Source: https://www.nysenate.gov/legislation/bills/2013/s5844/amendment/original
Timestamp: 2019-12-06 23:33:43
Document Index: 381997412

Matched Legal Cases: ['§ 3', '§ 3', '§ 18', '§ 1020', '§ 1020', '§ 3', '§ 1020', '§ 3', '§ 1020', '§ 1020', '§ 94', '§ 3', '§ 112', '§ 7208', '§ 3', '§ 94', '§ 7208', '§ 1020', '§ 3', '§ 3', '§ 3', '§ 3', '§ 3', '§ 3', '§ 3', '§ 3', '§ 3', '§ 18', '§ 1020']

NY State Senate Bill S5844
senate Bill S5844
Archive: Last Bill Status Via A8073 - Signed by Governor
Get Status Alerts for S5844
Jun 20, 2013 substituted by a8073
ordered to third reading cal.1574
S5844 (ACTIVE) - Details
S5844 (ACTIVE) - Summary
S5844 (ACTIVE) - Sponsor Memo
to amend the public service law, the public authorities law, the
executive law and the education law,
in relation to the powers and duties of
the department of public service and the
to repeal subdivision (u) of section 1020-f of the public
authorities law relating to general powers of the
authority; and providing for the repeal of certain provisions
(Part A); and
in relation to the issuance of securitized restructuring bonds
to refinance the outstanding debt of the Long Island power
This bill would bring accountability and transparency to the delivery
of electricity on Long Island and the Rockaway Peninsula in Queens
("service area") by: (i) authorizing the reformulation of the
relationship between the Long Island Power Authority (LIPA) and its
service provider so that the service provider takes over control of
utility operations in the service area and LIPA's focus is limited to
meeting its statutory, fiduciary, financial and related obligations;
(ii) creating a new Long Island-based office in the Department of
Public Service (DPS) to oversee the core utility operations of the
service provider; and (iii) authorizing the refinancing of a
significant portion of LIPA's outstanding debt at lower interest
rates and capping or eliminating certain categories of payments in
lieu of taxes (PILOTs), with the savings passed onto ratepayers.
Section 1 of the bill separates the bill into two parts.
Section 1 would (i) delete a provision under Public Service Law (PSL)
§ 3 related to DPS undertaking a management and operational audit,
and (ii) add a new PSL § 3-b that would establish a new office within
DPS to review and make recommendations to LIPA and its service
provider related to core utility functions, including pursuant to a
management and operational audit.
Section 2 would amend PSL § 18-a to create a funding mechanism for
DPS's new office, without increasing the amount LIPA currently pays
in 18-a assessments.
Section 3 would add new definitions to Public Authorities Law (PAL)
1020-b.
Sections 4 and 5 would reconstitute LIPA's board of trustees and
create new eligibility criteria, effective January 1, 2014.
Section 6 would repeal PAL § 1020-f(u).
Section 7 would amend PAL § 1020-f by requiring LIPA and its service
provider to comply with new or amended standards and procedures
commensurate with DPS's new authority under PSL § 3-b.
Section 8 would: (i) eliminate the franchise tax paid to the State
based on gross receipts; and (ii) starting in calendar year 2015, cap
at 2% per year any increases in PILOTs related to property owned by
Section 9 would amend PAL § 1020-s to ensure consistency with PSL § 3-b.
Section 10 would amend PAL§ 1020-w to conform requirements associated
with LIPA's annual audit to those of other public authorities.
Section 11 would amend PAL § 1020-cc to require LIPA and the service
provider to provide the state comptroller with a biannual report
related to contracts in excess of $250,000 per year, and would exempt
the service provider from the requirements of subdivision one of the
Section 12 would amend Executive Law (EL) § 94-a to empower the
Utility Intervention Unit (UIU), within the Department of State, to
participate in rate proceedings under PSL § 3-b and hold regular
forums in each of the service areas of the six investor-owned
utilities and LIPA.
Section 13 would allow LIPA to amend the operations services agreement
entered into with PSEG Long Island LLC (PSEG) solely upon review and
recommendation of DPS, followed by a resolution of the LIPA board,
notwithstanding the requirements of State Finance Law § 112 and any
Section 14 would supersede a condition established in a resolution
issued by the Public Authorities Control Board (PACB) related to the
implementation of certain rate increases.
Section 15 would amend Education L. § 7208(1) to exempt LIPA and the
service provider from certain engineering and surveyor requirements,
consistent with an exemption that exists with respect to
investor-owned utilities subject to oversight of the Public Service
Section 16 provides for the potential repowering of legacy
steam-generating units on Long Island.
Section 17 would make Part A of the bill effective on January 1, 2014,
(i) section 12 would take effect on April 1, 2014, (ii) sections 5,
10, 11, 14, 15 and 16 would take effect immediately, and (iii)
section 13 would take effect immediately but would expire and be
deemed repealed on January 1, 2015.
Section 1 of Part B of the bill would provide legislative findings.
Section 2 would define key terms.
Section 3 would authorize LIPA to issue a financing order with respect
to refinancing an amount of outstanding debt by issuing restructuring
bonds based upon a specified legal standard and expedited process to
be followed by LIPA, the PACB and the courts.{1} This section would
also establish that charges to ratepayers related to paying off such
restructuring bonds would be irrevocable, and that neither the State
nor LIPA would take or permit any action to reduce, impact, postpone
or terminate such charges. This section would also require that the
proceeds of the restructuring bonds be used to pay upfront financing
costs and other approved costs related to refinancing LIPA's debt.
Section 4 would create a special purpose corporate municipal
instrumentality of the State to issue the restructuring bonds and
pledge the restructuring property, including the ratepayer charges
and money collected from ratepayer charges, as security for such
bonds. This section would also establish such special purpose
entity's governance requirements, list the activities that it would
be allowed to undertake and provide that it cannot file for bankruptcy.
Section 5 would establish the required content of the financing order
to be issued by LIPA, and requirements and procedures related to
periodic reporting and the mechanism needed to make periodic
adjustments to ratepayer charges to ensure the adequacy of funds for
repayment of principal and interest on the associated restructuring
bonds and other ongoing financing costs. This section would also make
the final financing order irrevocable, and ratepayer charges
non-by-passable.
Section 6 would set the attributes of the restructuring bonds, so that
such bonds would be without recourse to the credit or any assets of
LIPA, would be tax exempt, would not constitute debt of the state and
would constitute legal investments.
Section 7 would establish the attributes of the "restructuring
property" the cash flow related to the restructuring bonds and other
ongoing financing costs - including that such property constitutes an
existing present property right not subject to setoff or defense and
may be pledged to create a perfected security interest or sold to
create a true sale.
