                                 CODE OF VIRGINIA

FINANCING FOR CERTAIN SECURITIZED ASSET COSTS; PHASE I UTILITY (§ 56-249.8)

A. As used in this section:
			&#8220;Ancillary agreement&#8221; means a bond, insurance policy, letter of
credit, reserve account, surety bond, interest rate lock or swap arrangement,
hedging arrangement, liquidity or credit support arrangement, or other financial
arrangement entered into in connection with securitized asset cost bonds.
			&#8220;Assignee&#8221; means a legally recognized entity to which an electric
utility assigns, sells, or transfers, other than as a security, all or a portion
of its interest in or right to securitized asset cost property.
&#8220;Assignee&#8221; includes a corporation, limited liability company,
general partnership or limited partnership, public authority trust, financing
entity, or other entity to which an assignee assigns, sells, or transfers, other
than as a security, all or a portion of its interest in or right to securitized
asset cost property.
			&#8220;Bondholder&#8221; means a person who holds a securitized asset cost
bond.
			&#8220;Electric utility&#8221; means a Phase I Utility, as that term is
defined in subdivision A 1 of § 56-585.1.
			&#8220;Financing costs&#8221; means:

   1. Interest and any premium, including any acquisition, defeasance, or
   redemption premium, payable on securitized asset cost bonds;

   2. Any payment required under any indenture, ancillary agreement, or other
   financing documents pertaining to securitized asset cost bonds and any amount
   required to fund or replenish a reserve account or other accounts established
   under the terms of any indenture, ancillary agreement, or other financing
   documents pertaining to securitized asset bonds;

   3. Any other costs related to structuring, offering, issuing, supporting,
   repaying, refunding, servicing, and complying with securitized asset cost
   bonds, including service fees, accounting and auditing fees, trustee fees,
   legal fees, consulting fees, structuring adviser fees, administrative fees,
   placement and underwriting fees, independent director and manager fees,
   capitalized interest, rating agency fees, stock exchange listing and
   compliance fees, security registration fees, filing fees, information
   technology programming costs, and any other costs necessary to otherwise
   ensure the timely payment of securitized asset cost bonds or other amounts or
   charges payable in connection with the bonds, including costs related to
   obtaining the financing order;

   4. Any taxes and license fees or other fees imposed on the revenues generated
   from the collection of securitized asset cost charges or otherwise resulting
   from the collection of securitized asset cost charges, in any such case
   whether paid, payable, or accrued;

   5. Any state and local taxes, franchise, gross receipts, and other taxes or
   similar charges, including regulatory assessment fees, whether paid, payable,
   or accrued;

   6. Any costs incurred by the Commission for any outside consultants or counsel
   retained in connection with the securitization of securitized asset costs; and

