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HF 1189

as introduced - 92nd Legislature (2021 - 2022) Posted on 02/22/2021 04:17pm

KEY: stricken = removed, old language.
underscored = added, new language.
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A bill for an act
relating to energy; creating a process regulated by the Public Utilities Commission
allowing electric utilities to reduce the cost impacts on customers when generating
plants are retired; establishing an account; providing for transition services to
workers at retiring electric generating plants; proposing coding for new law in
Minnesota Statutes, chapter 216B.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [216B.491] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Scope. new text end

new text begin For the purposes of sections 216B.491 to 216B.4991, the terms
defined in this subdivision have the meanings given them.
new text end

new text begin Subd. 2. new text end

new text begin Ancillary agreement. new text end

new text begin "Ancillary agreement" means any bond, insurance policy,
letter of credit, reserve account, surety bond, interest rate lock or swap arrangement, liquidity
or credit support arrangement, or other financial arrangement entered into in connection
with energy transition bonds that is designed to promote the credit quality and marketability
of energy transition bonds or to mitigate the risk of an increase in interest rates.
new text end

new text begin Subd. 3. new text end

new text begin Assignee. new text end

new text begin "Assignee" means any person to which an interest in energy transition
property is sold, assigned, transferred, or conveyed, other than as security, and any successor
to or subsequent assignee of the person.
new text end

new text begin Subd. 4. new text end

new text begin Bondholder. new text end

new text begin "Bondholder" means any holder or owner of energy transition
bonds.
new text end

new text begin Subd. 5. new text end

new text begin Clean energy resource. new text end

new text begin "Clean energy resource" means:
new text end

new text begin (1) renewable energy, as defined in section 216B.2422, subdivision 1;
new text end

new text begin (2) an energy storage system; or
new text end

new text begin (3) energy efficiency and load management, as defined in section 216B.241, subdivision
1.
new text end

new text begin Subd. 6. new text end

new text begin Customer. new text end

new text begin "Customer" means a person who takes electric service from an
electric utility for consumption of electricity in Minnesota.
new text end

new text begin Subd. 7. new text end

new text begin Electric generating facility. new text end

new text begin "Electric generating facility" means a facility that
generates electricity, is owned in whole or in part by an electric utility, and is used to serve
customers in Minnesota. Electric generating facility includes any interconnected infrastructure
or facility used to transmit or deliver electricity to Minnesota customers.
new text end

new text begin Subd. 8. new text end

new text begin Electric utility. new text end

new text begin "Electric utility" means an electric utility providing electricity
to Minnesota customers, including the electric utility's successors or assignees.
new text end

new text begin Subd. 9. new text end

new text begin Energy storage system. new text end

new text begin "Energy storage system" means a commercially
available technology that:
new text end

new text begin (1) uses mechanical, chemical, or thermal processes to:
new text end

new text begin (i) store energy and deliver the stored energy for use at a later time; or
new text end

new text begin (ii) store thermal energy for direct use for heating or cooling at a later time in a manner
that reduces the demand for electricity at the later time;
new text end

new text begin (2) if being used for electric grid benefits, is operationally visible and capable of being
controlled by the distribution or transmission entity managing it to enable and optimize the
safe and reliable operation of the electric system; and
new text end

new text begin (3) achieves any of the following:
new text end

new text begin (i) reduces peak electrical demand;
new text end

new text begin (ii) defers the need or substitutes for an investment in electric generation, transmission,
or distribution assets;
new text end

new text begin (iii) improves the reliable operation of the electrical transmission or distribution systems;
or
new text end

new text begin (iv) lowers customer costs by storing energy when the cost of generating or purchasing
energy is low and delivering energy to customers when costs are high.
new text end

new text begin Subd. 10. new text end

new text begin Energy transition bonds. new text end

new text begin "Energy transition bonds" means low-cost corporate
securities, including but not limited to senior secured bonds, debentures, notes, certificates
of participation, certificates of beneficial interest, certificates of ownership, or other evidences
of indebtedness or ownership that have a scheduled maturity of no longer than 30 years and
a final legal maturity date that is not later than 32 years from the issue date, that are rated
AA or Aa2 or better by a major independent credit rating agency at the time of issuance,
and that are issued by an electric utility or an assignee under a financing order.
new text end

new text begin Subd. 11. new text end

new text begin Energy transition charge. new text end

new text begin "Energy transition charge" means a charge that:
new text end

new text begin (1) is imposed on all customer bills by an electric utility that is the subject of a financing
order, or the electric utility's successors or assignees;
new text end

new text begin (2) is separate from the utility's base rates; and
new text end

new text begin (3) provides a source of revenue solely to repay, finance, or refinance energy transition
costs.
new text end

