANCING ORDER BECOMES FINAL; PROVIDED, HOWEVER, THAT ANY
SUCH ACTION, SUIT OR PROCEEDING AND ALL SUPPORTING PAPERS SHALL BE
COMMENCED DIRECTLY IN THE SUPREME COURT, APPELLATE DIVISION, THIRD JUDI-
CIAL DEPARTMENT.
§ 303. RECOVERY PROPERTY. 1. ALL RECOVERY PROPERTY SPECIFIED IN A
FINANCING ORDER SHALL CONSTITUTE AN EXISTING, PRESENT PROPERTY RIGHT.
SUCH PROPERTY SHALL EXIST WHETHER OR NOT THE REVENUES OR PROCEEDS ARIS-
ING FROM THE PROPERTY HAVE BEEN BILLED, HAVE ACCRUED, OR HAVE BEEN
COLLECTED.
2. RECOVERY PROPERTY SPECIFIED IN A FINANCING ORDER SHALL CONTINUE TO
EXIST UNTIL THE RECOVERY BONDS ISSUED PURSUANT TO SUCH ORDER ARE PAID IN
FULL AND ALL FINANCING COSTS OF THE BONDS HAVE BEEN RECOVERED IN FULL.
3. ALL OR ANY PORTION OF RECOVERY PROPERTY SPECIFIED IN A FINANCING
ORDER ISSUED TO A UTILITY CORPORATION MAY BE SOLD, ASSIGNED, OR TRANS-
FERRED TO A SUCCESSOR OR AN ASSIGNEE, INCLUDING AN AFFILIATE OR AFFIL-
IATES OF THE UTILITY CORPORATION OR ANY OTHER ASSIGNEE CREATED FOR THE
LIMITED PURPOSE OF ACQUIRING, OWNING, OR ADMINISTERING RECOVERY PROPERTY
OR ISSUING RECOVERY BONDS UNDER THE FINANCING ORDER. ALL OR ANY PORTION
OF RECOVERY PROPERTY MAY BE ENCUMBERED BY A SECURITY INTEREST TO SECURE
RECOVERY BONDS ISSUED PURSUANT TO THE ORDER AND OTHER FINANCING COSTS.
EACH SUCH SALE, ASSIGNMENT, TRANSFER, OR SECURITY INTEREST GRANTED BY A
UTILITY CORPORATION OR AFFILIATE OF A UTILITY CORPORATION OR ASSIGNEE
SHALL BE CONSIDERED TO BE A TRANSACTION IN THE ORDINARY COURSE OF BUSI-
NESS.
4. THE DESCRIPTION OF RECOVERY PROPERTY BEING SOLD, ASSIGNED, OR
TRANSFERRED TO AN ASSIGNEE IN ANY SALE AGREEMENT, PURCHASE AGREEMENT, OR
OTHER TRANSFER AGREEMENT OR CREATED AND RECOGNIZED AS PROPERTY OF AN
ASSIGNEE IN ACCORDANCE WITH SUBDIVISION NINE OF THIS SECTION, BEING
ENCUMBERED TO A SECURED PARTY IN ANY SECURITY AGREEMENT, PLEDGE AGREE-
MENT, OR OTHER SECURITY DOCUMENT, OR INDICATED IN ANY FINANCING STATE-
MENT IS ONLY SUFFICIENT IF SUCH DESCRIPTION OR INDICATION REFERS TO THE
SPECIFIC FINANCING ORDER THAT CREATED THE RECOVERY PROPERTY AND STATES
THAT SUCH AGREEMENT OR FINANCING STATEMENT COVERS ALL OR PART OF SUCH
RECOVERY PROPERTY DESCRIBED IN SUCH FINANCING ORDER. A DESCRIPTION OF
RECOVERY PROPERTY IN A FINANCING STATEMENT SHALL BE SUFFICIENT IF IT
REFERS TO THE FINANCING ORDER CREATING THE RECOVERY PROPERTY. THIS
SUBDIVISION SHALL APPLY TO ALL PURPORTED SALES, ASSIGNMENTS, OR TRANS-
FERS OF, AND ALL PURPORTED LIENS OR SECURITY INTERESTS IN, RECOVERY
PROPERTY, REGARDLESS OF WHETHER THE RELATED SALE AGREEMENT, PURCHASE
AGREEMENT, OTHER TRANSFER AGREEMENT, SECURITY AGREEMENT, PLEDGE AGREE-
MENT, OR OTHER SECURITY DOCUMENT WAS ENTERED INTO, OR ANY FINANCING
STATEMENT WAS FILED, BEFORE OR AFTER THE EFFECTIVE DATE OF THIS ARTICLE.
5. EVERY ELECTRIC BILL ISSUED BY A UTILITY CORPORATION THAT HAS
OBTAINED A FINANCING ORDER AND CAUSED RECOVERY BONDS TO BE ISSUED SHALL
COMPLY WITH THE PROVISIONS OF THIS SUBDIVISION; PROVIDED, HOWEVER, THAT
THE FAILURE OF A UTILITY CORPORATION TO COMPLY WITH THIS SUBDIVISION
SHALL NOT INVALIDATE, IMPAIR, OR AFFECT ANY FINANCING ORDER, RECOVERY
PROPERTY, RECOVERY CHARGE, OR RECOVERY BONDS. EVERY SUCH BILL SHALL:
(A) EXPLICITLY REFLECT THAT A PORTION OF THE CHARGES ON SUCH BILL
REPRESENTS RECOVERY CHARGES APPROVED IN A FINANCING ORDER ISSUED TO THE
UTILITY CORPORATION AND, IF THE RECOVERY PROPERTY HAS BEEN TRANSFERRED
TO, OR CREATED AT, AN ASSIGNEE, MUST INCLUDE A STATEMENT TO THE EFFECT
THAT THE ASSIGNEE IS THE OWNER OF THE RIGHTS TO RECOVERY CHARGES AND
THAT THE UTILITY CORPORATION OR OTHER ENTITY, IF APPLICABLE, IS ACTING
AS A COLLECTION AGENT OR SERVICER FOR THAT ASSIGNEE. THE TARIFF APPLI-
S. 9339 10
CABLE TO CONSUMERS MUST INDICATE THE RECOVERY CHARGE AND THE OWNERSHIP
OF THE CHARGE.
