As Introduced

129th General Assembly Regular Session 2011-2012

S. B. No. 248

Senator Balderson 

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A BILL

To amend section 4928.20 and to enact sections

1

4928.23, 4928.231, 4928.232, 4928.233, 4928.234,

2

4928.235, 4928.236, 4928.237, 4928.238, 4928.239,

3

4928.2310, 4928.2311, 4928.2312, 4928.2313,

4

4928.2314, 4928.2315, 4928.2316, 4928.2317, and

5

4928.2318 of the Revised Code to establish

6

standards for the securitization of costs for

7

electric distribution utilities.

8

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

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

Sec. 4928.20.  (A) The legislative authority of a municipal	14
corporation may adopt an ordinance, or the board of township	15
trustees of a township or the board of county commissioners of a	16
county may adopt a resolution, under which, on or after the	17
starting date of competitive retail electric service, it may	18
aggregate in accordance with this section the retail electrical	19
loads located, respectively, within the municipal corporation,	20
township, or unincorporated area of the county and, for that	21
purpose, may enter into service agreements to facilitate for those	22
loads the sale and purchase of electricity. The legislative	23
authority or board also may exercise such authority jointly with	24
any other such legislative authority or board. For customers that	25
are not mercantile customers, an ordinance or resolution under	26
this division shall specify whether the aggregation will occur	27
only with the prior, affirmative consent of each person owning,	28
occupying, controlling, or using an electric load center proposed	29
to be aggregated or will occur automatically for all such persons	30
pursuant to the opt-out requirements of division (D) of this	31
section. The aggregation of mercantile customers shall occur only	32
with the prior, affirmative consent of each such person owning,	33
occupying, controlling, or using an electric load center proposed	34
to be aggregated. Nothing in this division, however, authorizes	35
the aggregation of the retail electric loads of an electric load	36
center, as defined in section 4933.81 of the Revised Code, that is	37
located in the certified territory of a nonprofit electric	38
supplier under sections 4933.81 to 4933.90 of the Revised Code or	39
an electric load center served by transmission or distribution	40
facilities of a municipal electric utility.	41

(B) If an ordinance or resolution adopted under division (A)	42
of this section specifies that aggregation of customers that are	43
not mercantile customers will occur automatically as described in	44
that division, the ordinance or resolution shall direct the board	45
of elections to submit the question of the authority to aggregate	46
to the electors of the respective municipal corporation, township,	47
or unincorporated area of a county at a special election on the	48
day of the next primary or general election in the municipal	49
corporation, township, or county. The legislative authority or	50
board shall certify a copy of the ordinance or resolution to the	51
board of elections not less than ninety days before the day of the	52
special election. No ordinance or resolution adopted under	53
division (A) of this section that provides for an election under	54
this division shall take effect unless approved by a majority of	55
the electors voting upon the ordinance or resolution at the	56
election held pursuant to this division.	57

(C) Upon the applicable requisite authority under divisions	58
(A) and (B) of this section, the legislative authority or board	59
shall develop a plan of operation and governance for the	60
aggregation program so authorized. Before adopting a plan under	61
this division, the legislative authority or board shall hold at	62
least two public hearings on the plan. Before the first hearing,	63
the legislative authority or board shall publish notice of the	64
hearings once a week for two consecutive weeks in a newspaper of	65
general circulation in the jurisdiction or as provided in section	66
7.16 of the Revised Code. The notice shall summarize the plan and	67
state the date, time, and location of each hearing.	68

(D) No legislative authority or board, pursuant to an	69
ordinance or resolution under divisions (A) and (B) of this	70
section that provides for automatic aggregation of customers that	71
are not mercantile customers as described in division (A) of this	72
section, shall aggregate the electrical load of any electric load	73
center located within its jurisdiction unless it in advance	74
clearly discloses to the person owning, occupying, controlling, or	75
using the load center that the person will be enrolled	76
automatically in the aggregation program and will remain so	77
enrolled unless the person affirmatively elects by a stated	78
procedure not to be so enrolled. The disclosure shall state	79
prominently the rates, charges, and other terms and conditions of	80
enrollment. The stated procedure shall allow any person enrolled	81
in the aggregation program the opportunity to opt out of the	82
program every three years, without paying a switching fee. Any	83
such person that opts out before the commencement of the	84
aggregation program pursuant to the stated procedure shall default	85
to the standard service offer provided under section 4928.14 or	86
division (D) of section 4928.35 of the Revised Code until the	87
person chooses an alternative supplier.	88

(E)(1) With respect to a governmental aggregation for a	89
municipal corporation that is authorized pursuant to divisions (A)	90
to (D) of this section, resolutions may be proposed by initiative	91
or referendum petitions in accordance with sections 731.28 to	92
731.41 of the Revised Code.	93

(2) With respect to a governmental aggregation for a township	94
or the unincorporated area of a county, which aggregation is	95
authorized pursuant to divisions (A) to (D) of this section,	96
resolutions may be proposed by initiative or referendum petitions	97
in accordance with sections 731.28 to 731.40 of the Revised Code,	98
except that:	99

(a) The petitions shall be filed, respectively, with the	100
township fiscal officer or the board of county commissioners, who	101
shall perform those duties imposed under those sections upon the	102
city auditor or village clerk.	103

