As Passed by the Senate

129th General Assembly Regular Session 2011-2012

Am. Sub. H. B. No. 364

Representatives Roegner, Duffey 

Cosponsors: Representatives Blessing, Hill, Stebelton, Thompson, Stautberg, Martin, Hagan, C., Adams, R., Anielski, Antonio, Blair, Bubp, Buchy, Carney, DeGeeter, Dovilla, Fende, Garland, Gonzales, Goyal, Grossman, Hackett, Hall, Hollington, Johnson, Letson, Lundy, McClain, McGregor, Milkovich, Murray, Newbold, O'Brien, Slaby, Stinziano, Terhar, Williams, Young, Yuko Speaker Batchelder 

Senators Bacon, Balderson, Beagle, Brown, Coley, Daniels, Eklund, Faber, Gentile, Hite, Hughes, Jones, LaRose, Lehner, Patton, Sawyer, Schaffer, Schiavoni, Seitz, Smith, Tavares, Turner, Wagoner, Widener 

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A BILL

To amend sections 4928.143 and 4928.20 and to enact

1

sections 4928.23, 4928.231, 4928.232, 4928.233,

2

4928.234, 4928.235, 4928.236, 4928.237, 4928.238,

3

4928.239, 4928.2310, 4928.2311, 4928.2312,

4

4928.2313, 4928.2314, 4928.2315, 4928.2316,

5

4928.2317, and 4928.2318 of the Revised Code to

6

establish standards for the securitization of

7

costs for electric distribution utilities.

8

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That sections 4928.143 and 4928.20 be amended and	9
sections 4928.23, 4928.231, 4928.232, 4928.233, 4928.234,	10
4928.235, 4928.236, 4928.237, 4928.238, 4928.239, 4928.2310,	11
4928.2311, 4928.2312, 4928.2313, 4928.2314, 4928.2315, 4928.2316,	12
4928.2317, and 4928.2318 of the Revised Code be enacted to read as	13
follows:	14

Sec. 4928.143. (A) For the purpose of complying with section	15
4928.141 of the Revised Code, an electric distribution utility may	16
file an application for public utilities commission approval of an	17
electric security plan as prescribed under division (B) of this	18
section. The utility may file that application prior to the	19
effective date of any rules the commission may adopt for the	20
purpose of this section, and, as the commission determines	21
necessary, the utility immediately shall conform its filing to	22
those rules upon their taking effect.	23

(B) Notwithstanding any other provision of Title XLIX of the	24
Revised Code to the contrary except division (D) of this section,	25
divisions (I), (J), and (K) of section 4928.20, division (E) of	26
section 4928.64, and section 4928.69 of the Revised Code:	27

(1) An electric security plan shall include provisions	28
relating to the supply and pricing of electric generation service.	29
In addition, if the proposed electric security plan has a term	30
longer than three years, it may include provisions in the plan to	31
permit the commission to test the plan pursuant to division (E) of	32
this section and any transitional conditions that should be	33
adopted by the commission if the commission terminates the plan as	34
authorized under that division.	35

(2) The plan may provide for or include, without limitation,	36
any of the following:	37

(a) Automatic recovery of any of the following costs of the	38
electric distribution utility, provided the cost is prudently	39
incurred: the cost of fuel used to generate the electricity	40
supplied under the offer; the cost of purchased power supplied	41
under the offer, including the cost of energy and capacity, and	42
including purchased power acquired from an affiliate; the cost of	43
emission allowances; and the cost of federally mandated carbon or	44
energy taxes;	45

(b) A reasonable allowance for construction work in progress	46
for any of the electric distribution utility's cost of	47
constructing an electric generating facility or for an	48
environmental expenditure for any electric generating facility of	49
the electric distribution utility, provided the cost is incurred	50
or the expenditure occurs on or after January 1, 2009. Any such	51
allowance shall be subject to the construction work in progress	52
allowance limitations of division (A) of section 4909.15 of the	53
Revised Code, except that the commission may authorize such an	54
allowance upon the incurrence of the cost or occurrence of the	55
expenditure. No such allowance for generating facility	56
construction shall be authorized, however, unless the commission	57
first determines in the proceeding that there is need for the	58
facility based on resource planning projections submitted by the	59
electric distribution utility. Further, no such allowance shall be	60
authorized unless the facility's construction was sourced through	61
a competitive bid process, regarding which process the commission	62
may adopt rules. An allowance approved under division (B)(2)(b) of	63
this section shall be established as a nonbypassable surcharge for	64
the life of the facility.	65

(c) The establishment of a nonbypassable surcharge for the	66
life of an electric generating facility that is owned or operated	67
by the electric distribution utility, was sourced through a	68
competitive bid process subject to any such rules as the	69
commission adopts under division (B)(2)(b) of this section, and is	70
newly used and useful on or after January 1, 2009, which surcharge	71
shall cover all costs of the utility specified in the application,	72
excluding costs recovered through a surcharge under division	73
(B)(2)(b) of this section. However, no surcharge shall be	74
authorized unless the commission first determines in the	75
proceeding that there is need for the facility based on resource	76
planning projections submitted by the electric distribution	77
utility. Additionally, if a surcharge is authorized for a facility	78
pursuant to plan approval under division (C) of this section and	79
as a condition of the continuation of the surcharge, the electric	80
distribution utility shall dedicate to Ohio consumers the capacity	81
and energy and the rate associated with the cost of that facility.	82
Before the commission authorizes any surcharge pursuant to this	83
division, it may consider, as applicable, the effects of any	84
decommissioning, deratings, and retirements.	85

(d) Terms, conditions, or charges relating to limitations on	86
customer shopping for retail electric generation service,	87
bypassability, standby, back-up, or supplemental power service,	88
default service, carrying costs, amortization periods, and	89
accounting or deferrals, including future recovery of such	90
deferrals, as would have the effect of stabilizing or providing	91
certainty regarding retail electric service;	92

(e) Automatic increases or decreases in any component of the	93
standard service offer price;	94

(f) Consistent with sections 4928.23 to 4928.2318 of the	95
Revised Code, both of the following:	96

(i) Provisions for the electric distribution utility to	97
securitize any phase-in, inclusive of carrying charges, of the	98
utility's standard service offer price, which phase-in is	99
authorized in accordance with section 4928.144 of the Revised	100
Code; and provisions	101

(ii) Provisions for the recovery of the utility's cost of	102
securitization.	103

(g) Provisions relating to transmission, ancillary,	104
congestion, or any related service required for the standard	105
service offer, including provisions for the recovery of any cost	106
of such service that the electric distribution utility incurs on	107
or after that date pursuant to the standard service offer;	108

(h) Provisions regarding the utility's distribution service,	109
including, without limitation and notwithstanding any provision of	110
Title XLIX of the Revised Code to the contrary, provisions	111
regarding single issue ratemaking, a revenue decoupling mechanism	112
or any other incentive ratemaking, and provisions regarding	113
distribution infrastructure and modernization incentives for the	114
electric distribution utility. The latter may include a long-term	115
energy delivery infrastructure modernization plan for that utility	116
or any plan providing for the utility's recovery of costs,	117
including lost revenue, shared savings, and avoided costs, and a	118
just and reasonable rate of return on such infrastructure	119
modernization. As part of its determination as to whether to allow	120
in an electric distribution utility's electric security plan	121
inclusion of any provision described in division (B)(2)(h) of this	122
section, the commission shall examine the reliability of the	123
electric distribution utility's distribution system and ensure	124
that customers' and the electric distribution utility's	125
expectations are aligned and that the electric distribution	126
utility is placing sufficient emphasis on and dedicating	127
sufficient resources to the reliability of its distribution	128
system.	129