(B) INCLUDE THE RECOVERY CHARGE ON EACH CONSUMER'S BILL AS A SEPARATE
LINE ITEM AND INCLUDE EITHER THE RATE OR THE AMOUNT OF THE CHARGE ON
EACH BILL.
6. IF A UTILITY CORPORATION DEFAULTS ON ANY REQUIRED PAYMENT OF CHARG-
ES ARISING FROM RECOVERY PROPERTY SPECIFIED IN A FINANCING ORDER, THE
SUPREME COURT, ALBANY COUNTY, UPON PETITION BY AN INTERESTED PARTY, AND
WITHOUT LIMITING ANY OTHER REMEDIES AVAILABLE TO THE APPLYING PARTY,
SHALL ORDER THE SEQUESTRATION AND PAYMENT OF THE REVENUES ARISING FROM
THE RECOVERY PROPERTY TO THE FINANCING PARTIES OR THEIR REPRESENTATIVES.
ANY SUCH ORDER SHALL REMAIN IN FULL FORCE AND EFFECT NOTWITHSTANDING ANY
REORGANIZATION, BANKRUPTCY, OR OTHER INSOLVENCY PROCEEDINGS WITH RESPECT
TO THE UTILITY CORPORATION OR ITS SUCCESSORS OR ASSIGNEES.
7. THE INTEREST OF AN ASSIGNEE OR SECURED PARTY IN RECOVERY PROPERTY
SPECIFIED IN A FINANCING ORDER SHALL NOT BE SUBJECT TO SETOFF, COUNTER-
CLAIM, SURCHARGE, OR DEFENSE BY THE UTILITY CORPORATION OR ANY OTHER
PERSON, OR IN CONNECTION WITH THE REORGANIZATION, BANKRUPTCY, OR OTHER
INSOLVENCY OF THE UTILITY CORPORATION OR ANY OTHER ENTITY.
8. ANY SUCCESSOR TO A UTILITY CORPORATION, WHETHER PURSUANT TO ANY
REORGANIZATION, BANKRUPTCY, OR OTHER INSOLVENCY PROCEEDING OR WHETHER
PURSUANT TO ANY MERGER OR ACQUISITION, SALE, OR OTHER BUSINESS COMBINA-
TION, OR TRANSFER BY OPERATION OF LAW, AS A RESULT OF UTILITY CORPO-
RATION RESTRUCTURING OR OTHERWISE, SHALL PERFORM AND SATISFY ALL OBLI-
GATIONS OF, AND HAVE THE SAME RIGHTS UNDER A FINANCING ORDER AS THE
UTILITY CORPORATION UNDER THE FINANCING ORDER IN THE SAME MANNER AND TO
THE SAME EXTENT AS THE UTILITY CORPORATION, INCLUDING COLLECTION AND
PAYMENT OF ANY REVENUES AND PROCEEDS OF THE RECOVERY PROPERTY TO ANY
PERSON ENTITLED THERETO.
9. UPON PETITION BY THE UTILITY CORPORATION, RECOVERY PROPERTY MAY BE
IMMEDIATELY CREATED BY OPERATION OF LAW ON THE LATTER OF THE ISSUANCE OF
A FINANCING ORDER, OR THE ISSUANCE OF THE RECOVERY BONDS BY AN ASSIGNEE.
RECOVERY PROPERTY CREATED IN ACCORDANCE WITH THIS SUBDIVISION SHALL,
UPON CREATION, BELONG TO THE ASSIGNEE AND SUCH ASSIGNEE WILL HAVE THE
SAME RIGHTS TO AND BENEFITS ARISING FROM THE RECOVERY PROPERTY AS IT
WOULD HAVE IF IT ACQUIRED SUCH RECOVERY PROPERTY AS A RESULT OF A
PURCHASE, ACQUISITION OR OTHER TRANSFER FROM THE UTILITY CORPORATION.
§ 304. SALE, ASSIGNMENT, OR TRANSFER OF RECOVERY PROPERTY. 1. THE
SALE, ASSIGNMENT, OR OTHER TRANSFER OF RECOVERY PROPERTY BY A UTILITY
CORPORATION TO AN ASSIGNEE THAT THE PARTIES HAVE IN THE GOVERNING
CONTRACT EXPRESSLY STATED TO BE A SALE OR OTHER ABSOLUTE TRANSFER SHALL
CONSTITUTE AN ABSOLUTE TRANSFER AND TRUE SALE OF, AND NOT A SECURITY
INTEREST IN, THE TRANSFEROR'S RIGHT, TITLE, AND INTEREST IN, TO, AND
UNDER SUCH RECOVERY PROPERTY, OTHER THAN FOR FEDERAL AND STATE INCOME
TAX PURPOSES. THE PARTIES' CHARACTERIZATION OF SUCH TRANSACTION AS A
SALE OF AN INTEREST IN RECOVERY PROPERTY SHALL BE CONCLUSIVE THAT THE
TRANSACTION IS A TRUE SALE AND THAT OWNERSHIP HAS PASSED TO THE PARTY
CHARACTERIZED AS THE PURCHASER, REGARDLESS OF WHETHER THE PURCHASER HAS
POSSESSION OF ANY DOCUMENTS EVIDENCING OR PERTAINING TO THE INTEREST.
