220 ILCS 5/18-104
2021 Illinois Compiled Statutes|Chapter 220 - UTILITIES|220 ILCS 5/ - Public Utilities Act.|Article XVIII - Electric Utility Transitional Funding Law

Sec. 18-104.         Terms and provisions of transitional  funding orders.(a) Each transitional funding order shall create and  establish intangible transition property in an amount not to  exceed the sum of (i) the rate base established by the  Commission in the electric utility's last rate case prior to the effective date  of this amendatory Act of 1997, plus (ii)  any expenditures required  to be undertaken by such electric utility by the provisions of Section 16-128  of this Act, including labor severance costs and employee retraining costs,  plus  (iii) amounts necessary to fund debt  service and other reserves, commercially reasonable costs and fees necessary  in connection with the marketing of the transitional  funding instruments and grantee instruments, if any, plus (iv)  commercially reasonable costs incurred from and after the effective date of  this amendatory Act of 1997 or to be incurred which are associated with the  issuance and collateralization of transitional funding  instruments and grantee instruments, if any, plus (v) commercially reasonable  costs  incurred from and after the effective date of this amendatory Act of 1997 or to  be incurred which are associated with issuance of  such transitional funding instruments,  including the costs incurred from and after the effective date of this  amendatory Act of 1997, or to be  incurred, in connection with transactions to recapitalize, refinance  or retire stock and/or debt, any associated taxes   and the costs  incurred to obtain, collateralize, issue, service and/or  administer transitional funding instruments and grantee  instruments, if any, including interest and  other related fees, costs and charges (all of the foregoing  costs described in clauses (i) through (v) above to include  any taxes, where applicable, to the extent the costs thereof  would otherwise have been recoverable by an electric utility  through rates for tariffed services under the Public Utilities  Act as in effect prior to this amendatory Act of 1997), minus  (vi) the amount of any intangible transition property  previously created and established at the request of and for  the benefit of such electric utility in a prior transitional  funding order.  The transitional funding order shall authorize  (A) the sale, pledge, assignment or other transfer of, or the  establishment, creation and granting of an electric utility's,  assignee's or grantee's rights in and to, a specific dollar  amount of intangible transition property (which amount may be  in excess of the principal and interest payable on the  transitional funding instruments and grantee instruments, if  any, in order to provide for servicing costs and the funding  or maintenance of debt service and other reserves as security  to the holders of the transitional funding instruments), (B)  the issuance of a specific dollar amount of grantee  instruments or, if the transitional funding order does not  provide for the issuance of grantee instruments, a specific  dollar amount of transitional funding instruments, by or on  behalf of an electric utility, assignee, issuer or grantee, as  the case may be, and (C) the imposition and collection of a  specific amount of instrument funding charges projected to be  sufficient to pay when due the principal of and interest on  the corresponding grantee instruments or, if the transitional  funding order does not provide for the issuance of grantee  instruments, the corresponding transitional funding  instruments, in each case, together with premium, servicing  fees and other fees, costs and charges related thereto, and to  maintain any required reserves.  Except as otherwise  specifically set forth in the transitional funding order, the  transitional funding instruments issued pursuant to such order  shall be non-recourse to the credit or to any assets of the  electric utility other than any assets comprising intangible  transition property or grantee instruments, as applicable. The  obligation of retail customers and other persons to pay  instrument funding charges shall be contingent upon the  receipt by such retail customers and other persons of electric  power and energy, the kilowatt hours of which are included in  the calculation of the dollar amount of such instrument  funding charges, but the transitional funding order shall  specifically provide that such instrument funding charges will  not be subject to any defense, counterclaim or right of set  off arising as a result of failure by the pertinent electric  utility, upon whose application the intangible transition  property was created, to perform or provide past, present or  future services.  For purposes of the foregoing sentence, an  electric utility or alternative retail electric supplier  obligated to pay transition charges under subsection (b) of  Section 16-118 on behalf of certain retail customers shall be  deemed to have received the electric power and energy provided  to such retail customers.  The transitional funding order  shall also set forth the time to maturity for the grantee  instruments or, if the transitional funding order does not  provide for the issuance of grantee instruments, the time to  maturity for the transitional funding instruments issued  thereunder.  