Connecticut Seal

General Assembly

 

Raised Bill No. 1176

January Session, 2011

 

LCO No. 4529

 

*04529_______ET_*

Referred to Committee on Energy and Technology

 

Introduced by:

 

(ET)

 

AN ACT CONCERNING ELECTRIC RATE RELIEF.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. (NEW) (Effective July 1, 2011) (a) As used in this section:

(1) "Person" has the same meaning as provided in section 12-1 of the general statutes;

(2) "Electric generation services" has the same meaning as provided in section 16-1 of the general statutes;

(3) "Electric generation facility" means electric generation facility, as the term is used in section 12-94d of the general statutes;

(4) "Regional bulk power grid" means regional bulk power grid, as the term is used in section 16a-7b of the general statutes;

(5) "Alternative energy system" has the same meaning as provided in subdivision (21) of subsection (a) of section 12-213 of the general statutes;

(6) "Fuel cells" has the same meaning as provided in subdivision (113) of section 12-412 of the general statutes;

(7) "Commissioner" means the Commissioner of Revenue Services;

(8) "Department" means the Department of Revenue Services; and

(9) "Person subject to tax" means a person providing electric generation services and uploading electricity generated at such person's electric generation facility in this state to the regional bulk power grid.

(b) (1) For each calendar quarter commencing on or after July 1, 2011, there is hereby imposed a tax on each person subject to tax, which tax shall be one-half of one mill for oil-fueled generation, two cents on nuclear generation, and one-half of one cent on coal-fired generation, multiplied by the net kilowatt hours of electricity generated by such person at such person's electric generation facility in this state and uploaded to the regional bulk power grid, provided the tax imposed by this subsection on coal-fired generation shall only be imposed on the net kilowatt hours of electricity generated by such electric generation facility in this state and uploaded to regional bulk power grid during the months of January, February, June, July and August.

(2) Each person subject to tax shall, on or before the last day of January, April, July and October of each year, render to the commissioner a return, on forms prescribed or furnished by the commissioner, reporting the kilowatt hours of electricity generated by such person at such person's electric generation facility in this state and uploaded to the regional bulk power grid during the calendar quarter ending on the last day of the preceding month and reporting such other information as the commissioner deems necessary for the proper administration of this section. The tax imposed under this section shall be due and payable on the due date of such return. Each person subject to tax shall be required to file such return electronically with the department and to make payment of such tax by electronic funds transfer in the manner provided by chapter 228g of the general statutes, irrespective of whether the person subject to tax would have otherwise been required to file such return electronically or to make such tax payment by electronic funds transfer under the provisions of chapter 228g of the general statutes.

(c) Whenever the tax imposed under this section is not paid when due, a penalty of ten per cent of the amount due and unpaid or fifty dollars, whichever is greater, shall be imposed and interest at the rate of one per cent per month or fraction thereof shall accrue on such tax from the due date of such tax until the date of payment.

(d) The provisions of section 12-548 of the general statutes, sections 12-550 to 12-554, inclusive, of the general statutes and section 12-555a of the general statutes shall apply to the provisions of this section in the same manner and with the same force and effect as if the language of said sections had been incorporated in full into this section and had expressly referred to the tax imposed under this section, except to the extent that any provision is inconsistent with a provision in this section.

(e) The tax imposed by this section shall not apply to any net kilowatt hours of electricity generated at an electric generation facility in this state exclusively through the use of fuel cells or an alternative energy system.

(f) At the end of each fiscal year commencing with the fiscal year ending June 30, 2012, the Comptroller is authorized to record as revenue for such fiscal year the amount of tax imposed under the provisions of this section on electricity generated prior to the end of such fiscal year and which tax is received by the Commissioner of Revenue Services not later than five business days after the last day of July immediately following the end of such fiscal year.

(g) Revenues collected from the tax imposed pursuant to this section shall be (1) credited to the resources of the General Fund, (2) used to provide ratepayer relief, and (3) used to provide funding for clean and renewable energy projects.