(i) Provisions under which the electric distribution utility	130
may implement economic development, job retention, and energy	131
efficiency programs, which provisions may allocate program costs	132
across all classes of customers of the utility and those of	133
electric distribution utilities in the same holding company	134
system.	135

(C)(1) The burden of proof in the proceeding shall be on the	136
electric distribution utility. The commission shall issue an order	137
under this division for an initial application under this section	138
not later than one hundred fifty days after the application's	139
filing date and, for any subsequent application by the utility	140
under this section, not later than two hundred seventy-five days	141
after the application's filing date. Subject to division (D) of	142
this section, the commission by order shall approve or modify and	143
approve an application filed under division (A) of this section if	144
it finds that the electric security plan so approved, including	145
its pricing and all other terms and conditions, including any	146
deferrals and any future recovery of deferrals, is more favorable	147
in the aggregate as compared to the expected results that would	148
otherwise apply under section 4928.142 of the Revised Code.	149
Additionally, if the commission so approves an application that	150
contains a surcharge under division (B)(2)(b) or (c) of this	151
section, the commission shall ensure that the benefits derived for	152
any purpose for which the surcharge is established are reserved	153
and made available to those that bear the surcharge. Otherwise,	154
the commission by order shall disapprove the application.	155

(2)(a) If the commission modifies and approves an application	156
under division (C)(1) of this section, the electric distribution	157
utility may withdraw the application, thereby terminating it, and	158
may file a new standard service offer under this section or a	159
standard service offer under section 4928.142 of the Revised Code.	160

(b) If the utility terminates an application pursuant to	161
division (C)(2)(a) of this section or if the commission	162
disapproves an application under division (C)(1) of this section,	163
the commission shall issue such order as is necessary to continue	164
the provisions, terms, and conditions of the utility's most recent	165
standard service offer, along with any expected increases or	166
decreases in fuel costs from those contained in that offer, until	167
a subsequent offer is authorized pursuant to this section or	168
section 4928.142 of the Revised Code, respectively.	169

(D) Regarding the rate plan requirement of division (A) of	170
section 4928.141 of the Revised Code, if an electric distribution	171
utility that has a rate plan that extends beyond December 31,	172
2008, files an application under this section for the purpose of	173
its compliance with division (A) of section 4928.141 of the	174
Revised Code, that rate plan and its terms and conditions are	175
hereby incorporated into its proposed electric security plan and	176
shall continue in effect until the date scheduled under the rate	177
plan for its expiration, and that portion of the electric security	178
plan shall not be subject to commission approval or disapproval	179
under division (C) of this section, and the earnings test provided	180
for in division (F) of this section shall not apply until after	181
the expiration of the rate plan. However, that utility may include	182
in its electric security plan under this section, and the	183
commission may approve, modify and approve, or disapprove subject	184
to division (C) of this section, provisions for the incremental	185
recovery or the deferral of any costs that are not being recovered	186
under the rate plan and that the utility incurs during that	187
continuation period to comply with section 4928.141, division (B)	188
of section 4928.64, or division (A) of section 4928.66 of the	189
Revised Code.	190

(E) If an electric security plan approved under division (C)	191
of this section, except one withdrawn by the utility as authorized	192
under that division, has a term, exclusive of phase-ins or	193
deferrals, that exceeds three years from the effective date of the	194
plan, the commission shall test the plan in the fourth year, and	195
if applicable, every fourth year thereafter, to determine whether	196
the plan, including its then-existing pricing and all other terms	197
and conditions, including any deferrals and any future recovery of	198
deferrals, continues to be more favorable in the aggregate and	199
during the remaining term of the plan as compared to the expected	200
results that would otherwise apply under section 4928.142 of the	201
Revised Code. The commission shall also determine the prospective	202
effect of the electric security plan to determine if that effect	203
is substantially likely to provide the electric distribution	204
utility with a return on common equity that is significantly in	205
excess of the return on common equity that is likely to be earned	206
by publicly traded companies, including utilities, that face	207
comparable business and financial risk, with such adjustments for	208
capital structure as may be appropriate. The burden of proof for	209
demonstrating that significantly excessive earnings will not occur	210
shall be on the electric distribution utility. If the test results	211
are in the negative or the commission finds that continuation of	212
the electric security plan will result in a return on equity that	213
is significantly in excess of the return on common equity that is	214
likely to be earned by publicly traded companies, including	215
utilities, that will face comparable business and financial risk,	216
with such adjustments for capital structure as may be appropriate,	217
during the balance of the plan, the commission may terminate the	218
electric security plan, but not until it shall have provided	219
interested parties with notice and an opportunity to be heard. The	220
commission may impose such conditions on the plan's termination as	221
it considers reasonable and necessary to accommodate the	222
transition from an approved plan to the more advantageous	223
alternative. In the event of an electric security plan's	224
termination pursuant to this division, the commission shall permit	225
the continued deferral and phase-in of any amounts that occurred	226
prior to that termination and the recovery of those amounts as	227
contemplated under that electric security plan.	228

(F) With regard to the provisions that are included in an	229
electric security plan under this section, the commission shall	230
consider, following the end of each annual period of the plan, if	231
any such adjustments resulted in excessive earnings as measured by	232
whether the earned return on common equity of the electric	233
distribution utility is significantly in excess of the return on	234
common equity that was earned during the same period by publicly	235
traded companies, including utilities, that face comparable	236
business and financial risk, with such adjustments for capital	237
structure as may be appropriate. Consideration also shall be given	238
to the capital requirements of future committed investments in	239
this state. The burden of proof for demonstrating that	240
significantly excessive earnings did not occur shall be on the	241
electric distribution utility. If the commission finds that such	242
adjustments, in the aggregate, did result in significantly	243
excessive earnings, it shall require the electric distribution	244
utility to return to consumers the amount of the excess by	245
prospective adjustments; provided that, upon making such	246
prospective adjustments, the electric distribution utility shall	247
have the right to terminate the plan and immediately file an	248
application pursuant to section 4928.142 of the Revised Code. Upon	249
termination of a plan under this division, rates shall be set on	250
the same basis as specified in division (C)(2)(b) of this section,	251
and the commission shall permit the continued deferral and	252
phase-in of any amounts that occurred prior to that termination	253
and the recovery of those amounts as contemplated under that	254
electric security plan. In making its determination of	255
significantly excessive earnings under this division, the	256
commission shall not consider, directly or indirectly, the	257
revenue, expenses, or earnings of any affiliate or parent company.	258