   7. Any financing costs on the utility&#8217;s securitized asset cost balance
   prior to issuance of any securitized asset cost bonds, calculated at the
   utility&#8217;s approved weighted average cost of capital.
   				&#8220;Financing order&#8221; means an order that authorizes the issuance
   of securitized asset cost bonds; the imposition, collection, and periodic
   adjustments of a securitized asset cost charge; the creation of securitized
   asset cost property; the sale, assignment, or transfer of securitized asset
   cost property to an assignee; and any other actions necessary or advisable to
   take actions described in the financing order.
   				&#8220;Financing party&#8221; means bondholders and trustees, collateral
   agents, any party under an ancillary agreement, or any other person acting for
   the benefit of bondholders.
   				&#8220;Financing statement&#8221; has the same meaning as provided in
   &#xA7; 8.9A-102 of the Uniform Commercial Code.
   				&#8220;Pledgee&#8221; means a financing party to which an electric utility
   or its successors or assignees mortgages, negotiates, pledges, or creates a
   security interest or lien on all or any portion of its interest in or right to
   securitized asset cost property.
   				&#8220;Securitized asset cost bonds&#8221; means bonds, debentures, notes,
   certificates of participation, certificates of beneficial interest,
   certificates of ownership, or other evidences of indebtedness or ownership
   that are issued in one or more series or tranches by an electric utility or
   its assignee pursuant to a financing order, the proceeds of which are used
   directly or indirectly to recover, finance, or refinance Commission-approved
   securitized asset costs and financing costs, and that are secured by or
   payable from securitized asset cost property. If certificates of participation
   or ownership are issued, references in this section to principal, interest, or
   premium shall be construed to refer to comparable amounts under those
   certificates.
   				&#8220;Securitized asset cost charge&#8221; means the non-bypassable
   charges authorized by the Commission to repay, finance, or refinance
   securitized asset costs and financing costs (i) imposed on and part of all
   retail customer bills, except those of exempt retail access customers; (ii)
   collected by an electric utility or its successor or assignees, or a
   collection agent, in full, separate and apart from the electric
   utility&#8217;s base rates; and (iii) paid by all retail customers of the
   electric utility, irrespective of the generation supplier of such customer,
   except for an exempt retail access customer.
   				&#8220;Securitized asset costs&#8221; means (i) storm recovery costs
   incurred by an electric utility due to severe weather events, as recognized by
   nationally recognized standards including standards published by the Institute
   of Electrical and Electronics Engineers, and natural disasters and (ii)
   undepreciated generation utility plant balances.
   				&#8220;Storm recovery costs&#8221; means investments and expenses incurred
   by an electric utility on or after January 1, 2024, arising from or related to
   any major storm, extraordinary weather event, or natural disaster affecting
   Phase I Utility ratepayers in Virginia, including costs of the mobilization,
   staging, construction, reconstruction, repair, or replacement of production,
   generation, transport, transmission, general, or distribution facilities and
   the costs of any other activity by or on behalf of an electric utility in
   connection with the restoration of service associated with outages impacting
   its customers as a result of such major storm, extraordinary weather event, or
   natural disaster.
   				&#8220;Undepreciated generation utility plant balances&#8221; means any
   unrecovered capitalized costs of or undepreciated investments in one or more
   fossil-fired electric generating plants having nameplate capacity in excess of
   1,000 megawatts each, and related supply, transmission, equipment, and
   fixtures. &#8220;Undepreciated generation utility plant balances&#8221; shall
   include (i) the net book value of assets on the electric utility&#8217;s
   balance sheet related to such generating plants and related infrastructure and
   (ii) carrying costs authorized by the Commission. &#8220;Undepreciated
   generation utility plant balances&#8221; does not include (a) any costs of
   removing retired generating plant assets; (b) any capitalized costs and
   investments in fossil-fired electric generating plants and related supply,
   transmission, equipment, and fixtures incurred or made by an electric utility
   on or after December 31, 2023; and (c) any non-cash asset retirement
   obligation assets and related accumulated depreciation.
   				&#8220;Uniform Commercial Code&#8221; means Titles 8.1A through 8.13
   (&#xA7; 8.1A-101 et seq.).

B. Notwithstanding the provisions of Chapter 3 (§ 56-55 et seq.), an electric
utility may petition the Commission for a financing order pursuant to this
section. No more than four months after the date such petition is filed, the
Commission shall issue either (i) such financing order in accordance with the
requirements of subdivision 2 or (ii) an order rejecting the petition.

   1. The petition shall include (i) an estimate of the total amount of any
   securitized asset costs that the electric utility has incurred over the time
   period noted in the petition; (ii) an indication of whether the electric
   utility proposes to finance all or a portion of the securitized asset costs
   using one or more series or tranches of securitized asset cost bonds; (iii) an
   estimate and details of the financing costs related to the securitized asset
   costs to be financed through the securitized asset cost bonds; (iv) an
   estimate of the securitized asset cost charges necessary to recover the
   securitized asset costs and all financing costs and the proposed period for
   recovery of such costs; (v) a description of any benefits expected to result
   from the issuance of securitized asset cost bonds, including the avoidance of
   or significant mitigation of abrupt and significant increases in rates to the
   electric utility&#8217;s customers for the applicable time period; and (vi)
   direct testimony and exhibits supporting the petition. If the electric utility
   proposes to finance a portion of the securitized asset costs, the electric
   utility shall identify in the petition the specific amount of securitized
   asset costs for the applicable time period to be financed using securitized
   asset cost bonds. By electing not to finance a portion of the securitized
   asset costs for an applicable time period using securitized asset cost bonds,
   an electric utility shall not be deemed to waive its right to recover such
   costs pursuant to a separate proceeding with the Commission.