(b) The petitions shall contain the signatures of not less	104
than ten per cent of the total number of electors in,	105
respectively, the township or the unincorporated area of the	106
county who voted for the office of governor at the preceding	107
general election for that office in that area.	108

(F) A governmental aggregator under division (A) of this	109
section is not a public utility engaging in the wholesale purchase	110
and resale of electricity, and provision of the aggregated service	111
is not a wholesale utility transaction. A governmental aggregator	112
shall be subject to supervision and regulation by the public	113
utilities commission only to the extent of any competitive retail	114
electric service it provides and commission authority under this	115
chapter.	116

(G) This section does not apply in the case of a municipal	117
corporation that supplies such aggregated service to electric load	118
centers to which its municipal electric utility also supplies a	119
noncompetitive retail electric service through transmission or	120
distribution facilities the utility singly or jointly owns or	121
operates.	122

(H) A governmental aggregator shall not include in its	123
aggregation the accounts of any of the following:	124

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

125

(2) A customer in contract with a certified electric services	126
company;	127

(3) A customer that has a special contract with an electric	128
distribution utility;	129

(4) A customer that is not located within the governmental	130
aggregator's governmental boundaries;	131

(5) Subject to division (C) of section 4928.21 of the Revised	132
Code, a customer who appears on the "do not aggregate" list	133
maintained under that section.	134

(I) Customers that are part of a governmental aggregation	135
under this section shall be responsible only for such portion of a	136
surcharge under section 4928.144 of the Revised Code that is	137
proportionate to the benefits, as determined by the commission,	138
that electric load centers within the jurisdiction of the	139
governmental aggregation as a group receive. The proportionate	140
surcharge so established shall apply to each customer of the	141
governmental aggregation while the customer is part of that	142
aggregation. If a customer ceases being such a customer, the	143
otherwise applicable surcharge shall apply. Nothing in this	144
section shall result in less than full recovery by an electric	145
distribution utility of any surcharge authorized under section	146
4928.144 of the Revised Code. Nothing in this section shall result	147
in less than the full and timely imposition, charging, collection,	148
and adjustment by an electric distribution utility, its assignee,	149
or any collection agent, of the phase-in-recovery charges	150
authorized pursuant to a final financing order issued pursuant to	151
sections 4928.23 to 4928.2318 of the Revised Code.	152

(J) On behalf of the customers that are part of a	153
governmental aggregation under this section and by filing written	154
notice with the public utilities commission, the legislative	155
authority that formed or is forming that governmental aggregation	156
may elect not to receive standby service within the meaning of	157
division (B)(2)(d) of section 4928.143 of the Revised Code from an	158
electric distribution utility in whose certified territory the	159
governmental aggregation is located and that operates under an	160
approved electric security plan under that section. Upon the	161
filing of that notice, the electric distribution utility shall not	162
charge any such customer to whom competitive retail electric	163
generation service is provided by another supplier under the	164
governmental aggregation for the standby service. Any such	165
consumer that returns to the utility for competitive retail	166
electric service shall pay the market price of power incurred by	167
the utility to serve that consumer plus any amount attributable to	168
the utility's cost of compliance with the alternative energy	169
resource provisions of section 4928.64 of the Revised Code to	170
serve the consumer. Such market price shall include, but not be	171
limited to, capacity and energy charges; all charges associated	172
with the provision of that power supply through the regional	173
transmission organization, including, but not limited to,	174
transmission, ancillary services, congestion, and settlement and	175
administrative charges; and all other costs incurred by the	176
utility that are associated with the procurement, provision, and	177
administration of that power supply, as such costs may be approved	178
by the commission. The period of time during which the market	179
price and alternative energy resource amount shall be so assessed	180
on the consumer shall be from the time the consumer so returns to	181
the electric distribution utility until the expiration of the	182
electric security plan. However, if that period of time is	183
expected to be more than two years, the commission may reduce the	184
time period to a period of not less than two years.	185

(K) The commission shall adopt rules to encourage and promote	186
large-scale governmental aggregation in this state. For that	187
purpose, the commission shall conduct an immediate review of any	188
rules it has adopted for the purpose of this section that are in	189
effect on the effective date of the amendment of this section by	190
S.B. 221 of the 127th general assembly, July 31, 2008. Further,	191
within the context of an electric security plan under section	192
4928.143 of the Revised Code, the commission shall consider the	193
effect on large-scale governmental aggregation of any	194
nonbypassable generation charges, however collected, that would be	195
established under that plan, except any nonbypassable generation	196
charges that relate to any cost incurred by the electric	197
distribution utility, the deferral of which has been authorized by	198
the commission prior to the effective date of the amendment of	199
this section by S.B. 221 of the 127th general assembly, July 31,	200
2008.	201

Sec. 4928.23. As used in sections 4928.23 to 4928.2318 of the	202
Revised Code:	203

(A) "Ancillary agreement" means any bond insurance policy,	204
letter of credit, reserve account, surety bond, swap arrangement,	205
hedging arrangement, liquidity or credit support arrangement, or	206
other similar agreement or arrangement entered into in connection	207
with the issuance of phase-in-recovery bonds that is designed to	208
promote the credit quality and marketability of the bonds or to	209
mitigate the risk of an increase in interest rates.	210