Sec. 4928.20.  (A) The legislative authority of a municipal	259
corporation may adopt an ordinance, or the board of township	260
trustees of a township or the board of county commissioners of a	261
county may adopt a resolution, under which, on or after the	262
starting date of competitive retail electric service, it may	263
aggregate in accordance with this section the retail electrical	264
loads located, respectively, within the municipal corporation,	265
township, or unincorporated area of the county and, for that	266
purpose, may enter into service agreements to facilitate for those	267
loads the sale and purchase of electricity. The legislative	268
authority or board also may exercise such authority jointly with	269
any other such legislative authority or board. For customers that	270
are not mercantile customers, an ordinance or resolution under	271
this division shall specify whether the aggregation will occur	272
only with the prior, affirmative consent of each person owning,	273
occupying, controlling, or using an electric load center proposed	274
to be aggregated or will occur automatically for all such persons	275
pursuant to the opt-out requirements of division (D) of this	276
section. The aggregation of mercantile customers shall occur only	277
with the prior, affirmative consent of each such person owning,	278
occupying, controlling, or using an electric load center proposed	279
to be aggregated. Nothing in this division, however, authorizes	280
the aggregation of the retail electric loads of an electric load	281
center, as defined in section 4933.81 of the Revised Code, that is	282
located in the certified territory of a nonprofit electric	283
supplier under sections 4933.81 to 4933.90 of the Revised Code or	284
an electric load center served by transmission or distribution	285
facilities of a municipal electric utility.	286

(B) If an ordinance or resolution adopted under division (A)	287
of this section specifies that aggregation of customers that are	288
not mercantile customers will occur automatically as described in	289
that division, the ordinance or resolution shall direct the board	290
of elections to submit the question of the authority to aggregate	291
to the electors of the respective municipal corporation, township,	292
or unincorporated area of a county at a special election on the	293
day of the next primary or general election in the municipal	294
corporation, township, or county. The legislative authority or	295
board shall certify a copy of the ordinance or resolution to the	296
board of elections not less than ninety days before the day of the	297
special election. No ordinance or resolution adopted under	298
division (A) of this section that provides for an election under	299
this division shall take effect unless approved by a majority of	300
the electors voting upon the ordinance or resolution at the	301
election held pursuant to this division.	302

(C) Upon the applicable requisite authority under divisions	303
(A) and (B) of this section, the legislative authority or board	304
shall develop a plan of operation and governance for the	305
aggregation program so authorized. Before adopting a plan under	306
this division, the legislative authority or board shall hold at	307
least two public hearings on the plan. Before the first hearing,	308
the legislative authority or board shall publish notice of the	309
hearings once a week for two consecutive weeks in a newspaper of	310
general circulation in the jurisdiction or as provided in section	311
7.16 of the Revised Code. The notice shall summarize the plan and	312
state the date, time, and location of each hearing.	313

(D) No legislative authority or board, pursuant to an	314
ordinance or resolution under divisions (A) and (B) of this	315
section that provides for automatic aggregation of customers that	316
are not mercantile customers as described in division (A) of this	317
section, shall aggregate the electrical load of any electric load	318
center located within its jurisdiction unless it in advance	319
clearly discloses to the person owning, occupying, controlling, or	320
using the load center that the person will be enrolled	321
automatically in the aggregation program and will remain so	322
enrolled unless the person affirmatively elects by a stated	323
procedure not to be so enrolled. The disclosure shall state	324
prominently the rates, charges, and other terms and conditions of	325
enrollment. The stated procedure shall allow any person enrolled	326
in the aggregation program the opportunity to opt out of the	327
program every three years, without paying a switching fee. Any	328
such person that opts out before the commencement of the	329
aggregation program pursuant to the stated procedure shall default	330
to the standard service offer provided under section 4928.14 or	331
division (D) of section 4928.35 of the Revised Code until the	332
person chooses an alternative supplier.	333

(E)(1) With respect to a governmental aggregation for a	334
municipal corporation that is authorized pursuant to divisions (A)	335
to (D) of this section, resolutions may be proposed by initiative	336
or referendum petitions in accordance with sections 731.28 to	337
731.41 of the Revised Code.	338

(2) With respect to a governmental aggregation for a township	339
or the unincorporated area of a county, which aggregation is	340
authorized pursuant to divisions (A) to (D) of this section,	341
resolutions may be proposed by initiative or referendum petitions	342
in accordance with sections 731.28 to 731.40 of the Revised Code,	343
except that:	344

(a) The petitions shall be filed, respectively, with the	345
township fiscal officer or the board of county commissioners, who	346
shall perform those duties imposed under those sections upon the	347
city auditor or village clerk.	348

(b) The petitions shall contain the signatures of not less	349
than ten per cent of the total number of electors in,	350
respectively, the township or the unincorporated area of the	351
county who voted for the office of governor at the preceding	352
general election for that office in that area.	353

(F) A governmental aggregator under division (A) of this	354
section is not a public utility engaging in the wholesale purchase	355
and resale of electricity, and provision of the aggregated service	356
is not a wholesale utility transaction. A governmental aggregator	357
shall be subject to supervision and regulation by the public	358
utilities commission only to the extent of any competitive retail	359
electric service it provides and commission authority under this	360
chapter.	361

(G) This section does not apply in the case of a municipal	362
corporation that supplies such aggregated service to electric load	363
centers to which its municipal electric utility also supplies a	364
noncompetitive retail electric service through transmission or	365
distribution facilities the utility singly or jointly owns or	366
operates.	367

(H) A governmental aggregator shall not include in its	368
aggregation the accounts of any of the following:	369

(1) A customer that has opted out of the aggregation;

370

(2) A customer in contract with a certified electric services	371
company;	372

(3) A customer that has a special contract with an electric	373
distribution utility;	374

(4) A customer that is not located within the governmental	375
aggregator's governmental boundaries;	376

(5) Subject to division (C) of section 4928.21 of the Revised	377
Code, a customer who appears on the "do not aggregate" list	378
maintained under that section.	379

(I) Customers that are part of a governmental aggregation	380
under this section shall be responsible only for such portion of a	381
surcharge under section 4928.144 of the Revised Code that is	382
proportionate to the benefits, as determined by the commission,	383
that electric load centers within the jurisdiction of the	384
governmental aggregation as a group receive. The proportionate	385
surcharge so established shall apply to each customer of the	386
governmental aggregation while the customer is part of that	387
aggregation. If a customer ceases being such a customer, the	388
otherwise applicable surcharge shall apply. Nothing in this	389
section shall result in less than full recovery by an electric	390
distribution utility of any surcharge authorized under section	391
4928.144 of the Revised Code. Nothing in this section shall result	392
in less than the full and timely imposition, charging, collection,	393
and adjustment by an electric distribution utility, its assignee,	394
or any collection agent, of the phase-in-recovery charges	395
authorized pursuant to a final financing order issued pursuant to	396
sections 4928.23 to 4928.2318 of the Revised Code.	397