AFTER ANY SUCH TRANSACTION, THE RECOVERY PROPERTY SHALL NOT BE SUBJECT
TO ANY CLAIMS OF THE TRANSFEROR OR THE TRANSFEROR'S CREDITORS, OTHER
THAN CREDITORS HOLDING A PRIOR SECURITY INTEREST IN THE RECOVERY PROPER-
TY PERFECTED UNDER SECTION THREE HUNDRED SEVEN OF THIS ARTICLE.
2. NOTWITHSTANDING ANY PROVISION OF LAW TO THE CONTRARY, THE CHARAC-
TERIZATION OF ANY SALE, ASSIGNMENT, OR OTHER TRANSFER AS A TRUE SALE OR
OTHER ABSOLUTE TRANSFER PURSUANT TO SUBDIVISION ONE OF THIS SECTION AND
S. 9339 11
THE CORRESPONDING CHARACTERIZATION OF THE ASSIGNEE'S PROPERTY INTEREST
SHALL BE DETERMINATIVE AND CONCLUSIVE IRRESPECTIVE OF, AND NOT AFFECTED
OR IMPAIRED BY, THE EXISTENCE OF ANY OR ALL OF THE FOLLOWING CIRCUM-
STANCES:
(A) COMMINGLING OF AMOUNTS ARISING WITH RESPECT TO THE RECOVERY PROP-
ERTY WITH OTHER AMOUNTS;
(B) THE RETENTION BY THE TRANSFEROR OF A PARTIAL OR RESIDUAL INTEREST,
INCLUDING AN EQUITY INTEREST OR ENTITLEMENT TO ANY SURPLUS, IN THE
RECOVERY PROPERTY, WHETHER DIRECT OR INDIRECT, OR WHETHER SUBORDINATE OR
OTHERWISE;
(C) ANY RECOURSE THAT THE ASSIGNEE MAY HAVE AGAINST THE TRANSFEROR,
EXCEPT THAT ANY SUCH RECOURSE SHALL NOT BE CREATED, CONTINGENT UPON, OR
OTHERWISE OCCURRING OR RESULTING FROM THE INABILITY OR FAILURE OF ONE OR
MORE OF THE TRANSFEROR'S CONSUMERS TO TIMELY PAY ALL OR A PORTION OF THE
RECOVERY CHARGE;
(D) ANY INDEMNIFICATIONS, OBLIGATIONS, OR REPURCHASE RIGHTS MADE OR
PROVIDED BY THE TRANSFEROR, EXCEPT THAT SUCH INDEMNITY OR REPURCHASE
RIGHTS SHALL NOT BE BASED SOLELY UPON THE INABILITY OR FAILURE OF A
TRANSFEROR'S CONSUMERS TO TIMELY PAY ALL OR A PORTION OF THE RECOVERY
CHARGE;
(E) THE TRANSFEROR ACTING AS THE COLLECTOR OF THE RECOVERY CHARGES OR
THE EXISTENCE OF ANY CONTRACT DESCRIBED IN PARAGRAPH (K) OF SUBDIVISION
FIVE OF SECTION THREE HUNDRED TWO OF THIS ARTICLE;
(F) THE CONTRARY OR OTHER TREATMENT OF THE SALE, ASSIGNMENT, OR OTHER
TRANSFER FOR TAX, FINANCIAL REPORTING, OR OTHER PURPOSES;
(G) THE GRANTING OR PROVIDING TO HOLDERS OF THE RECOVERY BONDS OF A
PREFERRED RIGHT TO THE RECOVERY PROPERTY OR CREDIT ENHANCEMENT BY THE
UTILITY CORPORATION OR ITS AFFILIATES WITH RESPECT TO THE RECOVERY
BONDS; OR
(H) THE STATUS OF THE ASSIGNEE AS A DIRECT OR INDIRECT WHOLLY OWNED
SUBSIDIARY OR OTHER AFFILIATE OF THE UTILITY CORPORATION. THE SEPARATE
JURIDICAL PERSONALITY OF ANY ASSIGNEE OF RECOVERY PROPERTY WHICH IS A
SUBSIDIARY OR AFFILIATE OF THE UTILITY CORPORATION SHALL NOT BE DISRE-
GARDED DUE TO THE FACT THAT THE ASSIGNEE AND THE UTILITY CORPORATION
SHARE ANY ONE OR MORE INCIDENTS OF CONTROL, INCLUDING COMMON MANAGERS,
OFFICERS, DIRECTORS, MEMBERS, ACCOUNTING OR ADMINISTRATIVE SYSTEMS,
CONSOLIDATED TAX RETURNS, OR OFFICE SPACE, THAT THE ASSIGNEE MAY BE A
DISREGARDED ENTITY FOR TAX PURPOSES, THAT THE ELECTRIC CORPORATION
CAUSED THE FORMATION OF THE ASSIGNEE, THAT A CONTRACT BY THE UTILITY
CORPORATION AND THE ASSIGNEE DESCRIBED IN PARAGRAPH (K) OF SUBDIVISION
FIVE OF SECTION THREE HUNDRED TWO OF THIS ARTICLE EXISTS, THAT THE
ASSIGNEE HAS NO OTHER BUSINESS OTHER THAN PERTAINING TO THE RECOVERY
PROPERTY, THAT THE CAPITALIZATION OF THE ASSIGNEE IS LIMITED TO AMOUNTS
REQUIRED FOR COMPLIANCE WITH CERTAIN APPLICABLE FEDERAL INCOME TAX LAWS
AND REVENUE PROCEDURES, OR THAT OTHER FACTORS USED IN APPLYING A SINGLE
BUSINESS ENTERPRISE TEST TO JURIDICAL PERSONS ARE PRESENT.