(B) "Assignee" means any person or entity to which an	211
interest in phase-in-recovery property is sold, assigned,	212
transferred, or conveyed, other than as security, and any	213
successor to or subsequent assignee of such a person or entity.	214

(C) "Bond" includes debentures, notes, certificates of	215
participation, certificates of beneficial interest, certificates	216
of ownership or other evidences of indebtedness or ownership that	217
are issued by an electric distribution utility or an assignee	218
under a final financing order, the proceeds of which are used	219
directly or indirectly to recover, finance, or refinance phase-in	220
costs and financing costs, and that are secured by or payable from	221
revenues from phase-in-recovery charges.	222

(D) "Bondholder" means any holder or owner of a	223
phase-in-recovery bond.	224

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

225

(1) Principal, interest, and redemption premiums that are	226
payable on phase-in-recovery bonds;	227

(2) Any payment required under an ancillary agreement;

228

(3) Any amount required to fund or replenish a reserve	229
account or another account established under any indenture,	230
ancillary agreement, or other financing document relating to	231
phase-in-recovery bonds;	232

(4) Any costs of retiring or refunding any existing debt and	233
equity securities of an electric distribution utility in	234
connection with the issuance of phase-in-recovery bonds;	235

(5) Any costs incurred by an electric distribution utility to	236
obtain modifications of or amendments to any indenture, financing	237
agreement, security agreement, or similar agreement or instrument	238
relating to any existing secured or unsecured obligation of the	239
electric distribution utility in connection with the issuance of	240
phase-in-recovery bonds;	241

(6) Any costs incurred by an electric distribution utility to	242
obtain any consent, release, waiver, or approval from any holder	243
of an obligation described in division (E)(5) of this section that	244
are necessary to be incurred for the electric distribution utility	245
to issue or cause the issuance of phase-in-recovery bonds;	246

(7) Any taxes, franchise fees, or license fees imposed on	247
phase-in-recovery revenues;	248

(8) Any costs related to issuing or servicing	249
phase-in-recovery bonds or related to obtaining a financing order,	250
including servicing fees and expenses, trustee fees and expenses,	251
legal fees and expenses, administrative fees, placement fees,	252
underwriting fees, capitalized interest and equity, and	253
rating-agency fees;	254

(9) Any other similar costs that the public utilities	255
commission finds appropriate.	256

(F) "Financing order" means an order issued by the public	257
utilities commission under section 4928.232 of the Revised Code	258
that authorizes an electric distribution utility to issue	259
phase-in-recovery bonds and recover phase-in-recovery charges.	260

(G) "Final financing order" means a financing order that has	261
become final and has taken effect as provided in section 4928.233	262
of the Revised Code.	263

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

264

(1) Any trustee, collateral agent, or other person acting for	265
the benefit of any bondholder;	266

(2) Any party to an ancillary agreement, the rights and	267
obligations of which relate to or depend upon the existence of	268
phase-in-recovery property, the enforcement and priority of a	269
security interest in phase-in-recovery property, the timely	270
collection and payment of phase-in-recovery revenues, or a	271
combination of these factors.	272

(I) "Financing statement" has the same meaning as in section	273
1309.102 of the Revised Code.	274

(J) "Phase-in costs" means costs, inclusive of carrying	275
charges, that have been authorized by the commission prior to the	276
effective date of this section to be securitized or deferred as	277
regulatory assets in proceedings under section 4909.18, 4928.143,	278
or 4928.144 of the Revised Code or section 4928.14 of the Revised	279
Code as it existed prior to July 31, 2008, pursuant to a final	280
order for which appeals have been exhausted.	281

(K) "Phase-in-recovery property" means the property, rights,	282
and interests of an electric distribution utility or an assignee	283
under a final financing order, including the right to impose,	284
charge, and collect the phase-in-recovery charges that shall be	285
used to pay and secure the payment of phase-in-recovery bonds and	286
financing costs, and including the right to obtain adjustments to	287
those charges, and any revenues, receipts, collections, rights to	288
payment, payments, moneys, claims, or other proceeds arising from	289
the rights and interests created under the final financing order.	290

(L) "Phase-in-recovery revenues" means all revenues,	291
receipts, collections, payments, moneys, claims, or other proceeds	292
arising from phase-in-recovery property.	293

(M) "Successor" means, with respect to any entity, another	294
entity that succeeds by operation of law to the rights and	295
obligations of the first legal entity pursuant to any bankruptcy,	296
reorganization, restructuring, or other insolvency proceeding, any	297
merger, acquisition, or consolidation, or any sale or transfer of	298
assets, regardless of whether any of these occur as a result of a	299
restructuring of the electric power industry or otherwise.	300

Sec. 4928.231. (A) An electric distribution utility may apply	301
to the public utilities commission for a financing order that	302
authorizes the following:	303

(1) The issuance of phase-in-recovery bonds, in one or more	304
series, to recover uncollected phase-in costs;	305

(2) The imposition, charging, and collection of phase-in-	306
recovery charges, in accordance with the adjustment mechanism	307
approved by the commission under section 4928.232 of the Revised	308
Code, and consistent with the commission's authority regarding	309
governmental aggregation as provided in division (I) of section	310
4928.20 of the Revised Code, to recover both of the following:	311

(a) Uncollected phase-in costs;