Section 8 would establish the duties and limit the rights of LIPA and
any successor owner of LIPA's assets while restructuring bonds are
Section 9 would establish the State pledge to holders of restructuring
Sections 10 through 16 would establish additional requirements related
to choice of law, conflicts, severability, duration, standing and
Section 17 would make Part B of the bill effective immediately.
Section 2 of the bill would provide a severability clause.
Section 3 of the bill would make the bill effective as specified in
the effective date associated with each of the two parts of the bill.
PSL § 3 establishes the powers of DPS and PAL Article 5, Title 1-a
establishes the requirements and powers associated with LIPA. PSL
18-a establishes, among other things, the mechanism by which DPS is
funded. EL § 94-a(4)(b) establishes the powers of the UIU. PACB's
Resolution No. 97-LI-1, dated July 16, 1997, established requirements
related to LIPA's acquisition of certain assets. Education L. § 7208
provides categories of persons exempt from requirements related to
rendering services as a professional engineer or land surveyor.
This bill would significantly revamp LIPA's role with respect to the
delivery of electricity and its relationship to customers in the
service area, and bring much-needed accountability and transparency
to all matters related to electrical service in the service area.
Since 1998, when it acquired LILCO's capital stock and affiliated
assets, LIPA has never been directly responsible for operating the
transmission and delivery (T&D) system assets or providing
electricity to its customers; instead it has contracted out virtually
all of the day-to-day operations and service responsibilities to
other companies. This arrangement, and the fact that the LIPA-service
provider structure is largely excluded from State utility oversight,
has proven to be unworkable.
On November 13, 2012, Governor Andrew M. Cuomo established a
Commission pursuant to the Moreland Act to, among other things,
investigate LIPA's response to and preparations for Hurricanes Irene
and Sandy. The Commission's interim report, issued January 7, 2013,
found that LIPA and its current service provider - National Grid -
struggled in the context of both storm events related to storm
preparation, response and restoration of customer service. The
Commission found that the LIPA-National Grid management structure
contributed to these problems. The Commission also found that, in the
context of the provision of electric
service during normal conditions, LIPA and National Grid have
personnel with overlapping responsibilities related to communications
with customers and elected officials, determination of basic policies
and overall management, and operations of the system. The usage of
the "LIPA" brand name with respect to all matters related to the
service area, as well as the overlapping responsibilities between
LIPA and National Grid, create confusion with respect to which entity
is in charge of service, operations and management, and contribute to
strained customer relationships, limited accountability and
disconnected management, planning and operational processes.
Further, since acquiring LILCO's assets in 1998, LIPA's ratemaking
process has not been as transparent would be optimal. Confusion
related to ratemaking persists because of a provision of the LIPA Act
that exempts LIPA from having to obtain approval from the PSC with
regard to rates and charges (PAL § 1020-s), and a contrary resolution
adopted by the PACB in 1997 that requires LIPA to obtain the approval
of the PSC prior to implementing an increase in average customer
rates exceeding 2.5%. Many ratepayers and public officials are
skeptical of LIPA's ratemaking process and believe certain of its
rates should be been subject to PSC review and approval pursuant to
the PACB resolution.
Notwithstanding the operational and management problems associated
with the LIPA-National Grid structure, public ownership of LIPA's
assets does provide several important benefits, including the ability
of LIPA to obtain tax-exempt financing and reimbursement from the
Federal Emergency Management Agency associated with storm damages.
Accordingly, this bill would maximize the benefits of public
ownership of the T&D system by creating a more workable and effective
relationship between LIPA and its service provider, under the
oversight of a newly created Long Island-based office of DPS.
A. Maintaining Public Ownership of T&D Assets with Private Utility
Service Provider under DPS Oversight
A fundamental concern with respect to LIPA is the perceived lack of
transparency and oversight related to fixing rates and charges in
comparison to the regulatory oversight of investment-owned utilities.
To address these concerns, the bill would establish a new office
within DPS to review and make recommendations to LIPA and/or its
service provider related to core utility functions. The establishment
of this new office would be timed to coincide with LIPA's transition
on January 1, 2014 to a new service provider. In this regard, LIPA
entered into an Operations Services Agreement (OSA), dated December
28, 2011, with PSEG to create a new entity - called
"Servco"{2} - to
take over responsibilities from National Grid to operate and manage
LIPA's T&D assets. The new PSL § 3-b would authorize DPS to oversee
Servco's operations.
For example, the DPS rate review process envisioned under Part A of
the bill would maximize the transparency of and maintain the public's
confidence in LIPA's ability to fix rates at the lowest level, while
balancing existing obligations to bondholders, ratepayers and other
stakeholders. Rate review proceedings would be undertaken in a manner
proceedings associated with rate proposals made by investor-owned
utilities; i e., Servco would make the primary rate filings, an
evidentiary hearing would be held before an administrative law judge,
intervenors would be allowed to participate, briefs would be filed
and a final recommended decision issued. At that point, the final
decision on rates would be made by the LIPA board pursuant to the
same public process established with respect to management and
operational audits. L. 2012, ch. 8, § 3. The bill would amend PAL
1020-f to require that, in early 2015, a proceeding would be
commenced to review a 3-year rate proposal for 2016-18. Rate
proposals after 2018 would be reviewed if they seek to increase
revenues in excess of 2.5% - the same triggering mechanism currently
used for investor-owned utilities. Importantly, the rate review
process would be undertaken in a manner that would not delay LIPA's
existing budget schedule.
Additionally, the bill would require LIPA and Servco to prepare a
joint emergency response plan in early 2014 that must meet the same
requirements recently imposed on investor-owned utilities under PSL
66(21), with the initial storm plan being subject to a rigorous
public review process. Servco would be required to undertake at least
one drill per year to implement procedures to practice its emergency
response plan and include participation of appropriate municipal
emergency responders and officials. Servco would also be required to
file with DPS for review a report that evaluates its performance
during any major storm event. These requirements would assure that
Servco is better situated to address major storms in the future.
Other key provisions include requiring Servco to submit to DPS for
review its annual capital expenditure plans. DPS would be responsible
for investigating and mediating customer complaints, consistent with
the role it plays in resolving complaints made by customers of
investor-owned utilities. The existing requirement related to
management and operational audits would be amended to be consistent
with PSL § 3-b and require the next audit to be undertaken no later
than December 15, 2016 to better align the timing of the audit with
the three-year rate plan to be fixed by January 1, 2016. DPS would
review any proposal made by Servco related to distributed generation
or other related programs, with the first such proposal to be
provided to DPS by July 1, 2014. The bill would also require LIPA to
take certain measures to ensure that future staffing is kept at
levels only necessary to ensure that the authority is able to meet
its core obligations. Additionally, the size of the LIPA board would
be reduced from fifteen to nine trustees, with the new board
reconstituted on January 1, 2014 at the same time that Servco takes
over operations in the service area.
