CHAPTER 8.9. FINANCING OF SUBSTITUTE NATURAL GAS COSTS
IC 8-1-8.9
Chapter 8.9. Financing of Substitute Natural Gas Costs
IC 8-1-8.9-1
"Assignee" defined
Sec. 1. (a) As used in this chapter, "assignee" means any
individual, corporation, or other legal entity to which an SNG
property interest is transferred.
(b) The term includes an assignee of a person described in
subsection (a).
As added by P.L.175-2007, SEC.21.
IC 8-1-8.9-2
"Commission" defined
Sec. 2. As used in this chapter, "commission" refers to the Indiana
utility regulatory commission created by IC 8-1-1-2.
As added by P.L.175-2007, SEC.21.
IC 8-1-8.9-3
"Energy utility" defined
Sec. 3. As used in this chapter, "energy utility" has the meaning
set forth in IC 8-1-2.5-2.
As added by P.L.175-2007, SEC.21.
IC 8-1-8.9-4
"Financing entity" defined
Sec. 4. As used in this chapter, "financing entity" means a person
that provides:
(1) equity financing; or
(2) debt financing;
that is secured by an SNG property interest.
As added by P.L.175-2007, SEC.21.
IC 8-1-8.9-5
"Qualified contract" defined
Sec. 5. As used in this chapter, "qualified contract" means a
contract with a term of at least thirty (30) years for the sale of
substitute natural gas to an energy utility.
As added by P.L.175-2007, SEC.21.
IC 8-1-8.9-6
"Qualified cost" defined
Sec. 6. As used in this chapter, "qualified cost" means any cost
incurred by an energy utility in purchasing substitute natural gas
under a qualified contract.
As added by P.L.175-2007, SEC.21.
IC 8-1-8.9-7
"Qualified order" defined
Sec. 7. As used in this chapter, "qualified order" means a final and
irrevocable order that:
(1) is issued by the commission; and
(2) approves a qualified contract adopted in accordance with
this chapter and IC 8-1-2-42.1.
As added by P.L.175-2007, SEC.21.
IC 8-1-8.9-8
"Substitute natural gas" defined
Sec. 8. As used in this chapter, "substitute natural gas" or "SNG"
has the meaning set forth in IC 8-1-2-42.1(a).
As added by P.L.175-2007, SEC.21.
IC 8-1-8.9-9
"SNG property interest" defined
Sec. 9. As used in this chapter, "SNG property interest" means the
right, title, and interest that:
(1) are held by an energy utility or its assignee;
(2) are created by a qualified order; and
(3) entitle the energy utility or its assignee to recover qualified
costs under IC 8-1-2-42.1.
As added by P.L.175-2007, SEC.21.
IC 8-1-8.9-10
"SNG seller" defined
Sec. 10. As used in this chapter, "SNG seller" means any
individual, corporation, or other legal entity that engages in the
production and sale of substitute natural gas.
As added by P.L.175-2007, SEC.21.
IC 8-1-8.9-11
Qualified order for cost recovery
Sec. 11. (a) Notwithstanding any other law, the commission may,
in accordance with this chapter and IC 8-1-2-42.1, issue a qualified
order that:
(1) approves the terms of a qualified contract; and
(2) authorizes the recovery of qualified costs by an energy
utility from its customers.
(b) A qualified order issued under this section may not be:
(1) rescinded;
(2) nullified; or
(3) modified;
in such a manner that reduces or otherwise impairs the value of an
SNG property interest.
As added by P.L.175-2007, SEC.21.
IC 8-1-8.9-12
SNG property interest; property rights
Sec. 12. (a) An SNG property interest, including any right to
future purchases of substitute natural gas during the term of a
qualified contract, constitutes a present property right.
(b) Qualified costs recovered by an energy utility under a
qualified order constitute proceeds of only the SNG property interest
that is created by the qualified order.
(c) If the commission issues a qualified order under section 11 of
this chapter, the state covenants and agrees, for the benefit of the
energy utility and any assignee or financing entity involved, that the
state will not take or permit any action that would:
(1) reduce or otherwise impair the value of the SNG property
interest created by the qualified order; or
(2) limit, alter, or impair:
(A) the qualified order;
(B) the SNG property interest created by the qualified order;
or
(C) qualified costs that are:
(i) imposed on and collected by the energy utility; and
(ii) remitted to the SNG seller;
under the terms of the qualified contract;
until the qualified contract has been performed in full.
As added by P.L.175-2007, SEC.21.
IC 8-1-8.9-13
SNG property interest; assignability
Sec. 13. (a) An energy utility may assign an SNG property interest
to an assignee, including:
(1) another party to the qualified contract; or
(2) a financing entity.
An assignee may in turn assign an SNG property interest to a
financing entity that provides financing to the assignee.
(b) An assignment to a financing entity under this section may be:
(1) an absolute assignment of the SNG property interest; or
(2) an assignment of the SNG property interest as collateral for
an obligation owed to the financing entity.
(c) An assignee under this section may enforce the SNG property
interest by all applicable legal and equitable means.
(d) Any amounts collected by an energy utility in connection with
the sale, transfer, or disposition of substitute natural gas under a
qualified contract that forms the basis of an SNG property interest
assigned under this section constitute the property of the assignee.
Pending the transfer of the SNG property interest to the assignee, the
amounts described in this subsection shall be:
(1) segregated by the energy utility; and
(2) held in trust for the benefit of the assignee;
subject to the terms of the qualified contract that forms the basis of
the SNG property interest that is being assigned.
As added by P.L.175-2007, SEC.21.
IC 8-1-8.9-14
SNG property interest; bankruptcy setoff
Sec. 14. The interests of an assignee in:
(1) an SNG property interest transferred to the assignee under
section 13 of this chapter; and
(2) any revenues or collections arising from the SNG property
interest transferred;
are not subject to setoff by the energy utility that transferred the SNG
property interest, or by any other person, in connection with any
bankruptcy proceeding involving the energy utility.