Sec. 2. Subsection (a) of section 16-245e of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2011):

(a) As used in this section [,] and sections 16-245f to 16-245k, inclusive: [, and section 16-245m:]

(1) "Rate reduction bonds" means bonds, notes, certificates of participation or beneficial interest, or other evidences of indebtedness or ownership, issued pursuant to an executed indenture or other agreement of a financing entity, in accordance with this section and sections 16-245f to 16-245k, inclusive, the proceeds of which are used, directly or indirectly, to provide, recover, finance, or refinance stranded costs [or economic recovery transfer,] or to sustain funding of conservation and load management and renewable energy investment programs by substituting for disbursements to the General Fund from the Energy Conservation and Load Management Fund established by section 16-245m and from the Renewable Energy Investment Fund established by section 16-245n, and which, directly or indirectly, are secured by, evidence ownership interests in, or are payable from, transition property;

(2) "Competitive transition assessment" means those non-bypassable rates and other charges, that are authorized by the department (A) in a financing order [in respect to the economic recovery transfer, or in a financing order,] to sustain funding of conservation and load management and renewable energy investment programs by substituting disbursements to the General Fund from proceeds of rate reduction bonds for such disbursements from the Energy Conservation and Load Management Fund established by section 16-245m and from the Renewable Energy Investment Fund established by section 16-245n, or to recover those stranded costs that are eligible to be funded with the proceeds of rate reduction bonds pursuant to section 16-245f and the costs of providing, recovering, financing, or refinancing [the economic recovery transfer or] such substitution of disbursements to the General Fund or such stranded costs through a plan approved by the department in the financing order, including the costs of issuing, servicing, and retiring rate reduction bonds, (B) to recover those stranded costs determined under this section but not eligible to be funded with the proceeds of rate reduction bonds pursuant to section 16-245f, or (C) to recover costs determined under subdivision (1) of subsection (e) of section 16-244g. If requested by the electric company or electric distribution company, the department shall include in the competitive transition assessment non-bypassable rates and other charges to recover federal and state taxes whose recovery period is modified by the transactions contemplated in this section and sections 16-245f to 16-245k, inclusive;

(3) "Customer" means any individual, business, firm, corporation, association, tax-exempt organization, joint stock association, trust, partnership, limited liability company, the United States or its agencies, this state, any political subdivision thereof or state agency that purchases electric generation or distribution services as a retail end user in the state from any electric supplier, electric company or electric distribution company;

(4) "Finance authority" means the state, acting through the office of the State Treasurer;

(5) "Net proceeds" means "net proceeds" as defined in section 16-244f;

(6) "Stranded costs" means that portion of generation assets, generation-related regulatory assets or long-term contract costs determined by the department in accordance with the provisions of subsections (e), (f), (g) and (h) of this section;

(7) "Generation assets" means the total construction and other capital asset costs of generation facilities approved for inclusion in rates before July 1, 1997, but does not include any costs relating to the decommissioning of any such facility or any costs which the department found during a proceeding initiated before July 1, 1998, were incurred because of imprudent management;

(8) "Generation-related regulatory assets" means generation-related costs authorized or mandated before July 1, 1998, by the Department of Public Utility Control, approved for inclusion in the rates, and include, but are not limited to, costs incurred for deferred taxes, conservation programs, environmental protection programs, public policy costs and research and development costs, net of any applicable credits payable to customers, but does not include any costs which the department found during a proceeding initiated before July 1, 1998, were incurred because of imprudent management;

(9) "Long-term contract costs" mean the above-market portion of the costs of contractual obligations approved for inclusion in the rates that were entered into before January 1, 2000, arising from independent power producer contracts required by law or purchased power contracts approved by the Federal Energy Regulatory Commission;

(10) "Department" means the Department of Public Utility Control;

(11) "Financing entity" means the finance authority or any special purpose trust or other entity that is authorized by the finance authority to issue rate reduction bonds or acquire transition property pursuant to such terms and conditions as the finance authority may specify, or both;

(12) "Financing order" means an order of the department adopted in accordance with this section and sections 16-245f to 16-245k, inclusive;