new text begin Subd. 12. new text end

new text begin Energy transition costs. new text end

new text begin "Energy transition costs" means:
new text end

new text begin (1) as approved by the commission in a financing order issued under section 216B.492,
the pretax costs that the electric utility has incurred or will incur that are caused by, associated
with, or remain as a result of retiring or replacing electric generating facilities serving
Minnesota retail customers; and
new text end

new text begin (2) pretax costs that an electric utility has previously incurred related to the closure or
replacement of electric infrastructure or facilities occurring before the effective date of this
act.
new text end

new text begin Energy transition costs do not include any monetary penalty, fine, or forfeiture assessed
against an electric utility by a government agency or court under a federal or state
environmental statute, rule, or regulation.
new text end

new text begin Subd. 13. new text end

new text begin Energy transition property. new text end

new text begin "Energy transition property" means:
new text end

new text begin (1) all rights and interests of an electric utility or successor or assignee of an electric
utility under a financing order for the right to impose, bill, collect, receive, and obtain
periodic adjustments to energy transition charges authorized under a financing order issued
by the commission; and
new text end

new text begin (2) all revenue, collections, claims, rights to payments, payments, money, or proceeds
arising from the rights and interests specified in clause (1), regardless of whether any are
commingled with other revenue, collections, rights to payment, payments, money, or
proceeds.
new text end

new text begin Subd. 14. new text end

new text begin Energy transition revenue. new text end

new text begin "Energy transition revenue" means revenue,
receipts, collections, payments, money, claims, or other proceeds arising from energy
transition property.
new text end

new text begin Subd. 15. new text end

new text begin Financing costs. new text end

new text begin "Financing costs" means:
new text end

new text begin (1) principal, interest, and redemption premiums that are payable on energy transition
bonds;
new text end

new text begin (2) payments required under an ancillary agreement and amounts required to fund or
replenish a reserve account or other accounts established under the terms of any indenture,
ancillary agreement, or other financing document pertaining to the bonds;
new text end

new text begin (3) other demonstrable costs related to issuing, supporting, repaying, refunding, and
servicing the bonds, including but not limited to servicing fees, accounting and auditing
fees, trustee fees, legal fees, consulting fees, financial advisor fees, administrative fees,
placement and underwriting fees, capitalized interest, rating agency fees, stock exchange
listing and compliance fees, security registration fees, filing fees, information technology
programming costs, and any other demonstrable costs necessary to otherwise ensure and
guarantee the timely payment of the bonds or other amounts or charges payable in connection
with the bonds;
new text end

new text begin (4) taxes and license fees imposed on the revenue generated from collecting an energy
transition charge;
new text end

new text begin (5) state and local taxes, including franchise, sales and use, and other taxes or similar
charges, including but not limited to regulatory assessment fees, whether paid, payable, or
accrued; and
new text end

new text begin (6) costs incurred by the commission to hire and compensate additional temporary staff
needed to perform its responsibilities under this section and, in accordance with section
216B.494, to engage specialized counsel and expert consultants experienced in securitized
electric utility ratepayer-backed bond financing similar to energy transition bonds.
new text end

new text begin Subd. 16. new text end

new text begin Financing order. new text end

new text begin "Financing order" means an order issued by the commission
under section 216B.492 that authorizes an applicant to (1) issue energy transition bonds in
one or more series, (2) impose, charge, and collect energy transition charges, and (3) create
energy transition property.
new text end

new text begin Subd. 17. new text end

new text begin Financing party. new text end

new text begin "Financing party" means a holder of energy transition bonds
and a trustee, collateral agent, a party under an ancillary agreement, or any other person
acting for the benefit of energy transition bondholders.
new text end

new text begin Subd. 18. new text end

new text begin Nonbypassable. new text end

new text begin "Nonbypassable" means that the payment of an energy
transition charge required to repay bonds and related costs may not be avoided by any retail
customer located within an electric utility service area.
new text end

new text begin Subd. 19. new text end

new text begin Pretax costs. new text end

new text begin "Pretax costs" means costs approved by the commission,
including but not limited to:
new text end

new text begin (1) unrecovered capitalized costs of retired or replaced electric generating facilities;
new text end

new text begin (2) costs to decommission and restore the site of an electric generating facility;
new text end

new text begin (3) other applicable capital and operating costs, accrued carrying charges, deferred
expenses, reductions for applicable insurance and salvage proceeds; and
new text end

new text begin (4) costs to retire any existing indebtedness, fees, costs, and expenses to modify existing
debt agreements, or for waivers or consents related to existing debt agreements.
new text end

new text begin Subd. 20. new text end

new text begin Successor. new text end

new text begin "Successor" means a legal entity that succeeds by operation of law
to the rights and obligations of another legal entity as a result of bankruptcy, reorganization,
restructuring, other insolvency proceeding, merger, acquisition, consolidation, or sale or
transfer of assets.
new text end