312

(b) Financing costs, approved by the commission under section	313
4928.232 of the Revised Code, to issue, service, repay, or	314
refinance the phase-in-recovery bonds, incurred or paid upon	315
issuance of the bonds or over the life of the bonds.	316

(3) The creation of phase-in-recovery property under the	317
financing order.	318

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

319

(1) A description of the uncollected phase-in costs that the	320
electric distribution utility seeks to recover through the	321
issuance of phase-in-recovery bonds;	322

(2) An estimate of the date each series of phase-in-recovery	323
bonds are expected to be issued;	324

(3) The expected term during which the phase-in costs	325
associated with the issuance of each series of phase-in-recovery	326
bonds are expected to be recovered;	327

(4) An estimate of the financing costs, as described in	328
section 4928.232 of the Revised Code, associated with the issuance	329
of each series of phase-in-recovery bonds;	330

(5) An estimate of the amount of phase-in-recovery charges	331
necessary to recover the phase-in costs and financing costs set	332
forth in the application and the calculation for that estimate,	333
which calculation shall take into account the estimated date or	334
dates of issuance and the estimated principal amount of each	335
series of phase-in-recovery bonds;	336

(6) For phase-in-recovery charges not subject to allocation	337
according to an existing order, a proposed methodology for	338
allocating phase-in-recovery charges among customer classes,	339
including a proposed methodology for allocating such charges to	340
governmental aggregation customers based upon the proportionate	341
benefit determination made under division (I) of section 4928.20	342
of the Revised Code;	343

(7) A description of a proposed adjustment mechanism for use	344
as described in division (A)(2) of this section;	345

(8) A description and valuation of how the issuance of the	346
phase-in-recovery bonds, including financing costs, will both	347
result in cost savings to customers and mitigate rate impacts to	348
customers when compared to the use of other financing mechanisms	349
or cost-recovery methods available to the electric distribution	350
utility;	351

(9) Any other information required by the commission.

352

(C) The electric distribution utility may restate or	353
incorporate by reference in the application any information	354
required under division (B)(9) of this section that the electric	355
distribution utility previously filed with the commission under	356
sections 4928.141 to 4928.143 of the Revised Code.	357

Sec. 4928.232.  (A) Proceedings on an application submitted	358
by an electric distribution utility under section 4928.231 of the	359
Revised Code shall be governed by Chapter 4903. of the Revised	360
Code, but only to the extent that chapter is not inconsistent with	361
this section. Any party that participated in the proceeding in	362
which phase-in costs were approved under section 4928.144 of the	363
Revised Code shall have standing to participate in proceedings	364
under sections 4928.23 to 4928.2318 of the Revised Code.	365

(B) Within thirty days after the filing of an application	366
under section 4928.231 of the Revised Code, the public utilities	367
commission shall publish a schedule of the proceeding.	368

(C)(1) Not later than one hundred thirty-five days after the	369
date the application is filed, the commission shall issue either a	370
financing order, granting the application in whole or with	371
modifications, or an order suspending or rejecting the	372
application.	373

(2) If the commission suspends an application for a financing	374
order, the commission shall notify the electric distribution	375
utility of the suspension and may direct the electric distribution	376
utility to provide additional information as the commission	377
considers necessary to evaluate the application. Not later than	378
ninety days after the suspension, the commission shall issue	379
either a financing order, granting the application in whole or	380
with modifications, or an order rejecting the application.	381

(D)(1) The commission shall not issue a financing order under	382
division (C) of this section unless the commission determines that	383
the financing order is consistent with section 4928.02 of the	384
Revised Code.	385

(2) Except as provided in division (D)(1) of this section,	386
the commission shall issue a financing order under division (C) of	387
this section if the commission finds that the issuance of the	388
phase-in-recovery bonds and the phase-in-recovery charges	389
authorized by the order are both reasonably expected to result in	390
cost savings to customers and reasonably expected to mitigate rate	391
impacts to customers as compared with traditional financing	392
mechanisms or traditional cost-recovery methods available to the	393
electric distribution utility.	394

(E) The commission shall include all of the following in a	395
financing order issued under division (C) of this section:	396

(1) A determination of the maximum amount and a description	397
of the phase-in costs that may be recovered through	398
phase-in-recovery bonds issued under the financing order;	399

(2) A description of phase-in-recovery property, the creation	400
of which is authorized by the financing order;	401

(3) A description of the financing costs that may be	402
recovered through phase-in-recovery charges and the period over	403
which those costs may be recovered;	404

(4) For phase-in-recovery charges not subject to allocation	405
according to an existing order, a description of the methodology	406
and calculation for allocating phase-in-recovery charges among	407
customer classes, including the allocation of such charges, if	408
any, to governmental aggregation customers based upon the	409
proportionate benefit determination made under division (I) of	410
section 4928.20 of the Revised Code;	411

(5) A description of the adjustment mechanism for use in the	412
imposition, charging, and collection of the phase-in-recovery	413
charges;	414

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

415

(7) Any other provision the commission considers appropriate	416
to ensure the full and timely imposition, charging, collection,	417
and adjustment, pursuant to an approved adjustment mechanism, of	418
the phase-in-recovery charges described in divisions (E)(3) to (5)	419
of this section.	420

