2023 Louisiana Laws › Revised Statutes › Title 45 - Public Utilities and Carriers › §45:1271. Short title; purpose

RS 45:1271 - Short title; purpose
A. This Part shall be known and may be cited as the "Louisiana Electric Utility Energy Transition Securitization Act".
B. The purpose of this Part is to enable Louisiana electric utilities, if authorized by a financing order issued by the commission, to use securitization financing for certain energy transition costs, because this type of debt may lower the total amount of costs being included in customers' rates in comparison with conventional utility financing methods or alternative methods of recovery, thereby benefiting ratepayers. The energy transition bonds will not be public debt or a pledge of the full faith and credit of the state or any political or governmental unit thereof. Energy transition bonds will be solely the obligation of the issuer, an affiliate of an electric utility. The proceeds of the energy transition bonds shall be used for the purpose of recovering certain energy transition costs, solely as allowed by the commission. Securitization financing for energy transition costs is hereby recognized to be a valid public purpose. Federal tax laws and revenue procedures expressly require that special state legislation be enacted in order for such transactions to receive certain tax benefits. The legislature finds a need to promote securitization financing, if authorized by the commission, by providing clear and exclusive methods to create, transfer, and encumber interests in energy transition property as defined in this Part. This need is met by providing in this Part for such methods and by establishing that any conflict between the rules governing sales, assignments, or transfers of, or security interests, privileges, or other encumbrances of any nature upon, incorporeal movable property pursuant to other laws of this state and the methods provided in this Part, including without limitation with regard to creation, perfection, priority, or enforcement, shall be resolved in favor of the rules and methods established in this Part with regard to energy transition property.
C. The intent of this Part is to provide benefits to Louisiana ratepayers by allowing a Louisiana electric utility, if authorized by a financing order, to achieve certain tax and credit benefits of financing energy transition costs. This Part does not in any way limit, impair, or impact the commission's plenary jurisdiction over the rates charged and services rendered by public utilities in this state. Instead, this Part addresses certain property, security interest, and other matters to ensure that the financial and federal income tax benefits of financing energy transition costs through securitization are available in this state. The beneficial income tax and credit characteristics that may be achieved include the following:
(1) Treating the energy transition bonds as debt of the electric utility for income tax purposes.
(2) Treating the energy transition charges as gross income to the electric utility recognized under the utility's usual method of accounting for federal and state income tax purposes, rather than recognizing gross income upon the receipt of the financing order or of cash in exchange for the sale of the energy transition property or the issuance of the energy transition bonds.
(3) Avoiding the recognition of debt on the electric utility's balance sheet for certain credit and regulatory purposes by reason of the energy transition bonds.
(4) Treating the sale, assignment, or transfer of the energy transition property by the electric utility as a true sale for state law and bankruptcy purposes.
(5) Mitigating any adverse impact of the financing on the electric utility's credit rating.
D. This Part does not impose fees or energy transition charges, but instead only authorizes the commission to approve energy transition charges in its discretion.
Acts 2022, No. 255, §2, eff. June 3, 2022.