848.1
. (a) No later than 120 days after the effective date of this
article, and from time to time thereafter, the recovery corporation
shall apply to the commission for a determination that some or all of
the recovery corporation's recovery costs may be recovered through
fixed recovery amounts, which would be recovery property under this
article, and that any portion of the recovery corporation's federal
and State of California income and franchise taxes associated with
those fixed recovery amounts and not financed from proceeds of
recovery bonds be recovered through fixed recovery tax amounts. The
recovery corporation may request this determination by the commission
in a separate proceeding or in an existing proceeding, or both. The
recovery corporation shall in its application specify that consumers
within its service territory would benefit from reduced rates on a
present value basis through the issuance of recovery bonds. The
commission shall designate fixed recovery amounts and any associated
fixed recovery tax amounts as recoverable in one or more financing
orders if the commission determines, as part of its findings in
connection with the financing order, that the designation of the
fixed recovery amounts and any associated fixed recovery tax amounts,
and the issuance of recovery bonds in connection with fixed recovery
amounts, would reduce the rates on a present value basis that
consumers within the recovery corporation's service territory would
pay if the financing order were not adopted. Fixed recovery amounts
and any associated fixed recovery tax amounts shall only be imposed
on existing and future consumers in the service territory. Consumers
within the service territory shall continue to pay fixed recovery
amounts and any associated fixed tax recovery amounts until the
recovery bonds are paid in full by the financing entity. Once the
recovery bonds have been paid in full, the payment by consumers of
fixed recovery amounts and fixed recovery tax amounts shall
terminate.
(b) The commission shall establish an effective mechanism that
ensures recovery of recovery costs through fixed recovery amounts and
any associated fixed recovery tax amounts from existing and future
consumers in the service territory, provided that the costs shall not
be recoverable from any of the following:
(1) New load or incremental load of an existing consumer of the
recovery corporation where the load is being met through a direct
transaction and the transaction does not require the use of
transmission or distribution facilities owned by the recovery
corporation.
(2) Customer Generation departing load that is exempt from
Department of Water Resources power charges pursuant to the
commission's Decision No. 03-04-030, as modified by Decision No.
03-04-041, and as clarified and affirmed by Decision No. 03-05-039,
except that the load shall pay the costs as a component of and in
proportion to any purchase of electricity delivered by the recovery
corporation under standby or other service made following its
departure.
(3) The Department of Water Resources, with respect to the
pumping, generation, and transmission facilities and operations of
the State Water Resources Development System, except to the extent
that system facilities receive electric service from the recovery
corporation on or after December 19, 2003, under a commission
approved tariff.
(4) Retail electric load, continuously served by a local publicly
owned electric utility from January 1, 2000, through the effective
date of the act adding this section.
(5) Load that thereafter comes to take electric service from a
city where all the following conditions are met:
(A) The new load is from locations that never received electric
service from the recovery corporation.
(B) The city owns and operates the local publicly owned electric
utility.
(C) The local publicly owned electric utility served more than 95
percent of the customers receiving electric service residing within
the city limits prior to December 19, 2003.
(D) The city annexed the territory in which the load is located on
or after December 19, 2003.
(E) Following annexation, the city provides all municipal services
to the annexed territory that the city provides to other territory
within the city limits, including electric service.
(F) The total load exempt from paying fixed recovery amounts and
associated fixed recovery tax amounts pursuant to subparagraphs (A)
through (D), inclusive, does not exceed 50 megawatts, as determined
by the commission, and any load above the 50 megawatt exemption
amount shall be responsible for paying recovery amounts and
associated fixed recovery tax amounts, except as provided in
subdivision (c).
(c) Except as provided in paragraphs (4) and (5) of subdivision
(b), the commission shall determine the extent to which fixed
recovery amounts and any associated fixed recovery tax amounts are
recoverable from new municipal load, consistent with the commission's
determination in the limited rehearing granted in Decision
03-08-076. The determination of the commission shall be made on the
earlier of the date it adopts a financing order or December 31, 2004.
(d) Except as provided in paragraphs (4) and (5) of subdivision
(b) and in subdivision (c), the obligation to pay fixed recovery
amounts and any associated fixed recovery tax amounts cannot be
avoided by the formation of a local publicly owned electric utility
on or after December 19, 2003, or by annexation of any portion of the
service territory of the recovery corporation by an existing local
publicly owned electric utility.
(e) Recovery bonds authorized by the commission's financing orders
may be issued in one or more series on or before December 31, 2006.
(f) The commission may issue financing orders in accordance with
this article to facilitate the recovery, financing, or refinancing of
recovery costs. A financing order may be adopted only upon the
application of the recovery corporation and shall become effective in
accordance with its terms only after the recovery corporation files
with the commission the recovery corporation's written consent to all
terms and conditions of the financing order. A financing order may
specify how amounts collected from a consumer shall be allocated
between fixed recovery amounts, any associated fixed recovery tax
amounts, and other charges.