(F) The commission shall, in a financing order, afford the	421
electric distribution utility flexibility in establishing the	422
terms and conditions for the phase-in-recovery bonds to	423
accommodate changes in market conditions, including repayment	424
schedules, interest rates, financing costs, collateral	425
requirements, required debt service and other reserves, and the	426
ability of the electric distribution utility, at its option, to	427
effect a series of issuances of phase-in-recovery bonds and	428
correlated assignments, sales, pledges, or other transfers of	429
phase-in-recovery property. Any changes made under this section to	430
terms and conditions for the phase-in-recovery bonds shall be in	431
conformance with the financing order.	432

(G) A financing order may provide that the creation of	433
phase-in-recovery property shall be simultaneous with the sale of	434
that property to an assignee as provided in the application and	435
the pledge of the property to secure phase-in-recovery bonds.	436

(H) The commission shall, in a financing order, require that	437
after the final terms of each issuance of phase-in-recovery bonds	438
have been established, and prior to the issuance of those bonds,	439
the electric distribution utility shall determine the resulting	440
phase-in-recovery charges in accordance with the adjustment	441
mechanism described in the financing order. These	442
phase-in-recovery charges shall be final and effective upon the	443
issuance of the phase-in-recovery bonds, without further	444
commission action.	445

Sec. 4928.233.  (A) Any party to a proceeding under section	446
4928.232 of the Revised Code may petition the public utilities	447
commission for rehearing of an order within thirty days after the	448
date of the issuance of the order.	449

(B) Within sixty days after the issuance of an order after	450
rehearing or a decision denying a petition for rehearing, any	451
party aggrieved by the issuance of any such order or decision may	452
petition for review by the supreme court. Any such petition for	453
review shall be served upon the chairperson of the commission	454
personally or by service at the commission's office.	455

Because delay in the determination of the appeal will delay	456
the issuance of phase-in-recovery bonds, thereby diminishing	457
savings to customers that might be achieved if the bonds were	458
issued under a financing order, the supreme court shall proceed to	459
hear and determine the action as expeditiously as practicable and	460
shall give the action precedence over other matters not accorded	461
similar precedence by law.	462

(C) Any rehearing or review on appeal for a financing order	463
issued under section 4928.232 of the Revised Code shall be	464
governed by Chapter 4903. of the Revised Code.	465

(D) If any phase-in costs are, or if any financing order is,	466
subject to review by the commission or the supreme court, the	467
electric distribution utility may not issue any phase-in-recovery	468
bonds based on those costs or that financing order until all	469
appellate reviews, including any appellate review following a	470
commission decision on remand, have been exhausted.	471

(E) A financing order shall become final and take effect as	472
follows:	473

(1) On the expiration of the thirty-day period after the date	474
the commission issues the financing order, if no petition for	475
rehearing is filed with the commission within that period;	476

(2) On the expiration of the sixty-day period after the	477
denial of the petition for rehearing, if no petition for review is	478
filed with the supreme court within that period;	479

(3) On the expiration of the sixty-day period after the	480
commission issues an order after rehearing that approves or	481
modifies and approves the financing order, if no petition for	482
review is filed with the supreme court within that period;	483

(4) On the expiration of the ten-day period after the date	484
that the supreme court judgment entry or order that approves or	485
modifies and approves a financing order is filed with the clerk,	486
including any such order issued by the court following a	487
commission decision on remand, if no motion for reconsideration is	488
filed within that period;	489

(5) On the date the supreme court order denying a motion for	490
reconsideration of a judgment entry or order that approved or	491
modified and approved a financing order is filed with the clerk;	492

(6) On the date the supreme court judgment entry or order	493
issued after reconsideration of a judgment entry or order that	494
approved or modified and approved a financing order is filed with	495
the clerk;	496

(7) On the applicable effective date under division (E)(1),	497
(2), or (3) of this section regarding a financing order remanded	498
to the commission.	499

Sec. 4928.234.  (A) The phase-in-recovery property created in	500
a final financing order may be transferred, sold, conveyed, or	501
assigned to any person or entity not affiliated with the electric	502
distribution utility subject to the final financing order or to	503
any affiliate of the electric distribution utility created for the	504
limited purpose of acquiring, owning, or administering that	505
property, issuing phase-in-recovery bonds under the final	506
financing order, or a combination of these purposes.	507

(B) All or any portion of the phase-in-recovery property may	508
be pledged to secure the payment of phase-in-recovery bonds,	509
amounts payable to financing parties and bondholders, amounts	510
payable under any ancillary agreement, and other financing costs.	511

(C) The phase-in-recovery property shall constitute an	512
existing, present property right, notwithstanding any requirement	513
that the imposition, charging, and collection of phase-in-recovery	514
charges depend on the electric distribution utility continuing to	515
deliver retail electric distribution service or continuing to	516
perform its servicing functions relating to the collection of	517
phase-in-recovery charges or on the level of future energy	518
consumption. That property shall exist regardless of whether the	519
phase-in-recovery charges have been billed, have accrued, or have	520
been collected, and notwithstanding any requirement that the value	521
or amount of the property is dependent on the future provision of	522
service to customers by the electric distribution utility.	523

(D) All such phase-in-recovery property shall continue to	524
exist until the phase-in-recovery bonds issued under the final	525
financing order are paid in full and all financing costs relating	526
to the bonds have been paid in full.	527