   2. a. A financing order issued by the Commission pursuant to this section
   shall include:

      1. The amount of securitized asset costs to be financed using securitized
      asset cost bonds. The Commission shall describe and estimate the amount of
      financing costs that may be recovered through securitized asset cost
      charges. The financing order shall also specify the period over which
      securitized asset costs and financing costs may be recovered and whether the
      securitized asset cost bonds may be offered and issued in one or more series
      or tranches during a fixed period not to exceed one year after the date of
      the financing order;

      2. A finding that the proposed issuance of securitized asset cost bonds is
      in the public interest and the associated securitized asset cost charges are
      just and reasonable;

      3. A finding that the structuring and pricing of the securitized asset cost
      bonds are reasonably expected to result in reasonable securitized asset
      charges consistent with market conditions at the time the securitized asset
      cost bonds are priced and the terms set forth in such financing order;

      4. A requirement that, for so long as the securitized asset cost bonds are
      outstanding and until all financing costs have been paid in full, the
      imposition and collection of securitized asset cost charges authorized under
      a financing order shall be non-bypassable and paid by all retail customers
      of the electric utility, irrespective of the generation supplier of such
      customer, except for an exempt retail access customer;

      5. A formula-based true-up mechanism for making annual adjustments to the
      securitized asset cost charges that customers are required to pay pursuant
      to the financing order and for making any adjustments that are necessary to
      correct for any overcollection or undercollection of the charges or to
      otherwise ensure the timely payment of securitized asset cost bonds and
      financing costs and other required amounts and charges payable in connection
      with the securitized asset cost bonds;

      6. The securitized asset cost property that is, or shall be, created in
      favor of an electric utility or its successors or assignees and that shall
      be used to pay or secure securitized asset cost bonds and all financing
      costs;

      7. The authority of the electric utility to establish (i) the terms and
      conditions of the securitized asset cost bonds, including repayment
      schedules, expected interest rates, the issuance in one or more series or
      tranches with different maturity dates, and other financing costs, and (ii)
      the terms and conditions of the ancillary documents related to the
      securitized asset cost bonds, including servicing arrangements for
      securitized asset cost charges;

      8. A finding that the securitized asset cost charges shall be allocated
      among customer classes in accordance with the methodology approved in the
      electric utility&#8217;s most recent base rate case;

      9. A requirement that after the final terms of an issuance of securitized
      asset cost bonds have been established and before the issuance of
      securitized asset cost bonds, the electric utility determines the resulting
      initial securitized asset cost charge in accordance with the financing order
      and that such initial securitized asset cost charge be final and effective
      upon the issuance of such securitized asset cost bonds without further
      Commission action so long as such initial securitized asset cost charge is
      consistent with the financing order;

      10. A method of tracing funds collected as securitized asset cost charges,
      or other proceeds of securitized asset cost property, and a requirement that
      such method be the method of tracing such funds and determining the
      identifiable cash proceeds of any securitized asset cost property subject to
      the financing order under applicable law;

      11. A requirement that the electric utility&#8217;s base rates, exclusive of
      the cost of securitized asset cost bonds, reflect the reduction of rates
      associated with securitization effective on the date on which proceeds from
      the issuance of the securitized asset cost bonds are received by the
      electric utility. Such requirement may be met through the use of a temporary
      tracker to credit customers until such reduction is reflected in the base
      rates established through the electric utility&#8217;s next base rate case;

      12. Any other conditions not otherwise inconsistent with this section that
      the Commission determines are appropriate;

      13. A requirement that the electric utility&#8217;s base rates, exclusive of
      the cost of securitized asset cost bonds, reflect the reduction of rate base
      associated with the securitization of utility plant balances effective on
      the date proceeds from the issuance of the securitized asset cost bonds are
      received by the utility. This can be accomplished through the use of a
      temporary tracker to credit customers until the electric utility&#8217;s
      next base rate case, at which point the reduction in rate base shall be
      reflected in base rates;

      14. A method of tracing funds collected as securitized asset cost charges,
      or other proceeds of securitized asset cost property, and a requirement that
      such method be the method of tracing such funds and determining the
      identifiable cash proceeds of any securitized asset cost property subject to
      the financing order under applicable law; and