Sec. 2.

new text begin [216B.492] FINANCING ORDER.
new text end

new text begin Subdivision 1. new text end

new text begin Application. new text end

new text begin (a) An electric utility that has received approval from the
commission to retire an electric generating facility owned by the utility prior to the full
depreciation of the electric generating facility's value may file an application with the
commission for the issuance of a financing order to enable the utility to recover energy
transition costs through the issuance of energy transition bonds under this section.
new text end

new text begin (b) The application must include all of the following information:
new text end

new text begin (1) a description of the electric generating facility to be retired;
new text end

new text begin (2) the undepreciated value remaining in the electric generating facility that is proposed
to be financed through the issuance of bonds under this act, and the method used to calculate
the amount;
new text end

new text begin (3) the estimated savings to electric utility customers if the financing order is issued as
requested in the application, calculated by comparing the costs to customers that are expected
to result from implementing the financing order and the estimated costs associated with
implementing traditional electric utility financing mechanisms with respect to the same
undepreciated balance, expressed in net present value terms;
new text end

new text begin (4) an estimated schedule for the electric generating facility's retirement;
new text end

new text begin (5) a description of the nonbypassable energy transition charge electric utility customers
would be required to pay in order to fully recover financing costs, and the method and
assumptions used to calculate the amount;
new text end

new text begin (6) a proposed methodology for allocating the revenue requirement for the energy
transition charge among the utility's customer classes;
new text end

new text begin (7) a description of a proposed adjustment mechanism to be implemented when necessary
to correct any overcollection or undercollection of energy transition charges, in order to
complete payment of scheduled principal and interest on energy transition bonds and other
financing costs in a timely fashion;
new text end

new text begin (8) a memorandum with supporting exhibits, from a securities firm that is experienced
in the marketing of bonds and that is approved by the commissioner of management and
budget, indicating the proposed issuance satisfies the current published AA or Aa2 or higher
rating or equivalent rating criteria of at least one nationally recognized securities rating
organization for issuances similar to the proposed energy transition bonds;
new text end

new text begin (9) an estimate of the timing of the issuance and the term of the energy transition bonds,
or series of bonds, provided that the scheduled final maturity for each bond issuance does
not exceed 30 years;
new text end

new text begin (10) identification of plans to sell, assign, transfer, or convey, other than as a security,
interest in energy transition property, including identification of an assignee, and
demonstration that the assignee is a financing entity wholly owned, directly or indirectly,
by the electric utility;
new text end

new text begin (11) identification of ancillary agreements that may be necessary or appropriate;
new text end

new text begin (12) one or more alternative financing scenarios in addition to the preferred scenario
contained in the application; and
new text end

new text begin (13) a workforce transition plan that includes estimates of:
new text end

new text begin (i) the number of workers currently employed at the electric generating facility to be
retired by the electric utility and, separately reported, by contractors, including workers that
directly deliver fuel to the electric generating facility;
new text end

new text begin (ii) the number of workers identified in clause (i) who, as a result of the retirement of
the electric generating facility:
new text end

new text begin (A) are offered employment by the electric utility in the same job classification;
new text end

new text begin (B) are offered employment by the electric utility in a different job classification;
new text end

new text begin (C) are not offered employment by the electric utility;
new text end

new text begin (D) are offered early retirement by the electric utility; and
new text end

new text begin (E) retire as planned;
new text end

new text begin (iii) if the electric utility plans to replace the retiring generating facility with a new
electric generating facility owned by the electric utility, the number of jobs at the new
generating facility outsourced to contractors or subcontractors; and
new text end

new text begin (14) a plan to replace the retired electric generating facilities with other electric generating
facilities owned by the utility or power purchase agreements that meet the requirements of
subdivision 3, clause (15), and a schedule reflecting that the replacement resources are
operational or available at the time the retiring electric generating facilities cease operation.
new text end

new text begin Subd. 2. new text end

new text begin Findings. new text end

new text begin After providing notice and holding a public hearing on an application
filed under subdivision 1, the commission may issue a financing order if the commission
finds that:
new text end

new text begin (1) the energy transition costs described in the application related to the retirement of
electric generation facilities are reasonable;
new text end

new text begin (2) the proposed issuance of energy transition bonds and the imposition and collection
of energy transition charges:
new text end