(13) "Transition property" means the property right created pursuant to this section and sections 16-245f to 16-245k, inclusive, in respect [to the economic recovery transfer or in respect] of disbursements to the General Fund to sustain funding of conservation and load management and renewable energy investment programs or those stranded costs that are eligible to be funded with the proceeds of rate reduction bonds pursuant to section 16-245f, including, without limitation, the right, title, and interest of an electric company or electric distribution company or its transferee or the financing entity (A) in and to the rates and charges established pursuant to a financing order, as adjusted from time to time in accordance with subdivision (2) of subsection (b) of section 16-245i and the financing order, (B) to be paid the amount that is determined in a financing order to be the amount that the electric company or electric distribution company or its transferee or the financing entity is lawfully entitled to receive pursuant to the provisions of this section and sections 16-245f to 16-245k, inclusive, and the proceeds thereof, and in and to all revenues, collections, claims, payments, money, or proceeds of or arising from the rates and charges or constituting the competitive transition assessment that is the subject of a financing order including those non-bypassable rates and other charges referred to in subdivision (2) of this subsection, and (C) in and to all rights to obtain adjustments to the rates and charges pursuant to the terms of subdivision (2) of subsection (b) of section 16-245i and the financing order. "Transition property" shall constitute a current property right notwithstanding the fact that the value of the property right will depend on consumers using electricity or, in those instances where consumers are customers of a particular electric company or electric distribution company, the electric company or electric distribution company performing certain services;

(14) "State rate reduction bonds" means the rate reduction bonds issued on June 23, 2004, by the state to sustain funding of conservation and load management and renewable energy investment programs by substituting for disbursements to the General Fund from the Energy Conservation and Load Management Fund, established by section 16-245m, and from the Renewable Energy Investment Fund, established by section 16-245n. The state rate reduction bonds for the purposes of section 4-30a shall be deemed to be outstanding indebtedness of the state;

(15) "Operating expenses" means, with respect to state rate reduction bonds, [or economic recovery revenue bonds,] (A) all expenses, costs and liabilities of the state or the trustee incurred in connection with the administration or payment of the state rate reduction bonds, [or economic recovery revenue bonds,] or in discharge of its obligations and duties under the state rate reduction bonds, [or economic recovery revenue bonds,] or bond documents, expenses and other costs and expenses arising in connection with the state rate reduction bonds or economic recovery revenue bonds, or pursuant to the financing order providing for the issuance of such bonds including any arbitrage rebate and penalties payable under the code in connection with such bonds, and (B) all fees and expenses payable or disbursable to the servicers or others under the bond documents;

(16) "Bond documents" means, with respect to state rate reduction bonds, [or economic recovery revenue bonds,] the following documents: The servicing agreements, the tax compliance agreement and certificate, and the continuing disclosure agreement [and indenture] entered into in connection with the state rate reduction bonds [or the economic recovery revenue bonds] and the indenture;

(17) "Indenture" means [the indenture executed in connection with the state rate reduction bonds or the economic recovery revenue bonds, or,] with respect to state rate reduction bonds, the RRB Indenture, dated as of June 23, 2004, by and between the state and the trustee, as amended from time to time; and

(18) "Trustee" means, with respect to state rate reduction bonds, the trustee appointed under the indenture. [;]

[(19) "Economic recovery transfer" means the disbursement to the General Fund of nine hundred fifty-six million dollars from proceeds of the issuance of the economic recovery revenue bonds; and

(20) "Economic recovery revenue bonds" means rate reduction bonds issued to fund the economic recovery transfer, the costs of issuance, credit enhancements, operating expenses and such other costs as the finance authority deems necessary or advisable, and which shall be payable from competitive transition assessment charges that replace the competitive transition assessment charges funding stranded costs and that are offset in part by decreases to the charges funding the Energy Conservation and Load Management Fund, as provided in subdivision (3) of subsection (a) of section 16-245m.]

