Tex.
Utils. Code Section 104.366
Financing Orders and Issuance of Customer Rate Relief Bonds
(a)
If the railroad commission determines that customer rate relief bond financing for extraordinary costs is the most cost-effective method of funding regulatory asset reimbursements to be made to gas utilities, the railroad commission, after the final resolution of all applications filed under Section 104.365 (Regulatory Asset Determination), may request the authority to direct an issuing financing entity to issue customer rate relief bonds. Before making the request, the railroad commission must issue a financing order that complies with this section.(b)
To make the determination described by Subsection (a), the railroad commission must find that the proposed structuring, expected pricing, and proposed financing costs of the customer rate relief bonds are reasonably expected to provide benefits to customers by:(1)
considering customer affordability; and(2)
comparing:(A)
the estimated monthly costs to customers resulting from the issuance of customer rate relief bonds; and(B)
the estimated monthly costs to customers that would result from the application of conventional recovery methods.(c)
The financing order must:(1)
include a finding that the use of the securitization financing mechanism is in the public interest and consistent with the purposes of this subchapter;(2)
detail the total amount of the regulatory asset determinations to be included in the customer rate relief bond issuance;(3)
authorize the recovery of any tax obligation of the gas utilities arising or resulting from:(A)
receipt of customer rate relief bond proceeds; or(B)
collection or remittance of customer rate relief charges through the gas utilities’ gas cost recovery mechanism or other means that the railroad commission determines reasonable;(4)
authorize the issuance of customer rate relief bonds through an issuing financing entity;(5)
include a statement of:(A)
the aggregated regulatory asset determination to be included in the principal amount of the customer rate relief bonds, not to exceed $10 billion for any separate bond issue;(B)
the maximum scheduled final maturity of the customer rate relief bonds, not to exceed 30 years, except that the legal final maturity may be longer based on rating agency and market considerations; and(C)
the maximum interest rate that the customer rate relief bonds may bear, not to exceed the maximum net effective interest rate allowed by law;(6)
provide for the imposition, collection, and mandatory periodic formulaic adjustment of customer rate relief charges in accordance with Section 104.370 (True-up Mechanism) by all gas utilities and successors of gas utilities for which a regulatory asset determination has been made under Section 104.365 (Regulatory Asset Determination) to ensure that the customer rate relief bonds and all related financing costs will be paid in full and on a timely basis by customer rate relief charges;(7)
authorize the creation of customer rate relief property in favor of the issuing financing entity and pledge of customer rate relief property to the payment of the customer rate relief bonds;(8)
direct the issuing financing entity to disperse the proceeds of customer rate relief bonds, net of bond issuance costs, reserves, and any capitalized interest, to gas utilities for which a regulatory asset determination has been made under Section 104.365 (Regulatory Asset Determination) and include the amounts to be distributed to each participating gas utility;(9)
provide that customer rate relief charges be collected and allocated among customers of each gas utility for which a regulatory determination has been made under Section 104.365 (Regulatory Asset Determination) through uniform monthly volumetric charges to be paid by customers as a component of the gas utility’s gas cost or in another manner that the railroad commission determines reasonable; and(10)
reflect the commitment made by a gas utility receiving proceeds that the proceeds are in lieu of recovery of those costs through the regular ratemaking process or other mechanism to the extent the costs are reimbursed to the gas utility by customer rate relief bond financing proceeds.(d)
The financing order may provide for a centralized servicer to coordinate with participating gas utilities who bill and collect customer rate relief charges and to provide certain collection and forecast data required for calculating true-up adjustments. The financing order may not provide for the railroad commission, the authority, the issuing financing entity, or a participating utility to act as servicer.(e)
The principal amount determined by the railroad commission must be increased to include an amount sufficient to:(1)
pay the financing costs associated with the issuance, including all bond administrative expenses to be paid from the proceeds of the bonds;(2)
reimburse the authority and the railroad commission for any costs incurred for the issuance of the customer rate relief bonds and related bond administrative expenses;(3)
provide for any applicable bond reserve fund; and(4)
capitalize interest for the period determined necessary by the railroad commission.(f)
The authority, consistent with this subchapter and the terms of the financing order, shall:(1)
direct an issuing financing entity to issue customer rate relief bonds at the railroad commission’s request, in accordance with the requirements of Chapter 1232 (Texas Public Finance Authority), Government Code, and other provisions of Title 9, Government Code, that apply to bond issuance by a state agency;(2)
determine the methods of sale, types of bonds, bond forms, interest rates, principal amortization, amount of reserves or capitalized interest, and other terms of the customer rate relief bonds that in the authority’s judgment best achieve the economic goals of the financing order and effect the financing at the lowest practicable cost; and(3)
reimburse the railroad commission, the authority, or any issuing financing entity for bond administrative expenses and other costs authorized under this subchapter.(g)
To the extent authorized in the applicable financing order, an issuing financing entity may enter into credit agreements or ancillary agreements in connection with the issuance of customer rate relief bonds.(h)
The financing order becomes effective in accordance with its terms. The financing order, together with the customer rate relief property and the customer rate relief charges authorized by the financing order, is irrevocable and not subject to reduction, impairment, or adjustment by further action of the railroad commission, except as provided under Subsection (j) and authorized by Section 104.370 (True-up Mechanism).(i)
The railroad commission shall issue a financing order under this section not later than the 90th day following the date of the conclusion of all proceedings filed under Section 104.365 (Regulatory Asset Determination).(j)
A financing order is not subject to rehearing by the railroad commission. A financing order may be appealed only to a Travis County district court by a party to the proceeding. The appeal must be filed not later than the 15th day after the date the financing order is signed by the railroad commission.(k)
The judgment of the district court may be reviewed only by direct appeal to the Supreme Court of Texas. The appeal must be filed not later than the 15th day after the date of entry of judgment.(l)
All appeals shall be heard and determined by the district court and the Supreme Court of Texas as expeditiously as possible with lawful precedence over other matters. Review on appeal shall be based solely on the record before the railroad commission and briefs to the court and is limited to whether the financing order:(1)
complies with the constitution and laws of this state and the United States; and(2)
is within the authority of the railroad commission to issue under this subchapter.(m)
The railroad commission shall transmit a financing order to the authority after all appeals under this section have been exhausted.(n)
The authority shall direct an issuing financing entity to issue customer rate relief bonds as soon as practicable and not later than the 180th day after receipt of a financing order issued under this section, except that the authority may cause the issuance after the 180th day if necessary based on bond market conditions, the receipt of necessary approvals, and the timely receipt of necessary financial disclosure information from each participating gas utility.(o)
The issuing financing entity shall deliver customer rate relief bond proceeds net of upfront financing costs in accordance with the applicable financing order.(p)
For the benefit of the authority, the issuing financing entity, holders of customer rate relief bonds, and all other financing parties, the railroad commission shall guarantee in a financing order that the railroad commission will take all actions in the railroad commission’s powers to enforce the provisions of the financing order to ensure that customer rate relief charge revenues are sufficient to pay on a timely basis scheduled principal and interest on the customer rate relief bonds and all related financing costs and bond administrative expenses.(q)
The railroad commission shall make periodic reports to the public regarding each financing.
Source:
Section 104.366 — Financing Orders and Issuance of Customer Rate Relief Bonds, https://statutes.capitol.texas.gov/Docs/UT/htm/UT.104.htm#104.366 (accessed Jun. 5, 2024).