In addition to the new DPS oversight role, LIPA and Servco would be
required to provide the State Comptroller, and post on their
websites, a biannual report documenting all contracts entered into
with third parties in excess of $250,000 - thus, providing additional
transparency related to contracting practices. Because PSL § 3-b
would require DPS review of rate increases in excess of 2.5%, the
fifth project condition established under the 1997 PACB resolution
would become redundant and thus superseded by enactment of § 3-b into
law. The bill would also authorize LIPA to amend the OSA with PSEG,
consistent with increasing Servco's responsibilities and
accountability, and to address the new DPS oversight authority under
PSL § 3-b. Because the amended OSA would need to be approved in an
expedited manner to ensure a smooth transition to Servco, only LIPA
board approval, upon review and recommendation from DPS, would be
required to effectuate the contract amendments.
To this end, LIPA and PSEG have agreed to a Term Sheet, dated June 6,
2013, which describes the material and substantive terms of the
proposed amendments to the OSA. The Term Sheet specifies that, among
other things, (i) Servco would be provided with more autonomy over
setting policies, budgets and spending within budget limits, (ii)
Servco would provide LIPA's ratepayers associated operational
efficiency savings, and (iii) "PSEG Long Island" would replace "LIPA"
as the brand name associated with all T&D services in the service
area. Consistent with DPS's new authority under PSL § 3-b, the
amendments of the OSA would provide an enforcement mechanism
authorizing the imposition of liability against Servco related to its
response to major storm and other emergency events, and the right to
withhold incentive-based compensation if Servco fails to meet certain
specified performance-based metrics. The amendments would also
authorize LIPA to terminate the agreement for poor performance. The
amended OSA, like the OSA, would otherwise establish all of the
rights, obligations and responsibilities of Servco and LIPA, and
govern to what extent, if any, such rights, obligations and
responsibilities are to be changed in the future.
Importantly, LIPA and Servco together would continue to offer robust
energy efficiency and renewable programs consistent with the
long-term goals of the State, the budgets for which would be subject
to rate reviews by DPS and approved by LIPA's board. Additionally,
LIPA would collaborate with Servco, NYPA and NYSERDA to expand energy
efficiency measures offered on Long Island. As required under the new
PSL § 3-b, Servco would deliver a plan to DPS in 2014, and annually
thereafter, for a 21st Century utility plan that would incorporate
energy efficiency, clean distributed generation resources and other
programs consistent with meeting system-wide reliability needs. In
2012, LIPA launched a 50 MW feed in tariff for solar energy, and
recently approved an additional 100 MW solar feed-in tariff, a tariff
change to allow renewables to provide a 20 MW block of capacity, and
a competitive procurement for up to 280 MW renewables. The bill would
ensure that these measures would move forward. Further, the bill does
not affect any of LIPA's existing power supply contracts or open
procurements for new power supply.
Finally, LIPA pays a franchise tax of about $26 million per year to
the State based on gross receipts, despite the fact that a provision
of the Tax Law requiring investor-owned utilities to pay the same tax
was repealed in 2000. Additionally, a review of LIPA's annual budget
shows that PILOTs assessed by municipalities with respect to LIPA's
T&D-related properties are growing at a rapid rate. Both the gross
receipts tax paid to the State and the PILOTs assessed by
municipalities are passed on directly to LIPA's customers and paid as
part of the utility bill. To reduce the effect of these taxes, the
bill would eliminate entirely the gross receipts tax imposed by the
State and, starting in calendar year 2015, cap the property-related
PILOTs at 2% per year.
In sum, DPS oversight and the associated public participation
requirements established under the bill, along with amendments to be
made to the OSA, would shed light on and bring accountability to the
rate-making and storm planning processes, educate ratepayers and
public officials with respect to utility practices in the service
area, and make the oversight of ServcoLIPA more consistent with the
oversight of investor-owned utilities.
B. Refinancing LIPA's Debt
Part B of the bill would authorize LIPA to refinance a significant
portion of its debt in a manner that would provide much needed relief
to ratepayers in the service area. LIPA has approximately $7 billion
in outstanding debt, a substantial portion of which was issued to
refinance debt associated with construction of the now abandoned
Shoreham nuclear power plant. Today, LIPA maintains basically the
same amount of debt today as it did in 1998 when it acquired LILCO's
assets. The annual debt service associated with such debt - over $300
million per year - puts pressure on LIPA's customer rates. LIPA
customers pay a portion of that debt through the delivery charge on
Part B of the bill would create a special purpose entity authorized
pursuant to an expedited public process to issue restructuring bonds
to refinance some of LIPA's existing debt. The debt would be secured
by a new charge on customer bills, although the total delivery charge
paid by each customer would be reduced by an amount greater than the
new charge. The bill would provide the special purpose entity and the
new charge on the bill with certain attributes that would enable the
debt to be issued at lower interest rates than the interest rates on
the bonds that would be redeemed or defeased. Like other bonds issued
by State authorities, the restructuring bonds would be tied to a
statutory pledge and agreement that the State would not in any way
take or permit any action to revoke, modify, impair, postpone,
terminate or amend the provision of the bill in any manner that would
be materially adverse to the owners of such bonds.
Along with other cost-saving measures to be taken in the bill and the
amended OSA with PSEG, authorizing LIPA to refinance its debt in the
manner considered here would start the process of reducing the
overall debt burden borne by LIPA's ratepayers.
Starting in fiscal year 2014-15, all costs and expenses of DPS related
to responsibilities under PSL § 3-b would amount to an offset of
funds to be provided as a temporary state energy and utility service
conservation assessment under PSL § 18-a(6), until such assessment
expires by operation of law. The elimination of the State tax on
gross receipts paid by LIPA pursuant to PAL § 1020-q(2) would result
in a fiscal plan impact of approximately $26 million per year.
The effective dates of Parts A and B of the bill are as specified in
the last section of each of the individual parts.
{1} The Long Island Lighting Company or "LILCO" still exists as a
subsidiary of the Long Island Power Authority (referred to in Part B
of the bill as the "Authority"). The brand name "LIPA" is the d/b/a
of LILCO. Although the LIPA name is used with respect to most public
references associated with electricity delivery in the service area,
the actual parent entity and the entity that maintains statutory
authority on matters related to such electricity delivery is the
Authority. To avoid confusion, this memorandum refers simply to LIPA.
{2} Servco is the name specified in the OSA as the new service provider,
although it may be provided with a different name upon taking over
operations from a National Grid on January 1, 2014.