Sec. 3. Section 16-245f of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2011):

(a) An electric company or electric distribution company shall submit to the department an application for a financing order with respect to any proposal to sustain funding of conservation and load management and renewable energy investment programs by substituting disbursements to the General Fund from proceeds of rate reduction bonds for such disbursements from the Energy Conservation and Load Management Fund established by section 16-245m and from the Renewable Energy Investment Fund established by section 16-245n, and may submit to the department an application for a financing order with respect to the following stranded costs: (1) The cost of mitigation efforts, as calculated pursuant to subsection (c) of section 16-245e; (2) generation-related regulatory assets, as calculated pursuant to subsection (e) of section 16-245e; and (3) those long-term contract costs that have been reduced to a fixed present value through the buyout, buydown, or renegotiation of such contracts, as calculated pursuant to subsection (f) of section 16-245e. No stranded costs shall be funded with the proceeds of rate reduction bonds unless (A) the electric company or electric distribution company proves to the satisfaction of the department that the savings attributable to such funding will be directly passed on to customers through lower rates, and (B) the department determines such funding will not result in giving the electric distribution company or any generation entities or affiliates an unfair competitive advantage. The department shall hold a hearing for each such electric distribution company to determine the amount of disbursements to the General Fund from proceeds of rate reduction bonds that may be substituted for such disbursements from the Energy Conservation and Load Management Fund established by section 16-245m and from the Renewable Energy Investment Fund established by section 16-245n, and thereby constitute transition property and the portion of stranded costs that may be included in such funding and thereby constitute transition property. Any hearing shall be conducted as a contested case in accordance with chapter 54, except that any hearing with respect to a financing order or other order to sustain funding for conservation and load management and renewable energy investment programs by substituting the disbursement to the General Fund from the Energy Conservation and Load Management Fund established by section 16-245m and from the Renewable Energy Investment Fund established by section 16-245n shall not be a contested case, as defined in section 4-166. The department shall not include any rate reduction bonds as debt of an electric distribution company in determining the capital structure of the company in a rate-making proceeding, for calculating the company's return on equity or in any manner that would impact the electric distribution company for rate-making purposes, and shall not approve such rate reduction bonds that include covenants that have provisions prohibiting any change to their appointment of an administrator of the Energy Conservation and Load Management Fund. Nothing in this subsection shall be deemed to affect the terms of subsection (b) of section 16-245m.

[(b) Prior to September 1, 2010, each electric distribution company shall submit to the department an application for a financing order with respect to funding the economic recovery transfer through the issuance of economic recovery revenue bonds. The department shall hold a hearing for each such electric distribution company to determine the amount necessary to fund the economic recovery transfer, the payment of economic recovery revenue bonds, costs of issuance, credit enhancements and operating expenses for the economic recovery revenue bonds. Such amount as determined by the department shall constitute transition property. The department shall allocate the responsibility for the funding of the economic recovery transfer and the expenses of the economic recovery revenue bonds equitably between the electric distribution companies. Such allocation may provide that the respective charges payable by the customers of each electric distribution company may commence on different dates and that such rates may vary over the period the economic recovery revenue bonds and the related operating expenses are being paid, provided (1) such charges are equitably allocated to the customers of each electric distribution company, and (2) the department determines that, over such period, and taking into account the timing of charges, the charges on a kilowatt hour basis assessed to the customers of the respective electric distribution companies have substantially the same present value after consultation with the finance authority as to the discount rate to be used in determining such present value. Any hearing with respect to a financing order in respect to the economic recovery transfer and the issuance of economic recovery revenue bonds shall not be a contested case, as defined in section 4-166. The department shall issue a financing order in respect to the economic recovery revenue bonds for each electric distribution company on or before October 1, 2010. In such financing order, the department shall determine the competitive transition assessment in respect of the economic recovery revenue bonds, which shall not be assessed prior to June 30, 2011, unless the department sets an earlier date in the financing order. A component of the competitive transition assessment in respect of the economic recovery revenue bonds shall be equal to the decreases to the charges provided in subdivision (3) of subsection (a) of section 16-245m funding the Energy Conservation and Load Management Fund. The portion of the competitive transition assessment in respect to the economic recovery revenue bonds equal to such decreases shall be assessed and collected from the date such charges are reduced pursuant to the financing order. The department may provide in such financing order that money from other sources, including proceeds of charges assessed customers of municipal electric companies, transferred to the trustee under the indenture and intended to be used to pay debt service on the bonds shall be taken into account in making adjustments to the competitive transition assessment pursuant to subdivision (2) of subsection (b) of section 16-245i if such payment is not made from General Fund revenues and would not adversely affect the tax status or credit rating of economic recovery revenue bonds.]