3. ANY RIGHT THAT A UTILITY CORPORATION HAS IN THE RECOVERY PROPERTY
PRIOR TO ITS SALE, ASSIGNMENT, OR TRANSFER SHALL BE IN THE FORM OF A
CONTRACTUAL RIGHT OR CHOSE IN ACTION NOTWITHSTANDING ANY CONTRARY TREAT-
MENT THEREOF FOR ACCOUNTING OR TAX PURPOSES. THE OWNERSHIP OF AN INTER-
EST IN RECOVERY PROPERTY IS VOLUNTARILY TRANSFERRED BY A CONTRACT
BETWEEN THE OWNER AND THE ASSIGNEE THAT PURPORTS TO TRANSFER THE OWNER-
SHIP OF THAT INTEREST. UNLESS OTHERWISE PROVIDED, THE TRANSFER OF
OWNERSHIP BETWEEN THE PARTIES SHALL BE EFFECTIVE AS SOON AS THERE IS
WRITTEN AGREEMENT ON THE INTEREST, THE PURCHASE PRICE IS FIXED, AND THE
FINANCING ORDER HAS BEEN ISSUED. SUCH TRANSFER SHALL BE PERFECTED AND
S. 9339 12
TAKE EFFECT AGAINST ALL THIRD PARTIES INCLUDING, BUT NOT LIMITED TO,
SUBSEQUENT LIEN CREDITORS WHEN THE TRANSFER HAS BECOME EFFECTIVE BETWEEN
THE PARTIES AND WHEN A FINANCING STATEMENT GIVING NOTICE OF THE SALE,
ASSIGNMENT, OR TRANSFER IS FILED IN ACCORDANCE WITH SUBDIVISION FOUR OF
THIS SECTION. DELIVERY OF SUCH AN INTEREST IN RECOVERY PROPERTY SHALL
TAKE PLACE BY OPERATION OF LAW UPON THE FILING OF THE FINANCING STATE-
MENT.
4. FINANCING STATEMENTS REQUIRED TO BE FILED UNDER THIS SECTION SHALL
BE FILED, INDEXED, MAINTAINED, AND CONTINUED IN THE SAME MANNER AND IN
THE SAME SYSTEM OF RECORDS MAINTAINED FOR THE FILING OF FINANCING STATE-
MENTS UNDER ARTICLE NINE OF THE UNIFORM COMMERCIAL CODE. THE FILING OF
SUCH FINANCING STATEMENT SHALL BE THE ONLY METHOD OF PERFECTING A SALE,
ASSIGNMENT, OR TRANSFER OF RECOVERY PROPERTY. THE SALE, ASSIGNMENT, OR
TRANSFER OF AN INTEREST IN RECOVERY PROPERTY PERFECTED BY FILING A
FINANCING STATEMENT SHALL BE EFFECTIVE AGAINST ANY CONSUMERS OWING
PAYMENT OF THE RECOVERY CHARGES, CREDITORS OF THE TRANSFEROR, SUBSEQUENT
TRANSFEREES, AND ALL OTHER THIRD PERSONS NOTWITHSTANDING THE ABSENCE OF
ACTUAL KNOWLEDGE OF OR NOTICE TO SUCH CONSUMERS OF SUCH SALE, ASSIGN-
MENT, OR TRANSFER.
5. THE PRIORITY OF THE CONFLICTING OWNERSHIP INTERESTS OF ASSIGNEES IN
THE SAME INTEREST OR RIGHTS IN ANY RECOVERY PROPERTY SHALL BE DETERMINED
AS FOLLOWS:
(A) CONFLICTING PERFECTED INTERESTS OR RIGHTS OF ASSIGNEES RANK
ACCORDING TO PRIORITY IN TIME OF PERFECTION.
(B) A PERFECTED INTEREST OR RIGHT OF AN ASSIGNEE HAS PRIORITY OVER A
CONFLICTING UNPERFECTED INTEREST OR RIGHT OF AN ASSIGNEE.
(C) A PERFECTED INTEREST OR RIGHT OF AN ASSIGNEE HAS PRIORITY OVER A
PERSON WHO BECOMES A LIEN CREDITOR AFTER THE PERFECTION OF SUCH
ASSIGNEE'S INTEREST OR RIGHT.
6. THE PRIORITY OF A SALE, ASSIGNMENT, OR TRANSFER PERFECTED UNDER
THIS SECTION SHALL NOT BE IMPAIRED BY ANY LATER MODIFICATION OF THE
FINANCING ORDER OR RECOVERY PROPERTY OR BY THE COMMINGLING OF FUNDS
ARISING FROM RECOVERY PROPERTY WITH OTHER FUNDS. ANY OTHER SECURITY
INTEREST THAT MAY APPLY TO SUCH FUNDS, OTHER THAN A SECURITY INTEREST
PERFECTED UNDER SECTION THREE HUNDRED FIVE OF THIS ARTICLE, SHALL BE
TERMINATED WHEN THOSE FUNDS ARE TRANSFERRED TO A SEGREGATED ACCOUNT FOR
THE ASSIGNEE OR A FINANCING PARTY. IF RECOVERY PROPERTY HAS BEEN TRANS-
FERRED TO AN ASSIGNEE OR FINANCING PARTY, ANY PROCEEDS OF SUCH PROPERTY
SHALL BE HELD FOR AND DELIVERED TO THE ASSIGNEE OR FINANCING PARTY BY
ANY COLLECTOR UNDER ANY CONTRACT DESCRIBED IN PARAGRAPH (K) OF SUBDIVI-
SION FIVE OF SECTION THREE HUNDRED TWO OF THIS ARTICLE AS A MANDATARY
AND FIDUCIARY.