(J) On behalf of the customers that are part of a	398
governmental aggregation under this section and by filing written	399
notice with the public utilities commission, the legislative	400
authority that formed or is forming that governmental aggregation	401
may elect not to receive standby service within the meaning of	402
division (B)(2)(d) of section 4928.143 of the Revised Code from an	403
electric distribution utility in whose certified territory the	404
governmental aggregation is located and that operates under an	405
approved electric security plan under that section. Upon the	406
filing of that notice, the electric distribution utility shall not	407
charge any such customer to whom competitive retail electric	408
generation service is provided by another supplier under the	409
governmental aggregation for the standby service. Any such	410
consumer that returns to the utility for competitive retail	411
electric service shall pay the market price of power incurred by	412
the utility to serve that consumer plus any amount attributable to	413
the utility's cost of compliance with the alternative energy	414
resource provisions of section 4928.64 of the Revised Code to	415
serve the consumer. Such market price shall include, but not be	416
limited to, capacity and energy charges; all charges associated	417
with the provision of that power supply through the regional	418
transmission organization, including, but not limited to,	419
transmission, ancillary services, congestion, and settlement and	420
administrative charges; and all other costs incurred by the	421
utility that are associated with the procurement, provision, and	422
administration of that power supply, as such costs may be approved	423
by the commission. The period of time during which the market	424
price and alternative energy resource amount shall be so assessed	425
on the consumer shall be from the time the consumer so returns to	426
the electric distribution utility until the expiration of the	427
electric security plan. However, if that period of time is	428
expected to be more than two years, the commission may reduce the	429
time period to a period of not less than two years.	430

(K) The commission shall adopt rules to encourage and promote	431
large-scale governmental aggregation in this state. For that	432
purpose, the commission shall conduct an immediate review of any	433
rules it has adopted for the purpose of this section that are in	434
effect on the effective date of the amendment of this section by	435
S.B. 221 of the 127th general assembly, July 31, 2008. Further,	436
within the context of an electric security plan under section	437
4928.143 of the Revised Code, the commission shall consider the	438
effect on large-scale governmental aggregation of any	439
nonbypassable generation charges, however collected, that would be	440
established under that plan, except any nonbypassable generation	441
charges that relate to any cost incurred by the electric	442
distribution utility, the deferral of which has been authorized by	443
the commission prior to the effective date of the amendment of	444
this section by S.B. 221 of the 127th general assembly, July 31,	445
2008.	446

Sec. 4928.23. As used in sections 4928.23 to 4928.2318 of the	447
Revised Code:	448

(A) "Ancillary agreement" means any bond insurance policy,	449
letter of credit, reserve account, surety bond, swap arrangement,	450
hedging arrangement, liquidity or credit support arrangement, or	451
other similar agreement or arrangement entered into in connection	452
with the issuance of phase-in-recovery bonds that is designed to	453
promote the credit quality and marketability of the bonds or to	454
mitigate the risk of an increase in interest rates.	455

(B) "Assignee" means any person or entity to which an	456
interest in phase-in-recovery property is sold, assigned,	457
transferred, or conveyed, other than as security, and any	458
successor to or subsequent assignee of such a person or entity.	459

(C) "Bond" includes debentures, notes, certificates of	460
participation, certificates of beneficial interest, certificates	461
of ownership or other evidences of indebtedness or ownership that	462
are issued by an electric distribution utility or an assignee	463
under a final financing order, the proceeds of which are used	464
directly or indirectly to recover, finance, or refinance phase-in	465
costs and financing costs, and that are secured by or payable from	466
revenues from phase-in-recovery charges.	467

(D) "Bondholder" means any holder or owner of a	468
phase-in-recovery bond.	469

(E) "Financing costs" means any of the following:

470

(1) Principal, interest, and redemption premiums that are	471
payable on phase-in-recovery bonds;	472

(2) Any payment required under an ancillary agreement;

473

(3) Any amount required to fund or replenish a reserve	474
account or another account established under any indenture,	475
ancillary agreement, or other financing document relating to	476
phase-in-recovery bonds;	477

(4) Any costs of retiring or refunding any existing debt and	478
equity securities of an electric distribution utility in	479
connection with either the issuance of, or the use of proceeds	480
from, phase-in-recovery bonds;	481

(5) Any costs incurred by an electric distribution utility to	482
obtain modifications of or amendments to any indenture, financing	483
agreement, security agreement, or similar agreement or instrument	484
relating to any existing secured or unsecured obligation of the	485
electric distribution utility in connection with the issuance of	486
phase-in-recovery bonds;	487

(6) Any costs incurred by an electric distribution utility to	488
obtain any consent, release, waiver, or approval from any holder	489
of an obligation described in division (E)(5) of this section that	490
are necessary to be incurred for the electric distribution utility	491
to issue or cause the issuance of phase-in-recovery bonds;	492

(7) Any taxes, franchise fees, or license fees imposed on	493
phase-in-recovery revenues;	494

(8) Any costs related to issuing or servicing	495
phase-in-recovery bonds or related to obtaining a financing order,	496
including servicing fees and expenses, trustee fees and expenses,	497
legal, accounting, or other professional fees and expenses,	498
administrative fees, placement fees, underwriting fees,	499
capitalized interest and equity, and rating-agency fees;	500

(9) Any other similar costs that the public utilities	501
commission finds appropriate.	502

(F) "Financing order" means an order issued by the public	503
utilities commission under section 4928.232 of the Revised Code	504
that authorizes an electric distribution utility or an assignee to	505
issue phase-in-recovery bonds and recover phase-in-recovery	506
charges.	507

(G) "Final financing order" means a financing order that has	508
become final and has taken effect as provided in section 4928.233	509
of the Revised Code.	510

(H) "Financing party" means either of the following:

511

(1) Any trustee, collateral agent, or other person acting for	512
the benefit of any bondholder;	513

(2) Any party to an ancillary agreement, the rights and	514
obligations of which relate to or depend upon the existence of	515
phase-in-recovery property, the enforcement and priority of a	516
security interest in phase-in-recovery property, the timely	517
collection and payment of phase-in-recovery revenues, or a	518
combination of these factors.	519

(I) "Financing statement" has the same meaning as in section	520
1309.102 of the Revised Code.	521

(J) "Phase-in costs" means costs, inclusive of carrying	522
charges incurred before, on, or after the effective date of this	523
section, authorized by the commission before, on, or after the	524
effective date of this section to be securitized or deferred as	525
regulatory assets in proceedings under section 4909.18 of the	526
Revised Code, sections 4928.141 to 4928.143, or 4928.144 of the	527
Revised Code, or section 4928.14 of the Revised Code as it existed	528
prior to July 31, 2008, pursuant to a final order for which	529
appeals have been exhausted. "Phase-in costs" excludes the	530
following:	531

(1) With respect to any electric generating facility that, on	532
and after the effective date of this section, is owned, in whole	533
or in part, by an electric distribution utility applying for a	534
financing order under section 4928.231 of the Revised Code, costs	535
that are authorized under division (B)(2)(b) or (c) of section	536
4928.143 of the Revised Code;	537

(2) Costs incurred after the effective date of this section	538
related to the ongoing operation of an electric generating	539
facility, but not environmental clean-up or remediation costs	540
incurred by an electric distribution utility because of its	541
ownership or operation of an electric generating facility prior to	542
the effective date of this section, which such clean-up or	543
remediation costs are imposed or incurred pursuant to federal or	544
state law rules, or regulations and for which the commission	545
approves recovery in accordance with section 4909.18 of the	546
Revised Code, sections 4928.141 to 4928.143, or 4928.144 of the	547
Revised Code, or section 4928.14 of the Revised Code as it existed	548
prior to July 31, 2008.	549

(K) "Phase-in-recovery property" means the property, rights,	550
and interests of an electric distribution utility or an assignee	551
under a final financing order, including the right to impose,	552
charge, and collect the phase-in-recovery charges that shall be	553
used to pay and secure the payment of phase-in-recovery bonds and	554
financing costs, and including the right to obtain adjustments to	555
those charges, and any revenues, receipts, collections, rights to	556
payment, payments, moneys, claims, or other proceeds arising from	557
the rights and interests created under the final financing order.	558