[(c)] (b) The department, during the period commencing on January 1, 2011, and ending June 30, 2011, shall assess or cause to be assessed a charge per kilowatt hour of electricity sold to each end use customer of an electric distribution company and shall cause such assessments to be remitted to the General Fund. The department shall set such charge at a level which the department estimates will generate forty million dollars during the period it is assessed. Such charge shall not be assessed after June 30, 2011.

Sec. 4. Subsection (c) of section 16-245g of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2011):

(c) The competitive transition assessment shall be determined by the department in a general and equitable manner and [, in accordance with the provisions of subsection (b) of section 16-245f,] shall be imposed on all customers at a rate that is applied equally to all customers of the same class in accordance with methods of allocation in effect on July 1, 1998, provided the competitive transition assessment shall not be imposed on customers receiving services under a special contract which is in effect on July 1, 1998, until such special contract expires. The competitive transition assessment shall be imposed beginning on January 1, 2000, on all customers receiving services under a special contract which is entered into or renewed after July 1, 1998. The competitive transition assessment shall have a generally applicable manner of determination that may be measured on the basis of percentages of total costs of retail sales of electric generation services. [Subject to the provisions of subsection (b) of section 16-245f, the] The competitive transition assessment shall be payable by customers on an equal basis on the same payment terms and shall be eligible or subject to prepayment on an equal basis. Any exemption of the competitive transition assessment by customers under a special contract shall not result in an increase in rates to any customer.

Sec. 5. Subsections (a) and (b) of section 16-245h of the general statutes are repealed and the following is substituted in lieu thereof (Effective July 1, 2011):

(a) The competitive transition assessment described in subparagraph (A) of subdivision (2) of subsection (a) of section 16-245e shall constitute transition property when, and to the extent that, a financing order authorizing such portion of the competitive transition assessment has become effective in accordance with sections 16-245e to 16-245k, inclusive, and the transition property shall thereafter continuously exist as property for all purposes with all of the rights and privileges of sections 16-245e to 16-245k, inclusive, for the period and to the extent provided in the financing order, but in any event until the rate reduction bonds are paid in full, including all principal, interest, premium, costs, and arrearages on such bonds. Prior to its sale or other transfer by the electric company or electric distribution company pursuant to sections 16-245e to 16-245k, inclusive, transition property, other than transition property in respect of [the economic recovery transfer or in respect to disbursements to] the General Fund to sustain funding of conservation and load management and renewable energy investment programs, shall be a vested contract right of the electric company or electric distribution company, notwithstanding any contrary treatment thereof for accounting, tax, or other purpose. Transition property in respect of disbursements to the General Fund to sustain funding of conservation and load management and renewable energy investment programs shall immediately upon its creation vest solely in the financing entity. [Transition property in respect to the economic recovery transfer shall immediately upon its creation vest solely in the financing entity.] The electric company or electric distribution company shall have no right, title or interest in transition property in respect [to the economic recovery transfer or in respect] of disbursements to the General Fund to sustain funding of conservation and load management and renewable energy investment programs, and in respect of such transition property shall be only a collection agent on behalf of the financing entity.