new text begin (i) are just and reasonable;
new text end

new text begin (ii) are consistent with the public interest;
new text end

new text begin (iii) constitute a prudent and reasonable mechanism to finance the energy transition costs
described in the application; and
new text end

new text begin (iv) provide tangible and quantifiable benefits to customers that are substantially greater
than the benefits that would have been achieved absent the issuance of energy transition
bonds; and
new text end

new text begin (3) the proposed structuring, marketing, and pricing of the energy transition bonds:
new text end

new text begin (i) significantly lower overall costs to customers or significantly mitigate rate impacts
to customers relative to traditional methods of financing; and
new text end

new text begin (ii) achieve the maximum net present value of customer savings, as determined by the
commission in a financing order, consistent with market conditions at the time of sale and
the terms of the financing order.
new text end

new text begin Subd. 3. new text end

new text begin Contents. new text end

new text begin (a) A financing order issued under this section must:
new text end

new text begin (1) determine the maximum amount of energy transition costs that may be financed from
proceeds of energy transition bonds issued pursuant to the financing order;
new text end

new text begin (2) describe the proposed customer billing mechanism for energy transition charges and
include a finding that the mechanism is just and reasonable;
new text end

new text begin (3) describe the financing costs that may be recovered through energy transition charges
and the period over which the costs may be recovered, which must end no earlier than the
date of final legal maturity of the energy transition bonds;
new text end

new text begin (4) describe the energy transition property that is created and that may be used to pay,
and secure the payment of, the energy transition bonds and financing costs authorized in
the financing order;
new text end

new text begin (5) authorize the electric utility to finance energy transition costs through the issuance
of one or more series of energy transition bonds. An electric utility is not required to secure
a separate financing order for each issuance of energy transition bonds or for each scheduled
phase of the retirement or replacement of electric generating facilities approved in the
financing order;
new text end

new text begin (6) include a formula-based mechanism that must be used to make expeditious periodic
adjustments to the energy transition charge authorized by the financing order that are
necessary to correct for any overcollection or undercollection, or to otherwise guarantee
the timely payment of energy transition bonds, financing costs, and other required amounts
and charges payable in connection with energy transition bonds;
new text end

new text begin (7) specify the degree of flexibility afforded to the electric utility in establishing the
terms and conditions of the energy transition bonds, including but not limited to repayment
schedules, expected interest rates, and other financing costs;
new text end

new text begin (8) specify that the energy transition bonds must be issued as soon as feasible following
issuance of the financing order;
new text end

new text begin (9) require the electric utility, at the same time as energy transition charges are initially
collected and independent of the schedule to close and decommission the electric generating
facility, to remove the electric generating facility to be retired from the utility's rate base
and commensurately reduce the utility's base rates;
new text end

new text begin (10) specify a future ratemaking process to reconcile any difference between the projected
pretax costs included in the amount financed by energy transition bonds and the final actual
pretax costs incurred by the electric utility to retire or replace the electric generating facility;
new text end

new text begin (11) specify information regarding bond issuance and repayments, financing costs,
energy transaction charges, energy transition property, and related matters that the electric
utility is required to provide to the commission on a schedule determined by the commission;
new text end

new text begin (12) allow and may require the creation of an electric utility's energy transition property
to be conditioned on, and occur simultaneously with, the sale or other transfer of the energy
transition property to an assignee and the pledge of the energy transition property to secure
the energy transition bonds;
new text end

new text begin (13) ensure that the structuring, marketing, and pricing of energy transition bonds result
in the lowest securitization bond charges and maximize net present value customer savings,
consistent with market conditions and the terms of the financing order; and
new text end

new text begin (14) specify that the electric utility is prohibited from, after the electric generating
facilities subject to the finance order are removed from the electric utility's base rate:
new text end

new text begin (i) operating the electric generating facilities; or
new text end

new text begin (ii) selling the electric generating facilities to another entity to be operated as electric
generating facilities;
new text end

new text begin (15) specify that the electric utility must send a payment equal to 20 percent of the
proceeds from the issuance of energy transition bonds to the commissioner of employment
and economic development for deposit in the energy worker transition account established
in section 216B.4991, and that the balance of the proceeds:
new text end

new text begin (i) must not be used to acquire, construct, finance, own, operate, or purchase energy
from an electric generating facility that is not powered by a clean energy resource; and
new text end

new text begin (ii) may be used to construct, finance, operate, own, or purchase energy from, an electric
generating facility that complies with item (i), under conditions determined by the
commission, including the capacity of generating assets, the estimated date the asset is
placed into service, and any other factors deemed relevant by the commission, taking into
account the electric utility's resource plan most recently approved by the commission under
section 216B.2422.
new text end