Concurrently with the sale, pledge, assignment or  other transfer of, or the establishment, creation and granting  of an electric utility's, assignee's or grantee's rights in  and to, intangible transition property and grantee  instruments, if any, and the issuance of transitional funding  instruments, an electric utility, grantee, issuer or an  assignee shall begin to impose and collect the specified  instrument funding charges from retail customers, classes of  retail customers, and any other persons or groups of persons  as set forth in the pertinent transitional funding order and  shall file tariffs in accordance with subsection (j) of  Section 18-104 of this Article.(b) The transitional funding order shall require that  the proceeds from the issuance of transitional funding  instruments  shall be used for the purposes set  forth in subparagraph (1) of subsection (d) of Section 18-103  of this Article.(c) Notwithstanding any other provision of law, neither  the transitional funding order nor the intangible transition  property created and established thereby nor the instrument  funding charges authorized to be imposed and collected  thereunder shall be subject to reduction, postponement,  impairment or termination by any subsequent action of the  Commission; provided, however, that nothing in this paragraph  is intended to supersede any right of any party to the  Commission's proceeding relating to the transitional funding  order to seek judicial review of such transitional funding  order.(d) The Commission shall  provide in any transitional funding order for a  procedure for periodic adjustments to the instrument funding  charges set forth therein in order to ensure the repayment in  accordance with the projections set forth in the transitional  funding order of all grantee instruments or, if such  transitional funding order does not provide for the issuance  of grantee instruments, the corresponding transitional funding  instruments authorized therein and to reconcile the revenues  received from instrument funding charges during the applicable  adjustment period with the revenues projected to be received  from such charges as set forth in the relevant transitional  funding order.  Unless the transitional funding order  otherwise provides, such adjustments shall be required  whenever the instrument funding charges actually collected  during the applicable adjustment period by the appropriate  party or parties were greater or less than the instrument  funding charges projected in the relevant transitional funding  order to be collected in such adjustment period; provided  that, if so requested by an electric utility in any  application for a transitional funding order, the transitional  funding order may (i) specify a dollar or percentage amount of  variation from the projected revenues within which no such  adjustments will be required and/or (ii) set forth a maximum  adjustment amount for the instrument funding charges.  The  electric utility (or such other party as may be specified in  the pertinent transitional funding order) shall determine,  within 90 days of the end of each adjustment period (or such  shorter period as may be provided in the documents relating to  the pertinent transitional funding instruments or grantee  instruments, as applicable), whether any adjustments described  above in this subsection (d) of Section 18-104 are required.  If any such adjustments are so required, such adjustments  shall be implemented by the electric utility, grantee, issuer  or assignee, as applicable, with written notice to the  Commission, within such 90-day period (or such shorter period  as may be provided for in the documents relating to the  pertinent transitional funding instruments or grantee  instruments, as applicable).  Any such adjustment shall be  calculated to include amounts necessary for recovery of any  additional costs incurred by the grantee, electric utility,  assignee or issuer as a result of the relevant delay in  collections of instrument funding charges.  If, as a result of  any adjustment, the amount of any instrument funding charge,  as so adjusted, will exceed an amount per kilowatt-hour  greater than the amount per kilowatt-hour of  the instrument funding charge initially authorized by the  Commission in its transitional funding order,  then the relevant electric utility shall be obligated to file  amendatory tariffs in compliance with subsection (k) of  Section 18-104.(e) Except where this Article  specifically requires otherwise, the collection of instrument  funding charges and the allocation of any such collections as  among holders, assignees, issuers, grantees and any other  parties entitled to receive portions thereof, may be  accomplished according to the provisions set forth in the  applicable transitional funding order, or, if the order is  silent on any such matters, according to the provisions set  forth in the documents relating to the pertinent transitional  funding instruments or grantee instruments, as applicable.  Notwithstanding the foregoing, the electric utility, grantee,  issuer or assignee, as applicable, shall determine no later  than 90 days after the stated maturity date of each series of  grantee instruments or, if the related transitional funding  order does not provide for the issuance of grantee  instruments, the stated maturity date of transitional funding  instruments, whether the aggregate amount of instrument  funding charges collected prior to such stated maturity date  exceeds the amount required to provide for the payment of all  principal, interest, premium and servicing and other fees,  costs and charges owing under such grantee instruments or  transitional funding instruments, as the case may be.  