(b) Any surplus competitive transition assessment described in subparagraph (A) of subdivision (2) of subsection (a) of section 16-245e in excess of the amounts necessary to pay principal, premium, if any, interest and expenses of the issuance of the rate reduction bonds [issued prior to January 1, 2002, after such bonds have been defeased or paid in full, shall be remitted to the finance authority who shall apply such charges to the payment of economic recovery revenue bonds and cause such charges to be credited against the payment obligation in respect to the economic recovery revenue bonds of the customers making such excess payments. If the economic recovery revenue bonds are not issued, the finance authority shall transfer such excess charges to the General Fund. Any surplus competitive transition assessment described in subparagraph (A) of subdivision (2) of subsection (a) of section 16-245e in excess of the amounts necessary to pay principal, premium, if any, interest and expenses of the issuance of the rate reduction bonds issued on or after May 1, 2010,] shall be remitted to the financing entity and may be used to benefit customers [. No funds shall be remitted, applied or used in accordance with the terms of this subsection if such remittance, application or use would] if this would not result in a recharacterization of the tax, accounting, and other intended characteristics of the financing, including, but not limited to, the following:

(1) Avoiding the recognition of debt on the electric company's or the electric distribution company's balance sheet for financial accounting and regulatory purposes;

(2) Treating the rate reduction bonds as debt of the electric company or electric distribution company or its affiliates for federal income tax purposes;

(3) Treating the transfer of the transition property by the electric company or electric distribution company as a true sale for bankruptcy purposes; or

(4) Avoiding any adverse impact of the financing on the credit rating of the rate reduction bonds or the electric company or electric distribution company.

Sec. 6. Subsections (a) and (b) of section 16-245i of the general statutes are repealed and the following is substituted in lieu thereof (Effective July 1, 2011):

(a) The department may issue financing orders in accordance with sections 16-245e to 16-245k, inclusive, [to fund the economic recovery transfer,] to sustain funding of conservation and load management and renewable energy investment programs by substituting disbursements to the General Fund from proceeds of rate reduction bonds for such disbursements from the Energy Conservation and Load Management Fund established by section 16-245m and from the Renewable Energy Investment Fund established by section 16-245n, and to facilitate the provision, recovery, financing, or refinancing of stranded costs. [Except for a financing order in respect to the economic recovery revenue bonds, a] A financing order may be adopted only upon the application of an electric company or electric distribution company, pursuant to section 16-245f, and shall become effective in accordance with its terms only after the electric company or electric distribution company files with the department the electric company's or the electric distribution company's written consent to all terms and conditions of the financing order. [Any financing order in respect to the economic recovery revenue bonds shall be effective on issuance.]

(b) (1) Notwithstanding any general or special law, rule, or regulation to the contrary, except as otherwise provided in this subsection with respect to transition property that has been made the basis for the issuance of rate reduction bonds, the financing orders and the competitive transition assessment shall be irrevocable and the department shall not have authority either by rescinding, altering, or amending the financing order or otherwise, to revalue or revise for rate-making purposes the stranded costs, or the costs of providing, recovering, financing, or refinancing the stranded costs, [the amount of the economic recovery transfer] or the amount of disbursements to the General Fund from proceeds of rate reduction bonds substituted for such disbursements from the Energy Conservation and Load Management Fund established by section 16-245m and from the Renewable Energy Investment Fund established by section 16-245n, determine that the competitive transition assessment is unjust or unreasonable, or in any way reduce or impair the value of transition property either directly or indirectly by taking the competitive transition assessment into account when setting other rates for the electric company or electric distribution company; nor shall the amount of revenues arising with respect thereto be subject to reduction, impairment, postponement, or termination.

(2) Notwithstanding any other provision of this section, the department shall approve the adjustments to the competitive transition assessment as may be necessary to ensure timely recovery of all stranded costs that are the subject of the pertinent financing order, and the costs of capital associated with the provision, recovery, financing, or refinancing thereof, including the costs of issuing, servicing, and retiring the rate reduction bonds issued to recover stranded costs contemplated by the financing order and to ensure timely recovery of the costs of issuing, servicing, and retiring the rate reduction bonds issued to sustain funding of conservation and load management and renewable energy investment programs contemplated by the financing order. [, and to ensure timely recovery of the costs of issuing, servicing and retiring the economic recovery revenue bonds issued to fund the economic recovery transfer contemplated by the financing order.]