new text begin (b) A financing order issued under this section may:
new text end

new text begin (1) include conditions different from those requested in the application that the
commission determines are necessary to:
new text end

new text begin (i) promote the public interest; and
new text end

new text begin (ii) maximize the financial benefits or minimize the financial risks of the transaction to
customers and to directly impacted Minnesota workers and communities; and
new text end

new text begin (2) specify the selection of one or more underwriters of the energy transition bonds.
new text end

new text begin Subd. 4. new text end

new text begin Duration; irrevocability; subsequent order. new text end

new text begin (a) A financing order remains
in effect until the energy transition bonds issued under the financing order and all financing
costs related to the bonds have been paid in full.
new text end

new text begin (b) A financing order remains in effect and unabated notwithstanding the bankruptcy,
reorganization, or insolvency of the electric utility to which the financing order applies or
any affiliate, successor, or assignee of the electric utility.
new text end

new text begin (c) Subject to judicial review as provided for in section 216B.52, a financing order is
irrevocable and is not reviewable by future commissions. The commission may not reduce,
impair, postpone, or terminate energy transition charges approved in a financing order, or
impair energy transition property or the collection or recovery of energy transition revenue.
new text end

new text begin (d) Notwithstanding paragraph (c), the commission may, on its own motion or at the
request of an electric utility or any other person, commence a proceeding and issue a
subsequent financing order that provides for refinancing, retiring, or refunding energy
transition bonds issued under the original financing order if:
new text end

new text begin (1) the commission makes all of the findings specified in subdivision 2 with respect to
the subsequent financing order; and
new text end

new text begin (2) the modification contained in the subsequent financing order does not in any way
impair the covenants and terms of the energy transition bonds to be refinanced, retired, or
refunded.
new text end

new text begin Subd. 5. new text end

new text begin Effect on commission jurisdiction. new text end

new text begin (a) Except as provided in paragraph (b),
the commission, in exercising its powers and carrying out its duties under this section, is
prohibited from:
new text end

new text begin (1) considering energy transition bonds issued under this section to be debt of the electric
utility other than for income tax purposes, unless it is necessary to consider the energy
transition bonds to be debt in order to achieve consistency with prevailing utility debt rating
methodologies;
new text end

new text begin (2) considering the energy transition charges paid under the financing order to be revenue
of the electric utility;
new text end

new text begin (3) considering the energy transition costs or financing costs specified in the financing
order to be the regulated costs or assets of the electric utility; or
new text end

new text begin (4) determining any prudent action taken by an electric utility that is consistent with the
financing order to be unjust or unreasonable.
new text end

new text begin (b) Nothing in this subdivision:
new text end

new text begin (1) affects the authority of the commission to apply or modify any billing mechanism
designed to recover energy transition charges;
new text end

new text begin (2) prevents or precludes the commission from investigating an electric utility's
compliance with the terms and conditions of a financing order and requiring compliance
with the financing order; or
new text end

new text begin (3) prevents or precludes the commission from imposing regulatory sanctions against
an electric utility for failure to comply with the terms and conditions of a financing order
or the requirements of this section.
new text end

new text begin (c) The commission is prohibited from refusing to allow the recovery of any costs
associated with the retirement or replacement of electric generating facilities by an electric
utility solely because the electric utility has elected to finance those activities through a
financing mechanism other than energy transition bonds.
new text end

Sec. 3.

new text begin [216B.493] POST-ORDER COMMISSION DUTIES.
new text end

new text begin Subdivision 1. new text end

new text begin Financing cost review. new text end

new text begin Within 120 days after the date energy transition
bonds are issued, an electric utility subject to a financing order must file with the commission
the actual initial and ongoing financing costs, the final structure and pricing of the energy
transition bonds, and the actual energy transition charge. The commission must review the
prudence of the electric utility's actions to determine whether the actual financing costs
were the lowest that could reasonably be achieved, given the terms of the financing order
and market conditions prevailing at the time of the bond's issuance.
new text end

new text begin Subd. 2. new text end

new text begin Enforcement. new text end

new text begin If the commission determines that an electric utility's actions
under this section are not prudent or are inconsistent with the financing order, the commission
may apply any remedies available, provided that any remedy applied may not directly or
indirectly impair the security for the energy transition bonds.
new text end

Sec. 4.