      15. Any other conditions not otherwise inconsistent with this section that
      the Commission determines are appropriate.
      					b. Neither a financing order issued pursuant to this section nor the
      Commission&#8217;s approval of a petition for a financing order shall
      require that securitized asset cost bonds be marketed as a specified type of
      security or that the assignee be formed as a specified type of entity. The
      electric utility shall maintain discretion to determine the type of security
      that securitized asset cost bonds shall be.
      					c. A financing order issued to an electric utility may provide that
      creation of the electric utility&#8217;s securitized asset cost property is
      conditioned upon, and simultaneous with, the sale or other transfer for the
      securitized asset cost property to an assignee and the pledge of the
      securitized asset cost property to secure securitized asset cost bonds.
      					d. If the Commission issues a financing order, the Commission shall
      establish a protocol for the electric utility to annually file a petition
      or, in the Commission&#8217;s discretion, a letter setting out application
      of the formula-based mechanism and, based on estimates of consumption for
      each rate class and other mathematical factors, requesting administrative
      approval to make applicable adjustments. The review of the filing shall be
      limited to determining whether there are any mathematical or clerical errors
      in the application of the formula-based mechanism relating to the
      appropriate amount of any overcollection or undercollection of securitized
      asset cost charges and the amount of an adjustment. The adjustments shall
      ensure the recovery of revenues sufficient to provide for the payment of
      principal, interest, acquisition, defeasance, financing costs, or redemption
      premium and other fees, costs, and charges in respect of securitized asset
      cost bonds approved under the financing order. Within 30 days after
      receiving an electric utility&#8217;s request pursuant to this subdivision
      d, the Commission shall either approve the request or inform the electric
      utility of any mathematical or clerical errors in its calculation. If the
      Commission informs the electric utility of mathematical or clerical errors
      in its calculation, the electric utility may correct such errors and refile
      its request. The 30-day time frame previously described in this subdivision
      d shall apply to a refiled request.
      					e. Subsequent to the transfer of securitized asset cost property to an
      assignee or the issuance of securitized asset cost bonds authorized thereby,
      whichever is earlier, a financing order shall be irrevocable and, except for
      changes made pursuant to the formula-based mechanism authorized in this
      section, the Commission shall not amend, modify, or terminate the financing
      order by any subsequent action or reduce, impair, postpone, terminate, or
      otherwise adjust securitized asset cost charges approved in the financing
      order. After the issuance of a financing order, the electric utility shall
      retain sole discretion regarding whether to assign, sell, or otherwise
      transfer securitized asset cost property or to cause securitized asset cost
      bonds to be issued, including the right to defer or postpone such
      assignment, sale, transfer, or issuance.

   3. At the request of an electric utility, the Commission may commence a
   proceeding and issue a subsequent financing order that provides for
   refinancing, retiring, or refunding securitized asset cost bonds issued
   pursuant to the original financing order if the Commission finds that the
   subsequent financing order satisfies all of the criteria specified in this
   section for a financing order. Effective upon retirement of the refunded
   securitized asset bonds and the issuance of new securitized asset cost bonds,
   the Commission shall adjust the related securitized asset cost charges
   accordingly.

   4. a. A financing order shall remain in effect and securitized asset cost
   property under the financing order shall continue to exist until securitized
   asset cost bonds issued pursuant to the financing order have been paid in full
   or defeased and, in each case, all Commission-approved financing costs of such
   securitized asset cost bonds have been recovered in full.
   				b. A financing order issued to an electric utility shall remain in effect
   and unabated notwithstanding the reorganization, bankruptcy or other
   insolvency proceedings, merger, or sale of the electric utility or its
   successors or assignees.

C. 1. The Commission shall not, in exercising its powers and carrying out its
duties regarding any matter within its authority pursuant to this chapter, and
notwithstanding any other provision of law, (i) consider the securitized asset
cost bonds issued pursuant to a financing order to be the debt of the electric
utility other than for federal income tax purposes, including for any purpose
under § 56-585.8; (ii) consider the securitized asset cost charges paid under
the financing order to be the revenue of the electric utility for any purpose,
including for any purpose under § 56-585.8; (iii) consider the securitized
asset costs or financing costs specified in the financing order to be the costs
of the electric utility, including for any purpose under § 56-585.8; or (iv)
determine any action taken by an electric utility that is consistent with the
financing order to be unjust or unreasonable.

   2. The Commission shall not order or otherwise directly or indirectly require
   an electric utility to use securitized asset cost bonds to finance any
   project, addition, plant, facility, extension, capital improvement, equipment,
   or any other expenditure. After the issuance of a financing order, the
   electric utility shall retain sole discretion regarding whether to cause the
   securitized asset cost bonds to be issued, including the right to defer or
   postpone such sale, assignment, transfer, or issuance. Nothing shall prevent
   the electric utility from abandoning the issuance of securitized asset cost
   bonds under the financing order by filing with the Commission a statement of
   abandonment and the reasons therefor. The Commission shall not deny an
   electric utility its right to recover securitized asset costs as otherwise
   provided in this section, or refuse or condition authorization or approval of
   the issuance and sale by an electric utility of securities or the assumption
   by the electric utility of liabilities or obligations, solely because of the
   potential availability of securitized asset cost bond financing.