Sec. 4928.235.  (A)(1) A final financing order shall remain	528
in effect until the phase-in-recovery bonds issued under the final	529
financing order and all financing costs related to the bonds have	530
been paid in full.	531

(2) A final financing order shall remain in effect and	532
unabated notwithstanding the bankruptcy, reorganization, or	533
insolvency of the electric distribution utility or any affiliate	534
of the electric distribution utility or the commencement of any	535
judicial or nonjudicial proceeding on the final financing order.	536

(B) A final financing order is irrevocable and the public	537
utilities commission may not reduce, impair, postpone, or	538
terminate the phase-in-recovery charges authorized in the final	539
financing order or impair the property or the collection or	540
recovery of phase-in costs.	541

Under a final financing order, the electric distribution	542
utility retains sole discretion regarding whether to assign, sell,	543
or otherwise transfer phase-in-recovery property, or to cause	544
phase-in-recovery bonds to be issued, including the right to defer	545
or postpone such assignment, sale, transfer, or issuance.	546

Sec. 4928.236. At the request of the electric distribution	547
utility subject to a final financing order, the public utilities	548
commission may commence a proceeding and issue a subsequent	549
financing order that provides for retiring and refunding	550
phase-in-recovery bonds issued under the final financing order if	551
the commission finds that the subsequent financing order satisfies	552
all of the requirements of section 4928.232 of the Revised Code.	553
Effective on retirement of the refunded phase-in-recovery bonds	554
and the issuance of new phase-in-recovery bonds, the commission	555
shall adjust the related phase-in-recovery charges accordingly.	556

Sec. 4928.237.  (A) The public utilities commission, in	557
exercising the commission's powers and carrying out the	558
commission's duties regarding regulation and ratemaking, may not	559
do any of the following:	560

(1) Consider phase-in-recovery bonds issued under a final	561
financing order to be the debt of the electric distribution	562
utility subject to the final financing order;	563

(2) Consider the phase-in-recovery charges imposed, charged,	564
or collected under the final financing order to be revenue of the	565
electric distribution utility;	566

(3) Consider the phase-in costs or financing costs authorized	567
under the final financing order to be the costs of the electric	568
distribution utility.	569

(B) The commission may not order or otherwise require,	570
directly or indirectly, any electric distribution utility to use	571
phase-in-recovery bonds to finance the recovery of phase-in costs	572
or related carrying charges.	573

(C) The commission may not refuse to allow the recovery of	574
phase-in costs or related carrying charges solely because the	575
electric distribution utility has elected or may elect to finance	576
those costs and charges through a financing mechanism other than	577
the issuance of phase-in-recovery bonds.	578

If the electric distribution utility elects not to finance	579
those costs and charges through the issuance of phase-in-recovery	580
bonds as authorized in the final financing order, those costs and	581
charges shall be recovered as previously authorized by the	582
commission.	583

Sec. 4928.238.  (A) An electric distribution utility subject	584
to a final financing order shall file with the public utilities	585
commission, at least annually, or more frequently as provided in	586
the final financing order, a schedule applying the approved	587
adjustment mechanism to the phase-in-recovery charges authorized	588
under the final financing order, based on estimates of consumption	589
for each customer class and other mathematical factors. The	590
electric distribution utility shall submit with the schedule a	591
request for approval to make the adjustments to the	592
phase-in-recovery charges in accordance with the schedule.	593

(B) The commission's review of the request shall be limited	594
to a determination of whether there is any mathematical error in	595
the application of the adjustment mechanism to the	596
phase-in-recovery charges, including the calculation of any	597
proportionate charges allocated to governmental aggregation	598
customers as directed in the final financing order.	599

(C) A request submitted under division (A) of this section	600
shall be deemed approved, and the adjustments shall go into	601
immediate effect, if not approved by the commission within sixty	602
days after the request is submitted.	603

(D) No adjustment approved or deemed approved under this	604
section shall in any way affect the irrevocability of the final	605
financing order as specified in section 4928.235 of the Revised	606
Code.	607

Sec. 4928.239.  (A) As used in this section, "nonbypassable,"	608
with respect to phase-in-recovery charges, means that such charges	609
cannot be avoided by any customer or other person obligated to pay	610
the charges.	611

(B) As long as phase-in-recovery bonds issued under a final	612
financing order are outstanding and the related phase-in costs and	613
financing costs have not been recovered in full, the	614
phase-in-recovery charges authorized under the final financing	615
order shall be nonbypassable and shall apply to both of the	616
following, subject to the methodology approved in the final	617
financing order pursuant to division (E)(4) of section 4928.232 of	618
the Revised Code:	619

(1) All customers of the electric distribution utility	620
located within the electric distribution utility's service area,	621
regardless of whether the customers are or may become entitled to	622
purchase electric generation service from a provider of electric	623
generation service other than an electric distribution utility;	624

(2) Any person or entity located within the electric	625
distribution utility's service area that may subsequently receive	626
retail electric distribution service from another electric	627
distribution utility operating in the same service area.	628

(C) In the event that customers are or become entitled to	629
purchase electric generation service from a provider of electric	630
generation service other than an electric distribution utility,	631
the electric distribution utility subject to the final financing	632
order shall collect the phase-in-recovery charges directly from	633
those customers.	634