(3) Notwithstanding any general or special law, rule, or regulation to the contrary, any requirement under sections 16-245e to 16-245k, inclusive, or a financing order that the department take action with respect to the subject matter of a financing order shall be binding upon the department, as it may be constituted from time to time, and any successor agency exercising functions similar to the department and the department shall have no authority to rescind, alter, or amend that requirement in a financing order. Section 16-43 shall not apply to any sale, assignment, or other transfer of or grant of a security interest in any transition property or the issuance of rate reduction bonds under sections 16-245e to 16-245k, inclusive.

Sec. 7. Subsection (a) of section 16-245j of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2011):

(a) A financing entity may issue rate reduction bonds upon approval by the department in the pertinent financing order. Rate reduction bonds shall be nonrecourse to the credit or any assets of the electric company [,] or electric distribution company, [or the finance authority,] other than the transition property as specified in the pertinent financing order.

Sec. 8. Subsection (c) of section 16-245j of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2011):

(c) (1) Financing orders and rate reduction bonds shall not be deemed to constitute a debt or liability of the state or of any political subdivision thereof, other than the financing entity, shall not constitute a pledge of the full faith and credit of the state or any of its political subdivisions, other than the financing entity, but shall be payable solely from the funds provided under sections 16-245e to 16-245k, inclusive, and shall not constitute an indebtedness of the state within the meaning of any constitutional or statutory debt limitation or restriction and, accordingly, shall not be subject to any statutory limitation on the indebtedness of the state and shall not be included in computing the aggregate indebtedness of the state in respect to and to the extent of any such limitation. This subsection shall in no way preclude bond guarantees or enhancements pursuant to sections 16-245e to 16-245k, inclusive. All rate reduction bonds shall contain on the face thereof a statement to the following effect: "Neither the full faith and credit nor the taxing power of the State of Connecticut is pledged to the payment of the principal of, or interest on, this bond."

(2) The issuance of rate reduction bonds under sections 16-245e to 16-245k, inclusive, shall not directly, indirectly, or contingently obligate the state or any political subdivision thereof to levy or to pledge any form of taxation therefor or to make any appropriation for their payment.

(3) The exercise of the powers granted by sections 16-245e to 16-245k, inclusive, shall be in all respects for the benefit of the people of this state, for the increase of their commerce, welfare, and prosperity, and as the exercise of such powers shall constitute the performance of an essential public function, neither the finance authority, any electric company or electric distribution company, any affiliate of any electric company or electric distribution company, any financing entity, or any collection or other agent of any of the foregoing shall be required to pay any taxes or assessments upon or in respect of any revenues or property received, acquired, transferred, or used by the finance authority, any electric company or electric distribution company, any affiliate of any electric company or electric distribution company, any financing entity, or any collection or other agent of any of the foregoing under the provisions of sections 16-245e to 16-245k, inclusive, or upon or in respect of the income therefrom, and any rate reduction bonds shall be treated as issued by or on behalf of a public instrumentality created under the laws of the state for purposes of chapter 229.

(4) [(A)] The proceeds of any rate reduction bonds [, other than economic recovery revenue bonds,] shall be used for the purposes approved by the department in the financing order, including, but not limited to, disbursements to the General Fund in substitution for such disbursements from the Energy Conservation and Load Management Fund established by section 16-245m and from the Renewable Energy Investment Fund established by section 16-245n, the costs of refinancing or retiring of debt of the electric company or electric distribution company, and associated federal and state tax liabilities; provided such proceeds shall not be applied to purchase generation assets or to purchase or redeem stock or to pay dividends to shareholders or operating expenses other than taxes resulting from the receipt of such proceeds.

[(B) The proceeds of any economic recovery revenue bonds shall be used for the purposes approved by the department in the financing order, including, but not limited to, funding the economic recovery transfer, provided such proceeds shall not be applied to purchase generation assets or to purchase or redeem stock or to pay dividends to shareholders or operating expenses other than taxes resulting from the receipt of such proceeds.]