(L) "Phase-in-recovery revenues" means all revenues,	559
receipts, collections, payments, moneys, claims, or other proceeds	560
arising from phase-in-recovery property.	561

(M) "Successor" means, with respect to any entity, another	562
entity that succeeds by operation of law to the rights and	563
obligations of the first legal entity pursuant to any bankruptcy,	564
reorganization, restructuring, or other insolvency proceeding, any	565
merger, acquisition, or consolidation, or any sale or transfer of	566
assets, regardless of whether any of these occur as a result of a	567
restructuring of the electric power industry or otherwise.	568

Sec. 4928.231. (A) An electric distribution utility may apply	569
to the public utilities commission for a financing order that	570
authorizes the following:	571

(1) The issuance of phase-in-recovery bonds, in one or more	572
series, to recover uncollected phase-in costs;	573

(2) The imposition, charging, and collection of phase-in-	574
recovery charges, in accordance with the adjustment mechanism	575
approved by the commission under section 4928.232 of the Revised	576
Code, and consistent with the commission's authority regarding	577
governmental aggregation as provided in division (I) of section	578
4928.20 of the Revised Code, to recover both of the following:	579

(a) Uncollected phase-in costs;

580

(b) Financing costs.

581

(3) The creation of phase-in-recovery property under the	582
financing order.	583

(B) The application shall include all of the following:

584

(1) A description of the uncollected phase-in costs that the	585
electric distribution utility seeks to recover through the	586
issuance of phase-in-recovery bonds;	587

(2) An estimate of the date each series of phase-in-recovery	588
bonds are expected to be issued;	589

(3) The expected term during which the phase-in costs	590
associated with the issuance of each series of phase-in-recovery	591
bonds are expected to be recovered;	592

(4) An estimate of the financing costs, as described in	593
section 4928.23 of the Revised Code, associated with the issuance	594
of each series of phase-in-recovery bonds;	595

(5) An estimate of the amount of phase-in-recovery charges	596
necessary to recover the phase-in costs and financing costs set	597
forth in the application and the calculation for that estimate,	598
which calculation shall take into account the estimated date or	599
dates of issuance and the estimated principal amount of each	600
series of phase-in-recovery bonds;	601

(6) For phase-in-recovery charges not subject to allocation	602
according to an existing order, a proposed methodology for	603
allocating phase-in-recovery charges among customer classes,	604
including a proposed methodology for allocating such charges to	605
governmental aggregation customers based upon the proportionate	606
benefit determination made under division (I) of section 4928.20	607
of the Revised Code;	608

(7) A description of a proposed adjustment mechanism for use	609
as described in division (A)(2) of this section;	610

(8) A description and valuation of how the issuance of the	611
phase-in-recovery bonds, including financing costs, will both	612
result in cost savings to customers and mitigate rate impacts to	613
customers when compared to the use of other financing mechanisms	614
or cost-recovery methods available to the electric distribution	615
utility;	616

(9) Any other information required by the commission.

617

(C) The electric distribution utility may restate or	618
incorporate by reference in the application any information	619
required under division (B)(9) of this section that the electric	620
distribution utility filed with the commission under section	621
4909.18 or sections 4928.141 to 4928.144 of the Revised Code or	622
section 4928.14 of the Revised Code as it existed prior to July	623
31, 2008.	624

Sec. 4928.232.  (A) Proceedings before the public utilities	625
commission on an application submitted by an electric distribution	626
utility under section 4928.231 of the Revised Code shall be	627
governed by Chapter 4903. of the Revised Code, but only to the	628
extent that chapter is not inconsistent with this section or	629
section 4928.233 of the Revised Code. Any party that participated	630
in the proceeding in which phase-in costs were approved under	631
section 4909.18 or sections 4928.141 to 4928.144 of the Revised	632
Code or section 4928.14 of the Revised Code as it existed prior to	633
July 31, 2008, shall have standing to participate in proceedings	634
under sections 4928.23 to 4928.2318 of the Revised Code.	635

(B) When reviewing an application for a financing order	636
pursuant to sections 4928.23 to 4928.2318 of the Revised Code, the	637
commission may hold such hearings, make such inquiries or	638
investigations, and examine such witnesses, books, papers,	639
documents, and contracts as the commission considers proper to	640
carry out these sections. Within thirty days after the filing of an	641
application under section 4928.231 of the Revised Code, the	642
commission shall publish a schedule of the proceeding.	643

(C)(1) Not later than one hundred thirty-five days after the	644
date the application is filed, the commission shall issue either a	645
financing order, granting the application in whole or with	646
modifications, or an order suspending or rejecting the	647
application.	648

(2) If the commission suspends an application for a financing	649
order, the commission shall notify the electric distribution	650
utility of the suspension and may direct the electric distribution	651
utility to provide additional information as the commission	652
considers necessary to evaluate the application. Not later than	653
ninety days after the suspension, the commission shall issue	654
either a financing order, granting the application in whole or	655
with modifications, or an order rejecting the application.	656

(D)(1) The commission shall not issue a financing order under	657
division (C) of this section unless the commission determines that	658
the financing order is consistent with section 4928.02 of the	659
Revised Code.	660

(2) Except as provided in division (D)(1) of this section,	661
the commission shall issue a financing order under division (C) of	662
this section if, at the time the financing order is issued, the	663
commission finds that the issuance of the phase-in-recovery bonds	664
and the phase-in-recovery charges authorized by the order results	665
in, consistent with market conditions, both measurably enhancing	666
cost savings to customers and mitigating rate impacts to customers	667
as compared with traditional financing mechanisms or traditional	668
cost-recovery methods available to the electric distribution	669
utility or, if the commission previously approved a recovery	670
method, as compared with that recovery method.	671

(E) The commission shall include all of the following in a	672
financing order issued under division (C) of this section:	673

(1) A determination of the maximum amount and a description	674
of the phase-in costs that may be recovered through	675
phase-in-recovery bonds issued under the financing order;	676

(2) A description of phase-in-recovery property, the creation	677
of which is authorized by the financing order;	678

(3) A description of the financing costs that may be	679
recovered through phase-in-recovery charges and the period over	680
which those costs may be recovered;	681

(4) For phase-in-recovery charges not subject to allocation	682
according to an existing order, a description of the methodology	683
and calculation for allocating phase-in-recovery charges among	684
customer classes, including the allocation of such charges, if	685
any, to governmental aggregation customers based upon the	686
proportionate benefit determination made under division (I) of	687
section 4928.20 of the Revised Code;	688

(5) A description of the adjustment mechanism for use in the	689
imposition, charging, and collection of the phase-in-recovery	690
charges;	691

(6) The maximum term of the phase-in-recovery bonds;

692

(7) Any other provision the commission considers appropriate	693
to ensure the full and timely imposition, charging, collection,	694
and adjustment, pursuant to an approved adjustment mechanism, of	695
the phase-in-recovery charges described in divisions (E)(3) to (5)	696
of this section.	697