new text begin [216B.494] USE OF OUTSIDE EXPERTS.
new text end

new text begin (a) In carrying out the duties under this section, the commission may:
new text end

new text begin (1) contract with outside consultants and counsel experienced in securitized electric
utility customer-backed bond financing similar to energy transition bonds; and
new text end

new text begin (2) hire and compensate additional temporary staff as needed.
new text end

new text begin Expenses incurred by the commission under this paragraph must be treated as financing
costs and included in the energy transition charge. The costs incurred under clause (1) are
not an obligation of the state and are assigned solely to the transaction.
new text end

new text begin (b) If a utility's application for a financing order is denied or withdrawn for any reason
and energy transition bonds are not issued, the commission's costs to retain expert consultants
under this subdivision must be paid by the applicant utility and are deemed by the commission
to be prudent deferred expense eligible for recovery in the utility's future rates.
new text end

Sec. 5.

new text begin [216B.495] ENERGY TRANSITION CHARGE; BILLING TREATMENT.
new text end

new text begin (a) An electric utility that obtains a financing order and causes energy transition bonds
to be issued must:
new text end

new text begin (1) include on each customer's monthly electricity bill:
new text end

new text begin (i) a statement that a portion of the charges represents energy transition charges approved
in a financing order;
new text end

new text begin (ii) the amount and rate of the energy transition charge as a separate line item titled
"energy transition charge"; and
new text end

new text begin (iii) if energy transition property has been transferred to an assignee, a statement that
the assignee is the owner of the rights to energy transition charges and that the electric utility
or other entity, if applicable, is acting as a collection agent or servicer for the assignee; and
new text end

new text begin (2) file annually with the commission:
new text end

new text begin (i) a calculation of the impact of financing the retirement or replacement of electric
generating facilities on customer electricity rates, by customer class; and
new text end

new text begin (ii) evidence demonstrating that energy transition revenues are applied solely to the
repayment of energy transition bonds and other financing costs.
new text end

new text begin (b) Energy transition charges are nonbypassable and must be paid by all existing and
future customers receiving service from the electric utility or the utility's successors or
assignees under commission-approved rate schedules or special contracts.
new text end

new text begin (c) An electric utility's failure to comply with this section does not invalidate, impair,
or affect any financing order, energy transition property, energy transition charge, or energy
transition bonds, but does subject the electric utility to penalties under applicable commission
rules.
new text end

Sec. 6.

new text begin [216B.496] ENERGY TRANSITION PROPERTY.
new text end

new text begin Subdivision 1. new text end

new text begin General. new text end

new text begin (a) Energy transition property is an existing present property
right or interest in a property right even though the imposition and collection of energy
transition charges depends on the electric utility's collecting energy transition charges and
on future electricity consumption. The property right or interest exists regardless of whether
the revenues or proceeds arising from the energy transition property have been billed, have
accrued, or have been collected.
new text end

new text begin (b) Energy transition property exists until all energy transition bonds issued under a
financing order are paid in full and all financing costs and other costs of the energy transition
bonds have been recovered in full.
new text end

new text begin (c) All or any portion of energy transition property described in a financing order issued
to an electric utility may be transferred, sold, conveyed, or assigned to a successor or assignee
that is wholly owned, directly or indirectly, by the electric utility and is created for the
limited purpose of acquiring, owning, or administering energy transition property or issuing
energy transition bonds as authorized by the financing order. All or any portion of energy
transition property may be pledged to secure energy transition bonds issued under a financing
order, amounts payable to financing parties and to counterparties under any ancillary
agreements, and other financing costs. Each transfer, sale, conveyance, assignment, or
pledge by an electric utility or an affiliate of an electric utility is a transaction in the ordinary
course of business.
new text end

new text begin (d) If an electric utility defaults on any required payment of charges arising from energy
transition property described in a financing order, a court, upon petition by an interested
party and without limiting any other remedies available to the petitioner, must order the
sequestration and payment of the revenues arising from the energy transition property to
the financing parties.
new text end

new text begin (e) The interest of a transferee, purchaser, acquirer, assignee, or pledgee in energy
transition property specified in a financing order issued to an electric utility, and in the
revenue and collections arising from that property, is not subject to setoff, counterclaim,
surcharge, or defense by the electric utility or any other person, or in connection with the
reorganization, bankruptcy, or other insolvency of the electric utility or any other entity.
new text end

new text begin (f) A successor to an electric utility, whether resulting from a reorganization, bankruptcy,
or other insolvency proceeding, merger or acquisition, sale, other business combination,
transfer by operation of law, electric utility restructuring, or otherwise, must perform and
satisfy all obligations of, and has the same duties and rights under, a financing order as the
electric utility to which the financing order applies, and must perform the duties and exercise
the rights in the same manner and to the same extent as the electric utility, including
collecting and paying to any person entitled to receive revenues, collections, payments, or
proceeds of energy transition property.
new text end