S5844 (ACTIVE) - Bill Text download pdf
S. 5844                             2
S 3. Department of public service. [1.] There shall be  in  the  state
government  a  department  of public service. The chairman of the public
service commission shall be the chief executive officer of  the  depart-
ment.  He  or  she  shall  appoint  and  shall have the power to remove,
S. 5844                             3
S. 5844                             4
HAVE DISCRETION TO HAVE SUCH AN AUDIT PERFORMED BY ITS STAFF, OR  BY  AN
INDEPENDENT  CONTRACTOR.  IN  EVERY  CASE  IN WHICH AN AUDIT IS REQUIRED
PURSUANT TO SUBDIVISION (BB) OF SECTION ONE  THOUSAND  TWENTY-F  OF  THE
PUBLIC  AUTHORITIES LAW PERFORMED BY AN INDEPENDENT AUDITOR, THE DEPART-
MENT SHALL HAVE THE AUTHORITY TO SELECT THE AUDITOR, AND TO REQUIRE  THE
AUTHORITY  TO  ENTER INTO A CONTRACT WITH THE AUDITOR THAT IS CONSISTENT
VISION (BB) OF SECTION ONE THOUSAND TWENTY-F OF THE  PUBLIC  AUTHORITIES
(E)  ACCEPT,  INVESTIGATE, MEDIATE TO RESOLVE AND MAKE RECOMMENDATIONS
THE RESOLUTION OF COMPLAINTS FROM CONSUMERS IN THE  AUTHORITY'S  SERVICE
TERRITORY  RELATING  TO,  AMONG  OTHER THINGS, THE PROVISION OF ELECTRIC
(F) REVIEW THE NET METERING PROGRAM IMPLEMENTED UNDER SUBDIVISION  (H)
OF  SECTION ONE THOUSAND TWENTY-G OF THE PUBLIC AUTHORITIES LAW AND MAKE
RECOMMENDATIONS DESIGNED TO ENSURE CONSISTENCY WITH THE REQUIREMENTS  OF
SECTIONS  SIXTY-SIX-J  AND  SIXTY-SIX-L  OF  THIS CHAPTER, AND ANY REGU-
(G) REVIEW AND MAKE RECOMMENDATIONS WITH RESPECT TO ANY PROPOSED  PLAN
RELATED  TO  IMPLEMENTATION  OF  ENERGY EFFICIENCY MEASURES, DISTRIBUTED
GENERATION OR ADVANCED GRID TECHNOLOGY PROGRAMS HAVING  THE  PURPOSE  OF
PROVIDING  CUSTOMERS  WITH  TOOLS  TO  MORE  EFFICIENTLY AND EFFECTIVELY
MANAGE THEIR ENERGY USAGE AND UTILITY BILLS, AND IMPROVING SYSTEM  RELI-
(H)  REVIEW  THE  DATA,  INFORMATION AND REPORTS SUBMITTED PURSUANT TO
TIES LAW AND OTHER PERTINENT INFORMATION RELATED TO THE METRICS  IN  THE
OPERATIONS  SERVICES AGREEMENT, THE LONG ISLAND POWER AUTHORITY'S EVALU-
THE  AUTHORITY  WITH  RESPECT   TO   THE   SERVICE   PROVIDER'S   ANNUAL
TWO  OF  THIS SECTION, THE DEPARTMENT SHALL BE AUTHORIZED TO INSPECT ALL
PREMISES AND FACILITIES OWNED OR  OPERATED  BY  THE  AUTHORITY  AND  THE
SERVICE  PROVIDER, REVIEW ALL BOOKS AND RECORDS OF THE AUTHORITY AND THE
AL REPORTING CONSISTENT WITH THE  REQUIREMENTS  OF  SUBDIVISION  SIX  OF
THERETO;  PROVIDED,  HOWEVER,  THAT  THIS  AUTHORITY SHALL NOT EXTEND TO
S 2. Subdivision 2 and paragraph (b) of subdivision 6 of section  18-a
NN  of chapter 59 of the laws of 2009 and paragraph (b) of subdivision 6
as amended by section 1 of part BB of chapter 59 of the  laws  of  2013,
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S. 5844                             8
THOUSAND FOURTEEN, THE  AUTHORITY,  THROUGH  ITS  GOVERNANCE  COMMITTEE,
S. 5844                             9
KEPT  AT  LEVELS  ONLY NECESSARY TO ENSURE THAT THE AUTHORITY IS ABLE TO
MEET OBLIGATIONS WITH RESPECT TO ITS BONDS AND NOTES AND ALL  APPLICABLE
STATUTES  AND  CONTRACTS,  AND  OVERSEE  THE  ACTIVITIES  OF THE SERVICE
(U) RATE PLANS.  SUBJECT TO SUBDIVISION SIX OF  SECTION  ONE  THOUSAND
TWENTY-K  OF  THIS  TITLE TO FIX RATES AND CHARGES FOR THE FURNISHING OR
RENDITION OF GAS OR ELECTRIC POWER OR OF  ANY  RELATED  SERVICE  AT  THE
FIRST,  TWO  THOUSAND  FIFTEEN,  SUBMIT  FOR REVIEW TO THE DEPARTMENT OF
PUBLIC SERVICE A THREE-YEAR RATE PROPOSAL FOR RATES AND CHARGES TO  TAKE
2.  THE AUTHORITY AND THE SERVICE PROVIDER SHALL THEREAFTER SUBMIT FOR
REVIEW TO THE DEPARTMENT OF PUBLIC SERVICE ANY RATE PROPOSAL THAT  WOULD
INCREASE  THE RATES AND CHARGES AND THUS INCREASE THE AGGREGATE REVENUES
AN ANNUAL BASIS; PROVIDED, HOWEVER, THAT THE AUTHORITY  MAY  PLACE  SUCH
RATES  AND  CHARGES INTO EFFECT ON AN INTERIM BASIS, SUBJECT TO PROSPEC-
TIVE RATE ADJUSTMENT; PROVIDED, FURTHER, THAT A FINAL RATE  PLAN  ISSUED
AND  SHALL  BE CONSIDERED FINAL FOR THE PURPOSES OF REVIEW UNDER ARTICLE
SEVENTY-EIGHT OF THE CIVIL PRACTICE LAW AND RULES. THE AUTHORITY  AND/OR
THE  SERVICE PROVIDER MAY OTHERWISE SUBMIT FOR REVIEW TO SUCH DEPARTMENT
3. THE AUTHORITY SHALL NOT FIX ANY FINAL RATES  AND  CHARGES  PROPOSED
THAT  WOULD NOT BE SUBJECT TO REVIEW BY THE DEPARTMENT OF PUBLIC SERVICE
4. ANY RECOMMENDATIONS  ASSOCIATED  WITH  A  RATE  PROPOSAL  SUBMITTED
BY  THE DEPARTMENT OF PUBLIC SERVICE TO THE BOARD OF THE AUTHORITY IMME-
DIATELY UPON THEIR FINALIZATION BY THE DEPARTMENT. UNLESS THE  BOARD  OF
THE  AUTHORITY  MAKES A PRELIMINARY DETERMINATION IN ITS DISCRETION THAT
FISCAL OPERATING PRACTICES, ANY EXISTING CONTRACTUAL OR OPERATING  OBLI-
GATIONS,  OR THE PROVISION OF SAFE AND ADEQUATE SERVICE, THE BOARD SHALL
IMPLEMENT SUCH RECOMMENDATIONS AS PART OF ITS FINAL RATE PLAN  AND  SUCH
FINAL  DETERMINATION SHALL BE DEEMED TO SATISFY THE REQUIREMENTS OF THIS
SUBDIVISION AND BE CONSIDERED FINAL FOR THE  PURPOSES  OF  REVIEW  UNDER
ARTICLE  SEVENTY-EIGHT  OF  THE  CIVIL PRACTICE LAW AND RULES. THE BOARD
SHALL MAKE ANY SUCH PRELIMINARY DETERMINATION  OF  INCONSISTENCY  WITHIN
THIRTY  DAYS  OF  RECEIPT  OF  SUCH RECOMMENDATIONS, WITH NOTICE AND THE
BASIS OF SUCH DETERMINATION BEING PROVIDED TO THE DEPARTMENT  OF  PUBLIC
SERVICE,  AND  CONTEMPORANEOUSLY POSTED ON THE WEBSITES OF THE AUTHORITY
HEARING WITH RESPECT TO ITS PRELIMINARY DETERMINATION OF  INCONSISTENCY.