If it  is determined that the aggregate amount of instrument funding  charges collected exceeds the amount required to provide for  the payment of all principal, interest, premium and servicing  and other fees, costs and charges related to such grantee  instruments or transitional funding instruments, as the case  may be, such excess, together with any investment earnings  thereon, shall be paid to the owner of the pertinent  intangible transition property.(f) Notwithstanding any other provision of law, on such  conditions as the Commission may approve in the pertinent  transitional funding order, the interest of an electric  utility, assignee, issuer or grantee in intangible transition  property or grantee instruments, as applicable, may be  assigned, sold or otherwise transferred, in whole or in part,  and may, in whole or in part, be pledged or assigned as  security to or for the benefit of a holder or holders.  To the  extent that any such interest or portion thereof is assigned,  sold or otherwise transferred or is established, created and  granted to a grantee or is pledged or assigned as security,  the Commission, in the pertinent transitional funding order,  shall authorize the electric utility or any affiliate thereof  to contract with the grantee, issuer, assignee or holders to  collect the applicable instrument funding charges for the  benefit and account of the grantee, issuer, assignee or  holder, and such electric utility or affiliate will, except as  otherwise specified in the transitional funding order, account  for and remit the applicable instrument funding charge,  without the obligation to remit any investment earnings  thereon, to or for the account of the grantee, issuer,  assignee or holder.  The obligation of such electric utility  or affiliate to collect and remit the applicable instrument  funding charges hereunder shall continue irrespective of  whether such electric utility is providing electric power  and/or other services to the retail customers and other  persons obligated to pay such instrument funding charges.  If  the documents creating the transitional funding instruments or  grantee instruments, if any, so provide, such obligations  shall, in the event of a default by such electric utility or  affiliate in performing such obligations, be undertaken and  performed by any other entity selected by the assignee or any  holder, group of holders or trustee or agent on behalf of such  holder or holders, as the case may be, (i) which provides  electric power or services to a person that was a retail  customer of such electric utility and (ii) from whom such  electric utility is entitled to recover transition charges  under Section 16-108; provided, however, that any failure by  the designated party to perform such obligations shall not  affect the existence of the intangible transition property or  the instrument funding charges or the validity or  enforceability of the instrument funding charges in accordance  with their terms.(g) In its transitional funding order, the Commission  shall afford flexibility in establishing the terms and  conditions of the transitional funding instruments and the  grantee instruments, if any, including repayment schedules,  collateral, required debt service and other reserves, interest  rates and other financing costs and the ability of the  electric utility, at its option, to effect a series of  issuances of transitional funding instruments and grantee  instruments and correlated assignments, sales, pledges or  other transfers of intangible transition property and grantee  instruments, if any, not to exceed the aggregate dollar  amounts approved in the transitional funding order.(h) The electric utility shall file a statement of the  final terms of the issuance of any series of transitional  funding instruments or grantee instruments, if any, with the  Commission within 90 days of the receipt of proceeds from such  issuance.  In addition, the Commission may require the electric utility to file  periodic  reports on its use of the proceeds at intervals of not less than one year.(i) Any adjustment to instrument funding charges that is  necessary due to subsequent refinancing of transitional  funding instruments or grantee instruments, if any, shall be  authorized by the Commission in a supplemental order.(j) In connection with the issuance of a transitional  funding order and as a precondition to the imposition of any  instrument funding charges authorized thereby, the relevant  electric utility shall file tariffs  directing that the  amount of such instrument funding charges be deducted,  stated, and collected separately from the amounts otherwise billed by such  electric utility for base rates and transition charges and,  where applicable, other rates for tariffed services as set  forth in the transitional funding order.  Upon the  effectiveness of such tariff, the amounts of instrument  funding charges thereby deducted and to be deducted shall have  become intangible transition property as specified in the  transitional funding order.  The Commission shall have no  authority to review such tariffs except to confirm  that the instrument  funding charges authorized in the transitional funding order  have been deducted, stated, and collected separately from base rates and  transition charges and, where applicable, other rates for  tariffed services otherwise in effect at such time, and the  filing of any such tariff may not be suspended for any other  reason.  