§ 305. SECURITY INTERESTS. 1. THE PROVISIONS OF ARTICLE NINE OF THE
UNIFORM COMMERCIAL CODE RELATING TO SECURED TRANSACTIONS SHALL NOT APPLY
TO RECOVERY PROPERTY OR ANY RIGHT, TITLE, OR INTEREST OF A CORPORATION
OR ASSIGNEE THEREIN, WHETHER BEFORE OR AFTER THE ISSUANCE OF A FINANCING
ORDER, EXCEPT AS PROVIDED IN SUBDIVISION ONE OF SECTION THREE HUNDRED
SIX OF THIS ARTICLE. IN ADDITION, SUCH RIGHT, TITLE, OR INTEREST
PERTAINING TO A FINANCING ORDER, INCLUDING BUT NOT LIMITED TO, THE ASSO-
CIATED RECOVERY PROPERTY, AND ANY REVENUES, COLLECTIONS, CLAIMS, RIGHTS
TO PAYMENT, PAYMENTS, MONEY, OR PROCEEDS OF OR ARISING FROM RECOVERY
CHARGES PURSUANT TO SUCH ORDER, SHALL NOT BE DEEMED PROCEEDS OF ANY
RIGHT OR INTEREST OTHER THAN OF THE FINANCING ORDER AND THE RECOVERY
PROPERTY ARISING FROM THE FINANCING ORDER. ALL REVENUES AND COLLECTIONS
RESULTING FROM RECOVERY PROPERTY SHALL CONSTITUTE PROCEEDS ONLY OF THE
RECOVERY PROPERTY ARISING FROM THE FINANCING ORDER.
S. 9339 13
2. EXCEPT TO THE EXTENT PROVIDED IN THIS ARTICLE WITH RESPECT TO
FILINGS OF FINANCING STATEMENTS OR CONTROL OF DEPOSIT ACCOUNTS OR
INVESTMENT PROPERTY AS ORIGINAL COLLATERAL, THE CREATION, ATTACHMENT,
GRANTING, PERFECTION, AND PRIORITY OF SECURITY INTERESTS IN RECOVERY
PROPERTY TO SECURE RECOVERY BONDS SHALL BE GOVERNED SOLELY BY THIS ARTI-
CLE AND NOT BY THE UNIFORM COMMERCIAL CODE.
3. (A) A SECURITY INTEREST IN RECOVERY PROPERTY IS VALID AND ENFORCEA-
BLE AGAINST THE UTILITY CORPORATION AND ITS SUCCESSOR OR AN ASSIGNEE AND
THIRD PARTIES AND ATTACHES TO RECOVERY PROPERTY ONLY AFTER ALL OF THE
FOLLOWING CONDITIONS ARE MET:
(I) THE ISSUANCE OF A FINANCING ORDER;
(II) THE EXECUTION AND DELIVERY OF A SECURITY AGREEMENT WITH A FINANC-
ING PARTY IN CONNECTION WITH THE ISSUANCE OF RECOVERY BONDS; AND
(III) THE RECEIPT OF VALUE FOR THE RECOVERY BONDS.
(B) A SECURITY INTEREST ATTACHES TO RECOVERY PROPERTY WITHOUT PHYSICAL
DELIVERY OF COLLATERAL OR OTHER ACT WHEN ALL OF THE FOREGOING CONDITIONS
HAVE BEEN MET, UNLESS THE SECURITY AGREEMENT EXPRESSLY POSTPONES THE
TIME OF ATTACHMENT.
4. A SECURITY INTEREST IN RECOVERY PROPERTY IS PERFECTED ONLY IF IT
HAS ATTACHED AND A FINANCING STATEMENT INDICATING THE RECOVERY PROPERTY
COLLATERAL COVERED THEREBY HAS BEEN FILED. A FINANCING STATEMENT MUST
BE FILED TO PERFECT ALL SECURITY INTERESTS AND LIENS IN STORM RECOVERY
PROPERTY UNDER THIS ARTICLE. A SECURITY INTEREST IN RECOVERY PROPERTY
IS PERFECTED WHEN IT HAS ATTACHED AND WHEN THE APPLICABLE FINANCING
STATEMENT HAS BEEN FILED. THE INTEREST OF A SECURED PARTY IS NOT
PERFECTED UNLESS A FINANCING STATEMENT SUFFICIENT UNDER THIS ARTICLE AND
OTHERWISE IN ACCORDANCE WITH THE UNIFORM COMMERCIAL CODE IS FILED, AND
AFTER PERFECTION THE SECURED PARTY'S INTEREST CONTINUES IN THE RECOVERY
PROPERTY AND ALL PROCEEDS OF SUCH RECOVERY PROPERTY, WHETHER OR NOT
BILLED, ACCRUED, OR COLLECTED, AND WHETHER OR NOT DEPOSITED INTO A
DEPOSIT ACCOUNT AND HOWEVER EVIDENCED. A SECURITY INTEREST IN PROCEEDS
OF RECOVERY PROPERTY IS A PERFECTED SECURITY INTEREST IF THE SECURITY
INTEREST IN THE RECOVERY PROPERTY WAS PERFECTED UNDER THIS ARTICLE.