(F) The commission may, in a financing order, afford the	698
electric distribution utility flexibility in establishing the	699
terms and conditions for the phase-in-recovery bonds to	700
accommodate changes in market conditions, including repayment	701
schedules, interest rates, financing costs, collateral	702
requirements, required debt service and other reserves, and the	703
ability of the electric distribution utility, at its option, to	704
effect a series of issuances of phase-in-recovery bonds and	705
correlated assignments, sales, pledges, or other transfers of	706
phase-in-recovery property. Any changes made under this section to	707
terms and conditions for the phase-in-recovery bonds shall be in	708
conformance with the financing order.	709

(G) A financing order may provide that the creation of	710
phase-in-recovery property shall be simultaneous with the sale of	711
that property to an assignee as provided in the application and	712
the pledge of the property to secure phase-in-recovery bonds.	713

(H) The commission shall, in a financing order, require that	714
after the final terms of each issuance of phase-in-recovery bonds	715
have been established, and prior to the issuance of those bonds,	716
the electric distribution utility shall determine the resulting	717
phase-in-recovery charges in accordance with the adjustment	718
mechanism described in the financing order. These	719
phase-in-recovery charges shall be final and effective upon the	720
issuance of the phase-in-recovery bonds, without further	721
commission action.	722

Sec. 4928.233.  (A) Any party to a proceeding under section	723
4928.232 of the Revised Code may apply to the public utilities	724
commission for rehearing of an order within thirty days after the	725
date of the issuance of the order.	726

(B) Within sixty days after the issuance of an order after	727
rehearing or a decision denying an application for rehearing, any	728
party to the proceeding may file a notice of appeal with the	729
supreme court. Any such notice of appeal shall be served as	730
provided for in section 4903.13 of the Revised Code.	731

Because delay in the determination of the appeal will delay	732
the issuance of phase-in-recovery bonds, thereby diminishing	733
savings to customers that might be achieved if the bonds were	734
issued under a final financing order, the supreme court shall	735
proceed to hear and determine the action as expeditiously as	736
practicable and shall give the action precedence over other	737
matters not accorded similar precedence by law.	738

(C) Any review on appeal for a financing order issued under	739
section 4928.232 of the Revised Code shall be governed by Chapter	740
4903. of the Revised Code.	741

(D) If any phase-in costs are, or if any financing order is,	742
subject to review by the commission or the supreme court, the	743
electric distribution utility may not issue any phase-in-recovery	744
bonds based on those costs or that financing order until all	745
commission and appellate reviews, including any appellate review	746
following a commission decision on remand, have been exhausted.	747

(E) A financing order shall become final and take effect as	748
follows:	749

(1) On the expiration of the thirty-day period after the date	750
the commission issues the financing order, if no application for	751
rehearing is filed with the commission within that period;	752

(2) On the expiration of the sixty-day period after the	753
denial of the application for rehearing, if no notice of appeal is	754
filed with the supreme court within that period;	755

(3) On the expiration of the sixty-day period after the	756
commission issues an order after rehearing that approves or	757
modifies and approves the financing order, if no notice of appeal	758
is filed with the supreme court within that period;	759

(4) On the expiration of the ten-day period after the date	760
that the supreme court judgment entry or order that affirms or	761
modifies and affirms a financing order is filed with the clerk,	762
including any such order issued by the court following a	763
commission decision on remand, if no motion for reconsideration is	764
filed within that period;	765

(5) On the date the supreme court order denying a motion for	766
reconsideration of a judgment entry or order that affirmed or	767
modified and affirmed a financing order is filed with the clerk;	768

(6) On the date the supreme court judgment entry or order	769
issued after reconsideration of a judgment entry or order that	770
affirmed or modified and affirmed a financing order is filed with	771
the clerk;	772

(7) On the applicable effective date under division (E)(1),	773
(2), or (3) of this section regarding a financing order remanded	774
to the commission.	775

Sec. 4928.234.  (A) The phase-in-recovery property created in	776
a final financing order may be transferred, sold, conveyed, or	777
assigned to any person or entity not affiliated with the electric	778
distribution utility subject to the final financing order or to	779
any affiliate of the electric distribution utility created for the	780
limited purpose of acquiring, owning, or administering that	781
property, issuing phase-in-recovery bonds under the final	782
financing order, or a combination of these purposes.	783

(B) All or any portion of the phase-in-recovery property may	784
be pledged to secure the payment of phase-in-recovery bonds,	785
amounts payable to financing parties and bondholders, amounts	786
payable under any ancillary agreement, and other financing costs.	787

(C) The phase-in-recovery property shall constitute an	788
existing, present property right, notwithstanding any requirement	789
that the imposition, charging, and collection of phase-in-recovery	790
charges depend on the electric distribution utility continuing to	791
deliver retail electric distribution service or continuing to	792
perform its servicing functions relating to the collection of	793
phase-in-recovery charges or on the level of future energy	794
consumption. That property shall exist regardless of whether the	795
phase-in-recovery charges have been billed, have accrued, or have	796
been collected, and notwithstanding any requirement that the value	797
or amount of the property is dependent on the future provision of	798
service to customers by the electric distribution utility.	799

(D) All such phase-in-recovery property shall continue to	800
exist until the phase-in-recovery bonds issued under the final	801
financing order are paid in full and all financing costs relating	802
to the bonds have been paid in full.	803

Sec. 4928.235.  (A)(1) A final financing order shall remain	804
in effect until the phase-in-recovery bonds issued under the final	805
financing order and all financing costs related to the bonds have	806
been paid in full.	807

(2) A final financing order shall remain in effect and	808
unabated notwithstanding the bankruptcy, reorganization, or	809
insolvency of the electric distribution utility or any affiliate	810
of the electric distribution utility or the commencement of any	811
judicial or nonjudicial proceeding on the final financing order.	812

(B) A final financing order is irrevocable and the public	813
utilities commission may not reduce, impair, postpone, or	814
terminate the phase-in-recovery charges authorized in the final	815
financing order or impair the property or the collection or	816
recovery of phase-in costs.	817

(C)(1) Except as provided in division (C)(2) of this section,	818
under a final financing order, the electric distribution utility	819
retains sole discretion regarding whether to assign, sell, or	820
otherwise transfer phase-in-recovery property, or to cause	821
phase-in-recovery bonds to be issued, including the right to defer	822
or postpone such assignment, sale, transfer, or issuance.	823

(2) Subsequent to a financing order being issued or becoming	824
final and taking effect, but before phase-in-recovery bonds have	825
been issued, if market conditions are such that customers will not	826
realize cost savings from the issuance of the phase-in-recovery	827
bonds, the electric distribution utility shall not proceed with	828
the securitization under the issued or final financing order.	829

Sec. 4928.236. At the request of the electric distribution	830
utility subject to a final financing order, the public utilities	831
commission may commence a proceeding and issue a subsequent	832
financing order that provides for retiring and refunding	833
phase-in-recovery bonds issued under the final financing order if	834
the commission finds that the subsequent financing order satisfies	835
all of the requirements of section 4928.232 of the Revised Code.	836
Effective on retirement of the refunded phase-in-recovery bonds	837
and the issuance of new phase-in-recovery bonds, the commission	838
shall adjust the related phase-in-recovery charges accordingly.	839

Sec. 4928.237.  (A) The public utilities commission, in	840
exercising the commission's powers and carrying out the	841
commission's duties regarding regulation and ratemaking, may not	842
do any of the following:	843