new text begin Subd. 2. new text end

new text begin Security interests in energy transition property. new text end

new text begin (a) The creation, perfection,
and enforcement of any security interest in energy transition property to secure the repayment
of the principal and interest on energy transition bonds, amounts payable under any ancillary
agreement, and other financing costs are governed solely by this section.
new text end

new text begin (b) A security interest in energy transition property is created, valid, and binding when:
new text end

new text begin (1) the financing order that describes the energy transition property is issued;
new text end

new text begin (2) a security agreement is executed and delivered; and
new text end

new text begin (3) value is received for the energy transition bonds.
new text end

new text begin (c) Once a security interest in energy transition property is created, the security interest
attaches without any physical delivery of collateral or any other act. The lien of the security
interest is valid, binding, and perfected against all parties having claims of any kind in tort,
contract, or otherwise against the person granting the security interest, regardless of whether
the parties have notice of the lien, upon the filing of a financing statement with the secretary
of state.
new text end

new text begin (d) The description or indication of energy transition property in a transfer or security
agreement and a financing statement is sufficient only if the description or indication refers
to this section and the financing order creating the energy transition property.
new text end

new text begin (e) A security interest in energy transition property is a continuously perfected security
interest and has priority over any other lien, created by operation of law or otherwise, which
may subsequently attach to the energy transition property unless the holder of the security
interest has agreed otherwise in writing.
new text end

new text begin (f) The priority of a security interest in energy transition property is not affected by the
commingling of energy transition property or energy transition revenue with other money.
An assignee, bondholder, or financing party has a perfected security interest in the amount
of all energy transition property or energy transition revenue that is pledged to pay energy
transition bonds, even if the energy transition property or energy transition revenue is
deposited in a cash or deposit account of the electric utility in which the energy transition
revenue is commingled with other money. Any other security interest that applies to the
other money does not apply to the energy transition revenue.
new text end

new text begin (g) Neither a subsequent commission order amending a financing order under section
216B.492, subdivision 4, nor application of an adjustment mechanism, authorized by a
financing order under section 216B.492, subdivision 3, affects the validity, perfection, or
priority of a security interest in or transfer of energy transition property.
new text end

new text begin (h) A valid and enforceable security interest in energy transition property is perfected
only when it has attached and when a financing order has been filed with the secretary of
state in accordance with procedures that the secretary of state may establish. The financing
order must name the pledgor of the energy transition property as debtor and identify the
property.
new text end

new text begin Subd. 3. new text end

new text begin Sales of energy transition property. new text end

new text begin (a) A sale, assignment, or transfer of
energy transition property is an absolute transfer and true sale of, and not a pledge of or
secured transaction relating to, the seller's right, title, and interest in, to, and under the energy
transition property if the documents governing the transaction expressly state that the
transaction is a sale or other absolute transfer. A transfer of an interest in energy transition
property may be created when:
new text end

new text begin (1) the financing order creating and describing the energy transition property is effective;
new text end

new text begin (2) the documents evidencing the transfer of the energy transition property are executed
and delivered to the assignee; and
new text end

new text begin (3) value is received.
new text end

new text begin (b) A transfer of an interest in energy transition property must be filed with the secretary
of state against all third persons and perfected under chapter 336, revised article 9, part 3,
including any judicial lien or other lien creditors or any claims of the seller or creditors of
the seller, other than creditors holding a prior security interest, ownership interest, or
assignment in the energy transition property previously perfected under this subdivision or
subdivision 2.
new text end

new text begin (c) The characterization of a sale, assignment, or transfer as an absolute transfer and
true sale, and the corresponding characterization of the property interest of the assignee is
not affected or impaired by:
new text end

new text begin (1) commingling of energy transition revenue with other money;
new text end

new text begin (2) the retention by the seller of:
new text end

new text begin (i) a partial or residual interest, including an equity interest, in the energy transition
property, whether direct or indirect, or whether subordinate or otherwise; or
new text end

new text begin (ii) the right to recover costs associated with taxes, franchise fees, or license fees imposed
on the collection of energy transition revenue;
new text end

new text begin (3) any recourse that the purchaser may have against the seller;
new text end

new text begin (4) any indemnification rights, obligations, or repurchase rights made or provided by
the seller;
new text end

new text begin (5) an obligation of the seller to collect energy transition revenues on behalf of an
assignee;
new text end

new text begin (6) the treatment of the sale, assignment, or transfer for tax, financial reporting, or other
purposes;
new text end

new text begin (7) any subsequent financing order amending a financing order under section 216B.492,
subdivision 4, paragraph (d); or
new text end

new text begin (8) any application of an adjustment mechanism under section 216B.492, subdivision
3, paragraph (a), clause (6).
new text end