D. The electric bills of an electric utility that has obtained a financing order
and caused securitized asset cost bonds to be issued shall comply with the
provisions of this subsection; however, the failure of an electric utility to
comply with this subsection shall not invalidate, impair, or affect any
financing order, securitized asset cost property, securitized asset cost charge,
or securitized asset cost bonds. The electric utility shall:

   1. Explicitly reflect that a portion of the charges on any electric bill
   represents securitized asset cost charges approved in a financing order issued
   to the electric utility and, if the securitized asset cost property has been
   transferred to an assignee, such bill shall include a statement to the effect
   that the assignee is the owner of the rights to securitized asset cost charges
   and that the electric utility or another entity, if applicable, is acting as a
   collection agent or servicer for the assignee. The tariff applicable to
   customers must indicate the securitized asset cost charge and the ownership of
   the charge; and

   2. Include the securitized asset cost charge on each customer&#8217;s bill as
   a separate line item and include both the rate and the amount of the charge on
   each bill.

E. 1. The following provisions shall be applicable to securitized asset cost
property:
			a. All securitized asset cost property that is specified in a financing order
shall constitute an existing, present intangible property right or interest
therein, notwithstanding that the imposition and collection of securitized asset
cost charges depends on the electric utility, to which the financing order is
issued, performing its servicing functions relating to the collection of
securitized asset cost charges and on future electricity consumption. The
securitized asset cost property shall exist (i) regardless of whether or not the
revenues or proceeds arising from the securitized asset cost property have been
billed, have accrued, or have been collected and (ii) notwithstanding the fact
that the value or amount of the securitized asset cost property is dependent on
the future provision of service to customers by the electric utility or its
successors or assignees and the future consumption of electricity by customers;
			b. Securitized asset cost property specified in a financing order shall exist
until securitized asset cost bonds issued pursuant to the financing order are
paid in full and all financing costs and other costs of such securitized asset
cost bonds have been recovered in full;
			c. All or any portion of securitized asset cost property specified in a
financing order issued to an electric utility may be transferred, sold,
conveyed, or assigned to a successor or assignee that is wholly owned, directly
or indirectly, by the electric utility and created for the limited purpose of
acquiring, owning, or administering securitized asset cost property or issuing
securitized asset cost bonds under the financing order. All or any portion of
securitized asset cost property may be pledged to secure securitized asset cost
bonds issued pursuant to the financing order, amounts payable to financing
parties and to counterparties under any ancillary agreements, and other
financing costs. Any transfer, sale, conveyance, assignment, or grant of a
security interest in or pledge of securitized asset cost property by an electric
utility, or an affiliate of the electric utility, to an assignee, to the extent
previously authorized in a financing order, shall not require the prior consent
and approval of the Commission;
			d. If an electric utility defaults on any required payment of charges arising
from securitized asset cost property specified in a financing order, a court,
upon application by an interested party, and without limiting any other remedies
available to the applying party, shall order the sequestration and payment of
the revenues arising from the securitized asset cost property to the financing
parties or their assignees. Any such financing order shall remain in full force
and effect notwithstanding any reorganization, bankruptcy, or other insolvency
proceedings with respect to the electric utility or its successors or assignees;
			e. The interest of a transferee, purchaser, acquirer, assignee, or pledgee in
securitized asset cost property specified in a financing order issued to an
electric utility, and in the revenue and collections arising from that property,
shall not be subject to setoff, counterclaim, surcharge, or defense by the
electric utility or any other person or in connection with the reorganization,
bankruptcy, or other insolvency of the electric utility or any other entity;
			f. Any successor to an electric utility, whether pursuant to any
reorganization, bankruptcy, or other insolvency proceeding or whether pursuant
to any merger or acquisition, sale, or other business combination, or transfer
by operation of law, as a result of electric utility restructuring or otherwise,
shall perform and satisfy all obligations of, and have the same rights under a
financing order as, the electric utility under the financing order in the same
manner and to the same extent as the electric utility, including collecting and
paying to the person entitled to receive the revenues, collections, payments, or
proceeds of the securitized asset cost property. Nothing in this subdivision f
is intended to limit or impair any authority of the Commission concerning the
transfer or succession of interests of public utilities; and
			g. Securitized asset cost bonds shall be nonrecourse to the credit or any
assets of the electric utility other than the securitized asset cost property as
specified in the financing order and any rights under any ancillary agreement.