(D) The phase-in-recovery charges shall be collected by the	635
electric distribution utility or the electric distribution	636
utility's successors or assignees, or a collection agent, in full	637
through a charge that is separate and apart from the electric	638
distribution utility's base rates.	639

Sec. 4928.2310.  (A)(1) If an electric distribution utility	640
subject to a final financing order defaults on any required	641
payment of phase-in-recovery revenues, a court, upon application	642
by an interested party and without limiting any other remedies	643
available to the applicant, shall order the sequestration and	644
payment of the revenues for the benefit of bondholders, any	645
assignee, and any financing parties. The order shall remain in	646
full force and effect notwithstanding any bankruptcy,	647
reorganization, or other insolvency proceedings with respect to	648
the electric distribution utility or any affiliate.	649

(2) Notwithstanding division (A)(1) of this section,	650
customers of an electric distribution utility shall be held	651
harmless for the electric distribution utility's failure to remit	652
any required payment of phase-in-recovery revenues, and such	653
failure shall in no way affect the phase-in-recovery property or	654
the rights to impose, collect, and adjust the phase-in-recovery	655
charges under section 4928.23 to 4928.2318 of the Revised Code.	656

(B) Phase-in-recovery property under a final financing order	657
and the interests of an assignee, bondholder, or financing party	658
in that property under a financing agreement are not subject to	659
setoff, counterclaim, surcharge, or defense by the electric	660
distribution utility subject to the final financing order or any	661
other person, including as a result of the electric distribution	662
utility's failure to provide past, present, or future services, or	663
in connection with the bankruptcy, reorganization, or other	664
insolvency proceeding of the electric distribution utility, any	665
affiliate, or any other entity.	666

Sec. 4928.2311.  Any successor to an electric distribution	667
utility subject to a final financing order shall be bound by the	668
requirements of sections 4928.23 to 4928.2317 of the Revised Code.	669
The successor shall perform and satisfy all obligations of the	670
electric distribution utility under the final financing order, in	671
the same manner and to the same extent as the electric	672
distribution utility, including the obligation to collect and pay	673
phase-in-recovery revenues to the person entitled to receive those	674
revenues. The successor shall have the same rights of the electric	675
distribution utility under the final financing order, in the same	676
manner and to the same extent as the electric distribution	677
utility.	678

Sec. 4928.2312.  (A) Except as provided in division (C) of	679
this section, the creation, perfection, and enforcement of any	680
security interest in phase-in-recovery property under a final	681
financing order to secure the repayment of the principal of and	682
interest on phase-in-recovery bonds, amounts payable under any	683
ancillary agreement, and other financing costs are governed by	684
this section and not Chapters 1301. to 1309. of the Revised Code.	685

(B) The description of the phase-in-recovery property in a	686
transfer or security agreement and a financing statement is	687
sufficient only if the description refers to this section and the	688
final financing order creating the property. This section applies	689
to all purported transfers of, and all purported grants of, liens	690
on or security interests in that property, regardless of whether	691
the related transfer or security agreement was entered into, or	692
the related financing statement was filed, before or after the	693
effective date of this section.	694

(C)(1) A security interest in phase-in-recovery property	695
under a final financing order is created, valid, and binding at	696
the latest of the date that the security agreement is executed and	697
delivered or the date that value is received for the	698
phase-in-recovery bonds.	699

(2)(a) The security interest shall attach without any	700
physical delivery of collateral or other act, and, upon the filing	701
of the financing statement with the office of the secretary of	702
state, the lien of the security interest shall be valid, binding,	703
and perfected against all parties having claims of any kind in	704
tort, contract, or otherwise against the person granting the	705
security interest, regardless of whether the parties have notice	706
of the lien. Also upon this filing, a transfer of an interest in	707
the phase-in-recovery property shall be perfected against all	708
parties having claims of any kind, including any judicial lien or	709
other lien creditors or any claims of the seller or creditors of	710
the seller, other than creditors holding a prior security	711
interest, ownership interest, or assignment in the property	712
previously perfected in accordance with this division.	713

(b) The secretary of state shall maintain any financing	714
statement filed under division (C)(2) of this section in the same	715
manner that the secretary maintains financing statements filed by	716
transmitting utilities under division (B) of section 1309.501 of	717
the Revised Code. The filing of any financing statement under	718
division (C)(2) of this section shall be governed by the	719
provisions regarding the filing of financing statements in Chapter	720
1309. of the Revised Code.	721

(D)(1) A security interest in phase-in-recovery property	722
under a final financing order is a continuously perfected security	723
interest and has priority over any other lien, created by	724
operation of law or otherwise, that may subsequently attach to	725
that property or those rights or interests unless the holder of	726
any such lien has agreed in writing otherwise.	727

(2) The priority of a security interest in phase-in-recovery	728
property is not affected by the commingling of phase-in-recovery	729
revenues with other amounts. Any pledgee or secured party shall	730
have a perfected security interest in the amount of all	731
phase-in-recovery revenues that are deposited in any cash or	732
deposit account of the electric distribution utility in which	733
phase-in-recovery revenues have been commingled with other funds.	734
Any other security interest that may apply to those funds shall be	735
terminated when the funds are transferred to a segregated account	736
for an assignee or a financing party.	737

(3) No application of the adjustment mechanism as described	738
in section 4928.238 of the Revised Code shall affect the validity,	739
perfection, or priority of a security interest in or the transfer	740
of phase-in-recovery property under the final financing order.	741

Sec. 4928.2313.  (A) Any sale, assignment, or transfer of	742
phase-in-recovery property under a final financing order shall be	743
an absolute transfer and true sale of, and not a pledge of or	744
secured transaction relating to, the seller's right, title, and	745
interest in, to, and under the property, if the documents	746
governing the transaction expressly state that the transaction is	747
a sale or other absolute transfer. A transfer of an interest in	748
that property may be created only when all of the following have	749
occurred:	750

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

751

(2) The documents evidencing the transfer of the property	752
have been executed and delivered to the assignee.	753

(3) Value has been received for the property.