No such deductions referred to in this subsection  shall be construed as a change in or otherwise require a  recalculation of the authorized amounts of such base rates,  transition charges, and other rates for tariffed services under  Section 16-102, 16-107, 16-108, or 16-110, as applicable.  Instrument funding charges shall be recoverable with respect  to electric power and energy or other services for which the  deductions provided in this subsection have become effective  and no such deduction shall be effective with respect to any  services or power in respect of which instrument funding  charges have not been so authorized and imposed.(k) If any adjustment under subsection (d) of Section  18-104 results in the amount of any instrument funding charge  as so adjusted exceeding an amount per kilowatt-hour greater  than the amount per kilowatt-hour of the  instrument funding charge initially authorized by the  Commission in its transitional funding order,  the relevant electric utility shall file amendatory tariffs  reducing the amounts otherwise billed by such electric utility  for base rates and transition charges or, where applicable,  other rates for tariffed services, by the amount of such  excess.  Such amendatory tariff shall be subject to the  provisions of subsection (j) of Section 18-104, except that  (i) the failure of such amendatory tariff to become effective  for any reason shall not delay or impair the effectiveness of  the adjustments required under subsection (d) of Section 18-104 and (ii) the  obligation of retail customers and other  persons or groups of persons to pay instrument funding charges  as so adjusted shall not be subject to any defense,  counterclaim or right of set off arising as a result of  failure by the pertinent electric utility to comply with this  subsection (k) of Section 18-104.  Nothing in this subsection  (k) of Section 18-104 shall restrict any retail customer or  other person from bringing any suit in any court or from  exercising any other legal or equitable remedy against an  electric utility for any failure by such electric utility to  comply with this subsection (k) of Section 18-104.(l) The intangible transition property created under a  transitional funding order and the authority of the grantee,  assignee, issuer, electric utility or other person authorized  thereunder to impose and collect instrument funding charges  shall continue beyond the final date set forth in the  applicable transitional funding order until such time as all  grantee instruments authorized in such order or, if the  applicable transitional funding order does not provide for  grantee instruments, the related transitional funding  instruments authorized in such order, have been paid in full.Upon the later of the final date set forth in the applicable  transitional funding order for the imposition and collection  of instrument funding charges or the repayment in full of any  grantee instruments or transitional funding instruments, as  applicable, authorized in such order, the authority to impose  and collect the related instrument funding charges shall cease  and the relevant electric utility shall be entitled to file  tariffs revoking any deductions from base rates, transition  charges or other rates for tariffed services which were  granted in connection with such instrument funding charges  pursuant to subsection (j) of Section 18-104 or subsection  (k) of Section 18-104.  The Commission shall  have no authority to review such tariffs except to determine  that the rates and charges resulting from such revocation do  not exceed the applicable base rates, transition charges, or  other rates for tariffed services which would otherwise have  been in effect at the time of such revocation had no instrument funding charges  ever been deducted therefrom.(m) If so requested by an electric utility in its application for a  transitional funding order, the Commission, in the relevant  transitional  funding order, may authorize (i) the issuance of grantee instruments  and/or  transitional funding instruments with expected maturity dates later than  December 31, 2008 but not later than December 31, 2010 and (ii) the  imposition  and collection of instrument funding charges by electric utilities, grantees,  or  assignees later than December 31, 2008 but not later than December 31, 2010 if  the electric utility includes in its application a pro forma calculation of the  impact of the issuance of the transitional funding instruments or grantee  instruments and the associated use of proceeds on the revenue requirement  established by the Commission in the electric utility's last rate case, with  such calculation to be presented for illustrative purposes only,  and the Commission,  in its review of the relevant application for the transitional funding order,  finds that such action is in the public interest and that the  instrument funding charges to be applied toward payment of transitional funding  instruments after December 31, 2008 will be deducted, stated, and collected  separately from base rates and, where applicable, other rates for tariffed  services otherwise in effect at such time and as scheduled to be in effect  through such expected maturity date.    (Source: P.A. 90-561, eff. 12-16-97.)