   2. The following provisions shall be applicable to security interests:
   				a. The creation, perfection, and enforcement of any security interest in
   securitized asset cost property to secure the repayment of the principal and
   interest and other amounts payable in respect of securitized asset cost bonds;
   amounts payable under any indenture, ancillary agreement, or other financing
   documents in respect of the securitized asset costs; and other financing costs
   shall be governed by this subsection and not by the provisions of the Uniform
   Commercial Code;
   				b. A security interest in securitized asset cost property shall be created
   and enforceable when all of the following have occurred: (i) a financing order
   is issued, (ii) value is received by the debtor or seller for such securitized
   asset cost property, (iii) the debtor or seller has rights in such securitized
   asset cost property or the power to transfer rights in such securitized asset
   cost property, and (iv) a security agreement granting such security interest
   is executed and delivered by the debtor or seller. The description of
   securitized asset cost property in a security agreement shall be sufficient if
   the description refers to this section and the financing order creating the
   securitized asset cost property;
   				c. A security interest shall attach without any physical delivery of
   collateral or other act and, upon the filing of a financing statement with the
   Commission, the lien of the security interest shall be valid, binding, and
   perfected against all parties having claims of any kind in tort, contract, or
   otherwise against the person granting the security interest, regardless of
   whether the parties have notice of the lien. Also upon this filing, a transfer
   of an interest in the securitized asset cost property shall be perfected
   against all parties having claims of any kind, including any judicial lien or
   other lien creditors or any claims of the transferor or creditors of the
   transferor, and shall have priority over all competing claims other than any
   prior security interest, ownership interest, or assignment in the property
   previously perfected in accordance with this section;
   				d. The Commission shall maintain any financing statement filed to perfect
   any security interest under this section in the same manner that the
   Commission maintains financing statements filed by transmitting utilities
   under the Uniform Commercial Code. The filing of a financing statement under
   this section shall be governed by the provisions regarding the filing of
   financing statements in the Uniform Commercial Code;
   				e. The priority of a security interest in securitized asset cost property
   shall not be affected by the commingling of securitized asset cost charges
   with other amounts. Any pledgee or secured party shall have a perfected
   security interest in the amount of all securitized asset cost charges that are
   deposited in any cash or deposit account of the qualifying utility in which
   securitized asset cost charges have been commingled with other funds and any
   other security interest that may apply to those funds shall be terminated when
   they are transferred to a segregated account for the assignee or a financing
   party;
   				f. No application of the formula-based adjustment mechanism as provided in
   this section shall affect the validity, perfection, or priority of a security
   interest in or transfer of securitized asset cost property; and
   				g. If a default or termination occurs under the securitized asset cost
   bonds, the financing parties or their representatives may foreclose on or
   otherwise enforce their lien and security interest in any securitized asset
   cost property as if they were secured parties with a perfected and prior lien
   under the Uniform Commercial Code, and the Commission may order that amounts
   arising from securitized asset cost charges be transferred to a separate
   account for the financing parties&#8217; benefit, to which their lien and
   security interest shall apply. On application by or on behalf of the financing
   parties, the Commission shall order the sequestration and payment to them of
   revenues arising from the securitized asset cost charges.

   3. a. Any sale, assignment, or other transfer of securitized asset cost
   property shall be an absolute transfer and true sale of and not a pledge of,
   or secured transaction relating to, the transferor&#8217;s right, title, and
   interest in, to, and under the securitized asset cost property if the
   documents governing the transaction expressly state that the transaction is a
   sale or other absolute transfer other than for federal and state income tax
   purposes. For all purposes other than federal and state income tax purposes,
   the parties&#8217; characterization of a transaction as a sale of an interest
   in securitized asset cost property shall be conclusive that the transaction is
   a true sale and that ownership has passed to the party characterized as the
   purchaser, regardless of any fact or circumstance that might support
   characterization of the transfer as a secured transaction. A transfer of an
   interest in securitized asset cost property shall occur only when all of the
   following have occurred: (i) the financing order creating the securitized
   asset cost property has become effective, (ii) the documents evidencing the
   transfer of securitized asset cost property have been executed by the
   transferor and delivered to the assignee, and (iii) value is received by the
   transferor for the securitized asset cost property. After such a transaction,
   the securitized asset cost property shall not be subject to any claims of the
   transferor or the transferor&#8217;s creditors, other than creditors holding a
   prior security interest in the securitized asset cost property perfected in
   accordance with subdivision 2.
   				b. The characterization of the sale, assignment, or other transfer as an
   absolute transfer and true sale, and the corresponding characterization of the
   interest of the assignee as an ownership interest, shall not be affected or
   impaired by the occurrence of any of the following factors:

      1. Commingling of securitized asset cost charges with other amounts;

      2. The retention by the seller of (i) a partial or residual interest,
      including an equity interest, in the securitized asset cost property,
      whether direct or indirect, or whether subordinate or otherwise, or (ii) the
      right to recover costs associated with taxes, franchise fees, or license
      fees imposed on the collection of securitized asset cost charges;

      3. Any recourse that the assignee may have against the seller;

      4. Any right or obligation that the seller may have to repurchase the
      securitized asset cost charges;

      5. Any indemnification obligations of the seller;

      6. The obligation of the seller to collect securitized asset cost charges on
      behalf of the assignee;

      7. The transferor acting as the servicer of the securitized asset cost
      charges or the existence of any contract that authorizes or requires the
      electric utility, to the extent that any interest in securitized asset cost
      property is sold or assigned, to agree with the assignee or any financing
      party that it will continue to operate its system to provide service to its
      customers, will collect amounts in respect of the securitized asset cost
      charges for the benefit and account of such assignee or financing party, and
      will account for and remit such amounts to or for the account of such
      assignee or financing party;

      8. The treatment of the sale, conveyance, assignment, or other transfer for
      tax, financial reporting, or other purposes;

      9. The granting or providing to bondholders of a preferred right to the
      securitized asset cost property or credit enhancement by the electric
      utility or its affiliates with respect to the securitized asset cost bonds;
      or

      10. Any application of the formula-based adjustment mechanism as provided in
      this section.
      					c. Any right that an electric utility has in the securitized asset cost
      property before its pledge, sale, or transfer or any other right created
      under this section or created in the financing order and assignable under
      this section or assignable pursuant to a financing order shall be property
      in the form of a contract right or a chose in action. Transfer of an
      interest in securitized asset cost property to an assignee shall be
      enforceable only when all of the following have occurred: (i) a financing
      order is issued, (ii) value is received by the transferor for such
      securitized asset cost property, (iii) the transferor has rights in such
      securitized asset cost property or the power to transfer rights in such
      securitized asset cost property, and (iv) transfer documents in connection
      with the issuance of securitized asset cost bonds are executed and delivered
      by the transferor. An enforceable transfer of an interest in securitized
      asset cost property to an assignee shall be perfected against all third
      parties, including subsequent judicial or other lien creditors, when a
      notice of that transfer has been given by the filing of a financing
      statement in accordance with subdivision 2 c. The transfer shall be
      perfected against third parties as of the date of filing.
      					d. The Commission shall maintain any financing statement filed to
      perfect any sale, assignment, or transfer of securitized asset cost property
      under this section in the same manner that the Commission maintains
      financing statements filed by transmitting utilities under the Uniform
      Commercial Code. The filing of any financing statement under this section
      shall be governed by the provisions regarding the filing of financing
      statements in the Uniform Commercial Code. The filing of such a financing
      statement shall be the only method of perfecting a transfer of securitized
      asset cost property.
      					e. The priority of a transfer perfected under this section shall not be
      impaired by any later modification of the financing order or securitized
      asset cost property or by the commingling of funds arising from securitized
      asset cost property with other funds. Any other security interest that may
      apply to those funds, other than a security interest perfected under
      subdivision 2, shall be terminated when they are transferred to a segregated
      account for the assignee or a financing party. If securitized asset cost
      property has been transferred to an assignee or financing party, any
      proceeds of that property shall be held in trust for the assignee or
      financing party.
      					f. The priority of the conflicting interests of assignees in the same
      interest or rights in any securitized asset cost property shall be
      determined as follows:

      1. Conflicting perfected interests or rights of assignees shall rank
      according to priority in time of perfection. Priority shall date from the
      time a filing covering the transfer is made in accordance with subdivision 2
      c;

      2. A perfected interest or right of an assignee shall have priority over a
      conflicting unperfected interest or right of an assignee; and

      3. A perfected interest or right of an assignee shall have priority over a
      person who becomes a lien creditor after the perfection of such
      assignee&#8217;s interest or right.

F. The description of securitized asset cost property being transferred to an
assignee in any sale agreement, purchase agreement, or other transfer agreement,
granted or pledged to a pledgee in any security agreement, pledge agreement, or
other security document, or indicated in any financing statement shall only be
sufficient if such description or indication refers to the financing order that
created the securitized asset cost property and states that the agreement or
financing statement covers all or part of the property described in the
financing order. This section shall apply to all purported transfers of, and all
purported grants or liens or security interests in, securitized asset cost
property, regardless of whether the related sale agreement, purchase agreement,
other transfer agreement, security agreement, pledge agreement, or other
security document was entered into, or any financing statement was filed.