As added by P.L.175-2007, SEC.21.
IC 8-1-8.9-15
SNG property interest; true sale
Sec. 15. (a) If an agreement by an energy utility or an assignee to
assign an SNG property interest expressly states that the assignment
is a sale or is otherwise an absolute transfer:
(1) the resulting transaction:
(A) is a true sale; and
(B) is not a secured transaction; and
(2) title, both legal and equitable, passes to the person to which
the SNG property interest is assigned.
(b) A transaction resulting from an agreement described in
subsection (a) is a true sale regardless of whether:
(1) the assignee has recourse against the assignor; or
(2) the agreement provides for any of the following:
(A) The assignor's retention of an equity interest in the SNG
property interest transferred.
(B) Continuing obligations of the energy utility under the
qualified contract, including the obligation of the energy
utility to serve as the collector of qualified costs.
(C) The treatment of the transfer as a financing for tax,
financial reporting, or other purposes.
As added by P.L.175-2007, SEC.21.
IC 8-1-8.9-16
SNG property interest; security interests
Sec. 16. (a) An SNG property interest does not constitute an
account or a general intangible under IC 26-1-9.1-102. The creation,
granting, perfection, and enforcement of liens and security interests
in SNG property interests are governed by this chapter and not by
IC 26-1-9.1.
(b) A valid and enforceable lien and security interest in an SNG
property interest may be created only by the execution and delivery
of a security agreement with a financing entity in connection with the
issuance of indebtedness. The security interest attaches automatically
from the time that value is received for the indebtedness secured by
the SNG property interest and, upon perfection through the filing of
notice with the secretary of state:
(1) constitutes a continuously perfected lien and security
interest in the SNG property interest and all proceeds of the
SNG property interest, whether or not accrued;
(2) has priority in the order of its filing; and
(3) takes precedence over any subsequent judicial lien or other
creditor's lien.
If notice is filed with the secretary of state not later than ten (10)
days after value is received for the indebtedness, the security interest
is perfected retroactive to the date the value was received. If notice
is not filed with the secretary of state within ten (10) days after value
is received for the indebtedness, the security interest is perfected as
of the date of filing.
(c) Transfer of an SNG property interest to an assignee is
perfected against all third parties, including subsequent judicial or
other lien creditors, upon:
(1) the delivery of transfer documents to the assignee; and
(2) the filing of notice with the secretary of state in accordance
with subsection (b).
However, if notice of the transfer is not filed with the secretary of
state within ten (10) days after the delivery of the transfer
documentation, the transfer of the SNG property interest is not
perfected against third parties until the notice is filed.
(d) The priority of a lien and security interest under this section
is not impaired by either of the following:
(1) A later modification of the qualified order creating the SNG
property interest being transferred.
(2) The commingling of other funds with funds collected in
connection with a qualified contract. Any other security interest
that may apply to funds collected in connection with a qualified
contract terminates when the funds are transferred to a
segregated account for the benefit of the assignee or a financing
entity. If an SNG property interest has been transferred to an
assignee, any proceeds from the SNG property interest shall be
held in trust for the assignee.
(e) If a default or termination occurs in connection with a
financing secured by an SNG property interest, the financing entity
or its representative may foreclose on or otherwise enforce its lien
and security interest in the SNG property interest as if the financing
entity were a secured party under IC 26-1-9.1. Amounts arising from
the qualified contract that is the basis of the SNG property interest
shall be transferred to a separate account for the financing entity's
benefit and are subject to the financing entity's security interest and
lien.
As added by P.L.175-2007, SEC.21.
IC 8-1-8.9-17
SNG property interest; status of parties to transaction
Sec. 17. An assignee or a financing party is not considered an
energy utility solely by virtue of its participation in any transaction
described in this chapter.
As added by P.L.175-2007, SEC.21.
IC 8-1-8.9-18
SNG property interest; successor obligations
Sec. 18. Any entity that becomes a successor to an energy utility
as the result of:
(1) any bankruptcy, reorganization, or other insolvency
proceeding;
(2) any merger, sale, or transfer involving the energy utility; or
(3) the operation of law;
or for any other reason, shall perform and satisfy any obligations of
the energy utility incurred under this chapter in the same manner and
to the same extent as the energy utility would have been obligated to
perform, including the obligation to pay to an assignee any funds
collected by the energy utility in connection with the SNG property
interest assigned to the assignee.
As added by P.L.175-2007, SEC.21.
IC 8-1-8.9-19
SNG property interest; SNG seller contract with energy utility
Sec. 19. An SNG seller that is an assignee may contract with the
energy utility, in the qualified contract or in another contract, for the
performance of services related to the sale of substitute natural gas
under the qualified contract, including:
(1) the transportation and distribution of substitute natural gas;
and
(2) billing, collection, and other related services;
according to terms and conditions that reasonably compensate the
energy utility for its services and adequately secure payment to the
SNG seller.
As added by P.L.175-2007, SEC.21.
IC 8-1-8.9-20
SNG property interest; SNG seller rights
Sec. 20. If an energy utility makes a true sale of an SNG property
interest to an SNG seller under section 15 of this chapter, the SNG
seller:
(1) retains title to all substitute natural gas distributed by the
energy utility to the energy utility's retail end use customers;
(2) is entitled to all amounts collected by the energy utility from
its retail end use customers for the distribution of the substitute
natural gas, subject to the terms of the qualified contract; and
(3) has the same rights to payments made by the energy utility's
retail end use customers as does the energy utility that provides
the substitute natural gas to those customers.
As added by P.L.175-2007, SEC.21.