754

(B) The characterization of the sale, assignment, or transfer	755
as an absolute transfer and true sale and the corresponding	756
characterization of the property interest of the purchaser shall	757
be effective and perfected against all third parties and shall not	758
be affected or impaired by, among other things, the occurrence of	759
any of the following:	760

(1) Commingling of phase-in-recovery revenues with other	761
amounts;	762

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

763

(a) A partial or residual interest, including an equity	764
interest, in the phase-in-recovery property, whether direct or	765
indirect, or whether subordinate or otherwise;	766

(b) The right to recover costs associated with taxes,	767
franchise fees, or license fees imposed on the collection of	768
phase-in-recovery revenues.	769

(3) Any recourse that the purchaser or any assignee may have	770
against the seller;	771

(4) Any indemnification rights, obligations, or repurchase	772
rights made or provided by the seller;	773

(5) The obligation of the seller to collect phase-in-recovery	774
revenues on behalf of an assignee;	775

(6) The treatment of the sale, assignment, or transfer for	776
tax, financial reporting, or other purposes;	777

(7) Any application of the adjustment mechanism under the	778
final financing order.	779

Sec. 4928.2314.  (A) The imposition, charging, collection,	780
and receipt of phase-in-recovery revenues under sections 4928.231	781
to 4928.2317 of the Revised Code are not subject to taxation by	782
any municipality of this state under the authority granted to	783
municipalities.	784

(B) Phase-in-recovery bonds issued under a final financing	785
order shall not constitute a debt or a pledge of the faith and	786
credit or taxing power of this state or of any county,	787
municipality, or any other political subdivision of this state.	788
Bondholders shall have no right to have taxes levied by this state	789
or the taxing authority of any county, municipality, or any other	790
political subdivision of this state for the payment of the	791
principal of or interest on the bonds. The issuance of	792
phase-in-recovery bonds does not, directly, indirectly, or	793
contingently, obligate this state or any county, municipality, or	794
political subdivision of this state to levy any tax or make any	795
appropriation for payment of the principal of or interest on the	796
bonds.	797

Sec. 4928.2315.  (A) The state pledges to and agrees with the	798
bondholders, any assignee, and any financing parties under a final	799
financing order that the state will not take or permit any action	800
that impairs the value of phase-in-recovery property under the	801
final financing order or revises the phase-in costs for which	802
recovery is authorized under the final financing order or, except	803
as allowed under section 4928.238 of the Revised Code, reduce,	804
alter, or impair phase-in-recovery charges that are imposed,	805
charged, collected, or remitted for the benefit of the	806
bondholders, any assignee, and any financing parties, until any	807
principal, interest, and redemption premium in respect of	808
phase-in-recovery bonds, all financing costs, and all amounts to	809
be paid to an assignee or financing party under an ancillary	810
agreement are paid or performed in full.	811

(B) Any person who issues phase-in-recovery bonds is	812
permitted to include the pledge specified in division (A) of this	813
section in the phase-in-recovery bonds, ancillary agreements, and	814
documentation related to the issuance and marketing of the	815
phase-in-recovery bonds.	816

Sec. 4928.2316.  (A) The law governing the validity,	817
enforceability, attachment, perfection, priority, and exercise of	818
remedies with respect to the transfer of phase-in-recovery	819
property under a final financing order, or creation of a security	820
interest in any such property, phase-in-recovery charges, or final	821
financing order shall be the laws of this state as set forth in	822
sections 4928.23 to 4928.2318 of the Revised Code.	823

(B) This section shall control in the event of a conflict	824
between sections 4928.23 to 4928.2317 of the Revised Code and any	825
other law regarding the attachment, assignment, or perfection, the	826
effect of perfection, or priority of any security interest in or	827
transfer of phase-in-recovery property under a final financing	828
order.	829

Sec. 4928.2317.  If any provision of sections 4928.23 to	830
4928.2318 of the Revised Code is held to be invalid or is	831
superseded, replaced, repealed, or expires for any reason, that	832
occurrence shall not affect any action allowed under those	833
sections that is taken prior to that occurrence by the public	834
utilities commission, an electric distribution utility, an	835
assignee, a collection agent, a financing party, a bondholder, or	836
a party to an ancillary agreement. Any such action shall remain in	837
full force and effect.	838

Sec. 4928.2318.  An assignee or financing party shall not be	839
considered an electric distribution utility or person providing	840
electric service by virtue of engaging in the transactions	841
described in sections 4928.23 to 4928.2313 of the Revised Code.	842

Section 2.  That existing section 4928.20 of the Revised Code	843
is hereby repealed.	844