FINANCING STATEMENTS REQUIRED TO BE FILED PURSUANT TO THIS ARTICLE SHALL
BE FILED, INDEXED, MAINTAINED, AND CONTINUED IN THE SAME MANNER AND IN
THE SAME SYSTEM OF RECORDS MAINTAINED FOR THE FILING OF FINANCING STATE-
MENTS UNDER THE UNIFORM COMMERCIAL CODE, EXCEPT THAT THE REQUIREMENT AS
TO CONTINUATION STATEMENTS DOES NOT APPLY. THE FILING OF SUCH A FINANC-
ING STATEMENT SHALL BE THE ONLY METHOD OF PERFECTING A LIEN OR SECURITY
INTEREST ON RECOVERY PROPERTY. THE FINANCING STATEMENT SHALL BE FILED
AS IF THE DEBTOR NAMED THEREIN WERE LOCATED IN THIS STATE.
5. THE PRIORITY OF THE CONFLICTING SECURITY INTERESTS OF SECURED
PARTIES IN THE SAME INTEREST OR RIGHTS IN ANY RECOVERY PROPERTY IS
DETERMINED AS FOLLOWS:
(A) CONFLICTING PERFECTED SECURITY INTERESTS OF SECURED PARTIES RANK
ACCORDING TO PRIORITY IN TIME OF PERFECTION;
(B) A PERFECTED SECURITY INTEREST OF A SECURED PARTY HAS PRIORITY OVER
A CONFLICTING UNPERFECTED SECURITY INTEREST OF A SECURED PARTY; AND
(C) A PERFECTED SECURITY INTEREST OF A SECURED PARTY HAS PRIORITY OVER
A PERSON WHO BECOMES A LIEN CREDITOR AFTER THE PERFECTION OF SUCH
SECURED PARTY'S SECURITY INTEREST.
6. A PERFECTED SECURITY INTEREST IN RECOVERY PROPERTY AND ALL PROCEEDS
OF SUCH RECOVERY PROPERTY, WHETHER OR NOT BILLED, ACCRUED, OR COLLECTED,
AND WHETHER OR NOT DEPOSITED INTO A DEPOSIT ACCOUNT AND HOWEVER
EVIDENCED, SHALL HAVE PRIORITY OVER A CONFLICTING LIEN OR PRIVILEGE OF
ANY NATURE IN THE SAME COLLATERAL PROPERTY, EXCEPT A SECURITY INTEREST
S. 9339 14
IS SUBORDINATE TO THE RIGHTS OF A PERSON THAT BECOMES A LIEN CREDITOR
BEFORE THE PERFECTION OF SUCH SECURITY INTEREST. A SECURITY INTEREST IN
RECOVERY PROPERTY WHICH QUALIFIES FOR PRIORITY OVER A CONFLICTING SECU-
RITY INTEREST, LIEN, OR PRIVILEGE ALSO HAS PRIORITY OVER THE CONFLICTING
SECURITY INTEREST, LIEN, OR PRIVILEGE IN PROCEEDS OF THE RECOVERY PROP-
ERTY. THE RELATIVE PRIORITY OF A PERFECTED SECURITY INTEREST OF A
SECURED PARTY IS NOT ADVERSELY AFFECTED BY ANY LIEN, PRIVILEGE, OR SECU-
RITY INTEREST IN A DEPOSIT ACCOUNT OF THE UTILITY CORPORATION THAT IS A
COLLECTOR AS DESCRIBED IN PARAGRAPH (K) OF SUBDIVISION FIVE OF SECTION
THREE HUNDRED TWO OF THIS ARTICLE AND INTO WHICH THE REVENUES ARE DEPOS-
ITED. THE PRIORITY OF A SECURITY INTEREST PERFECTED UNDER THIS SECTION
SHALL NOT BE DEFEATED OR IMPAIRED BY ANY LATER MODIFICATION OF THE
FINANCING ORDER OR RECOVERY PROPERTY OR BY THE COMMINGLING OF FUNDS
ARISING FROM RECOVERY PROPERTY WITH OTHER FUNDS. ANY OTHER SECURITY
INTEREST THAT MAY APPLY TO THOSE FUNDS SHALL BE TERMINATED AS TO ALL
FUNDS TRANSFERRED TO A SEGREGATED ACCOUNT FOR THE BENEFIT OF AN ASSIGNEE
OR A FINANCING PARTY OR TO AN ASSIGNEE OR FINANCING PARTY DIRECTLY. THE
PERFECTION BY CONTROL, THE EFFECT OF PERFECTION BY CONTROL, AND THE
PRIORITY OF A SECURITY INTEREST GRANTED BY THE ISSUER OF AND SECURING
RECOVERY BONDS HELD BY A SECURED PARTY HAVING CONTROL OF A SEGREGATED
DEPOSIT ACCOUNT OR SECURITIES ACCOUNT AS ORIGINAL COLLATERAL INTO WHICH
REVENUES, COLLECTIONS, OR PROCEEDS OF RECOVERY PROPERTY ARE DEPOSITED OR
CREDITED SHALL BE GOVERNED BY SECTION 1-301 OF UNIFORM COMMERCIAL CODE.
