Sec. 16-245h. Transition property. Surplus competitive transition assessment. Restrictions on use of transition property by electric or electric distribution companies.
Sec. 16-245h. Transition property. Surplus competitive transition assessment. Restrictions on use of transition property by electric or electric distribution
companies. (a) The competitive transition assessment described in subparagraph (A)
of subdivision (2) of subsection (a) of section 16-245e shall constitute transition property
when, and to the extent that, a financing order authorizing such portion of the competitive
transition assessment has become effective in accordance with sections 16-245e to 16-245k, inclusive, and the transition property shall thereafter continuously exist as property for all purposes with all of the rights and privileges of sections 16-245e to 16-245k,
inclusive, for the period and to the extent provided in the financing order, but in any
event until the rate reduction bonds are paid in full, including all principal, interest,
premium, costs, and arrearages on such bonds. Prior to its sale or other transfer by the
electric company or electric distribution company pursuant to sections 16-245e to 16-245k, inclusive, transition property, other than transition property in respect of disbursements to the General Fund to sustain funding of conservation and load management and
renewable energy investment programs, shall be a vested contract right of the electric
company or electric distribution company, notwithstanding any contrary treatment
thereof for accounting, tax, or other purpose. Transition property in respect of disbursements to the General Fund to sustain funding of conservation and load management and
renewable energy investment programs shall immediately upon its creation vest solely
in the financing entity. The electric company or electric distribution company shall have
no right, title or interest in transition property in respect of disbursements to the General
Fund to sustain funding of conservation and load management and renewable energy
investment programs, and in respect of such transition property shall be only a collection
agent on behalf of the financing entity.
(b) Any surplus competitive transition assessment described in subparagraph (A)
of subdivision (2) of subsection (a) of section 16-245e in excess of the amounts necessary
to pay principal, premium, if any, interest and expenses of the issuance of the rate reduction bonds shall be remitted to the financing entity and may be used to benefit customers
if this would not result in a recharacterization of the tax, accounting, and other intended
characteristics of the financing, including, but not limited to, the following:
(1) Avoiding the recognition of debt on the electric company's or the electric distribution company's balance sheet for financial accounting and regulatory purposes;
(2) Treating the rate reduction bonds as debt of the electric company or electric
distribution company or its affiliates for federal income tax purposes;
(3) Treating the transfer of the transition property by the electric company or electric
distribution company as a true sale for bankruptcy purposes; or
(4) Avoiding any adverse impact of the financing on the credit rating of the rate
reduction bonds or the electric company or electric distribution company.
(c) Electric companies and electric distribution companies may sell and assign all
or portions of their interest in transition property to an affiliate. Electric companies and
electric distribution companies or their affiliates may sell or assign their interests to one
or more financing entities that make that property the basis for issuance of rate reduction
bonds to the extent approved in the pertinent financing orders. Electric companies, electric distribution companies, their affiliates, or financing entities may pledge transition
property as collateral, directly or indirectly, for rate reduction bonds to the extent approved in the pertinent financing orders providing for a security interest in the transition
property, in the manner as set forth in section 16-245k. In addition, transition property
may be sold or assigned by (1) the financing entity or a trustee for the holders of rate
reduction bonds in connection with the exercise of remedies upon a default, or (2) any
person acquiring the transition property after a sale or assignment pursuant to this subsection.
(d) To the extent that any interest in transition property is so sold or assigned, or is
so pledged as collateral, the department shall authorize the electric company or electric
distribution company to contract with the financing entity that it will continue to operate
its system to provide service to its customers, will collect amounts in respect of the
competitive transition assessment for the benefit and account of the financing entity,
and will account for and remit these amounts to or for the account of the financing entity.
Contracting with the financing entity in accordance with that authorization shall not
impair or negate the characterization of the sale, assignment, or pledge as an absolute
transfer, a true sale, or security interest, as applicable.
(P.A. 98-28, S. 11, 117; Sept. 8 Sp. Sess. P.A. 03-1, S. 5; P.A. 04-180, S. 2.)
History: P.A. 98-28 effective July 1, 1998; Sept. 8 Sp. Sess. P.A. 03-1 amended Subsec. (a) to add provisions re transition
property in respect of disbursements to the General Fund, effective September 10, 2003; P.A. 04-180 amended Subsec.
(a) to make technical changes and to replace "described in this subsection" with "in respect of disbursements to the General
Fund to sustain funding of conservation and load management and renewable energy investment programs", effective June
1, 2004.