(1) Consider phase-in-recovery bonds issued under a final	844
financing order to be the debt of the electric distribution	845
utility subject to the final financing order;	846

(2) Consider the phase-in-recovery charges imposed, charged,	847
or collected under the final financing order to be revenue of the	848
electric distribution utility;	849

(3) Consider the phase-in costs or financing costs authorized	850
under the final financing order to be the costs of the electric	851
distribution utility.	852

(B) The commission may not order or otherwise require,	853
directly or indirectly, any electric distribution utility to use	854
phase-in-recovery bonds to finance the recovery of phase-in costs.	855

(C) The commission may not refuse to allow the recovery of	856
phase-in costs solely because the electric distribution utility	857
has elected or may elect to finance those costs through a	858
financing mechanism other than the issuance of phase-in-recovery	859
bonds.	860

If the electric distribution utility elects not to finance	861
those costs through the issuance of phase-in-recovery bonds as	862
authorized in the final financing order, those costs shall be	863
recovered as authorized by the commission prior to the application	864
for the financing order.	865

Sec. 4928.238.  (A) An electric distribution utility subject	866
to a final financing order shall file with the public utilities	867
commission, at least annually, or more frequently as provided in	868
the final financing order, a schedule applying the approved	869
adjustment mechanism to the phase-in-recovery charges authorized	870
under the final financing order, based on estimates of consumption	871
for each customer class and other mathematical factors. The	872
electric distribution utility shall submit with the schedule a	873
request for approval to make the adjustments to the	874
phase-in-recovery charges in accordance with the schedule.	875

(B) The commission's review of the request shall be limited	876
to a determination of whether there is any mathematical error in	877
the application of the adjustment mechanism to the	878
phase-in-recovery charges, including the calculation of any	879
proportionate charges allocated to governmental aggregation	880
customers as directed in the final financing order.	881

(C) A request submitted under division (A) of this section	882
shall be deemed approved, and the adjustments shall go into	883
immediate effect, if not approved by the commission within sixty	884
days after the request is submitted.	885

(D) No adjustment approved or deemed approved under this	886
section shall in any way affect the irrevocability of the final	887
financing order as specified in section 4928.235 of the Revised	888
Code.	889

Sec. 4928.239.  (A) As used in this section, "nonbypassable,"	890
with respect to phase-in-recovery charges, means that such charges	891
cannot be avoided by any customer or other person obligated to pay	892
the charges.	893

(B)(1) As long as phase-in-recovery bonds issued under a	894
final financing order are outstanding and the related phase-in	895
costs and financing costs have not been recovered in full, the	896
phase-in-recovery charges authorized under the final financing	897
order shall be nonbypassable. Subject to the methodology approved	898
in the final financing order pursuant to division (E)(4) of	899
section 4928.232 of the Revised Code, phase-in-recovery charges	900
shall apply to all customers of the electric distribution utility	901
for as long as they remain customers of the electric distribution	902
utility, except as provided in division (B)(2) of this section. If	903
a customer of the electric distribution utility purchases electric	904
generation service from a competitive retail electric service	905
provider, the electric distribution utility shall collect the	906
phase-in-recovery charges directly from that customer.	907

(2) If a customer of the electric distribution utility	908
subsequently receives retail electric distribution service from	909
another electric distribution utility operating in the same	910
service area, including by succession, assignment, transfer, or	911
merger, the phase-in-recovery charges shall continue to apply to	912
that customer.	913

(C) The phase-in-recovery charges shall be collected by the	914
electric distribution utility or the electric distribution	915
utility's successors or assignees, or a collection agent, in full	916
through a charge that is separate and apart from the electric	917
distribution utility's base rates.	918

Sec. 4928.2310.  (A)(1) If an electric distribution utility	919
subject to a final financing order defaults on any required	920
payment of phase-in-recovery revenues, a court, upon application	921
by an interested party and without limiting any other remedies	922
available to the applicant, shall order the sequestration and	923
payment of the revenues for the benefit of bondholders, any	924
assignee, and any financing parties. The court order shall remain	925
in full force and effect notwithstanding any bankruptcy,	926
reorganization, or other insolvency proceedings with respect to	927
the electric distribution utility or any affiliate.	928

(2) Notwithstanding division (A)(1) of this section,	929
customers of an electric distribution utility shall be held	930
harmless for the electric distribution utility's failure to remit	931
any required payment of phase-in-recovery revenues, and such	932
failure shall in no way affect the phase-in-recovery property or	933
the rights to impose, collect, and adjust the phase-in-recovery	934
charges under sections 4928.23 to 4928.2318 of the Revised Code.	935

(B) Phase-in-recovery property under a final financing order	936
and the interests of an assignee, bondholder, or financing party	937
in that property under a financing agreement are not subject to	938
setoff, counterclaim, surcharge, or defense by the electric	939
distribution utility subject to the final financing order or any	940
other person, including as a result of the electric distribution	941
utility's failure to provide past, present, or future services, or	942
in connection with the bankruptcy, reorganization, or other	943
insolvency proceeding of the electric distribution utility, any	944
affiliate, or any other entity.	945

Sec. 4928.2311.  Any successor to an electric distribution	946
utility subject to a final financing order shall be bound by the	947
requirements of sections 4928.23 to 4928.2317 of the Revised Code.	948
The successor shall perform and satisfy all obligations of the	949
electric distribution utility under the final financing order, in	950
the same manner and to the same extent as the electric	951
distribution utility, including the obligation to collect and pay	952
phase-in-recovery revenues to the person entitled to receive those	953
revenues. The successor shall have the same rights of the electric	954
distribution utility under the final financing order, in the same	955
manner and to the same extent as the electric distribution	956
utility.	957

Sec. 4928.2312.  (A) Except as provided in division (C) of	958
this section, the creation, perfection, and enforcement of any	959
security interest in phase-in-recovery property under a final	960
financing order to secure the repayment of the principal of and	961
interest on phase-in-recovery bonds, amounts payable under any	962
ancillary agreement, and other financing costs are governed by	963
this section and not Chapters 1301. to 1309. of the Revised Code.	964

(B) The description of the phase-in-recovery property in a	965
transfer or security agreement and a financing statement is	966
sufficient only if the description refers to this section and the	967
final financing order creating the property. This section applies	968
to all purported transfers of, and all purported grants of, liens	969
on or security interests in that property, regardless of whether	970
the related transfer or security agreement was entered into, or	971
the related financing statement was filed, before or after the	972
effective date of this section.	973

(C)(1) A security interest in phase-in-recovery property	974
under a final financing order is created, valid, and binding at	975
the latest of the date that the security agreement is executed and	976
delivered or the date that value is received for the	977
phase-in-recovery bonds.	978

(2)(a) The security interest shall attach without any	979
physical delivery of collateral or other act, and, upon the filing	980
of the financing statement with the office of the secretary of	981
state, the lien of the security interest shall be valid, binding,	982
and perfected against all parties having claims of any kind in	983
tort, contract, or otherwise against the person granting the	984
security interest, regardless of whether the parties have notice	985
of the lien. Also upon this filing, a transfer of an interest in	986
the phase-in-recovery property shall be perfected against all	987
parties having claims of any kind, including any judicial lien or	988
other lien creditors or any claims of the seller or creditors of	989
the seller, other than creditors holding a prior security	990
interest, ownership interest, or assignment in the property	991
previously perfected in accordance with this division.	992