7. IF A DEFAULT OCCURS UNDER THE TERMS OF ANY RECOVERY BOND, THE
SECURED PARTY MAY FORECLOSE ON OR OTHERWISE ENFORCE THE SECURITY INTER-
EST IN ANY RECOVERY PROPERTY AS IF IT WAS A SECURED PARTY UNDER THE
UNIFORM COMMERCIAL CODE. A SECURED PARTY HOLDING A SECURITY INTEREST IN
RECOVERY PROPERTY SHALL BE ENTITLED TO EXERCISE ALL OF THE SAME RIGHTS
AND REMEDIES AVAILABLE TO A SECURED PARTY UNDER THE UNIFORM COMMERCIAL
CODE, TO THE SAME EXTENT AS IF THOSE RIGHTS AND REMEDIES WERE SET FORTH
IN THIS ARTICLE. THE COURT MAY ORDER THAT AMOUNTS ARISING FROM RECOVERY
PROPERTY BE TRANSFERRED TO A SEPARATE ACCOUNT OF THE SECURED PARTY FOR
THE FINANCING PARTIES' BENEFIT, TO WHICH THEIR SECURITY INTEREST SHALL
APPLY. ON PETITION BY OR ON BEHALF OF A SECURED PARTY, THE COURT SHALL
ORDER THE SEQUESTRATION AND PAYMENT TO THE FINANCING PARTIES OF REVENUES
ARISING FROM THE RECOVERY PROPERTY.
8. A SECURITY INTEREST CREATED UNDER THIS SECTION MAY PROVIDE FOR A
SECURITY INTEREST IN AFTER-ACQUIRED COLLATERAL. SUCH SECURITY INTEREST
SHALL NOT BE INVALID OR FRAUDULENT AGAINST CREDITORS SOLELY BECAUSE THE
GRANTOR OR THE UTILITY CORPORATION AS COLLECTOR OR SERVICER HAS THE
RIGHT OR ABILITY TO COMMINGLE THE COLLATERAL OR PROCEEDS, OR COLLECT,
COMPROMISE, ENFORCE, AND OTHERWISE DEAL WITH COLLATERAL.
9. ANY ACTION ARISING UNDER THE PROVISIONS OF THIS ARTICLE TO ENFORCE
A SECURITY INTEREST IN RECOVERY PROPERTY, OR WHICH OTHERWISE ASSERTS AN
INTEREST IN, OR A RIGHT IN, TO OR AGAINST ANY RECOVERY PROPERTY, WHEREV-
ER LOCATED OR DEEMED LOCATED, OR ANY SECURITY INTEREST GOVERNED BY THIS
ARTICLE, SHALL BE BROUGHT IN THE SUPREME COURT, ALBANY COUNTY. SUCH
ACTIONS SHALL BE GOVERNED BY THE APPLICABLE PROVISIONS OF THE CIVIL
PRACTICE LAW AND RULES AND OTHER LAW APPLICABLE TO EXECUTORY
PROCEEDINGS, INCLUDING PROVISIONAL REMEDIES, BUT ONLY TO THE EXTENT SUCH
LAWS ARE CONSISTENT WITH THE LANGUAGE AND PURPOSES OF THIS ARTICLE.
§ 306. CHOICE OF LAW; CONFLICTS. 1. THE LAW GOVERNING THE VALIDITY,
ENFORCEABILITY, ATTACHMENT, PERFECTION, PRIORITY, EXERCISE OF REMEDIES,
AND VENUE WITH RESPECT TO THE CREATION, RECOGNITION, SALE, ASSIGNMENT,
OR TRANSFER OF AN INTEREST OR RIGHT OR THE CREATION OF A SECURITY INTER-
EST IN ANY RECOVERY PROPERTY SHALL BE EXCLUSIVELY THE LAWS OF THIS
S. 9339 15
STATE, WITHOUT APPLYING THIS STATE'S LAW ON CONFLICT OF LAWS AND
NOTWITHSTANDING ANY CONTRARY CONTRACTUAL PROVISION, EXCEPT AS PROVIDED
IN SUBDIVISION SIX OF SECTION THREE HUNDRED FIVE OF THIS ARTICLE. THE
VALIDITY, ENFORCEABILITY, ATTACHMENT, PERFECTION, PRIORITY, AND EXERCISE
OF REMEDIES WITH RESPECT TO THE CREATION, RECOGNITION, SALE, ASSIGNMENT,
OR TRANSFER OF AN INTEREST OR RIGHT OR THE CREATION OF A SECURITY INTER-
EST IN ANY RECOVERY PROPERTY SHALL BE GOVERNED BY THIS ARTICLE, AND
SOLELY TO THE EXTENT NOT ADDRESSED BY THIS ARTICLE, BY THE UNIFORM
COMMERCIAL CODE AND OTHER LAWS OF THIS STATE. NOTWITHSTANDING THE
PRECEDING SENTENCE, THIS ARTICLE PROVIDES THAT THE UNIFORM COMMERCIAL
CODE APPLIES TO THE FILINGS OF FINANCING STATEMENTS REFERENCED IN THIS
ARTICLE, TO PERFECTION, THE EFFECT OF PERFECTION OR NONPERFECTION, AND
THE PRIORITY OF SECURITY INTERESTS HELD BY A SECURED PARTY HAVING
CONTROL OF DEPOSIT ACCOUNTS OR SECURITIES ACCOUNTS AS ORIGINAL COLLAT-
ERAL SECURING RECOVERY BONDS, NOTWITHSTANDING THAT PROCEEDS OF RECOVERY
CHARGES ARE DEPOSITED THEREIN, AND TO THE ENFORCEMENT OF SECURITY INTER-
ESTS IN RECOVERY PROPERTY, IN EACH CASE SUBJECT TO SUBDIVISION TWO OF
THIS SECTION.
2. INSOFAR AS THE PROVISIONS OF THIS ARTICLE ARE INCONSISTENT WITH THE
PROVISIONS OF ANY OTHER LAW OR PART THEREOF REGARDING THE ATTACHMENT,
CREATION, PERFECTION, THE EFFECT OF PERFECTION, OR PRIORITY OF, AND
SALE, ASSIGNMENT, OR TRANSFER OF, OR SECURITY INTEREST IN, RECOVERY
PROPERTY, OR THE EXERCISE OF REMEDIES WITH RESPECT THERETO, THE
PROVISIONS OF THIS ARTICLE SHALL BE CONTROLLING.