AT  SUCH  HEARING,  THE  DEPARTMENT  OF PUBLIC SERVICE SHALL PRESENT THE
DETERMINATION OF INCONSISTENCY AND THE SERVICE PROVIDER MAY PRESENT  ITS
S. 5844                            10
POSITION.    THE AUTHORITY AND THE SERVICE PROVIDER MAY, DURING THE TIME
DISPUTED ISSUES.   WITHIN THIRTY DAYS AFTER  SUCH  PUBLIC  HEARING,  THE
BOARD  OF  THE  AUTHORITY  SHALL  ANNOUNCE  ITS  FINAL DETERMINATION AND
PLANNED IMPLEMENTATION WITH RESPECT TO ANY SUCH  RECOMMENDATIONS.    THE
APPLICABLE  JUDICIAL REVIEW PROCEEDING, INCLUDING REVIEW AVAILABLE UNDER
(bb) Comprehensive and regular management and  operations  audits.  1.
The  authority AND THE SERVICE PROVIDER shall cooperate in the undertak-
ing and completion of a regular and comprehensive management  and  oper-
ations  audit conducted pursuant to the requirements of this subdivision
and [subdivision two of section  three]  PARAGRAPH  (D)  OF  SUBDIVISION
THREE  OF  SECTION  THREE-B  of the public service law. Such audit shall
review and evaluate the [authority's] overall operations and  management
OF  THE AUTHORITY AND SERVICE PROVIDER, including [the authority's] SUCH
operations and management in the context of [its] THE  AUTHORITY'S  duty
to  set  rates  at the lowest level consistent with standards and proce-
dures provided in subdivision (u) of this section, and include, but  not
reliable  service;  (ii)  the  overall efficiency of the authority's AND
SERVICE PROVIDER'S operations; (iii) the manner in which  the  authority
is  meeting  its debt service obligations; (iv) the authority's Fuel and
Purchased Power Cost Adjustment clause and recovery of costs  associated
with  such  clause;  (v)  the  authority's AND SERVICE PROVIDER'S annual
budgeting procedures and process; (VI) THE APPLICATION, IF ANY,  OF  THE
PERFORMANCE  METRICS DESIGNATED IN THE OPERATIONS SERVICES AGREEMENT AND
THE ACCURACY OF THE DATA RELIED UPON WITH RESPECT TO  SUCH  APPLICATION;
2.  The  department  of public service shall notify the authority that
said department is in the process of initiating a comprehensive  manage-
sion  in  a  manner  that  ensures  the timeliness of such audit, and in
[this subdivision] CHAPTER EIGHT OF THE LAWS OF TWO THOUSAND TWELVE  and
undertaken  in  a  manner  and  to  an extent that is practicable in the
ture; the second comprehensive management and operations audit shall  be
initiated  no  later  than  December  fifteenth,  two thousand [fifteen]
SIXTEEN; and all  additional  comprehensive  management  and  operations
audits  shall  be  initiated  at least once every five years thereafter.