G. All financing statements referenced in this section shall be subject to Part
5 of Title 8.9A (&#xA7; 8.9A-501 et seq.) of the Uniform Commercial Code, except
that the requirement as to continuation statements shall not apply.

H. The laws of the Commonwealth shall govern the validity, enforceability,
attachment, perfection, priority, and exercise of remedies with respect to the
transfer of an interest or right or the pledge or creation of a security
interest in any securitized asset cost property.

I. Neither the Commonwealth nor its political subdivisions shall be liable on
any securitized asset cost bonds, and the bonds shall not be a debt or a general
obligation of the Commonwealth or any of its political subdivisions, agencies,
or instrumentalities, nor shall they be special obligations or indebtedness of
the Commonwealth or any of its agencies or political subdivisions. An issue of
securitized asset cost bonds shall not, directly, indirectly, or contingently,
obligate the Commonwealth or any agency, political subdivision, or
instrumentality of the Commonwealth to levy any tax or make any appropriation
for payment of the securitized asset cost bonds, other than in their capacity as
consumers of electricity. All securitized asset cost bonds shall contain on the
face thereof a statement to the following effect: &#8220;NEITHER THE FULL FAITH
AND CREDIT NOR THE TAXING POWER OF THE COMMONWEALTH IS PLEDGED TO THE PAYMENT OF
THE PRINCIPAL OF, OR INTEREST ON, THIS BOND.&#8221;

J. All of the following entities may legally invest any sinking funds, moneys,
or other funds in securitized asset cost bonds:

   1. Subject to applicable statutory restrictions on state or local investment
   authority, the Commonwealth, units of local government, political
   subdivisions, public bodies, and public officers, except for members of the
   Commission;

   2. Banks and bankers, savings and loan associations, credit unions, trust
   companies, savings banks and institutions, investment companies, insurance
   companies, insurance associations, and other persons carrying on a banking or
   insurance business;

   3. Personal representatives, guardians, trustees, and other fiduciaries; and

   4. All other persons authorized to invest in bonds or other obligations of a
   similar nature.

K. 1. The Commonwealth and its agencies, including the Commission, pledge and
agree with bondholders, the owners of the securitized asset cost property, and
other financing parties that the Commonwealth and its agencies shall not take
any action listed in this subdivision. This subsection does not preclude
limitation or alteration if full compensation is made by law for the full
protection of the securitized asset cost charges collected pursuant to a
financing order and of the bondholders and any assignee or financing party
entering into a contract with the electric utility. The Commonwealth and its
agencies, including the Commission, shall not:
			a. Alter the provisions of this section that authorize the Commission to
create an irrevocable contract right or chose in action by the issuance of a
financing order, to create securitized asset cost property, and to make the
securitized asset cost charges imposed by a financing order irrevocable,
binding, or non-bypassable charges;
			b. Take or permit any action that impairs or would impair the value of
securitized asset cost property or the security for the securitized asset cost
bonds or revises the securitized asset costs for which recovery is authorized;
			c. In any way impair the rights and remedies of the bondholders, assignees,
and other financing parties; or
			d. Except for changes made pursuant to the formula-based adjustment mechanism
authorized under this section, reduce, alter, or impair securitized asset cost
charges that are to be imposed, billed, charged, collected, and remitted for the
benefit of the bondholders, any assignee, and any other financing parties until
any and all principal, interest, premium, financing costs and other fees,
expenses, or charges incurred, and any contracts to be performed, in connection
with the related securitized asset cost bonds have been paid and performed in
full.

   2. Any person that issues securitized asset cost bonds may include the
   language specified in subdivision 1 in the securitized asset cost bonds and
   related documentation.

L. An assignee or financing party shall not be considered an electric utility or
person providing electric service by virtue of engaging in the transactions
described in this section.

M. If there is a conflict between this section and any other law regarding the
attachment, assignment, or perfection, or the effect of perfection, or priority
of, assignment or transfer of, or security interest in securitized asset cost
property, this section shall govern.

N. In making determinations under this section, the Commission may engage an
outside consultant and counsel.

O. Nothing in this section shall be construed to limit the ability of an
electric utility to seek any available relief pursuant to any other provision of
law, including &#xA7; 56-585.8.

P. The provisions of this section shall not apply to any customer that has
chosen to purchase electric energy from a licensed supplier other than the
incumbent electric utility serving the exclusive territory in which such
customer is located pursuant to &#xA7; 56-577 prior to February 1, 2019.

HISTORY: 2025, cc. 497, 597.