3. NOTHING IN THIS SECTION SHALL BE CONSTRUED SO AS TO CONFLICT WITH
THE PROVISIONS OF SUBDIVISION SIX OF SECTION THREE HUNDRED FIVE OF THIS
ARTICLE.
§ 307. RECOVERY BONDS NOT PUBLIC DEBT. RECOVERY BONDS ARE NOT A DEBT
OR A GENERAL OBLIGATION OF THE STATE OR ANY OF ITS POLITICAL SUBDIVI-
SIONS, AGENCIES, OR INSTRUMENTALITIES AND ARE NOT A CHARGE ON THEIR FULL
FAITH AND CREDIT. AN ISSUE OF RECOVERY BONDS SHALL NOT, DIRECTLY OR
INDIRECTLY OR CONTINGENTLY, OBLIGATE THE STATE OR ANY AGENCY, POLITICAL
SUBDIVISION, OR INSTRUMENTALITY OF THE STATE TO LEVY ANY TAX OR MAKE ANY
APPROPRIATION FOR PAYMENT OF THE BONDS, OTHER THAN FOR PAYING RECOVERY
CHARGES IN THEIR CAPACITY AS CONSUMERS OF ELECTRICITY. ALL RECOVERY
BONDS AUTHORIZED BY A FINANCING ORDER BY THE COMMISSION MUST CONTAIN ON
THE FACE THEREOF A STATEMENT TO THE FOLLOWING EFFECT: "NEITHER THE FULL
FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF NEW YORK IS
PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, OR INTEREST ON, THIS BOND."
§ 308. STATE PLEDGE. 1. THE STATE PLEDGES TO AND AGREES WITH THE HOLD-
ERS OF RECOVERY BONDS, ANY ASSIGNEE AND ALL FINANCING PARTIES THAT THE
STATE WILL NOT IN ANY WAY TAKE OR PERMIT ANY ACTION THAT LIMITS, ALTERS
OR IMPAIRS THE VALUE OF RECOVERY PROPERTY OR, EXCEPT AS REQUIRED BY A
TRUE-UP MECHANISM DESCRIBED IN THE FINANCING ORDER, REDUCE, ALTER OR
IMPAIR RECOVERY CHARGES THAT ARE IMPOSED, COLLECTED AND REMITTED FOR THE
BENEFIT OF THE OWNERS OF RECOVERY BONDS, ANY ASSIGNEE, AND ALL FINANCING
PARTIES, UNTIL ALL PRINCIPAL, INTEREST AND REDEMPTION PREMIUM IN RESPECT
OF RECOVERY BONDS, ALL OTHER FINANCING COSTS AND ALL AMOUNTS TO BE PAID
TO AN ASSIGNEE OR FINANCING PARTY UNDER AN ANCILLARY AGREEMENT ARE PAID
OR PERFORMED IN FULL.
2. ANY PERSON THAT ISSUES RECOVERY BONDS SHALL BE PERMITTED TO INCLUDE
THE PLEDGE SPECIFIED IN SUBDIVISION ONE OF THIS SECTION ON THE FACE OF
SUCH BONDS AND IN ANY ANCILLARY AGREEMENTS OR OTHER DOCUMENTATION
RELATED TO THE ISSUANCE AND MARKETING OF SUCH BONDS.
§ 309. ASSIGNEE NOT A UTILITY CORPORATION. AN ASSIGNEE OR FINANCING
PARTY SHALL NOT BE CONSIDERED A UTILITY CORPORATION AS DEFINED IN SUBDI-
S. 9339 16
VISION TWENTY-FOUR OF SECTION TWO OF THIS CHAPTER SOLELY BY VIRTUE OF
ENGAGING IN ANY OF THE TRANSACTIONS DESCRIBED IN THIS ARTICLE.
§ 310. EFFECT OF INVALIDITY. IF ANY PROVISION OF THIS ARTICLE IS HELD
INVALID OR IS INVALIDATED, SUPERSEDED, REPLACED REPEALED, OR EXPIRES FOR
ANY REASON, SUCH OCCURRENCE SHALL NOT AFFECT THE VALIDITY OF ANY ACTION
ALLOWED UNDER THIS ARTICLE TAKEN BY A UTILITY CORPORATION, OR AN ASSIG-
NEE, A FINANCING PARTY, A COLLECTION AGENT, OR A PARTY TO AN ANCILLARY
AGREEMENT. ANY SUCH ACTION SHALL REMAIN IN FULL FORCE AND EFFECT WITH
RESPECT TO ALL RECOVERY BONDS ISSUED OR AUTHORIZED IN A FINANCING ORDER
ISSUED PURSUANT TO THIS ARTICLE ON OR BEFORE THE DATE THAT SUCH
PROVISION IS HELD INVALID OR IS INVALIDATED, SUPERSEDED, REPLACED, OR
REPEALED, OR EXPIRES FOR ANY REASON.
§ 311. EFFECT OF A FINANCING ORDER. SECTION SEVENTY OF THIS CHAPTER
SHALL NOT APPLY TO: 1. ANY SALE, ASSIGNMENT OR TRANSFER OF RECOVERY
PROPERTY OR ANY EQUITY POSITION HELD BY THE UTILITY CORPORATION IN AN
ASSIGNEE; OR
2. ANY OTHER TRANSACTION CONTEMPLATED BY OR APPROVED IN A FINANCING
ORDER ISSUED BY THE COMMISSION PURSUANT TO THIS ARTICLE.
§ 3. This act shall take effect immediately.