Within a reasonable time after such notification to the authority,  said
department  or  the  independent  auditor  retained  by the authority to
undertake such audit shall hold public statement hearings,  with  proper
both  oral  and  written  comments from the public on matters related to
ation absent an extension for good cause  shown  by  the  department  of
public  service  or  the  independent  auditor  under  contract with the
authority with notice of such extension to the governor,  the  temporary
president  of the senate, the speaker of the assembly, and the chairs of
the authority and the department of public service. Such audit shall  be
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MADE BY THE DEPARTMENT; PROVIDED,  HOWEVER,  THAT  THE  OBLIGATIONS  SET
FORTH  IN THIS SUBDIVISION SHALL NOT EXTEND TO AFFILIATES OF THE SERVICE
were] SECTION WAS in effect on December thirty-first,  nineteen  hundred
S. 5844                            14
ninety-nine,  [paragraph  (b) of subdivision four of section one hundred
seventy-four of the navigation law,] and any taxes  imposed  by  a  city
3.  No  municipality  or  governmental subdivision, including a school
district or special district, shall be liable to the  authority  or  any
other  entity for a refund of property taxes originally assessed against
the Shoreham plant. Any judicial determination that the  Shoreham  plant
assessment  was excessive, unequal or unlawful for any of the years from
nineteen hundred seventy-six to the effective date of this  title  shall
not  result  in  a refund by any taxing jurisdiction of taxes previously
paid by LILCO pursuant to such Shoreham plant assessment. The  authority
shall  discontinue and abandon all proceedings, brought by its predeces-
sor in interest, which seek the repayment of all or part  of  the  taxes
amended  by  chapter  388  of  the  laws  of 2011, is amended to read as
facility as defined therein, [and] (c) section eighteen-a  of  such  law
provides  for  assessment for certain costs, property or operations, AND
(D) TO THE EXTENT THAT THE DEPARTMENT  OF  PUBLIC  SERVICE  REVIEWS  AND
MAKES  RECOMMENDATIONS  WITH  RESPECT TO THE OPERATIONS AND PROVISION OF
SERVICES OF, AND RATES AND BUDGETS ESTABLISHED BY, THE AUTHORITY  PURSU-
S  10. Section 1020-w of the public authorities law, as added by chap-
S 1020-w. Audit and annual reports.  The  accounts  of  the  authority
shall  be  subject  to  the  supervision of the state comptroller and an
annual audit shall be performed by an independent  certified  accountant
DATION  OF  ITS FINANCE AND AUDIT COMMITTEE.  The authority shall submit
governing bodies of the counties  of  Suffolk  and  Nassau,  a  detailed
report  pursuant to the provisions of section two thousand eight hundred
of [title one of article nine of] this chapter, which  report  shall  be
verified  by  the  chairman of the authority. The authority shall comply
with the provisions of sections two  thousand  eight  hundred  one,  two
thousand  eight  hundred  two  and  two  thousand eight hundred three of
S 11. Section 1020-cc of the public authorities  law,  as  amended  by
S  1020-cc.  Authority  subject to certain provisions contained in the
state finance law, the public service law, the social services  law  and
the  general  municipal  law. 1. All contracts of the authority shall be
made by the state. The authority shall also establish  rules  and  regu-
lations  with  respect to providing to its residential gas, electric and
S. 5844                            15
two and sections one hundred seventeen and one hundred eighteen  of  the
public  service  law  and section one hundred thirty-one-s of the social
services law. The  authority  shall  conform  to  any  safety  standards
regarding  manual lockable disconnect switches for solar electric gener-
subparagraph (ii) of paragraph (a) of subdivision five and  subparagraph
(ii)  of  paragraph  (a) of subdivision five-a of section sixty-six-j of
the  public  service  law.  The  authority  shall  let   contracts   for
construction  or  purchase of supplies, materials, or equipment pursuant
to section one hundred three and paragraph (e) of  subdivision  four  of
TROLLER  ON  MARCH  THIRTY-FIRST  AND SEPTEMBER THIRTIETH OF EACH YEAR A
DOLLARS PER YEAR ENTERED INTO WITH A THIRD PARTY AND RELATED TO  MANAGE-
MENT  AND  OPERATION  SERVICES  ASSOCIATED WITH THE AUTHORITY'S ELECTRIC
TRANSMISSION AND DISTRIBUTION SYSTEM, INCLUDING THE NAME  OF  THE  THIRD
PARTY,  THE  CONTRACT  TERM AND A DESCRIPTION OF SERVICES OR GOODS TO BE
PROCURED, AND POST SUCH REPORT ON EACH OF THEIR WEBSITES. ALL  CONTRACTS
ENTERED  INTO  BETWEEN  THE  SERVICE  PROVIDER AND THIRD PARTIES ARE NOT
S 12. Paragraph (b) of subdivision 4 of section 94-a of the  executive
law,  as amended by chapter 8 of the laws of 2012, is amended to read as
in any proceedings before the public service commission OR  THE  DEPART-
MENT  OF  PUBLIC  SERVICE, to the extent authorized by sections THREE-B,
twenty-four-a, seventy-one, eighty-four  or  ninety-six  of  the  public
service  law  or  any other applicable provision of law, where he or she
deems such initiation, intervention or participation to be necessary  or
state  and  local  administrative and regulatory agencies engaged in the
(iii) accept and investigate complaints of any kind from  Long  Island
power  authority  consumers,  attempt  to  mediate such complaints where
appropriate directly with such authority and  refer  complaints  to  the
appropriate  state or local agency authorized by law to take action with
(IV) HOLD REGULAR FORUMS IN EACH OF THE  SERVICE  TERRITORIES  OF  THE
COMBINATION  GAS AND ELECTRIC CORPORATIONS, AS DEFINED UNDER SECTION TWO
OF THE PUBLIC SERVICE LAW,  AND  THE  LONG  ISLAND  POWER  AUTHORITY  TO
CIENCY  AND  DISTRIBUTED GENERATION, AND OTHER MATTERS AFFECTING CONSUM-
S 13. Notwithstanding  section  112  of  the  state  finance  law  and
notwithstanding  any  other  provision of law to the contrary, including
amending contracts of any amount, the Long Island Lighting  Company  dba
LIPA  is  authorized  to  amend the operations services agreement, dated
December 28, 2011, entered into with PSEG  Long  Island  LLC,  including
following:  (1)  upon  review  and  written  recommendations made by the
S. 5844                            16
power authority ("authority"), setting forth the reasons for  and  find-
ings  underlying  such recommendations; and (2) adoption of a resolution
Long Island, New York under the name of LIPA. In  connection  with  that
S. 5844                            17
ing  electric  utility  service  to residential, commercial, industrial,
nonprofit and governmental customers in  the  counties  of  Suffolk  and
the  "service area").  Such acquisition effectively converted LILCO from
an investor-owned utility that was comprehensively regulated by the  New
gy  Regulatory  Commission  (FERC),  to  a municipal utility that is not
2. Since May 28, 1998, neither the authority  nor  LIPA  has  directly
operated  or maintained the T&D system assets, provided electric service
or billed and collected T&D rates from LIPA's  customers;  instead,  the
to  other  companies.  Most of these operations and service responsibil-
ities have been contracted out to affiliates of a company now  known  as
National  Grid  plc  (National  Grid), a multi-national electric and gas
utility company organized under the laws of England and  Wales  pursuant
customer  bills as well as on service trucks and other equipment used in
the service area, affiliates of National Grid have been  principally  in
charge  of management and operation of the T&D system assets and provid-
ing electricity to consumers in the service area.    The  authority  and
LIPA  have  now  contracted with affiliates of Public Service Enterprise
ation and maintenance services for the T&D system assets for  ten  years
3.  High  costs  of electric utility service poses a serious threat to
the economic well-being, health and safety of the residents of  and  the
ity  service  deter  commerce  and industry from locating in the service
high electric rates.  The  authority  has  approximately  seven  billion
dollars  in  outstanding debt, a substantial portion of which was issued
to refinance debt associated with  construction  of  the  now  abandoned
Shoreham  nuclear  power  plant. The annual debt service associated with
5. As of December 31, 2012, the three major rating agencies  generally
rated  the authority's debt in the single-A range, though Moody's Inves-
6. If securitized restructuring bonds were issued by a  bankruptcy-re-
to  finance a portion of the costs of purchasing, redeeming or defeasing
outstanding debt of the authority, and other associated costs, the  debt
service  on the authority's debt could be reduced and the costs of elec-
the investing public and result in the lowest possible  yields  if  they
are  issued  by a newly organized, special purpose public benefit corpo-
8. The purpose of this act is to provide a legislative foundation  for
costs  of  constructing and financing the now abandoned Shoreham nuclear
S. 5844                            18
power plant, including the creation of  restructuring  property  by  the
authority  to  provide  for the redemption or defeasance of a portion of
entity, nonprofit organization or other legally-recognized  entity  that
