841
. (a) An electrical corporation shall, by June 1, 1997, and may
from time to time thereafter apply to the commission for a
determination that certain transition costs may be recovered through
fixed transition amounts, which would therefore constitute transition
property under this article. An electrical corporation may request
this determination by the commission in separate proceedings or in an
order instituting investigation or order instituting rulemaking, or
both. The electrical corporation shall in its application specify
that the residential and small commercial customers as defined in
subdivision (h) of Section 331 would benefit from reduced rates
through the issuance of rate reduction bonds. The commission shall
designate fixed transition 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 transition amounts, and issuance of rate reduction
bonds in connection with some or all of the fixed transition amounts
would reduce rates that residential and small commercial customers
would have paid if the financing order were not adopted. These
customers shall continue to pay fixed transition amounts after
December 31, 2001, until the bonds are paid in full by the financing
entity. No electrical corporation shall be found to have acted
imprudently or unreasonably for failing to amend a power purchase
contract where the amendment would modify or waive an existing
requirement that the seller be a qualifying facility pursuant to
federal law.
(b) The commission may issue financing orders in accordance with
this article to facilitate the provision, recovery, financing, or
refinancing of transition costs. A financing order may be adopted
only upon the application of an electrical corporation and shall
become effective in accordance with its terms only after the
electrical corporation files with the commission the electrical
corporation's written consent to all terms and conditions of the
financing order. A financing order may specify how amounts collected
from a customer shall be allocated between fixed transition amounts
and other charges.
(c) Notwithstanding Section 455.5, Section 1708, or any other
provision of law, except as otherwise provided in this subdivision
with respect to transition property that has been made the basis for
the issuance of rate reduction bonds, the financing orders and the
fixed transition 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 transition costs, or the costs of providing,
recovering, financing, or refinancing the transition costs, determine
that the fixed transition amounts or rates are unjust or
unreasonable, or in any way reduce or impair the value of transition
property either directly or indirectly by taking fixed transition
amounts into account when setting other rates for the electrical
corporation; 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 owners of
transition property and holders of rate reduction bonds that the
state shall neither limit nor alter the fixed transition amounts,
transition property, financing orders, and all rights thereunder
until the obligations, together with the interest thereon, are fully
met and discharged, 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 owners and holders.
The bank as agent for the state is authorized to include this pledge
and undertaking for the state in these obligations. Notwithstanding
any other provision of this section, the commission shall approve the
adjustments to the fixed transition amounts as may be necessary to
ensure timely recovery of all transition costs that are the subject
of the pertinent financing order, and the costs of capital associated
with the provision, recovery, financing, or refinancing thereof,
including the costs of issuing, servicing, and retiring the rate
reduction bonds contemplated by the financing order. The adjustments
shall not impose fixed transition amounts upon classes of customers
who were not subject to the fixed transition amounts in the pertinent
financing order.
(d) (1) Financing orders issued under this article do not
constitute a debt or liability of the state or of any political
subdivision thereof, other than the financing entity, and do not
constitute a pledge of the full faith and credit of the state or any
of its political subdivisions, other than the financing entity, 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 the 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 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. Nothing in
this section shall prevent, or be construed to prevent, the financing
entity from pledging the full faith and credit of the infrastructure
bank fund to the payment of bonds or issuance of bonds authorized
pursuant to this article.
(e) 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 electrical
corporation's 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
transition amounts that are the subject of the pertinent financing
order, as required by subdivision (c). 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.
(f) Fixed transition amounts shall constitute transition property
when, and to the extent that, a financing order authorizing the fixed
transition amounts has become effective in accordance with this
article, and the transition 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 rate reduction
bonds are paid in full, including all principal, interest, premium,
costs, and arrearages thereon.
(g) Any surplus fixed transition amounts 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 residential and small
commercial 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 electrical corporation'
s balance sheet for financial accounting and regulatory purposes.
(2) Treating the rate reduction bonds as debt of the electrical
corporation or its affiliates for federal income tax purposes.
(3) Treating the transfer of the transition property by the
electrical corporation as a true sale for bankruptcy purposes.
(4) Avoiding any adverse impact of the financing on the electrical
corporation's credit rating.