Sec. 7.

new text begin [216B.497] ENERGY TRANSITION BONDS.
new text end

new text begin (a) Banks, trust companies, savings and loan associations, insurance companies, executors,
administrators, guardians, trustees, and other fiduciaries may legally invest any money
within the individual's or entity's control in energy transition bonds.
new text end

new text begin (b) Energy transition bonds issued under a financing order are not debt of or a pledge
of the faith and credit or taxing power of the state, any agency of the state, or any political
subdivision. Holders of energy transition bonds may not have taxes levied by the state or a
political subdivision in order to pay the principal or interest on energy transition bonds. The
issuance of energy transition bonds does not directly, indirectly, or contingently obligate
the state or a political subdivision to levy any tax or make any appropriation to pay principal
or interest on the energy transition bonds.
new text end

new text begin (c) The state pledges to and agrees with holders of energy transition bonds, any assignee,
and any financing parties that the state will not:
new text end

new text begin (1) take or permit any action that impairs the value of energy transition property; or
new text end

new text begin (2) reduce, alter, or impair energy transition charges that are imposed, collected, and
remitted for the benefit of holders of energy transition bonds, any assignee, and any financing
parties, until any principal, interest, and redemption premium payable on energy transition
bonds, all financing costs, and all amounts to be paid to an assignee or financing party under
an ancillary agreement are paid in full.
new text end

new text begin (d) A person who issues energy transition bonds may include the pledge specified in
paragraph (c) in the energy transition bonds, ancillary agreements, and documentation
related to the issuance and marketing of the energy transition bonds.
new text end

Sec. 8.

new text begin [216B.498] ASSIGNEE OF FINANCING PARTY NOT SUBJECT TO
COMMISSION REGULATION.
new text end

new text begin An assignee or financing party that is not already regulated by the commission does not
become subject to commission regulation solely as a result of engaging in any transaction
authorized by or described in sections 216B.491 to 216B.499.
new text end

Sec. 9.

new text begin [216B.499] EFFECT ON OTHER LAWS.
new text end

new text begin (a) If any provision of sections 216B.491 to 216B.499 conflicts with any other law
regarding the attachment, assignment, perfection, effect of perfection, or priority of any
security interest in or transfer of energy transition property, sections 216B.491 to 216B.499
govern.
new text end

new text begin (b) Nothing in this subdivision precludes an electric utility for which the commission
has initially issued a financing order from applying to the commission for:
new text end

new text begin (1) a subsequent financing order amending the financing order under section 216B.492,
subdivision 4, paragraph (d); or
new text end

new text begin (2) approval to issue energy transition bonds to refund all or a portion of an outstanding
series of energy transition bonds.
new text end

Sec. 10.

new text begin [216B.4991] ENERGY WORKER TRANSITION ACCOUNT.
new text end

new text begin Subdivision 1. new text end

new text begin Account established. new text end

new text begin The energy worker transition account is established
as a separate account in the special revenue fund in the state treasury. The commissioner
must credit to the account appropriations and transfers to the account, and payments of
proceeds from the sale of bonds realized by an electric utility operating under a financing
order issued by the commission under section 216B.492. Earnings, such as interest, dividends,
and any other earnings arising from assets of the account, must be credited to the account.
Funds remaining in the account at the end of a fiscal year are not canceled to the general
fund but remain in the account until expended. The commissioner must manage the account.
new text end

new text begin Subd. 2. new text end

new text begin Expenditures. new text end

new text begin (a) Money in the account may be used only to provide assistance
to workers laid off by an electric utility that has ceased operation and issued bonds under
a financing order issued by the Public Utilities Commission under section 216B.492. The
types of assistance that may be provided from the account are:
new text end

new text begin (1) transition, support, and training services listed under section 116L.17, subdivision
4, clauses (1) to (5);
new text end

new text begin (2) employment and training services, as defined in section 116L.19, subdivision 4;
new text end

new text begin (3) income maintenance and support services, as defined in section 116L.19, subdivision
5;
new text end

new text begin (4) assistance to workers in starting a business, as described in section 116L.17,
subdivision 11; and
new text end

new text begin (5) extension of unemployment benefits.
new text end

new text begin (b) No more than five percent of funds in the account may be used to pay the department's
costs to administer the account.
new text end

new text begin (c) The commissioner may make grants to a state or local government unit, nonprofit
organization, community action agency, business organization or association, or labor
organization to provide the services allowed under this subdivision. No more than ten percent
of funds allocated to a grantee may be used to pay administrative costs.
new text end