(b) The secretary of state shall maintain any financing	993
statement filed under division (C)(2) of this section in the same	994
manner that the secretary maintains financing statements filed by	995
transmitting utilities under division (B) of section 1309.501 of	996
the Revised Code. The filing of any financing statement under	997
division (C)(2) of this section shall be governed by the	998
provisions regarding the filing of financing statements in Chapter	999
1309. of the Revised Code.	1000

(D)(1) A security interest in phase-in-recovery property	1001
under a final financing order is a continuously perfected security	1002
interest and has priority over any other lien, created by	1003
operation of law or otherwise, that may subsequently attach to	1004
that property or those rights or interests unless the holder of	1005
any such lien has agreed in writing otherwise.	1006

(2) The priority of a security interest in phase-in-recovery	1007
property is not affected by the commingling of phase-in-recovery	1008
revenues with other amounts. Any pledgee or secured party shall	1009
have a perfected security interest in the amount of all	1010
phase-in-recovery revenues that are deposited in any cash or	1011
deposit account of the electric distribution utility in which	1012
phase-in-recovery revenues have been commingled with other funds.	1013
Any other security interest that may apply to those funds shall be	1014
terminated when the funds are transferred to a segregated account	1015
for an assignee or a financing party.	1016

(3) No application of the adjustment mechanism as described	1017
in section 4928.238 of the Revised Code shall affect the validity,	1018
perfection, or priority of a security interest in or the transfer	1019
of phase-in-recovery property under the final financing order.	1020

Sec. 4928.2313.  (A) Any sale, assignment, or transfer of	1021
phase-in-recovery property under a final financing order shall be	1022
an absolute transfer and true sale of, and not a pledge of or	1023
secured transaction relating to, the seller's right, title, and	1024
interest in, to, and under the property, if the documents	1025
governing the transaction expressly state that the transaction is	1026
a sale or other absolute transfer. A transfer of an interest in	1027
that property may be created only when all of the following have	1028
occurred:	1029

(1) The financing order has become final and taken effect.

1030

(2) The documents evidencing the transfer of the property	1031
have been executed and delivered to the assignee.	1032

(3) Value has been received for the property.

1033

(B) The characterization of the sale, assignment, or transfer	1034
as an absolute transfer and true sale and the corresponding	1035
characterization of the property interest of the purchaser shall	1036
be effective and perfected against all third parties and shall not	1037
be affected or impaired by, among other things, the occurrence of	1038
any of the following:	1039

(1) Commingling of phase-in-recovery revenues with other	1040
amounts;	1041

(2) The retention by the seller of either of the following:

1042

(a) A partial or residual interest, including an equity	1043
interest, in the phase-in-recovery property, whether direct or	1044
indirect, or whether subordinate or otherwise;	1045

(b) The right to recover costs associated with taxes,	1046
franchise fees, or license fees imposed on the collection of	1047
phase-in-recovery revenues.	1048

(3) Any recourse that the purchaser or any assignee may have	1049
against the seller;	1050

(4) Any indemnification rights, obligations, or repurchase	1051
rights made or provided by the seller;	1052

(5) The obligation of the seller to collect phase-in-recovery	1053
revenues on behalf of an assignee;	1054

(6) The treatment of the sale, assignment, or transfer for	1055
tax, financial reporting, or other purposes;	1056

(7) Any application of the adjustment mechanism under the	1057
final financing order.	1058

Sec. 4928.2314.  (A) The transfer and ownership of	1059
phase-in-recovery property and the imposition, charging,	1060
collection, and receipt of phase-in-recovery revenues under	1061
sections 4928.231 to 4928.2317 of the Revised Code are exempt from	1062
all taxes and similar charges imposed by the state or any county,	1063
municipal corporation, school district, local authority, or other	1064
subdivision.	1065

(B) Phase-in-recovery bonds issued under a final financing	1066
order shall not constitute a debt or a pledge of the faith and	1067
credit or taxing power of this state or of any county, municipal	1068
corporation, or any other political subdivision of this state.	1069
Bondholders shall have no right to have taxes levied by this state	1070
or the taxing authority of any county, municipal corporation, or	1071
any other political subdivision of this state for the payment of	1072
the principal of or interest on the bonds. The issuance of	1073
phase-in-recovery bonds does not, directly, indirectly, or	1074
contingently, obligate this state or any county, municipal	1075
corporation, or political subdivision of this state to levy any	1076
tax or make any appropriation for payment of the principal of or	1077
interest on the bonds.	1078

Sec. 4928.2315.  (A) The state pledges to and agrees with the	1079
bondholders, any assignee, and any financing parties under a final	1080
financing order that the state will not take or permit any action	1081
that impairs the value of phase-in-recovery property under the	1082
final financing order or revises the phase-in costs for which	1083
recovery is authorized under the final financing order or, except	1084
as allowed under section 4928.238 of the Revised Code, reduce,	1085
alter, or impair phase-in-recovery charges that are imposed,	1086
charged, collected, or remitted for the benefit of the	1087
bondholders, any assignee, and any financing parties, until any	1088
principal, interest, and redemption premium in respect of	1089
phase-in-recovery bonds, all financing costs, and all amounts to	1090
be paid to an assignee or financing party under an ancillary	1091
agreement are paid or performed in full.	1092

(B) Any person who issues phase-in-recovery bonds is	1093
permitted to include the pledge specified in division (A) of this	1094
section in the phase-in-recovery bonds, ancillary agreements, and	1095
documentation related to the issuance and marketing of the	1096
phase-in-recovery bonds.	1097

Sec. 4928.2316.  (A) The law governing the validity,	1098
enforceability, attachment, perfection, priority, and exercise of	1099
remedies with respect to the transfer of phase-in-recovery	1100
property under a final financing order, or creation of a security	1101
interest in any such property, phase-in-recovery charges, or final	1102
financing order shall be the laws of this state as set forth in	1103
sections 4928.23 to 4928.2318 of the Revised Code.	1104

(B) This section shall control in the event of a conflict	1105
between sections 4928.23 to 4928.2317 of the Revised Code and any	1106
other law regarding the attachment, assignment, or perfection, the	1107
effect of perfection, or priority of any security interest in or	1108
transfer of phase-in-recovery property under a final financing	1109
order.	1110

Sec. 4928.2317.  If any provision of sections 4928.23 to	1111
4928.2318 of the Revised Code is held to be invalid or is	1112
superseded, replaced, repealed, or expires for any reason, that	1113
occurrence shall not affect any action allowed under those	1114
sections that is taken prior to that occurrence by the public	1115
utilities commission, an electric distribution utility, an	1116
assignee, a collection agent, a financing party, a bondholder, or	1117
a party to an ancillary agreement. Any such action shall remain in	1118
full force and effect.	1119

Sec. 4928.2318.  An assignee or financing party shall not be	1120
considered an electric distribution utility or person providing	1121
electric service by virtue of engaging in the transactions	1122
described in sections 4928.23 to 4928.2313 of the Revised Code.	1123

Section 2.  That existing sections 4928.143 and 4928.20 of	1124
the Revised Code are hereby repealed.	1125