(5) Rate reduction bonds are made and declared (A) securities in which all public officers and public bodies of the state and its political subdivisions, all insurance companies, state banks and trust companies, national banking associations, savings banks, savings and loan associations, investment companies, executors, administrators, trustees and other fiduciaries may properly and legally invest funds, including capital in their control or belonging to them, and (B) securities which may properly and legally be deposited with and received by any state or municipal officer or any agency or political subdivision of the state for any purpose for which the deposit of bonds or obligations of the state is now or may be authorized.

(6) Rate reduction bonds [, other than economic recovery revenue bonds,] shall mature at such time or times approved by the department in the financing order; provided that such maturity shall not be later than December 31, 2011. [Economic recovery revenue bonds shall mature at such time or times approved by the department in the financing order, provided such maturity shall not be later than eight years after the date of issuance, provided such maturity may be extended for economic reasons, upon the advice of the financing entity.]

(7) Rate reduction bonds issued and at any time outstanding may, if and to the extent permitted under the indenture or other agreement pursuant to which they are issued, be refunded by other rate reduction bonds.

Sec. 9. Subsection (e) of section 16-245j of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2011):

(e) [In conjunction with the issuance of economic recovery revenue bonds or state rate reduction bonds] When the state is the authorized financing entity: (1) The Treasurer may enter into a trust indenture for the benefit of holders of the rate reduction bonds with a corporate trustee, which may be any trust company or commercial bank qualified to do business within or without the state; such trust indenture shall be consistent with the financing order and may contain such other provisions as may be appropriate including those regulating the investment of funds and the remedies of bondholders; (2) the Treasurer may make representations and agreements for the benefit of the holders of rate reduction bonds to make secondary market disclosures; (3) the Treasurer may enter into interest rate swap agreements and other agreements for the purpose of moderating interest rate risk on rate reduction bonds as permitted elsewhere within sections 16-245e to 16-245k, inclusive, provided the obligations under such agreements are payable from the transition property; (4) the Treasurer may enter into such other agreements and instruments to secure the rate reduction bonds as provided in sections 16-245f to 16-245k, inclusive; and (5) the Treasurer may take such other actions as necessary or appropriate for the issuance and distribution of the rate reduction bonds pursuant to the financing order and the Treasurer and the Secretary of the Office of Policy and Management may make representations and agreements for the benefit of the holders of the rate reduction bonds which are necessary or appropriate to ensure exclusion of the interest payable on the rate reduction bonds from gross income under the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended.

Sec. 10. Subsection (l) of section 16-245k of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2011):

(l) The authority of the department to issue financing orders pursuant to sections 16-245e to 16-245k, inclusive, shall expire on December 31, 2008. [, with respect to bonds other than economic recovery revenue bonds. The authority of the department to issue financing orders pursuant to sections 16-245e to 16-245k, inclusive, with respect to economic recovery revenue bonds shall expire on December 31, 2012.] The expiration of the authority shall have no effect upon financing orders adopted by the department pursuant to sections 16-245e to 16-245k, inclusive, or any transition property arising therefrom, or upon the charges authorized to be levied thereunder, or the rights, interests, and obligations of the electric company or electric distribution company or a financing entity or holders of rate reduction bonds pursuant to the financing order, or the authority of the department to monitor, supervise, or take further action with respect to the financing order in accordance with the terms of sections 16-245e to 16-245k, inclusive, and of the financing order.

This act shall take effect as follows and shall amend the following sections:

Section 1

July 1, 2011

New section

Sec. 2

July 1, 2011

16-245e(a)

Sec. 3

July 1, 2011

16-245f

Sec. 4

July 1, 2011

16-245g(c)

Sec. 5

July 1, 2011

16-245h(a) and (b)

Sec. 6

July 1, 2011

16-245i(a) and (b)

Sec. 7

July 1, 2011

16-245j(a)

Sec. 8

July 1, 2011

16-245j(c)

Sec. 9

July 1, 2011

16-245j(e)

Sec. 10

July 1, 2011

16-245k(l)

Statement of Purpose:

To provide relief for Connecticut's electric ratepayers.

[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not underlined.]