takes  electric  delivery  service  within  the service area by means of
S. 5844                            19
transmission or distribution facilities are owned by LIPA or  any  other
6.  "Financing  cost"  means  the  costs  to  issue, service, or repay
restructuring bonds, whether incurred upon issuance of such  restructur-
ing  bonds or over the life of the restructuring bonds, and approved for
recovery in a restructuring cost financing order.   Without  limitation,
(b)  any  payment required under an ancillary agreement and any amount
required to fund or replenish a debt service reserve  account  or  other
(c) any federal, state or local taxes,  payments  in  lieu  of  taxes,
franchise  fees  or  license fees imposed on transition charge revenues;
restructuring bond  issuer  and  servicing  restructuring  property  and
restructuring  bonds,  or  related  to  the efforts to prepare or obtain
approval of a restructuring cost  financing  order,  including,  without
limitation,  costs  of  calculating  adjustments  of transition charges,
servicing fees and expenses, trustee fees and expenses, legal  fees  and
expenses,   accounting   fees  and  expenses,  administrative  fees  and
expenses, placement fees, underwriting fees, fees and  expenses  of  the
any  other related cost that is approved for recovery in the restructur-
ity or any servicer, trustee, collateral  agent,  and  other  person  or
entity  acting for the benefit of owners of the restructuring bonds, the
restructuring bond issuer or the authority that  may  own  restructuring
9.  "Ongoing  financing  costs"  means  financing  costs  that are not
replenish a debt service reserve account or  other  account  established
under  any  indenture,  ancillary  agreement or other financing document
relating to restructuring bonds; (c) any federal, state or local  taxes,
payments  in  lieu  of  taxes, franchise fees or license fees imposed on
transition charge revenues; and (d) any cost  related  to  administering
the  restructuring  bond  issuer and servicing restructuring property or
for recovery in the restructuring cost financing order. Ongoing  financ-
ing  costs  shall  include  any excess of actual upfront financing costs
over the estimate of upfront financing costs included in  the  principal
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financing document relating to the restructuring  bonds,  and  fees  and
expenses  of  the  authority's  advisors  and  outside  counsel, if any.
Upfront financing costs include reimbursement to any person  of  amounts
S. 5844                            22
advanced  for  payment  of  such  costs.  Upfront financing costs do not
include scheduled debt service or other ongoing financing costs, to  the
extent  such  ongoing financing costs are payable from transition charge
S. 5844                            23
only be challenged by an aggrieved party pursuant to an action, suit  or
proceeding  filed  within thirty days of the effective date of this act,
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(h) The restructuring bond issuer and its  corporate  existence  shall
continue  until  one  year and one day after all restructuring bonds and
ongoing financing costs and other  indebtedness  of  restructuring  bond
issuer  have  been actually paid and all its other liabilities and obli-
S. 5844                            27
the existence of restructuring bond issuer, all of its rights and  prop-
cost  financing  orders.  The  restructuring  cost financing order shall
include the following: (i) a description of the  approved  restructuring
ty  proposes  to  pay through the sale of the restructuring property and
the issuance of  the  restructuring  bonds;  (iii)  designation  of  the
authority  as  the  entity  in  which initial ownership of restructuring
property will vest; (iv) an estimate of the date on which  restructuring
bonds  will be issued and the expected scheduled term to maturity of the
restructuring bonds; (v) a description of the estimated debt service  on
the  restructuring  bonds  and other ongoing financing costs that may be
recovered through transition charges; as part of this  description,  the
restructuring  cost financing order may include qualitative or quantita-
tive limitations on financing costs approved to  be  recovered  provided
that  no  such limitation on financing costs shall impair the ability of
ing transition charges on  an  equal  percentage  basis  among  customer
service  classifications  and  among  volumetric  (kWh)  and demand (kW)
charges within those customer service  classifications,  along  with  an
associated  bill  impact  analysis  of the proposed methodology; (vii) a
description of the proposed adjustment  mechanism  to  reconcile  actual
finding  that  the adjustment mechanism is just and reasonable; (viii) a
description of the benefits to consumers in the service  area  that  are
expected  to  result from the sale of the restructuring property and the
issuance of restructuring bonds as opposed  to  traditional  alternative
financing  mechanisms;  (ix) specifying the entity that will contract to
act as servicer with respect  to  the  restructuring  property  and  the
restructuring  bonds on terms and conditions mutually acceptable to such
entities that will contract to provide administrative or other  services
property  will  be created and vest and addressing such other matters as
may be necessary or desirable for the  marketing  or  servicing  of  the
restructuring  bonds  or  the  servicing  of the restructuring property;
(xii) authorizing the imposition, billing and collection  of  transition
will  be  created  and that may be used to pay and secure the payment of
the restructuring bonds approved to be issued in the restructuring  cost
financing  order;  (xiv)  a  requirement  that  the  amounts in the debt
service reserve accounts or other accounts funded with the  proceeds  of
restructuring  bonds  or transition charges be fully used, to the extent
practical, to make the final payments of principal and interest  on  the
to  consumers  on  the same basis as such consumers would have then been
obligated to pay transition costs; and  (xv)  the  finding  required  by
S. 5844                            28
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overcollections  or  undercollections  resulting  from  the mathematical
error shall be taken  into  account  in  the  next  succeeding  periodic
subdivision  4  of  section  five of this act. No adjustment pursuant to
this section shall require any approvals or action under any  other  law
or  shall be deemed to be the establishment of a new charge, fee or rate
challenging such final restructuring cost financing order has lapsed  or
(b)  A  restructuring  cost financing order may be amended on or after
the date of issuance of restructuring bonds  approved  thereunder  only:
(i)  at  the  request  of  the  authority;  (ii)  in accordance with any
cost financing order; (iii) subject to  the  limitations  set  forth  in
subdivision  7  of  section three of this act; and (iv) upon approval by
the PACB within thirty days of  receipt  of  such  amendment;  provided,
however,  that  if  no approval or disapproval is made within such time,
all of its obligations and contracts with  the  authority's  bondholders
(a)  A  restructuring  cost financing order shall remain in effect and
unabated until the restructuring bonds issued pursuant to  the  restruc-
turing  cost  financing  order  have  been  paid in full and all ongoing
financing and all amounts to be paid to an assignee or  financing  party
(b)  A  restructuring  cost financing order shall remain in effect and
the authority, the restructuring bond  issuer,  LIPA  or  any  successor
owner  of the T&D system assets, or any affiliate of the aforementioned,
(c) For so long as restructuring bonds issued pursuant to  a  restruc-
turing  cost  financing  order are outstanding, and the related approved
restructuring costs have not been paid in full, the  transition  charges
authorized  in  the  restructuring cost financing order shall be non-by-
passable and shall apply to all consumers connected to  the  T&D  system
assets  and  taking electric delivery service located within the service
area, whether or not the consumers  produce  their  own  electricity  or
S. 5844                            30
(a)  It  is  hereby  found  and  declared  that  the activities of the
regarded as performing an essential governmental  function  in  carrying
(b)  The  restructuring bond issuer shall not be required to pay taxes
or assessments upon any of the property acquired or controlled by it  or
(c)  Restructuring  bonds,  their  transfer  and  the income therefrom
shall, at all times, be free from taxation by the state or  any  munici-
3.  Restructuring  bonds  not  debt  of the state. Restructuring bonds
provisions  of  this act shall not constitute a debt, general obligation
or a pledge of the faith and credit or taxing power of the state  or  of
any  county,  municipality or any other political subdivision, agency or
instrumentality of the state.  Holders of restructuring bonds shall  not
cipality  or  any other political subdivision, agency or instrumentality
eon. The issuance of restructuring bonds does not obligate the state  or
instrumentality of the state to levy any tax or make  any  appropriation
for  payment of the principal of or interest on the restructuring bonds.