(g) Notwithstanding Section 455.5 or 1708, or any other provision
of law, except as otherwise provided in Section 848.7 or in this
subdivision with respect to recovery property that has been made the
basis for the issuance of recovery bonds and with respect to any
associated fixed recovery tax amounts, the financing order, the fixed
recovery amounts and any associated fixed recovery tax amounts shall
be irrevocable, and the commission shall not have authority either
by rescinding, altering, or amending the financing order or
otherwise, to revalue or revise for ratemaking purposes, the recovery
costs or the costs of recovering, financing, or refinancing the
recovery costs, determine that the fixed recovery amounts, any
associated fixed recovery tax amounts or rates are unjust or
unreasonable, or in any way reduce or impair the value of recovery
property or of the right to receive any associated fixed recovery tax
amounts either directly or indirectly by taking fixed recovery
amounts or any associated fixed recovery tax amounts into account
when setting other rates for the recovery corporation or when setting
charges for the Department of Water Resources; nor shall the amount
of revenues arising with respect thereto be subject to reduction,
impairment, postponement, or termination. Except as otherwise
provided in this subdivision, the State of California does hereby
pledge and agree with the recovery corporation, owners of recovery
property, and holders of recovery bonds that the state shall neither
limit nor alter the fixed recovery amounts, any associated fixed
recovery tax amounts, recovery property, financing orders, or any
rights thereunder until the recovery bonds, together with the
interest thereon, are fully paid and discharged, and any associated
fixed recovery tax amounts have been satisfied or, in the
alternative, have been refinanced through an additional issue of
recovery bonds; provided nothing contained in this section shall
preclude the limitation or alteration if and when adequate provision
shall be made by law for the protection of the recovery corporation,
owners, and holders. The financing entity is authorized to include
this pledge and undertaking for the state in these recovery bonds.
Notwithstanding any other provision of this section, the commission
shall approve adjustments to the fixed recovery amounts and any
associated fixed recovery tax amounts as may be necessary to ensure
timely recovery of all recovery costs that are the subject of the
pertinent financing order, and the costs of capital associated with
the recovery, financing, or refinancing thereof, including servicing
and retiring the recovery bonds contemplated by the financing order.
When setting other rates for the recovery corporation, nothing in
this subdivision shall prevent the commission from taking into
account either of the following:
(1) Any collection of fixed recovery amounts in excess of amounts
actually required to pay recovery costs financed or refinanced by
recovery bonds.
(2) Any collection of fixed recovery tax amounts in excess of
amounts actually required to pay federal and State of California
income and franchise taxes associated with fixed recovery amounts;
provided that this would not result in a recharacterization of the
tax, accounting, and other intended characteristics of the financing,
including, but not limited to, either of the following:
(A) Treating the recovery bonds as debt of the recovery
corporation or its affiliates for federal income tax purposes.
(B) Treating the transfer of the recovery property by the recovery
corporation as a true sale for bankruptcy purposes.
(h) (1) Financing orders issued under this article do not
constitute a debt or liability of the state or of any political
subdivision thereof, and do not constitute a pledge of the full faith
and credit of the state or any of its political subdivisions, but
are payable solely from the funds provided therefor under this
article and shall be consistent with Sections 1 and 18 of Article XVI
of the California Constitution. This subdivision shall in no way
preclude bond guarantees or enhancements pursuant to this article.
All recovery bonds shall contain on the face thereof a statement to
the following effect: "Neither the full faith and credit nor the
taxing power of the State of California is pledged to the payment of
the principal of, or interest on, this bond."
(2) The issuance of recovery bonds under this article shall not
directly, indirectly, or contingently obligate the state or any
political subdivision thereof to levy or to pledge any form of
taxation therefor or to make any appropriation for their payment.
(i) The commission shall establish procedures for the expeditious
processing of applications for financing orders, including the
approval or disapproval thereof within 120 days of the recovery
corporation making application therefor. The commission shall provide
in any financing order for a procedure for the expeditious approval
by the commission of periodic adjustments to the fixed recovery
amounts and any associated fixed recovery tax amounts that are the
subject of the pertinent financing order, as required by subdivision
(g). The procedure shall require the commission to determine whether
the adjustments are required on each anniversary of the issuance of
the financing order, and at the additional intervals as may be
provided for in the financing order, and for the adjustments, if
required, to be approved within 90 days of each anniversary of the
issuance of the financing order, or of each additional interval
provided for in the financing order.
(j) Fixed recovery amounts are recovery property when, and to the
extent that, a financing order authorizing the fixed recovery amounts
has become effective in accordance with this article, and the
recovery property shall thereafter continuously exist as property for
all purposes with all of the rights and privileges of this article
for the period and to the extent provided in the financing order, but
in any event until the recovery bonds are paid in full, including
all principal, interest, premium, costs, and arrearages thereon.
(k) This article and any financing order made pursuant to this
article do not amend, reduce, modify, or otherwise affect the right
of the Department of Water Resources to recover its revenue
requirements and to receive the charges that it is to recover and
receive pursuant to Division 27 (commencing with Section 80000) of
the Water Code, or pursuant to any agreement entered into by the
commission and the Department of Water Resources pursuant to that
division.