All restructuring bonds  must  contain  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
4.  Restructuring  bonds as legal investments. Any restructuring bonds
issued by the restructuring bond issuer are hereby  made  securities  in
which  all  public  officers  and  bodies  of this state and all munici-
palities, all insurance companies and  associations  and  other  persons
carrying  on an insurance business, all banks, bankers, trust companies,
persons carrying on a banking business, all trusts, estates and  guardi-
anships  and  all other persons whatsoever, who are now or may hereafter
belonging to them. The restructuring bonds are also hereby made  securi-
ties  which  may  be  deposited with and shall be received by all public
officers and bodies of the state and all municipalities for any  purpose
for  which the deposit of bonds or other obligations of the state is now
S 7. Restructuring property. 1. (a)  Restructuring  property  that  is
created  pursuant  to a restructuring cost financing order shall consti-
tute an existing, present property right, notwithstanding the fact  that
the  imposition  and  collection  of  transition  charges will depend on
further acts that have not yet occurred, including but not  limited  to:
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S 8. Rights and duties while restructuring bonds are outstanding.   1.
compliance  with  the provisions of this act and the applicable restruc-
turing cost financing order, the authority shall have the right,  juris-
S. 5844                            34
any  successor  owner  of  the T&D system assets, the restructuring bond
and any other person or entity that owns restructuring property  or  has
the  right  to  impose,  bill  or  collect  transition charges until the
restructuring bonds issued pursuant to the restructuring cost  financing
order  have  been  paid in full and all financing costs relating to such
ing its powers and carrying out  its  duties  regarding  regulation  and
turing  cost  financing  order  to  be  the debt of any owner of the T&D
system assets, consider transition charges paid under the  restructuring
cost  financing  order  to  be  revenue  of  any owner of the T&D system
assets, or consider the approved restructuring costs or ongoing  financ-
ing  costs  specified  in  the  restructuring cost financing order to be
costs of any owner of the T&D system assets or any  affiliate,  nor  may
by  any  owner  of  the  T&D  system  assets that is consistent with the
restructuring cost financing order is  unjust  or  unreasonable  from  a
regulatory  or  ratemaking  perspective;  provided  that, subject to the
limitations set forth in subdivision 4 of section five of this  act  and
the  state  pledge in section nine of this act, nothing in this subdivi-
provided in subdivision 3 of section five of this act; (ii)  prevent  or
the  T&D  system  assets  and of any financing entity with the terms and
ance therewith; or (iii)  prevent  or  preclude  the  authority  or  any
tions  of  a  restructuring  cost financing order or the requirements of
this act.  When setting other rates for any  owner  of  the  T&D  system
regulator  from  taking  into  account  the  collection by such owner of
servicing fees in excess of incremental  costs  of  providing  servicing
services,  or  the  collection  by  such owner of administration fees in
provided  that this would not result in a recharacterization of the tax,
ing, but not limited to, either of the following: (i) treating  restruc-
turing  bonds  as debt for federal income tax purposes; or (ii) treating
any transfer of the restructuring property  to  the  restructuring  bond
issuer  or  to  any other financing entity as a true sale for bankruptcy
(a) Any failure of any financing  entity  to  apply  the  proceeds  of
restructuring  bonds, or proceeds from the sale of restructuring proper-
ty, in a reasonable, prudent and appropriate manner or otherwise  comply
with  any  provision  of this act shall not invalidate, impair or affect
any restructuring cost financing order, restructuring property,  transi-
S. 5844                            35
of  the restructuring property for the benefit of such owner or pledgee,
the state will not in any way take or permit  any  action  that  limits,
alters  or  impairs  the  value  of restructuring property or, except as
financing order, reduce, alter or impair  transition  charges  that  are
imposed,  collected  and  remitted  for  the  benefit  of  the owners of
principal, interest and redemption premium in respect  of  restructuring
bonds,  all  ongoing  financing  costs  and all amounts to be paid to an
assignee or financing party under an ancillary  agreement  are  paid  or
(b)  Any person who issues restructuring bonds is permitted to include
the pledge specified in subdivision (a) of this section in the  restruc-
turing  bonds,  ancillary  agreements  and  documentation related to the
S 10. Choice of law. The law governing, as applicable,  the  validity,
enforceability,  attachment,  perfection, priority and exercise of reme-
a security interest in any restructuring property, transition charge  or
restructuring  cost  financing  order, shall be the laws of the state of
S 11. Conflicts. In the event of conflict between  this  act  and  any
other  law  regarding  the  attachment, assignment or perfection, or the
or transfer of restructuring property, this  act  shall  govern  to  the
extent  of  the  conflict. In the event of conflict between this act and
ing any provisions of law to the  contrary,  no  approvals,  notices  or
authorizations  other than those specified in this act shall be required
with respect to any restructuring cost financing order, and  the  trans-
actions  and  contracts authorized in or contemplated by this act or any
restructuring cost financing order, including but  not  limited  to  the
of  any  approved  restructuring  costs,  the  issuance of restructuring
bonds, the sale or other transfer of  restructuring  property,  and  any
contracts  and  expenses  incurred  to facilitate the preparation of any
S 12. Effect of invalidity on actions.  Effective  on  the  date  that
this  act is held to be invalid or is invalidated, superseded, replaced,
action allowed under this act that is taken by the authority, LIPA,  the
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